<PAGE> 1
As filed with the Securities and Exchange Commission on September 29, 2000
Registration No. 33-00488/811-04416
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 53 [X]
[X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 52
Armada Funds (formerly known as "NCC Funds")
(Exact Name of Registrant as Specified in Charter)
One Freedom Valley Drive
Oaks, Pennsylvania, 19456
(Address of Principal Executive Offices)
Registrant's Telephone Number:
1-800-622-FUND
W. Bruce McConnel, III, Esq.
DRINKER BIDDLE & REATH LLP
One Logan Square
18th and Cherry Streets
Philadelphia, Pennsylvania 19103-6996
(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)
[X ] on October 1, 2000 pursuant to paragraph (b)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) 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.
The Title of Securities Being Registered . . . . Shares of beneficial interest
<PAGE> 2
<PAGE>
ARMADA FUNDS
A, B AND C SHARES (RETAIL)
PROSPECTUS
OCTOBER 2, 2000
ARMADA CORE EQUITY FUND
ARMADA EQUITY GROWTH FUND
ARMADA EQUITY INCOME FUND
ARMADA EQUITY INDEX FUND
ARMADA INTERNATIONAL EQUITY FUND
ARMADA LARGE CAP ULTRA FUND
ARMADA MID CAP GROWTH FUND
ARMADA SMALL CAP GROWTH FUND
ARMADA SMALL CAP VALUE FUND
ARMADA TAX MANAGED EQUITY FUND
ARMADA BALANCED ALLOCATION FUND
ARMADA BOND FUND
ARMADA GNMA FUND
ARMADA INTERMEDIATE BOND FUND
ARMADA LIMITED MATURITY BOND FUND
ARMADA STRATEGIC INCOME BOND FUND
ARMADA TOTAL RETURN ADVANTAGE FUND
ARMADA U.S. GOVERNMENT INCOME FUND
ARMADA MICHIGAN MUNICIPAL BOND FUND
ARMADA NATIONAL TAX EXEMPT BOND FUND
ARMADA OHIO TAX EXEMPT BOND FUND
ARMADA PENNSYLVANIA MUNICIPAL BOND FUND
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENT ADVISER
NATIONAL CITY INVESTMENT MANAGEMENT COMPANY
INVESTMENT SUB-ADVISER
NATIONAL ASSET MANAGEMENT CORPORATION
(ARMADA CORE EQUITY FUND AND ARMADA TOTAL RETURN ADVANTAGE FUND)
Page 1 of 150
<PAGE>
ABOUT THIS PROSPECTUS
Armada Funds (the Trust) is a mutual fund family that offers different
classes of shares in separate investment portfolios (Funds). The Funds have
individual investment goals and strategies. This prospectus gives you
important information that you should know about the Class A, Class B and
Class C Shares of the Funds before investing. The Trust also offers Class A,
Class B and Class C Shares of Armada money market Funds in a separate
prospectus which is available by calling 1-800-622-FUND (3863). Please read
this prospectus and keep it for future reference.
THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN REVIEW
THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS SOME GENERAL INFORMATION
YOU SHOULD KNOW ABOUT RISK AND RETURN THAT IS COMMON TO EACH OF THE FUNDS. FOR
MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
<TABLE>
PAGE
<S> <C>
ARMADA CORE EQUITY FUND ................................................... 2
ARMADA EQUITY GROWTH FUND.................................................. 4
ARMADA EQUITY INCOME FUND.................................................. 6
ARMADA EQUITY INDEX FUND................................................... 8
ARMADA INTERNATIONAL EQUITY FUND...........................................10
ARMADA LARGE CAP ULTRA FUND................................................12
ARMADA MID CAP GROWTH FUND.................................................14
ARMADA SMALL CAP GROWTH FUND...............................................16
ARMADA SMALL CAP VALUE FUND................................................18
ARMADA TAX MANAGED EQUITY FUND.............................................20
ARMADA BALANCED ALLOCATION FUND............................................27
ARMADA BOND FUND...........................................................30
ARMADA GNMA FUND...........................................................32
ARMADA INTERMEDIATE BOND FUND..............................................34
ARMADA LIMITED MATURITY BOND FUND..........................................36
ARMADA STRATEGIC INCOME BOND FUND..........................................38
ARMADA TOTAL RETURN ADVANTAGE FUND.........................................40
ARMADA U.S. GOVERNMENT INCOME FUND.........................................42
ARMADA MICHIGAN MUNICIPAL BOND FUND........................................48
ARMADA NATIONAL TAX EXEMPT BOND FUND.......................................50
ARMADA OHIO TAX EXEMPT BOND FUND...........................................52
ARMADA PENNSYLVANIA MUNICIPAL BOND FUND....................................54
MORE INFORMATION ABOUT RISK................................................58
MORE INFORMATION ABOUT FUND INVESTMENTS....................................62
INVESTMENT ADVISER, SUB-ADVISER AND
INVESTMENT TEAMS.......................................................64
PURCHASING, SELLING AND EXCHANGING FUND SHARES.............................71
DIVIDENDS AND TAXES........................................................73
FINANCIAL HIGHLIGHTS.......................................................74
</TABLE>
Page 2 of 150
<PAGE>
INTRODUCTION
Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.
Fund performance is measured against one or more indices. An index measures the
market prices of a specific group of securities in a particular market or
securities in a market sector. You cannot invest directly in an index. Unlike a
mutual fund, an index does not have an investment adviser and does not pay any
commissions or expenses. If an index had expenses, its performance would be
lower.
Class A, Class B and Class C Shares have different expenses and other
characteristics, allowing you to choose the class that best suits your needs.
You should consider the amount you want to invest, how long you plan to have it
invested, and whether you plan to make additional investments.
CLASS A SHARES
- Front-end sales charge (varies based on Equity or Fixed Income
investment)
- Low 12b-1 fees
- $500 minimum initial investment-no subsequent minimum
CLASS B SHARES (EXCHANGE ONLY FROM AN ARMADA NON-MONEY MARKET FUND OR
ARRANGE FOR A SYSTEMATIC EXCHANGE PROGRAM)
- No front-end sales charge
- Contingent deferred sales charge (back-end charge if you redeem within
5 years-declining from year to year)
- Higher 12b-1 fees than Class A
- $500 minimum initial investment-no subsequent minimum
- Converts to Class A shares after eighth year
CLASS C SHARES
- No front-end sales charge
- Contingent deferred sales charge (back-end charge if you redeem
within the first 18 months)
- Higher 12b-1 fees than Class A
- $500 minimum initial investment-no subsequent minimum
- Does not convert to any other share class
Page 3 of 150
<PAGE>
RISK/RETURN INFORMATION COMMON TO THE FUNDS
Each Fund has its own investment goal and strategies for reaching that goal. The
investment managers invest Fund assets in a way that they believe will help a
Fund achieve its goal. Still, investing in each Fund involves risk and there is
no guarantee that a Fund will achieve its goal. An investment manager's
judgments about the markets, the economy, or companies may not anticipate actual
market movements, economic conditions or company performance, and these
judgments may affect the return on your investment.
No matter how good a job an investment manager does, you could lose money on
your investment in a Fund, just as you could with other investments.
An investment in a Fund is not a bank deposit and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any government
agency.
The value of your investment in a Fund is based primarily on the market prices
of the securities the Fund holds. These prices change daily due to economic and
other events that affect particular companies and other issuers. These price
movements, sometimes called volatility, may be greater or lesser depending on
the types of securities a Fund owns and the markets in which they trade. The
effect on a Fund of a change in the value of a single security will depend on
how widely the Fund diversifies its holdings.
Page 4 of 150
<PAGE>
ARMADA CORE EQUITY FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS Large cap common stocks
SHARE PRICE VOLATILITY High
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in large capitalization common
stocks
INVESTOR PROFILE Investors seeking capital appreciation,
who are willing to accept the risk of
investing in equity securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Core Equity Fund's investment objective is to provide capital
appreciation by blending value and growth investment styles. The investment
objective may be changed without a shareholder vote. The Fund normally invests
at least 80% of its total assets in a diversified portfolio of common stocks and
securities convertible into common stocks of companies with large stock market
capitalizations. The Sub-Adviser will normally invest between 20% and 50% of its
assets in the following three types of equity securities: (1) common stocks that
meet the Sub-Adviser's criteria for five-year annual earnings-per-share rate
during the last five years; (2) common stocks with price-to-earnings ratios
below the average of the companies included in the S&P 500 Composite Index; and
(3) common stocks that pay dividends at a rate above the average of the
companies included in the S&P 500 Composite Index.
The Sub-Adviser utilizes a systematic, disciplined investment process when
selecting individual securities. This includes: (1) screening a database for
liquidity and the criteria listed above; (2) scoring each issue emphasizing
fundamental, valuation and technical indicators; and (3) security analysis that
further evaluates the company and the stock, which includes an analysis of
company fundamentals such as earnings, profitability and management, valuation
such as price/earnings, price/book and yield, and technical analysis emphasizing
individual stock price trends.
The sell discipline involves the monitoring of each company's fundamental,
valuation, and technical measures. If one of these measures is unfavorable, an
immediate review of that company is performed. If two of these three measures
are unfavorable, that stock is sold. The Fund may invest up to 20% of its total
assets at the time of purchase in foreign equity securities.
The Fund considers a large capitalization or "large cap" company to be one that
has a comparable market capitalization to the companies in the S&P 500 Composite
Index. The S&P 500 Composite Index is a widely recognized, unmanaged index of
500 common stocks which are generally representative of the U.S. stock market as
a whole.
Page 5 of 150
<PAGE>
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may decline in response. These
factors contribute to price volatility, which is the principal risk of investing
in the Fund.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country.
The Fund is also subject to the risk that large cap equity securities may
underperform other segments of the equity markets or the equity markets as a
whole. For additional information about risks, see "More Information About
Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class C Shares because it has not
completed a full calendar year of operations.
The bar chart does not reflect sales charges. If sales charges had been
reflected, the returns for Class A Shares of the Fund would be less than those
shown below.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1998 31.99%
1999 19.72%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
25.04% -6.90%
(12/31/98) (9/30/98)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was -0.87%.
Page 6 of 150
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500 COMPOSITE INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR SINCE INCEPTION
---------------------------------------------------------------------------------------------
<S> <C> <C>
ARMADA CORE EQUITY FUND 19.72% 22.19%(1)
S&P 500 COMPOSITE INDEX(5) 21.04% 21.29%(2)
<CAPTION>
CLASS B SHARES 1 YEAR SINCE INCEPTION
---------------------------------------------------------------------------------------------
<S> <C> <C>
ARMADA CORE EQUITY FUND 18.92% 25.26%(3)
S&P 500 COMPOSITE INDEX(5) 21.04% 24.76%(4)
</TABLE>
(1)Since August 1, 1997.
(2)Since July 31, 1997.
(3)Since January 6, 1998.
(4)Since December 31, 1997.
(5)The S&P 500 Composite Index is a widely recognized, unmanaged index of 500
common stocks which are generally representative of the U.S. stock market as a
whole.
FUND FEES AND EXPENSES
SEE PAGE 22 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 7 of 150
<PAGE>
ARMADA EQUITY GROWTH FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS Large cap equity securities
SHARE PRICE VOLATILITY High
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in growth-oriented common
stocks of larger issuers
INVESTOR PROFILE Investors seeking capital appreciation
and who are willing to accept the risk
of investing in equity securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Equity Growth Fund's investment objective is to provide capital
appreciation by investing in a diversified portfolio of publicly traded larger
cap equity securities. The investment objective may be changed without
shareholder vote. The Fund will normally invest at least 80% of its total assets
in a diversified portfolio of common stocks and securities convertible into
common stocks of companies with large stock market capitalization. The Fund may
invest up to 20% of its total assets at the time of purchase in foreign equity
securities. In buying and selling securities for the Fund, the Adviser considers
factors such as historical and projected earnings growth, earnings quality and
liquidity. The Fund generally purchases common stocks that are listed on a
national securities exchange or unlisted securities with an established
over-the-counter market.
The Fund considers a large capitalization or "large cap" company to be one that
has a comparable market capitalization to the companies in the S&P 500 Composite
Index. The S&P 500 Composite Index is a widely recognized, unmanaged index of
500 common stocks which are generally representative of the U.S. stock market as
a whole.
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may decline in response. These
factors contribute to price volatility, which is the principal risk of investing
in the Fund.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in
Page 8 of 150
<PAGE>
response to events that do not otherwise affect the value of the security in the
issuer's home country.
The Fund is also subject to the risk that large cap equity securities may
underperform other segments of the equity markets or the equity markets as a
whole. For additional information about risks, see "More Information About
Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class C Shares because it has not
completed a full calendar year of operations.
This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.
The bar chart does not reflect sales charges. If sales charges had been
reflected, the returns for Class A Shares of the Fund would be less than those
shown below.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1992 6.05%
1993 -0.47%
1994 -0.94%
1995 28.51%
1996 19.98%
1997 36.34%
1998 28.74%
1999 22.66%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
22.85% -9.00%
(12/31/98) (9/30/98)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 1.50%.
Page 9 of 150
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500 COMPOSITE INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS SINCE INCEPTION
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA EQUITY GROWTH FUND 22.66% 27.12% 17.16%(1)
S&P 500 COMPOSITE INDEX(5) 21.04% 28.55% 19.63%(2)
<CAPTION>
CLASS B SHARES 1 YEAR 5 YEARS SINCE INCEPTION
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA EQUITY GROWTH FUND 22.04% N/A 25.68%(3)
S&P 500 COMPOSITE INDEX(5) 21.04% N/A 24.76%(4)
</TABLE>
(1)Since April 15, 1991.
(2)Since March 31, 1991.
(3)Since January 6, 1998.
(4)Since December 31, 1997.
(5)The S&P 500 Composite Index is a widely recognized, unmanaged index of 500
common stocks which are generally representative of the U.S. stock market as a
whole.
FUND FEES AND EXPENSES
SEE PAGE 22 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 10 of 150
<PAGE>
ARMADA EQUITY INCOME FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS Income producing, value-oriented equity
securities
SHARE PRICE VOLATILITY Medium
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in value-oriented equity
securities that in the aggregate provide
a higher yield than the general market
INVESTOR PROFILE Investors seeking an income component as
well as capital appreciation and who are
willing to accept the risk of investing
in equity securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Equity Income Fund's investment objective is to provide capital
appreciation by investing in a diversified portfolio of publicly traded equity
securities which, in the aggregate, provide a premium current yield. Equity
securities include public and privately issued equity securities, common and
preferred stocks, warrants, rights to subscribe to common stock and convertible
securities, as well as instruments that attempt to track the price movement of
equity indices. The investment objective may be changed without a shareholder
vote.
The Fund normally invests at least 80% of its total assets in common stocks and
securities convertible into common stocks of companies that pay dividends. The
Fund may invest up to 20% of its total assets at the time of purchase in foreign
equity securities. In buying and selling securities for the Fund, the Adviser
attempts to emphasize equity securities and convertible securities that provide
a higher yield than the general market. The Fund will generally sell securities
when they fail to satisfy investment criteria.
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may decline in response. These
factors contribute to price volatility, which is the principal risk of investing
in the Fund.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in
Page 11 of 150
<PAGE>
response to events that do not otherwise affect the value of the security in the
issuer's home country.
The Fund is also subject to the risk that income producing equity securities may
underperform other segments of the equity markets or the equity markets as a
whole. For additional information about risks, see "More Information About
Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class C Shares because it has not
completed a full calendar year of operations.
This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.
The bar chart does not reflect sales charges. If sales charges had been
reflected, the returns for Class A Shares of the Fund would be less than those
shown below.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1995 27.37%
1996 17.89%
1997 28.87%
1998 9.77%
1999 -0.25%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
12.50% -9.24%
(6/30/97) (9/30/99)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was -7.03%.
Page 12 of 150
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500/BARRA VALUE INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS SINCE INCEPTION
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA EQUITY INCOME FUND -0.25% 16.20% 14.61%(1)
S&P 500/BARRA VALUE INDEX(5) 12.72% 22.94% 20.38%(2)
<CAPTION>
CLASS B SHARES 1 YEAR 5 YEARS SINCE INCEPTION
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA EQUITY INCOME FUND -0.92% N/A 4.67%(3)
S&P 500/BARRA VALUE INDEX(5) 12.72% N/A 13.69%(4)
</TABLE>
(1)Since August 22, 1994.
(2)Since August 31, 1994.
(3)Since January 6, 1998.
(4)Since December 31, 1997.
(5)The S&P 500/Barra Value Index is comprised of securities in the S&P 500
Composite Index that have a lower than median market capitalization weighted
price-to-book ratio.
FUND FEES AND EXPENSES
SEE PAGE 22 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 13 of 150
<PAGE>
ARMADA EQUITY INDEX FUND
FUND SUMMARY
INVESTMENT GOAL To approximate, before Fund expenses,
the investment results of the S&P 500
Composite Index
INVESTMENT FOCUS Common stocks of larger issuers
SHARE PRICE VOLATILITY High
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in stocks that comprise the
S&P 500 Composite Index
INVESTOR PROFILE Investors seeking returns similar to the
S&P 500 Composite Index, who are willing
to accept the risk of investing in
equity securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Equity Index Fund's investment objective is to provide investment
results that, before Fund expenses, approximate the aggregate price and dividend
performance of the securities included in the S&P 500 Composite Index by
investing in securities comprising the S&P 500 Composite Index. The investment
objective may be changed without a shareholder vote. The S&P 500 Composite Index
is made up of common stocks of 500 large, publicly traded companies. The Fund
buys and holds all stocks included in the S&P 500 Composite Index in exactly the
same proportion as those stocks are held in the Index. Stocks are eliminated
from the Fund when removed from the S&P 500 Composite Index. The Adviser makes
no attempt to "manage" the Fund in the traditional sense (i.e., by using
economic, financial or market analyses).
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may decline in response. These
factors contribute to price volatility, which is the principal risk of investing
in the Fund.
The Fund is also subject to the risk that the S&P 500 Composite Index of common
stocks may underperform other segments of the equity markets or the equity
markets as a whole.
The Fund's ability to duplicate the performance of the S&P 500 Composite Index
will depend to some extent on the size and timing of cash flows into and out of
the Fund, as well as on the level of the Fund's expenses. For additional
information about risks, see "More Information About Risk."
Page 14 of 150
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class B or Class C Shares because
neither has completed a full calendar year of operations.
This bar chart shows the performance of the Fund's Class A Shares for one year.
The bar chart does not reflect sales charges. If sales charges had been
reflected, the returns for Class A Shares of the Fund would be less than those
shown below.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1999 20.28%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
14.65% -6.31%
(12/31/99) (9/30/99)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was -0.73%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500 COMPOSITE INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR SINCE INCEPTION
---------------------------------------------------------------------------
<S> <C> <C>
ARMADA EQUITY INDEX FUND 20.28% 33.06%(1)
S&P 500 COMPOSITE INDEX(2) 21.04% 33.95%(1)
</TABLE>
(1)Since October 15, 1998.
(2)The S&P 500 Composite Index is a widely recognized, unmanaged index of 500
common stocks which are generally representative of the U.S. stock market as a
whole.
FUND FEES AND EXPENSES
SEE PAGE 22 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 15 of 150
<PAGE>
ARMADA INTERNATIONAL EQUITY FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS Equity securities of foreign issuers
SHARE PRICE VOLATILITY High
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in equity securities of
issuers located in at least three
foreign countries
INVESTOR PROFILE Investors seeking capital appreciation,
who are willing to accept the risks of
foreign investing
PRINCIPAL INVESTMENT STRATEGIES
The Armada International Equity Fund's investment objective is to provide
capital appreciation by investing in a portfolio of equity securities of foreign
issuers. Equity securities of foreign issuers includes common stock, preferred
stock and convertible bonds, of companies headquartered outside the United
States. The investment objective may be changed without a shareholder vote. The
Fund will normally invest at least 80% of its total assets in the equity
securities of foreign issuers. The Fund focuses on issuers included in the
Morgan Stanley Capital International Europe, Australasia, Far East (MSCI EAFE)
Index. The MSCI EAFE Index is an unmanaged index which represents the
performance of more than 1,000 equity securities of companies located in those
regions.
The Adviser makes judgments about the attractiveness of countries based upon a
collection of criteria. The relative valuation, growth prospects, fiscal,
monetary and regulatory government policies are considered jointly and generally
in making these judgments. The percentage of the Fund in each country is
determined by its relative attractiveness and weight in the MSCI EAFE Index.
More than 25% of the Fund's assets may be invested in the equity securities of
issuers located in the same country. Within foreign markets, the Adviser buys
and sells securities based on its analysis of competitive position and
valuation. The Adviser sells securities whose competitive position is
deteriorating or whose valuation is unattractive relative to industry peers.
Likewise, companies with strong and durable competitive advantages and
attractive valuation are considered for purchase.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities, and may lower Fund performance.
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report
Page 16 of 150
<PAGE>
poor results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may decline in
response. These factors contribute to price volatility, which is the principal
risk of investing in the Fund.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country.
Companies making up the MSCI EAFE Index are generally issuers of larger cap
securities of multi-national companies who are affected by risks worldwide.
Investment in a particular country of 25% or more of the Fund's total assets
will make the Fund's performance more dependent upon the political and economic
circumstances of that country than a mutual fund more widely diversified among
issuers in different countries.
The Fund is also subject to the risk that international equity securities may
underperform other segments of the equity markets or the equity markets as a
whole. For additional information about risks, see "More Information About
Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class C Shares because it has not
completed a full calendar year of operations.
The bar chart does not reflect sales charges. If sales charges had been
reflected, the returns for Class A Shares of the Fund would be less than those
shown below.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1998 19.53%
1999 49.71%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
36.05% -15.62%
(12/31/99) (9/30/98)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was -5.79%.
Page 17 of 150
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE MSCI EAFE INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR SINCE INCEPTION
-------------------------------------------------------------------------------------------
<S> <C> <C>
ARMADA INTERNATIONAL EQUITY FUND 49.71% 23.39%(1)
MSCI EAFE INDEX(5) 26.96% 13.99%(2)
<CAPTION>
CLASS B SHARES 1 YEAR SINCE INCEPTION
-------------------------------------------------------------------------------------------
<S> <C> <C>
ARMADA INTERNATIONAL EQUITY FUND 48.70% 33.30%(3)
MSCI EAFE INDEX(5) 26.96% 23.43%(4)
</TABLE>
(1)Since August 1, 1997.
(2)Since July 31, 1997.
(3)Since January 6, 1998.
(4)Since December 31, 1997.
(5)The Morgan Stanley Capital International Europe, Australasia and Far East
(MSCI EAFE) Index is an unmanaged index which represents the performance of
more than 1,000 equity securities of companies located in those regions.
FUND FEES AND EXPENSES
SEE PAGE 23 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 18 of 150
<PAGE>
ARMADA LARGE CAP ULTRA FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS Large cap equity securities
SHARE PRICE VOLATILITY High
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in equity securities of large
companies that the Adviser believes have
the potential for long-term
above-average growth
INVESTOR PROFILE Investors seeking growth of capital, and
who are willing to accept the risks of
investing in equity securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Large Cap Ultra Fund's investment objective is to provide capital
appreciation by investing in a diversified portfolio of publicly traded larger
cap equity securities. The investment objective may be changed without a
shareholder vote. The Fund will normally invest at least 80% of its total assets
in a diversified portfolio of common stocks and securities convertible into the
common stocks of companies with large market capitalizations.
The Adviser takes a long-term approach to managing the Fund and typically
invests in companies that have exhibited consistent, above-average growth in
revenues and earnings, strong management, and sound and improving financial
fundamentals. The Adviser will consider selling a security when there is a
deterioration of fundamentals leading to a deceleration in earnings growth.
The Fund considers a large capitalization or "large cap" company to be one that
has a comparable market capitalization as the companies in the S&P 500/Barra
Growth Index. The S&P 500/Barra Growth Index is an unmanaged index comprised of
common stocks which are capitalization-weighted and have higher price-to-book
ratios.
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may decline in response. These
factors contribute to price volatility, which is the principal risk of investing
in the Fund.
The Fund is also subject to the risk that large cap equity securities may
underperform other segments of the equity markets or the equity markets as a
whole. For additional information about risks, see "More Information About
Risk."
Page 19 of 150
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class C Shares because it has not
completed a full calendar year of operations.
The bar chart does not reflect sales charges. If sales charges had been
reflected, the returns for Class A Shares of the Fund would be less than those
shown below.
This bar chart shows the performance of the Fund's Class A Shares from year to
year. On June 10, 2000 the Parkstone Large Capitalization Fund was reorganized
into the similarly managed Armada Large Cap Ultra Fund. Performance information
before June 10, 2000 represents performance of the Parkstone Fund while
performance after that date represents performance of the newly organized Armada
Fund.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C> <C>
1997 28.76%
1998 42.37%
1999 28.53%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C> <C>
25.49% -9.17%
(12/31/98) (9/30/98)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 5.50%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500/BARRA GROWTH INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR SINCE INCEPTION
---------------------------------------------------------------------------
<S> <C> <C>
ARMADA LARGE CAP ULTRA FUND 28.53% 30.26%(1)
S&P 500/BARRA GROWTH INDEX(3) 28.26% 32.07%(2)
CLASS B SHARES 1 YEAR SINCE INCEPTION
---------------------------------------------------------------------------
<S> <C> <C>
ARMADA LARGE CAP ULTRA FUND 27.53% 29.33%(1)
S&P 500/BARRA GROWTH INDEX(3) 28.26% 32.07%(2)
</TABLE>
(1)Since February 1, 1996.
(2)Since January 31, 1996.
(3)The S&P 500/Barra Growth Index is comprised of securities in the S&P 500
Composite Index that have a higher than average price-to-book ratio.
FUND FEES AND EXPENSES
SEE PAGE 23 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 20 of 150
<PAGE>
ARMADA MID CAP GROWTH FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS Mid-cap equity securities
SHARE PRICE VOLATILITY High
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in growth-oriented equity
securities of medium-sized issuers
INVESTOR PROFILE Investors seeking capital growth, and
who are willing to accept the risks of
investing in equity securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Mid Cap Growth Fund's investment objective is to provide capital
appreciation by investing in a diversified portfolio of publicly traded mid
cap equity securities. The investment objective may be changed without a
shareholder vote. The Fund will normally invest at least 80% of its total
assets in the common stock of medium-sized companies as measured by their
stock market capitalizations. The Fund may invest up to 20% of its total
assets at the time of purchase in foreign equity securities. In selecting
investments for the Fund to buy and sell, the Adviser invests in companies
that have typically exhibited consistent, above-average growth in revenues
and earnings, strong management, sound and improving financial fundamentals
and presently exhibit the potential for growth.
The Fund considers a mid-capitalization or "mid cap" company to be one that has
a comparable market capitalization as the companies in the Russell Midcap Growth
Index. The Russell Midcap Growth Index is an unmanaged index which reflects a
medium-sized universe of growth-oriented securities.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities, and may lower Fund performance.
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may decline in response. These
factors contribute to price volatility, which is the principal risk of investing
in the Fund.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily
Page 21 of 150
<PAGE>
affect the U.S. economy or similar issuers located in the United States. In
addition, investments in foreign countries are generally denominated in a
foreign currency. As a result, changes in the value of those currencies compared
to the U.S. dollar may affect (positively or negatively) the value of a Fund's
investments. These currency movements may happen separately from and in response
to events that do not otherwise affect the value of the security in the issuer's
home country.
The Fund is also subject to the risk that mid cap equity securities may
underperform other segments of the equity markets or the equity markets as a
whole. For additional information about risks, see "More Information About
Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class C Shares because it has not
completed a full calendar year of operations.
The bar chart does not reflect sales charges. If sales charges had been
reflected, the returns for Class A Shares of the Fund would be less than those
shown below.
This bar chart shows the performance of the Fund's Class A Shares from year to
year. On June 10, 2000 the Parkstone Mid Capitalization Fund was reorganized
into the similarly managed Armada Mid Cap Growth Fund. Performance information
before June 10, 2000 represents performance of the Parkstone Fund while
performance after that date represents performance of the newly organized Armada
Fund.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C> <C>
1990 -3.31%
1991 27.60%
1992 15.22%
1993 12.90%
1994 -5.43%
1995 29.58%
1996 18.53%
1997 11.60%
1998 11.04%
1999 45.47%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C> <C>
34.98% -19.28%
(12/31/99) (9/30/98)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 14.97%.
Page 22 of 150
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE RUSSELL MID CAP GROWTH INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ARMADA MID CAP GROWTH FUND 45.47% 22.59% 15.44% 16.84%(1)
RUSSELL MID CAP GROWTH INDEX(4) 51.30% 28.02% 18.95% 19.85%(1)
<CAPTION>
CLASS B SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ARMADA MID CAP GROWTH FUND 44.47% 21.69% N/A 17.10%(2)
RUSSELL MID CAP GROWTH INDEX(4) 51.30% 28.02% N/A 22.24%(3)
</TABLE>
(1)Since October 31, 1988.
(2)Since February 4, 1994.
(3)Since January 31, 1994.
(4)The Russell Mid Cap Growth Index measures the performance of those
companies in the Russell Mid Cap Index with higher price-to-book ratios and
higher forecasted growth values. The Russell Mid Cap Index measures the
performance of the 800 smallest U.S. companies among the largest 1000 U.S.
companies based on market capitalization.
FUND FEES AND EXPENSES
SEE PAGE 23 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 23 of 150
<PAGE>
ARMADA SMALL CAP GROWTH FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS Small cap equity securities
SHARE PRICE VOLATILITY High
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in growth-oriented equity
securities of smaller issuers
INVESTOR PROFILE Investors seeking capital appreciation,
who are willing to accept the risk of
share price volatility that may
accompany small cap investing
PRINCIPAL INVESTMENT STRATEGIES
The Armada Small Cap Growth Fund's investment objective is to provide capital
appreciation by investing in a diversified portfolio of publicly traded small
cap equity securities. The investment objective may be changed without a
shareholder vote. The Fund normally invests at least 80% of its total assets in
the common stocks of companies with small stock market capitalizations. The Fund
may invest up to 20% of its total assets at the time of purchase in foreign
equity securities. The Adviser seeks to invest in small capitalization companies
with strong growth in revenue, earnings and cash flow. Purchase decisions are
also based on the security's valuation relative to the company's expected growth
rate, earnings quality and competitive position, valuation compared to similar
securities and the security's trading liquidity. Reasons for selling securities
include disappointing fundamentals, negative industry developments, evidence of
management's inability to execute a sound business plan, capitalization
exceeding the Adviser's definition of "small capitalization," desire to reduce
exposure to an industry or sector, and valuation levels which cannot be
justified by the company's fundamental growth prospects.
The Fund considers a small capitalization or "small cap" company to be one that
has a comparable market capitalization to the companies in the Russell 2000
Growth Index. The Russell 2000 Growth Index is an unmanaged index comprised of
securities in the Russell 2000 Index with a greater than average growth
orientation. The Russell 2000 Index is an unmanaged index comprised of the 2000
smallest companies of the 3000 largest U.S. companies based on market
capitalization.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities, and may lower Fund performance.
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report
Page 24 of 150
<PAGE>
poor results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may decline in
response. These factors contribute to price volatility, which is the principal
risk of investing in the Fund.
The smaller capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these small companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
Therefore, small cap stocks may be more volatile than those of larger companies.
These securities may be traded over the counter or listed on an exchange.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country.
The Fund is also subject to the risk that small cap equity securities may
underperform other segments of the equity markets or the equity markets as a
whole. For additional information about risks, see "More Information About
Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class C Shares because it has not
completed a full calendar year of operations.
The bar chart does not reflect sales charges. If sales charges had been
reflected, the returns for Class A Shares of the Fund would be less than those
shown below.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C> <C>
1998 7.28%
1999 35.63%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C> <C>
36.11% -21.18%
(12/31/99) (9/30/98)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 9.48%.
Page 25 of 150
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE RUSSELL 2000 GROWTH INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR SINCE INCEPTION
----------------------------------------------------------------------------------------
<S> <C> <C>
ARMADA SMALL CAP GROWTH FUND 35.63% 20.17%(1)
RUSSELL 2000 GROWTH INDEX(5) 43.10% 17.58%(2)
<CAPTION>
CLASS B SHARES 1 YEAR SINCE INCEPTION
----------------------------------------------------------------------------------------
<S> <C> <C>
ARMADA SMALL CAP GROWTH FUND 34.81% 20.25%(3)
RUSSELL 2000 GROWTH INDEX(5) 43.10% 20.36%(4)
</TABLE>
(1)Since August 1, 1997.
(2)Since July 31, 1997.
(3)Since January 6, 1998.
(5)Since December 31, 1997.
(5)The Russell 2000 Growth Index is comprised of securities in the Russell 2000
Stock Index with a greater than average growth orientation. The Russell 2000
Index is an unmanaged index comprised of the 2000 smallest companies of the 3000
largest U.S. companies based on market capitalization.
FUND FEES AND EXPENSES
SEE PAGE 23 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 26 of 150
<PAGE>
ARMADA SMALL CAP VALUE FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS Small cap equity securities
SHARE PRICE VOLATILITY High
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in value-oriented equity
securities of smaller issuers
INVESTOR PROFILE Investors seeking capital appreciation,
who are willing to accept the risk of
share price volatility that may
accompany small cap investing
PRINCIPAL INVESTMENT STRATEGIES
The Armada Small Cap Value Fund's investment objective is to provide capital
appreciation by investing in a diversified portfolio of publicly traded small
cap equity securities. The investment objective may be changed without a
shareholder vote. The Fund will normally invest at least 80% of its total assets
in the common stocks of small capitalization companies. The Fund may invest up
to 20% of its total assets at the time of purchase in foreign equity securities.
In buying and selling securities for the Fund, the Adviser uses a value-oriented
approach.
The Adviser generally seeks to invest in equity securities based upon price to
cash flow, price to book and price to sales ratios which are lower than the
market averages. The Adviser generally sells securities based upon
price/earnings, price/book and price/cash flow ratios which rise above market
averages or when a company no longer has a small capitalization.
The Fund considers a small capitalization or "small cap" company to be one that
has a comparable market capitalization to the companies in the Russell 2000
Value Index. The Russell 2000 Value Index is an unmanaged index comprised of
securities in the Russell 2000 Index which have higher than median book to price
ratios and lower than median growth characteristics. The Russell 2000 Index is
an unmanaged index comprised of the 2000 smallest companies of the 3000 largest
U.S. companies based on market capitalization.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may increase transaction costs and capital gains tax liabilities, and may
lower Fund performance.
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
Page 27 of 150
<PAGE>
prices of securities issued by such companies may decline in response. These
factors contribute to price volatility, which is the principal risk of investing
in the Fund.
The smaller capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
Therefore, small cap stocks may be more volatile than those of larger companies.
These securities may be traded over the counter or listed on an exchange.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country.
The Fund is also subject to the risk that small cap equity securities may
underperform other segments of the equity markets or the equity markets as a
whole. For additional information about risks, see "More Information About
Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class C Shares because it has not
completed a full calendar year of operations.
This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.
The bar chart does not reflect sales charges. If sales charges had been
reflected, the returns for Class A Shares of the Fund would be less than those
shown below.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C> <C>
1995 18.41%
1996 22.32%
1997 32.05%
1998 -7.64%
1999 7.65%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C> <C>
17.92% -17.92%
(6/30/99) (9/30/98)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 8.84%.
Page 28 of 150
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE RUSSELL 2000 VALUE INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS SINCE INCEPTION
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA SMALL CAP VALUE FUND 7.65% 13.72% 13.60%(1)
RUSSELL 2000 VALUE INDEX(5) -1.49% 13.13% 12.02%(2)
<CAPTION>
CLASS B SHARES 1 YEAR 5 YEARS SINCE INCEPTION
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA SMALL CAP VALUE FUND 6.97% N/A -0.70%(3)
RUSSELL 2000 VALUE INDEX(5) -1.49% N/A -4.00%(4)
</TABLE>
(1)Since August 15, 1994.
(2)Since July 31, 1994.
(3)Since January 6, 1998.
(4)Since December 31, 1997.
(5)The Russell 2000 Value Index is comprised of securities in the Russell 2000
Index with a less than average growth orientation. The Russell 2000 Index is an
unmanaged index comprised of the 2000 smallest companies of the 3000 largest
U.S. companies based on market capitalization. Companies in the Russell 2000
Value Index generally have low price to book and price-earnings ratios.
FUND FEES AND EXPENSES
SEE PAGE 24 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 29 of 150
<PAGE>
ARMADA TAX MANAGED EQUITY FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation, while minimizing
the impact of taxes
INVESTMENT FOCUS Equity securities
SHARE PRICE VOLATILITY High
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in common stock using
strategies designed to minimize the
impact of taxes
INVESTOR PROFILE Investors who are seeking capital
appreciation while minimizing the impact
of taxes and who are willing to accept
the risk of investing in equity
securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Tax Managed Equity Fund's investment objective is to provide capital
appreciation while minimizing the impact of taxes on shareholders' returns. The
investment objective may be changed without a shareholder vote. The Fund
normally invests at least 80% of the Fund's total assets in common stocks. The
Fund may invest up to 20% of its total assets at the time of purchase in foreign
equity securities. Equity securities of foreign issuers include common stock,
preferred stock and convertible bonds of companies headquartered outside the
United States.
The Adviser buys and sells common stocks based on factors such as historical and
projected long-term earnings growth, earnings quality and liquidity. The Adviser
attempts to minimize the realization of taxable gains by investing in the
securities of companies with above average earnings predictability and stability
which the Fund expects to hold for several years. This generally results in a
low level of portfolio turnover. In addition, the Fund seeks to distribute
relatively low levels of taxable investment income by investing in stocks with
low dividend yields. When the Fund sells appreciated securities, it will attempt
to select the share lots with the highest cost basis in order to hold realized
capital gains to a minimum.
The Fund may, when consistent with its overall investment approach, sell
depreciated securities to offset realized capital gains. The Fund may make
in-kind redemptions consistent with its investment objective. An in-kind
redemption may serve to minimize any tax impact on the remaining shareholders,
because a Fund generally recognizes no taxable gain (or loss) on the securities
used to make an in-kind redemption. The Fund is not a tax exempt fund, and it
expects to distribute taxable dividends and capital gains from time to time.
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report
Page 30 of 150
<PAGE>
poor results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may decline in
response. These factors contribute to price volatility, which is the principal
risk of investing in the Fund.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country. For
additional information about risks, see "More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class C Shares because it has not
completed a full calendar year of operations.
This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.
The bar chart does not reflect sales charges. If sales charges had been
reflected, the returns for Class A Shares of the Fund would be less than those
shown below.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C> <C>
1990 -1.08%
1991 34.07%
1992 6.89%
1993 1.20%
1994 -1.85%
1995 29.51%
1996 20.64%
1997 39.06%
1998 37.25%
1999 18.77%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C> <C>
23.02% -14.38%
(12/31/98) (9/30/90)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 3.79%.
Page 31 of 150
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500 COMPOSITE INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ARMADA TAX MANAGED EQUITY FUND 18.77% 28.78% 17.43% 18.14%(1)
S&P 500 COMPOSITE INDEX(4) 21.04% 28.55% 18.20% 19.10%(1)
CLASS B SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ARMADA TAX MANAGED EQUITY FUND 17.99% N/A N/A 21.67%(2)
S&P 500 COMPOSITE INDEX(4) 21.04% N/A N/A 22.30%(3)
</TABLE>
(1)Since June 30, 1984.
(2)Since May 4, 1998.
(3)Since April 30, 1998.
(4)The S&P 500 Composite Index is a widely recognized, unmanaged index of 500
common stocks which are generally representative of the U.S. stock market as a
whole.
The performance of the Armada Tax Managed Equity Fund for the period prior to
May 11, 1998 is represented by the performance of a common trust fund ("common
trust fund") which operated prior to the effectiveness of the registration
statement of the Tax Managed Equity Fund. The common trust fund was advised by
National City Bank, an affiliate of the Adviser. At the time of the Tax Managed
Equity Fund's inception, the common trust fund was operated using materially
equivalent investment objectives, policies, guidelines and restrictions as the
Fund. In connection with the Tax Managed Equity Fund's commencement of
operations, on May 11, 1998, the common trust fund transferred its assets to the
Fund. At the time of the transfer, the Adviser did not manage any other
collective investment or common trust funds using materially equivalent
investment objectives, policies, guidelines and restrictions to those of the Tax
Managed Equity Fund.
The common trust fund was not open to the public generally, nor registered under
the Investment Company Act of 1940 (the "1940 Act") or subject to certain
restrictions that are imposed by the 1940 Act and the Internal Revenue Code. If
the common trust fund had been registered under the 1940 Act, performance may
have been adversely affected. Performance quotations of the common trust fund
represent past performance of the Adviser managed common trust fund, which are
separate and distinct from the Tax Managed Equity Fund; do not represent past
performance of the Fund; and should not be considered as representative of
future results of the Fund.
FUND FEES AND EXPENSES
SEE PAGE 24 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 32 of 150
<PAGE>
FUND FEES AND EXPENSES OF THE ARMADA EQUITY FUNDS
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE RESPECTIVE FUNDS.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
Core Equity Fund Equity Growth Fund Equity Income Fund
Class A Class B Class C Class A Class B Class C Class A Class B Class C
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales 5.50% None None 5.50% None None 5.50% None None
Charge (Load)
Imposed on
Purchases (as a
percentage of
offering price)(1)
Maximum Deferred None 5.00%(2) 1.00%(3) None 5.00%(2) 1.00%(3) None 5.00%(2) 1.00%(3)
Sales Charge
(Load) (as a
percentage of net
asset value)
Maximum Sales None None None None None None None None None
Charge (Load)
Imposed on
Reinvested
Dividends and
other Distributions
(as a percentage of
offering price)
Redemption Fee None None None None None None None None None
(as a percentage
of amount redeemed,
if applicable)
Exchange Fee None None None None None None None None None
<CAPTION>
Equity Index Fund International Equity Fund Large Cap Ultra Fund
Class A Class B Class C Class A Class B Class C Class A Class B Class C
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales 3.75% None None 5.50% None None 5.50% None None
Charge (Load)
Imposed on
Purchases (as a
percentage of
offering price)(1)
Maximum Deferred None 5.00%(2) 1.00%(3) None 5.00%(2) 1.00%(3) None 5.00%(2) 1.00%(3)
Sales Charge
(Load) (as a
percentage of net
asset value)
Maximum Sales None None None None None None None None None
Charge (Load)
Imposed on
Reinvested
Dividends and
other
Distributions (as
a percentage of
offering price)
Redemption Fee None None None None None None None None None
(as a percentage
of amount
redeemed, if
applicable)
Page 33 of 150
<PAGE>
Exchange Fee None None None None None None None None None
<CAPTION>
Mid Cap Growth Fund Small Cap Growth Fund Small Cap Value Fund
Class A Class B Class C Class A Class B Class C Class A Class B Class C
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales 5.50% None None 5.50% None None 5.50% None None
Charge (Load)
Imposed on
Purchases (as a
percentage of
offering price)(1)
Maximum Deferred None 5.00%(2) 1.00%(3) None 5.00%(2) 1.00%(3) None 5.00%(2) 1.00%(3)
Sales Charge
(Load) (as a
percentage of net
asset value)
Maximum Sales None None None None None None None None None
Charge (Load)
Imposed on
Reinvested
Dividends and
other
Distributions (as
a percentage of
offering price)
Redemption Fee None None None None None None None None None
(as a percentage
of amount
redeemed, if
applicable)
Exchange Fee None None None None None None None None None
<CAPTION>
Tax Managed Equity Fund
Class A Class B Class C
----------------------------------------------------
<S> <C> <C> <C>
Maximum Sales 5.50% None None
Charge (Load)
Imposed on
Purchases (as a
percentage of
offering price)(1)
Maximum Deferred None 5.00%(2) 1.00%(3)
Sales Charge
(Load) (as a
percentage of net
asset value)
Maximum Sales None None None
Charge (Load)
Imposed on
Reinvested
Dividends and
other
Distributions (as
a percentage of
offering price)
Redemption Fee None None None
(as a percentage
of amount
redeemed, if
applicable)
Exchange Fee None None None
</TABLE>
Page 34 of 150
<PAGE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Class A Shares(4)
<TABLE>
<CAPTION>
Equity Income International
Core Equity Fund Equity Growth Fund Fund Equity Index Fund Equity Fund
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Advisory 0.75% 0.75% 0.75% 0.35% 1.15%
Fees
Distribution and 0.10% 0.10% 0.10% 0.10% 0.10%
Service (12b-1) Fees
Other Expenses 0.46% 0.36% 0.38% 0.39% 0.49%
----- ----- ----- ------- -----
Total Annual Fund 1.31%(5) 1.21% (5) 1.23%(5) 0.84%(6) 1.74%(5)
Operating Expenses
<CAPTION>
Mid Cap Growth Small Cap Growth Small Cap Value Tax Managed Equity
Large Cap Ultra Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
Investment Advisory 0.75% 1.00% 1.00% 1.00% 0.75%
Fees
Distribution and 0.10% 0.10% 0.10% 0.10% 0.10%
Service (12b-1) Fees
Other Expenses 0.43% 0.47% 0.44% 0.42% 0.41%
------ ------ ------ ------ -----
Total Annual Fund 1.28%(7) 1.57%(7) 1.54%(5) 1.52%(5) 1.26%(5)
Operating Expenses
Class B Shares(4)
<CAPTION>
Equity Income International
Core Equity Fund Equity Growth Fund Fund Equity Index Fund Equity Fund
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Advisory 0.75% 0.75% 0.75% 0.35% 1.15%
Fees
Distribution and 1.00% 1.00% 1.00% 1.00% 1.00%
Service (12b-1) Fees
Other Expenses 0.21% 0.11% 0.13% 0.14% 0.24%
------ ------ ------ ------ -----
Total Annual Fund 1.96% 1.86% 1.88% 1.49% 2.39%
Operating Expenses
<CAPTION>
Mid Cap Growth Small Cap Growth Small Cap Value Tax Managed Equity
Large Cap Ultra Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
Investment Advisory 0.75% 1.00% 1.00% 1.00% 0.75%
Fees
Distribution and 1.00% 1.00% 1.00% 1.00% 1.00%
Service (12b-1) Fees
Other Expenses 0.18% 0.22% 0.19% 0.17% 0.16%
------ ------ ------ ------ -----
Total Annual Fund 1.93% 2.22% 2.19% 2.17% 1.91%
Operating Expenses
Page 35 of 150
<PAGE>
<CAPTION>
Class C Shares (4)
Equity Income
Core Equity Fund Equity Growth Fund Fund Equity Index Fund International Equity Fund
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fees 0.75% 0.75% 0.75% 0.35% 1.15%
Distribution and 1.00% 1.00% 1.00% 1.00% 1.00%
Service (12b-1) Fees
Other Expenses 0.21% 0.11% 0.13% 0.14% 0.24%
------ ------ ------ ------ -----
Total Annual Fund 1.96% 1.86% 1.88% 1.49% 2.39%
Operating Expenses
<CAPTION>
Large Cap Ultra Mid Cap Growth Small Cap Growth Small Cap Value Tax Managed Equity
Fund Fund Fund Fund Fund
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fees 0.75% 1.00% 1.00% 1.00% 0.75%
Distribution and 1.00% 1.00% 1.00% 1.00% 1.00%
Service (12b-1) Fees
Other Expenses 0.18% 0.22% 0.19% 0.17% 0.16%
------ ------ ------ ------ -----
Total Annual Fund 1.93% 2.22% 2.19% 2.17% 1.91%
Operating Expenses
</TABLE>
(1)This sales charge varies depending upon how much you invest. See "Sales
Charges."
(2)This amount applies to redemptions during the first and second years. The
deferred sales charge decreases to 4.0%, 3.0% and 2.0% for redemptions made
during the third through fifth years, respectively. No deferred sales charge is
charged after the fifth year. For more information see "Contingent Deferred
Sales Charges."
(3)A contingent deferred sales charge is charged only with respect to Class C
Shares redeemed prior to eighteen months from the date of purchase.
(4)The Trust has implemented plans imposing shareholder servicing fees with
respect to Class A, Class B and Class C Shares of each Fund. Pursuant to such
plans, the Trust enters into shareholder servicing agreements with certain
financial institutions under which they agree to provide shareholder
administrative services to their customers who beneficially own Class A,
Class B or Class C Shares in consideration for the payment of up to 0.25% (on
an annualized basis) of the net asset value of such Class A, Class B or Class
C Shares of the Funds. Shareholder servicing fees paid by Class A Shares are
included in Other Expenses and Fees paid by Class B and Class C Shares are
included in Distribution and Service (12b-1) Fees in the table above. For
further information concerning these plans, see "Shareholder Services Plans"
in the Statement of Additional Information.
(5)Each of these Funds' (other than the Equity Index Fund's) total actual
annual operating expenses for Class A Shares for the most recent fiscal year
were less than the amounts shown above because the Distributor waived a
portion of the fees in order to keep total operating expenses for Class A
Shares at a specified level. With these fee waivers, each Fund's actual total
operating expenses for Class A Shares were:
<TABLE>
<S> <C>
Core Equity Fund 1.25%
Equity Growth Fund 1.15%
Equity Income Fund 1.17%
International Equity Fund 1.68%
Small Cap Growth Fund 1.48%
Small Cap Value Fund 1.46%
Tax Managed Equity Fund 1.20%
</TABLE>
The Distributor expects to continue these waivers so that total operating
expenses for Class A Shares for the current fiscal year will be as follows.
These fee waivers remain in place as of the date of this prospectus, but the
Distributor may discontinue all or part of these waivers at any time.
<TABLE>
<S> <C>
Core Equity Fund 1.26%
Equity Income Fund 1.18%
Equity Growth Fund 1.16%
International Equity Fund 1.69%
Page 36 of 150
<PAGE>
Large Cap Ultra Fund 1.23%
Mid Cap Growth Fund 1.52%
Small Cap Growth Fund 1.49%
Small Cap Value Fund 1.47%
Tax Managed Equity Fund 1.21%
</TABLE>
(6)The Equity Index Fund's total actual annual operating expenses for Class A,
Class B and Class C Shares for the most recent fiscal year were less than the
amounts shown above because the Adviser and Distributor each waived a portion of
the fees in order to keep total operating expenses for Class A, Class B and
Class C Shares at a specified level. With these fee waivers, the Fund's actual
total operating expenses were, for Class A, Class B and Class C Shares
respectively, 0.59%, 1.34%, and 1.34%. The Adviser and Distributor expect to
continue these waivers so that the total operating expenses for Class A, Class
B and Class C Shares for the current fiscal year are expected to be,
respectively, 0.59%, 1.34% and 1.34%. These fee waivers remain in place as of
the date of this prospectus, but the Adviser and/or Distributor may discontinue
all or part of these waivers at any time.
(7) The Adviser and Distributor expect to waive fees for the Large Cap Ultra
Fund and Mid Cap Growth Fund so that total operating expenses for Class A Shares
for the current fiscal year will be 1.23% and 1.52%, respectively. These fee
waivers remain in effect as of the date of this prospectus, but the Adviser
and/or Distributor may discontinue all or part of these waivers at any time.
For more information about these fees, see "Investment Adviser, Sub-Adviser and
Investment Team" and "Distribution of Fund Shares."
Page 37 of 150
<PAGE>
EXAMPLE
These Examples are intended to help you compare the cost of investing in
Armada Equity Funds with the cost of investing in other mutual funds. The
Examples assume that you invest $10,000 in a Fund for the time periods
indicated and that you sell your shares at the end of the period.
The Examples also assume that each year your investment has a 5% return, Fund
expenses remain the same and your Class B Shares convert to Class A Shares
after eight years. Although your actual costs and returns might be different,
your approximate costs of investing $10,000 in a Fund would be:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Core Equity Fund
----------------------------------------------------------------------------------------------------------------------
Class A Shares $676 $942 $1,229 $2,042
----------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $699 $1015 $1,257 $2,115
----------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $199 $615 $1,057 $2,115
----------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $299 $615 $1,057 $2,285
----------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $199 $615 $1,057 $2,285
----------------------------------------------------------------------------------------------------------------------
Equity Growth Fund
----------------------------------------------------------------------------------------------------------------------
Class A Shares $667 $913 $1,178 $1,935
----------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $689 $985 $1,206 $2,008
----------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $189 $585 $1,006 $2,008
----------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $289 $585 $1,006 $2,180
----------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $189 $585 $1,006 $2,180
----------------------------------------------------------------------------------------------------------------------
Equity Income Fund
----------------------------------------------------------------------------------------------------------------------
Class A Shares $668 $919 $1,188 $1,957
----------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $691 $991 $1,216 $2,030
----------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $191 $591 $1,016 $2,030
----------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $291 $591 $1,016 $2,201
----------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $191 $591 $1,016 $2,201
----------------------------------------------------------------------------------------------------------------------
Equity Index Fund
----------------------------------------------------------------------------------------------------------------------
Class A Shares $458 $633 $823 $1,373
----------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $652 $871 $1,013 $1,602
----------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $152 $471 $813 $1,602
----------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $252 $471 $813 $1,779
----------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $152 $471 $813 $1,779
----------------------------------------------------------------------------------------------------------------------
International Equity Fund
----------------------------------------------------------------------------------------------------------------------
Class A Shares $717 $1068 $1,442 $2,489
----------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $742 $1145 $1,475 $2,562
----------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $242 $745 $1,275 $2,562
----------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $342 $745 $1,275 $2,726
----------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $242 $745 $1,275 $2,726
----------------------------------------------------------------------------------------------------------------------
Large Cap Ultra Fund
----------------------------------------------------------------------------------------------------------------------
Class A Shares $673 $934 $1,214 $2,010
----------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $696 $1,006 $1,242 $2,083
----------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $196 $606 $1,042 $2,083
----------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $296 $606 $1,042 $2,254
----------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $196 $606 $1,042 $2,254
----------------------------------------------------------------------------------------------------------------------
Mid Cap Growth Fund
----------------------------------------------------------------------------------------------------------------------
Class A Shares $701 $1,018 $1,358 $2,315
----------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $725 $1,094 $1,390 $2,391
----------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $225 $694 $1,190 $2,391
----------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $325 $694 $1,190 $2,554
----------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $225 $694 $1,190 $2,554
----------------------------------------------------------------------------------------------------------------------
Small Cap Growth Fund
----------------------------------------------------------------------------------------------------------------------
Class A Shares $698 $1,010 $1,343 $2,284
----------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $722 $1,085 $1,375 $2,357
----------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $222 $685 $1,175 $2,357
----------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $322 $685 $1,190 $2,524
----------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $222 $685 $1,190 $2,524
----------------------------------------------------------------------------------------------------------------------
Page 38 of 150
<PAGE>
----------------------------------------------------------------------------------------------------------------------
Small Cap Value Fund
----------------------------------------------------------------------------------------------------------------------
Class A Shares $696 $1,004 $1,333 $2,263
----------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $720 $1,079 $1,364 $2,336
----------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $220 $679 $1,164 $2,336
----------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $320 $679 $1,164 $2,503
----------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $220 $679 $1,164 $2,503
----------------------------------------------------------------------------------------------------------------------
Tax Managed Equity Fund
----------------------------------------------------------------------------------------------------------------------
Class A Shares $671 $928 $1,204 $1,989
----------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $694 $1,000 $1,232 $2,064
----------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $194 $600 $1,032 $2,064
----------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $294 $600 $1,032 $2,233
----------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $194 $600 $1,032 $2,233
----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) If you sell your shares at the end of the period.
(2) If you do not sell your shares at the end of the period.
Page 39 of 150
<PAGE>
ARMADA BALANCED ALLOCATION FUND
FUND SUMMARY
INVESTMENT GOAL Long-term capital appreciation and
current income
INVESTMENT FOCUS A combination of growth-oriented common
stocks, fixed income securities and cash
equivalents
SHARE PRICE VOLATILITY Medium
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in a diversified portfolio of
growth-oriented common stocks,
investment grade fixed income securities
and cash equivalents with varying asset
allocations depending on the Adviser's
assessment of market conditions
INVESTOR PROFILE Investors seeking a broad
diversification by asset class and style
to manage risk and provide the potential
for above-average total returns (as
gauged by the returns of the S&P 500
Composite Index and the Lehman Aggregate
Bond Index)
PRINCIPAL INVESTMENT STRATEGIES
The Armada Balanced Allocation Fund's investment objective is to provide
long-term capital appreciation and current income. The investment objective may
be changed without a shareholder vote.
The Fund intends to invest 45% to 75% of its net assets in common stocks and
convertible securities, 25% to 55% of its net assets in investment grade
fixed income securities such as corporate bonds and U.S. government
securities and up to 30% of its net assets in cash and cash equivalent
securities. The Fund may invest up to 20% of its total assets at the time of
purchase in foreign securities (which includes common stock, preferred stock
and convertible bonds of companies headquartered outside the United States).
The Fund also invests in the common stock of small capitalization companies.
The Adviser buys and sells equity securities based on their potential for
long-term capital appreciation. The Fund invests the fixed income portion of its
portfolio of investments in a broad range of investment grade debt securities
(which are those rated at the time of investment in one of the four highest
rating categories by a major rating agency) for current income. If a fixed
income security is downgraded, the Adviser will re-evaluate the holding to
determine whether it is in the best interests of investors to sell. The Adviser
buys and sells fixed income securities and cash equivalents based on a number of
factors, including yield to maturity, maturity, quality and the outlook for
particular issuers and market sectors. The Fund invests in cash equivalent,
short-term obligations for stability and liquidity.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities, and may lower Fund performance.
Page 40 of 150
<PAGE>
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may decline in response. These
factors contribute to price volatility, which is the principal risk of investing
in the Fund.
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower rated securities is even
greater than that of higher rated securities. Also, longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.
The Fund is also subject to the risk that the Adviser's asset allocation
decisions will not anticipate market trends successfully. For example, weighting
common stocks too heavily during a stock market decline may result in a failure
to preserve capital. Conversely, investing too heavily in fixed income
securities during a period of stock market appreciation may result in lower
total return.
The smaller capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these small companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
Therefore, small cap stocks may be more volatile than those of larger companies.
These securities may be traded over the counter or listed on an exchange.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country.
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies and
instrumentalities are backed by the U.S. Treasury, while others are backed
solely by the ability of the agency to borrow from the U.S. Treasury or by the
agency's own resources.
The Fund is also subject to the risk that investment grade fixed income and
growth-oriented equity securities may underperform other segments of the fixed
income or equity markets or the
Page 41 of 150
<PAGE>
fixed income or equity markets as a whole. For additional information about
risks, see "More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class C Shares because it has not
completed a full calendar year of operations.
This bar chart shows the performance of the Fund's Class A Shares for the last
year.
The bar chart does not reflect sales charges. If sales charges had been
reflected, the returns for Class A Shares of the Fund would be less than those
shown below.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C> <C>
1999 14.97%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C> <C>
16.10% -3.35%
(12/31/99) (9/30/99)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was -0.43%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN U.S. AGGREGATE BOND INDEX, THE
S&P 500 COMPOSITE INDEX AND THE BALANCED ALLOCATION HYBRID BENCHMARK INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR SINCE INCEPTION
------------------------------------------------------------------------------------------------------
<S> <C> <C>
ARMADA BALANCED ALLOCATION FUND 14.97% 16.89%(1)
LEHMAN U.S. AGGREGATE BOND INDEX(4) -0.83% 2.45%(1)
S&P 500 COMPOSITE INDEX(5) 21.04% 22.73%(1)
BALANCED ALLOCATION HYBRID BENCHMARK INDEX(6) 12.00% 14.74%(1)
CLASS B SHARES 1 YEAR SINCE INCEPTION
------------------------------------------------------------------------------------------------------
<S> <C> <C>
ARMADA BALANCED ALLOCATION FUND 14.28% 20.09%(2)
LEHMAN U.S. AGGREGATE BOND INDEX(4) -0.83% 0.03%(3)
S&P 500 COMPOSITE INDEX(5) 21.04% 29.97%(3)
BALANCED ALLOCATION HYBRID BENCHMARK INDEX(6) 12.00% 14.68%(3)
</TABLE>
(1)Since July 31, 1998.
(2)Since November 11, 1998.
(3)Since October 31, 1998.
(4)The Lehman U.S. Aggregate Bond Index is an unmanaged, fixed income, market
value-weighted index that includes treasury issues, agency issues, corporate
bond issues and mortgage-backed securities.
(5)The S&P 500 Composite Index is a widely recognized, unmanaged index of 500
common stocks which are generally representative of the U.S. stock market as a
whole.
(6)The Hybrid Benchmark Index is a blend of 60% S&P 500 Composite Index and 40%
Lehman Aggregate Bond Index, as calculated by the Adviser.
Page 42 of 150
<PAGE>
FUND FEES AND EXPENSES OF THE BALANCED ALLOCATION FUND
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of
offering price)(1) 4.75% None None
Maximum Deferred Sales Charge (Load) (as a percentage of net asset value) None 5.00%(2) 1.00%(3)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends and other
Distributions (as a percentage of offering price) None None None
Redemption Fee (as a percentage of amount redeemed, if applicable) None None None
Exchange Fee None None None
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)(4)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Advisory Fees 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees 0.10% 1.00% 1.00%
Other Expenses 0.47% 0.22% 0.22%
----- ----- -----
Total Annual Fund Operating Expenses 1.32%(5) 1.97% 1.97%
--------------------------------------------------------------------------------------------------
</TABLE>
(1)This sales charge varies depending upon how much you invest. See "Sales
Charges."
(2)This amount applies to redemptions during the first and second years. The
deferred sales charge decreases to 4.0%, 3.0% and 2.0% for redemptions made
during the third through fifth years, respectively. No deferred sales charge is
charged after the fifth year. For more information see "Contingent Deferred
Sales Charges."
(3)A contingent deferred sales charge is charged only with respect to Class C
Shares redeemed prior to eighteen months from the date of purchase.
(4)The Trust has implemented plans imposing shareholder servicing fees with
respect to Class A, Class B and Class C Shares of each Fund. Pursuant to such
plans, the Trust enters into shareholder servicing agreements with certain
financial institutions under which they agree to provide shareholder
administrative services to their customers who beneficially own Class A,
Class B and Class C Shares in consideration for the payment of up to .25% (on
an annualized basis) of the net asset value of such Class A, Class B and
Class C Shares of the Funds. Shareholder servicing fees paid by the Class A
Shares are included in Other Expenses and Fees paid by Class B and Class C
Shares are included in Distribution and Service (12b-1) Fees in the table
above. For further information concerning these plans, see "Shareholder
Services Plans" in the Statement of Additional Information.
(5)The Fund's total actual annual operating expenses for Class A Shares for the
most recent fiscal year were less than the amounts shown above because the
Distributor waived a portion of the fees in order to keep total operating
expenses for Class A Shares at a specified level. With these fee waivers, the
Fund's actual total operating expenses for Class A Shares were 1.26%. The
Distributor expects to continue these waivers so that total operating expenses
for Class A Shares for the current fiscal year are expected to be 1.27%. These
fee waivers remain in place as of the date of this prospectus, but the
Distributor may discontinue all or part of these waivers at any time.
For more information about these fees, see "Investment Adviser, Sub-Adviser and
Investment Team" and "Distribution of Fund Shares."
Page 43 of 150
<PAGE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the
Balanced Allocation Fund with the cost of investing in other mutual funds. The
Example assumes that you invest $10,000 in the Fund for the time periods
indicated and that you sell your shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund
expenses remain the same and your Class B Shares convert to Class A Shares after
eight years. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balanced Allocation Fund
---------------------------------------------------------------------------------------------------------
Class A Shares $603 $873 $1,164 $1,990
---------------------------------------------------------------------------------------------------------
Class B Shares(1) $700 $1,018 $1,262 $2,126
---------------------------------------------------------------------------------------------------------
Class B Shares(2) $200 $618 $1,062 $2,126
---------------------------------------------------------------------------------------------------------
Class C Shares(1) $300 $618 $1,062 $2,296
---------------------------------------------------------------------------------------------------------
Class C Shares(2) $200 $618 $1,062 $2,296
---------------------------------------------------------------------------------------------------------
</TABLE>
(1) If you sell your shares at the end of the period.
(2) If you do not sell your shares at the end of the period.
Page 44 of 150
<PAGE>
ARMADA BOND FUND
FUND SUMMARY
INVESTMENT GOAL Current income as well as preservation
of capital
INVESTMENT FOCUS Investment grade fixed income securities
SHARE PRICE VOLATILITY Medium
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in a diversified portfolio of
investment grade fixed income
securities, which maintains a
dollar-weighted average maturity of
between four and twelve years
INVESTOR PROFILE Investors seeking current income, and
who are willing to accept the risks of
investing in fixed income securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Bond Fund's investment objective is to provide current income as well
as preservation of capital by investing primarily in a portfolio of high- and
medium-grade fixed income securities. The investment objective may be changed
without a shareholder vote.
The Fund normally invests at least 80% of the value of its total assets in
high- and medium-grade fixed income securities of all types, including but
not limited to obligations of corporate and U.S. government issuers and
mortgage-backed and asset-backed securities. Corporate obligations may
include bonds, notes and debentures. U.S. government securities may include
U.S. Treasury obligations and obligations of certain U.S. government agencies
or instrumentalities such as Ginnie Maes and Fannie Maes. High- and
medium-grade fixed income securities are those rated in one of the four
highest rating categories by a major rating agency, or determined by the
Adviser to be of equivalent quality.
If a security is downgraded, the Adviser will re-evaluate the holding to
determine whether it is in the best interests of investors to sell. In buying
and selling securities for the Fund, the Adviser considers a number of factors,
including yield to maturity, maturity, quality and the outlook for particular
issuers and market sectors. The Fund generally maintains a dollar-weighted
average maturity of between four and twelve years.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities, and may lower Fund performance.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
Page 45 of 150
<PAGE>
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
The mortgages underlying mortgage-backed securities may be paid off early, which
makes it difficult to determine their actual maturity and therefore calculate
how they will respond to changes in interest rates. The Fund may have to
reinvest prepaid amounts at lower interest rates. This risk of prepayment is an
additional risk of mortgage-backed securities. This risk also exists for other
asset-backed securities, although generally to a lesser degree.
Debt extension risk is the risk that an issuer will pay principal on an
obligation held by the Fund (such as an asset-backed or mortgage-backed
security) later than expected. This may happen during a period of rising
interest rates. Under these circumstances, the value of the obligation will
decrease and the Fund will suffer from the inability to invest in higher
yielding securities.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies and
instrumentalities are backed by the U.S. Treasury, while others are backed
solely by the ability of the agency to borrow from the U.S. Treasury or by the
agency's own resources.
The Fund is also subject to the risk that investment grade fixed income
securities may underperform other segments of the fixed income markets or the
fixed income markets as a whole. For additional information about risks, see
"More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class C Shares because it has not
completed a full calendar year of operations.
The bar chart does not reflect sales charges. If sales charges had been
reflected, the returns for Class A Shares of the Fund would be less than those
shown below.
This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year. On June 9, 2000 the Parkstone Bond Fund was reorganized into
the similarly managed Armada Bond Fund. Performance information before June 9,
2000 represents performance of the Parkstone Fund while performance after that
date represents performance of the newly organized Armada Fund.
Page 46 of 150
<PAGE>
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C> <C>
1990 8.12%
1991 15.06%
1992 6.30%
1993 9.84%
1994 -3.68%
1995 17.13%
1996 3.11%
1997 9.12%
1998 7.27%
1999 -2.04%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C> <C>
6.11% -2.61%
(6/30/95) (3/31/94)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 2.40%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN U.S. AGGREGATE BOND INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ARMADA BOND FUND -2.04% 6.73% 6.84% 7.07%(1)
LEHMAN U.S. AGGREGATE BOND INDEX(4) -0.83% 7.73% 7.70% 8.06%(1)
<CAPTION>
CLASS B SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ARMADA BOND FUND -2.76% 6.04% N/A 4.19%(2)
LEHMAN U.S. AGGREGATE BOND INDEX(4) -0.83% 7.73% N/A 5.72%(3)
</TABLE>
(1)Since October 31, 1988.
(2)Since February 4, 1994.
(3)Since January 31, 1994.
(4)The Lehman U.S. Aggregate Bond Index is an unmanaged, fixed income, market
value-weighted index that includes treasury issues, agency issues, corporate
bond issues and mortgage-backed securities.
FUND FEES AND EXPENSES
SEE PAGE 44 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 47 of 150
<PAGE>
ARMADA GNMA FUND
FUND SUMMARY
INVESTMENT GOAL Current income as well as preservation
of capital
INVESTMENT FOCUS Mortgage-backed securities
SHARE PRICE VOLATILITY Low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in mortgage-backed securities
guaranteed by the Government National
Mortgage Association (GNMA)
INVESTOR PROFILE Investors seeking current income, and
who are willing to accept the risks of
investing in mortgage-backed securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada GNMA Fund's investment objective is to provide current income as well
as preservation of capital by investing primarily in mortgage-backed securities
guaranteed by GNMA. GNMA securities are backed by the full faith and credit of
the U.S. government. The investment objective may be changed without a
shareholder vote.
The Fund normally invests at least 80% of the value of its total assets in
mortgage-backed securities guaranteed by GNMA, which is an agency of the U.S.
government established to supervise and finance certain types of mortgages.
In addition to mortgage-backed securities, the Fund invests in other types of
investment grade fixed income securities such as U.S. Treasury obligations,
U.S. government agency obligations, asset-backed securities and commercial
paper.
In buying and selling securities for the Fund, the Adviser assesses current and
projected market conditions by considering a number of factors including yield
to maturity, maturity, quality and the outlook for particular issuers and market
sectors.
The Fund's dollar-weighted average portfolio maturity will be between three and
ten years. Investment grade fixed income securities are those rated in one of
the four highest rating categories by a major rating agency, or determined by
the Adviser to be of equivalent quality.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
Mortgage-backed securities are fixed income securities representing an interest
in a pool of underlying mortgage loans. Mortgage-backed securities are sensitive
to changes in interest rates, but may respond to these changes differently from
other fixed income securities due to the possibility of prepayment of the
underlying mortgage loans. As a result, it may not be possible to determine in
advance the actual maturity date or average life of a mortgage-backed security.
Page 48 of 150
<PAGE>
Rising interest rates tend to discourage refinancings, with the result that the
average life and volatility of the security will increase, exacerbating its
decrease in market price. When interest rates fall, however, mortgage-backed
securities may not gain as much in market value because of the expectation of
additional mortgage prepayments that must be reinvested at lower interest rates.
Prepayment risk may make it difficult to calculate the average maturity of the
Fund of mortgage-backed securities and, therefore, to assess the volatility risk
of the Fund. This risk also exists for other asset-backed securities, although
generally to a lesser degree.
Debt extension risk is the risk that an issuer will pay principal on an
obligation held by the Fund (such as an asset-backed or mortgage-backed
security) later than expected. This may happen during a period of rising
interest rates. Under these circumstances, the value of the obligation will
decrease and the Fund will suffer from the inability to invest in higher
yielding securities.
The Fund is also subject to the risk that mortgage-backed securities may
underperform other segments of the fixed income markets or the fixed income
markets as a whole.
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies and
instrumentalities are backed by the U.S. Treasury, while others are backed
solely by the ability of the agency to borrow from the U.S. Treasury or by the
agency's own resources.
For additional information about risks, see "More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class C Shares because it has not
completed a full calendar year of operations.
This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.
The bar chart does not reflect sales charges. If sales charges had been
reflected, the returns for Class A Shares of the Fund would be less than those
shown below.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C> <C>
1997 9.03%
1998 6.34%
1999 0.56%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C> <C>
4.05% -0.88%
(6/30/97) (6/30/99)
</TABLE>
Page 49 of 150
<PAGE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 3.77%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN GNMA INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR SINCE INCEPTION
-----------------------------------------------------------------------------------------
<S> <C> <C>
ARMADA GNMA FUND 0.56% 6.03%(1)
LEHMAN GNMA INDEX(3) 1.92% 6.90%(2)
</TABLE>
(1)Since September 11, 1996.
(2)Since August 31, 1996.
(3)The Lehman GNMA Index tracks GNMA issues, including single family, mobile
home, midgets and graduated payments components.
FUND FEES AND EXPENSES
SEE PAGE 44 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 50 of 150
<PAGE>
ARMADA INTERMEDIATE BOND FUND
FUND SUMMARY
INVESTMENT GOAL High current income as well as
preservation of capital
INVESTMENT FOCUS Investment grade fixed income securities
SHARE PRICE VOLATILITY Medium
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in investment grade fixed
income securities, while maintaining a
dollar-weighted average maturity of
between three and ten years
INVESTOR PROFILE Investors seeking current income, and
who are willing to accept the risks of
investing in fixed income securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Intermediate Bond Fund's investment objective is to provide
current income as well as preservation of capital by investing in a portfolio
of investment grade fixed income securities. The investment objective may be
changed without a shareholder vote.
The Fund normally invests at least 80% of the value of its total assets in
domestic and foreign investment grade fixed income securities of all types,
including obligations of corporate and governmental issuers and
mortgage-backed and asset-backed securities. Corporate obligations include
bonds, notes and debentures. Governmental obligations include securities
issued by the U.S. government, its agencies and instrumentalities, as well as
obligations of foreign governments. Investment grade fixed income securities
are those rated in one of the four highest rating categories by a major
rating agency, or determined by the Adviser to be of equivalent quality.
If a security is downgraded, the Adviser will re-evaluate the holding to
determine whether it is in the best interests of investors to sell. In buying
and selling securities for the Fund, the Adviser considers a number of factors,
including yield to maturity, maturity, quality and the outlook for particular
issuers and market sectors. The Fund generally maintains an average maturity of
between three and ten years.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities, and may lower Fund performance.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
Page 51 of 150
<PAGE>
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
The mortgages underlying mortgage-backed securities may be paid off early, which
makes it difficult to determine their actual maturity and therefore calculate
how they will respond to changes in interest rates. The Fund may have to
reinvest prepaid amounts at lower interest rates. This risk of prepayment is an
additional risk of mortgage-backed securities. This risk also exists for other
asset-backed securities, although generally to a lesser degree.
Debt extension risk is the risk that an issuer will pay principal on an
obligation held by the Fund (such as an asset-backed or mortgage-backed
security) later than expected. This may happen during a period of rising
interest rates. Under these circumstances, the value of the obligation will
decrease and the Fund will suffer from the inability to invest in higher
yielding securities.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies and
instrumentalities are backed by the U.S. Treasury, while others are backed
solely by the ability of the agency to borrow from the U.S. Treasury or by the
agency's own resources.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country. These
various risks will be even greater for investments in emerging market countries
since political turmoil and rapid changes in economic conditions are more likely
to occur in these countries.
The Fund is also subject to the risk that investment grade fixed income
securities may underperform other segments of the fixed income markets or the
fixed income markets as a whole. For additional information about risks, see
"More Information About Risk."
Page 52 of 150
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class C Shares because it has not
completed a full calendar year of operations.
This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.
The bar chart does not reflect sales charges. If sales charges had been
reflected, the returns for Class A Shares of the Fund would be less than those
shown below.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1992 6.91%
1993 10.18%
1994 -4.78%
1995 15.39%
1996 2.77%
1997 6.67%
1998 7.44%
1999 -0.37%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
5.33% -3.34%
(6/30/95) (3/31/94)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 2.07%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN INTERMEDIATE GOVERNMENT/CREDIT
INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA INTERMEDIATE BOND FUND -0.37% 6.25% 6.24%(1)
LEHMAN INTERMEDIATE U.S. GOVERNMENT/CREDIT INDEX(5) 0.39% 7.09% 6.95%(2)
<CAPTION>
CLASS B SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA INTERMEDIATE BOND FUND -0.98% N/A 2.27%(3)
LEHMAN INTERMEDIATE U.S. GOVERNMENT/CREDIT INDEX(5) 0.39% N/A 4.32%(4)
</TABLE>
(1)Since April 15, 1991.
(2)Since March 31, 1991.
(3)Since January 6, 1998.
(4)Since December 31, 1997.
(5)The Lehman Intermediate U.S. Government/Credit Index (formerly, the Lehman
U.S. Government/Corporate Index) is an unmanaged index which is representative
of intermediate-term bonds.
Page 53 of 150
<PAGE>
FUND FEES AND EXPENSES
SEE PAGE 44 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 54 of 150
<PAGE>
ARMADA LIMITED MATURITY BOND FUND (FORMERLY ARMADA ENHANCED INCOME FUND)
FUND SUMMARY
INVESTMENT GOAL Current income as well as preservation
of capital
INVESTMENT FOCUS Investment grade debt securities
SHARE PRICE VOLATILITY Low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in investment grade fixed
income securities, while maintaining a
dollar-weighted average maturity of
between one and five years
INVESTOR PROFILE Investors seeking total return and who
are willing to accept some risks of
price volatility
PRINCIPAL INVESTMENT STRATEGIES
The Armada Limited Maturity Bond Fund's investment objective is to provide
current income as well as preservation of capital by investing in a portfolio of
investment grade fixed income securities. The investment objective may be
changed without a shareholder vote.
The Fund normally invests at least 80% of the value of its total assets in
investment grade debt securities of all types, including obligations of
corporate and U.S. government issuers, mortgage-backed and asset-backed
securities. Corporate obligations may include bonds, notes and debentures.
U.S. government securities may include U.S. Treasury obligations and
obligations of certain U.S. government agencies or instrumentalities such as
Ginnie Maes and Fannie Maes. Investment grade fixed income securities are
those rated in one of the four highest rating categories by a major rating
agency, or determined by the Adviser to be of equivalent quality.
If a security is downgraded, the Adviser will re-evaluate whether continuing to
hold the security is in the best interest of shareholders. In buying and selling
securities for the Fund, the Adviser considers a number of factors including
yield to maturity, maturity, quality and the outlook for particular issuers and
market sectors. The Fund generally maintains an average dollar-weighted
portfolio maturity of between one and five years.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities, and may lower Fund performance.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
Page 55 of 150
<PAGE>
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
The mortgages underlying mortgage-backed securities may be paid off early, which
makes it difficult to determine their actual maturity and therefore calculate
how they will respond to changes in interest rates. The Fund may have to
reinvest prepaid amounts at lower interest rates. This risk of prepayment is an
additional risk of mortgage-backed securities. This risk also exists for other
asset-backed securities, although generally to a lesser degree.
Debt extension risk is the risk that an issuer will pay principal on an
obligation held by the Fund (such as an asset-backed or mortgage-backed
security) later than expected. This may happen during a period of rising
interest rates. Under these circumstances, the value of the obligation will
decrease and the Fund will suffer from the inability to invest in higher
yielding securities.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies and
instrumentalities are backed by the U.S. Treasury, while others are backed
solely by the ability of the agency to borrow from the U.S. Treasury or by the
agency's own resources.
The Fund is also subject to the risk that investment grade fixed income
securities may underperform other segments of the fixed income markets or the
fixed income markets as a whole. For additional information about risks, see
"More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class C Shares because it has not
completed a full calendar year of operations.
This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.
The bar chart does not reflect sales charges. If sales charges had been
reflected, the returns for Class A Shares of the Fund would be less than those
shown below.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1995 7.60%
1996 5.18%
1997 6.33%
1998 6.58%
1999 3.15%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
3.12% 0.28%
(9/30/98) (6/30/99)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 2.45%.
Page 56 of 150
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE MERRILL LYNCH 1-3 YEAR
U.S. CORPORATE/GOVERNMENT INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS SINCE INCEPTION
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA LIMITED MATURITY BOND FUND 3.15% 5.76% 5.64%(1)
MERRILL LYNCH 1-3 YEAR U.S. CORPORATE/GOVERNMENT INDEX(3) 3.06% 6.50% 6.04%(2)
</TABLE>
(1)Since September 9, 1994.
(2)Since August 31, 1994.
(3)The Merrill Lynch 1-3 year U.S. Corporate/Government Index is a market
capitalization weighted index including U.S. Treasury and Agency bonds and U.S.
fixed coupon investment grade corporate bonds (U.S. domestic and Yankee/global
bonds). U.S. Treasury bonds must have at least $1 billion face value outstanding
and agency and corporate bonds must have at least $150 million face value
outstanding to be included in the index. Both total return and price returns are
calculated daily. Prices are taken as of approximately 3 p.m. Eastern Time.
Quality range is BBB3-AAA based on composite Moody and S&P ratings. Maturities
for all bonds are greater than or equal to one year and less than three years.
Floaters, Equipment Trust Certificates, and Title 11 securities are excluded.
FUND FEES AND EXPENSES
SEE PAGE 44 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 57 of 150
<PAGE>
ARMADA STRATEGIC INCOME BOND FUND
FUND SUMMARY
INVESTMENT GOAL High current income with some capital
appreciation
INVESTMENT FOCUS A combination of investment grade,
high-yield and foreign fixed income
securities
SHARE PRICE VOLATILITY Medium to high
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Allocating assets among different fixed
income security sectors, including U.S.
and foreign issues, with a significant
portion rated below investment grade.
The Fund will normally maintain a
dollar-weighted average maturity of
between four and twelve years
INVESTOR PROFILE Investors seeking a high level of
current income, and who are willing to
accept the risks of investing in fixed
income securities, including high-yield
and foreign fixed income securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Strategic Income Bond Fund's investment objective is to provide
high current income by investing in three major sectors of fixed income
securities: domestic investment grade fixed income securities, domestic
high-yield fixed income securities and fixed income securities of issuers in
foreign countries. The Fund will limit investments in securities of issuers
in countries with emerging markets or economies to no more than 10% of the
Fund's total assets. The types of fixed income securities in which the Fund
will invest include asset-backed securities, mortgage-backed securities and
obligations of corporate and U.S. government issuers. Corporate obligations
may include bonds, notes and debentures issued by companies headquartered in
the U.S. or developed foreign countries. U.S. government securities may
include U.S. Treasury obligations and obligations of certain U.S. government
agencies or instrumentalities. High-yield fixed income securities are
commonly referred to as "junk bonds." The investment objective may be changed
without a shareholder vote.
The Adviser allocates between 15% and 65% of the Fund's assets to each of the
three major sectors of fixed income securities based on its analysis of the
fixed income markets. Investment grade fixed income securities are those rated
in one of the four highest rating categories by a major rating agency, or
determined by the Adviser to be of equivalent quality. High-yield fixed income
securities are those rated below investment grade or are unrated and determined
by the Adviser to be equivalent to a non-investment grade security. The Fund
does not intend to invest in high-yield fixed income securities rated by
Standard & Poors, at the time of purchase, below C or that are of equivalent
quality. If a security is downgraded below C or the equivalent, the Adviser will
reevaluate whether continuing to hold the security is in the best interest of
shareholders.
In buying and selling particular securities for the Fund, the Adviser considers
a number of factors, including yield to maturity, maturity, quality and the
outlook for particular issuers, currencies and
Page 58 of 150
<PAGE>
market sectors. The Fund generally maintains a dollar-weighted average maturity
of between four and twelve years, however there is no limit on the maturity of
any single security.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities and may lower Fund performance.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
The Fund may allocate any amount of its assets invested in a particular sector
of the fixed income markets to any types of securities within that sector.
Accordingly, a heavier weighting of assets in securities that carry greater
risks will correspondingly increase the risks of investing in the Fund. For
example, the risks of investing in the Fund will be greater if the Fund
concentrates a high percentage of its domestic investment grade fixed income
securities sector investments in corporate obligations than if it invests a high
percentage of such sector's investments in U.S. government securities.
High-yield bonds involve greater risks of default or downgrade and are more
volatile than investment grade securities. High-yield bonds involve greater risk
of price declines than investment grade securities due to actual or perceived
changes in an issuer's creditworthiness. In addition, issuers of high-yield
bonds may be more susceptible than other issuers to economic downturns.
High-yield bonds are subject to the risk that the issuer may not be able to pay
interest or dividends and ultimately to repay principal upon maturity.
Discontinuation of these payments could substantially adversely affect the
market value of the security.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of the Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country.
Emerging market countries are countries that the World Bank or the United
Nations considers to be emerging or developing. Emerging markets may be more
likely to experience political turmoil or rapid changes in market or economic
conditions than more developed countries. Emerging market countries often have
less uniformity in accounting and reporting requirements and unreliable
securities valuation. It is sometimes difficult to obtain and enforce court
judgments in such countries and there is often a greater potential for
nationalization and/or expropriation of assets by the government of an emerging
market country. In addition, the financial stability of issuers (including
governments) in emerging market countries may be more precarious than in other
countries. As a result, there will tend to be an increased risk of price
volatility associated with the Fund's investments in emerging market countries,
which may be magnified by currency fluctuations relative to the U.S. dollar.
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
The Fund is also subject to debt extension risk. Debt extension risk is the risk
that an issuer will exercise its right to pay principal on an obligation held by
the Fund (such as an asset-backed or mortgage-backed security) later than
expected. This may happen during a period of rising interest rates. Under these
circumstances, the value of the obligation will decrease and the Fund will
suffer from the inability to invest in higher yielding securities.
The mortgages underlying mortgage-backed securities may be paid off early, which
makes it difficult to determine their actual maturity and therefore calculate
how they will respond to changes in interest rates. The Fund may have to
reinvest prepaid amounts at lower interest rates. This risk of prepayment is an
additional risk of mortgage-backed securities. This risk also exists for other
asset-backed securities, although generally to a lesser degree.
Page 59 of 150
<PAGE>
The Fund invests in leveraged instruments, such as futures and options
contracts. The more the Fund invests in these leveraged instruments, the greater
the possibility for gains or losses on those investments.
The Fund is also subject to the risk that any or all of its fixed income market
segments may underperform other segments of the fixed income markets or the
fixed income markets as a whole. For additional information about risks, see
"More Information About Risk."
PERFORMANCE INFORMATION
There is no performance information for the Class A, Class B, or Class C Shares
because none has commenced operations as of the date of this Prospectus.
The performance of Class A, Class B and Class C Shares will differ due to
differences in expenses.
FUND FEES AND FEES AND EXPENSES
SEE PAGE 45 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 60 of 150
<PAGE>
ARMADA TOTAL RETURN ADVANTAGE FUND
FUND SUMMARY
INVESTMENT GOAL Current income as well as preservation
of capital
INVESTMENT FOCUS Investment grade fixed income securities
SHARE PRICE VOLATILITY Medium
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in investment grade fixed
income securities, while maintaining an
average dollar-weighted maturity of
between four and twelve years
INVESTOR PROFILE Investors seeking total return with less
price volatility than would be the case
if the Fund were to invest in equity
securities, and who are willing to
accept the risks of investing in fixed
income securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Total Return Advantage Fund's investment objective is to provide
current income as well as preservation of capital by investing primarily in a
portfolio of investment grade fixed income securities. The investment objective
may be changed without a shareholder vote.
The Fund normally invests at least 80% of the value of its total assets in
investment grade fixed income securities of all types, including asset-backed
securities and mortgage-backed securities and obligations of corporate and
U.S. government issuers. Corporate obligations may include bonds, notes and
debentures. U.S. government securities may include U.S. Treasury obligations
and obligations of certain U.S. government agencies or instrumentalities such
as Ginnie Maes and Fannie Maes. Fixed income securities are designed to
provide a fixed rate of interest at maturity and return the principal value
at the end of the term. Investment grade fixed income securities are those
rated in one of the four highest rating categories by a major rating agency,
or determined by the Adviser to be of equivalent quality.
If a security is downgraded, the Adviser will re-evaluate whether continuing to
hold the security is in the best interest of shareholders. In buying and selling
securities for the Fund, the Adviser uses a number of strategies, including
duration/maturity management, sector allocation and individual security
selection. The Fund may invest up to 15% of its assets in fixed income
securities that are non-rated or rated below investment grade, sometimes known
as "junk bonds." The Fund does not intend to invest in junk bonds rated by
Standard & Poor's, at the time of purchase, below C or that are of equivalent
quality. If a security is downgraded below C or the equivalent, the Adviser will
reevaluate whether continuing to hold the security is in the best interest of
the shareholders.
The Fund generally maintains an average dollar-weighted maturity of between four
and twelve years.
Page 61 of 150
<PAGE>
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities, and may lower Fund performance.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower rated securities is even
greater than that of higher rated securities. Also, longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.
Junk bonds involve greater risks of default or downgrade and are more volatile
than investment grade securities. Junk bonds involve greater risk of price
declines than investment grade securities due to actual or perceived changes in
an issuer's creditworthiness. In addition, issuers of junk bonds may be more
susceptible than other issuers to economic downturns. Junk bonds are subject to
the risk that the issuer may not be able to pay interest or dividends on a
timely basis and ultimately to repay principal upon maturity. Discontinuation of
these payments could substantially adversely affect the market value of the
security.
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
The mortgages underlying mortgage-backed securities may be paid off early, which
makes it difficult to determine their actual maturity and therefore calculate
how they will respond to changes in interest rates. The Fund may have to
reinvest prepaid amounts at lower interest rates. This risk of prepayment is an
additional risk of mortgage-backed securities. This risk also exists for other
asset-backed securities, although generally to a lesser degree.
Debt extension risk is the risk that an issuer will pay principal on an
obligation held by the Fund (such as an asset-backed or mortgage-backed
security) later than expected. This may happen during a period of rising
interest rates. Under these circumstances, the value of the obligation will
decrease and the Fund will suffer from the inability to invest in higher
yielding securities.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies and
instrumentalities are backed by the full faith and credit of the United States,
while others are backed solely by the ability of the agency to borrow from the
U.S. Treasury or by the agency's own resources.
The Fund is also subject to the risk that investment grade fixed income
securities may underperform other segments of the fixed income markets or the
fixed income markets as a whole. For additional information about risks, see
"More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
Page 62 of 150
<PAGE>
There is no performance information for Class C Shares because it has not
completed a full calendar year of operations.
This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.
The bar chart does not reflect sales charges. If sales charges had been
reflected, the returns for Class A Shares of the Fund would be less than those
shown below.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1995 18.37%
1996 2.86%
1997 8.54%
1998 8.68%
1999 -3.21%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
6.28% -2.58%
(6/30/95) (3/31/96)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 4.39%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN U.S. GOVERNMENT/CREDIT
INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS SINCE INCEPTION
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA TOTAL RETURN ADVANTAGE FUND -3.21% 6.81% 6.24%(1)
LEHMAN U.S. GOVERNMENT/CREDIT INDEX(3) -2.15% 7.60% 6.88%(2)
</TABLE>
(1)Since September 6, 1994.
(2)Since August 31, 1994.
(3)The Lehman U.S. Government/Credit Index (formerly, the U.S.
government/Corporate Index) is a widely recognized index
of government and corporate debt securities rated investment grade or better,
with maturities of at least 1 year.
FUND FEES AND EXPENSES
SEE PAGE 45 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 63 of 150
<PAGE>
ARMADA U.S. GOVERNMENT INCOME FUND
FUND SUMMARY
INVESTMENT GOAL Current income as well as preservation
of capital
INVESTMENT FOCUS Mortgage-backed securities
SHARE PRICE VOLATILITY Low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in mortgage-related securities
issued or guaranteed by the U.S.
government
INVESTOR PROFILE Investors seeking current income, and
who are willing to accept the risks of
investing in fixed income securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada U.S. Government Income Fund's investment objective is to provide
current income as well as preservation of capital by investing primarily in U.S.
government securities. The investment objective may be changed without a
shareholder vote.
The Fund normally invests at least 80% of its total assets in obligations
issued or guaranteed by the U.S. government or its agencies or
instrumentalities. The types of U.S. government securities include
mortgage-related securities, and Treasury bills, notes and bonds. The Fund
may invest up to 20% of the value of its total assets in mortgage-related
debt securities and preferred stock of non-governmental issuers and the same
proportion of its total assets in non-governmental asset backed securities.
In buying and selling securities for the Fund, the Adviser considers a number
of factors, including yield to maturity, maturity, quality and the outlook
for particular issuers and market sectors. The Fund generally maintains a
dollar-weighted average maturity of between three and ten years.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities, and may lower Fund performance.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
The Fund is also subject to the risk that U.S. government securities may
underperform other segments of the fixed income markets or the fixed income
markets as a whole.
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
Page 64 of 150
<PAGE>
The mortgages underlying mortgage-backed securities may be paid off early, which
makes it difficult to determine their actual maturity and therefore calculate
how they will respond to changes in interest rates. The Fund may have to
reinvest prepaid amounts at lower interest rates. This risk of prepayment is an
additional risk of mortgage-backed securities. This risk also exists for other
asset-backed securities, although generally to a lesser degree.
Debt extension risk is the risk that an issuer will pay principal on an
obligation held by the Fund (such as an asset-backed or mortgage-backed
security) later than expected. This may happen during a period of rising
interest rates. Under these circumstances, the value of the obligation will
decrease and the Fund will suffer from the inability to invest in higher
yielding securities.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies and
instrumentalities are backed by the U.S. Treasury, while others are backed
solely by the ability of the agency to borrow from the U.S. Treasury or by the
agency's own resources. For additional information about risks, see "More
Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class C Shares because it has not
completed a full calendar year of operations.
The bar chart does not reflect sales charges. If sales charges had been
reflected, the returns for Class A Shares of the Fund would be less than those
shown below.
This bar chart shows the performance of the Fund's Class A Shares from year to
year. On June 10, 2000 the Parkstone U.S. Government Income Fund was reorganized
into the similarly managed Armada U.S. Government Income Fund. Performance
information before June 10, 2000 represents performance of the Parkstone Fund
while performance after that date represents performance of the newly organized
Armada Fund.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1993 7.41%
1994 -0.70%
1995 13.50%
1996 4.54%
1997 7.87%
1998 6.83%
1999 0.95%
Page 65 of 150
<PAGE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
3.88% -1.13%
(6/30/95) (3/31/94)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 3.22%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN MORTGAGE-BACKED SECURITIES INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA U.S. GOVERNMENT INCOME FUND 0.95% 6.66% 5.62%(1)
LEHMAN MORTGAGE-BACKED SECURITIES INDEX(2) 1.85% 7.98% 6.47%(2)
<CAPTION>
CLASS B SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA U.S. GOVERNMENT INCOME FUND 0.20% 5.90% 4.62%(3)
LEHMAN MORTGAGE-BACKED SECURITIES INDEX(5) 1.85% 7.98% 6.23%(4)
</TABLE>
(1)Since November 12, 1992.
(2)Since October 31, 1992.
(3)Since February 4, 1994.
(4)Since January 31, 1994.
(5)The Lehman Mortgage-Backed Securities Index is a widely-recognized, market
value-weighted (higher market value stocks have more influence than lower market
value stocks) index of mortgage-backed securities issued by GNMA, FHLMC, and
Fannie Mae. All securities in the index are rated AAA, with maturities of at
least one year.
FUND FEES AND EXPENSES
SEE PAGE 45 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 66 of 150
<PAGE>
FUND FEES AND EXPENSES OF THE ARMADA FIXED INCOME FUNDS
THIS TABLE DESCRIBES THE SHAREHOLDER FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD SHARES OF THE RESPECTIVE FUNDS.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
Bond Fund GNMA Fund Intermediate Bond Fund
Class A Class B Class C Class A Class B Class C Class A Class B Class C
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales 4.75% None None 4.75% None None 4.75% None None
Charge (Load)
Imposed on
Purchases (as a
percentage of
offering price)(1)
Maximum Deferred None 5.00%(2) 1.00%(3) None 5.00%(2) 1.00%(3) None 5.00%(2) 1.00%(3)
Sales Charge
(Load) (as a
percentage of net
asset value)
Maximum Sales None None None None None None None None None
Charge (Load)
Imposed on
Reinvested
Dividends and
other
Distributions (as
a percentage of
offering price)
Redemption Fee None None None None None None None None None
(as a percentage
of amount
redeemed, if
applicable)
Exchange Fee None None None None None None None None None
<CAPTION>
Limited Maturity Bond Fund Strategic Income Bond Fund* Total Return Advantage Fund
Class A Class B Class C Class A Class B Class C Class A Class B Class C
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales 2.75% None None 4.75% None None 4.75% None None
Charge (Load)
Imposed on
Purchases (as a
percentage of
offering price)(1)
Maximum Deferred None 5.00%(2) 1.00%(3) None 5.00%(2) 1.00%(3) None 5.00%(2) 1.00%(3)
Sales Charge
(Load) (as a
percentage of net
asset value)
Maximum Sales None None None None None None None None None
Charge (Load)
Imposed on
Reinvested
Dividends and
other
Distributions (as
a percentage of
offering price)
Redemption Fee None None None None None None None None None
(as a percentage of
Page 67 of 150
<PAGE>
amount redeemed,
if applicable)
Exchange Fee None None None None None None None None None
<CAPTION>
U.S. Government Income Fund
Class A Class B Class C
-----------------------------------------------------
<S> <C> <C> <C>
Maximum Sales 4.75% None None
Charge (Load)
Imposed on
Purchases (as a
percentage of
offering price)(1)
Maximum Deferred None 5.00%(2) 1.00%(3)
Sales Charge
(Load) (as a
percentage of net
asset value)
Maximum Sales None None None
Charge (Load)
Imposed on
Reinvested
Dividends and
other
Distributions (as
a percentage of
offering price)
Redemption Fee None None None
(as a percentage
of amount
redeemed, if
applicable)
Exchange Fee None None None
</TABLE>
Page 68 of 150
<PAGE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Class A Shares(4)
<TABLE>
<CAPTION>
Limited Maturity Strategic Income Bond
Bond Fund GNMA Fund Intermediate Bond Fund Bond Fund Fund
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment 0.55% 0.55% 0.55% 0.45% 0.75%
Advisory Fees
Distribution and 0.10% 0.10% 0.10% 0.10% 0.10%
Service (12b-1)
Fees
Other Expenses 0.39% 0.46% 0.39% 0.29% 0.45%(7)
----- ----- ----- ----- -------
Total Annual Fund 1.04%(5) 1.11%(5) 1.04%(6) 0.84%(6) 1.30%(8)
Operating Expenses
<CAPTION>
Total Return U.S. Government Income
Advantage Fund Fund
--------------------------------------------------------------
<S> <C> <C>
Investment 0.55% 0.55%
Advisory Fees
Distribution and 0.10% 0.10%
Service (12b-1)
Fees
Other Expenses 0.37% 0.43%
----- -----
Total Annual Fund 1.02%(6) 1.08%(9)
Operating Expenses
Class B Shares(4)
<CAPTION>
Limited Maturity Strategic Income Bond
Bond Fund GNMA Fund Intermediate Bond Fund Fund Bond Fund
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment 0.55% 0.55% 0.55% 0.45% 0.75%
Advisory Fees
Distribution and 1.00% 1.00% 1.00% 0.85% 1.00%
Service (12b-1)
Fees
Other Expenses 0.14% 0.21% 0.14% 0.34% 0.20%(7)
----- ----- ----- ----- -------
Total Annual Fund 1.69% 1.76% 1.69%(6) 1.64%(6) 1.95%(8)
Operating Expenses
<CAPTION>
Total Return U.S. Government Income
Advantage Fund Fund
--------------------------------------------------------------
Investment 0.55% 0.55%
Advisory Fees
Distribution and 1.00% 1.00%
Service (12b-1)
Fees
Other Expenses 0.12% 0.18%
----- -----
Total Annual Fund 1.67%(6) 1.73%(9)
Operating Expenses
Page 69 of 150
<PAGE>
Class C Shares(4)
<CAPTION>
Limited Maturity Strategic Income Bond
Bond Fund GNMA Fund Intermediate Bond Fund Bond Fund Fund
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment 0.55% 0.55% 0.55% 0.45% 0.75%
Advisory Fees
Distribution and 1.00% 1.00% 1.00% 1.00% 1.00%
Service (12b-1)
Fees
Other Expenses 0.14% 0.21% 0.14% 0.19% 0.20%(7)
----- ----- ----- ----- -------
Total Annual Fund 1.69% 1.76% 1.69%(6) 1.64%(6) 1.95%(8)
Operating Expenses
<CAPTION>
Total Return U.S. Government Income
Advantage Fund Fund
--------------------------------------------------------------
<S> <C> <C>
Investment 0.55% 0.55%
Advisory Fees
Distribution and 1.00% 1.00%
Service (12b-1)
Fees
Other Expenses 0.12% 0.18%
----- -----
Total Annual Fund 1.67%(6) 1.73%(9)
Operating Expenses
</TABLE>
*The Strategic Income Bond Fund had not commenced operations as of the date
of this Prospectus.
(1)This sales charge varies depending upon how much you invest. See "Sales
Charges."
(2)This amount applies to redemptions during the first and second years. The
deferred sales charge decreases to 4.0%, 3.0% and 2.0% for redemptions made
during the third through fifth years, respectively. No deferred sales charge is
charged after the fifth year. For more information see "Contingent Deferred
Sales Charges."
(3)A contingent deferred sales charge is charged only with respect to Class C
Shares redeemed prior to eighteen months from the date of purchase.
(4)The Trust has implemented plans imposing shareholder servicing fees with
respect to Class A, Class B and Class C Shares of each Fund. Pursuant to such
plans, the Trust enters into shareholder servicing agreements with certain
financial institutions under which they agree to provide shareholder
administrative services to their customers who beneficially own Class A,
Class B and Class C Shares in consideration for the payment of up to 0.25%
(on an annualized basis) of the net asset value of such Class A, Class B or
Class C Shares of the Funds (with the exception of the Class A and Class B
Shares of the Limited Maturity Bond Fund which pays 0.10%. Shareholder
servicing fees paid by Class A Shares are included in Other Expenses and Fees
paid by Class B and Class C Shares are included in Distribution and Service
(12b-1) Fees in the table above. For further information concerning these
plans, see "Shareholder Services Plans" in the Statement of Additional
Information.
(5)Each of these Funds' total actual annual operating expenses for Class A,
Class B and Class C Shares for the most recent fiscal year were less than the
amounts shown above because the Adviser and Distributor each waived a portion
of the fees in order to keep total operating expenses at a specified level.
With these fee waivers, each Fund's actual total operating expenses for Class
A, Class B and Class C Shares were, respectively:
<TABLE>
<S> <C>
Bond Fund 0.98%
GNMA Fund 1.05%
</TABLE>
The Distributor expects to continue these waivers so that total operating
expenses for Class A Shares for the current fiscal year will be as follows.
These fee waivers remain in place as of the date of this prospectus, but the
Distributor may discontinue all or part of these waivers at any time.
<TABLE>
<S> <C>
Bond Fund 0.99%
GNMA Fund 1.06%
</TABLE>
(6)Each of these Funds' total actual annual operating expenses for Class A
Shares for the most recent fiscal year were less than the amounts shown above
because the Distributor waived a portion of the fees in order to keep total
operating expenses for Class A Shares at a specified level. With these fee
waivers, the Fund's actual total operating expenses for Class A Shares were,
respectively:
<TABLE>
<S> <C> <C> <C>
Intermediate Bond Fund 0.83% 1.54% 1.54%
Limited Maturity Bond Fund 0.64% 1.52% 1.52%
Total Return Advantage Fund 0.73% 1.46% N/A
</TABLE>
The Adviser and Distributor each expects to continue these waivers so that total
operating expenses for Class A, Class B and Class C Shares for the current
fiscal year will be as follows. These fee waivers remain in place as of the date
of this prospectus, but the Adviser and/or Distributor may discontinue all or
part of these waivers at any time.
Page 70 of 150
<PAGE>
<TABLE>
<S> <C> <C> <C>
Intermediate Bond Fund 0.84% 1.54% 1.54%
Limited Maturity Bond Fund 0.66% 1.54% 1.54%
Total Return Advantage Fund 0.74% 1.47% 1.47%
</TABLE>
(7)Other expenses for the Strategic Income Bond Fund are based on estimated
amounts for the current fiscal year.
(8)The Distributor plans to waive a portion of its fees for the current fiscal
year. The Distributor may revise or cancel this expense limitation at any time
and will notify you of any material change.
(9)The Adviser and Distributor each expect to waive fees for the U.S.
Government Income Fund so that total operating expenses for Class A, Class B
and Class C Shares for the current fiscal year will be 1.03%, 1.73% and
1.73%, respectively. These fee waivers remain in effect as of the date of
this prospectus, but the Adviser and/or Distributor may discontinue all or
part of these waivers at any time.
*Estimated
For more information about these fees, see "Investment Adviser, Sub-Adviser and
Investment Team" and "Distribution of Fund Shares."
EXAMPLE
These Examples are intended to help you compare the cost of investing in the
Armada Fixed Income Funds with the cost of investing in other mutual funds.
The Examples assume that you invest $10,000 in a Fund for the time periods
indicated and that you sell your shares at the end of the period.
The Examples also assume that each year your investment has a 5% return, Fund
expenses remain the same and your Class B Shares convert to Class A Shares after
eight years. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in a Fund would be:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bond Fund
----------------------------------------------------------------------------------------------------------------------
Class A Shares $576 $790 $1,022 $1,686
----------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $672 $933 $1,118 $1,823
----------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $172 $533 $918 $1,823
----------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $272 $533 $918 $1,998
----------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $172 $533 $918 $1,998
----------------------------------------------------------------------------------------------------------------------
GNMA Fund
----------------------------------------------------------------------------------------------------------------------
Class A Shares $583 $811 $1,058 $1,762
----------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $679 $954 $1,154 $1,900
----------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $179 $554 $954 $1,900
----------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $279 $554 $954 $2,073
----------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $179 $554 $954 $2,073
----------------------------------------------------------------------------------------------------------------------
Intermediate Bond Fund
----------------------------------------------------------------------------------------------------------------------
Class A Shares $576 $790 $1,022 $1,686
----------------------------------------------------------------------------------------------------------------------
Page 71 of 150
<PAGE>
----------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $672 $933 $1,118 $1,825
----------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $172 $533 $918 $1,825
----------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $272 $533 $918 $1,998
----------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $172 $533 $918 $1,998
----------------------------------------------------------------------------------------------------------------------
Limited Maturity Bond
Fund
----------------------------------------------------------------------------------------------------------------------
Class A Shares $358 $536 $728 $1,284
----------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $667 $917 $1,092 $1,728
----------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $167 $517 $892 $1,728
----------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $267 $517 $892 $1,944
----------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $167 $517 $892 $1,944
----------------------------------------------------------------------------------------------------------------------
Strategic Income Bond
Fund
----------------------------------------------------------------------------------------------------------------------
Class A Shares $601 $868 N/A N/A
----------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $698 $1,102 N/A N/A
----------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $198 $612 N/A N/A
----------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $298 $612 N/A N/A
----------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $198 $612 N/A N/A
----------------------------------------------------------------------------------------------------------------------
Total Return Advantage
Fund
----------------------------------------------------------------------------------------------------------------------
Class A Shares $574 $784 $1,011 $1,667
----------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $670 $926 $1,107 $1,802
----------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $170 $526 $907 $1,802
----------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $270 $526 $907 $1,976
----------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $170 $526 $907 $1,976
----------------------------------------------------------------------------------------------------------------------
U.S. Government Income
Fund
----------------------------------------------------------------------------------------------------------------------
Class A Shares $580 $802 $1,042 $1,730
----------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $676 $945 $1,139 $1,867
----------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $176 $545 $939 $1,867
----------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $276 $545 $939 $2,041
----------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $176 $545 $939 $2,041
----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) If you sell your shares at the end of the period.
(2) If you do not sell your shares at the end of the period.
Page 72 of 150
<PAGE>
ARMADA MICHIGAN MUNICIPAL BOND FUND
FUND SUMMARY
INVESTMENT GOAL Current income exempt from federal
income tax and, to the extent possible,
from Michigan personal income tax, as is
consistent with conservation of capital
INVESTMENT FOCUS Michigan tax exempt securities
SHARE PRICE VOLATILITY Medium
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in municipal obligations that
pay interest that is exempt from federal
and Michigan state income taxes
INVESTOR PROFILE Investors seeking tax exempt current
income, and who are willing to accept
moderate share price volatility
PRINCIPAL INVESTMENT STRATEGIES
The Armada Michigan Municipal Bond Fund's investment objective is to provide
current income exempt from federal income tax and, to the extent possible, from
Michigan personal income tax, as is consistent with conservation of capital.
Such income may be subject to the federal alternative minimum tax when received
by certain shareholders. The investment objective may be changed without a
shareholder vote.
The Fund invests primarily in debt securities issued by or on behalf of the
State of Michigan, its political subdivisions and its agencies and
instrumentalities that generate income exempt from federal and Michigan state
income, but may be treated as a preference item for individuals for purposes of
the federal alternative minimum tax (Michigan municipal securities). The Fund
also invests in municipal securities issued by or on behalf of territories and
possessions of the United States, the District of Columbia and their political
subdivisions, agencies, instrumentalities and authorities.
In selecting securities for the Fund to buy and sell, the Adviser considers each
security's yield and total return potential relative to other available
municipal securities. The Fund will normally invest at least 80% of the value of
its total assets in Michigan municipal securities. However, some Fund dividends
may be taxable, such as dividends that are derived from occasional taxable
investments and distributions of short and long-term capital gains. Also, Fund
dividends will generally be subject to state and local income taxes for any
shareholders who are not Michigan residents. The Fund may invest up to 100% of
its total assets in private activity bonds which may be treated as a specific
tax preference item under the federal alternative minimum tax.
The Fund invests in investment grade securities, which are those rated in one of
the four highest rating categories by a major rating agency, or determined by
the Adviser to be of equivalent quality. If a security is downgraded, the
Adviser will re-evaluate whether continuing to hold the security is in the best
interest of its shareholders. The Fund ordinarily will maintain a
dollar-weighted average portfolio maturity of between three and ten years.
Page 73 of 150
<PAGE>
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
The Fund is also subject to the risk that tax free municipal securities may
underperform other segments of the fixed income markets or the fixed income
markets as a whole.
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund's focus of investments in securities of issuers located in Michigan
subjects the Fund to economic and governmental policies of that state.
The Fund is non-diversified, which means that it may invest in the securities of
relatively few issuers. As a result, the Fund may be more susceptible than a
diversified fund to a single adverse economic or political and regulatory
occurrences affecting one or more of these issuers, and may experience increased
volatility due to its investments in those securities. For additional
information about risks, see "More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class C Shares because it has not
completed a full calendar year of operations.
The bar chart does not reflect sales charges. If sales charges had been
reflected, the returns for Class A Shares of the Fund would be less than those
shown below.
This bar chart shows the performance of the Fund's Class A Shares from year to
year. On June 10, 2000 the Parkstone Michigan Municipal Bond Fund was
reorganized into the similarly managed Armada Michigan Municipal Bond Fund.
Performance information before June 10, 2000 represents performance of the
Parkstone Fund while performance after that date represents performance of the
newly organized Armada Fund.
Page 74 of 150
<PAGE>
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1991 9.78%
1992 6.98%
1993 9.67%
1994 -3.00%
1995 13.24%
1996 2.84%
1997 6.93%
1998 4.76%
1999 -1.60%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
5.19% -3.27%
(3/31/95) (3/31/94)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 2.95%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN 7 YEAR MUNICIPAL BOND INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS SINCE INCEPTION
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA MICHIGAN MUNICIPAL BOND FUND -1.60% 5.12% 5.44%(1)
LEHMAN 7 YEAR MUNICIPAL BOND INDEX(5) -0.14% 6.36% 6.65%(2)
<CAPTION>
CLASS B SHARES 1 YEAR 5 YEARS SINCE INCEPTION
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA MICHIGAN MUNICIPAL BOND FUND -2.33% 4.38% 2.91%(3)
LEHMAN 7 YEAR MUNICIPAL BOND INDEX(5) -0.14% 6.36% 4.67%(4)
</TABLE>
(1)Since July 2,1990.
(2)Since June 30, 1990.
(3)Since February 4, 1994.
(4)Since January 31, 1994.
(5)The Lehman Seven Year Municipal Bond Index is a broad based total return
index. The bonds are all investment grade, fixed rate with maturities of 7-8
years and are selected from issues larger than $50 million dated since January
1984.
FUND FEES AND EXPENSES
SEE PAGE 56 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 75 of 150
<PAGE>
ARMADA NATIONAL TAX EXEMPT BOND FUND
FUND SUMMARY
INVESTMENT GOAL Current income exempt from federal
income tax as is consistent with
conservation of capital
INVESTMENT FOCUS Municipal securities
SHARE PRICE VOLATILITY Medium
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in municipal obligations that
pay interest that is exempt from federal
income tax
INVESTOR PROFILE Investors seeking tax exempt current
income, and who are willing to accept
moderate share price volatility
PRINCIPAL INVESTMENT STRATEGIES
The Armada National Tax Exempt Bond Fund's investment objective is to provide
current income exempt from federal income tax as is consistent with conservation
of capital. The investment objective may be changed without a shareholder vote.
The Fund normally invests at least 80% of its net assets in debt securities that
generate income exempt from federal income tax. However, Fund dividends may be
taxable for state and local income tax purposes. Also, some Fund dividends may
be taxable for federal income tax purposes, such as those derived from
occasional taxable investments and distributions of short and long-term capital
gains. The Fund may invest up to 20% of its total assets in private activity
bonds, the income of which may be treated as a specific tax preference item
under the federal alternative minimum tax.
The Fund invests in municipal securities issued by or on behalf of states,
territories and possessions of the United States, the District of Columbia
and their political subdivisions, agencies, instrumentalities and
authorities. In selecting securities for the Fund to buy and sell, the
Adviser considers each security's yield and total return potential relative
to other available municipal securities.
The Fund primarily invests only in investment grade securities. Investment grade
municipal securities are those rated in one of the four highest rating
categories as determined by a major rating agency. If a security is downgraded,
the Adviser will re-evaluate whether continuing to hold the security is in the
best interest of shareholders. The Fund ordinarily will maintain a
dollar-weighted average effective maturity of between three and ten years.
Page 76 of 150
<PAGE>
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund is also subject to the risk that tax exempt securities may underperform
other segments of the fixed income markets or the fixed income markets as a
whole. For additional information about risks, see "More Information About
Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class C Shares because it has not
completed a full calendar year of operations.
This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.
The bar chart does not reflect sales charges. If sales charges had been
reflected, returns would be less than those shown below.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1990 4.65%
1991 8.45%
1992 9.74%
1993 11.76%
1994 -4.58%
1995 14.05%
1996 -1.07%
1997 6.57%
1998 5.85%
1999 -0.91%
</TABLE>
Page 77 of 150
<PAGE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
5.44% -4.13%
(3/31/95) (3/31/94)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 3.13%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN 10 YEAR MUNICIPAL BOND INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS 10 YEARS
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA NATIONAL TAX EXEMPT BOND FUND -0.91% 4.75% 5.29%
LEHMAN 7 YEAR MUNICIPAL BOND INDEX -0.14% 6.36% 6.60%
LEHMAN 10 YEAR MUNICIPAL BOND INDEX(2) -1.24% 7.12% 7.10%
</TABLE>
(1)The Lehman 7 Year Municipal Bond Index is a broad based total return index.
The bonds are all investment grade, fixed rate with maturities of 7-8 years
and are selected from issues larger than $50 million dated since January
1984. The Fund changed to this index as its benchmark because it better
reflects the range of maturities within the Fund's portfolio than the Lehman
10 Year Municipal Bond Index, the Fund's prior benchmark.
(2)The Lehman 10 Year Municipal Bond Index is a broad based return index. The
bonds are all investment grade, fixed rate with maturities of 9-12 years and are
selected from issues larger than $50 million dated since January 1984.
The performance of the Armada National Tax Exempt Bond Fund for the period prior
to June 22, 1998 is represented by the performance of a common trust fund
("common trust fund") which operated prior to the effectiveness of the
registration statement of the National Tax Exempt Bond Fund. The common trust
fund was advised by National City Bank, an affiliate of the Adviser. At the time
of the National Tax Exempt Bond Fund's inception, the common trust fund was
operated using materially equivalent investment objectives, policies, guidelines
and restrictions as the Fund. In connection with the National Tax Exempt Bond
Fund's commencement of operations, on June 22, 1998, the common trust fund
transferred its assets to the Fund. At the time of the transfer, the Adviser did
not manage any other collective investment or common trust funds using
materially equivalent investment objectives, policies, guidelines and
restrictions to those of the National Tax Exempt Bond Fund.
The common trust fund was not open to the public generally, nor registered under
the Investment Company Act of 1940 (the "1940 Act") or subject to certain
restrictions that are imposed by the 1940 Act and the Internal Revenue Code. If
the common trust fund had been registered under the 1940 Act, performance may
have been adversely affected. Performance quotations of the common trust fund
represent past performance of the Adviser managed common trust fund, which are
separate and distinct from the National Tax Exempt Bond Fund; do not represent
past performance of the Fund; and should not be considered as representative of
future results of the Fund.
FUND FEES AND EXPENSES
SEE PAGE 56 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 78 of 150
<PAGE>
ARMADA OHIO TAX EXEMPT BOND FUND
FUND SUMMARY
INVESTMENT GOAL Current income exempt from federal
income and, to the extent possible, Ohio
personal income taxes, consistent with
conservation of capital
INVESTMENT FOCUS Ohio municipal securities
SHARE PRICE VOLATILITY Medium
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in municipal obligations that
pay interest that is exempt from federal
income and Ohio personal income taxes
INVESTOR PROFILE Investors seeking total return and who
are willing to accept some risks of
price volatility
PRINCIPAL INVESTMENT STRATEGIES
The Armada Ohio Tax Exempt Bond Fund's investment objective is to provide
current income exempt from federal income tax and, to the extent possible, from
Ohio personal income tax, as is consistent with the conservation of capital. The
investment objective may be changed without a shareholder vote.
The Fund normally invests at least 80% of its total assets in debt securities
issued by the State of Ohio, its political subdivisions and their agencies
and instrumentalities that generate income exempt from federal income and
Ohio personal income taxes (Ohio municipal securities). However, some Fund
dividends may be taxable, such as dividends that are derived from occasional
taxable investments and distributions of short and long-term capital gains.
Also, Fund dividends may be subject to state and local income taxes for any
shareholders who are not Ohio residents. The Fund may invest up to 20% of its
total assets in private activity bonds which may be treated as a specific tax
preference item under the federal alternative minimum tax. In selecting
securities for the Fund to buy and sell, the Adviser considers each
security's yield and total return potential relative to other available
municipal securities.
The Fund invests primarily in investment grade securities, which are those rated
in one of the four highest rating categories by a major rating agency, or
determined by the Adviser to be of equivalent quality. If a security is
downgraded, the Adviser will re-evaluate whether continuing to hold the security
is in the best interest of shareholders. The Fund ordinarily will maintain an
average weighted effective maturity of between three and ten years.
Page 79 of 150
<PAGE>
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
The Fund is also subject to the risk that tax exempt municipal securities may
underperform other segments of the fixed income markets or the fixed income
markets as a whole.
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund's focus of investing in securities of issuers located in Ohio subjects
the Fund to economic and government policies of that state.
The Fund is non-diversified, which means that it may invest in the securities of
relatively few issuers. As a result, the Fund may be more susceptible than a
diversified fund to a single adverse economic or political and regulatory
occurrences affecting one or more of these issuers, and may experience increased
volatility due to its investments in those securities. For additional
information about risks, see "More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class B or Class C Shares because Class
B Shares have not yet commenced operations and Class C Shares has not completed
a full calendar year of operations.
This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.
Page 80 of 150
<PAGE>
The bar chart does not reflect sales charges. If sales charges had been
reflected, returns would be less than those shown below.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1992 6.82%
1993 10.14%
1994 -4.19%
1995 13.37%
1996 3.92%
1997 7.35%
1998 5.25%
1999 -1.14%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
5.04% -4.89%
(3/31/95) (3/31/94)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 3.01%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN 7 YEAR MUNICIPAL BOND INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS SINCE INCEPTION
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA OHIO TAX EXEMPT BOND FUND -1.14% 5.65% 5.31%(1)
LEHMAN 7 YEAR MUNICIPAL BOND INDEX(3) -0.14% 6.36% 6.41%(2)
</TABLE>
(1)Since April 15, 1991.
(2)Since March 31, 1991.
(3)The Lehman 7 Year Municipal Bond Index is a broad based total return
index. The bonds are all investment grade, fixed rate with maturities of 7-8
years and are selected from issues larger than $50 million dated since January
1984.
FUND FEES AND EXPENSES
SEE PAGE 56 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 81 of 150
<PAGE>
ARMADA PENNSYLVANIA MUNICIPAL BOND FUND
FUND SUMMARY
INVESTMENT GOAL Current income exempt from both regular
federal income tax and, to the extent
possible, Pennsylvania personal income
tax as is consistent with conservation
of capital
INVESTMENT FOCUS Pennsylvania municipal securities
SHARE PRICE VOLATILITY Medium
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in municipal obligations that
pay interest that is exempt from federal
income and Pennsylvania personal income
taxes
INVESTOR PROFILE Investors seeking tax exempt current
income, and who are willing to accept
moderate share price volatility
PRINCIPAL INVESTMENT STRATEGIES
The Armada Pennsylvania Municipal Bond Fund's investment objective is to provide
current income exempt from regular federal income tax and, to the extent
possible, from Pennsylvania personal income tax as is consistent with
conservation of capital. The investment objective may be changed without a
shareholder vote.
The Fund normally invests at least 80% of its net assets in debt securities
issued by the Commonwealth of Pennsylvania, its political subdivisions and
their agencies and instrumentalities that generate income exempt from federal
income and Pennsylvania personal income taxes (Pennsylvania municipal
securities). However, some Fund dividends may be taxable, such as dividends
that are derived from occasional taxable investments and distributions of
short and long-term capital gains. Also, Fund dividends may be subject to
state and local income taxes for any shareholders who are not Pennsylvania
residents.
The Fund may invest up to 100% of its total assets in private activity bonds
which may be treated as a specific tax preference item under the federal
alternative minimum tax. In selecting securities for the Fund to buy and
sell, the Adviser considers each security's yield and total return potential
relative to other available municipal securities.
The Fund primarily invests in investment grade securities, which are those rated
in one of the four highest rating categories by a major rating agency, or
determined by the Adviser to be of equivalent quality. If a security is
downgraded, the Adviser will re-evaluate whether continuing to hold the security
is in the best interest of shareholders. The Fund ordinarily will maintain an
average weighted portfolio maturity of between three and ten years.
Page 82 of 150
<PAGE>
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
The Fund is also subject to the risk that tax free municipal securities may
underperform other segments of the fixed income markets or the fixed income
markets as a whole.
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund's focus of investments in securities of issuers located in Pennsylvania
subjects the Fund to economic conditions and government policies within that
state.
The Fund is non-diversified, which means that it may invest in the securities of
relatively few issuers. As a result, the Fund may be more susceptible than a
diversified fund to a single adverse economic or political and regulatory
occurrences affecting one or more of these issuers, and may experience increased
volatility due to its investments in those securities. For additional
information about risks, see "More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class B or Class C Shares because Class
B Shares have not yet commenced operations and Class C Shares has not completed
a full calendar year of operations.
This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.
Page 83 of 150
<PAGE>
The bar chart does not reflect sales charges. If sales charges had been
reflected, returns would be less than those shown below.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1997 6.83%
1998 5.62%
1999 -1.05%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
2.88% -1.85%
(9/30/98) (6/30/99)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 2.95%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN 7 YEAR MUNICIPAL BOND INDEX.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------------------
<S> <C> <C>
ARMADA PENNSYLVANIA MUNICIPAL BOND FUND -1.05% 4.26%(1)
LEHMAN 7 YEAR MUNICIPAL BOND INDEX(3) -0.14% 5.12%(2)
</TABLE>
(1)Since September 11, 1996.
(2)Since August 31, 1996.
(3)The Lehman 7 Year Municipal Bond Index is a broad based total return
index. The bonds are all investment grade, fixed rate with maturities of 7-8
years and are selected from issues larger than $50 million dated since January
1984.
FUND FEES AND EXPENSES
SEE PAGE 56 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 84 of 150
<PAGE>
FUND FEES AND EXPENSES OF THE ARMADA TAX FREE BOND FUNDS
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE RESPECTIVE FUNDS.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
Michigan Municipal Bond Fund National Tax Exempt Bond Fund Ohio Tax Exempt Bond Fund
Class A Class B Class C Class A Class B Class C Class A Class B Class C
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales 4.75% None None 4.75% None None 3.00% None None
Charge (Load)
Imposed on
Purchases (as a
percentage of
offering price)(1)
Maximum Deferred None 5.00%(2) 1.00%(3) None 5.00%(2) 1.00%(3) None 5.00%(2) 1.00%(3)
Sales Charge
(Load) (as a
percentage of net
asset value)
Maximum Sales None None None None None None None None None
Charge (Load)
Imposed on
Reinvested
Dividends and
other
Distributions (as
a percentage of
offering price)
Redemption Fee None None None None None None None None None
(as a percentage
of amount
redeemed, if
applicable)
Exchange Fee None None None None None None None None None
</TABLE>
Page 85 of 150
<PAGE>
<TABLE>
<CAPTION>
Pennsylvania Municipal Bond Fund
Class A Class B Class C
----------------------------------------------------
<S> <C> <C> <C>
Maximum Sales 3.00% None None
Charge (Load)
Imposed on
Purchases (as a
percentage of
offering price)(1)
Maximum Deferred None 5.00%(2) 1.00%(3)
Sales Charge
(Load) (as a
percentage of net
asset value)
Maximum Sales None None None
Charge (Load)
Imposed on
Reinvested
Dividends and
other
Distributions (as
a percentage of
offering price)
Redemption Fee None None None
(as a percentage
of amount
redeemed, if
applicable)
Exchange Fee None None None
</TABLE>
Page 86 of 150
<PAGE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Class A Shares(4)
<TABLE>
<CAPTION>
National Tax Exempt Ohio Tax Exempt Bond Pennsylvania Municipal
Michigan Municipal Bond Fund Bond Fund Fund Bond Fund
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Advisory 0.55% 0.55% 0.55% 0.55%
Fees
Distribution and 0.10% 0.10% 0.10% 0.10%
Service (12b-1) Fees
Other Expenses 0.28% 0.26% 0.25% 0.29%
----- ----- ----- -----
Total Annual Fund 0.93%(5) 0.91%(6) 0.90%(6) 0.94%(6)
Operating Expenses(5)
Class B Shares(4)
<CAPTION>
National Tax Exempt Ohio Tax Exempt Bond Pennsylvania Municipal
Michigan Municipal Bond Fund Bond Fund Fund Bond Fund
----------------------------------------------------------------------------------------------------------------------------- -
<S> <C> <C> <C> <C>
Investment Advisory 0.55% 0.55% 0.55% 0.55%
Fees
Distribution and 0.85% 0.85% 0.85% 0.85%
Service (12b-1) Fees
Other Expenses 0.18% 0.16% 0.15% 0.19%
----- ----- ----- -----
Total Annual Fund 1.58%(5) 1.56%(6) 1.55% 1.59%
Operating Expenses(5)
Class C Shares(4)
<CAPTION>
National Tax Exempt Ohio Tax Exempt Bond Pennsylvania Municipal
Michigan Municipal Bond Fund Bond Fund Fund Bond Fund
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Advisory 0.55% 0.55% 0.55% 0.55%
Fees
Distribution and 1.00% 1.00% 1.00% 1.00%
Service (12b-1) Fees
Other Expenses 0.18% 0.16% 0.15% 0.19%
----- ----- ----- -----
Total Annual Fund 1.73% 1.71%(6) 1.70% 1.74%(6)
Operating Expenses
</TABLE>
(1)This sales charge varies depending upon how much you invest. See "Sales
Charges."
(2)This amount applies to redemptions during the first and second years. The
deferred sales charge decreases to 4.0%, 3.0% and 2.0% for redemptions made
during the third through fifth years, respectively. No deferred sales charge is
charged after the fifth year. For more information see "Contingent Deferred
Sales Charges."
(3)A contingent deferred sales charge is charged only with respect to Class C
Shares redeemed prior to eighteen months from the date of purchase.
(4)The Trust has implemented plans imposing shareholder servicing fees with
respect to Class A, Class B and Class C Shares of each Fund. Pursuant to such
plans, the Trust enters into shareholder servicing agreements with certain
financial institutions under which they agree to provide shareholder
administrative services to their customers who beneficially own Class A,
Class B or Class C Shares in consideration for the payment of up to .10% (on
an annualized basis) of the net asset value of such Class A or Class B Shares
of the Funds and .25% of the net asset value of Class C Shares. Shareholder
servicing fees paid by Class A Shares are included in Other Expenses and fees
paid by Class B and Class C Shares are included in Distribution and Service
(12b-1) Fees in the table above. For further information concerning these
plans, see "Shareholder Services Plans" in the Statement of Additional
Information.
(5)The Adviser and Distributor each expects to waive fees for the Michigan
Municipal Bond Fund so that total operating expenses for Class A, Class B
and Class C Shares will be 0.72%, 1.42% and 1.73%, respectively. These fee
waivers remain in place as of the date of the prospectus, but the Adviser
and/or Distributor may discontinue all or part of these waivers at any time.
(6)Each of these Funds' total actual annual operating expenses for the Class
A, Class B and Class C Shares, as applicable, for the most recent fiscal year
were less than the amounts shown above because the Adviser and Distributor
each waived a portion of the fees in order to keep total operating expenses
at a specified level. With these fee waivers, the Fund's actual total
operating expenses for Class A, Class B and Class C Shares were, respectively:
Page 87 of 150
<PAGE>
<TABLE>
<S> <C> <C> <C>
National Tax Exempt Bond Fund 0.63% 1.34% 1.49%
Ohio Tax Exempt Bond Fund 0.61% N/A N/A
Pennsylvania Municipal Bond Fund 0.63% N/A 1.51%
</TABLE>
The Adviser and Distributor each expects to continue these waivers so that
total operating expenses for Class A, Class B and Class C Shares, as
applicable, for the current fiscal year will be as follows. These fee waivers
remain in place as of the date of this prospectus, but the Adviser and/or
Distributor may discontinue all or part of these waivers at any time.
<TABLE>
<S> <C> <C> <C>
National Tax Exempt Bond Fund 0.71% 1.41% 1.56%
Ohio Tax Exempt Bond Fund 0.70% 1.40% 1.55%
Pennsylvania Municipal Bond Fund 0.71% 1.44% 1.59%
</TABLE>
For more information about these fees, see "Investment Adviser, Sub-Adviser and
Investment Team" and "Distribution of Fund Shares."
Page 88 of 150
<PAGE>
EXAMPLE
These Examples are intended to help you compare the cost of investing in the
Armada Tax Free Bond Funds with the cost of investing in other mutual funds.
The Examples assume that you invest $10,000 in a Fund for the time periods
indicated and that you sell your shares at the end of the period.
The Examples also assume that each year your investment has a 5% return,
Fund expenses remain the same and your Class B Shares convert to Class A
Shares after eight years. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in a Fund would be:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michigan Municipal Bond
Fund
-------------------------------------------------------------------------------------------------------------------
Class A Shares $565 $757 $965 $1,564
-------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $661 $899 $1,060 $1,702
-------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $161 $499 $860 $1,702
-------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $276 $545 $939 $2,041
-------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $176 $545 $939 $2,041
-------------------------------------------------------------------------------------------------------------------
National Tax Exempt Bond
Fund
-------------------------------------------------------------------------------------------------------------------
Class A Shares $565 $751 $955 $1,541
-------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $659 $893 $1,050 $1,680
-------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $159 $493 $850 $1,680
-------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $274 $539 $928 $2,019
-------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $174 $539 $928 $2,019
-------------------------------------------------------------------------------------------------------------------
Ohio Tax Exempt Bond
Fund
-------------------------------------------------------------------------------------------------------------------
Class A Shares $389 $578 $784 $1,375
-------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $658 $890 $1,045 $1,669
-------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $158 $490 $845 $1,669
-------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $273 $536 $923 $2,009
-------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $173 $536 $923 $2,009
-------------------------------------------------------------------------------------------------------------------
Pennsylvania Municipal
Bond Fund
-------------------------------------------------------------------------------------------------------------------
Class A Shares $393 $591 $804 $1,420
-------------------------------------------------------------------------------------------------------------------
Class B Shares(1) $662 $902 $1,066 $1,713
-------------------------------------------------------------------------------------------------------------------
Class B Shares(2) $162 $502 $866 $1,713
-------------------------------------------------------------------------------------------------------------------
Class C Shares(1) $277 $548 $944 $2,052
-------------------------------------------------------------------------------------------------------------------
Class C Shares(2) $177 $548 $944 $2,052
-------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) If you sell your shares at the end of the period.
(2) If you do not sell your shares at the end of the period.
Page 89 of 150
<PAGE>
MORE INFORMATION ABOUT RISK
The following chart indicates the specific risks associated with each of the
funds. A description of these risks can be found on the following pages.
EQUITY RISK-- Equity securities include public and privately issued equity
securities, common and preferred stocks, warrants, rights to subscribe to common
stock and convertible securities, as well as instruments that attempt to track
the price movement of equity indices. Investments in equity securities and
equity derivatives in general are subject to market risks that may cause their
prices to fluctuate over time. The value of securities convertible into equity
securities, such as warrants or convertible debt, is also affected by prevailing
interest rates, the credit quality of the issuer and any call provision.
Fluctuations in the value of equity securities in which a mutual fund invests
will cause a fund's net asset value to fluctuate. An investment in a portfolio
of equity securities may be more suitable for long-term investors who can bear
the risk of these share price fluctuations.
Armada Core Equity Fund
Armada Equity Growth Fund
Armada Equity Income Fund
Armada Equity Index Fund
Armada International Equity Fund
Armada Large Cap Ultra Fund
Armada Mid Cap Growth Fund
Armada Small Cap Growth Fund
Armada Small Cap Value Fund
Armada Tax Managed Equity Fund
Armada Balanced Allocation Fund
CONVERTIBLE SECURITIES RISK -- Convertible securities have characteristics of
both fixed income and equity securities. Fund The value of the convertible
security tends to move with the market value of the underlying stock, but may
also be affected by interest rates, credit quality of the issuer and any call
provisions.
Armada Core Equity Fund
Armada Equity Growth Fund
Armada Equity Income
Armada International Equity Fund
Armada Large Cap Ultra Fund
Armada Mid Cap Growth Fund
Armada Tax Managed Equity Fund
Armada Balanced Allocation Fund
Armada Strategic Income Bond Fund
FIXED INCOME RISK-- The market value of fixed income investments change in
response to interest rate changes and other factors. During periods of falling
interest rates, the values of outstanding fixed income securities generally
rise. Moreover, while securities with longer maturities tend to produce higher
yields, the prices of longer maturity securities are also subject to greater
market fluctuations as a result of changes in interest rates. In addition to
these fundamental risks, different types of fixed income securities may be
subject to the following additional risks:
Armada Balanced Allocation Fund
Armada Bond Fund
Armada GNMA Fund
Armada Intermediate Bond Fund
Armada Limited Maturity Bond Fund
Armada Strategic Income Bond Fund
Armada Total Return Advantage Fund
Armada U.S. Government Income Fund
Armada Michigan Municipal Bond Fund
Armada National Tax Exempt Bond Fund
Armada Ohio Tax Exempt Bond Fund
Armada Pennsylvania Municipal Bond Fund
Page 90 of 150
<PAGE>
CALL RISK -- During periods of falling interest rates, certain debt obligations
with high interest rates may be prepaid (or "called") by the issuer prior to
maturity. This may cause a Fund's average weighted maturity to fluctuate, and
may require a Fund to invest the resulting proceeds at lower interest rates.
Armada Balanced Allocation Fund
Armada Bond Fund
Armada GNMA Fund
Armada Intermediate Bond Fund
Armada Limited Maturity Bond Fund
Armada Strategic Income Bond Fund
Armada Total Return Advantage Fund
Armada U.S. Government Income Fund
Armada Michigan Municipal Bond Fund
Armada National Tax Exempt Bond Fund
Armada Ohio Tax Exempt Bond Fund
Armada Pennsylvania Municipal Bond Fund
CREDIT RISK -- The possibility that an issuer will be unable to make timely
payments of either principal or interest.
Armada Balanced Allocation Fund
Armada Bond Fund
Armada GNMA Fund
Armada Intermediate Bond Fund
Armada Limited Maturity Bond Fund
Armada Strategic Income Bond Fund
Armada Total Return Advantage Fund
Armada U.S. Government Income Fund
Armada Michigan Municipal Bond Fund
Armada National Tax Exempt Bond Fund
Armada Ohio Tax Exempt Bond Fund
Armada Pennsylvania Municipal Bond Fund
EVENT RISK -- Securities may suffer declines in credit quality and market value
due to issuer restructurings or other factors. This risk should be reduced
because of the diversification provided by the Fund's multiple holdings.
Armada Balanced Allocation Fund
Armada Bond Fund
Armada GNMA Fund
Armada Intermediate Bond Fund
Armada Limited Maturity Bond Fund
Armada Strategic Income Bond Fund
Armada Total Return Advantage Fund
Armada Michigan Municipal Bond Fund
Armada National Tax Exempt Bond Fund
Armada Ohio Tax Exempt Bond Fund
Armada Pennsylvania Municipal Bond Fund
HIGH-YIELD, LOWER RATED SECURITIES RISK (or "junk bonds") are subject to
additional risks associated with investing in high-yield securities,
including:
Armada Strategic Income Bond Fund
Armada Total Return Advantage Fund
- High-yield, lower rated securities involve greater risk of default or price
declines than investments in investment grade securities (E.G., securities
rated BBB or
Page 91 of 150
<PAGE>
higher by S&P or Baa or higher by Moody's) due to changes in the issuer's
creditworthiness.
- The market for high-yield, lower rated securities may be thinner and less
active, causing market price volatility and limited liquidity in the
secondary market. This may limit the ability of a Fund to sell these
securities at their fair market values either to meet redemption requests,
or in response to changes in the economy or the financial markets.
- Market prices for high-yield, lower rated securities may also be affected
by investors' perception of the issuer's credit quality and the outlook for
economic growth. Thus, prices for high-yield, lower rated securities may
move independently of interest rates and the overall bond market.
- The market for high-yield, lower rated securities may be adversely affected
by legislative and regulatory developments.
MUNICIPAL ISSUER RISK-- There may be economic or political changes that impact
the ability of municipal issuers to repay principal and to make interest
payments on municipal securities. Changes to the financial condition or credit
rating of municipal issuers may also adversely affect the value of the Fund's
municipal securities. Constitutional or legislative limits on borrowing by
municipal issuers may result in reduced supplies of municipal securities.
Moreover, certain municipal securities are backed only by a municipal issuer's
ability to levy and collect taxes.
Armada Michigan Municipal Bond Fund
Armada National Tax Exempt Bond Fund
Armada Ohio Tax Exempt Bond Fund
Armada Pennsylvania Municipal Bond Fund
In addition, the Fund's concentration of investments in issuers located in a
single state makes the Fund more susceptible to adverse political or economic
developments affecting that state. The Fund also may be riskier than mutual
funds that buy securities of issuers in numerous states.
Armada Michigan Municipal Bond Fund
Armada Ohio Tax Exempt Bond Fund
Armada Pennsylvania Municipal Bond Fund
Page 92 of 150
<PAGE>
ASSET-BACKED SECURITIES RISK -- Asset-backed securities are fixed income
securities representing an interest in a pool of shorter-term loans such as
automobile loans, home equity loans, equipment or computer leases or credit card
receivables. The payments from the loans are passed through to the security
holder. The loans underlying asset-backed securities tend to have prepayment
rates that do not vary with interest rates. In addition, the short-term nature
of the loans reduces the impact of any change in prepayment level. However, it
is possible that prepayments will alter the cash flow on asset-backed securities
and it is not possible to determine in advance the actual final maturity date or
average life. Faster prepayment will shorten the average life and slower
prepayment will lengthen it, affecting the price volatility of the security.
However, it is possible to determine what the range of that movement could be
and to calculate the effect that it will have on the price of the security.
Armada Balanced Allocation Fund
Armada Bond Fund
Armada GNMA Fund
Armada Intermediate Bond Fund
Armada Limited Maturity Bond Fund
Armada Strategic Income Bond Fund
Armada Total Return Advantage Fund
Armada U.S. Government Income Fund
MORTGAGE-BACKED SECURITIES RISK -- Mortgage-backed securities are fixed
income securities representing an interest in a pool of underlying mortgage
loans. They are sensitive to changes in interest rates, but may respond to
these changes differently from other fixed income securities due to the
possibility of prepayment of the underlying mortgage loans. As a result, it
may not be possible to determine in advance the actual maturity date or
average life of a mortgage-backed security. Rising interest rates tend to
discourage refinancings, with the result that the average life and volatility
of the security will increase exacerbating its decrease in market price. When
interest rates fall, however, mortgage-backed securities may not gain as much
in market value because of the expectation of additional mortgage prepayments
that must be reinvested at lower interest rates. Prepayment risk may make it
difficult to calculate the average maturity of a portfolio of mortgage-backed
securities and, therefore, to assess the volatility risk of that portfolio.
Armada Balanced Allocation Fund
Armada Bond Fund
Armada GNMA Fund
Armada Intermediate Bond Fund
Armada Limited Maturity Bond Fund
Armada Strategic Income Bond Fund
Armada Total Return Advantage Fund
Armada U.S. Government Income Fund
Page 93 of 150
<PAGE>
FOREIGN SECURITY RISKS-- Investments in securities of foreign companies or
governments can be more volatile than investments in U.S. companies or
governments. Diplomatic, political, or economic developments, including
nationalization or appropriation, could affect investments in foreign countries.
Foreign securities markets generally have less trading volume and less liquidity
than U.S. markets. In addition, the value of securities denominated in foreign
currencies, and of dividends from such securities, can change significantly when
foreign currencies strengthen or weaken relative to the U.S. dollar. Foreign
companies or governments generally are not subject to uniform accounting,
auditing, and financial reporting standards comparable to those applicable to
domestic U.S. companies or governments. Transaction costs are generally higher
than those in the U.S. and expenses for custodial arrangements of foreign
securities may be somewhat greater than typical expenses for custodial
arrangements of similar U.S. securities. Investment in sovereign debt
obligations by certain Funds involves risks not present in debt obligations of
corporate issuers. The issuer of the debt or the governmental authorities that
control the repayment of the debt may be unable or unwilling to repay principal
or interest when due in accordance with the terms of such debt, and a Fund may
have limited recourse to compel payment in the event of a default. Periods of
economic uncertainty may result in volatility of market prices of sovereign
debt, and in turn a Fund's NAV, to a greater extent than the volatility inherent
in debt obligations of U.S. issuers. Some foreign governments levy withholding
taxes against dividend and interest income. Although in some countries a portion
of these taxes are recoverable, the non-recovered portion will reduce the income
received from the securities comprising the portfolio.
Armada Core Equity Fund
Armada Equity Growth Fund
Armada Equity Income Fund
Armada International Equity Fund
Armada Large Cap Ultra Fund
Armada Mid Cap Growth Fund
Armada Small Cap Growth Fund
Armada Small Cap Value Fund
Armada Tax Managed Equity Fund
Armada Balanced Allocation Fund
Armada Intermediate Bond Fund
Armada Limited Maturity Bond Fund
Armada Strategic Income Bond Fund
Armada Total Return Advantage Fund
Armada U.S. Government Income Fund
In addition to these risks, certain foreign securities may be subject to the
following additional risks factors:
Page 94 of 150
<PAGE>
CURRENCY RISK -- Investments in foreign securities denominated in foreign
currencies involve additional risks, including:
- The value of a Fund's assets measured in U.S. dollars may be affected by
changes in currency rates and in exchange control regulations.
- A Fund may incur substantial costs in connection with conversions between
various currencies.
- A Fund may be unable to hedge against possible variations in foreign
exchange rates or to hedge a specific security transaction or portfolio
position.
- Only a limited market currently exists for hedging transactions relating to
currencies in certain emerging markets.
Armada Core Equity Fund
Armada Equity Growth Fund
Armada Equity Income Fund
Armada International Equity Fund
Armada Large Cap Ultra Fund
Armada Mid Cap Growth Fund
Armada Small Cap Growth Fund
Armada Small Cap Value Fund
Armada Tax Managed Equity Fund
Armada Balanced Allocation Fund
Armada Intermediate Bond Fund
Armada Limited Maturity Bond Fund
Armada Strategic Income Bond Fund
Armada Total Return Advantage Fund
Armada U.S. Government Income Fund
HEDGING RISK -- Hedging is a strategy designed to offset investment risks.
Hedging activities include, among other things, the use of forwards, options and
futures. There are risks associated with hedging activities, including:
- The success of a hedging strategy may depend on an ability to predict
movements in the prices of individual securities, fluctuations in markets,
and movements in interest and currency exchange rates.
- There may be an imperfect or no correlation between the changes in market
value of the securities held by the Fund or the currencies in which those
securities are denominated and the prices of forward contracts, futures and
options on futures.
- There may not be a liquid secondary market for a futures contract or
option.
- Trading restrictions or limitations may be imposed by an exchange, and
government regulations may restrict trading in currencies, futures
contracts and options.
Armada Core Equity Fund
Armada Equity Growth Fund
Armada Equity Income Fund
Armada Equity Index Fund
Armada International Equity Fund
Armada Large Cap Ultra Fund
Armada Mid Cap Growth Fund
Armada Small Cap Growth Fund
Armada Small Cap Value Fund
Armada Tax Managed Equity Fund
Armada Balanced Allocation Fund
Armada Bond Fund
Armada GNMA Fund
Armada Intermediate Bond Fund
Armada Limited Maturity Bond Fund
Armada Strategic Income Bond Fund
Armada Total Return Advantage Fund
Armada U.S. Government Income Fund
Page 95 of 150
<PAGE>
LEVERAGING RISK -- Leveraging activities include, among other things, borrowing
and the use of short sales, options and futures. There are risks associated with
leveraging activities, including:
- A fund experiencing losses over certain ranges in the market that exceed
losses experienced by a non-leveraged Fund.
- There may be an imperfect or no correlation between the changes in market
value of the securities held by a fund and the prices of futures and
options on futures.
- Although the funds will only purchase exchange-traded futures and options,
due to market conditions there may not be a liquid secondary market for a
futures contract or option. As a result, the funds may be unable to close
out their futures or options contracts at a time which is advantageous.
- Trading restrictions or limitations may be imposed by an exchange, and
government regulations may restrict trading in futures contracts and
options.
Armada Core Equity Fund
Armada Equity Growth Fund
Armada Equity Income Fund
Armada Equity Index Fund
Armada International Equity Fund
Armada Large Cap Ultra Fund
Armada Mid Cap Growth Fund
Armada Small Cap Growth Fund
Armada Small Cap Value Fund
Armada Tax Managed Equity Fund
Armada Balanced Allocation Fund
Armada GNMA Fund
Armada Intermediate Bond Fund
Armada Limited Maturity Bond Fund
Armada Strategic Income Bond Fund
Armada Total Return Advantage Fund
Armada U.S. Government Income Fund
In addition, the following leveraged instruments are subject to certain specific
risks:
DERIVATIVES RISK -- The Funds use derivatives to attempt to achieve their
investment objectives, while at the same time maintaining liquidity. To
collateralize (or cover) these derivatives transactions, the Funds hold cash or
U.S. government securities.
Armada Core Equity Fund
Armada Equity Growth Fund
Armada Equity Income Fund
Armada Equity Index Fund
Armada International Equity Fund
Armada Large Cap Ultra Fund
Armada Mid Cap Growth Fund
Armada Small Cap Growth Fund
Armada Small Cap Value Fund
Armada Tax Managed Equity Fund
Armada Balanced Allocation Fund
Armada Bond Fund
Armada GNMA Fund
Armada Intermediate Bond Fund
Armada Limited Maturity Bond Fund
Armada Strategic Income Bond Fund
Armada Total Return Advantage Fund
Armada U.S. Government Income Fund
Page 96 of 150
<PAGE>
FUTURES RISK -- Futures contracts and options on futures contracts provide
for the future sale by one party and purchase by another party of a specified
amount of a specific security at a specified future time and at a specified
price. An option on a futures contract gives the purchaser the right, in
exchange for a premium, to assume a position in a futures contract at a
specified exercise price during the term of the option. Index futures are
futures contracts for various indices that are traded on registered
securities exchanges.
The Funds may use futures contracts and related options for bona fide hedging
purposes to offset changes in the value of securities held or expected to be
acquired. They may also be used to gain exposure to a particular market or
instrument, to create a synthetic money market position, and for certain other
tax-related purposes. The Funds will only enter into futures contracts traded on
a national futures exchange or board of trade.
Armada Core Equity Fund
Armada Equity Growth Fund
Armada Equity Income Fund
Armada Equity Index Fund
Armada International Equity Fund
Armada Large Cap Ultra Fund
Armada Mid Cap Growth Fund
Armada Small Cap Growth Fund
Armada Small Cap Value Fund
Armada Tax Managed Equity Fund
Armada Balanced Allocation Fund
Armada Bond Fund
Armada GNMA Fund
Armada Limited Maturity Bond Fund
Armada Strategic Income Bond Fund
Armada Total Return Advantage Fund
Armada U.S. Government Income Fund
OPTIONS RISK -- The buyer of an option acquires the right to buy (a call
option) or sell (a put option) a certain quantity of a security (the
underlying security) or instrument at a certain price up to a specified point
in time. The seller or writer of an option is obligated to sell (a call
option) or buy (a put option) the underlying security. When writing (selling)
call options on securities, a Fund may cover its position by owning the
underlying security on which the option is written or by owning a call option
on the underlying security. Alternatively, a Fund may cover its position by
maintaining in a segregated account cash or liquid securities equal in value
to the exercise price of the call option written by the Fund.
Armada Core Equity Fund
Armada Equity Growth Fund
Armada Equity Income Fund
Armada International Equity Fund
Armada Large Cap Ultra Fund
Armada Mid Cap Growth Fund
Armada Small Cap Growth Fund
Armada Small Cap Value Fund
Armada Tax Managed Equity Fund
Armada Balanced Allocation Fund
Armada Bond Fund
Armada GNMA Fund
Armada Limited Maturity Bond Fund
Armada Strategic Income Bond Fund
Armada Total Return Advantage Fund
Armada U.S. Government Income Fund
Because option premiums paid or received by the Funds are small in relation to
the market value of the investments underlying the options, buying and selling
put and call options can be more speculative than investing directly in
securities.
Page 97 of 150
<PAGE>
SHORT SALES RISK -- Short sales are transactions in which a Fund sells a
security it does not own. To complete a short sale, a Fund must borrow the
security to deliver to the buyer. The Fund is then obligated to replace the
borrowed security by purchasing the security at the market price at the time
of replacement. This price may be more or less than the price at which the
security was sold by the Fund.
Armada Mid Cap Growth Fund
Armada Tax Managed Equity Fund
Armada Balanced Allocation Fund
Armada GNMA Fund
Armada U.S. Government Income Fund
REAL ESTATE INVESTING RISK -- The Fund's investments in the securities of
real estate investment trusts (REITs) and companies principally engaged in
the real estate industry may subject the Fund to the risks associated with
the direct ownership of real estate. Risks commonly associated with the
direct ownership of real estate include fluctuations in the value of
underlying properties and defaults by borrowers or tenants. In addition to
these risks, REITs are dependent on specialized management skills and some
REITs may have investments in relatively few properties, or in a small
geographic area or a single type of property. These factors may increase the
volatility of the Fund's investments in REITs.
Armada Equity Income Fund
Armada Mid Cap Growth Fund
Armada Small Cap Value Fund
Armada Intermediate Bond Fund
Armada Limited Maturity Bond Fund
REGIONAL RISK -- To the extent that a Fund's investments are focused in a
specific geographic region, the Fund may be subject to the political and other
developments affecting that region. Regional economies are often closely
interrelated, and political and economic developments affecting one region,
country or state often affect other regions, countries or states, thus
subjecting a Fund to additional risks.
Armada Michigan Municipal Bond Fund
Armada Ohio Tax Exempt Bond Fund
Armada Pennsylvania Municipal Bond Fund
TRACKING ERROR RISK -- Factors such as Fund expenses, imperfect correlation
between the Fund's investments and those of its benchmark, rounding of share
prices, changes to the benchmark, regulatory policies, and leverage, may affect
its ability to achieve perfect correlation. The magnitude of any tracking error
may be affected by a higher portfolio turnover rate. Because an index is just a
composite of the prices of the securities it represents rather than an actual
portfolio of those securities, an index will have no expenses. As a result, the
Fund, which will have expenses such as taxes, custody, management fees and other
operational costs, and brokerage, may not achieve its investment objective of
accurately correlating to its index.
Armada Equity Index Fund
Page 98 of 150
<PAGE>
MORE INFORMATION ABOUT FUND INVESTMENTS
In addition to the investments and strategies described in this prospectus, each
Fund also may invest in other securities, use other strategies and engage in
other investment practices. These investments and strategies, as well as those
described in this prospectus, are described in detail in our Statement of
Additional Information.
The investments and strategies described in this prospectus are those that we
use under normal conditions. During unusual economic, market, political or
other conditions, or for other temporary defensive or liquidity purposes,
each Fund may invest up to 100% of its assets in short-term high quality debt
instruments that would not ordinarily be consistent with a Fund's principal
investment strategies, which may prevent the Fund from achieving its
investment objective. A Fund will do so only if the Adviser or Sub-Adviser
believes that the risk of loss outweighs the opportunity for achieving a
Fund's investment objective. Of course, the Trust cannot guarantee that any
Fund will achieve its investment goal.
The Trust has applied for an order from the SEC that, if granted, would allow
the non-money market funds offered by the Trust to use cash balances that have
not been invested in portfolio securities and cash collateral from securities
lending programs to purchase shares of the money market funds offered by the
Trust. A non-money market fund will hold shares of money market funds only to
the extent that its total investment in the money market funds does not exceed
25% of its total assets.
INVESTMENT ADVISER, SUB-ADVISER AND INVESTMENT TEAMS
The Investment Adviser makes investment decisions for the Funds and continuously
reviews, supervises and administers each Fund's respective investment program.
The Investment Adviser oversees the Sub-Adviser to ensure compliance with the
Funds' investment policies and guidelines, and monitors the Sub-Adviser's
adherence to its investment style. The Adviser pays the Sub-Adviser out of the
Investment Advisory fees it receives (described on page [ ]).
The Board of Trustees of the Trust supervises the Adviser and establishes
policies that the Adviser must follow in its management activities.
National City Investment Management Company ("IMC"), with its principal offices
at 1900 East Ninth Street, Cleveland, Ohio 44114, serves as Adviser to the
Funds. On June 30, 2000, IMC had approximately $25.6 billion in assets under
management.
IMC utilizes a team approach for management of the Funds. No one person is
primarily responsible for making investment recommendations to the team. In the
case of the Armada Core Equity and the Armada Total Return Advantage Funds,
National Asset Management Corporation ("NAM"), with its principal offices at 101
South Fifth St., 5th Floor, Louisville, KY 40202, serves as Sub-Adviser and
manages these funds on a day-to-day basis. NAM selects, buys and sells the
securities of these Funds under the supervision of the Adviser and the Board of
Trustees.
The table below shows the IMC management teams responsible for each fund as well
as the advisory fees IMC received for each fund for the fiscal period ended May
31, 2000.
Page 99 of 150
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
ADVISORY FEES PAID AS A
PERCENTAGE OF AVERAGE NET ASSETS
MANAGEMENT TEAM/ FOR THE FISCAL YEAR ENDED MAY
FUND NAME INVESTMENT ADVISER 31, 2000
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
National Asset Management
Core Equity Fund Corporation (sub-adviser) 0.75%
--------------------------------------------------------------------------------------------------------------------------
Equity Growth Fund Equity Large Cap Core/Diversified 0.75%
Growth Team
--------------------------------------------------------------------------------------------------------------------------
Equity Income Fund Equity Value Team 0.75%
--------------------------------------------------------------------------------------------------------------------------
Equity Index Fund Equity Team 0.19%(1)
--------------------------------------------------------------------------------------------------------------------------
International Equity Fund International Equity Team 1.15%
--------------------------------------------------------------------------------------------------------------------------
Large Cap Ultra Fund Equity Large Cap Ultra Growth Team 0.75%
--------------------------------------------------------------------------------------------------------------------------
Mid Cap Growth Fund Small and Mid Cap Growth Team 1.00%
--------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Fund Small and Mid Cap Growth Team 1.00%
--------------------------------------------------------------------------------------------------------------------------
Small Cap Value Fund Equity Value Team 1.00%
--------------------------------------------------------------------------------------------------------------------------
Tax Managed Equity Fund Equity Large Cap Core/Diversified 0.75%
Growth Team
--------------------------------------------------------------------------------------------------------------------------
Balanced Allocation Fund Equity and Fixed Income Teams 0.75%
--------------------------------------------------------------------------------------------------------------------------
Bond Fund Taxable Fixed Income Team 0.55%
--------------------------------------------------------------------------------------------------------------------------
GNMA Fund Taxable Fixed Income Team 0.55%
--------------------------------------------------------------------------------------------------------------------------
Intermediate Bond Fund Taxable Fixed Income Team 0.40%
--------------------------------------------------------------------------------------------------------------------------
Limited Maturity Bond Fund Taxable Fixed Income Team 0.35%
--------------------------------------------------------------------------------------------------------------------------
Strategic Income Bond Fund Taxable Fixed Income Team 0.75%(2)
--------------------------------------------------------------------------------------------------------------------------
National Asset Management
Total Return Advantage Fund Corporation (sub-adviser) 0.35%
--------------------------------------------------------------------------------------------------------------------------
U.S. Government Income Fund Taxable Fixed Income Team 0.55%
--------------------------------------------------------------------------------------------------------------------------
Michigan Municipal Bond Fund Tax Exempt Fixed Income Team 0.55%
--------------------------------------------------------------------------------------------------------------------------
National Tax Exempt Bond Fund Tax Exempt Fixed Income Team 0.33%(1)
--------------------------------------------------------------------------------------------------------------------------
Ohio Tax Exempt Bond Fund Tax Exempt Fixed Income Team 0.33%(1)
--------------------------------------------------------------------------------------------------------------------------
Pennsylvania Municipal Bond Fund Tax Exempt Fixed Income Team 0.34%(1)
</TABLE>
(1)Adviser fee or waiver changed during the period.
(2)The Strategic Income Bond Fund had not yet commenced operations as of the
date of this Prospectus. The fee shown represents the contractual advisory fee
rate that the Fund will pay the Adviser.
Page 100 of 150
<PAGE>
Page 101 of 150
<PAGE>
PURCHASING, SELLING AND EXCHANGING FUND SHARES
This section tells you how to purchase, sell (sometimes called "redeem") and
exchange Class A, Class B and Class C Shares of the Funds.
The classes have different expenses and other characteristics.
CLASS A SHARES
- LOW 12B-1 FEES
- $500 MINIMUM INITIAL INVESTMENT - NO SUBSEQUENT MINIMUM
CLASS B SHARES (EXCHANGE ONLY FROM AN ARMADA NON-MONEY MARKET FUND OR
ARRANGE FOR A SYSTEMATIC EXCHANGE PROGRAM)
- CONTINGENT DEFERRED SALES CHARGE
- HIGHER 12B-1 FEES THAN CLASS A
- $500 MINIMUM INITIAL INVESTMENT - NO SUBSEQUENT MINIMUM
- CONVERTS TO CLASS A SHARES AFTER THE EIGHTH YEAR
CLASS C SHARES
- CONTINGENT DEFERRED SALES CHARGE
- HIGHER 12B-1 FEES THAN CLASS A
- $500 MINIMUM INITIAL INVESTMENT - NO SUBSEQUENT MINIMUM
- DOES NOT CONVERT TO ANY OTHER CLASS
For investors purchasing shares through a Planned Investment Program, the
minimum initial investment is $50.
Class A and Class B Shares are for individual and corporate investors and
retirement plans. Class C Shares are for individual investors and retirement
plans.
HOW TO PURCHASE FUND SHARES
You may purchase shares directly by:
- Internet
- Telephone
- Mail
- Automated Clearing House (ACH), or
- Wire
To purchase shares directly from us, please log on to our website at
www.armadafunds.com, or call 1-800-622-FUND (3863). To set up a new account with
a different registration, complete and send in an Armada Funds New Account
application. You may complete the application directly online through the Armada
Website. Please print, sign and mail when finished or, you may call
1-800-622-FUND (3863) to obtain an application. Unless you arrange to pay by
wire or ACH, write your check, payable in U.S. dollars, to "Armada Funds (Fund
name)." The Trust cannot accept third-party checks, credit cards, credit card
checks or cash.
Page 102 of 150
<PAGE>
To purchase shares by wire, call 1-800-622-FUND (3863) to set up your account to
accommodate wire transactions and to receive a wire control number to be
included in the body of the wire. To initiate your wire transaction, call your
depository institution. Federal funds (monies transferred from one bank to
another through the Federal Reserve system with same-day availability) should be
wired to:
State Street Bank and Trust Company
ABA #011000028
Account
(Account Registration)
(Account Number)
(Wire Control Number)
Note: Your bank may charge you a fee for this service.
BUYING OR SELLING SHARES THROUGH A FINANCIAL INTERMEDIARY
You may also buy shares through accounts with brokers and other institutions
that are authorized to place trades in Fund shares for their customers. If you
invest through an authorized institution, you will have to follow its
procedures. Your broker or institution may charge a fee for its services, in
addition to the fees charged by the Trust. You will also generally have to
address your correspondence or questions regarding a Fund to your institution.
Your investment representative is responsible for transmitting all subscription
and redemption requests, investment information, documentation and money to the
Fund on time. Certain investment representatives have agreements with the Funds
that allow them to enter confirmed purchase or redemption orders on behalf of
clients and customers. Under this arrangement, the investment representative
must send your payment to the Funds by the time they price their shares on the
following day. If your investment representative fails to do so, it may be
responsible for any resulting fees or losses.
GENERAL INFORMATION
You may purchase shares on any day that the New York Stock Exchange is open for
business (a "Business Day").
The Trust may reject any purchase order if it is determined that accepting the
order would not be in the best interests of the Fund or its shareholders.
The price per share (the offering price) will be the net asset value per share
(NAV) next determined after a Fund receives your purchase order plus, in the
case of Class A Shares, the applicable front-end sales charge. Daily NAV is
calculated for each of the Funds each Business Day at 4:00 p.m. Eastern time,
the regularly-scheduled close of normal trading on the New York Stock Exchange.
The deadline for submitting a purchase order to the Transfer Agent in order to
receive the current Business Day's NAV is 4:00 p.m. Eastern time.
So, for you to be eligible to receive dividends declared on the day you submit
your purchase order, a Fund generally must receive your order by the above
listed deadlines and federal funds (readily available funds) before 2:00 p.m.
Eastern time the following day.
Page 103 of 150
<PAGE>
HOW WE CALCULATE NAV
NAV for one Fund share is the value of that share's portion of the assets of the
Fund less liabilities and class expenses.
In calculating NAV, a Fund generally values its investment portfolio at market
price. In the event that a sale of a particular fixed income security is not
reported for that day, fixed income securities are priced at the mean between
the most recent quoted bid and asked prices. Unlisted securities and securities
traded on a national securities market for which market quotations are readily
available are valued at the mean between the most recent bid and asked prices.
In the event that a sale of a particular equity security is not reported for
that day, shares are priced at the last bid quotation. If market prices are
unavailable or a Fund thinks that they are unreliable, fair value prices may be
determined in good faith using methods approved by the Board of Trustees.
Some Funds hold securities that are listed on foreign exchanges. These
securities may trade on weekends or other days when the Funds do not calculate
NAV. As a result, the market value of these Fund's investments may change on
days when you cannot buy or sell shares of the Fund.
PLANNED INVESTMENT PROGRAM
With a $50 minimum initial investment and if you have a checking or savings
account with a bank, you may purchase Class A, Class B or Class C Shares
automatically through regular deductions from your account in amounts of at
least $50 per month.
You may arrange for participation in this program via the Internet at
www.armadafunds.com, by calling 1-800-622-FUND (3863) or by completing an
account application.
Page 104 of 150
<PAGE>
SALES CHARGES
FRONT-END SALES CHARGES -- CLASS A SHARES
The offering price of Class A Shares is the NAV next calculated after a Fund
receives your request, plus the front-end sales load.
The amount of any front-end sales charge included in your offering price varies,
depending on the amount of your investment:
CORE EQUITY, EQUITY GROWTH, EQUITY INCOME, INTERNATIONAL EQUITY, LARGE CAP
ULTRA, MID CAP GROWTH, SMALL CAP GROWTH, SMALL CAP VALUE AND TAX MANAGED EQUITY
FUNDS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
SALES CHARGE AS A % OF DEALERS' REALLOWANCE AS
OFFERING PRICE PER AS A % OF NET ASSET A % OF OFFERING PRICE
If your Investment is: SHARE VALUE PER SHARE PER SHARE
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.50 5.80 5.25
------------------------------------------------------------------------------------------------------------------------
$25,000 but less than $50,000 5.25 5.50 5.00
------------------------------------------------------------------------------------------------------------------------
$50,000 but less than $100,000 4.75 5.00 4.50
------------------------------------------------------------------------------------------------------------------------
$100,000 but less than $250,000 3.75 3.90 3.50
------------------------------------------------------------------------------------------------------------------------
$250,000 but less than $500,000 3.00 3.10 2.75
------------------------------------------------------------------------------------------------------------------------
$500,000 but less than $1,000,000 2.00 2.00 1.75
------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------
BALANCED ALLOCATION, BOND, GNMA, INTERMEDIATE BOND, STRATEGIC INCOME BOND FUND,
TOTAL RETURN ADVANTAGE, U.S. GOVERNMENT INCOME, MICHIGAN MUNICIPAL BOND AND
NATIONAL TAX EXEMPT BOND FUNDS
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
SALES CHARGE AS A % OF DEALERS' REALLOWANCE AS
OFFERING PRICE PER AS A % OF NET ASSET A % OF OFFERING PRICE
If your Investment is: SHARE VALUE PER SHARE PER SHARE
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 4.75 5.00 4.50
------------------------------------------------------------------------------------------------------------------------
$50,000 but less than $100,000 4.00 4.20 3.75
------------------------------------------------------------------------------------------------------------------------
$100,000 but less than $250,000 3.75 3.90 3.50
------------------------------------------------------------------------------------------------------------------------
$250,000 but less than $500,000 2.50 2.80 2.25
------------------------------------------------------------------------------------------------------------------------
$500,000 but less than $1,000,000 2.00 2.00 1.75
------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------
LIMITED MATURITY BOND FUND
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
SALES CHARGE AS A % OF DEALERS' REALLOWANCE AS
OFFERING PRICE PER AS A % OF NET ASSET A % OF OFFERING PRICE
If your Investment is: SHARE VALUE PER SHARE PER SHARE
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 2.75 2.83 2.50
------------------------------------------------------------------------------------------------------------------------
$100,000 but less than $250,000 1.75 1.78 1.50
------------------------------------------------------------------------------------------------------------------------
$250,000 but less than $500,000 1.00 1.01 0.75
------------------------------------------------------------------------------------------------------------------------
$500,000 but less than $1,000,000 0.50 0.50 0.25
------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------
Page 105 of 150
<PAGE>
EQUITY INDEX FUND
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
SALES CHARGE AS A % OF DEALERS' REALLOWANCE AS
OFFERING PRICE PER AS A % OF NET ASSET A % OF OFFERING PRICE
If your Investment is: SHARE VALUE PER SHARE PER SHARE
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 3.75 3.90 3.50
------------------------------------------------------------------------------------------------------------------------
$100,000 but less than $250,000 2.75 2.83 2.50
------------------------------------------------------------------------------------------------------------------------
$250,000 but less than $500,000 2.00 2.04 1.75
------------------------------------------------------------------------------------------------------------------------
$500,000 but less than $1,000,000 1.25 1.27 1.00
------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------
OHIO TAX EXEMPT BOND AND PENNSYLVANIA MUNICIPAL BOND FUNDS
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
SALES CHARGE AS A % OF DEALERS' REALLOWANCE AS
OFFERING PRICE PER AS A % OF NET ASSET A % OF OFFERING PRICE
If your Investment is: SHARE VALUE PER SHARE PER SHARE
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 3.00 3.09 2.75
------------------------------------------------------------------------------------------------------------------------
$100,000 but less than $250,000 2.00 2.04 1.75
------------------------------------------------------------------------------------------------------------------------
$250,000 but less than $500,000 1.50 1.52 1.25
------------------------------------------------------------------------------------------------------------------------
$500,000 but less than $1,000,000 1.00 1.01 0.75
------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more 0.00 0.00 0.00
------------------------------------------------------------------------------------------------------------------------
</TABLE>
With respect to purchases of $1,000,000 or more of the Funds, the Adviser may
pay from its own resources a fee of 1.00% (or .25% in the case of the Limited
Maturity Bond Fund) of the amount invested to the financial institution placing
the purchase order. A 1.00% (or .25% in the case of the Limited Maturity Bond
Fund) sales charge will be assessed against a shareholder's Fund account if its
value falls below $1,000,000 due to a redemption by the shareholder within the
first year following the initial investment of $1,000,000 or more.
WAIVER OF FRONT-END SALES CHARGE -- CLASS A SHARES
The front-end sales charge will be waived on Class A Shares purchased:
- by Trustees and Officers of the Trust and their immediate families (spouse,
parents, siblings, children and grandchildren);
- by directors and retired directors of National City Corporation (NCC) or
any of its affiliates and their immediate families, employees and retired
employees of NCC or any of its affiliates and their immediate families and
participants in employee benefit/retirement plans of NCC or any of its
affiliates and their immediate families;
- by direct transfer of rollover from a qualified plan for which affiliates
of NCC serve as trustee or agent (or certain institutions having
relationships with affiliates of NCC);
- by investors purchasing through payroll deduction, investors in Armada Plus
account through NCC's Retirement Plan Services or investors investing
through "one stop" networks;
- by orders placed by qualified broker-dealers, investment advisers or
financial planners who charge a management fee for their services and place
trades for their own account or accounts of clients;
- when shares are purchased through certain broker-dealers who have agreed to
provide certain services with respect to shares of the Funds, including
Charles Schwab Mutual
Page 106 of 150
<PAGE>
Fund Marketplace.(TM) Check with your broker-dealer to see if you qualify
for this exemption; and
- By direct rollover from an Armada Plus Retirement Plan or Armada SIMPLE
IRA.
REPURCHASE OF CLASS A SHARES
You may repurchase any amount of Class A Shares of any Fund at NAV without the
normal front-end sales charge, up to the limit of the value of any amount of
Class A Shares (other than those which were purchased with reinvested dividends
and distributions) that you redeemed within the past 180 days. In effect, this
allows you to reacquire shares that you may have had to redeem, without
re-paying the front-end sales charge. To exercise this privilege, the Fund must
receive your purchase order within 180 days of your redemption. IN ADDITION, YOU
MUST NOTIFY THE FUND WHEN YOU SEND IN YOUR PURCHASE ORDER THAT YOU ARE
REPURCHASING SHARES AND WOULD LIKE TO EXERCISE THIS OPTION.
REDUCED SALES CHARGES -- CLASS A SHARES
RIGHTS OF ACCUMULATION. In calculating the appropriate sales charge rate, this
right allows you to add the value of the Class A Shares you already own to the
amount that you are currently purchasing. The Fund will combine the value of
your current purchases with the current value of any Class A Shares you
purchased previously for
(i) your account
(ii) your spouse's account
(iii) a joint account with your spouse or
(iv) your minor children's trust or custodial accounts.
A fiduciary purchasing shares for the same fiduciary account, trust or estate
may also use this right of accumulation. The Fund will only consider the value
of Class A Shares purchased previously that were sold subject to a sales charge.
TO BE ENTITLED TO A REDUCED SALES CHARGE BASED ON SHARES ALREADY OWNED, YOU MUST
ASK US FOR THE REDUCTION AT THE TIME OF PURCHASE. You must provide the Fund with
your account number(s) and, if applicable, the account numbers for your spouse
and/or children (and provide the children's ages). The Fund may amend or
terminate this right of accumulation at any time.
LETTER OF INTENT. You may purchase Class A Shares at the sales charge rate
applicable to the total amount of the purchases you intend to make over a
13-month period. In other words, a Letter of Intent allows you to purchase Class
A Shares of a Fund over a 13-month period and receive the same sales charge as
if you had purchased all the shares at the same time. The Fund will only
consider the value of Class A Shares sold subject to a sales charge. As a
result, shares of the Class A Shares purchased with dividends or distributions
will not be included in the calculation. To be entitled to a reduced sales
charge based on shares you intend to purchase over the 13-month period, you must
send the Fund a Letter of Intent. In calculating the total amount of purchases
you may include in your letter purchases made up to 90 days before the date of
the Letter. The 13-month period begins on the date of the first purchase,
including those purchases made in the 90-day period before the date of the
Letter. Please note that the purchase price of these prior purchases will not be
adjusted.
If you do not purchase the amount of shares indicated in the Letter, the Letter
authorizes the Fund to hold in escrow 4% of the total amount you intend to
purchase. If you do not complete the total intended purchase at the end of the
13-month period or you redeem the entire amount within one
Page 107 of 150
<PAGE>
year from the time of fulfillment, the Fund's transfer agent will redeem the
necessary portion of the escrowed shares to make up the difference between the
reduced rate sales charge (based on the amount you intended to purchase) and the
sales charge that would normally apply (based on the actual amount you
purchased).
COMBINED PURCHASE/QUANTITY DISCOUNT PRIVILEGE. When calculating the appropriate
sales charge rate, the Fund will combine same day purchases of Class A Shares
(that are subject to a sales charge) made by you, your spouse and your minor
children (under age 21). This combination also applies to Class A Shares you
purchase with a Letter of Intent. YOU MUST NOTIFY THE FUND OF THE PURCHASES THAT
QUALIFY FOR THIS DISCOUNT.
CONTINGENT DEFERRED SALES CHARGES -- CLASS B AND CLASS C SHARES
You do not pay a sales charge when you purchase Class B or Class C Shares. The
offering price of Class B and Class C Shares is simply the next calculated NAV.
But if you sell your Class B Shares within five years after your purchase or
your Class C Shares within eighteen months of purchase, you will pay a
contingent deferred sales charge as described in the table below for Class B
Shares or 1.00% for Class C Shares on either (1) the NAV of the shares at the
time of purchase, or (2) NAV of the shares next calculated after the Fund
receives your sale request in good order, whichever is less. The sales charge
does not apply to shares you purchase through reinvestment of dividends or
distributions. So, you never pay a deferred sales charge on any increase in your
investment above the initial offering price. This sales charge does not apply to
exchanges of Class B Shares of one Fund for Class B Shares of another Fund or to
exchanges of Class C Shares of one Fund for Class C Shares of another Fund.
After eight years, your Class B Shares are converted to Class A Shares. There is
no conversion feature for Class C Shares.
<TABLE>
<CAPTION>
CLASS B SHARES
CONTINGENT DEFERRED SALES CHARGE AS A PERCENTAGE OF
YEARS SINCE PURCHASE DOLLAR AMOUNT SUBJECT TO CHARGE
-----------------------------------------------------------------------------
<S> <C>
FIRST 5.0%
SECOND 5.0%
THIRD 4.0%
FOURTH 3.0%
FIFTH 2.0%
SIXTH NONE
SEVENTH NONE
EIGHTH NONE
</TABLE>
When an investor redeems his or her Class B and Class C Shares, the redemption
order is processed to minimize the amount of the contingent deferred sales
charge that will be charged. Class B and Class C Shares are redeemed first
from those Class B and Class C Shares that are not subject to the deferred
sales load (i.e. Class B and Class C Shares that were acquired through
reinvestment of dividends or capital gain distributions) and thereafter, unless
otherwise designated by the shareholder, from the Class B and Class C Shares
that have been held the longest.
Page 108 of 150
<PAGE>
The contingent deferred sales charge will be waived if you sell your Class B or
Class C Shares for the following reasons:
- redemptions following the death or disability of a shareholder;
- redemptions representing a minimum required distribution from an IRA or a
custodial account to a shareholder who has reached 70 1/2 years of age;
- minimum required distributions from an IRA or a custodial account to a
shareholder who has died or become disabled;
- redemptions by participants in a qualified plan for retirement loans,
financial hardship, certain participant expenses and redemptions due to
termination of employment with plan sponsor;
- redemptions by a settlor of a living trust;
- redemptions effected pursuant to a Fund's right to liquidate a
shareholder's account if the value of shares held in the account is less
than the minimum account size;
- return of excess contributions;
- redemptions following the death or disability of both shareholders in the
case of joint accounts;
- exchanges of Class B Shares between Class B Shares or Class C Shares
between Class C Shares, respectively of the Trust; and
- distributions of less than 10% of the annual account value under a
Systematic Withdrawal Plan.
GENERAL INFORMATION ABOUT SALES CHARGES
Your securities dealer is paid a commission when you buy Shares, and, for
Class A Shares, is paid a servicing fee as long as you hold your shares. For
Class B or C Shares, your securities dealer receives a servicing fee after 12
months and then as long as you hold your shares. Your securities dealer or
servicing agent may receive different levels of compensation depending on
which class of shares you buy.
From time to time, some financial institutions may be reallowed up to the entire
sales charge. Firms that receive a reallowance of the entire sales charge may be
considered underwriters for the purpose of federal securities law.
Page 109 of 150
<PAGE>
HOW TO SELL YOUR FUND SHARES
Holders of Class A, Class B and Class C Shares may sell shares by following the
procedures established when they opened their account or accounts. If you have
questions, call 1-800-622-FUND (3863).
If you own your shares directly, you may sell (sometimes called "redeem") your
shares on any Business Day through the Internet, at www.armadafunds.com, by
telephone at 1-800-622-FUND (3863) or by mail. The minimum amount for Internet
and telephone redemptions is $100.
If you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares. Your broker or
institution may charge a fee for its services, in addition to the fees charged
by the Fund.
If you would like to sell $100,000 or more of your shares, please notify the
Fund in writing and include a signature guarantee by a bank or other financial
institution (a notarized signature is not sufficient).
The sale price of each share for redemption requests received in good order by
the Fund will be the next NAV determined less, in the case of Class B and Class
C Shares, any applicable deferred sales charge. Good order means that your
request includes complete information and legal requirements on your purchase,
exchange or redemption and that the Fund has received the appropriate assets.
When an Investor redeems his or her Class B Shares, the redemption order is
processed to minimize the amount of the contingent deferred sales charge that
will be charged. Class B Shares are redeemed first from those Class B Shares
that are not subject to the deferred sales load (i.e., Class B Shares that were
acquired through reinvestment of dividends or capital gain distributions) and
thereafter, unless otherwise designated by the shareholder, from the Class B
Shares that have been held the longest. You may arrange for participation in
this program via the Internet at www.armadafunds.com, by calling 1-800-522-FUND
(3863), or by completing an account application.
SYSTEMATIC WITHDRAWAL PLAN
If you have at least $1,000 in your account, you may use the Systematic
Withdrawal Plan. Under the plan you may arrange periodic automatic
withdrawals of at least $100 from any Fund. The proceeds of each withdrawal
will be mailed to you by check or, if you have a checking or savings account
with a bank, electronically transferred to your account. There will be no
deferred sales charge on systematic withdrawals made on Class B or Class C
Shares, as long as the amounts withdrawn do not exceed 10% annually of the
account balance. You may arrange for participation in this program via the
Internet at www.armadafunds.com by calling 1-800-622-FUND (3863), or by
completing an account application.
RECEIVING YOUR MONEY
Normally, we will send your sale proceeds within seven Business Days after we
receive your request in good order. Good order means that your request includes
complete information on your purchase, exchange or redemption and that the Fund
has received the appropriate assets. Your proceeds can be wired to your bank
account or sent to you by check. Armada Funds does not charge a fee to wire your
funds; however, your institution may charge a fee. IF YOU RECENTLY PURCHASED
YOUR SHARES BY CHECK OR THROUGH ACH, REDEMPTION PROCEEDS MAY NOT BE
Page 110 of 150
<PAGE>
AVAILABLE UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15 DAYS FROM YOUR
DATE OF PURCHASE). IF YOU RECENTLY CHANGED YOUR ADDRESS, YOU WILL NOT BE ABLE TO
REDEEM YOUR SHARES WITHIN 10 DAYS AFTER THE CHANGE WITHOUT A SIGNATURE
GUARANTEE.
REDEMPTIONS IN KIND
We generally pay sale (redemption) proceeds in cash. However, under unusual
conditions that make the payment of cash unwise (and for the protection of a
Fund's remaining shareholders) we might pay all or part of your redemption
proceeds in liquid securities with a market value equal to the redemption price
(redemption in kind). It is highly unlikely that your shares would ever be
redeemed in kind, but if they were you would probably have to pay transaction
costs to sell the securities distributed to you, as well as taxes on any capital
gains from the sale as with any redemption. The Armada Tax Managed Equity Fund
may fund redemptions of $1 million or more with appreciated securities rather
than cash.
INVOLUNTARY SALE OF YOUR SHARES
If your account balance drops below $500 because of redemptions, you may be
required to sell your shares. But, we will always give you at least 60 days'
written notice to give you time to add to your account and avoid the sale of
your shares.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
The Fund may suspend your right to sell your shares if the New York Stock
Exchange restricts trading, the SEC declares an emergency or for other reasons.
More information about this is in our Statement of Additional Information.
HOW TO EXCHANGE YOUR SHARES
You may exchange your shares on any Business Day through the Internet at
www.armadafunds.com, by telephone or by mail. Exchange requests into a new Fund
must be for an amount of at least $500.
The exchange privilege is a convenient way to respond to changes in
investment goals or in market conditions. This privilege is not designed for
market-timing - switching money into investments in anticipation of rising
prices or taking money out in anticipation of the market falling. As money is
shifted in and out, a Fund incurs expenses for buying and selling securities.
These costs are borne by all Fund shareholders, including the long-term
investors who do not generate the costs. Therefore, the Fund discourages
short-term trading by, among other things, limiting the number of exchanges
to one exchange every two months during a given 12-month period beginning
upon the date of the first exchange transaction. The Trust may contact a
shareholder who exceeds the limit and, if a market-timing pattern continues,
management of the Trust may require the shareholder to redeem all Fund
shares. The Trust may contact a shareholder who exceeds the limit and, if a
market-timing pattern continue, management of the Trust may revoke the
shareholder's privilege to purchase shares of the Fund through exchanges.
Management of the Trust reserves the right to limit, amend or impose charges
upon, terminate or otherwise modify the exchange privilege. Any modification
to the exchange privilege will not otherwise affect your right to redeem
shares. You will be provided 60 days' notice before any material action is
taken. Any modification in the exchange privilege will not otherwise affect
your right to redeem shares.
IF YOU RECENTLY PURCHASED SHARES BY CHECK OR THROUGH ACH, YOU MAY NOT BE ABLE TO
EXCHANGE YOUR SHARES UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15 DAYS
FROM YOUR DATE OF PURCHASE).
Page 111 of 150
<PAGE>
When you exchange shares, you are really selling your shares and buying other
Fund shares. So, your sale price and purchase price will be based on the NAV
next calculated after the Fund receives your exchange request.
CLASS A SHARES
You may exchange Class A Shares of any Armada Fund for Class A Shares of any
other Armada Fund. If you exchange shares that you purchased without a sales
charge or with a lower sales charge into an Armada Fund with a sales charge or
with a higher sales charge, the exchange is subject to an incremental sales
charge (e.g., the difference between the lower and higher applicable sales
charges). If you exchange shares into an Armada Fund with the same, lower or no
sales charge there is no incremental sales charge for the exchange in this
manner.
CLASS B SHARES
You may exchange Class B Shares of any Armada Fund for Class B Shares of any
other Armada Fund. No contingent deferred sales charge is imposed on redemptions
of shares you acquire in an exchange, provided you hold your shares for at least
five years from your initial purchase.
CLASS C SHARES
You may exchange Class C Shares of any Armada Fund for Class C Shares of any
other Armada Fund. No contingent deferred sales charge is imposed on redemptions
of shares you acquire in an exchange in this manner, provided you hold your
shares for at least 18 months from your initial purchase.
TELEPHONE AND INTERNET TRANSACTIONS
Purchasing, selling and exchanging Fund shares over the telephone or via the
Internet is extremely convenient, but not without risk. Although the Trust has
certain safeguards and procedures to confirm the authenticity of instructions,
the Trust is not responsible for any losses or costs incurred by following
telephone or Internet instructions we reasonably believe to be genuine. If you
or your financial institution transact with the Fund over the telephone or via
the Internet, you will generally bear the risk of any loss, provided the Fund
has followed reasonable procedures to confirm the authenticity of instructions.
SYSTEMATIC EXCHANGE PROGRAM AVAILABLE TO CLASS A, B AND C SHARES
The Systematic Exchange Program allows you to exchange your existing shares
of an Armada money market fund for any other Armada Fund of the same class
automatically, at periodic intervals. The minimum amount of each exchange is
$50. Exchanging in this manner may reduce the average cost per share of a
Fund.
Because purchases of Class A Shares of Funds may be subject to an initial sales
charge, it may be beneficial for you to execute a Letter of Intent indicating an
intent to purchase Class A Shares in connection with this program.
If you would like to enter a systematic exchange program concerning Class B or
Class C Shares you must exchange them within six or twelve months from the date
of purchase.
Page 112 of 150
<PAGE>
You may arrange for participation in this program via the Internet at
www.armadafunds.com, by calling 1-800-622-FUND (3863) or by completing an
account application.
DISTRIBUTION OF FUND SHARES
Each Fund has adopted a distribution plan under Rule 12b-1, pursuant to the 1940
Act, that allows each Fund to pay distribution and service fees for the sale and
distribution of its shares, and for services provided to shareholders. Because
these fees are paid out of a Fund's assets continuously, over time these fees
will increase the cost of your investment and may cost you more than paying
other types of sales charges.
Distribution fees, as a percentage of average daily net assets are as follows:
<TABLE>
<CAPTION>
Class A(1) Class B Class C
------- ------- -------
<S> <C> <C> <C>
Armada Core Equity Fund 0.05% 0.75% 0.75%
Armada Equity Growth Fund 0.05% 0.75% 0.75%
Armada Equity Income Fund 0.05% 0.75% 0.75%
Armada Equity Index Fund 0.005% 0.75% 0.75%
Armada International Equity Fund 0.05% 0.75% 0.75%
Armada Large Cap Ultra Fund 0.05% 0.75% 0.75%
Armada Mid Cap Growth Fund 0.05% 0.75% 0.75%
Armada Small Cap Growth Fund 0.05% 0.75% 0.75%
Armada Small Cap Value Fund 0.05% 0.75% 0.75%
Armada Tax Managed Equity Fund 0.05% 0.75% 0.75%
Armada Balanced Allocation Fund 0.05% 0.75% 0.75%
Armada Bond Fund 0.05% 0.75% 0.75%
Armada GNMA Fund 0.05% 0.75% 0.75%
Armada Intermediate Bond Fund 0.05% 0.75% 0.75%
Armada Limited Maturity Bond Fund 0.02% 0.75% 0.75%
Armada Strategic Income Bond Fund 0.05%(2) 0.75%(2) 0.75%(2)
Armada Total Return Advantage Fund 0.02% 0.75% 0.75%
Armada U.S. Government Income Fund 0.05% 0.75% 0.75%
Armada Michigan Municipal Bond Fund 0.05% 0.75% 0.75%
Armada National Tax Exempt Bond Fund 0.05% 0.75% 0.75%
Armada Ohio Tax Exempt Bond Fund 0.05% 0.75% 0.75%
Armada Pennsylvania Municipal Bond Fund 0.02% 0.75% 0.75%
</TABLE>
(1)Each Fund is permitted to pay up to 0.10% for distribution fees on Class A
Shares.
(2)As of the date of the Prospectus, the Strategic Income Bond Fund had not
yet commenced operations. The Prospectus will be supplemented to advise
prospective investors when shares of the Fund will be available for purchase.
The amounts indicated are the distribution fees the Fund intends to pay upon
start up of operations.
The Distributor may, from time to time in its sole discretion, institute one or
more promotional incentive programs for dealers, which will be paid for by the
Distributor from any sales charge it receives or from any other source available
to it. Under any such program, the Distributor may provide cash or non-cash
compensation as recognition for past sales or encouragement for future sales
that may include the following: merchandise, travel expenses, prizes, meals, and
lodgings, and gifts that do not exceed $100 per year, per individual.
Page 113 of 150
<PAGE>
DIVIDENDS AND TAXES
The following Funds distribute income annually:
Armada International Equity Fund
Armada Small Cap Growth Fund
Armada Small Cap Value Fund
The following Funds distribute income quarterly:
Armada Core Equity Fund
Armada Equity Growth Fund
Armada Equity Income Fund
Armada Equity Index Fund
Armada Large Cap Ultra Fund
Armada Mid Cap Growth Fund
Armada Tax Managed Equity Fund
Armada Balanced Allocation Fund
The following Funds accrue income daily and distribute monthly:
Armada Bond Fund
Armada GNMA Fund
Armada Intermediate Bond Fund
Armada Limited Maturity Bond Fund
Armada Total Return Advantage Fund
Armada U.S. Government Income Fund
Armada Michigan Municipal Bond Fund
Armada National Tax Exempt Bond Fund
Armada Ohio Tax Exempt Bond Fund
Armada Pennsylvania Municipal Bond Fund
It is anticipated that the Armada Strategic Income Bond Fund will distribute
income monthly.
Each Fund makes distributions of capital gains, if any, at least annually. If
you own Fund shares on a Fund's record date, you will be entitled to receive the
dividend and/or capital gain distribution.
You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. You may change your
distribution options directly through the Internet at www.armadafunds.com, or
you must notify the Fund in writing prior to the date of the distribution.
Your election will be effective for dividends and distributions paid the next
day if done through the Internet or after the Fund receives your written
notice.
FEDERAL TAXES
Each Fund contemplates declaring as dividends each year all or substantially all
of its taxable income, including its net capital gain (the excess of long-term
capital gain over short-term capital loss). Distributions attributable to the
net capital gain of a Fund will be taxable to you as long-term capital gain,
regardless of how long you have held your shares. Other Fund distributions
(other than exempt-interest dividends, discussed below) will generally be
taxable as ordinary
Page 114 of 150
<PAGE>
income. You will be subject to income tax on Fund distributions regardless of
whether they are paid in cash or reinvested in additional shares. You will be
notified annually of the tax status of distributions to you.
The Funds use a tax management technique known as "highest in, first out." Using
this technique, the portfolio holdings that have experienced the smallest gain
or largest loss are sold first in an effort to minimize capital gains and
enhance after-tax returns.
You should note that if you purchase shares just before a distribution, the
purchase price will reflect the amount of the upcoming distribution, but you
will be taxable on the entire amount of the distribution received, even though,
as an economic matter, the distribution simply constitutes a return of capital.
This is known as "buying into a dividend."
You will recognize taxable gain or loss on a sale, exchange or redemption of
your shares, including an exchange for shares of another Fund (or an in-kind
redemption), based on the difference between your tax basis in the shares and
the amount you receive for them. (To aid in computing your tax basis, you
generally should retain your account statements for the periods during which you
held shares.) Any loss realized on shares held for six months or less will be
treated as a long-term capital loss to the extent of any capital gain dividends
that were received on the shares. Additionally, any loss realized on a sale or
redemption of shares of a Fund may be disallowed under "wash sale" rules to the
extent the shares disposed of are replaced with other shares of a Fund within a
period of 61 days beginning 30 days before and ending 30 days after the shares
are disposed of, such as pursuant to a dividend reinvestment in shares of a
Fund. If disallowed, the loss will be reflected in an adjustment to the basis of
the shares acquired.
The one major exception to these tax principles is that distributions on, and
sales, exchanges and redemptions of, shares held in an IRA (or other
tax-qualified plan) will not be currently taxable.
It is expected that the Armada International Equity Fund will be subject to
foreign withholding taxes with respect to dividends or interest received from
sources in foreign countries. The Armada International Equity Fund may make an
election to treat a proportionate amount of such taxes as constituting a
distribution to each shareholder, which would allow each shareholder either (1)
to credit such proportionate amount of taxes against U.S. federal income tax
liability or (2) to take such amount as an itemized deduction.
The Armada Michigan Municipal Bond Fund, Armada National Tax Exempt Bond
Fund, Armada Ohio Tax Exempt Bond Fund, and Armada Pennsylvania Municipal
Bond Fund (the "Tax Free Bond Funds") anticipate that substantially all of
their income dividends will be "exempt interest dividends," which are exempt
from federal income taxes. However, some dividends will be taxable, such as
dividends that are derived from occasional taxable investments and
distributions of short and long-term capital gains. Interest on indebtedness
incurred by a shareholder to purchase or carry shares of any Tax Free Bond
Fund generally will not be deductible for federal income tax purposes.
You should note that a portion of the exempt-interest dividends paid by the
Tax Exempt Funds may constitute an item of tax preference for purposes of
determining federal alternative minimum tax liability. Exempt-interest
dividends will also be considered along with other adjusted gross income in
determining whether any Social Security or railroad retirement payments
received by you are subject to federal income taxes.
Page 115 of 150
<PAGE>
If you receive an exempt-interest dividend with respect to any share and the
share is held by you for six months or less, any loss on the sale or exchange of
the share will be disallowed to the extent of such dividend amount.
The foregoing is only a summary of certain tax considerations under current law,
which may be subject to change in the future. Shareholders who are nonresident
aliens, foreign trusts or estates, or foreign corporations or partnerships, may
be subject to different United States federal income tax treatment. You should
consult your tax adviser for further information regarding federal, state, local
and/or foreign tax consequences relevant to your specific situation.
STATE AND LOCAL TAXES
Shareowners may also be subject to state and local taxes on distributions and
redemptions. State income taxes may not apply, however, to the portions of each
Fund's distributions, if any, that are attributable to interest on federal
securities or interest on securities of the particular state or localities
within the state. The Armada Pennsylvania Municipal Bond Fund intends to
distribute income that is exempt from Pennsylvania personal income taxes. The
Armada Ohio Tax Exempt Bond Fund intends to distribute income that is exempt
from Ohio personal income taxes. The Armada Michigan Municipal Bond Fund intends
to distribute income that is exempt from Michigan income taxes. Shareowners
should consult their tax advisers regarding the tax status of distributions in
their states and localities.
MORE INFORMATION ABOUT TAXES IS IN THE STATEMENT OF ADDITIONAL INFORMATION.
Page 116 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
The tables that follow present performance information about Class A, Class B
and Class C Shares of each Fund. This information is intended to help you
understand each Fund's financial performance for the past five years, or, if
shorter, the period of the Fund's operations. Some of this information reflects
financial information for a single Fund share. The total returns in the table
represent the rate that you would have earned (or lost) on an investment in a
Fund, assuming you reinvested all of your dividends and distributions.
Except as stated otherwise below, this information has been audited by Ernst
& Young LLP, independent auditors, whose reports, along with each Fund's
financial statements, are included in the annual report. The Financial
Highlights of the GNMA Fund and Pennsylvania Municipal Bond Fund from each
Fund's respective commencement of operations date through May 31, 1996, were
audited by each Fund's former independent accountants.
In June 2000, the Parkstone Bond, Large Capitalization, U.S. Government
Income, Michigan Municipal Bond, and Mid Capitalization Funds were
reorganized, respectively, into the Armada Bond, Large Cap Ultra, U.S.
Government Income, Michigan Municipal Bond, and Mid Cap Growth Funds. In
connection with this reorganization, each of these Armada Funds adopted the
financial highlights, financial statements and performance history of its
corresponding acquired Parkstone Fund. The Financial Highlights for these
Funds for the periods prior to the fiscal year ended May 31, 2000 were
audited by PricewaterhouseCoopers LLP, former independent accountants to The
Parkstone Group of Funds.
You can obtain the Funds' annual report, which contains more performance
information, at no charge by calling 1-800-622-FUND (3863).
Page 117 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA CORE EQUITY FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31, 2000 FOR THE YEAR ENDED FOR THE PERIOD ENDED
MAY 31, 1999 MAY 31, 1998
CLASS A CLASS B CLASS C(5) CLASS A CLASS B CLASS A(3) CLASS B(4)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.71 $13.63 $14.55 $11.34 $11.33 $10.00 $10.25
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.00) (0.07) (0.05) (0.05)(7) (0.16)(7) 0.04 0.00
Net gain on securities (realized and unrealized) 1.62 1.59 0.13 2.93 2.97 1.34 1.08
Total from investment operations 1.62 1.52 0.08 2.88 2.81 1.38 1.08
LESS DISTRIBUTIONS
Dividends from net investment income (0.00) (0.00) (0.00) (0.00) (0.00) (0.04) (0.00)
Distributions from net realized capital gains (0.53) (0.53) (0.00) (0.51) (0.51) (0.00) (0.00)
Total distributions (0.53) (0.53) (0.00) (0.51) (0.51) (0.04) (0.00)
Net asset value, end of period $14.80 $14.62 $14.63 $13.71 $13.63 $11.34 $11.33
TOTAL RETURN 11.98%(1) 11.31%(1) 0.55%(1,2) 25.78%(1) 25.17%(1) 13.85%(1,2) 10.54%(1,2)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $4,146 $1,840 $2 $1,731 $1,106 $408 $2
Ratio of expenses to average net assets 1.25% 1.96% 1.96%(6) 1.23% 1.94% 1.14%(6) 1.83%(6)
Ratio of net investment income/(loss) to average
net assets (0.22)% (0.93)% (0.93)%(6) (0.40)% (1.11%) 0.14%(6) (0.51)%(6)
Ratio of expenses to average net assets before
fee waivers 1.31% 1.96% 1.96%(6) 1.23% 1.94% 1.30%(6) 2.00%(6)
Ratio of net investment income/(loss) to average
net assets before fee waivers (0.28)% (0.93)% (0.93)%(6) (0.40)% (1.11%) 0.04%(6) (0.50)%(6)
Portfolio turnover rate 37% 37% 37% 43% 43% 60% 60%
</TABLE>
(1) TOTAL RETURN EXCLUDES SALES CHARGE.
(2) RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(3) CLASS A COMMENCED OPERATIONS ON AUGUST 1, 1997.
(4) CLASS B COMMENCED OPERATIONS ON JANUARY 6, 1998.
(5) CLASS C COMMENCED OPERATIONS ON JANUARY 20, 2000.
(6) ANNUALIZED.
(7) CALCULATED BASED UPON AVERAGE SHARES OUTSTANDING.
Page 118 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA EQUITY GROWTH FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
CLASS A CLASS B CLASS C(4) CLASS A CLASS B CLASS A CLASS B(3) CLASS A CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $24.55 $24.33 $28.04 $21.35 $21.28 $18.67 $19.44 $18.05 $14.79
INCOME FROM INVESTMENT OPERATIONS
Net investment income (0.06)(5) (0.26)(5) (0.08)(5) (0.09)(5) (0.27)(5) (0.04) (0.24) 0.05 0.10
Net gain/(loss) on securities
(realized and unrealized) 4.53 4.56 0.42 4.28 4.31 4.99 2.08 4.66 3.47
Total from investment operations 4.47 4.30 0.34 4.19 4.04 4.95 1.84 4.71 3.57
LESS DISTRIBUTIONS
Dividends from net investment
income (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.05) (0.10)
Dividends in excess of net
investment income (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.01) (0.02)
Distributions from net realized
capital gains (0.26) (0.26) (0.00) (0.99) (0.99) (2.27) (0.00) (4.03) (0.19)
Total distributions (0.26) (0.26) (0.00) (0.99) (0.99) (2.27) (0.00) (4.09) (0.31)
Net asset value, end of period $28.76 $28.37 $28.38 $24.55 $24.33 $21.35 $21.28 $18.67 $18.05
TOTAL RETURN 18.22%(1) 17.68%(1) 1.21%(1,6) 19.88%(1) 19.22%(1) 28.32%(1) 27.90%(1,2) 29.24%(1) 24.34%(1)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's) $180,000 $3,713 $263 $156,356 $1,400 $12,380 $24 $6,931 $6,013
Ratio of expenses to average
net assets 1.15% 1.86% 1.86%(2) 1.17% 1.88% 1.23% 1.92%(2) 1.22% 1.26%
Ratio of net investment
income/(loss) to average net
assets (0.24)% (0.95)% (0.95)%(2) (0.36)% (1.07)% (0.26)% (0.92)%(2) 0.25% 0.60%
Ratio of expenses to average
net assets before fee waivers 1.21% 1.86% 1.86%(2) 1.17% 1.88% 1.23% 1.92%(2) 1.22% 1.28%
Ratio of net investment
income/(loss) to average net
assets before fee waivers (0.30)% (0.95)% (0.95)%(2) (0.36)% (1.07)% (0.26)% (0.92)%(2) 0.25% 0.58%
Portfolio turnover rate 25% 25% 25% 57% 57% 260% 260% 197% 74%
</TABLE>
(1) TOTAL RETURN EXCLUDES SALES CHARGE.
(2) ANNUALIZED.
(3) CLASS B COMMENCED OPERATIONS ON JANUARY 6, 1998.
(4) CLASS C COMMENCED OPERATIONS ON JANUARY 27, 2000.
(5) CALCULATED BASED UPON AVERAGE SHARES OUTSTANDING.
(6) TOTAL RETURN FOR THE PERIOD INDICATED HAS NOT BEEN ANNUALIZED.
Page 119 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA EQUITY INCOME FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
CLASS A CLASS B CLASS C(4) CLASS A CLASS B CLASS A CLASS B(3) CLASS A CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $18.79 $18.69 $15.27 $17.51 $17.54 $14.86 $16.28 $12.65 $11.01
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.30 0.19 0.08 0.21 0.17 0.26 0.46 0.31 0.33
Net gain/loss on securities
(realized and unrealized) (1.87) (1.84) 0.63 1.55 1.39 3.41 0.86 2.68 1.77
Total from investment operations (1.57) (1.65) 0.71 1.76 1.56 3.67 1.32 2.99 2.10
LESS DISTRIBUTIONS
Dividends from net investment income (0.31) (0.20) (0.05) (0.23) (0.16) (0.29) (0.06) (0.27) (0.32)
Distributions from net realized
capital gains (0.91) (0.91) (0.00) (0.25) (0.25) (0.73) (0.00) (0.51) (0.14)
Total distributions (1.22) (1.11) (0.05) (0.48) (0.41) (1.02) (0.06) (0.78) (0.46)
Net asset value, end of period $16.00 $15.93 $15.93 $18.79 $18.69 $17.51 $17.54 $14.86 $12.65
TOTAL RETURN (8.30)%(3) (8.77)%(3) 4.65%(2,5) 10.40%(2) 9.14%(2) 25.41%(2) 25.58%(1,2) 24.33%(2) 19.37%(2)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $9,070 $1,357 $105 $11,075 $997 $2,151 $3 $410 $263
Ratio of expenses to average net
assets 1.17% 1.88% 1.88%(1) 1.18% 1.89% 1.17% 1.86%(1) 1.26% 1.31%
Ratio of net investment income
to average net assets 1.82% 1.11% 1.11%(1) 1.82% 1.11% 1.62% 0.68%(1) 2.17% 2.75%
Ratio of expenses to average net
assets before fee waivers 1.23% 1.88% 1.88%(1) 1.18% 1.89% 1.17% 1.86%(1) 1.26% 1.32%
Ratio of net investment income
to average net assets before
fee waivers 1.76% 1.11% 1.11%(1) 1.82% 1.11% 1.62% 0.68%(1) 2.17% 2.74%
Portfolio turnover rate 40% 40% 40% 19% 19% 18% 18% 35% 53%
</TABLE>
(1) ANNUALIZED.
(2) TOTAL RETURN EXCLUDES SALES CHARGE.
(3) CLASS B COMMENCED OPERATIONS ON JANUARY 6, 1998.
(4) CLASS C COMMENCED OPERATIONS JANUARY 27, 2000.
(5) TOTAL RETURNS FOR THE PERIOD INDICATED HAS NOT BEEN ANNUALIZED.
Page 120 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA EQUITY INDEX FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED MAY 31,
FOR THE YEAR ENDED MAY 31, 2000 1999
CLASS A CLASS B(2) CLASS C(3) CLASS A(1)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.29 $12.04 $12.61 $9.09
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.09 0.01 0.01 0.07
Net gain/(loss) on securities (realized and unrealized) 1.01 0.17 (0.41) 2.18
Total from investment operations 1.10 0.18 (0.40) 2.25
LESS DISTRIBUTIONS
Dividends from net investment income (0.11) (0.02) (0.01) (0.05)
Distributions from net realized capital gains (0.06) (0.00) (0.00) (0.00)
Total distributions (0.17) (0.02) (0.01) (0.05)
Net asset value, end of period $12.22 $12.20 $12.20 $11.29
TOTAL RETURN 9.70%(4) 1.46%(4,5) (3.17%)(4,5) 24.83%(4,5)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $8,253 $524 $277 $3,892
Ratio of expenses to average net assets 0.59% 1.34%(6) 1.34%(6) 0.36%(6)
Ratio of net investment income/(loss) to average net assets 0.77% 0.02%(6) 0.02%(6) 1.22%(6)
Ratio of expenses to average net assets before fee waivers 0.84% 1.49%(6) 1.49%(6) 0.71%(6)
Ratio of net investment income/(loss) to average net
assets before fee waivers 0.52% (0.13)%(6) 0.13%(6) 0.87%(6)
Portfolio turnover rate 48% 48% 48% 9%
</TABLE>
(1) CLASS A COMMENCED OPERATIONS ON OCTOBER 15, 1998.
(2) CLASS B COMMENCED OPERATIONS ON JANUARY 4, 2000.
(3) CLASS C COMMENCED OPERATIONS ON JANUARY 17, 2000.
(4) TOTAL RETURN EXCLUDES SALES CHARGE.
(5) RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(6) ANNUALIZED.
Page 121 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA INTERNATIONAL EQUITY FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE PERIOD ENDED
MAY 31, 2000 MAY 31, 1999 MAY 31, 1998
CLASS A CLASS B CLASS C(4) CLASS A CLASS B CLASS A(2) CLASS B(3)
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.87 $10.83 $15.37 $10.82 $10.83 $10.00 $9.30
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.03) (0.10) (0.04) (0.01) (0.07) 0.04 0.05
Net gain/(loss) on securities
(realized and unrealized) 4.21 4.17 (0.50) 0.10 0.08 0.79 1.48
Total from investment operations 4.18 4.07 (0.54) 0.09 0.01 0.83 1.53
LESS DISTRIBUTIONS
Dividends from net investment income (0.01) (0.00) (0.00) (0.04) (0.01) (0.01) (0.00)
Distributions from net realized capital gains (0.07) (0.07) (0.00) (0.00) (0.00) (0.00) (0.00)
Total distributions (0.08) (0.07) (0.00) (0.04) (0.01) (0.01) (0.00)
Net asset value, end of period $14.97 $14.83 $14.83 $10.87 $10.83 $10.82 $10.83
TOTAL RETURN 38.50%(1) 37.61%(1) (3.51)%(1,5) 0.84%(1) 0.10%(1) 8.28%(1,5) 16.45%(1,5)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $3,618 $623 $165 $1,127 $42 $ 276 $1
Ratio of expenses to average net assets 1.68% 2.39% 2.39%(6) 1.68% 2.43% 1.39%(6) 2.08%(6)
Ratio of net investment income/(loss) to average
net assets (0.19)% (0.90)% (0.90)%(6) (0.04)% (0.80)% 1.49%(6) 0.59%(6)
Ratio of expenses to average net assets before
fee waivers 1.74% 2.39% 2.39%(6) 1.68% 2.43% 1.47%(6) 2.14%(6)
Ratio of net investment income/(loss) to average
net assets before fee waivers (0.25)% (0.90)% (0.90)%(6) (0.04)% (0.80)% 1.41%(6) 0.53%(6)
Portfolio turnover rate 124% 124% 124% 78% 78% 28% 28%
</TABLE>
1 TOTAL RETURN EXCLUDES SALES CHARGE.
2 CLASS A COMMENCED OPERATIONS ON AUGUST 1, 1997.
3 CLASS B COMMENCED OPERATIONS ON JANUARY 6, 1998.
4 CLASS C COMMENCED OPERATIONS ON JANUARY 5, 2000.
5 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
6 ANNUALIZED.
Page 122 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA LARGE CAP ULTRA FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR ENDED MAY 31, 2000 YEAR ENDED MAY 31, 1999
CLASS A CLASS B CLASS A CLASS B
<S> <C> <C> <C> <C>
Net Asset Value, beginning of Period $ 19.67 $ 19.21 $ 16.19 $ 15.95
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (0.06) (0.13) (0.11) (0.23)
Net realized and unrealized gain on securities 4.98 4.78 3.89 3.79
Total from investment operations 4.92 4.65 3.78 3.56
LESS DISTRIBUTIONS
Net realized gains (4.78) (4.78) (0.30) (0.30)
Total Distributions (4.78) (4.78) (0.30) (0.30)
Net Asset Value, End of Period $ 19.81 $ 19.08 $ 19.67 $ 19.21
TOTAL RETURN (EXCLUDES SALES AND REDEMPTION CHARGES) 26.66% 25.81% 23.42% 22.38%
RATIOS/SUPPLEMENTARY DATA:
Net Assets, end of period (000) $ 21,550 $15,770 $ 24,513 $14,128
Ratio of expenses to average net assets 1.30% 2.05% 1.35% 2.11%
Ratio of net investment loss to average net assets (0.61)% (1.36)% (0.59)% (1.34)%
Portfolio turnover rate 82.30% 82.30% 50.51% 50.51%
</TABLE>
Page 123 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA LARGE CAP ULTRA FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
ELEVEN MONTHS ENDED MAY 31, 1998 YEAR ENDED JUNE 30, 1997
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of Period $14.44 $ 14.34 $ 14.28 $11.23 $11.22 $11.16
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.06) (0.12) (0.06) (0.00) (0.05) (0.06)
Net realized and unrealized gain on
securities 3.51 3.43 3.32 3.30 3.25 3.27
Total from investment operations 3.45 3.31 3.26 3.30 3.20 3.21
LESS DISTRIBUTIONS
Net investment income (0.00) (0.00) (0.00) (0.01) (0.00) (0.01)
Net realized gains (1.67) (1.67) (1.67) (0.08) (0.08) (0.08)
Tax return of capital (0.03) (0.03) (0.03) (0.00) (0.00) (0.00)
Total Distributions (1.70) (1.70) (1.70) (0.09) (0.08) (0.09)
Net Asset Value, End of Period $16.19 $ 15.95 $15.84 $14.44 $14.34 $14.28
TOTAL RETURN (EXCLUDES SALES AND REDEMPTION
CHARGES) 25.95%(a) 25.12%(a) 24.87%(a) 29.52% 28.62% 28.82%
RATIOS/SUPPLEMENTARY DATA:
Net Assets, end of period (000) $21,628 $10,169 $268 $12,260 $4,130 $ 42
Ratio of expenses to average net assets 1.35%(b) 2.09%(b) 2.09%(b) 1.37% 2.12% 2.12%
Ratio of net investment income/ (loss) to
average net assets (0.45)%(b) (1.21)%(b) (1.24)%(b) (0.14)% -0.88% -0.91%
Portfolio turnover rate 24.74% 24.74% 24.74% 48.44% 48.44% 48.44%
</TABLE>
(a) NOT ANNUALIZED
(b) ANNUALIZED
Page 124 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA LARGE CAP ULTRA FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
DECEMBER 28, 1995 TO JUNE 30, 1996 (a)
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Net Asset Value, beginning of Period $10.00 $10.00 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) 0.03 0.01 (0.00)
Net realized and unrealized gain on securities 1.23 1.23 1.17
Total from investment operations 1.26 1.24 1.17
LESS DISTRIBUTIONS
Net investment income (0.03) (0.02) (0.00)
Tax return of capital (0.00) (0.00) (0.01)
Total Distributions (0.03) (0.02) (0.01)
Net Asset Value, End of Period $11.23 $11.22 $ 11.16
TOTAL RETURN (EXCLUDES SALES AND REDEMPTION 8.99%(b) 8.77%(b) 8.14%(b)
CHARGES)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, end of period (000) $1,657 $ 832 $ 2
Ratio of expenses to average net assets 1.40%(c) 1.78%(c) 2.24%(c)
Ratio of net investment income (loss) to average 0.31%(c) (0.32)%(c) (0.45)%(c)
net assets
Ratio of expenses to average net assets* 2.62%(c) 4.07%(c) 4.25%(c)
Portfolio turnover rate 0.86% 0.86% 0.86%
</TABLE>
* DURING THE PERIOD CERTAIN FEES WERE VOLUNTARILY REDUCED. IF SUCH VOLUNTARY
FEE REDUCTIONS HAD NOT OCCURRED, THE RATIOS WOULD HAVE BEEN AS INDICATED.
(a) PERIOD FROM COMMENCEMENT OF OPERATIONS
(b) NOT ANNUALIZED
(c) ANNUALIZED
Page 125 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA MID CAP GROWTH FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR ENDED MAY 31, 2000 YEAR ENDED MAY 31, 1999
CLASS A CLASS B CLASS A CLASS B
<S> <C> <C> <C> <C>
Net Asset Value, beginning of Period $ 14.10 $ 13.14 $ 14.98 $ 14.20
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (0.15)(a) (0.24)(a) (0.19) (0.28)
Net realized and unrealized
gain on securities 6.23 5.70 1.15 1.06
Total from investment operations 6.08 5.46 0.96 0.78
LESS DISTRIBUTIONS
Net realized gains (4.65) (4.65) (1.84) (1.84)
Total Distributions (4.65) (4.65) (1.84) (1.84)
Net Asset Value, End of Period $ 15.53 $ 13.95 $ 14.10 $ 13.14
TOTAL RETURN (EXCLUDES SALES AND
REDEMPTION CHARGES) 51.48% 50.40% 8.08% 7.19%
RATIOS/SUPPLEMENTARY DATA:
Net Assets, end of period (000) $ 46,183 $ 18,584 $ 50,605 $ 16,629
Ratio of expenses to average net assets 1.54% 2.29% 1.57% 2.32%
Ratio of net investment loss to
average net assets (1.00)% (1.75)% (1.00)% (1.75)%
Portfolio turnover rate 110.26% 110.26% 100.19% 100.19%
</TABLE>
(a) CALCULATED BASED UPON AVERAGE SHARES OUTSTANDING.
Page 126 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA MID CAP GROWTH FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
ELEVEN MONTHS ENDED MAY 31, 1998 YEAR ENDED JUNE 30, 1997
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of Period $15.72 $ 15.12 $15.24 $20.71 $20.28 $20.36
INCOME FROM INVESTMENT OPERATIONS
Net investment (loss) (0.14) (0.23) (0.23) (0.16) (0.24) (0.21)
Net realized and unrealized gain on securities 2.51 2.42 2.46 1.30 1.21 1.22
Total from investment operations 2.37 2.19 2.23 1.14 0.97 1.01
LESS DISTRIBUTIONS
Net realized gains (3.11) (3.11) (3.11) (6.13) (6.13) (6.13)
Total Distributions (3.11) (3.11) (3.11) (6.13) (6.13) (6.13)
Net Asset Value, End of Period $14.98 $ 14.20 $14.36 $15.72 $15.12 $15.24
TOTAL RETURN (EXCLUDES SALES AND REDEMPTION CHARGES) 16.84%(a) 16.27%(a) 16.44%(a) 5.78% 4.94% 5.17%
RATIOS/SUPPLEMENTARY DATA:
Net Assets, end of period (000) $90,183 $23,780 $2,228 $80,634 $21,994 $2,018
Ratio of expenses to average net assets 1.55%(b) 2.30%(b) 2.30%(b) 1.56% 2.31% 2.31%
Ratio of net investment loss to average net assets (1.02)%(b) (1.77)%(b) (1.77)%(b) (1.05)% (1.80%) (1.80%)
Portfolio turnover rate 38.41% 38.41% 38.41% 38.47% 38.47% 38.47%
</TABLE>
(a) NOT ANNUALIZED
(b) ANNUALIZED
Page 127 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA MID CAP GROWTH FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1996 YEAR ENDED JUNE 30, 1995
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C(a)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of Period $ 16.56 $16.35 $ 16.40 $ 14.69 $ 14.63 $ 16.29
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (0.16) (0.23) (0.17) (0.12) (0.11) (0.02)
Net realized and unrealized gain on securities 4.97 4.82 4.79 3.46 3.30 1.60
Total from investment
operations 4.81 4.59 4.62 3.34 3.19 1.58
LESS DISTRIBUTIONS
Net realized gains (0.66) (0.66) (0.66) (0.48) (0.48) (0.00)
In excess of net realized gains (0.00) (0.00) (0.00) (0.99) (0.99) (1.47)
Total Distributions (0.66) ( 0.66) (0.66) (1.47) (1.47) (1.47)
Net Asset Value, End of Period $ 20.71 $20.28 $ 20.36 $ 16.56 $16.35 $16.40
TOTAL RETURN (EXCLUDES SALES AND REDEMPTION CHARGES) 29.57% 28.59% 28.69% 24.85% 23.88% 23.56%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, end of period (000) $66,260 $15,840 $ 1,088 $43,803 $6,073 $ 153
Ratio of expenses to average net assets 1.54% 2.29% 2.29% 1.51% 2.29% 2.27%(b)
Ratio of net investment loss to average net assets (0.94)% (1.70)% (1.73)% (0.87)% (1.61%) (1.43)%(b)
Ratio of expenses to average net assets* 1.54% 2.29% 2.29% 1.54% 2.54% 2.53%(b)
Ratio of net investment loss to average net assets* (0.94)% (1.70)% (1.73)% (0.90)% (1.87%) (1.70)%(b)
Portfolio turnover rate 49.27% 49.27% 49.27% 46.39% 46.39% 46.39%
</TABLE>
* DURING THE PERIOD, CERTAIN FEES WERE VOLUNTARILY REDUCED. IF SUCH VOLUNTARY
FEE REDUCTIONS HAD NOT OCCURRED, THE RATIOS WOULD HAVE BEEN AS INDICATED.
(a) PERIOD FROM NOVEMBER 16, 1994 (COMMENCEMENT OF OFFERING OF CLASS C SHARES)
TO JUNE 30, 1995.
(b) ANNUALIZED.
(c) REPRESENTS TOTAL RETURN FOR THE INSTITUTIONAL SHARES FOR THE PERIOD FROM
JULY 1, 1994 TO NOVEMBER 15, 1994 PLUS THE TOTAL RETURN FOR THE CLASS C
SHARES FOR THE PERIOD FROM NOVEMBER 16, 1994 TO JUNE 30, 1995.
Page 128 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA SMALL CAP GROWTH FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
MAY 31, 2000 MAY 31, 1999
CLASS A CLASS B CLASS C(5) CLASS A CLASS B
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.11 $10.01 $16.20 $11.68 $11.66
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.07)(7) (0.17)(7) (0.07)(7) (0.05)(7) (0.10)(7)
Net gain/(loss) on securities (realized and unrealized) 4.77 4.74 (1.56) (1.41) (1.44)
Total from investment operations 4.70 4.57 (1.63) (1.46) (1.54)
LESS DISTRIBUTIONS
Dividends from net investment income (0.00) (0.00) (0.00) (0.00) (0.00)
Distributions from net realized capital gains (0.00) (0.00) (0.00) (0.11) (0.11)
Total distributions (0.00) (0.00) (0.00) (0.11) (0.11)
Net asset value, end of period $14.81 $14.58 $14.57 $10.11 $10.01
TOTAL RETURN 46.49%(1) 45.65%(1) (10.06)%(1,2) (12.54)%(1) (13.26)%(1)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $2,710 $372 $77 $1,089 $139
Ratio of expenses to average net assets 1.48% 2.19% 2.19%(6) 1.51% 2.23%
Ratio of net investment income/(loss) to average (0.53)% (1.24)% (1.24)%(6) (0.51)% (1.23)%
net assets
Ratio of expenses to average net assets before 1.54% 2.19% 2.19%(6) 1.51% 2.23%
fee waivers
Ratio of net investment income/(loss) to average net (0.59)% (1.24)% (1.24)%(6) (0.51)% (1.23)%
assets before fee waivers
Portfolio turnover rate 155% 155% 155% 159% 159%
<CAPTION>
FOR THE PERIOD ENDED
MAY 31, 1998
CLASS A(3) CLASS B(4)
<S> <C> <C>
Net asset value, beginning of period $10.00 $10.64
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) 0.01 (0.01)
Net gain/(loss) on securities (realized and unrealized) 1.71 1.03
Total from investment operations 1.72 1.02
LESS DISTRIBUTIONS
Dividends from net investment income (0.01) (0.00)
Distributions from net realized capital gains (0.03) (0.00)
Total distributions (0.04) (0.00)
Net asset value, end of period $11.68 $11.66
TOTAL RETURN 17.18%(1,2) 9.59%(1,2)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $331 $1
Ratio of expenses to average net assets 1.23%(6) 1.92%(6)
Ratio of net investment income/(loss) to average (0.32)%(6) (0.87)%(6)
net assets
Ratio of expenses to average net assets before 1.34%(6) 3.06%(6)
fee waivers
Ratio of net investment income/(loss) to average net (0.43)%(6) (2.01)%(6)
assets before fee waivers
Portfolio turnover rate 31% 31%
</TABLE>
1 TOTAL RETURN EXCLUDES SALES CHARGE.
2 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
3 CLASS A COMMENCED OPERATIONS ON AUGUST 1, 1997.
4 CLASS B COMMENCED OPERATIONS ON JANUARY 6, 1998.
5 CLASS C COMMENCED OPERATIONS ON JANUARY 20, 2000.
6 ANNUALIZED.
7 CALCULATED BASED UPON AVERAGE SHARES OUTSTANDING.
Page 129 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA SMALL CAP VALUE FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999
CLASS A CLASS B CLASS C(4) CLASS A CLASS B
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.31 $13.19 $13.07 $15.47 $15.42
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) 0.27 0.14 0.01 0.06 (0.03)
Net gain/(loss) on securities (realized and unrealized) 1.38 1.41 1.54 (0.85) (0.87)
Total from investment operations 1.65 1.55 1.55 (0.79) (0.90)
LESS DISTRIBUTIONS
Dividends from net investment income (0.19) (0.12) (0.00) (0.04) (0.00)
Dividends in excess of net investment income (0.00) (0.00) (0.00) (0.00) (0.00)
Distributions from net realized capital gains (0.00) (0.00) (0.00) (1.33) (1.33)
Total distributions (0.19) (0.12) (0.00) (1.37) (1.33)
Net asset value, end of period $14.77 $14.62 $14.62 $ 13.31 $13.19
TOTAL RETURN 12.59%(2) 11.87%(2) 11.86%(2,5) (4.38)%(2) (5.13)%(2)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $9,727 $742 $68 $11,542 $515
Ratio of expenses to average net assets 1.46% 2.17% 2.17%(1) 1.38% 2.08%
Ratio of net investment income/(loss) to average net assets 1.72% 1.01% 1.01%(1) 0.44% (0.26)%
Ratio of expenses to average net assets before fee waivers 1.52% 2.17% 2.17%(1) 1.38% 2.08%
Ratio of net investment income/(loss) to average net assets 1.66% 1.01% 1.01%(1) 0.44% (0.26)%
before fee waivers
Portfolio turnover rate 120% 120% 120% 79% 79%
<CAPTION>
1998 1997 1996
CLASS A CLASS B(3) CLASS A CLASS A
<S> <C> <C> <C> <C>
Net asset value, beginning of period $14.95 $15.28 $12.94 $11.26
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.01 0.00 0.08 0.06
Net gain/(loss) on securities (realized and unrealized) 2.84 0.14 2.83 2.37
Total from investment operations 2.85 0.14 2.91 2.43
LESS DISTRIBUTIONS
Dividends from net investment income (0.04) (0.00) (0.05) (0.06)
Dividends in excess of net investment income (0.00) (0.00) (0.00) (0.02)
Distributions from net realized capital gains (2.29) (0.00) (0.85) (0.67)
Total distributions (2.33) (0.00) (0.90) (0.75)
Net asset value, end of period $ 15.47 $15.42 $14.95 $12.94
TOTAL RETURN 19.51%(2) 19.12%(1,2) 23.26%(2) 22.28%(2)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $10,634 $61 $4,929 $4,702
Ratio of expenses to average net assets 1.23% 1.92%(1) 1.22% 1.30%
Ratio of net investment income/(loss) to average net assets 0.19% (0.48)%(1) 0.57% 0.58%
Ratio of expenses to average net assets before fee waivers 1.23% 1.92%(1) 1.22% 1.32%
Ratio of net investment income/(loss) to average net assets 0.19% (0.48)%(1) 0.51% 0.56%
before fee waivers
Portfolio turnover rate 89% 89% 64% 106%
</TABLE>
1 ANNUALIZED.
2 TOTAL RETURN EXCLUDES SALES CHARGE.
3 CLASS B COMMENCED OPERATIONS ON JANUARY 6, 1998.
4 CLASS C COMMENCED OPERATIONS ON JANUARY 27, 2000.
5 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
Page 130 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA TAX MANAGED EQUITY FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31, 2000 FOR THE YEAR ENDED MAY
31, 1999
CLASS A CLASS B CLASS C(4) CLASS A CLASS B
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.16 $12.12 $14.01 $9.93 $9.93
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) 0.00 (0.07) (0.03) 0.04 (0.02)
Net gain/(loss) on securities (realized and unrealized) 2.18 2.12 0.18 2.24 2.23
Total from investment operations 2.18 2.05 0.15 2.28 2.21
LESS DISTRIBUTIONS
Dividends from net investment income (0.00) (0.00) (0.00) (0.04) (0.01)
Distributions from net realized capital gains (0.01) (0.01) (0.00) (0.01) (0.01)
Total distributions (0.01) (0.01) (0.00) (0.05) (0.02)
Net asset value, end of period $14.33 $14.16 $14.16 $12.16 $12.12
TOTAL RETURN 18.01%(1) 16.95%(1) 1.07%(1, 6) 23.03%(1) 22.31%(1)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $17,372 $11,135 $453 $7,353 $5,377
Ratio of expenses to average net assets 1.20% 1.91% 1.91%(5) 1.09% 1.79%
Ratio of net investment income/(loss) to average net assets (0.06)% (0.77)% (0.77)%(5) 0.11% (0.59%)
Ratio of expenses to average net assets before fee waivers 1.26% 1.91% 1.91%(5) 1.27% 1.97%
Ratio of net investment income/(loss) to average net assets (0.12)% (0.77)% (0.77)%(5) (0.07%) (0.77%)
before fee waivers
Portfolio turnover rate 3% 3% 3% 5% 5%
<CAPTION>
FOR THE PERIOD ENDED MAY 31,
1998
CLASS A(2) CLASS B(3)
<S> <C> <C>
Net asset value, beginning of period $10.10 $10.21
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.00) (0.00)
Net gain/(loss) loss on securities (realized and unrealized) (0.17) (0.28)
Total from investment operations (0.17) (0.28)
LESS DISTRIBUTIONS
Dividends from net investment income (0.00) (0.00)
Distributions from net realized capital gains (0.00) (0.00)
Total distributions (0.00) (0.00)
Net asset value, end of period $9.93 $9.93
TOTAL RETURN (23.63%)(1,5) (32.24%)(1,5)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $10 $85
Ratio of expenses to average net assets 0.54%(5) 1.23%(5)
Ratio of net investment income/(loss) to average net assets 0.63%(5) 0.43%(5)
Ratio of expenses to average net assets before fee waivers 1.24%(5) 1.98%(5)
Ratio of net investment income/(loss) to average net assets (0.07%)(5) 1.18%(5)
before fee waivers
Portfolio turnover rate 0% 0%
</TABLE>
1 TOTAL RETURN EXCLUDES SALES CHARGE.
2 CLASS A COMMENCED OPERATIONS ON MAY 11, 1998.
3 CLASS B COMMENCED OPERATIONS ON MAY 4, 1998.
4 CLASS C COMMENCED OPERATIONS ON JANUARY 10, 2000.
5 ANNUALIZED.
6 TOTAL RETURNS ARE FOR THE PERIODS INDICATED AND HAVE NOT BEEN ANNUALIZED.
Page 131 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA BALANCED ALLOCATION FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
MAY 31, 2000 MAY 31, 1999
CLASS A CLASS B CLASS C(5) CLASS A(3) CLASS B(4)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.31 $10.33 $11.88 $9.74 $9.82
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.23 0.15 0.02 0.14 0.10
Net gain/(loss) on securities (realized and unrealized) 1.35 1.36 (0.20) 0.57 0.51
Total from investment operations 1.58 1.51 (0.18) 0.71 0.61
LESS DISTRIBUTIONS
Dividends from net investment income (0.21) (0.14) (0.00) (0.14) (0.10)
Total distributions (0.21) (0.14) (0.00) (0.14) (0.10)
Net asset value, end of period $11.68 $11.70 $11.70 $10.31 $10.33
TOTAL RETURN 15.48%(1) 14.79%(1) (1.52)%(1,2) 7.26%(1,2) 6.07%(1,2)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $3,965 $691 $3 $1,466 $385
Ratio of expenses to average net assets 1.26% 1.97% 1.97%(6) 1.31%(6) 2.02%(6)
Ratio of net investment income to average net assets 1.95% 1.24% 1.24%(6) 2.50%(6) 1.29%(6)
Ratio of expenses to average net assets before fee waivers 1.32% 1.97% 1.97%(6) 1.31%(6) 2.02%(6)
Ratio of investment income to average net assets before fee waivers 1.89% 1.24% 1.24%(6) 2.50%(6) 1.29%(6)
Portfolio turnover rate 182% 182% 182% 116% 116%
</TABLE>
1 TOTAL RETURN EXCLUDES SALES CHARGE.
2 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
3 CLASS A COMMENCED OPERATIONS ON JULY 31, 1998.
4 CLASS B COMMENCED OPERATIONS ON NOVEMBER 11, 1998.
5 CLASS C COMMENCED OPERATIONS ON APRIL 20, 2000.
6 ANNUALIZED.
Page 132 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA BOND FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
MAY 31, 2000 MAY 31, 1999
------------- ------------
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.......................... $ 9.95 $ 9.93 $ 10.27 $ 10.25
--------- ---------- --------- ---------
INVESTMENT ACTIVITIES
Net investment income (loss)............................... 0.57 0.50 0.53 0.47
Net realized and unrealized gains (losses)
from investments........................................ (0.55) (0.56) (0.29) (0.30)
--------- ---------- --------- ---------
Total from investment activities................... 0.02 (0.06) 0.24 0.17
--------- ----------- --------- ---------
DISTRIBUTIONS
Net investment income...................................... (0.57) (0.49) (0.54) (0.47)
Net realized gains......................................... (0.00) (0.00) (0.02) (0.02)
-------- ---------- --------- ---------
Total distributions................................ (0.57) (0.49) (0.56) (0.49)
--------- ---------- --------- ---------
Net asset value, end of period................................ $ 9.40 $ 9.38 $ 9.95 $ 9.93
========= ========== ========= =========
TOTAL RETURN (EXCLUDES SALES AND REDEMPTION CHARGES).......... 0.05% (0.58)% 2.55% 1.66%
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000).......................... $ 3,787 $ 558 $ 11,916 $ 4,548
Ratio of expenses to average net assets.................... 0.98% 1.69% 1.19% 1.94%
Ratio of net investment income (loss)
to average net assets................................... 6.07% 5.36% 5.29% 4.53%
Ratio of expenses to average net assets*................... 1.04% 1.69% 1.28% 2.03%
Portfolio turnover......................................... 162.00% 162.00% 268.66% 268.66%
</TABLE>
The performance set forth in this table is the financial data of the
Parkstone Bond Fund, series of a predecessor company. The Parkstone Group of
Funds. Armada Bond Fund acquired the assets and assumed the liabilities of
Parkstone Bond Fund on June 9, 2000. The net asset value at the beginning of
each period and the changes in net asset value, including the net asset
values at the end of each period listed have been restated to reflect the
conversion ration of .9799154 on the date of reorganization.
* During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratio would have been as
indicated.
Page 133 of 150
<PAGE>
<TABLE>
<CAPTION>
ELEVEN MONTHS ENDED YEAR ENDED
MAY 31, 1998 JUNE 30, 1997
------------ -------------
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.......................... $ 9.95 $ 9.93 $ 9.78 $ 9.75
------------- ------------- -------------- ------------
INVESTMENT ACTIVITIES
Net investment income (loss)............................... 0.53 0.47 0.58 0.51
Net realized and unrealized gains (loss)
from investments........................................ 0.33 0.33 0.17 0.16
------------- ------------- -------------- ------------
Total from investment activities................... 0.86 0.80 0.75 0.67
------------- ------------- -------------- ------------
DISTRIBUTIONS
Net investment income...................................... (0.54) (0.48) (0.58) (0.49)
------------- ------------- -------------- ------------
Total distributions................................ (0.54) (0.48) (0.58) (0.49)
------------- ------------- -------------- ------------
Net asset value, end of period................................ $ 10.27 $ 10.25 $ 9.95 $ 9.93
============= ============= ============== ============
TOTAL RETURN (EXCLUDES SALES AND REDEMPTION CHARGES).......... 8.83%(a) 8.18%(a) 7.92% 7.09%
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000).......................... $ 16,669 $ 6,423 $ 19,760 $ 5,967
Ratio of expenses to average net assets.................... 1.19%(b) 1.04%(b) 1.19% 1.94%
Ratio of net investment income (loss) to
average net assets...................................... 5.81%(b) 5.07%(b) 5.88% 5.15%
Ratio of expenses to average net assets*................... 1.28%(b) 2.03%(b) 1.28% 2.03%
Portfolio turnover......................................... 545.68% 545.68% 827.00% 827.00%
</TABLE>
The performance set forth in this table is the financial data of the
Parkstone Bond Fund, series of a predecessor company. The Parkstone Group of
Funds. Armada Bond Fund acquired the assets and assumed the liabilities of
Parkstone Bond Fund on June 9, 2000. The net asset value at the beginning of
each period and the changes in net asset value, including the net asset
values at the end of each period listed have been restated to reflect the
conversion ration of .9799154 on the date of reorganization.
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
Page 134 of 150
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30, 1996 1995
------------- -------------
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period................ $ 9.94 $ 9.92 $ 9.56 $ 9.49
INVESTMENT ACTIVITIES
Net investment income (loss)..................... 0.59 0.51 0.60 0.53
Net realized and unrealized gains
(loss) from investments........................ (0.16) (0.17) 0.39 0.43
---------- --------- ---------- ---------
Total from investment activities............... 0.43 0.34 0.99 0.96
---------- --------- ---------- ---------
DISTRIBUTIONS
Net investment income............................ (0.59) (0.51) (0.60) (0.53)
Net realized gains............................... -- -- (0.01) --
--------- --------- --------- ---------
Total distributions........................ (0.59) (0.51) (0.61) (0.53)
---------- --------- ---------- ---------
Net asset value, end of period................... $ 9.78 $ 9.75 $ 9.94 $ 9.92
========== ========= ========== =========
TOTAL RETURN (EXCLUDES SALES AND REDEMPTION CHARGES) 4.27% 3.46% 10.85% 10.62%
RATIOS/SUPPLEMENTARY DATA:
Net assets at end of period (000)................ $ 20,175 $ 4,426 $ 17,572 $ 1,330
Ratio of expenses to average net assets.......... 1.19% 1.94% 1.24% 2.03%
Ratio of net investment income (loss)
to average net assets.......................... 5.71% 4.97% 6.32% 5.54%
Ratio of expenses to average net assets*......... 1.28% 2.03% 1.39% 2.39%
Portfolio turnover............................... 118927% 118927% 1011% 1011%
</TABLE>
The performance set forth in this table is the financial data of the
Parkstone Bond Fund, series of a predecessor company. The Parkstone Group of
Funds. Armada Bond Fund acquired the assets and assumed the liabilities of
Parkstone Bond Fund on June 9, 2000. The net asset value at the beginning of
each period and the changes in net asset value, including the net asset
values at the end of each period listed have been restated to reflect the
conversion ration of .9799154 on the date of reorganization.
* During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been
as indicated.
Page 135 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA GNMA FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997
CLASS A CLASS B(4) CLASS C(5) CLASS A CLASS A CLASS A(3)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.10 $9.76 $9.72 $10.36 $10.15 $10.02
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.57 0.40 0.18 0.59 0.58 0.45
Net gain/(loss) on securities
(realized and unrealized) (0.35) (0.01) 0.03 (0.20) 0.31 0.23
Total from investment operations 0.22 0.39 0.21 0.39 0.89 0.68
LESS DISTRIBUTIONS
Dividends from net investment income (0.57) (0.40) (0.18) (0.58) (0.58) (0.45)
Distributions from net realized
capital gains (0.00) (0.00) (0.00) (0.07) (0.10) (0.01)
Distributions in excess of net realized
capital gains (0.00) (0.00) (0.00) (0.00) (0.00) (0.09)
Total distributions (0.57) (0.40) (0.18) (0.65) (0.68) (0.55)
Net asset value, end of period $9.75 $9.75 $9.75 $10.10 $10.36 $10.15
TOTAL RETURN 2.33%(6) 4.07%(2,6) 2.16%(2,6) 3.77%(6) 8.90%(6) 8.83%(6)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $1,231 $161 $84 $1,497 $ 549 $ 128
Ratio of expenses to average net assets 1.05% 1.76%(1) 1.76%(1) 1.03% 1.09% 1.12%(1)
Ratio of net investment income to
average net assets 5.79% 5.08%(1) 5.08%(1) 5.67% 5.54% 6.17%(1)
Ratio of expenses to average net assets
before fee waivers 1.11% 1.76%(1) 1.76%(1) 1.03% 1.09% 1.12%(1)
Ratio of net investment income to
average net assets before fee waivers 5.73% 5.08%(1) 5.08%(1) 5.67% 5.54% 6.17%(1)
Portfolio turnover rate 79% 79% 79% 85% 291% 57%
</TABLE>
(1) ANNUALIZED.
(2) RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(3) CLASS A COMMENCED OPERATIONS ON SEPTEMBER 11, 1996.
(4) CLASS B COMMENCED OPERATIONS ON AUGUST 11, 1999.
(5) CLASS C COMMENCED OPERATIONS ON JANUARY 27, 2000.
(6) TOTAL RETURN EXCLUDES SALES CHARGE.
Page 136 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA INTERMEDIATE BOND FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
CLASS A CLASS B CLASS C(4) CLASS A CLASS B CLASS A CLASS B(3) CLASS A CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.41 $10.41 $9.91 $10.63 $10.63 $10.42 $10.70 $10.35 $10.60
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.61 0.54 (0.00) 0.54 0.45 0.58 0.20 0.57 0.59
Net gain/ (loss) on securities (realized
and unrealized) (0.48) (0.47) (0.02) (0.16) (0.15) 0.21 (0.07) 0.07 (0.23)
Total from investment operations 0.13 0.07 (0.16) 0.38 0.30 0.79 0.13 0.64 0.36
LESS DISTRIBUTIONS
Dividends from net investment income (0.61) (0.54) (0.00) (0.54) (0.46) (0.58) (0.20) (0.57) (0.59)
Distributions from net realized capital
gains (0.01) (0.01) (0.00) (0.06) (0.06) (0.00) (0.00) (0.00) (0.00)
Distributions in excess of net realized
capital gains (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.02)
Total distributions (0.62) (0.55) (0.00) (0.60) (0.52) (0.58) (0.20) (0.57) (0.61)
Net asset value, end of period $9.92 $9.93 $9.93 $10.41 $10.41 $10.63 $10.63 $10.42 $10.35
TOTAL RETURN 1.25%(1) 0.64%(1) 0.22%(1,5) 3.54%(1) 2.83%(1) 7.71%(1) 7.39%(1,2) 6.36%(1) 3.44%(1)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s) $3,874 $733 $191 $5,129 $709 $3,288 $2 $3,720 $6,216
Ratio of expenses to average net assets 0.83% 1.54% 1.54%(2) 0.86% 1.57% 0.91% 1.60%(2) 0.96% 1.04%
Ratio of net investment income to average
net assets 5.97% 5.26% 5.26%(2) 4.96% 4.25% 5.48% 3.38%(2) 5.52% 5.50%
Ratio of expenses to average net assets
before fee waivers 1.04% 1.69% 1.69%(2) 1.00% 1.71% 1.06% 1.49%(2) 1.05% 1.06%
Ratio of net investment income to average
net assets before 5.76% 5.11% 5.11%(2) 4.82% 4.11% 5.33% 3.49%(2) 5.44% 5.48%
fee waivers
Portfolio turnover rate 201% 201% 201% 256% 256% 160% 160% 217% 45%
</TABLE>
(1) TOTAL RETURN EXCLUDES SALES CHARGE.
(2) ANNUALIZED.
(3) CLASS B COMMENCED OPERATIONS ON JANUARY 6, 1998.
(4) CLASS C COMMENCED OPERATIONS ON MAY 30, 2000.
(5) TOTAL RETURN FOR THE PERIOD INDICATED HAS NOT BEEN ANNUALIZED.
Page 137 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA LIMITED MATURITY BOND FUND (FORMERLY ARMADA ENHANCED INCOME FUND)
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
CLASS A CLASS B(1) CLASS C(2) CLASS A CLASS A CLASS A CLASS A
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.99 $9.90 $9.85 $10.08 $10.00 $10.02 $10.18
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.56 0.39 0.18 0.56 0.57 0.57 0.56
Net gain/(loss) on securities (realized and
unrealized) (0.24) (0.17) (0.12) (0.05) 0.09 0.01 (0.05)
Total from investment operations 0.32 0.22 0.06 0.51 0.66 0.58 0.51
LESS DISTRIBUTIONS
Dividends from net investment income (0.57) (0.39) (0.18) (0.55) (0.57) (0.57) (0.56)
Dividends in excess of net investment income (0.00) (0.00) (0.00) 0.00 (0.00) (0.00) (0.11)
Distributions of net realized capital gains (0.00) (0.00) (0.00) (0.05) (0.01) (0.03) (0.00)
Total distributions (0.57) (0.39) (0.18) (0.60) (0.58) (0.60) (0.67)
Net asset value, end of period $9.74 $9.73 $9.73 $9.99 $10.08 $10.00 $10.02
TOTAL RETURN 3.47%(4) 2.22%(4,5) 0.56%(4,5) 4.94%(4) 6.68%(4) 5.91%(4) 5.13%(4)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $873 $180 $18 $550 $559 $2,051 $1,718
Ratio of expenses to average net assets 0.64% 1.54%(3) 1.54%(3) 0.53% 0.41% 0.31% 0.33%
Ratio of net investment income to average
net assets 5.74% 4.84%(3) 4.84%(3) 5.39% 5.65% 5.63% 5.55%
Ratio of expenses to average net assets
before fee waivers 0.84% 1.64%(3) 1.64%(3) 0.75% 0.80% 0.75% 0.80%
Ratio of net investment income to average
net assets before fee waivers 5.54% 4.74%(3) 4.74%(3) 5.17% 5.26% 5.18% 5.08%
Portfolio turnover rate 90% 90% 90% 190% 135% 225% 98%
</TABLE>
(1) CLASS B COMMENCED OPERATIONS ON AUGUST 11, 1999.
(2) CLASS C COMMENCED OPERATIONS ON JANUARY 27, 2000.
(3) ANNUALIZED.
(4) TOTAL RETURN EXCLUDES SALES CHARGE.
(5) TOTAL RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
Page 138 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA TOTAL RETURN ADVANTAGE FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997
CLASS A CLASS B(1) CLASS A CLASS A CLASS A CLASS A
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.98 $9.73 $10.25 $9.89 $9.87 $10.54
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.57 0.39 0.56 0.61 0.64 0.62(4)
Net gain/(loss) on securities (realized and unrealized) (0.44) (0.19) (0.23) 0.36 0.16 (0.22)
Total from investment operations 0.13 0.20 0.33 0.97 0.80 0.40
LESS DISTRIBUTIONS
Dividends from net investment income (0.57) (0.37) (0.56) (0.61) (0.64) (0.62)
Dividends in excess of net investment income (0.01) (0.00) (0.00) (0.00) (0.00) (0.14)
Distributions from net realized capital gains (0.06) (0.06) (0.04) (0.00) (0.00) (0.31)
Distributions in excess of net realized capital gains (0.00) (0.00) (0.00) (0.00) (0.14) (0.00)
Total distributions (0.64) (0.43) (0.60) (0.61) (0.78) (1.07)
Net asset value, end of period $9.47 $9.50 $9.98 $10.25 $9.89 $9.87
TOTAL RETURN 1.41%(3) 2.17%(3,5) 3.18%(3) 10.08%(3) 8.35%(3) 3.74%(3)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $5,035 $1 $4,686 $640 $2,186 $2,040
Ratio of expenses to average net assets 0.73% 1.47%(2) 0.69% 0.54% 0.41% 0.36%
Ratio of net investment income to average
net assets 5.92% 5.18%(2) 5.48% 6.14% 6.46% 6.12%
Ratio of expenses to average net assets before
fee waivers 1.02% 1.67%(2) 0.89% 0.97% 0.96% 0.89%
Ratio of net investment income to average
net assets before fee waivers 5.63% 4.98%(2) 5.28% 5.71% 5.91% 5.59%
Portfolio turnover rate 121% 121% 142% 170% 169% 268%
</TABLE>
(1) CLASS B COMMENCED OPERATIONS ON SEPTEMBER 29, 1999.
(2) ANNUALIZED.
(3) TOTAL RETURN EXCLUDES SALES CHARGE.
(4) CALCULATED BASED UPON AVERAGE SHARES OUTSTANDING.
(5) TOTAL RETURN FOR THE PERIOD INDICATED HAS NOT BEEN ANNUALIZED.
Page 139 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA U.S. GOVERNMENT INCOME FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR ENDED MAY 31, YEAR ENDED MAY 31, 1999
2000
CLASS A CLASS B CLASS A CLASS B
<S> <C> <C> <C> <C>
Net Asset Value, beginning of Period $ 9.13 $ 9.11 $ 9.27 $ 9.24
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.54 0.48 0.55 0.47
Net realized and unrealized loss on securities (0.37) (0.38) (0.14) (0.13)
Total from investment operations 0.17 0.10 0.41 0.34
LESS DISTRIBUTIONS
Net investment income (0.53) (0.47) (0.55) (0.47)
Total Distributions (0.53) (0.47) (0.55) (0.47)
Net Asset Value, End of Period $ 8.77 $ 8.74 $ 9.13 $ 9.11
TOTAL RETURN (EXCLUDES SALES AND REDEMPTION 1.96% 1.10% 4.46% 3.76%
CHARGES)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, end of period (000) $ 20,790 $ 9,192 $38,190 $16,373
Ratio of expenses to average net assets 1.08% 1.83% 1.00% 1.75%
Ratio of net investment income to average
net assets 6.03% 5.28% 5.92% 5.15%
Ratio of expenses to average net assets* 1.19% 1.94% 1.34% 2.09%
Portfolio turnover rate 73.52% 73.52% 52.60% 52.60%
</TABLE>
* DURING THE PERIOD, CERTAIN FEES WERE VOLUNTARILY REDUCED. IF SUCH VOLUNTARY
FEE REDUCTIONS HAD NOT OCCURRED, THE RATIOS WOULD HAVE BEEN AS INDICATED.
Page 140 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA U.S. GOVERNMENT INCOME FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
ELEVEN MONTHS ENDED MAY 31, 1998 YEAR ENDED JUNE 30, 1997
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of Period $ 9.15 $ 9.13 $9.10 $ 9.25 $9.21 $9.19
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.61 0.55 0.54 0.70 0.63 0.64
Net realized and unrealized gain/(loss) on securities 0.08 0.07 0.08 (0.10) (0.09) (0.11)
Total from investment operations 0.69 0.62 0.62 0.60 0.54 0.53
LESS DISTRIBUTIONS
Net investment income (0.53) (0.47) (0.47) (0.59) (0.52) (0.50)
Tax return of capital (0.04) (0.04) (0.04) (0.11) (0.10) (0.12)
Total Distributions (0.57) (0.51) (0.51) (0.70) (0.62) (0.62)
Net Asset Value, End of Period $ 9.27 $ 9.24 $9.21 $9.15 $9.13 $9.10
TOTAL RETURN (EXCLUDES SALES AND REDEMPTION CHARGES) 7.80%(a) 6.98%(a) 7.03%(a) 6.86% 6.06% 6.07%
RATIOS/SUPPLEMENTARY DATA:
Net Assets, end of period (000) $54,710 $23,739 $ 363 $58,589 $23,448 $69
Ratio of expenses to average net assets 1.00%(b) 1.75%(b) 1.74%(b) 1.02% 1.77% 1.77%
Ratio of net investment income to average net assets 7.20%(b) 6.45%(b) 6.34%(b) 7.64% 6.89% 6.89%
Ratio of expenses to average net assets* 1.34%(b) 2.09%(b) 2.08%(b) 1.36% 2.11% 2.11%
Portfolio turnover rate 278.94% 278.94% 278.94% 499.53% 499.53% 499.53%
</TABLE>
* DURING THE PERIOD, CERTAIN FEES WERE VOLUNTARILY REDUCED. IF SUCH VOLUNTARY
FEE REDUCTIONS HAD NOT OCCURRED, THE RATIOS WOULD HAVE BEEN AS INDICATED.
(a) NOT ANNUALIZED.
(b) ANNUALIZED.
Page 141 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA U.S. GOVERNMENT INCOME FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1996 YEAR ENDED JUNE 30, 1995
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C(a)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 9.42 $ 9.39 $ 9.36 $9.41 $9.38 $9.12
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.73 0.66 0.66 0.75 0.68 0.28
Net realized and unrealized
gain/(loss) on securities (0.17) (0.18) (0.17) (0.00) 0.01 0.24
Total from investment operations 0.56 0.48 0.49 0.75 0.69 0.52
LESS DISTRIBUTIONS
Net investment income (0.65) (0.59) (0.66) (0.66) (0.61) (0.25)
Tax return of capital (0.08) (0.07) (0.00) (0.08) (0.07) (0.03)
Total Distributions (0.73) (0.66) (0.66) (0.74) (0.68) (0.28)
Net Asset Value, End of Period $ 9.25 $ 9.21 $ 9.19 $9.42 $9.39 $9.36
TOTAL RETURN (EXCLUDES SALES
AND REDEMPTION CHARGES) 5.97% 5.22% 5.25% 8.46% 7.71% 5.26%(c)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, end of period (000) $52,250 $19,556 $ 70 $50,931 $8,478 $ 29
Ratio of expenses to average net assets 1.01% 1.76% 1.76% 1.04% 1.83% 2.88%(b)
Ratio of net investment income to average
net assets 7.70% 6.92% 6.92% 8.03% 7.28% 11.54%(b)
Ratio of expenses to average net assets* 1.35% 2.10% 2.10% 1.44% 2.44% 2.88%(b)
Portfolio turnover rate 348.01% 348.01% 348.01% 114.71% 114.71% 114.71%
</TABLE>
* DURING THE PERIOD, CERTAIN FEES WERE VOLUNTARILY REDUCED. IF SUCH VOLUNTARY
FEE REDUCTIONS HAD NOT OCCURRED, THE RATIOS WOULD HAVE BEEN AS INDICATED.
(a) PERIOD FROM NOVEMBER 16, 1994 (COMMENCEMENT OF OFFERING OF CLASS C SHARES)
TO JUNE 30, 1995.
(b) ANNUALIZED.
(c) REPRESENTS TOTAL RETURN FOR THE INSTITUTIONAL SHARES FOR THE PERIOD FROM
JULY 1, 1994 TO NOVEMBER 15, 1994 PLUS THE TOTAL RETURN FOR THE CLASS C SHARES
FOR THE PERIOD FROM NOVEMBER 16, 1994 TO JUNE 30, 1995.
Page 142 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA MICHIGAN MUNICIPAL BOND FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR ENDED MAY 31, 2000 YEAR ENDED MAY 31, 1999
CLASS A CLASS B CLASS A CLASS B
<S> <C> <C> <C> <C>
Net Asset Value, beginning of Period $ 10.91 $10.92 $ 11.06 $11.07
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.45 0.37 0.44 0.36
Net realized and unrealized loss
on securities (0.53) (0.53) (0.08) (0.08)
Total from investment operations (0.08) (0.16) 0.36 0.28
LESS DISTRIBUTIONS
Net investment income (0.44) (0.36) (0.44) (0.36)
Net realized gains (0.01) (0.01) (0.07) (0.07)
Total Distributions (0.45) (0.37) (0.51) (0.43)
Net Asset Value, End of Period $10.38 $10.39 $10.91 $10.92
TOTAL RETURN (EXCLUDES SALES AND
REDEMPTION CHARGES) (0.68)% (1.41)% 3.38% 2.52%
RATIOS/SUPPLEMENTARY DATA:
Net Assets, end of period (000) $14,799 $1,881 $28,305 $3,217
Ratio of expenses to average net assets 1.06% 1.81% 1.01% 1.76%
Ratio of net investment income to
average net assets 4.21% 3.46% 3.96% 3.21%
Ratio of expenses to average net assets* 1.16% 1.91% 1.29% 2.05%
Portfolio turnover rate 9.60% 9.60% 6.52% 6.52%
</TABLE>
* DURING THE PERIOD, CERTAIN FEES WERE VOLUNTARILY REDUCED. IF SUCH VOLUNTARY
FEE REDUCTIONS HAD NOT OCCURRED, THE RATIO WOULD HAVE BEEN AS INDICATED.
Page 143 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA MICHIGAN MUNICIPAL BOND FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
ELEVEN MONTHS ENDED MAY 31, 1998 YEAR ENDED JUNE 30, 1997
CLASS A CLASS B CLASS A CLASS B
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.89 $10.90 $10.76 $10.76
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.42 0.34 0.49 0.41
Net realized and unrealized
gain on securities 0.23 0.23 0.14 0.13
Total from investment operations 0.65 0.57 0.63 0.54
LESS DISTRIBUTIONS
Net investment income (0.45) (0.37) (0.46) (0.36)
Net realized gains (0.03) (0.03) (0.04) (0.04)
Total Distributions (0.48) (0.40) (0.50) (0.40)
Net Asset Value, End of Period $11.06 $11.07 $10.89 $10.90
TOTAL RETURN (EXCLUDES SALES AND
REDEMPTION CHARGES) 5.96%(a) 5.32%(a) 5.89% 5.05%
RATIOS/SUPPLEMENTARY DATA:
Net Assets, end of period (000) $38,536 $3,983 $38,302 $3,503
Ratio of expenses to average net assets 0.99%(b) 1.74%(b) 1.01% 1.76%
Ratio of net investment income to
average net assets 4.09%(b) 3.34%(b) 4.48% 3.73%
Ratio of expenses to average net assets* 1.28%(b) 2.03%(b) 1.30% 2.05%
Portfolio turnover rate 26.24% 26.24% 28.48% 28.48%
</TABLE>
* DURING THE PERIOD, CERTAIN FEES WERE VOLUNTARILY REDUCED. IF SUCH VOLUNTARY
FEE REDUCTIONS HAD NOT OCCURRED, THE RATIO WOULD HAVE BEEN AS INDICATED.
(a) NOT ANNUALIZED.
(b) ANNUALIZED.
Page 144 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA MICHIGAN MUNICIPAL BOND FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1996 YEAR ENDED JUNE 30, 1995
CLASS A CLASS B CLASS A CLASS B CLASS C (A)(B)
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $10.75 $ 10.75 $10.53 $10.52 $10.11
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) 0.47 0.40 0.48 0.40 (0.02)
Net realized and unrealized gain
on securities 0.04 0.04 0.23 0.24 0.62
Total from investment operations 0.51 0.44 0.71 0.64 0.60
LESS DISTRIBUTIONS
Net investment income (0.47) (0.40) (0.48) (0.40) 0.00
Net realized gains (0.03) (0.03) (0.01) (0.01) (0.17)
Total Distributions (0.50) (0.43) (0.49) (0.41) (0.17)
Net Asset Value, End of Period $10.76 $ 10.76 $ 10.75 $10.75 $10.54
TOTAL RETURN (EXCLUDES SALES
AND REDEMPTION CHARGES) 4.87% 4.13% 6.99% 6.28% 3.39%(d)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, end of period (000) $36,681 $3,565 $37,874 $2,270 --
Ratio of expenses to average net 1.02% 1.77% 1.00% 1.78% 0.48%(c)
assets
Ratio of net investment
income/(loss)
to average net assets 4.32% 3.57% 4.57% 3.80% (0.32)%(c)
Ratio of expenses to average net 1.31% 2.06% 1.32% 2.32% 0.48%(c)
assets*
Portfolio turnover rate 27.66% 27.66% 26.06% 26.06% 26.06%
</TABLE>
* DURING THE PERIOD, CERTAIN FEES WERE VOLUNTARILY REDUCED. IF SUCH VOLUNTARY
FEE REDUCTIONS HAD NOT OCCURRED, THE RATIOS WOULD HAVE BEEN AS INDICATED.
(a) THERE WAS ONLY ONE SHARE OUTSTANDING FOR THE CLASS C SHARES AT JUNE 30,
1995.
(b) PERIOD FROM NOVEMBER 16, 1994 (COMMENCEMENT OF OFFERING OF CLASS C SHARES)
TO JUNE 30, 1995.
(c) ANNUALIZED.
(d) REPRESENTS TOTAL RETURN FOR THE INSTITUTIONAL SHARES FOR THE PERIOD FROM
JULY 1, 1994 TO NOVEMBER 15, 1994 PLUS THE TOTAL RETURN FOR THE CLASS C
SHARES FOR THE PERIOD FROM NOVEMBER 16, 1994 TO JUNE 30, 1995, NOT
ANNUALIZED.
Page 145 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA NATIONAL TAX EXEMPT BOND FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED MAY 31, 2000 ENDED MAY 31, 1999
CLASS A CLASS B CLASS C(6) CLASS A(2) CLASS B(5)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.97 $9.96 $9.52 $10.04 $10.23
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.41 0.34 0.03 0.41 0.13
Net gain/(loss) on securities (realized and unrealized) (0.42) (0.45) (0.02) (0.04) (0.26)
Total from investment operations (0.01) (0.11) 0.01 0.37 (0.13)
LESS DISTRIBUTIONS
Dividends from net investment income (0.41) (0.34) (0.03) (0.41) (0.14)
Distribution from net realized capital gains (0.01) (0.01) (0.00) (0.03) (0.00)
Total distributions (0.42) (0.35) (0.03) (0.44) (0.14)
Net asset value, end of period $9.54 $9.50 $9.50 $9.97 $9.96
TOTAL RETURN (0.02)%(3) (1.05)%(3) 0.09%(3,4) 3.67%(3,4) (1.22)%(3,4)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $4,009 $224 $0 $4,205 $ 275
Ratio of expenses to average net assets 0.64% 1.35% 1.50%(1) 0.46%(1) 1.17%(1)
Ratio of net investment income to average net assets 4.27% 3.56% 3.41%(1) 4.29%(1) 3.58%(1)
Ratio of expenses to average net assets before fee waivers 0.91% 1.56% 1.65%(1) 0.97%(1) 1.68%(1)
Ratio of net investment income to average net assets before fee 4.00% 3.35% 3.26%(1) 3.78%(1) 3.07%(1)
waivers
Portfolio turnover rate 65% 65% 65% 23% 23%
</TABLE>
1 ANNUALIZED
2 CLASS A COMMENCED OPERATIONS ON JUNE 19, 1998.
3 TOTAL RETURN EXCLUDES SALES CHARGE.
4 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
5 CLASS B COMMENCED OPERATIONS ON JANUARY 29, 1999.
6 CLASS C COMMENCED OPERATIONS ON FEBRUARY 24, 2000.
Page 146 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA OHIO TAX EXEMPT BOND FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
CLASS A CLASS A CLASS A CLASS A CLASS A
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.00 $ 11.09 $10.82 $10.66 $10.70
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.47 0.52 0.51 0.51 0.50
Net gain/(loss) on securities (realized and unrealized) (0.53) (0.08) 0.28 0.16 (0.04)
Total from investment operations (0.06) 0.44 0.79 0.67 0.46
LESS DISTRIBUTIONS
Dividends from net investment income (0.47) (0.52) (0.51) (0.51) (0.50)
Distributions from net realized capital gains (0.01) (0.01) (0.01) (0.00) (0.00)
Total distributions (0.48) (0.53) (0.52) (0.51) (0.50)
Net asset value, end of period $10.46 $ 11.00 $11.09 $10.82 $10.66
TOTAL RETURN (0.51)%(1) 3.93%(1) 7.39%(1) 6.38%(1) 4.35%(1)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $5,173 $4,808 $4,037 $3,535 $2,869
Ratio of expenses to average net assets 0.62% 0.38% 0.25% 0.24% 0.26%
Ratio of net investment income to average net assets 4.42% 4.67% 4.59% 4.71% 4.68%
Ratio of expenses to average net assets before fee waivers 0.90% 0.88% 0.80% 0.79% 0.83%
Ratio of net investment income to average net assets before fee 4.14% 4.17% 4.04% 4.16% 4.11%
waivers
Portfolio turnover rate 31% 19% 15% 23% 10%
</TABLE>
(1) TOTAL RETURN EXCLUDES SALES CHARGE.
Page 147 of 150
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA PENNSYLVANIA MUNICIPAL BOND FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997
CLASS A CLASS C(4) CLASS A CLASS A CLASS A(3)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.40 $9.95 $10.45 $10.22 $10.13
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.44 0.13 0.48 0.45 0.31
Net gain/(loss) on securities (realized and unrealized) (0.45) (0.14) (0.04) 0.24 0.12
Total from investment operations (0.01) (0.01) 0.44 0.69 0.43
LESS DISTRIBUTIONS
Dividends from net investment income (0.46) (0.03) (0.48) (0.45) (0.31)
Distributions from net realized capital gains (0.02) (0.00) (0.01) (0.00) (0.02)
Distributions in excess of net realized capital gains (0.00) (0.00) (0.00) (0.01) (0.01)
Total distributions (0.48) (0.03) (0.49) (0.46) (0.34)
Net asset value, end of period $9.91 $9.91 $10.40 $10.45 $10.22
TOTAL RETURN (0.05)%(5) (0.06)%(2,5)4.21%(5) 6.84%(5) 6.13%(1,5)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $216 $0 $218 $125 $81
Ratio of expenses to average net assets 0.63% 1.53%(1) 0.58% 0.77% 0.99%(1)
Ratio of net investment income to average net assets 4.45% 3.55%(1) 4.70% 4.32% 4.26%(1)
Ratio of expenses to average net assets before fee waivers 0.94% 1.68%(1) 0.93% 0.94% 1.00%(1)
Ratio of net investment income to average net assets before fee 4.14% 3.40%(1) 4.35% 4.15% 4.25%(1)
waivers
Portfolio turnover rate 38% 38% 15% 20% 42%
</TABLE>
1 ANNUALIZED.
2 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
3 CLASS A COMMENCED OPERATIONS ON SEPTEMBER 11, 1996.
4 CLASS C COMMENCED OPERATIONS FEBRUARY 24, 2000.
5 TOTAL RETURN EXCLUDES SALES CHARGE.
Page 148 of 150
<PAGE>
ARMADA FUNDS
INVESTMENT ADVISER
National City Investment Management Company
1900 East Ninth Street
Cleveland, Ohio 44114
DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
LEGAL COUNSEL
Drinker Biddle & Reath LLP
One Logan Square
18th and Cherry Streets
Philadelphia, Pennsylvania 19103-6996
More information about the Funds is available without charge through the
following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI, as it may be amended or supplemented from time to time, includes more
detailed information about the Armada Funds. The SAI is on file with the SEC and
is incorporated by reference into this prospectus. This means that the SAI, for
legal purposes, is a part of this prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS
These reports list each Fund's holdings and contain information from the Fund's
managers about strategies, and recent market conditions and trends and their
impact on Fund performance. The reports also contain detailed financial
information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:
BY INTERNET: www.armadafunds.com
BY TELEPHONE: Call 1-800-622-FUND (3863)
BY MAIL: Write to Armada Funds at:
One Freedom Valley Drive
Oaks, Pennsylvania 19456
Page 149 of 150
<PAGE>
FROM THE SEC: You can also obtain the SAI or the Annual and Semi-Annual reports,
as well as other information about the Armada Funds, from the EDGAR Database on
the SEC's website ("http://www.sec.gov"). You may review and copy documents at
the SEC Public Reference Room in Washington, DC (For information on the
operation of the Public Reference Room, call 202-942-8090). You may request
documents by mail from the SEC, upon payment of a duplicating fee, by writing
to: Securities and Exchange Commission, Public Reference Section, Washington, DC
20549-0102. You may also obtain this information, upon payment of a duplicating
fee, by e-mailing the SEC at the following address: [email protected].
Armada Funds' Investment Company Act registration number is 811-4416.
Page 150 of 150
<PAGE>
ARMADA FUNDS
I SHARES (INSTITUTIONAL)
PROSPECTUS
OCTOBER 2, 2000
ARMADA CORE EQUITY FUND
ARMADA EQUITY GROWTH FUND
ARMADA EQUITY INCOME FUND
ARMADA EQUITY INDEX FUND
ARMADA INTERNATIONAL EQUITY FUND
ARMADA LARGE CAP ULTRA FUND
ARMADA MID CAP GROWTH FUND
ARMADA SMALL CAP GROWTH FUND
ARMADA SMALL CAP VALUE FUND
ARMADA TAX MANAGED EQUITY FUND
ARMADA BALANCED ALLOCATION FUND
ARMADA BOND FUND
ARMADA GNMA FUND
ARMADA INTERMEDIATE BOND FUND
ARMADA LIMITED MATURITY BOND FUND
ARMADA STRATEGIC INCOME BOND FUND
ARMADA TOTAL RETURN ADVANTAGE FUND
ARMADA U.S. GOVERNMENT INCOME FUND
ARMADA MICHIGAN MUNICIPAL BOND FUND
ARMADA NATIONAL TAX EXEMPT BOND FUND
ARMADA OHIO TAX EXEMPT BOND FUND
ARMADA PENNSYLVANIA MUNICIPAL BOND FUND
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED ANY
FUND SHARES OR DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
STATEMENT TO THE CONTRARY IS A CRIMINAL OFFENSE.
Page 1 of 118
<PAGE>
INVESTMENT ADVISER
NATIONAL CITY INVESTMENT MANAGEMENT COMPANY
INVESTMENT SUB-ADVISER
NATIONAL ASSET MANAGEMENT CORPORATION
(ARMADA CORE EQUITY FUND AND
ARMADA TOTAL RETURN ADVANTAGE FUND)
Page 2 of 118
<PAGE>
ABOUT THIS PROSPECTUS
Armada Funds (the Trust) is a mutual fund family that offers different
classes of shares in separate investment portfolios (Funds). The Funds have
individual investment goals and strategies. This prospectus gives you
important information that you should know about the Class I Shares of the
Funds before investing. The Trust also offers Class I Shares of Armada money
market funds in a separate prospectus which is available by calling
1-800-622-FUND (3863). Please read this prospectus and keep it for future
reference.
THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS SOME GENERAL
INFORMATION YOU SHOULD KNOW ABOUT RISK AND RETURN THAT IS COMMON TO EACH OF THE
FUNDS. FOR MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
PAGE
<TABLE>
<S> <C>
ARMADA CORE EQUITY FUND................................................2
ARMADA EQUITY GROWTH FUND..............................................4
ARMADA EQUITY INCOME FUND..............................................6
ARMADA EQUITY INDEX FUND...............................................8
ARMADA INTERNATIONAL EQUITY FUND.......................................10
ARMADA LARGE CAP ULTRA FUND............................................12
ARMADA MID CAP GROWTH FUND.............................................14
ARMADA SMALL CAP GROWTH FUND...........................................16
ARMADA SMALL CAP VALUE FUND............................................18
ARMADA TAX MANAGED EQUITY FUND.........................................20
ARMADA BALANCED ALLOCATION FUND........................................24
ARMADA BOND FUND.......................................................27
ARMADA GNMA FUND.......................................................29
ARMADA INTERMEDIATE BOND FUND..........................................31
ARMADA LIMITED MATURITY BOND FUND......................................33
ARMADA STRATEGIC INCOME BOND FUND......................................35
ARMADA TOTAL RETURN ADVANTAGE FUND.....................................37
ARMADA U.S. GOVERNMENT INCOME FUND ....................................39
ARMADA MICHIGAN MUNICIPAL BOND FUND....................................43
ARMADA NATIONAL TAX EXEMPT BOND FUND...................................45
ARMADA OHIO TAX EXEMPT BOND FUND.......................................47
ARMADA PENNSYLVANIA MUNICIPAL BOND FUND................................49
MORE INFORMATION ABOUT RISK............................................52
MORE INFORMATION ABOUT FUND INVESTMENTS................................56
THE INVESTMENT ADVISER, SUB-ADVISER AND
INVESTMENT TEAM....................................................58
PURCHASING AND SELLING FUND SHARES.....................................60
DIVIDENDS AND TAXES....................................................62
FINANCIAL HIGHLIGHTS...................................................63
</TABLE>
Page 3 of 118
<PAGE>
INTRODUCTION
Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.
Fund performance is measured against one or more indices. An index measures the
market prices of a specific group of securities in a particular market or
securities in a market sector. You cannot invest directly in an index. Unlike a
mutual fund, an index does not have an investment adviser and does not pay any
commissions or expenses. If an index had expenses, its performance would be
lower.
CLASS I SHARES HAVE NO SALES CHARGE, NO MINIMUM INITIAL INVESTMENT AND ARE ONLY
AVAILABLE TO FINANCIAL INSTITUTIONS.
RISK/RETURN INFORMATION COMMON TO THE FUNDS
Each Fund has its own investment goal and strategies for reaching that goal. The
investment managers invest Fund assets in a way that they believe will help a
Fund achieve its goal. Still, investing in each Fund involves risk and there is
no guarantee that a Fund will achieve its goal. An investment manager's
judgments about the markets, the economy, or companies may not anticipate actual
market movements, economic conditions or company performance, and these
judgments may affect the return on your investment.
No matter how good a job an investment manager does, you could lose money on
your investment in a Fund, just as you could with other investments.
An investment in a Fund is not a bank deposit and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any government
agency.
The value of your investment in a Fund is based primarily on the market prices
of the securities the Fund holds. These prices change daily due to economic and
other events that affect particular companies and other issuers. These price
movements, sometimes called volatility, may be greater or lesser depending on
the types of securities a Fund owns and the markets in which they trade. The
effect on a Fund of a change in the value of a single security will depend on
how widely the Fund diversifies its holdings.
Page 4 of 118
<PAGE>
ARMADA CORE EQUITY FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS Large cap common stocks
SHARE PRICE VOLATILITY High
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in large capitalization
common stocks
INVESTOR PROFILE Investors seeking capital appreciation,
who are willing to accept the risk of
investing in equity securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Core Equity Fund's investment objective is to provide capital
appreciation by blending value and growth investment styles. The investment
objective may be changed without a shareholder vote.
The Fund normally invests at least 80% of its total assets in a diversified
portfolio of common stocks and securities convertible into common stocks of
companies with large stock market capitalizations. The Sub-Adviser will
normally invest between 20% and 50% of its assets in the following three
types of equity securities: (1) common stocks that meet the Sub-Adviser's
criteria for five-year annual earnings-per-share rate during the last five
years; (2) common stocks with price-to-earnings ratios below the average of
the companies included in the S&P 500 Composite Index; and (3) common stocks
that pay dividends at a rate above the average of the companies included in
the S&P 500 Composite Index.
The Sub-Adviser utilizes a systematic, disciplined investment process when
selecting individual securities. This includes: (1) screening a database for
liquidity and the criteria listed above; (2) scoring each issue emphasizing
fundamental, valuation and technical indicators; and (3) security analysis that
further evaluates the company and the stock, which includes an analysis of
company fundamentals such as earnings, profitability and management, valuation
such as price/earnings, price/book and yield, and technical analysis emphasizing
individual stock price trends.
The sell discipline involves the monitoring of each company's fundamental,
valuation, and technical measures. If one of these measures is unfavorable, an
immediate review of that company is performed. If two of these three measures
are unfavorable, that stock is sold. The Fund may invest up to 20% of its total
assets at the time of purchase in foreign equity securities.
The Fund considers a large capitalization or "large cap" company to be one that
has a comparable market capitalization to the companies in the S&P 500 Composite
Index. The S&P 500 Composite Index is a widely recognized, unmanaged index of
500 common stocks which are generally representative of the U.S. stock market as
a whole.
Page 5 of 118
<PAGE>
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may decline in response. These
factors contribute to price volatility, which is the principal risk of investing
in the Fund.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country.
The Fund is also subject to the risk that large cap equity securities may
underperform other segments of the equity markets or the equity markets as a
whole. For additional information about risks, see "More Information About
Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1998 32.37%
1999 19.94%
BEST QUARTER WORST QUARTER
25.10% -6.78%
(12/31/98) (9/30/98)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was -0.63%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500 COMPOSITE INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR SINCE INCEPTION
----------------------------------------------------------------------------------------
<S> <C> <C>
ARMADA CORE EQUITY FUND 19.94% 22.46%(1)
S&P 500 COMPOSITE INDEX(3) 21.04% 21.29%(2)
</TABLE>
(1)Since August 1, 1997
(2)Since July 31, 1997
(3)The S&P 500 Composite Index is a widely recognized, unmanaged index of 500
common stocks which are generally representative of the U.S. stock market as a
whole.
Page 6 of 118
<PAGE>
FUND FEES AND EXPENSES
SEE PAGE 22 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 7 of 118
<PAGE>
ARMADA EQUITY GROWTH FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS Large cap equity securities
SHARE PRICE VOLATILITY High
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in growth oriented common
stocks of larger issuers.
INVESTOR PROFILE Investors seeking capital appreciation
and who are to accept the risk of
investing in equity securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Equity Growth Fund's investment objective is to provide capital
appreciation by investing in a diversified portfolio of publicly traded larger
cap equity securities. The investment objective may be changed without
shareholder vote.
The Fund will normally invest at least 80% of its total assets in a diversified
portfolio of common stocks and securities convertible into common stocks of
companies with large stock market capitalization. The Fund may invest up to
20% of its total assets at the time of purchase in foreign equity securities.
In buying and selling securities for the Fund, the Adviser considers factors
such as historical and projected earnings growth, earnings quality and
liquidity. The Fund generally purchases common stocks that are listed on a
national securities exchange or unlisted securities with an established
over-the-counter market.
The Fund considers a large capitalization or "large cap" company to be one that
has a comparable market capitalization to the companies in the S&P 500 Composite
Index. The S&P 500 Composite Index is a widely recognized, unmanaged index of
500 common stocks which are generally representative of the U.S. stock market as
a whole.
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may decline in response. These
factors contribute to price volatility, which is the principal risk of investing
in the Fund.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in
Page 8 of 118
<PAGE>
response to events that do not otherwise affect the value of the security in
the issuer's home country.
The Fund is also subject to the risk that large cap equity securities may
underperform other segments of the equity markets or the equity markets as a
whole. For additional information about risks, see "More Information About
Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows the performance of the Fund's Class I Shares from year to
year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1990 1.28%
1991 36.12%
1992 6.38%
1993 -0.27%
1994 -0.79%
1995 28.93%
1996 20.33%
1997 36.61%
1998 29.09%
1999 22.98%
BEST QUARTER WORST QUARTER
22.87% -13.71%
(12/31/98) (9/30/90)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 1.64%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500 COMPOSITE INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ARMADA EQUITY GROWTH FUND 22.98% 27.46% 17.18% 17.54%(1)
S&P 500 COMPOSITE INDEX(3) 21.04% 28.55% 18.20% 18.20%(2)
</TABLE>
(1)Since December 20, 1989
(2)Since December 31, 1989
(3)The S&P 500 Composite Index is a widely recognized, unmanaged index of 500
common stocks which are generally representative of the U.S. stock market as a
whole.
Page 9 of 118
<PAGE>
FUND FEES AND EXPENSES
SEE PAGE 22 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 10 of 118
<PAGE>
ARMADA EQUITY INCOME FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS Income producing, value-oriented equity
securities
SHARE PRICE VOLATILITY Medium
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in value-oriented equity
securities that in the aggregate
provide a higher yield than the general
market
INVESTOR PROFILE Investors seeking an income component
as well as capital appreciation and
who are willing to accept the risk
of investing in equity securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Equity Income Fund's investment objective is to provide capital
appreciation by investing in a diversified portfolio of publicly traded equity
securities which, in the aggregate, provide a premium current yield. Equity
securities include public and privately issued equity securities, common and
preferred stocks, warrants, rights to subscribe to common stock and convertible
securities, as well as instruments that attempt to track the price movement of
equity indices. The investment objective may be changed without a shareholder
vote.
The Fund normally invests at least 80% of its total assets in common stocks and
securities convertible into common stocks of companies that pay dividends. The
Fund may invest up to 20% of its total assets at the time of purchase in foreign
equity securities. In buying and selling securities for the Fund, the Adviser
attempts to emphasize equity securities and convertible securities that provide
a higher yield than the general market. The Fund will generally sell securities
when they fail to satisfy investment criteria.
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may decline in response. These
factors contribute to price volatility, which is the principal risk of investing
in the Fund.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in
Page 11 of 118
<PAGE>
response to events that do not otherwise affect the value of the security in the
issuer's home country.
The Fund is also subject to the risk that income producing equity securities may
underperform other segments of the equity markets or the equity markets as a
whole. For additional information about risks, see "More Information About
Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows the performance of the Fund's Class I Shares from year to
year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1995 27.70%
1996 18.08%
1997 29.21%
1998 10.23%
1999 -0.13%
BEST QUARTER WORST QUARTER
12.63% -9.19%
(6/30/97) (9/30/99)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was -6.86%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500/BARRA VALUE INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS SINCE INCEPTION
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA EQUITY INCOME FUND -0.13% 16.49% 15.02%(1)
S&P 500/BARRA VALUE INDEX(3) 12.72% 22.94% 21.04%(2)
</TABLE>
(1)Since July 1, 1994
(2)Since June 30, 1994
(3)The S&P 500/Barra Value Index is comprised of securities in the S&P 500
Composite Index that have a lower than median market capitalization weighted
price-to-book ratio.
FUND FEES AND EXPENSES
SEE PAGE 22 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 12 of 118
<PAGE>
ARMADA EQUITY INDEX FUND
FUND SUMMARY
INVESTMENT GOAL To approximate, before Fund expenses,
the investment results of the S&P 500
Composite Index
INVESTMENT FOCUS Common stocks of larger issuers
SHARE PRICE VOLATILITY High
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in stocks that comprise the
S&P 500 Composite Index
INVESTOR PROFILE Investors seeking returns similar to
the S&P 500 Composite Index, who are
willing to accept the risk of investing
in equity securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Equity Index Fund's investment objective is to provide investment
results that, before Fund expenses, approximate the aggregate price and dividend
performance of the securities included in the S&P 500 Composite Index by
investing in securities comprising the S&P 500 Composite Index. The investment
objective may be changed without a shareholder vote.
The S&P 500 Composite Index is made up of common stocks of 500 large,
publicly traded companies. The Fund buys and holds all stocks included in the
S&P 500 Composite Index in exactly the same proportion as those stocks are
held in the Index. Stocks are eliminated from the Fund when removed from the
S&P 500 Composite Index. The Adviser makes no attempt to "manage" the Fund in
the traditional sense (i.e., by using economic, financial or market analyses).
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may decline in response. These
factors contribute to price volatility, which is the principal risk of investing
in the Fund.
The Fund is also subject to the risk that the S&P 500 Composite Index of common
stocks may underperform other segments of the equity markets or the equity
markets as a whole.
The Fund's ability to duplicate the performance of the S&P 500 Composite Index
will depend to some extent on the size and timing of cash flows into and out of
the Fund, as well as on the level of the Fund's expenses. For additional
information about risks, see "More Information About Risk."
Page 13 of 118
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
This bar chart shows the performance of the Fund's Class I Shares for one year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1999 20.61%
BEST QUARTER WORST QUARTER
14.65% -6.32%
(12/31/99) (9/30/99)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was -0.59%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500 COMPOSITE INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR SINCE INCEPTION
----------------------------------------------------------------------------------------
<S> <C> <C>
ARMADA EQUITY INDEX FUND 20.61% 19.02%(1)
S&P 500 COMPOSITE INDEX(2) 21.04% 18.62%(1)
</TABLE>
(1)Since July 10, 1998
(2)The S&P 500 Composite Index is a widely recognized, unmanaged index of 500
common stocks which are generally representative of the U.S. stock market as a
whole.
FUND FEES AND EXPENSES
SEE PAGE 22 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 14 of 118
<PAGE>
ARMADA INTERNATIONAL EQUITY FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS Equity securities of foreign issuers
SHARE PRICE VOLATILITY High
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in equity securities of
issuers located in at least three
foreign countries
INVESTOR PROFILE Investors seeking capital appreciation,
who are willing to accept the risks
of foreign investing
PRINCIPAL INVESTMENT STRATEGIES
The Armada International Equity Fund's investment objective is to provide
capital appreciation by investing in a portfolio of equity securities of foreign
issuers. Equity securities of foreign issuers include common stock, preferred
stock and convertible bonds of companies headquartered outside the United
States. The investment objective may be changed without a shareholder vote.
The Fund will normally invest at least 80% of its total assets in the equity
securities of foreign issuers. The Fund focuses on issuers included in the
Morgan Stanley Capital International Europe, Australasia, Far East (MSCI
EAFE) Index. The MSCI EAFE Index is an unmanaged index which represents the
performance of more than 1,000 equity securities of companies located in
those regions.
The Adviser makes judgments about the attractiveness of countries based upon a
collection of criteria. The relative valuation, growth prospects, fiscal,
monetary and regulatory government policies are considered jointly and generally
in making these judgments. The percentage of the Fund in each country is
determined by its relative attractiveness and weight in the MSCI EAFE Index.
More than 25% of the Fund's assets may be invested in the equity securities of
issuers located in the same country. Within foreign markets, the Adviser buys
and sells securities based on its analysis of competitive position and
valuation. The Adviser sells securities whose competitive position is
deteriorating or whose valuation is unattractive relative to industry peers.
Likewise, companies with strong and durable competitive advantages and
attractive valuation are considered for purchase.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities, and may lower Fund performance.
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
Page 15 of 118
<PAGE>
prices of securities issued by such companies may decline in response. These
factors contribute to price volatility, which is the principal risk of investing
in the Fund.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country.
Companies making up the MSCI EAFE Index are generally issuers of larger cap
securities of multi-national companies who are affected by risks worldwide.
Investment in a particular country of 25% or more of the Fund's total assets
will make the Fund's performance more dependent upon the political and economic
circumstances of that country than a mutual fund more widely diversified among
issuers in different countries.
The Fund is also subject to the risk that international equity securities may
underperform other segments of the equity markets or the equity markets as a
whole. For additional information about risks, see "More Information About
Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows the performance of the Fund's Class I Shares from year to
year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1998 19.98%
1999 50.13%
BEST QUARTER WORST QUARTER
36.24% -15.57%
(12/31/99) (9/30/98)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was -5.71%.
Page 16 of 118
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE MSCI EAFE INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR SINCE INCEPTION
-------------------------------------------------------------------------------------
<S> <C> <C>
ARMADA INTERNATIONAL EQUITY FUND 50.13% 23.77%(1)
MSCI EAFE INDEX(2) 26.96% 13.99%(2)
</TABLE>
(1)Since August 1, 1997
(2)Since July 31, 1997
(3)The Morgan Stanley Capital International Europe, Australasia and Far East
(MSCI EAFE) Index is an unmanaged index which represents the performance of more
than 1,000 equity securities of companies located in those regions.
FUND FEES AND EXPENSES
SEE PAGE 22 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 17 of 118
<PAGE>
ARMADA LARGE CAP ULTRA FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS Large cap equity securities
SHARE PRICE VOLATILITY High
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in equity securities of large
companies that the Adviser believes
have the potential for long-term above-
average growth
INVESTOR PROFILE Investors seeking growth of capital,
and who are willing to accept the risks
of investing in equity securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Large Cap Ultra Fund's investment objective is to provide capital
appreciation by investing in a diversified portfolio of publicly traded larger
cap equity securities. The investment objective may be changed without a
shareholder vote.
The Fund will normally invest at least 80% of its total assets in a
diversified portfolio of common stocks and securities convertible into the
common stocks of companies with large market capitalizations.
The Adviser takes a long-term approach to managing the Fund and typically
invests in companies that have exhibited consistent, above-average growth in
revenues and earnings, strong management, and sound and improving financial
fundamentals. The Adviser will consider selling a security when there is a
deterioration of fundamentals leading to a deceleration in earnings growth.
The Fund considers a large capitalization or "large cap" company to be one that
has a comparable market capitalization as the companies in the S&P 500/Barra
Growth Index. The S&P 500/Barra Growth Index is an unmanaged index comprised of
common stocks which are capitalization-weighted and have higher price-to-book
ratios.
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may decline in response. These
factors contribute to price volatility, which is the principal risk of investing
in the Fund.
The Fund is also subject to the risk that large cap equity securities may
underperform other segments of the equity markets or the equity markets as a
whole. For additional information about risks, see "More Information About
Risk."
Page 18 of 118
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
This bar chart shows the performance of the Fund's Class I Shares from year to
year.
This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year. On June 10, 2000 the Parkstone Large Capitalization Fund was
reorganized into the similarly managed Armada Large Cap Ultra Fund. Performance
information before June 10, 2000 represents performance of the Parkstone Fund
while performance after that date represents performance of the newly organized
Armada Fund.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1996 23.23%
1997 29.08%
1998 42.62%
1999 29.04%
BEST QUARTER WORST QUARTER
25.53% -9.12%
(12/31/98) (9/30/98)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 5.68%.
THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED
DECEMBER 31, 1999 TO THOSE OF THE S&P 500/BARRA GROWTH INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR SINCE INCEPTION
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
ARMADA LARGE CAP ULTRA FUND 29.04% 30.87%(1)
S&P 500/BARRA GROWTH INDEX(3) 28.26% 32.54%(2)
</TABLE>
(1)Since December 28, 1995
(2)Since December 31, 1995
(3)The S&P 500/Barra Growth Index is comprised of securities in the S&P 500
Composite Index that have a higher than average price-to-book ratio.
FUND FEES AND EXPENSES
SEE PAGE 22 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 19 of 118
<PAGE>
ARMADA MID CAP GROWTH FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS Mid-cap equity securities
SHARE PRICE VOLATILITY High
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in growth-oriented equity
securities of medium-sized issuers
INVESTOR PROFILE Investors seeking capital growth, and
who are willing to accept the risks of
investing in equity securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Mid Cap Growth Fund's investment objective is to provide capital
appreciation by investing in a diversified portfolio of publicly traded mid
cap equity securities. The investment objective may be changed without a
shareholder vote.
The Fund will normally invest at least 80% of its total assets in the common
stock of medium sized companies as measured by their stock market
capitalizations. The Fund may invest up to 20% of its total assets at the
time of purchase in foreign equity securities. In selecting investments for
the Fund to buy and sell, the Adviser invests in companies that have
typically exhibited consistent, above-average growth in revenues and
earnings, strong management, sound and improving financial fundamentals and
presently exhibit the potential for growth.
The Fund considers a mid-capitalization or "mid cap" company to be one that has
a comparable market capitalization within the range as the companies in the
Russell Midcap Growth Index. The Russell Midcap Growth Index is an unmanaged
index which reflects a medium-sized universe of growth-oriented securities.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities, and may lower Fund performance.
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may decline in response. These
factors contribute to price volatility, which is the principal risk of investing
in the Fund.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments
Page 20 of 118
<PAGE>
in foreign countries are generally denominated in a foreign currency. As a
result, changes in the value of those currencies compared to the U.S. dollar may
affect (positively or negatively) the value of a Fund's investments. These
currency movements may happen separately from and in response to events that do
not otherwise affect the value of the security in the issuer's home country.
The Fund is also subject to the risk that mid cap equity securities may
underperform other segments of the equity markets or the equity markets as a
whole. For additional information about risks, see "More Information About
Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
This bar chart shows the performance of the Fund's Class I Shares from year to
year.
This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year. On June 10, 2000 the Parkstone Mid Capitalization Fund was
reorganized into the similarly managed Armada Mid Cap Growth Fund. Performance
information before June 10, 2000 represents performance of the Parkstone Fund
while performance after that date represents performance of the newly organized
Armada Fund.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1990 -3.30%
1991 27.60%
1992 15.22%
1993 12.97%
1994 -5.30%
1995 29.86%
1996 18.32%
1997 11.70%
1998 11.31%
1999 45.85%
BEST QUARTER WORST QUARTER
35.09% -19.22%
(12/31/99) (9/30/98)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 15.02%.
Page 21 of 118
<PAGE>
THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED
DECEMBER 31, 1999 TO THOSE OF THE RUSSELL MIDCAP GROWTH INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ARMADA MID CAP GROWTH FUND 45.85% 22.75% 15.53% 16.93%(1)
RUSSELL MIDCAP GROWTH INDEX(2) 51.30% 28.02% 18.95% 19.85%(1)
</TABLE>
(1)Since October 31, 1988
(2)The Russell Mid Cap Growth Index measures the performance of those companies
in the Russell Mid Cap Index with higher price to book ratios and higher
forecasted growth values. The Russell Mid Cap Index measures the performance of
the 800 smallest U.S. companies among the largest 1000 U.S. companies based on
market capitalization.
FUND FEES AND EXPENSES
SEE PAGE 22 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 22 of 118
<PAGE>
ARMADA SMALL CAP GROWTH FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS Small cap equity securities
SHARE PRICE VOLATILITY High
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in growth-oriented equity
securities of smaller issuers
INVESTOR PROFILE Investors seeking capital appreciation,
who are willing to accept the risk of
share price volatility that may
accompany small cap investing
PRINCIPAL INVESTMENT STRATEGIES
The Armada Small Cap Growth Fund's investment objective is to provide capital
appreciation by investing in a diversified portfolio of publicly traded small
cap equity securities. The investment objective may be changed without a
shareholder vote.
The Fund normally invests at least 80% of its total assets in the common
stocks of companies with small stock market capitalizations. The Fund may
invest up to 20% of its total assets at the time of purchase in foreign
equity securities.
The Adviser seeks to invest in small capitalization companies with strong growth
in revenue, earnings and cash flow. Purchase decisions are also based on the
security's valuation relative to the company's expected growth rate, earnings
quality and competitive position, valuation compared to similar securities and
the security's trading liquidity. Reasons for selling securities include
disappointing fundamentals, negative industry developments, evidence of
management's inability to execute a sound business plan, capitalization
exceeding the Adviser's definition of "small capitalization," desire to reduce
exposure to an industry or sector, and valuation levels which cannot be
justified by the company's fundamental growth prospects.
The Fund considers a small capitalization or "small cap" company to be one that
has a comparable market capitalization to the companies in the Russell 2000
Growth Index. The Russell 2000 Growth Index is an unmanaged index comprised of
securities in the Russell 2000 Index which have greater than average growth
orientation. The Russell 2000 Index is an unmanaged index comprised of the 2000
smallest companies of the 3000 largest U.S. companies based on market
capitalization.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities, and may lower Fund performance.
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the
Page 23 of 118
<PAGE>
value of the Fund's securities may fluctuate from day to day. Individual
companies may report poor results or be negatively affected by industry and/or
economic trends and developments. The prices of securities issued by such
companies may decline in response. These factors contribute to price volatility,
which is the principal risk of investing in the Fund.
The smaller capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these small companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
Therefore, small cap stocks may be more volatile than those of larger companies
may. These securities may be traded over the counter or listed on an exchange.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country.
The Fund is also subject to the risk that small cap equity securities may
underperform other segments of the equity markets or the equity markets as a
whole. For additional information about risks, see "More Information About
Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows the performance of the Fund's Class I Shares from year to
year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1998 7.56%
1999 36.06%
BEST QUARTER WORST QUARTER
36.30% -21.14%
(12/31/99) (9/30/98)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 9.63%.
Page 24 of 118
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF RUSSELL 2000 GROWTH INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------------
<S> <C> <C>
ARMADA SMALL CAP GROWTH FUND 36.06% 20.49%(1)
RUSSELL 2000 GROWTH INDEX(3) 43.10% 17.58%(2)
</TABLE>
(1)Since August 1, 1997
(2)Since July 31, 1997
(3)The Russell 2000 Growth Index is comprised of securities in the Russell 2000
Stock Index with a greater than average growth orientation. The Russell 2000
Index is an unmanaged index comprised of the 2000 smallest companies of the 3000
largest U.S. companies based on market capitalization.
FUND FEES AND EXPENSES
SEE PAGE 22 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 25 of 118
<PAGE>
ARMADA SMALL CAP VALUE FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS Small cap equity securities
SHARE PRICE VOLATILITY High
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in value-oriented equity
securities of smaller issuers
INVESTOR PROFILE Investors seeking capital appreciation,
who are willing to accept the risk of
share price volatility that may
accompany small cap investing
PRINCIPAL INVESTMENT STRATEGIES
The Armada Small Cap Value Fund's investment objective is to provide capital
appreciation by investing in a diversified portfolio of publicly traded small
cap equity securities. The investment objective may be changed without a
shareholder vote.
The Fund will normally invest at least 80% of its total assets in the common
stocks of small capitalization companies. The Fund may invest up to 20% of
its total assets at the time of purchase in foreign equity securities. In
buying and selling securities for the Fund, the Adviser uses a value-oriented
approach.
The Adviser generally seeks to invest in equity securities based upon price to
cash flow, price to book and price to sales ratios which are lower than the
market averages. The Adviser generally sells securities based upon
price/earnings, price/book and price/cash flow ratios which rise above market
averages or when a company no longer has a small capitalization.
The Fund considers a small capitalization or "small cap" company to be one that
has a comparable market capitalization to the companies in the Russell 2000
Value Index. The Russell 2000 Value Index is an unmanaged index comprised of
securities in the Russell 2000 Index which have higher than median book to price
ratios and lower than median growth characteristics. The Russell 2000 Index is
an unmanaged index comprised of the 2000 smallest companies of the 3000 largest
U.S. companies based on market capitalization.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may increase transaction costs and capital gains tax liabilities, and may
lower Fund performance.
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may decline in response. These
factors contribute to price volatility, which is the principal risk of investing
in the Fund.
Page 26 of 118
<PAGE>
The smaller capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these small companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
Therefore, small cap stocks may be more volatile than those of larger companies.
These securities may be traded over the counter or listed on an exchange.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country.
The Fund is also subject to the risk that small cap equity securities may
underperform other segments of the equity markets or the equity markets as a
whole. For additional information about risks, see "More Information About
Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows the performance of the Fund's Class I Shares from year to
year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1995 18.63%
1996 22.64%
1997 32.43%
1998 -6.96%
1999 7.91%
BEST QUARTER WORST QUARTER
17.91% -17.57%
(6/30/99) (9/30/98)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 9.06%.
Page 27 of 118
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE RUSSELL 2000 VALUE INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS SINCE INCEPTION
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA SMALL CAP VALUE FUND 7.91% 14.11% 14.40%(1)
RUSSELL 2000 VALUE INDEX(3) -1.49% 13.13% 12.02%(2)
</TABLE>
(1)Since July 26, 1994
(2)Since July 31, 1994
(3)The Russell 2000 Value Index is comprised of securities in the Russell 2000
Index with a less than average growth orientation. The Russell 2000 Index is an
unmanaged index comprised of the 2000 smallest companies of the 3000 largest
U.S. companies based on market capitalization. Companies in the Russell 2000
Value Index generally have low price to book and price-earnings ratios.
FUND FEES AND EXPENSES
SEE PAGE 22 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 28 of 118
<PAGE>
ARMADA TAX MANAGED EQUITY FUND
FUND SUMMARY
INVESTMENT GOAL Capital appreciation, while minimizing
the impact of taxes
INVESTMENT FOCUS Equity securities
SHARE PRICE VOLATILITY High
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in common stock using
strategies designed to minimize the
impact of taxes
INVESTOR PROFILE Investors who are seeking capital
appreciation while minimizing the
impact of taxes and who are willing to
accept the risk of investing in equity
securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Tax Managed Equity Fund's investment objective is to provide capital
appreciation while minimizing the impact of taxes on shareholders' returns. The
investment objective may be changed without a shareholder vote.
The Fund normally invests at least 80% of its total assets in common stocks.
The Fund may invest up to 20% of its total assets at the time of purchase in
foreign equity securities. Equity securities of foreign issuers include
common stock, preferred stock and convertible bonds of companies
headquartered outside the United States.
The Adviser buys and sells common stocks based on factors such as historical and
projected long-term earnings growth, earnings quality and liquidity. The Adviser
attempts to minimize the realization of taxable gains by investing in the
securities of companies with above-average earnings predictability and stability
which the Fund expects to hold for several years. This generally results in a
low level of portfolio turnover. In addition, the Fund seeks to distribute
relatively low levels of taxable investment income by investing in stocks with
low dividend yields. When the Fund sells appreciated securities, it will attempt
to select the share lots with the highest cost basis in order to hold realized
capital gains to a minimum.
The Fund may, when consistent with its overall investment approach, sell
depreciated securities to offset realized capital gains. The Fund may make
in-kind redemptions consistent with its investment objective. An in-kind
redemption may serve to minimize any tax impact on the remaining shareholders,
because a Fund generally recognizes no taxable gain (or loss) on the securities
used to make an in-kind redemption. The Fund is not a tax exempt fund, and it
expects to distribute taxable dividends and capital gains from time to time.
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
Page 29 of 118
<PAGE>
prices of securities issued by such companies may decline in response. These
factors contribute to price volatility, which is the principal risk of investing
in the Fund.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country. For
additional information about risks, see "More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows the performance of the Fund's Class I Shares from year to
year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1990 -1.08%
1991 34.07%
1992 6.89%
1993 1.20%
1994 -1.85%
1995 29.51%
1996 20.64%
1997 39.06%
1998 36.84%
1999 18.94%
BEST QUARTER WORST QUARTER
22.87% -14.38%
(12/31/98) (9/30/90)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 3.84%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500 COMPOSITE INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ARMADA TAX MANAGED EQUITY FUND 18.94% 28.74% 17.41% 18.13%(1)
S&P 500 COMPOSITE INDEX(2) 21.04% 28.55% 18.20% 19.10%(1)
</TABLE>
(1)Since June 30, 1984
(2)The S&P 500 Composite Index is a widely recognized, unmanaged index of 500
common stocks which are generally representative of the U.S. stock market as a
whole.
Page 30 of 118
<PAGE>
The performance of the Armada Tax Managed Equity Fund for the period prior to
April 9, 1998 is represented by the performance of a common trust fund ("common
trust fund") which operated prior to the effectiveness of the registration
statement of the Tax Managed Equity Fund. The common trust fund was advised by
National City Bank, an affiliate of the Adviser. At the time of the Tax Managed
Equity Fund's inception, the common trust fund was operated using materially
equivalent investment objectives, policies, guidelines and restrictions as the
Fund. In connection with the Tax Managed Equity Fund's commencement of
operations, on April 9, 1998, the common trust fund transferred its assets to
the Fund. At the time of the transfer, the Adviser did not manage any other
collective investment or common trust funds using materially equivalent
investment objectives, policies, guidelines and restrictions to those of the Tax
Managed Equity Fund.
The common trust fund was not open to the public generally, nor registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), or subject to
certain restrictions that are imposed by the 1940 Act and the Internal Revenue
Code. If the common trust fund had been registered under the 1940 Act,
performance may have been adversely affected. Performance quotations of the
common trust fund represent past performance of the Adviser managed common trust
fund, which are separate and distinct from the Tax Managed Equity Fund; do not
represent past performance of the Fund; and should not be considered as
representative of future results of the Fund.
Page 31 of 118
<PAGE>
FUND FEES AND EXPENSES OF THE ARMADA EQUITY FUNDS
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE RESPECTIVE FUNDS.
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
Core Equity Equity Growth Equity Income Equity Index International
Fund Fund Fund Fund Equity Fund
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fees 0.75% 0.75% 0.75% 0.35% 1.15%
Distribution and Service
(12b-1) Fees 0.10% 0.10% 0.10% 0.10% 0.10%
Other Expenses 0.21% 0.11% 0.13% 0.14% 0.24%
----- ----- ----- ----- -----
Total Annual Fund
Operating Expenses 1.06%(1) 0.96%(1) 0.98%(1) 0.59%(2) 1.49%(1)
</TABLE>
<TABLE>
<CAPTION>
Large Cap Mid Cap Growth Small Cap Small Cap Tax Managed
Ultra Fund Fund Growth Fund Value Fund Equity Fund
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Advisory Fees 0.75% 1.00% 1.00% 1.00% 0.75%
Distribution and Service
(12b-1) Fees 0.10% 0.10% 0.10% 0.10% 0.10%
Other Expenses 0.18% 0.22% 0.19% 0.17% 0.16%
----- ----- ----- ----- -----
Total Annual Fund Operating
Expenses 1.03%(3) 1.32%(3) 0.29%(1) 1.27%(1) 1.01%(1)
</TABLE>
(1)Each of these Funds' total actual annual operating expenses for the most
recent fiscal year were less than the amount shown above because the
Distributor waived a portion of the fees in order to keep total operating
expenses at a specified level. With these fee waivers, each Fund's actual
total operating expenses were:
Core Equity Fund - 1.00% Small Cap Growth Fund - 1.23%
Equity Growth Fund - 0.90% Small Cap Value Fund - 1.21%
Equity Income Fund - 0.92% Tax Managed Equity Fund - 0.95%
International Equity Fund - 1.43%
The Distributor expects to continue these waivers so that total operating
expenses for the current fiscal year are expected to be as follows. These fee
waivers remain in place as of the date of this prospectus, but the Distributor
may discontinue all or part of these waivers at any time:
Core Equity Fund - 1.01% Small Cap Growth Fund - 1.24%
Equity Growth Fund - 0.91% Small Cap Value Fund - 1.22%
Equity Income Fund - 0.93% Tax Managed Equity Fund - 0.96%
International Equity Fund - 1.44%
(2)The Equity Index Fund's total actual annual operating expenses for the most
recent fiscal year were less than the amount shown above because the Adviser and
Distributor each waived a portion of the fees in order to keep total operating
expenses at a specified level. With these fee waivers, the Fund's actual total
operating expenses were 0.34%. The Advisor and Distributor each expects to
continue these waivers so that total operating expenses for the current fiscal
year are expected to be 0.34%. These fee waivers remain in place as of the date
of this prospectus, but the Advisor and/or Distributor may discontinue all or
part of these waivers at any time.
(3) The Distributor expects to waive fees for the Large Cap Ultra Fund and Mid
Cap Growth Fund so that total operating expenses for the current fiscal year are
expected to be 0.98% and 1.27%, respectively. Therefore waivers remain in place
as of the date of this prospectus, but the Distributor may discontinue all or
part of these waivers at any time.
Page 32 of 118
<PAGE>
For more information about these fees, see "Investment Adviser, Sub-Adviser and
Investment Team" and "Distribution of Fund Shares."
EXAMPLE
These Examples are intended to help you compare the cost of investing in each
Armada Equity Fund with the cost of investing in other mutual funds. The
Examples assume that you invest $10,000 in a Fund for the time periods
indicated.
The Examples also assume that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in each Armada Equity Fund would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
---------------------------------------------------------
<S> <C> <C> <C> <C>
Core Equity Fund $108 $337 $585 $1,294
Equity Growth Fund $98 $306 $531 $1,178
Equity Income Fund $100 $312 $542 $1,201
Equity Index Fund $60 $189 $329 $738
International Equity Fund $152 $471 $813 $1,779
Large Cap Ultra Fund $105 $328 $569 $1,259
Mid Cap Growth Fund $134 $418 $723 $1,590
Small Cap Growth Fund $131 $409 $708 $1,556
Small Cap Value Fund $129 $403 $697 $1,534
Tax Managed Equity Fund $103 $322 $558 $1,236
</TABLE>
Page 33 of 118
<PAGE>
<TABLE>
<S> <C>
ARMADA BALANCED ALLOCATION FUND
FUND SUMMARY
INVESTMENT GOAL Long-term capital appreciation and current income
INVESTMENT FOCUS A combination of growth-oriented common stocks, fixed
income securities and cash equivalents
SHARE PRICE VOLATILITY Medium
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in a diversified portfolio of growth-oriented
common stocks investment grade fixed income securities and
cash equivalents with varying asset allocations depending on
the Adviser's assessment of market conditions
INVESTOR PROFILE Investors seeking a broad diversification by asset class and
style to manage risk and provide the potential for above-average
total returns (as gauged by the returns of the S&P 500 Composite
Index and the Lehman Aggregate Bond Index)
</TABLE>
PRINCIPAL INVESTMENT STRATEGIES
The Armada Balanced Allocation Fund's investment objective is to provide
long-term capital appreciation and current income. The investment objective may
be changed without a shareholder vote.
The Fund intends to invest 45% to 75% of its net assets in common stocks and
convertible securities, 25% to 55% of its net assets in investment grade
fixed income securities such as corporate bonds and U.S. government
securities, and up to 30% of its net assets in cash and cash equivalent
securities. The Fund may invest up to 20% of its total assets at the time of
purchase in foreign securities (which include common stock, preferred stock
and convertible bonds of companies headquartered outside the United States).
The Fund also invests in the common stock of small capitalization companies.
The Adviser buys and sells equity securities based on their potential for
long-term capital appreciation. The Fund invests the fixed income portion of its
portfolio of investments in a broad range of investment grade debt securities
(which are those rated at the time of investment in one of the four highest
rating categories by a major rating agency) for current income. If a fixed
income security is downgraded, the Adviser will re-evaluate the holding to
determine whether it is in the best interests of investors to sell. The Adviser
buys and sells fixed income securities and cash equivalents based on a number of
factors, including yield to maturity, quality and the outlook for particular
issuers and market sectors. The Fund invests in cash equivalent, short-term
obligations for stability and liquidity.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities, and may lower Fund performance.
Page 34 of 118
<PAGE>
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may decline in response. These
factors contribute to price volatility, which is the principal risk of investing
in the Fund.
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower rated securities is even
greater than that of higher rated securities. Also, longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.
The Fund is also subject to the risk that the Adviser's asset allocation
decisions will not anticipate market trends successfully. For example, weighting
common stocks too heavily during a stock market decline may result in a failure
to preserve capital. Conversely, investing too heavily in fixed income
securities during a period of stock market appreciation may result in lower
total return.
The smaller capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these small companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
Therefore, small cap stocks may be more volatile than those of larger companies
may. These securities may be traded over the counter or listed on an exchange.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country.
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies and
instrumentalities are backed by the U.S. Treasury, while others are backed
solely by the ability of the agency to borrow from the U.S. Treasury or by the
agency's own resources.
The Fund is also subject to the risk that investment grade fixed income and
growth-oriented equity securities may underperform other segments of the fixed
income or equity markets or the
Page 35 of 118
<PAGE>
fixed income or equity markets as a whole. For additional information about
risks, see "More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
This bar chart shows the performance of the Fund's Class I Shares for one year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1999 15.27%
BEST QUARTER WORST QUARTER
16.09% -3.21%
(12/31/99) (9/30/99)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was -0.41%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN U.S. AGGREGATE BOND INDEX, S&P
500 COMPOSITE INDEX AND THE BALANCED ALLOCATION HYBRID BENCHMARK.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR SINCE INCEPTION
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
ARMADA BALANCED ALLOCATION FUND 15.27% 14.31%(1)
LEHMAN U.S. AGGREGATE BOND INDEX(3) -0.83% 2.45%(2)
S&P 500 COMPOSITE INDEX(4) 21.04% 20.48%(2)
BALANCED ALLOCATION HYBRID BENCHMARK(5) 12.00% 13.47%(2)
</TABLE>
(1)Since July 10, 1998
(2)Since June 30, 1998
(3)The Lehman U.S. Aggregate Bond Index is an unmanaged, fixed income, market
value-weighted index that includes treasury issues, agency issues, corporate
bond issues and mortgage-backed securities.
(4)The S&P 500 Composite Index is a widely recognized, unmanaged index of 500
common stocks which are generally representative of the U.S. stock market as a
whole.
(5)The Balanced Allocation Hybrid Benchmark is a blend of 60% S&P 500
Composite Index and 40% Lehman Aggregate Bond Index, as calculated by the
Adviser.
Page 36 of 118
<PAGE>
FUND FEES AND EXPENSES OF THE BALANCED ALLOCATION FUND
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
CLASS I
-------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees 0.75%
Distribution and Service (12b-1) Fees 0.10%
Other Expenses 0.22%
-----
Total Annual Fund Operating Expenses(1) 1.07%
</TABLE>
(1)The Fund's total actual annual operating expenses for the most recent fiscal
year were less than the amount shown above because the Distributor waived a
portion of the fees in order to keep total operating expenses at a specified
level. With these fee waivers, each Fund's actual total operating expenses were
1.01%. The Distributor expects to continue these waivers so that total operating
expenses for the current fiscal year are expected to be 1.02%. These fee waivers
remain in place as of the date of this prospectus, but the Distributor may
discontinue all or part of these waivers at any time.
For more information about these fees, see "Investment Adviser, Sub-Adviser and
Investment Team," and "Distribution of Fund Shares."
EXAMPLE
This Example is intended to help you compare the cost of investing in the
Balanced Allocation Fund with the cost of investing in other mutual funds. The
Example assumes that you invest $10,000 in the Fund for the time periods
indicated.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$109 $340 $590 $1,306
</TABLE>
Page 37 of 118
<PAGE>
ARMADA BOND FUND
FUND SUMMARY
INVESTMENT GOAL Current income as well as preservation
of capital
INVESTMENT FOCUS Investment grade fixed income
securities
SHARE PRICE VOLATILITY Medium
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in a diversified portfolio of
investment grade fixed income
securities, which maintains a dollar-
weighted average maturity of between
four and twelve years
INVESTOR PROFILE Investors seeking current income, and
who are willing to accept the risks of
investing in fixed income securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Bond Fund's investment objective is to provide current income as well
as preservation of capital by investing primarily in a portfolio of investment
grade fixed income securities. The investment objective may be changed without a
shareholder vote.
The Fund normally invests at least 80% of the value of its
total assets in investment grade fixed income securities of all types, including
but not limited to obligations of corporate and U.S. government issuers and
mortgage-backed and asset-backed securities. Corporate obligations may include
bonds, notes and debentures. U.S. government securities may include U.S.
Treasury obligations and obligations of certain U.S. government agencies or
instrumentalities such as Ginnie Maes and Fannie Maes. Investment grade fixed
income securities are those rated in one of the four highest rating categories
by a major rating agency, or determined by the Adviser to be of equivalent
quality.
If a security is downgraded, the Adviser will re-evaluate the holding to
determine whether it is in the best interest of investors to sell. In buying and
selling securities for the Fund, the Adviser considers a number of factors,
including yield to maturity, maturity, quality and the outlook for particular
issuers and market sectors. The Fund generally maintains a dollar-weighted
average maturity of between four and twelve years.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities, and may lower Fund performance.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
Page 38 of 118
<PAGE>
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
The mortgages underlying mortgage-backed securities may be paid off early, which
makes it difficult to determine their actual maturity and therefore calculate
how they will respond to changes in interest rates. The Fund may have to
reinvest prepaid amounts at lower interest rates. This risk of prepayment is an
additional risk of mortgage-backed securities. This risk also exists for other
asset-backed securities, although generally to a lesser degree.
Debt extension risk is the risk that an issuer will pay principal on an
obligation held by the Fund (such as an asset-backed or mortgage-backed
security) later than expected. This may happen during a period of rising
interest rates. Under these circumstances, the value of the obligation will
decrease and the Fund will suffer from the inability to invest in higher
yielding securities.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies and
instrumentalities are backed by the U.S. Treasury, while others are backed
solely by the ability of the agency to borrow from the U.S. Treasury or by the
agency's own resources.
The Fund is also subject to the risk that investment grade fixed income
securities may underperform other segments of the fixed income markets or the
fixed income markets as a whole. For additional information about risks, see
"More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows the performance of the Fund's Class I Shares from year to
year.
On June 9, 2000 the Parkstone Bond Fund was reorganized into the similarly
managed Armada Bond Fund. Performance information before June 9, 2000 represents
performance of the Parkstone Fund while performance after that date represents
performance of the newly organized Armada Fund.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1990 8.14%
1991 15.01%
1992 6.24%
1993 9.77%
1994 -3.52%
1995 18.06%
1996 3.47%
1997 9.22%
1998 7.58%
1999 -1.80%
Page 39 of 118
<PAGE>
BEST QUARTER WORST QUARTER
6.17% -2.59%
(6/30/95) (3/31/94)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 2.49%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN U.S. AGGREGATE BOND INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ARMADA BOND FUND -1.80% 7.11% 7.03% 7.25%(1)
LEHMAN U.S. AGGREGATE BOND INDEX(2) -0.83% 7.73% 7.70% 8.06%(1)
</TABLE>
(1)Since October 31, 1988
(2)The Lehman U.S. Aggregate Bond Index is an unmanaged, fixed income, market
value-weighted index that includes treasury issues, agency issues, corporate
bond issues and mortgage-backed securities.
FUND FEES AND EXPENSES
SEE PAGE 41 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 40 of 118
<PAGE>
ARMADA GNMA FUND
FUND SUMMARY
INVESTMENT GOAL Current income as well as preservation
of capital
INVESTMENT FOCUS Mortgage-backed securities
SHARE PRICE VOLATILITY Low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in mortgage-backed
securities, guaranteed by the
Government National Mortgage
Association (GNMA)
INVESTOR PROFILE Investors seeking current income, and
who are willing to accept the risks of
investing in mortgage-backed securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada GNMA Fund's investment objective is to provide current income as well
as preservation of capital by investing primarily in mortgage-backed securities
guaranteed by GNMA. GNMA securities are backed by the full faith and credit of
the U.S. government. The investment objective may be changed without a
shareholder vote.
The Fund normally invests at least 80% of the value of its total assets in
mortgage-backed securities guaranteed by GNMA, which is an agency of the U.S.
government established to supervise and finance certain types of mortgages.
In addition to mortgage-backed securities, the Fund invests in other types of
investment grade fixed income securities such as U.S. Treasury obligations,
U.S. government agency obligations, asset-backed securities and commercial
paper.
In buying and selling securities for the Fund, the Adviser assesses current
and projected market conditions by considering a number of factors, including
yield to maturity, maturity, quality and the outlook for particular issuers
and market sectors.
The Fund's dollar-weighted average portfolio maturity will be between three and
ten years. Investment grade fixed income securities are those rated in one of
the four highest rating categories by a major rating agency, or determined by
the Adviser to be of equivalent quality.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
Mortgage-backed securities are fixed income securities representing an interest
in a pool of underlying mortgage loans. Mortgage-backed securities are sensitive
to changes in interest rates, but may respond to these changes differently from
other fixed income securities due to the possibility of prepayment of the
underlying mortgage loans. As a result, it may not be possible to determine in
advance the actual maturity date or average life of a mortgage-backed security.
Page 41 of 118
<PAGE>
Rising interest rates tend to discourage refinancings, with the result that the
average life and volatility of the security will increase, exacerbating its
decrease in market price. When interest rates fall, however, mortgage-backed
securities may not gain as much in market value because of the expectation of
additional mortgage prepayments that must be reinvested at lower interest rates.
Prepayment risk may make it difficult to calculate the average maturity of the
Fund of mortgage-backed securities and, therefore, to assess the volatility risk
of the Fund. This risk also exists for other asset-backed securities, although
generally to a lesser degree.
Debt extension risk is the risk that an issuer will pay principal on an
obligation held by the Fund (such as an asset-backed or mortgage-backed
security) later than expected. This may happen during a period of rising
interest rates. Under these circumstances, the value of the obligation will
decrease and the Fund will suffer from the inability to invest in higher
yielding securities.
The Fund is also subject to the risk that mortgage-backed securities may
underperform other segments of the fixed income markets or the fixed income
markets as a whole.
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies and
instrumentalities are backed by the U.S. Treasury, while others are backed
solely by the ability of the agency to borrow from the U.S. Treasury or by the
agency's own resources.
For additional information about risks, see "More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1995 16.15%
1996 4.75%
1997 9.31%
1998 6.50%
1999 0.91%
BEST QUARTER WORST QUARTER
5.15% -0.72%
(3/31/95) (6/30/99)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 3.79%.
Page 42 of 118
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN GNMA INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS SINCE INCEPTION
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA GNMA FUND 0.91% 7.40% 6.83%(1)
LEHMAN GNMA INDEX(3) 1.92% 8.07% 7.34%(2)
</TABLE>
(1)Since August 10, 1994
(2)Since July 31, 1994
(3)The Lehman GNMA Index tracks GNMA issues, including single family, mobile
home, midgets and graduated payment components.
FUND FEES AND EXPENSES
SEE PAGE 41 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 43 of 118
<PAGE>
<TABLE>
<S> <C>
ARMADA INTERMEDIATE BOND FUND
FUND SUMMARY
INVESTMENT GOAL High current income as well as preservation of capital
INVESTMENT FOCUS Investment grade fixed income securities
SHARE PRICE VOLATILITY Medium
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in investment grade fixed income securities,
while maintaining a dollar-weighted average maturity
between three and ten years
INVESTOR PROFILE Investors seeking current income, and who are willing to
accept the risks of investing in fixed income securities
</TABLE>
PRINCIPAL INVESTMENT STRATEGIES
The Armada Intermediate Bond Fund's investment objective is to provide current
income as well as preservation of capital by investing in a portfolio of
investment grade fixed income securities. The investment objective may be
changed without a shareholder vote.
The Fund normally invests at least 80% of the value of its total assets in
domestic and foreign investment grade fixed income securities of all types,
including obligations of corporate and governmental issuers and
mortgage-backed and asset-backed securities. Corporate obligations may
include bonds, notes and debentures. Governmental obligations may include
securities issued by the U.S. government, its agencies or instrumentalities,
as well as obligations of foreign governments. Investment grade fixed income
securities are those rated in one of the four highest rating categories by a
major rating agency, or determined by the Adviser to be of equivalent quality.
If a security is downgraded, the Adviser will re-evaluate the holding to
determine whether it is in the best interests of investors to sell. In buying
and selling securities for the Fund, the Adviser considers a number of factors,
including yield to maturity, maturity, quality and the outlook for particular
issuers and market sectors. The Fund generally maintains an average maturity of
between three and ten years.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities, and may lower Fund performance.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower rated securities is even
greater than that of higher rated securities. Also, longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.
Page 44 of 118
<PAGE>
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
The mortgages underlying mortgage-backed securities may be paid off early, which
makes it difficult to determine their actual maturity and therefore calculate
how they will respond to changes in interest rates. The Fund may have to
reinvest prepaid amounts at lower interest rates. This risk of prepayment is an
additional risk of mortgage-backed securities. This risk also exists for other
asset-backed securities, although generally to a lesser degree.
Debt extension risk is the risk that an issuer will pay principal on an
obligation held by the Fund (such as an asset-backed or mortgage-backed
security) later than expected. This may happen during a period of rising
interest rates. Under these circumstances, the value of the obligation will
decrease and the Fund will suffer from the inability to invest in higher
yielding securities.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies and
instrumentalities are backed by the U.S. Treasury, while others are backed
solely by the ability of the agency to borrow from the U.S. Treasury or by the
agency's own resources.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country. These
various risks will be even greater for investments in emerging market countries
since political turmoil and rapid changes in economic conditions are more likely
to occur in these countries.
The Fund is also subject to the risk that investment grade fixed income
securities may underperform other segments of the fixed income markets or the
fixed income markets as a whole. For additional information about risks, see
"More Information About Risk."
Page 45 of 118
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows the performance of the Fund's Class I Shares from year to
year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1990 8.28%
1991 15.69%
1992 7.51%
1993 10.32%
1994 -4.52%
1995 15.74%
1996 3.12%
1997 6.94%
1998 7.91%
1999 -0.04%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
5.46% -3.22%
(12/31/90) (3/31/94)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 2.20%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN INTERMEDIATE U.S.
GOVERNMENT/CREDIT INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ARMADA INTERMEDIATE BOND FUND -0.04% 6.60% 6.92% 6.91%(1)
LEHMAN INTERMEDIATE U.S. GOVERNMENT/CREDIT INDEX(3) 0.39% 7.09% 7.26% 7.26%(2)
</TABLE>
(1)Since December 20, 1989.
(2)Since December 31, 1989.
(3)The Lehman Intermediate U.S. Government/Credit Index (formerly, the Lehman
U.S. Government/Corporate Index) is an unmanaged index which is
representative of intermediate-term bonds.
FUND FEES AND EXPENSES
SEE PAGE 41 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 46 of 118
<PAGE>
ARMADA LIMITED MATURITY BOND FUND (FORMERLY ARMADA ENHANCED INCOME FUND)
FUND SUMMARY
INVESTMENT GOAL Current income as well as preservation
of capital
INVESTMENT FOCUS Investment grade debt securities
SHARE PRICE VOLATILITY Low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in investment grade fixed
income securities, while maintaining
a dollar-weighted average maturity of
between one and five years
INVESTOR PROFILE Investors seeking total return and who
are willing to accept some risks of
price volatility
PRINCIPAL INVESTMENT STRATEGIES
The Armada Limited Maturity Bond Fund's investment objective is to provide
current income as well as preservation of capital by investing in a portfolio of
investment grade fixed-income securities. The investment objective may be
changed without a shareholder vote.
The Fund normally invests at least 80% of the value of its total assets in
investment grade debt securities of all types, including obligations of
corporate and U.S. government issuers, mortgage-backed and asset-backed
securities. Corporate obligations may include bonds, notes and debentures.
U.S. government securities may include U.S. Treasury obligations and
obligations of certain U.S. government agencies or instrumentalities such as
Ginnie Maes and Fannie Maes. Investment grade fixed income securities are
those rated in one of the four highest rating categories by a major rating
agency, or determined by the Adviser to be of equivalent quality.
If a security is downgraded, the Adviser will re-evaluate whether continuing to
hold the security is in the best interest of shareholders. In buying and selling
securities for the Fund, the Adviser considers a number of factors, including
yield to maturity, maturity, quality and the outlook for particular issuers and
market sectors. The Fund generally maintains an average dollar-weighted
portfolio maturity of between one and five years.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities, and may lower Fund performance.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
Page 47 of 118
<PAGE>
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
The mortgages underlying mortgage-backed securities may be paid off early, which
makes it difficult to determine their actual maturity and therefore calculate
how they will respond to changes in interest rates. The Fund may have to
reinvest prepaid amounts at lower interest rates. This risk of prepayment is an
additional risk of mortgage-backed securities. This risk also exists for other
asset-backed securities, although generally to a lesser degree.
Debt extension risk is the risk that an issuer will pay principal on an
obligation held by the Fund (such as an asset-backed or mortgage-backed
security) later than expected. This may happen during a period of rising
interest rates. Under these circumstances, the value of the obligation will
decrease and the Fund will suffer from the inability to invest in higher
yielding securities.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies and
instrumentalities are backed by the U.S. Treasury, while others are backed
solely by the ability of the agency to borrow from the U.S. Treasury or by the
agency's own resources.
The Fund is also subject to the risk that investment grade fixed income
securities may underperform other segments of the fixed income markets or the
fixed income markets as a whole. For additional information about risks, see
"More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows the performance of the Fund's Class I Shares from year to
year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1995 7.69%
1996 5.29%
1997 6.43%
1998 6.58%
1999 3.20%
BEST QUARTER WORST QUARTER
2.95% 0.28%
(9/30/98) (6/30/99)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 2.50%.
Page 48 of 118
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE MERRILL LYNCH 1-3 YEAR
U.S. CORPORATE/GOVERNMENT INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS SINCE INCEPTION
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA LIMITED MATURITY BOND FUND 3.20% 5.83% 5.67%(1)
MERRILL LYNCH 1-3 YEAR U.S. CORPORATE/GOVERNMENT INDEX(3) 3.25% 6.59% 6.17%(2)
</TABLE>
(1)Since July 7, 1994.
(2)Since June 30, 1994.
(3)The Merrill Lynch 1-3 Year U.S. Corporate/Government Index is a market
capitalization weighted index including U.S. Treasury and Agency bonds and U.S.
fixed coupon investment grade corporate bonds (U.S. domestic and Yankee/global
bonds). U.S. Treasury bonds must have at least $1 billion face value outstanding
and agency and corporate bonds must have at least $150 million face value
outstanding to be included in the index. Both total return and price returns are
calculated daily. Prices are taken as of approximately 3 p.m. Eastern Time.
Quality range is BBB3-AAA based on composite Moody and S&P ratings. Maturities
for all bonds are greater than or equal to one year and less than three years.
Floaters, Equipment Trust Certificates, and Title 11 securities are excluded.
FUND FEES AND EXPENSES
SEE PAGE 41 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 49 of 118
<PAGE>
ARMADA STRATEGIC INCOME BOND FUND
FUND SUMMARY
INVESTMENT GOAL High current income with some capital
appreciation
INVESTMENT FOCUS A combination of investment grade,
high-yield and foreign fixed income
securities
SHARE PRICE VOLATILITY Medium to high
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Allocating assets among different
fixed income security sectors,
including U.S. and foreign issues,
with a significant portion rated below
investment grade. The Fund will
normally maintain a dollar-weighted
average maturity of between four and
twelve years
INVESTOR PROFILE Investors seeking a high level of
current income, and who are willing to
accept the risks of investing in fixed
income securities, including
high-yield and foreign fixed income
securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Strategic Income Bond Fund's investment objective is to provide
high current income by investing in three major sectors of fixed income
securities: domestic investment grade fixed income securities, domestic
high-yield fixed income securities and fixed income securities of issuers in
foreign countries. The Fund will limit investment in securities of issuers in
countries with emerging markets or economies to no more than 10% of the Fund's
total assets. The types of fixed income securities in which the Fund will
invest include asset-backed securities, mortgage-backed securities and
obligations of corporate and U.S. government issuers. Corporate obligations
may include bonds, notes and debentures issued by companies headquartered in
the U.S. or developed foreign countries. U.S. government securities may
include U.S. Treasury obligations and obligations of certain U.S. government
agencies or instrumentalities. High-yield fixed income securities are
commonly referred to as "junk bonds." The investment objective may be changed
without a shareholder vote.
The Adviser allocates between 15% and 65% of the Fund's assets to each of the
three major sectors of fixed income securities based on its analysis of the
fixed income markets. Investment grade fixed income securities are those rated
in one of the four highest rating categories by a major rating agency, or
determined by the Adviser to be of equivalent quality. High-yield fixed income
securities are those rated below investment grade or are unrated and determined
by the Adviser to be equivalent to a non-investment grade security. The Fund
does not intend to invest in high-yield fixed income securities rated by
Standard & Poor's, at the time of purchase, below C or that are of equivalent
quality. If a security is downgraded below C or the equivalent, the Adviser will
reevaluate whether continuing to hold the security is in the best interest of
shareholders.
In buying and selling particular securities for the Fund, the Adviser considers
a number of factors, including yield to maturity, maturity, quality and the
outlook for particular issuers, currencies and
Page 50 of 118
<PAGE>
market sectors. The Fund generally maintains a dollar-weighted average maturity
of between four and twelve years, however there is no limit on the maturity of
any single security.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities and may lower Fund performance.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
The Fund may allocate any amount of its assets invested in a particular
sector of the fixed income markets to any types of securities within that
sector. Accordingly, a heavier weighting of assets in securities that carry
greater risks will correspondingly increase the risks of investing in the
Fund. For example, the risks of investing in the Fund will be greater if the
Fund concentrates a high percentage of its domestic investment grade fixed
income securities sector investments in corporate obligations than if it
invests a high percentage of such sector's investments in U.S. Government
securities.
High-yield bonds involve greater risks of default or downgrade and are more
volatile than investment grade securities. High-yield bonds involve greater risk
of price declines than investment grade securities due to actual or perceived
changes in an issuer's creditworthiness. In addition, issuers of high-yield
bonds may be more susceptible than other issuers to economic downturns.
High-yield bonds are subject to the risk that the issuer may not be able to pay
interest or dividends and ultimately to repay principal upon maturity.
Discontinuation of these payments could substantially adversely affect the
market value of the security.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of the Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country.
Emerging market countries are countries that the World Bank or the United
Nations considers to be emerging or developing. Emerging markets may be more
likely to experience political turmoil or rapid changes in market or economic
conditions than more developed countries. Emerging market countries often
have less uniformity in accounting and reporting requirements and unreliable
securities valuation. It is sometimes difficult to obtain and enforce court
judgments in such countries and there is often a greater potential for
nationalization and/or expropriation of assets by the government of an
emerging market country. In addition, the financial stability of issuers
(including governments) in emerging market countries may be more precarious
than in other countries. As a result, there will tend to be an increased risk
of price volatility associated with the Fund's investments in emerging market
countries, which may be magnified by currency fluctuations relative to the
U.S. dollar.
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
The Fund is also subject to debt extension risk. Debt extension risk is the risk
that an issuer will pay principal on an obligation held by the Fund (such as an
asset-backed or mortgage-backed security) later than expected. This may happen
during a period of rising interest rates. Under these circumstances, the value
of the obligation will decrease and the Fund will suffer from the inability to
invest in higher yielding securities.
The mortgages underlying mortgage-backed securities may be paid off early, which
makes it difficult to determine their actual maturity and therefore calculate
how they will respond to changes in interest rates. The Fund may have to
reinvest prepaid amounts at lower interest rates. This risk of prepayment is an
additional risk of mortgage-backed securities. This risk also exists for other
asset-backed securities, although generally to a lesser degree.
Page 51 of 118
<PAGE>
The Fund invests in leveraged instruments, such as futures and options
contracts. The more the Fund invests in these leveraged instruments, the greater
the possibility for gains or losses on those investments.
The Fund is also subject to the risk that any or all of its fixed income market
segments may underperform other segments of the fixed income markets or the
fixed income markets as a whole. For additional information about risks, see
"More Information About Risk."
PERFORMANCE INFORMATION
There is no performance information for the Fund because it had not commenced
operations as of the date of this prospectus.
FUND FEES AND EXPENSES
SEE PAGE 41 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 52 of 118
<PAGE>
ARMADA TOTAL RETURN ADVANTAGE FUND
FUND SUMMARY
INVESTMENT GOAL Current income as well as preservation
of capital
INVESTMENT FOCUS Investment grade fixed income
securities
SHARE PRICE VOLATILITY Medium
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in investment grade fixed
income securities, while maintaining an
average dollar-weighted maturity of
between four and twelve years
INVESTOR PROFILE Investors seeking total return with
less price volatility than would be the
case if the Fund were to invest in
equity securities, and who are willing
to accept the risks of investing in
fixed income securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada Total Return Advantage Fund's investment objective is to provide
current income as well as preservation of capital by investing primarily in a
portfolio of investment grade fixed income securities. The investment
objective may be changed without a shareholder vote.
The Fund normally invests at least 80% of the value of its total assets in
investment grade fixed income securities of all types, including asset-backed
securities and mortgage-backed securities and obligations of corporate and
U.S. government issuers. Corporate obligations may include bonds, notes and
debentures. U.S. government securities may include U.S. Treasury obligations
and obligations of certain U.S. government agencies or instrumentalities such
as Ginnie Maes or Fannie Maes. Fixed income securities are designed to
provide a fixed rate of interest at maturity and return the principal value
at the end of the term. Investment grade fixed income securities are those
rated in one of the four highest rating categories by a major rating agency,
or determined by the Adviser to be of equivalent quality.
If a security is downgraded, the Adviser will re-evaluate whether continuing to
hold the security is in the best interest of shareholders. In buying and selling
securities for the Fund, the Adviser uses a number of strategies, including
duration/maturity management, sector allocation and individual security
selection. The Fund may invest up to 15% of its assets in fixed income
securities that are non-rated or rated below investment grade, sometimes known
as "junk bonds." The Fund does not invest in junk bonds rated by Standard &
Poor's, at the time of purchase, below C or that are of equivalent quality. If a
security is downgraded below C or the equivalent, the Adviser will reevaluate
whether continuing to hold the security is in the best interests of the
shareholders.
The Fund generally maintains an average dollar-weighted maturity of between four
and twelve years.
Page 53 of 118
<PAGE>
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities, and may lower Fund performance.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower rated securities is even
greater than that of higher rated securities. Also, longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.
Junk bonds involve greater risks of default or downgrade and are more volatile
than investment grade securities. Junk bonds involve greater risk of price
declines than investment grade securities due to actual or perceived changes in
an issuer's creditworthiness. In addition, issuers of junk bonds may be more
susceptible than other issuers to economic downturns. Junk bonds are subject to
the risk that the issuer may not be able to pay interest or dividends on a
timely basis and ultimately to repay principal upon maturity. Discontinuation of
these payments could substantially adversely affect the market value of the
security.
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
The mortgages underlying mortgage-backed securities may be paid off early, which
makes it difficult to determine their actual maturity and therefore calculate
how they will respond to changes in interest rates. The Fund may have to
reinvest prepaid amounts at lower interest rates. This risk of prepayment is an
additional risk of mortgage-backed securities. This risk also exists for other
asset-backed securities, although generally to a lesser degree.
Debt extension risk is the risk that an issuer will pay principal on an
obligation held by the Fund (such as an asset-backed or mortgage-backed
security) later than expected. This may happen during a period of rising
interest rates. Under these circumstances, the value of the obligation will
decrease and the Fund will suffer from the inability to invest in higher
yielding securities.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies and
instrumentalities are backed by the full faith and credit of the United States,
while others are backed solely by the ability of the agency to borrow from the
U.S. Treasury or by the agency's own resources.
The Fund is also subject to the risk that investment grade fixed income
securities may underperform other segments of the fixed income markets or the
fixed income markets as a whole. For additional information about risks, see
"More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
Page 54 of 118
<PAGE>
This bar chart shows the performance of the Fund's Class I Shares from year to
year.
<TABLE>
<CAPTION>
<S> <C>
1995 19.18%
1996 3.11%
1997 8.91%
1998 9.05%
1999 -2.95%
BEST QUARTER WORST QUARTER
6.92% -2.52%
(6/30/95) (3/31/96)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 4.41%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN U.S. GOVERNMENT/CREDIT
INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEAR SINCE INCEPTION
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA TOTAL RETURN ADVANTAGE FUND -2.95% 7.21% 6.68%(1)
LEHMAN U.S. GOVERNMENT/CREDIT INDEX(3) -2.15% 7.60% 7.06%(2)
</TABLE>
(1)Since July 7, 1994
(2)Since June 30, 1994
(3)The Lehman U.S. Government/Credit Index (formerly, the Lehman U.S.
Government/Corporate Index) is a widely recognized index of government
and corporate debt securities rated investment grade or better, with
maturities of at least 1 year.
FUND FEES AND EXPENSES
SEE PAGE 41 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 55 of 118
<PAGE>
ARMADA U.S. GOVERNMENT INCOME FUND
FUND SUMMARY
INVESTMENT GOAL Current income as well as preservation
of capital
INVESTMENT FOCUS Mortgage-backed securities
SHARE PRICE VOLATILITY Low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in mortgage-related
securities issued or guaranteed by the
U.S. government
INVESTOR PROFILE Investors seeking current income, and
who are willing to accept the risks of
investing in fixed income securities
PRINCIPAL INVESTMENT STRATEGIES
The Armada U.S. Government Income Fund's investment objective is to provide
current income as well as preservation of capital by investing primarily in U.S.
government securities. The investment objective may be changed without a
shareholder vote.
The Fund normally invests at least 80% of its total assets in obligations
issued or guaranteed by the U.S. government or its agencies or
instrumentalities. The types of U.S. government securities include
mortgage-related securities, and Treasury bills, notes and bonds. The Fund
may invest up to 20% of the value of its total assets in mortgage-related
debt securities and preferred stock of non-governmental issuers and the same
proportion of its total assets in non-governmental asset backed securities.
In buying and selling securities for the Fund, the Adviser considers a number
of factors, including yield to maturity, maturity, quality and the outlook
for particular issuers and market sectors. The Fund generally maintains a
dollar-weighted average maturity of between three and ten years.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities, and may lower Fund performance.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
The Fund is also subject to the risk that U.S. government securities may
underperform other segments of the fixed income markets or the fixed income
markets as a whole.
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
Page 56 of 118
<PAGE>
The mortgages underlying mortgage-backed securities may be paid off early, which
makes it difficult to determine their actual maturity and therefore calculate
how they will respond to changes in interest rates. The Fund may have to
reinvest prepaid amounts at lower interest rates. This risk of prepayment is an
additional risk of mortgage-backed securities. This risk also exists for other
asset-backed securities, although generally to a lesser degree.
Debt extension risk is the risk that an issuer will pay principal on an
obligation held by the Fund (such as an asset-backed or mortgage-backed
security) later than expected. This may happen during a period of rising
interest rates. Under these circumstances, the value of the obligation will
decrease and the Fund will suffer from the inability to invest in higher
yielding securities.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies and
instrumentalities are backed by the U.S. Treasury, while others are backed
solely by the ability of the agency to borrow from the U.S. Treasury or by the
agency's own resources. For additional information about risks, see "More
Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
This bar chart shows the performance of the Fund's Class I Shares from year to
year.
On June 10, 2000 the Parkstone U.S. Government Income Fund was reorganized into
the similarly managed Armada U.S. Government Income Fund. Performance
information before June 10, 2000 represents performance of the Parkstone Fund
while performance after that date represents performance of the newly organized
Armada Fund.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1993 7.48%
1994 -0.55%
1995 13.77%
1996 4.70%
1997 8.11%
1998 7.08%
1999 1.23%
BEST QUARTER WORST QUARTER
3.94% -1.06%
(6/30/95) (3/31/94)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 3.36%.
Page 57 of 118
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN MORTGAGE-BACKED SECURITIES
INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS SINCE INCEPTION
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA U.S. GOVERNMENT INCOME FUND 1.23% 6.90% 5.82%(1)
LEHMAN MORTGAGE-BACKED SECURITIES INDEX(3) 1.85% 7.98% 6.47%(2)
</TABLE>
(1)Since November 12, 1992
(2)Since October 31, 1992
(3)The Lehman Mortgage-Backed Securities Index is a widely-recognized, market
value-weighted (higher market value stocks have more influence than lower market
value stocks) index of mortgage-backed securities issued by GNMA, FHLMC, and
Fannie Mae. All securities in the index are rated AAA, with maturities of at
least one year.
FUND FEES AND EXPENSES
SEE PAGE 41 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 58 of 118
<PAGE>
FUND FEES AND EXPENSES OF THE ARMADA FIXED INCOME FUNDS
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE RESPECTIVE FUNDS.
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
Intermediate Limited Maturity
Bond Fund GNMA Fund Bond Fund Bond Fund
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Advisory Fees 0.55% 0.55% 0.55% 0.45%
Distribution and Service
(12b-1) Fees 0.10% 0.10% 0.10% 0.10%
Other Expenses 0.14% 0.21% 0.14% 0.19%
----- ----- ----- -----
Total Annual Fund Operating
Expenses 0.79%(1) 0.86%(1) 0.79%(2) 0.74%(2)
</TABLE>
<TABLE>
<CAPTION>
Strategic Total Return U.S.
Income Bond Advantage Government
Fund(3) Fund Income Fund
<S> <C> <C> <C>
-----------------------------------------------
Investment Advisory Fees 0.75% 0.55% 0.55%
Distribution and Service (12b-1)
Fees 0.10% 0.10% 0.10%
Other Expenses 0.20%(4) 0.12% 0.18%
----- ----- -----
Total Annual Fund Operating
Expenses 1.05%(2) 0.77%(2) 0.83%(1)
</TABLE>
(1) Total actual annual operating expenses for the Bond Fund and the GNMA
Fund for the most recent fiscal year were less than the amount shown above
because the Distributor waived a portion of the fees in order to keep total
operating expenses at a specified level. With these fee waivers, each Fund's
actual total operating expenses were:
Bond Fund - 0.73%
GNMA Fund - 0.80%
The Distributor expects to continue these waivers so that total operating
expenses for the current fiscal year are expected to be as follows. These fee
waivers remain in place as of the date of this prospectus, but the Distributor
may discontinue all or part of these waivers at any time:
Bond Fund - 0.74%
GNMA Fund - 0.81%
(2)Each of these Funds' total actual annual operating expenses for the most
recent fiscal year were less than the amount shown above because the Adviser
and Distributor each waived a portion of the fees in order to keep total
operating expenses at a specified level. With these fee waivers, each Fund's
actual total operating expenses were:
Intermediate Bond Fund - 0.58% Strategic Income Bond Fund - 0.64%
Limited Maturity Bond Fund - 0.54% Total Return Advantage Fund - 0.48%
The Adviser and Distributor each expects to continue these waivers so that total
operating expenses for the current fiscal year are expected to be as follows.
These fee waivers remain in place as of the date of this prospectus, but the
Adviser and/or Distributor may discontinue all or part of these waivers at any
time.
Intermediate Bond Fund - 0.59% Strategic Income Bond Fund - 0.65%
Limited Maturity Bond Fund - 0.56% Total Return Advantage Fund - 0.49%
(3)The Fund had not yet commenced operations at the time this prospectus was
printed.
(4)Other Expenses for the Strategic Income Bond Fund are based on estimated
amounts for the current fiscal year.
The Distributor expects to waive fees for the U.S. Government Income Fund so
that total operating expenses for the current fiscal year are expected to be
0.78%. These fee waivers remain in place as of the date of this prospectus, but
the Distributor may discontinue all or part of these waivers at any time.
Page 59 of 118
<PAGE>
For more information about these fees, see "Investment Adviser, Sub-Adviser and
Investment Team," and "Distribution of Fund Shares."
EXAMPLE
These Examples are intended to help you compare the cost of investing in each
Armada Fixed Income Fund with the cost of investing in other mutual funds.
The Examples assume that you invest $10,000 in a Fund for the time periods
indicated.
The Examples also assume that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different,
your approximate costs of investing $10,000 in each Armada Fixed Income Fund
would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
-----------------------------------------------
<S> <C> <C> <C> <C>
Bond Fund $81 $252 $439 $978
GNMA Fund $88 $274 $477 $1,061
Intermediate Bond Fund $81 $252 $439 $978
Limited Maturity Bond $76 $237 $411 $918
Strategic Income Bond Fund $107 $334 N/A N/A
Total Return Advantage Fund $79 $246 $428 $954
U.S. Government Income Fund $85 $265 $460 $1,025
</TABLE>
Page 60 of 118
<PAGE>
ARMADA MICHIGAN MUNICIPAL BOND FUND
FUND SUMMARY
INVESTMENT GOAL Current income exempt from federal
income tax and, to the extent possible,
from Michigan personal income tax, as
is consistent with conservation of
capital
INVESTMENT FOCUS Michigan tax exempt securities
SHARE PRICE VOLATILITY Medium
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in municipal obligations that
pay interest that is exempt from
federal and Michigan state income taxes
INVESTOR PROFILE Investors seeking tax exempt current
income, and who are willing to accept
moderate share price volatility
PRINCIPAL INVESTMENT STRATEGIES
The Armada Michigan Municipal Bond Fund's investment objective is to provide
current income exempt from federal income tax and, to the extent possible, from
Michigan personal income tax, as is consistent with conservation of capital.
Such income may be subject to the federal alternative minimum tax when received
by certain shareholders. The investment objective may be changed without a
shareholder vote.
The Fund invests primarily in debt securities issued by or on behalf of the
State of Michigan, its political subdivisions and its agencies and
instrumentalities that generate income exempt from federal and Michigan state
income taxes, but may be treated as a preference item for individuals for
purposes of the federal alternative minimum tax (Michigan municipal securities).
The Fund also invests in municipal securities issued by or on behalf of
territories and possessions of the United States, the District of Columbia and
their political subdivisions, agencies, instrumentalities and authorities.
In selecting securities for the Fund to buy and sell, the Adviser considers each
security's yield and total return potential relative to other available
municipal securities. The Fund will normally invest at least 80% of the value of
its total assets in Michigan municipal securities. However, some Fund dividends
may be taxable, such as dividends that are derived from occasional taxable
investments and distributions of short and long-term capital gains. Also, Fund
dividends will generally be subject to state and local income taxes for any
shareholders who are not Michigan residents. The Fund may invest up to 100% of
its total assets in private activity bonds which may be treated as a specific
tax preference item under the federal alternative minimum tax.
The Fund invests in investment grade securities, which are those rated in one of
the four highest rating categories by a major rating agency, or determined by
the Adviser to be of equivalent quality. If a security is downgraded, the
Adviser will re-evaluate whether continuing to hold the security is in the best
interests of its shareholders. The Fund ordinarily will maintain a
dollar-weighted average portfolio maturity of between three and ten years.
Page 61 of 118
<PAGE>
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
The Fund is also subject to the risk that tax free municipal securities may
underperform other segments of the fixed income markets or the fixed income
markets as a whole.
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund's focus of investments in securities of issuers located in Michigan
subjects the Fund to economic and governmental policies of that state.
The Fund is non-diversified, which means that it may invest in the securities of
relatively few issuers. As a result, the Fund may be more susceptible than a
diversified fund to a single adverse economic or political and regulatory
occurrences affecting one or more of these issuers, and may experience increased
volatility due to its investments in those securities. For additional
information about risks, see "More Information About Risk."
Page 62 of 118
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
This bar chart shows the performance of the Fund's Class I Shares from year to
year.
On June 10, 2000 the Parkstone Michigan Municipal Bond Fund was reorganized into
the similarly managed Armada Michigan Municipal Bond Fund. Performance
information before June 10, 2000 represents performance of the Parkstone Fund
while performance after that date represents performance of the newly organized
Armada Fund.
<TABLE>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1991 9.78%
1992 6.98%
1993 9.74%
1994 -2.86%
1995 13.63%
1996 3.03%
1997 7.18%
1998 5.00%
1999 -1.34%
BEST QUARTER WORST QUARTER
5.25% -3.28%
(3/31/95) (3/31/94)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 3.07%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN 7 YEAR MUNICIPAL BOND INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS SINCE INCEPTION
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA MICHIGAN MUNICIPAL BOND FUND -1.34% 5.39% 5.61%(1)
LEHMAN 7 YEAR MUNICIPAL BOND INDEX(3) -0.14% 6.36% 6.65%(2)
</TABLE>
(1)Since July 2, 1990
(2)Since June 30, 1990
(3)The Lehman 7 Year Municipal Bond Index is a broad based total return
index. The bonds are investment grade, fixed rate with maturities of 7-8 years
and are selected from issues larger than $50 million dated since January 1984.
FUND FEES AND EXPENSES
SEE PAGE 51 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 63 of 118
<PAGE>
ARMADA NATIONAL TAX EXEMPT BOND FUND
FUND SUMMARY
INVESTMENT GOAL Current income exempt from federal
income tax as is consistent with
conservation of capital
INVESTMENT FOCUS Municipal securities
SHARE PRICE VOLATILITY Medium
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in municipal obligations that
pay interest that is exempt from
federal income tax
INVESTOR PROFILE Investors seeking tax exempt current
income, and who are willing to accept
moderate share price volatility
PRINCIPAL INVESTMENT STRATEGIES
The Armada National Tax Exempt Bond Fund's investment objective is to provide
current income exempt from federal income tax as is consistent with conservation
of capital. The investment objective may be changed without a shareholder vote.
The Fund normally invests at least 80% of its total assets in debt securities
that generate income exempt from federal income tax. However, Fund dividends
may be taxable for state and local income tax purposes. Also, some Fund
dividends may be taxable for federal income tax purposes, such as those
derived from occasional taxable investments and distributions of short and
long-term capital gains. The Fund may invest up to 20% of its total assets in
private activity bonds, the income of which may be treated as a specific tax
preference item under the federal alternative minimum tax.
The Fund invests in municipal securities issued by or on behalf of states,
territories and possessions of the United States, the District of Columbia
and their political subdivisions, agencies, instrumentalities and
authorities. In selecting securities for the Fund to buy and sell, the
Adviser considers each security's yield and total return potential relative
to other available municipal securities.
The Fund primarily invests only in investment grade securities. Investment grade
municipal securities are those rated in one of the four highest rating
categories as determined by a major rating agency. If a security is downgraded,
the Adviser will re-evaluate whether continuing to hold the security is in the
best interest of shareholders. The Fund ordinarily will maintain a
dollar-weighted average effective maturity of between three and ten years.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
Page 64 of 118
<PAGE>
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund is also subject to the risk that tax exempt securities may underperform
other segments of the fixed income markets or the fixed income markets as a
whole. For additional information about risks, see "More Information About
Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows the performance of the Fund's Class I Shares from year to
year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1990 4.65%
1991 8.45%
1992 9.74%
1993 11.76%
1994 -4.58%
1995 14.05%
1996 -1.07%
1997 6.57%
1998 5.95%
1999 -1.12%
BEST QUARTER WORST QUARTER
5.44% -4.13%
(3/31/95) (3/31/94)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 3.18%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN 7 YEAR MUNICIPAL BOND INDEX
AND THE LEHMAN 10 YEAR MUNICIPAL BOND INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS 10 YEARS
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA NATIONAL TAX EXEMPT BOND FUND -1.12% 4.73% 5.28%
LEHMAN 7 YEAR MUNICIPAL BOND INDEX(1) -0.14% 6.36% 6.60%
LEHMAN 10 YEAR MUNICIPAL BOND INDEX(2) -1.24% 7.12% 7.10%
</TABLE>
(1)The Lehman 7 Year Municipal Bond Index is a broad based total return
index. The bonds are all investment grade, fixed rate with maturities of 7-8
years and are selected from issues larger than $50 million dated since
January 1984. The Fund changed to this index as its benchmark because it
better reflects the range of maturities within the Fund's portfolio than the
Lehman 10 Year Municipal Bond Index the Fund's prior benchmark.
(2)The Lehman 10 Year Municipal Bond Index is a broad based total return index.
The bonds are all investment grade, fixed rate with maturities of 9-12 years and
are selected from issues larger than $50 million dated since January 1984.
The performance of the Armada National Tax Exempt Bond Fund for the period prior
to April 9, 1998 is represented by the performance of a common trust fund
("common trust fund") which operated prior to the effectiveness of the
registration statement of the National Tax Exempt Bond
Page 65 of 118
<PAGE>
Fund. The common trust fund was advised by National City Bank, an affiliate of
the Adviser. At the time of the National Tax Exempt Bond Fund's inception, the
common trust fund was operated using materially equivalent investment
objectives, policies, guidelines and restrictions as the Fund. In connection
with the National Tax Exempt Bond Fund's commencement of operations, on April
9, 1998, the common trust fund transferred its assets to the Fund. At the time
of the transfer, the Adviser did not manage any other collective investment or
common trust funds using materially equivalent investment objectives, policies,
guidelines and restrictions to those of the National Tax Exempt Bond Fund.
The common trust fund was not open to the public generally, nor registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), or subject to
certain restrictions that are imposed by the 1940 Act and the Internal Revenue
Code. If the common trust fund had been registered under the 1940 Act,
performance may have been adversely affected. Performance quotations of the
common trust fund represent past performance of the Adviser managed common trust
fund, which are separate and distinct from the National Tax Exempt Bond Fund; do
not represent past performance of the Fund; and should not be considered as
representative of future results of the Fund.
FUND FEES AND EXPENSES
SEE PAGE 51 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 66 of 118
<PAGE>
ARMADA OHIO TAX EXEMPT BOND FUND
FUND SUMMARY
INVESTMENT GOAL Current income exempt from federal
income tax and, to the extent possible,
Ohio personal income taxes, consistent
with conservation of capital
INVESTMENT FOCUS Ohio municipal securities
SHARE PRICE VOLATILITY Medium
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in municipal obligations that
pay interest that is exempt from
Federal income and Ohio personal income
taxes
INVESTOR PROFILE Investors seeking total return and who
are willing to accept some risks of
price volatility
PRINCIPAL INVESTMENT STRATEGIES
The Armada Ohio Tax Exempt Bond Fund's investment objective is to provide
current income exempt from federal income tax and, to the extent possible, from
Ohio personal income tax, as is consistent with the conservation of capital. The
investment objective may be changed without a shareholder vote.
The Fund normally invests at least 80% of its total assets in debt securities
issued by the State of Ohio, its political subdivisions and their agencies
and instrumentalities that generate income exempt from federal income and
Ohio personal income taxes (Ohio municipal securities). However, some Fund
dividends may be taxable, such as dividends that are derived from occasional
taxable investments and distributions of short and long-term capital gains.
Also, Fund dividends may be subject to state and local income taxes for any
shareholders who are not Ohio residents. The Fund may invest up to 20% of its
total assets in private activity bonds which may be treated as a specific tax
preference item under the federal alternative minimum tax. In selecting
securities for the Fund to buy and sell, the Adviser considers each
security's yield and total return potential relative to other available
municipal securities.
The Fund invests primarily in investment grade securities, which are those rated
in one of the four highest rating categories by a major rating agency, or
determined by the Adviser to be of equivalent quality. If a security is
downgraded, the Adviser will re-evaluate whether continuing to hold the security
is in the best interest of shareholders. The Fund ordinarily will maintain an
average weighted effective maturity of between three and ten years.
Page 67 of 118
<PAGE>
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
The Fund is also subject to the risk that tax exempt municipal securities may
underperform other segments of the fixed income markets or the fixed income
markets as a whole.
An investment in the Fund is subject to interest risk, which is the possibility
that the Fund's yield will decline due to falling interest rates.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund's focus of investing in securities of issuers located in Ohio subjects
the Fund to economic and government policies of that state.
The Fund is non-diversified, which means that it may invest in the securities of
relatively few issuers. As a result, the Fund may be more susceptible than a
diversified fund to a single adverse economic or political and regulatory
occurrences affecting one or more of these issuers, and may experience increased
volatility due to its investments in those securities. For additional
information about risks, see "More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows the performance of the Fund's Class I Shares from year to
year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1991 8.59%
1992 6.73%
1993 10.14%
1994 -4.27%
1995 13.44%
1996 3.93%
1997 7.24%
1998 5.44%
1999 -1.11%
</TABLE>
Page 68 of 118
<PAGE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
5.13% -4.88%
(3/31/95) (3/31/94)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 3.06%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN 7 YEAR MUNICIPAL BOND INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS SINCE INCEPTION
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA OHIO TAX EXEMPT BOND FUND -1.11% 5.68% 5.33%(1)
LEHMAN 7 YEAR MUNICIPAL BOND INDEX(3) -0.14% 6.36% 6.60%(2)
</TABLE>
(1)Since January 5, 1990.
(2)Since December 31, 1989.
(3)The Lehman 7 Year Municipal Bond Index is a broad based total return
index. The bonds are all investment grade, fixed rate with maturities of 7-8
years and are selected from issues larger than $50 million dated since January
1984.
FUND FEES AND EXPENSES
SEE PAGE 51 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 69 of 118
<PAGE>
ARMADA PENNSYLVANIA MUNICIPAL BOND FUND
FUND SUMMARY
INVESTMENT GOAL Current income exempt from both regular
federal income tax and, to the extent
possible, Pennsylvania personal income
tax as is consistent with conservation
of capital
INVESTMENT FOCUS Pennsylvania municipal securities
SHARE PRICE VOLATILITY Medium
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in municipal obligations that
pay interest that is exempt from
federal income and Pennsylvania
personal income taxes
INVESTOR PROFILE Investors seeking tax exempt current
income, and who are willing to accept
moderate share price volatility
PRINCIPAL INVESTMENT STRATEGIES
The Armada Pennsylvania Municipal Bond Fund's investment objective is to
provide current income exempt from regular federal income tax and, to the
extent possible, from Pennsylvania personal income tax, as is consistent with
conservation of capital. The investment objective may be changed without a
shareholder vote.
The Fund normally invests at least 80% of its net assets in debt securities
issued by the Commonwealth of Pennsylvania, its political subdivisions and
their agencies and instrumentalities that generate income exempt from federal
income and Pennsylvania personal income taxes (Pennsylvania municipal
securities). However, some Fund dividends may be taxable, such as dividends
that are derived from occasional taxable investments and distributions of
short and long-term capital gains. Also, Fund dividends will generally be
subject to state and local income taxes for any shareholders who are not
Pennsylvania residents.
The Fund may invest up to 100% of its total assets in private activity bonds
which may be treated as a specific tax preference item under the federal
alternative minimum tax. In selecting securities for the Fund to buy and
sell, the Adviser considers each security's yield and total return potential
relative to other available municipal securities.
The Fund primarily invests in investment grade securities, which are those
rated in one of the four highest rating categories by a major rating agency,
or determined by the Adviser to be of equivalent quality. If a security is
downgraded, the Adviser will re-evaluate whether continuing to hold the
security is in the best interest of shareholders. The Fund ordinarily will
maintain an average weighted portfolio maturity of between three and ten
years.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
Page 70 of 118
<PAGE>
The Fund is also subject to the risk that tax free municipal securities may
underperform other segments of the fixed income markets or the fixed income
markets as a whole.
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund's focus of investments in securities of issuers located in Pennsylvania
subjects the Fund to economic conditions and government policies within that
state.
The Fund is non-diversified, which means that it may invest in the securities of
relatively few issuers. As a result, the Fund may be more susceptible than a
diversified fund to a single adverse economic or political and regulatory
occurrences affecting one or more of these issuers, and may experience increased
volatility due to its investments in those securities. For additional
information about risks, see "More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows the performance of the Fund's Class I Shares from year to
year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1995 9.93%
1996 3.91%
1997 6.94%
1998 5.62%
1999 -0.96%
BEST QUARTER WORST QUARTER
3.80% -1.83%
(3/31/95) (6/30/99)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 2.90%.
Page 71 of 118
<PAGE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN 7 YEAR MUNICIPAL BOND INDEX.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS SINCE INCEPTION
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA PENNSYLVANIA MUNICIPAL BOND FUND -0.96% 5.03% 4.52%(1)
LEHMAN 7 YEAR MUNICIPAL BOND INDEX(3) -0.14% 6.36% 5.57%(2)
</TABLE>
(1)Since August 10, 1994
(2)Since July 31, 1994
(3)The Lehman 7 Year Municipal Bond Index is a broad based total return
index. The bonds are all investment grade, fixed rate with maturities of 7-8
years and are selected from issues larger than $50 million dated since January
1984.
FUND FEES AND EXPENSES
SEE PAGE 51 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF
YOU BUY AND HOLD FUND SHARES.
<PAGE>
FUND FEES AND EXPENSES OF THE ARMADA TAX FREE BOND FUNDS
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE RESPECTIVE FUNDS.
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
Michigan National Tax Ohio Tax Pennsylvania
Municipal Exempt Bond Exempt Bond Municipal
Bond Fund Fund Bond Fund Bond Fund
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Advisory Fees 0.55% 0.55% 0.55% 0.55%
Distribution and Service (12b-1) Fees 0.10% 0.10% 0.10% 0.10%
Other Expenses 0.18% 0.16% 0.15% 0.19%
----- ----- ----- -----
Total Annual Fund Operating Expenses 0.83%(1) 0.81%(2) 0.80%(2) 0.84%(2)
</TABLE>
(1)The Adviser and Distributor each expects to waive fees for the Michigan
Municipal Bond Fund so that total operating expenses for the current fiscal year
are expected to be 0.63%. These fee waivers remain in place as of the date of
this prospectus, but the Adviser and/or Distributor may discontinue all or part
of these waivers at any time.
(2)Each Fund's total actual annual operating expenses for the most recent fiscal
year were less than the amount shown above because the Adviser and Distributor
each waived a portion of the fees in order to keep total operating expenses at a
specified level. With these fee waivers, each Fund's actual total operating
expenses were:
National Tax Exempt Bond Fund -- 0.61%
Ohio Tax Exempt Bond Fund -- 0.60%
Pennsylvania Municipal Bond Fund -- 0.61%
The Adviser and Distributor each expects to continue these waivers so that total
operating expenses for the current fiscal year are expected to be as follows.
These fee waivers remain in place as of the date of this prospectus, but the
Adviser and/or Distributor may discontinue all or part of these waivers at any
time.
National Tax Exempt Bond Fund -- 0.55%
Ohio Tax Exempt Bond Fund -- 0.53%
Pennsylvania Municipal Bond Fund -- 0.53%
For more information about these fees, see "Investment Adviser, Sub-Adviser and
Investment Team," and "Distribution of Fund Shares."
Page 72 of 118
<PAGE>
EXAMPLE
These Examples are intended to help you compare the cost of investing in each
Armada Municipal Bond Fund with the cost of investing in other mutual funds.
The Examples assume that you invest $10,000 in a Fund for the time periods
indicated.
The Examples also assume that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different,
your approximate costs of investing $10,000 in each Armada Tax Free Bond
Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Michigan Municipal Bond Fund $85 $265 $460 $1,025
National Tax Exempt Bond Fund $83 $259 $450 $1,002
Ohio Tax Exempt Bond Fund $82 $255 $444 $ 990
Pennsylvania Municipal Bond Fund $86 $268 $466 $1,037
</TABLE>
Page 73 of 118
<PAGE>
MORE INFORMATION ABOUT RISK
The following chart indicates the specific investment risks associated with
each of the funds. A description of these risks can be found on the following
pages.
<TABLE>
<S> <C>
EQUITY RISK -- Equity securities include public and Armada Core Equity Fund
privately issued equity securities, common and Armada Equity Growth Fund
preferred stocks, warrants, rights to subscribe to Armada Equity Income Fund
common stock and convertible securities, as well as Armada Equity Index Fund
instruments that attempt to track the price movement Armada International Equity Fund
of equity indices. Investments in equity securities Armada Large Cap Ultra Fund
and equity derivatives in general are subject to Armada Mid Cap Growth Fund
market risks that may cause their prices to fluctuate Armada Small Cap Growth Fund
over time. The value of securities convertible into Armada Small Cap Value Fund
equity securities, such as warrants or convertible Armada Tax Managed Equity Fund
debt, is also affected by prevailing interest rates, Armada Balanced Allocation Fund
the credit quality of the issuer and any call
provision. Fluctuations in the value of equity
securities in which a mutual fund invests will cause
a fund's net asset value to fluctuate. An investment
in a portfolio of equity securities may be more
suitable for long-term investors who can bear the
risk of these share price fluctuations.
CONVERTIBLE SECURITIES RISK -- Convertible securities Armada Equity Growth Fund
have Armada Core Equity Fund characteristics of Armada Equity Income Fund
both fixed income and equity securities. The value Armada International Equity Fund
of the convertible security tends to move with the Armada Large Cap Ultra Fund
market value of the underlying stock, but may also Armada Mid Cap Growth Fund
be affected by interest rates, credit quality of the Armada Tax Managed Equity Fund
issuer and any call provisions. Armada Balanced Allocation Fund
Armada Strategic Income Bond Fund
Page 74 of 118
<PAGE>
FIXED INCOME RISK -- The market value of fixed income Armada Balanced Allocation Fund
investments change in response to interest rate Armada Bond Fund
changes and other factors. During periods of falling Armada GNMA Fund
interest rates, the values of outstanding fixed Armada Intermediate Bond Fund
income securities generally rise. Moreover, while Armada Limited Maturity Bond Fund
securities with longer maturities tend to produce Armada Strategic Income Bond Fund
higher yields, the prices of longer maturity Armada Total Return Advantage Fund
securities are also subject to greater market Armada U.S. Government Income Fund
fluctuations as a result of changes in interest Armada Michigan Municipal Bond Fund
rates. In addition to these fundamental risks, Armada National Tax Exempt Bond Fund
different types of fixed income securities may be Armada Ohio Tax Exempt Bond Fund
subject to the following additional risks: Armada Pennsylvania Municipal Bond Fund
CALL RISK -- During periods of falling interest Armada Mid Cap Growth Fund
rates, certain debt obligations with high interest Armada Balanced Allocation Fund
rates may be prepaid (or "called") by the issuer Armada Bond Fund
prior to maturity. This may cause a Fund's average Armada GNMA Fund
weighted maturity to fluctuate, and may require a Armada Intermediate Bond Fund
Fund to invest the resulting proceeds at lower Armada Limited Maturity Bond Fund
interest rates. Armada Strategic Income Bond Fund
Armada Total Return Advantage Fund
Armada U.S. Government Income Fund
Armada Michigan Municipal Bond Fund
Armada National Tax Exempt Bond Fund
Armada Ohio Tax Exempt Bond Fund
Armada Pennsylvania Municipal Bond Fund
CREDIT RISK -- The possibility that an issuer will be Armada Mid Cap Growth Fund
unable to make timely payments of either principal or Armada Balanced Allocation Fund
interest. Armada Bond Fund
Armada GNMA Fund
Armada Intermediate Bond Fund
Armada Limited Maturity Bond Fund
Armada Strategic Income Bond Fund
Armada U.S. Government Income Fund
Armada Total Return Advantage Fund
Armada Michigan Municipal Bond Fund
Armada National Tax Exempt Bond Fund
Armada Ohio Tax Exempt Bond Fund
Armada Pennsylvania Municipal Bond Fund
Page 75 of 118
<PAGE>
EVENT RISK -- Securities may suffer declines in Armada Balanced Allocation Fund
credit quality and market value due to issuer Armada Bond Fund
restructurings or other factors. This risk should be Armada GNMA Fund
reduced because of the diversification provided by Armada Intermediate Bond Fund
the Fund's multiple holdings. Armada Limited Maturity Bond Fund
Armada Strategic Income Bond Fund
Armada Total Return Advantage Fund
Armada Michigan Municipal Bond Fund
Armada National Tax Exempt Bond Fund
Armada Ohio Tax Exempt Bond Fund
Armada Pennsylvania Municipal Bond Fund
HIGH-YIELD, LOWER RATED SECURITIES RISK (or "junk bonds") Armada Strategic Income Bond Fund
are subject to additional risks associated with Armada Total Return Advantage Fund
investing in high-yield securities, including:
- High-yield, lower rated securities involve
greater risk of default or price declines than
investments in investment grade securities
(E.G., securities rated BBB or higher by S&P or
Baa or higher by Moody's) due to changes in the
issuer's creditworthiness.
- The market for high-yield, lower rated
securities may be thinner and less active,
causing market price volatility and limited
liquidity in the secondary market. This may
limit the ability of a Fund to sell these
securities at their fair market values either to
meet redemption requests, or in response to
changes in the economy or the financial markets.
- Market prices for high-yield, lower rated
securities may also be affected by investors'
perception of the issuer's credit quality and
the outlook for economic growth. Thus, prices
for high-yield, lower rated securities may move
independently of interest rates and the overall
bond market.
- The market for high-yield, lower rated securities
may be adversely affected by legislative and
regulatory developments.
Page 76 of 118
<PAGE>
MUNICIPAL ISSUER RISK -- There may be economic or Armada Michigan Municipal Bond Fund
political changes that impact the ability of Armada National Tax Exempt Bond Fund
municipal issuers to repay principal and to make Armada Ohio Tax Exempt Bond Fund
interest payments on municipal securities. Changes to Armada Pennsylvania Municipal Bond Fund
the financial condition or credit rating of municipal
issuers may also adversely affect the value of the
Fund's municipal securities. Constitutional or
legislative limits on borrowing by municipal issuers
may result in reduced supplies of municipal
securities. Moreover, certain municipal securities
are backed only by a municipal issuer's ability to
levy and collect taxes.
In addition, the Fund's concentration of investments Armada Michigan Municipal Bond Fund
in issuers located in a single state makes the Fund Armada Ohio Tax Exempt Bond Fund
more susceptible to adverse political or economic Armada Pennsylvania Municipal Bond Fund
developments affecting that state. The Fund also may
be riskier than mutual funds that buy securities of
issuers in numerous states.
ASSET-BACKED SECURITIES RISK -- Asset-backed Armada Balanced Allocation Fund
securities are fixed income securities representing Armada Bond Fund
an interest in a pool of shorter-term loans such as Armada GNMA Fund
automobile loans, home equity loans, equipment or Armada Intermediate Bond Fund
computer leases or credit card receivables. The Armada Limited Maturity Bond Fund
payments from the loans are passed through to the Armada Strategic Income Bond Fund
security holder. The loans underlying asset-backed Armada Total Return Advantage Fund
securities tend to have prepayment rates that do not Armada U.S. Government Income Fund
vary with interest rates. In addition, the short-term
nature of the loans reduces the impact of any change
in prepayment level. However, it is possible that
prepayments will alter the cash flow on asset-backed
securities and it is not possible to determine in
advance the actual final maturity date or average
life. Faster prepayment will shorten the average life
and slower prepayment will lengthen it, affecting the
price volatility of the security. However, it is
possible to determine what the range of that movement
could be and to calculate the effect that it will
have on the price of the security.
Page 77 of 118
<PAGE>
MORTGAGE-BACKED SECURITIES RISK -- Mortgage-backed Armada Balanced Allocation Fund
securities are fixed income securities representing Armada Bond Fund
an interest in a pool of underlying mortgage loans. Armada GNMA Fund
Mortgage -backed securities are sensitive to changes Armada Intermediate Bond Fund
in interest rates, but may respond to these changes Armada Limited Maturity Bond Fund
differently from other fixed income securities due to Armada Strategic Income Bond Fund
the possibility of prepayment of the underlying Armada Total Return Advantage Fund
mortgage loans. As a result, it may not be possible Armada U.S. Government Income Fund
to determine in advance the actual maturity date or
average life of a mortgage-backed security. Rising
interest rates tend to discourage refinancings, with
the result that the average life and volatility of
the security will increase exacerbating its decrease
in market price. When interest rates fall, however,
mortgage-backed securities may not gain as much in
market value because of the expectation of additional
mortgage prepayments that must be reinvested at lower
interest rates. Prepayment risk may make it difficult
to calculate the average maturity of a portfolio of
mortgage-backed securities and, therefore, to assess
the volatility risk of that portfolio.
Page 78 of 118
<PAGE>
FOREIGN SECURITY RISK -- Investments in securities Armada Core Equity Fund
of foreign companies or governments can be more Armada Equity Growth Fund
volatile than investments in U.S. companies or Armada Equity Income Fund
governments. Diplomatic, political, or economic Armada International Equity Fund
developments, including nationalization or Armada Large Cap Ultra Fund
appropriation, could affect investments in foreign Armada Mid Cap Growth Fund
countries. Foreign securities markets generally have Armada Small Cap Growth Fund
less trading volume and less liquidity than U.S. Armada Small Cap Value Fund
markets. In addition, the value of securities Armada Tax Managed Equity Fund
denominated in foreign currencies, and of dividends Armada Balanced Allocation Fund
from such securities, can change significantly when Armada Intermediate Bond Fund
foreign currencies strengthen or weaken relative to Armada Limited Maturity Bond Fund
the U.S. dollar. Foreign companies or governments Armada Strategic Income Bond Fund
generally are not subject to uniform accounting, Armada Total Return Advantage Fund
auditing, and financial reporting standards Armada U.S. Government Income Fund
comparable to those applicable to domestic U.S.
companies or governments. Transaction costs are
generally higher than those in the U.S. and expenses
for custodial arrangements of foreign securities may
be somewhat greater than typical expenses for
custodial arrangements of similar U.S. securities.
Investment in sovereign debt obligations by certain
Funds involves risks not present in debt obligations
of corporate issuers. The issuer of the debt or the
governmental authorities that control the repayment
of the debt may be unable or unwilling to repay
principal or interest when due in accordance with the
terms of such debt, and a Fund may have limited
recourse to compel payment in the event of a default.
Periods of economic uncertainty may result in
volatility of market prices of sovereign debt, and in
turn a Fund's NAV, to a greater extent than the
volatility inherent in debt obligations of U.S.
issuers. Some foreign governments levy withholding
taxes against dividend and interest income. Although
in some countries a portion of these taxes are
recoverable, the non-recovered portion will reduce
the income received from the securities comprising
the portfolio.
In addition to these risks, certain foreign
securities may be subject to the following additional
risks factors:
Page 79 of 118
<PAGE>
CURRENCY RISK -- Investments in foreign securities Armada Core Equity Fund
denominated in foreign currencies involve additional Armada Equity Growth Fund
risks, including: Armada Equity Income Fund
Armada International Equity Fund
- The value of a Fund's assets measured in U.S. Armada Large Cap Ultra Fund
dollars may be affected by changes in currency Armada Mid Cap Growth Fund
rates and in exchange control regulations. Armada Small Cap Growth Fund
- A Fund may incur substantial costs in connection Armada Small Cap Value Fund
with conversions between various currencies. Armada Tax Managed Equity Fund
- A Fund may be unable to hedge against possible Armada Balanced Allocation Fund
variations in foreign exchange rates or to hedge Armada Intermediate Bond Fund
a specific security transaction or portfolio Armada Limited Maturity Bond Fund
position. Armada Strategic Income Bond Fund
- Only a limited market currently exists for Armada Total Return Advantage Fund
hedging transactions relating to currencies in Armada U.S. Government Income Fund
certain emerging markets.
HEDGING RISK -- Hedging is a strategy designed to Armada Core Equity Fund
offset investment risks. Hedging activities include, Armada Equity Growth Fund
among other things, the use of forwards, options and Armada Equity Income Fund
futures. There are risks associated with hedging Armada Equity Index Fund
activities, including: Armada International Equity Fund
Armada Large Cap Ultra Fund
- The success of a hedging strategy may depend on Armada Mid Cap Growth Fund
an ability to predict movements in the prices of Armada Small Cap Growth Fund
individual securities, fluctuations in markets, Armada Small Cap Value Fund
and movements in interest and currency exchange Armada Tax Managed Equity Fund
rates. Armada Balanced Allocation Fund
- There may be an imperfect or no correlation Armada Bond Fund
between the changes in market value of the Armada GNMA Fund
securities held by the Fund or the currencies in Armada Intermediate Bond Fund
which those securities are denominated and the Armada Limited Maturity Bond Fund
prices of forward contracts, futures and options Armada Strategic Income Bond Fund
on futures. Armada Total Return Advantage Fund
- There may not be a liquid secondary market for a Armada U.S. Government Income Fund
futures contract or option.
- Trading restrictions or limitations may be
imposed by an exchange, and government
regulations may restrict trading in currencies,
futures contracts and options.
Page 80 of 118
<PAGE>
LEVERAGING RISK -- Leveraging activities include, Armada Core Equity Fund
among other things, borrowing and the use of short Armada Equity Growth Fund
sales, options and futures. There are risks Armada Equity Income Fund
associated with leveraging activities, including: Armada Equity Index Fund
Armada International Equity Fund
- A fund experiencing losses over certain ranges Armada Large Cap Ultra Fund
in the market that exceed losses experienced by Armada Mid Cap Growth Fund
a non-leveraged Fund. Armada Small Cap Growth Fund
- There may be an imperfect or no correlation Armada Small Cap Value Fund
between the changes in market value of the Armada Tax Managed Equity Fund
securities held by a fund and the prices of Armada Balanced Allocation Fund
futures and options on futures. Armada GNMA Fund
- Although the funds will only purchase Armada Intermediate Bond Fund
exchange-traded futures and options, due to Armada Limited Maturity Bond Fund
market conditions there may not be a liquid Armada Strategic Income Bond Fund
secondary market for a futures contract or Armada Total Return Advantage Fund
option. As a result, the funds may be unable to Armada U.S. Government Income Fund
close out their futures or options contracts at
a time which is advantageous.
- Trading restrictions or limitations may be
imposed by an exchange, and government
regulations may restrict trading in futures
contracts and options.
In addition, the following leveraged instruments are subject to certain specific risks:
DERIVATIVES RISK -- The Funds use derivatives to Armada Core Equity Fund
attempt to achieve their investment objectives, while Armada Equity Growth Fund
at the same time maintaining liquidity. To Armada Equity Income Fund
collateralize (or cover) these derivatives Armada Equity Index Fund
transactions, the Funds hold cash or U.S. government Armada International Equity Fund
securities. Armada Large Cap Ultra Fund
Armada Mid Cap Growth Fund
Armada Small Cap Growth Fund
Armada Small Cap Value Fund
Armada Tax Managed Equity Fund
Armada Balanced Allocation Fund
Armada Bond Fund
Armada GNMA Fund
Armada Intermediate Bond Fund
Armada Limited Maturity Bond Fund
Armada Strategic Income Bond Fund
Armada Total Return Advantage Fund
Armada U.S. Government Income Fund
Page 81 of 118
<PAGE>
FUTURES RISK -- Futures contracts and options on futures Armada Core Equity Fund
contracts provide for the future sale by one party Armada Equity Growth Fund
and purchase by another party of a specified amount Armada Equity Income Fund
of a specific security at a specified future time and Armada Equity Index Fund
at a specified price. An option on a futures contract Armada International Equity Fund
gives the purchaser the right, in exchange for a Armada Large Cap Ultra Fund
premium, to assume a position in a futures contract Armada Mid Cap Growth Fund
at a specified exercise price during the term of the Armada Small Cap Growth Fund
option. Index futures are futures contracts for Armada Small Cap Value Fund
various indices that are traded on registered Armada Tax Managed Equity Fund
securities exchanges. Armada Balanced Allocation Fund
Armada Bond Fund
The Funds may use futures contracts and related Armada GNMA Fund
options for bona fide hedging purposes to offset Armada Limited Maturity Bond Fund
changes in the value of securities held or expected Armada Strategic Income Bond Fund
to be acquired. They may also be used to gain Armada Total Return Advantage Fund
exposure to a particular market or instrument, to Armada U.S. Government Income Fund
create a synthetic money market position, and for
certain other tax-related purposes. The Funds will
only enter into futures contracts traded on a
national futures exchange or board of trade.
OPTIONS RISK -- The buyer of an option acquires the Armada Core Equity Fund
right to buy (a call option) or sell (a put option) Armada Equity Growth Fund
a certain quantity of a security (the underlying Armada Equity Income Fund
security) or instrument at a certain price up to a Armada International Equity Fund
specified point in time. The seller or writer of an Armada Large Cap Ultra Fund
option is obligated to sell (a call option) or buy (a Armada Mid Cap Growth Fund
put option) the underlying security. When writing Armada Small Cap Growth Fund
(selling) call options on securities, a Fund may Armada Small Cap Value Fund
cover its position by owning the underlying security Armada Tax Managed Equity Fund
on which the option is written or by owning a call Armada Balanced Allocation Fund
option on the underlying security. Alternatively, a Armada Bond Fund
Fund may cover its position by maintaining in a Armada GNMA Fund
segregated account cash or liquid securities equal in Armada Limited Maturity Bond Fund
value to the exercise price of the call option Armada Strategic Income Bond Fund
written by a Fund. Armada Total Return Advantage Fund
Armada U.S. Government Income Fund
Because option premiums paid or received by the Funds
are small in relation to the market value of the
investments underlying the options, buying and
selling put and call options can be more speculative
than investing directly in securities.
Page 82 of 118
<PAGE>
SHORT SALES RISK -- Short sales are transactions in Armada Mid Cap Growth Fund
which a Fund sells a security it does not own. To Armada Tax Managed Equity Fund
complete a short sale, a Fund must borrow the Armada Balanced Allocation Fund
security to deliver to the buyer. The Fund is then Armada GNMA Fund
obligated to replace the borrowed security by Armada U.S. Government Income Fund
purchasing the security at the market price at the
time of replacement. This price may be more or less
than the price at which the security was sold by the Fund.
REAL ESTATE INVESTING RISK -- The Fund's investments in Armada Equity Income Fund
the securities of real estate investment trusts Armada Mid Cap Growth Fund
(REITs) and companies principally engaged in the real Armada Small Cap Value Fund
estate industry may subject the Fund to the risks Armada Intermediate Bond Fund
associated with the direct ownership of real estate. Armada Limited Maturity Bond Fund
Risks commonly associated with the direct ownership
of real estate include fluctuations in the value of
underlying properties and defaults by borrowers or
tenants. In addition to these risks, REITs are
dependent on specialized management skills and some
REITs may have investments in relatively few
properties, or in a small geographic area or a single
type of property. These factors may increase the
volatility of the Fund's investments in REITs.
REGIONAL RISK -- To the extent that a Fund's Armada Michigan Municipal Bond Fund
investments are focused in a specific geographic Armada Ohio Tax Exempt Bond Fund
region, the Fund may be subject to the political and Armada Pennsylvania Municipal Bond Fund
other developments affecting that region. Regional
economies are often closely interrelated, and
political and economic developments affecting one
region, country or state often affect other regions,
countries or states, thus subjecting a Fund to
additional risks.
TRACKING ERROR RISK -- Factors such as Fund expenses, Armada Equity Index Fund
imperfect correlation between the Fund's investments
and those of its benchmark, rounding of share
prices, changes to the benchmark, regulatory
policies, and leverage, may affect its ability to
achieve perfect correlation. The magnitude of any
tracking error may be affected by a higher portfolio
turnover rate. Because an index is just a composite
of the prices of the securities it represents rather
than an actual portfolio of those securities, an
index will have no expenses. As a result, the Fund,
which will have expenses such as taxes, custody,
management fees and other operational costs, and
brokerage, may not achieve its investment objective
of accurately correlating to its index.
</TABLE>
Page 83 of 118
<PAGE>
MORE INFORMATION ABOUT FUND INVESTMENTS
In addition to the investments and strategies described in this prospectus, each
Fund also may invest in other securities, use other strategies and engage in
other investment practices. These investments and strategies, as well as those
described in this prospectus, are described in detail in our Statement of
Additional Information.
The investments and strategies described in this prospectus are those that we
use under normal conditions. During unusual economic, market, political or
other conditions, or for other temporary defensive or liquidity purposes,
each Fund may invest up to 100% of its assets in short-term high quality debt
instruments that would not ordinarily be consistent with a Fund's principal
investment strategies, which may prevent the Fund from achieving its
investment objective. A Fund will do so only if the Adviser or Sub-Adviser
believes that the risk of loss outweighs the opportunity for achieving a
Fund's investment objective. Of course, the Trust cannot guarantee that any
Fund will achieve its investment goal.
The Trust has applied for an order from the SEC that, if granted, would allow
the non-money market funds offered by the Trust to use cash balances that have
not been invested in portfolio securities and cash collateral from securities
lending programs to purchase shares of the money market funds offered by the
Trust. A non-money market fund will hold shares of money market funds only to
the extent that its total investment in the money market funds does not exceed
25% of its total assets.
INVESTMENT ADVISER, SUB-ADVISER AND INVESTMENT TEAMS
The Investment Adviser makes investment decisions for the Funds and continuously
reviews, supervises and administers each Fund's respective investment program.
The Investment Adviser oversees the Sub-Adviser to ensure compliance with the
Funds' investment policies and guidelines, and monitors the Sub-Adviser's
adherence to its investment style. The Adviser pays the Sub-Adviser out of the
Investment Advisory fees it receives (described on page 57).
The Board of Trustees of the Trust supervises the Adviser and establishes
policies that the Adviser must follow in its management activities.
National City Investment Management Company ("IMC"), with its principal offices
at 1900 East Ninth Street, Cleveland, Ohio 44114, serves as Adviser to the
Funds. On June 30, 2000, IMC had approximately $25.6 billion in assets under
management.
IMC utilizes a team approach for management of the Funds. No one person is
primarily responsible for making investment recommendations to the team. In the
case of the Armada Core Equity and the Armada Total Return Advantage Funds,
National Asset Management Corporation ("NAM"), with its principal offices at 101
South Fifth St., 5th Floor, Louisville, KY 40202, serves as Sub-Adviser and
manages these Funds on a day-to-day basis. NAM selects, buys and sells the
securities of these Funds under the supervision of the Adviser and the Board of
Trustees.
Page 84 of 118
<PAGE>
The table below shows the IMC management teams responsible for each Fund as well
as the advisory fees IMC received for each Fund for the fiscal period ended May
31, 2000.
<TABLE>
<CAPTION>
ADVISORY FEES PAID AS
A PERCENTAGE OF
AVERAGE NET ASSETS FOR
MANAGEMENT TEAM/INVESTMENT THE FISCAL YEAR ENDED
FUND NAME ADVISER MAY 31, 2000
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
National Asset Management Corporation
Core Equity Fund (sub-adviser) 0.75%
------------------------------------------------------------------------------------------------------------
Equity Growth Fund Equity Large Cap Core/Diversified 0.75%
Growth Team
------------------------------------------------------------------------------------------------------------
Equity Income Fund Equity Value Team 0.75%
------------------------------------------------------------------------------------------------------------
Equity Index Fund Equity Team 0.19%(1)
------------------------------------------------------------------------------------------------------------
International Equity Fund International Equity Team 1.15%
------------------------------------------------------------------------------------------------------------
Large Cap Ultra Fund Equity Large Cap Ultra Growth Team 0.75%
------------------------------------------------------------------------------------------------------------
Mid Cap Growth Fund Small and Mid Cap Growth Team 1.00%
------------------------------------------------------------------------------------------------------------
Small Cap Growth Fund Small and Mid Cap Growth Team 1.00%
------------------------------------------------------------------------------------------------------------
Small Cap Value Fund Equity Value Team 1.00%
------------------------------------------------------------------------------------------------------------
Tax Managed Equity Fund Equity Large Cap Core/Diversified 0.75%
Growth Team
------------------------------------------------------------------------------------------------------------
Balanced Allocation Fund Equity and Fixed Income Teams 0.75%
------------------------------------------------------------------------------------------------------------
Bond Fund Taxable Fixed Income Team 0.55%
------------------------------------------------------------------------------------------------------------
GNMA Fund Taxable Fixed Income Team 0.55%
------------------------------------------------------------------------------------------------------------
Intermediate Bond Fund Taxable Fixed Income Team 0.40%
------------------------------------------------------------------------------------------------------------
Limited Maturity Bond Fund Taxable Fixed Income Team 0.35%
------------------------------------------------------------------------------------------------------------
Strategic Income Bond Fund Taxable Fixed Income Team 0.75%(2)
------------------------------------------------------------------------------------------------------------
National Asset Management Corporation
Total Return Advantage Fund (sub-adviser) 0.35%
------------------------------------------------------------------------------------------------------------
U.S. Government Income Fund Taxable Fixed Income Team 0.55%
------------------------------------------------------------------------------------------------------------
Michigan Municipal Bond Fund Tax Exempt Fixed Income Team 0.55%
------------------------------------------------------------------------------------------------------------
National Tax Exempt Bond Fund Tax Exempt Fixed Income Team 0.33%(1)
------------------------------------------------------------------------------------------------------------
Ohio Tax Exempt Bond Fund Tax Exempt Fixed Income Team 0.33%(1)
------------------------------------------------------------------------------------------------------------
Pennsylvania Municipal Bond Fund Tax Exempt Fixed Income Team 0.34%(1)
------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Adviser fee or waiver changed during period.
(2) The Strategic Income Bond Fund had not yet commenced operations as of the
date of this Prospectus. The fee shown represents the contractual advisory
fee rate that the Fund will pay the Adviser.
THE ADVISER'S PAST PERFORMANCE - STRATEGIC INCOME BOND FUND
Since November 1, 1996, the Adviser has managed some assets as part of a larger
portfolio of a retirement trust, the National City Non-Contributory Retirement
Trust-Strategic Income (the "Retirement Trust Assets"). The Retirement Trust
Assets have the same investment objectives as the Strategic Income Bond Fund
and are managed by the Adviser using policies and strategies that are
substantially similar to those used by the Adviser to manage the Strategic
Income Bond Fund. The Adviser's Taxable Fixed Income and International Equity
Teams are jointly responsible for managing both the Retirement Trust both the
Retirement Trust Assets and the Strategic Income Bond Fund. The Adviser
manages no other accounts in a manner substantially similar to that of the
Retirement Trust Assets and the Strategic Income Bond Fund. A composite of
the performance of the Retirement Trust Assets is listed below. The
performance data for the Retirement Trust Assets have been adjusted to
reflect the deduction of fees and expenses that will be paid by the Strategic
Income Bond. Fund Also listed below are four indices The Lehman Aggregate
Page 85 of 118
<PAGE>
Bond Index, Lehman High-Yield Index and Lehman G-7 Index (ex-11s) as each
comprised of securities that are representative of one of the three primary
fixed income market sectors in which the Retirement Trust Assets and the
Strategic Income Bond Fund invest The Hybrid Index is a blended index
calculated by the Adviser by assigning a weight of one-third to each of the
other indices. These indices are unmanaged indices which assume the
reinvestment of dividends on securities in the index.
The Retirement Trust Assets are not subject to the investment limitations,
diversification requirements and other restrictions imposed by the Investment
Company Act of 1940, as amended (the "1940 Act"), and the Internal Revenue
Code. If they were, their returns might have been lower. The performance of
The Retirement Trust Assets does not represent the historical performance of
and should not be interpreted as indicative of the future performance of the
Strategic Income Bond Fund. Rather, it is intended to provide investors with
information about the historical investment performance of the Strategic
Income Bond Fund's Adviser.
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
(ENDED 6/30/00) (NOVEMBER 1, 1996)
------------------------------------------------------------------------------------------
<S> <C> <C>
RETIREMENT TRUST ASSETS 0.30% 4.26%
LEHMAN AGGREGATE BOND INDEX(1) 4.56% 6.01%
LEHMAN HIGH-YIELD INDEX(2) -1.03% 4.94%
LEHMAN G-7 INDEX (EX-U.S.)(3) 3.09% 2.44%
HYBRID INDEX(4) 2.28% 4.56%
</TABLE>
(1)The Lehman Aggregate Bond Index is an unmanaged, fixed income, market
value-weighted index that includes treasury issues, agency issues, corporate
bond issues and mortgage-backed securities.
(2)The Lehman High-Yield Index is an unmanaged, market value-weighed index that
tracks the daily price-only, coupon and total return performance of
noninvestment grade, fixed rate, publicly placed, dollar-denominated and
nonconvertible debt registered with the U.S. Securities and Exchange Commission.
(3)The Lehman G-7 Index (ex-U.S.) is a sub-group of the Lehman Global Treasury
Index which tracks fixed-rate, non-convertible, local currency and ECU
denominated sovereign debt issues which have at least one year remaining to
maturity. The Lehman G-7 (ex-U.S.) Index is geographically limited to the "G-7"
group of industrialized countries, excluding the United States (Canada, Germany,
France, Italy, Japan, and the United Kingdom). The country components are
weighted according to market capitalization.
(4)The Hybrid Index is an index composed of one-third of each index listed
above, as calculated by the Adviser.
PURCHASING AND SELLING FUND SHARES
This section tells you how to purchase and sell (sometimes called "redeem")
Class I Shares of the Funds.
CLASS I SHARES HAVE NO SALES CHARGE, NO MINIMUM INITIAL INVESTMENT AND ARE ONLY
AVAILABLE TO FINANCIAL INSTITUTIONS.
Class I Shares are for financial institutions investing for their own or their
customers' accounts. For information on how to open an account and setup
procedures for placing transactions call 1-800-622-FUND (3863).
From time to time, the Adviser may pay from its own resources a fee to financial
institutions that generate purchase orders.
Page 86 of 118
<PAGE>
HOW TO PURCHASE FUND SHARES
You may buy shares through accounts with brokers and other institutions that
are authorized to place trades in Fund shares for their customers. If you
invest through an authorized institution, you will have to follow its
procedures. Your broker or institution may charge a fee for its services, in
addition to the fees charged by the Trust. You will also generally have to
address your correspondence or questions regarding a fund to your institution.
GENERAL INFORMATION
You may purchase shares on any day that the New York Stock Exchange is open for
business (a "Business Day").
The Trust may reject any purchase order if it is determined that accepting the
order would not be in the best interests of the Fund or its shareholders.
The price per share (the offering price) will be the net asset value per
share (NAV) next determined after a Fund receives your purchase order. Daily
NAV is calculated for each of the funds each Business Day at 4:00 p.m.
Eastern Time, the regularly-scheduled close of normal trading on the New York
Stock Exchange. The deadline for submitting a purchase order to the Transfer
Agent in order to receive the current Business Day's NAV is 4:00 p.m. Eastern
time.
So, for you to be eligible to receive dividends declared on the day you submit
your purchase order, generally a Fund must receive your order by the
above-listed deadlines and federal funds (readily available funds) before 2:00
p.m. Eastern time the following day.
HOW WE CALCULATE NAV
NAV for one Fund share is the value of that share's portion of the assets of the
Fund less liabilities and class expenses.
In calculating NAV, a fund generally values its investment portfolio at market
price. In the event that a sale of a particular fixed income security is not
reported for that day, fixed income securities are priced at the mean between
the most recent quoted bid and asked prices. Unlisted securities and securities
traded on a national securities market for which market quotations are readily
available are valued at the mean between the most recent bid and asked prices.
In the event that a sale of a particular equity security is not reported for
that day, shares are priced at the last bid quotation. If market prices are
unavailable or a Fund thinks that they are unreliable, fair value prices may be
determined in good faith using methods approved by the Board of Trustees.
Some Funds hold securities that are listed on foreign exchanges. These
securities may trade on weekends or other days when the Funds do not calculate
NAV. As a result, the market value of these Fund's investments may change on
days when you cannot buy and hold Fund shares.
SALES CHARGES
There are no sales charges on the purchase of Class I Shares.
Page 87 of 118
<PAGE>
HOW TO SELL YOUR FUND SHARES
Holders of Class I Shares may sell shares by following the procedures
established when they opened their account or accounts. If you have questions,
call 1-800-622-FUND (3863).
If you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares.
The sale price of each share will be the next NAV determined after the Fund
receives your request.
RECEIVING YOUR MONEY
Normally, we will send your sale proceeds within seven Business Days after we
receive your request in good order. Good order means that your request includes
complete information on your purchase, exchange or redemption and that the Fund
has received the appropriate assets. Your proceeds can be wired to your bank
account or sent to you by check. Armada Funds do not charge a fee to wire your
funds; however, your institution may charge a fee. IF YOU PURCHASE YOUR SHARES
BY CHECK OR THROUGH EACH, REDEMPTION PROCEEDS MAY NOT BE AVAILABLE UNTIL YOUR
CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15 DAYS FROM YOUR DATE OF PURCHASE).
If you recently changed your address on your account, redemption proceeds will
not be available until after 10 business days without a signature guarantee.
REDEMPTIONS IN KIND
We generally pay sale (redemption) proceeds in cash. However, under unusual
conditions that make the payment of cash unwise (and for the protection of a
Fund's remaining shareholders) we might pay all or part of your redemption
proceeds in liquid securities with a market value equal to the redemption price
(redemption in kind). It is highly unlikely that your shares would ever be
redeemed in kind, but if they were you would probably have to pay transaction
costs to sell the securities distributed to you, as well as taxes on any capital
gains from the sale as with any redemption. The Armada Tax Managed Equity Fund
may fund redemptions of $1 million or more with appreciated securities rather
than cash.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A Fund may suspend your right to sell your shares if the New York Stock Exchange
restricts trading, the SEC declares an emergency or for other reasons. More
information about this is in our Statement of Additional Information.
DISTRIBUTION OF FUND SHARES
Each Fund has adopted a distribution plan under Rule 12b-1, pursuant to the 1940
Act, that allows each Fund to pay distribution and service fees for the sale and
distribution of its shares, and for services provided to shareholders. Because
these fees are paid out of a Fund's assets continuously, over time these fees
will increase the cost of your investment and may cost you more than paying
other types of sales charges.
Page 88 of 118
<PAGE>
Distribution fees, after fee waivers, as a percentage of average daily net
assets are as follows:
<TABLE>
<CAPTION>
CLASS I(1)
----------
<S> <C>
Armada Core Equity Fund 0.05%
Armada Equity Growth Fund 0.05%
Armada Equity Income Fund 0.05%
Armada Equity Index Fund 0.005%
Armada International Equity Fund 0.05%
Armada Large Cap Ultra Fund 0.05%
Armada Mid Cap Growth Fund 0.05%
Armada Small Cap Growth Fund 0.05%
Armada Small Cap Value Fund 0.05%
Armada Tax Managed Equity Fund 0.05%
Armada Balanced Allocation Fund 0.05%
Armada Bond Fund 0.05%
Armada GNMA Fund 0.05%
Armada Intermediate Bond Fund 0.05%
Armada Limited Maturity Bond Fund 0.02%
Armada Strategic Income Bond Fund 0.05%(2)
Armada Total Return Advantage Fund 0.02%
Armada U.S. Government Income Fund 0.05%
Armada Michigan Municipal Bond Fund 0.05%
Armada National Tax Exempt Bond Fund 0.05%
Armada Ohio Tax Exempt Bond Fund 0.05%
Armada Pennsylvania Municipal Bond Fund 0.02%
</TABLE>
(1)Each Fund is permitted to pay up to 0.10% for distribution fees on Class I
shares.
(2)As of the date of the Prospectus, the Strategic Income Bond Fund had not
yet commenced operations. The Prospectus will be supplemented to advise
prospective investors when shares of the Fund will be available for purchase.
The amounts indicated are the distribution fees the Fund intends to pay upon
start up of operations.
The Distributor may, from time to time in its sole discretion, institute one or
more promotional incentive programs for dealers, which will be paid for by the
Distributor from any sales charge it receives or from any other source available
to it. Under any such program, the Distributor may provide cash or non-cash
compensation as recognition for past sales or encouragement for future sales
that may include the following: merchandise, travel expenses, prizes, meals, and
lodgings, and gifts that do not exceed $100 per year, per individual.
Page 89 of 118
<PAGE>
DIVIDENDS AND TAXES
The following Funds distribute income annually:
Armada International Equity Fund
Armada Small Cap Growth Fund
Armada Small Cap Value Fund
The following Funds distribute income quarterly:
Armada Core Equity Fund
Armada Equity Growth Fund
Armada Equity Income Fund
Armada Equity Index Fund
Armada Large Cap Ultra Fund
Armada Mid Cap Growth Fund
Armada Tax Managed Equity Fund
Armada Balanced Allocation Fund
The following Funds accrue income daily and distribute monthly:
Armada Bond Fund
Armada GNMA Fund
Armada Intermediate Bond Fund
Armada Limited Maturity Bond Fund
Armada Total Return Advantage Fund
Armada U.S. Government Income Fund
Armada Michigan Municipal Bond Fund
Armada National Tax Exempt Bond Fund
Armada Ohio Tax Exempt Bond Fund
Armada Pennsylvania Municipal Bond Fund
It is anticipated that the Armada Strategic Income Bond Fund will distribute
income monthly.
Each Fund makes distributions of capital gains, if any, at least annually. If
you own Fund shares on a Fund's record date, you will be entitled to receive the
dividend and/or capital gain distribution.
You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment you
must notify the Fund in writing prior to the date of the distribution. Your
election will be effective for dividends and distributions paid after the Fund
receives your written notice. To cancel your election, simply send the Fund
written notice.
Page 90 of 118
<PAGE>
FEDERAL TAXES
Each Fund contemplates declaring as dividends each year all or substantially all
of its taxable income, including its net capital gain (the excess of long-term
capital gain over short-term capital loss). Distributions attributable to the
net capital gain of a Fund will be taxable to you as long-term capital gain,
regardless of how long you have held your shares. Other Fund distributions
(other than exempt-interest dividends, discussed below) will generally be
taxable as ordinary income. You will be subject to income tax on Fund
distributions regardless of whether they are paid in cash or reinvested in
additional shares. You will be notified annually of the tax status of
distributions to you.
The Funds use a tax management technique known as "highest in, first out." Using
this technique, the portfolio holdings that have experienced the smallest gain
or largest loss are sold first in an effort to minimize capital gains and
enhance after-tax returns.
You should note that if you purchase shares just before a distribution, the
purchase price will reflect the amount of the upcoming distribution, but you
will be taxable on the entire amount of the distribution received, even though,
as an economic matter, the distribution simply constitutes a return of capital.
This is known as "buying into a dividend."
You will recognize taxable gain or loss on a sale, exchange or redemption of
your shares, including an exchange for shares of another Fund, or an in-kind
redemption, based on the difference between your tax basis in the shares and the
amount you receive for them. (To aid in computing your tax basis, you generally
should retain your account statements for the periods during which you held
shares.) Any loss realized on shares held for six months or less will be treated
as a long-term capital loss to the extent of any capital gain dividends that
were received on the shares. Additionally, any loss realized on a sale or
redemption of shares of a Fund may be disallowed under "wash sale" rules to the
extent the shares disposed of are replaced with other shares of a Fund within a
period of 61 days beginning 30 days before and ending 30 days after the shares
are disposed of, such as pursuant to a dividend reinvestment in shares of a
Fund. If disallowed, the loss will be reflected in an adjustment to the basis of
the shares acquired.
The one major exception to these tax principles is that distributions on, and
sales, exchanges and redemptions of, shares held in an IRA (or other
tax-qualified plan) will not be currently taxable.
It is expected that the Armada International Equity Fund will be subject to
foreign withholding taxes with respect to dividends or interest received from
sources in foreign countries. The Armada International Equity Fund may make an
election to treat a proportionate amount of such taxes as constituting a
distribution to each shareholder, which would allow each shareholder either (1)
to credit such proportionate amount of taxes against U.S. federal income tax
liability or (2) to take such amount as an itemized deduction.
The Armada Michigan Municipal Bond Fund, Armada National Tax Exempt Bond
Fund, Armada Ohio Tax Exempt Bond Fund and Armada Pennsylvania Municipal Bond
Fund (the "Tax Free Bond Funds") anticipate that substantially all of their
income dividends will be "exempt interest dividends," which are exempt from
federal income taxes. However, some dividends will be taxable, such as
dividends that are derived from occasional taxable investments and
distributions of short and long-term capital gains. Interest on indebtedness
incurred by a shareholder to purchase or carry shares of any Tax Free Bond
Fund generally will not be deductible for federal income tax purposes.
Page 91 of 118
<PAGE>
You should note that a portion of the exempt-interest dividends paid by the
Tax Free Bond Funds may constitute an item of tax preference for purposes of
determining federal alternative minimum tax liability. Exempt-interest
dividends will also be considered along with other adjusted gross income in
determining whether any Social Security or railroad retirement payments
received by you are subject to federal income taxes.
If you receive an exempt-interest dividend with respect to any share and the
share is held by you for six months or less, any loss on the sale or exchange of
the share will be disallowed to the extent of such dividend amount.
The foregoing is only a summary of certain tax considerations under current law,
which may be subject to change in the future. Shareholders who are nonresident
aliens, foreign trusts or estates, or foreign corporations or partnerships, may
be subject to different United States federal income tax treatment. You should
consult your tax adviser for further information regarding federal, state, local
and/or foreign tax consequences relevant to your specific situation.
STATE AND LOCAL TAXES
Shareowners may also be subject to state and local taxes on distributions and
redemptions. State income taxes may not apply, however, to the portions of each
Fund's distributions, if any, that are attributable to interest on federal
securities or interest on securities of the particular state or localities
within the state. The Armada Pennsylvania Municipal Bond Fund intends to
distribute income that is exempt from Pennsylvania personal income taxes. The
Armada Ohio Tax Exempt Bond Fund intends to distribute income that is exempt
from Ohio personal income taxes. The Armada Michigan Municipal Bond Fund intends
to distribute income that is exempt from Michigan income taxes. Shareowners
should consult their tax advisers regarding the tax status of distributions in
their states and localities.
MORE INFORMATION ABOUT TAXES IS IN THE STATEMENT OF ADDITIONAL INFORMATION.
Page 92 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
The tables that follow present performance information about Class I Shares of
each Fund. This information is intended to help you understand each Fund's
financial performance for the past five years, or, if shorter, the period of the
Fund's operations. Some of this information reflects financial information for a
single Fund share. The total returns in the table represent the rate that you
would have earned (or lost) on an investment in a Fund, assuming you reinvested
all of your dividends and distributions.
Except as stated otherwise below, this information has been audited by Ernst
& Young LLP, independent auditors, whose reports, along with each Fund's
financial statements, are included in the annual report. The Financial
Highlights of the GNMA Fund and Pennsylvania Municipal Bond Fund from each
Fund's respective commencement of operations date through May 31, 1996, were
audited by each Fund's former independent accountants
In June 2000, the Parkstone Bond, Large Capitalization, U.S. Government
Income, Michigan Municipal Bond, and Mid Capitalization Funds were
reorganized, respectively, into the Armada Bond, Large Cap Ultra, U.S.
Government Income, Michigan Municipal Bond, and Mid Cap Growth Funds. In
connection with this reorganization, each of these Armada Funds adopted the
financial highlights, financial statements and performance history of its
corresponding acquired Parkstone Fund. The Financial Highlights for each of
these Funds for the periods prior the fiscal year ended May 31, 2000 were
audited by PricewaterhouseCoopers LLP, former independent accountants to The
Parkstone Group of Funds.
You can obtain the Fund's annual report, which contains more performance
information, at no charge by calling 1-800-622-FUND (3863).
Page 93 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA CORE EQUITY FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31, FOR THE PERIOD ENDED
2000 1999 MAY 31, 1998(2)
<S> <C> <C> <C>
Net asset value, beginning of period $13.75 $11.35 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) 0.02 (0.02)(4) 0.05
Net gain on securities (realized and unrealized) 1.65 2.94 1.35
Total from investment operations 1.67 2.92 1.40
LESS DISTRIBUTIONS
Dividends from net investment income (0.01) (0.01) (0.05)
Distributions from net realized capital gains (0.53) (0.51) (0.00)
Total distributions (0.54) (0.52) (0.05)
Net asset value, end of period $14.88 $13.75 $11.35
TOTAL RETURN 12.31% 26.08% 14.03%(1)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $141,207 $145,603 $110,504
Ratio of expenses to average net assets 1.00% 0.98% 0.89%(3)
Ratio of net investment income/(loss) to average net assets 0.03% (0.15)% 0.61%(3)
Ratio of expenses to average net assets before fee waivers 1.06% 0.98% 1.06%(3)
Ratio of net investment income/(loss) to average net assets
before fee waivers (0.03)% (0.15)% 0.44%(3)
Portfolio turnover rate 37% 43% 60%
</TABLE>
(1) RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(2) CLASS I COMMENCED OPERATIONS ON AUGUST 1, 1997.
(3) ANNUALIZED.
(4) CALCULATED BASED UPON AVERAGE SHARES OUTSTANDING.
Page 94 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA EQUITY GROWTH FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $24.61 $21.35 $18.63 $18.02 $14.77
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) 0.00(1) (0.03)(1) (0.00) 0.09 0.14
Net gain on securities (realized and unrealized) 4.55 4.28 5.00 4.66 3.46
Total from investment operations 4.55 4.25 5.00 4.75 3.60
LESS DISTRIBUTIONS
Dividends from net investment income (0.01) (0.00) (0.01) (0.09) (0.14)
Dividends in excess of net investment income (0.00) (0.00) (0.00) (0.02) (0.02)
Distributions from net realized capital gains (0.26) (0.99) (2.27) (4.03) (0.19)
Total distributions (0.27) (0.99) (2.28) (4.14) (0.35)
Net asset value, end of period $28.89 $24.61 $21.35 $18.63 $18.02
TOTAL RETURN 18.49% 20.16% 28.65% 29.57% 24.61%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $1,251,015 $1,262,154 $352,413 $255,594 $166,671
Ratio of expenses to average net assets 0.90% 0.92% 0.98% 0.97% 1.01%
Ratio of net investment income/(loss) to average net
assets 0.01% (0.11)% (0.01)% 0.49% 0.85%
Ratio of expenses to average net assets before fee
waivers 0.96% 0.92% 0.98% 0.97% 1.03%
Ratio of net investment income/(loss) to average net
assets before fee waivers (0.05)% (0.11)% (0.01)% 0.49% 0.83%
Portfolio turnover rate 25% 57% 260% 197% 74%
</TABLE>
(1) CALCULATED BASED UPON AVERAGE SHARES OUTSTANDING.
Page 95 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA EQUITY INCOME FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $18.80 $17.53 $14.87 $12.66 $11.01
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.35 0.30 0.27 0.30 0.34
Net gain/(loss) on securities
(realized and unrealized) (1.85) 1.50 3.44 2.73 1.79
Total from investment operations (1.50) 1.80 3.71 3.03 2.13
LESS DISTRIBUTIONS
Dividends from net investment income (0.36) (0.28) (0.32) (0.31) (0.34)
Distributions from net realized capital gains (0.91) (0.25) (0.73) (0.51) (0.14)
Total distributions (1.27) (0.53) (1.05) (0.82) (0.48)
Net asset value, end of period $16.03 $18.80 $17.53 $14.87 $12.66
TOTAL RETURN (7.95)% 10.62% 25.69% 24.62% 19.72%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $500,135 $548,361 $193,923 $127,130 $61,978
Ratio of expenses to average net assets 0.92% 0.93% 0.92% 1.01% 1.06%
Ratio of net investment income to average net
assets 2.07% 2.07% 1.80% 2.44% 3.02%
Ratio of expenses to average net assets before
fee waivers 0.98% 0.93% 0.92% 1.01% 1.08%
Ratio of net investment income to average net
assets before fee waivers 2.01% 2.07% 1.80% 2.44% 3.00%
Portfolio turnover rate 40% 19% 18% 35% 53%
</TABLE>
Page 96 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA EQUITY INDEX FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR PERIOD
ENDED MAY ENDED MAY
31, 2000 31,1999(1)
<S> <C> <C>
Net asset value, beginning of period $11.32 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.13 0.11
Net gain on securities (realized and unrealized) 0.99 1.29
Total from investment operations 1.12 1.40
LESS DISTRIBUTIONS
Dividends from net investment income (0.13) (0.08)
Distributions from net realized capital gains (0.06) (0.00)
Total distributions (0.19) (0.08)
Net asset value, end of period $12.25 $11.32
TOTAL RETURN 9.92% 14.16%(2)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $354,637 $253,854
Ratio of expenses to average net assets 0.34% 0.20%(3)
Ratio of net investment income to average net assets 1.02% 1.38%(3)
Ratio of expenses to average net assets before fee waivers 0.59% 0.55%(3)
Ratio of net investment income to average net assets before
fee waivers 0.77% 1.03%(3)
Portfolio turnover rate 48% 9%
</TABLE>
(1) CLASS I COMMENCED OPERATIONS ON JULY 10, 1998.
(2) RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(3) ANNUALIZED.
Page 97 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA INTERNATIONAL EQUITY FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR FOR THE PERIOD
ENDED MAY 31, ENDED MAY 31, ENDED MAY 31,
2000 1999 1998(1)
<S> <C> <C> <C>
Net asset value, beginning of period $10.91 $10.86 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) 0.01 (0.01) 0.08
Net gain on securities (realized and unrealized) 4.23 0.11 0.79
Total from investment operations 4.24 0.10 0.87
LESS DISTRIBUTIONS
Dividends from net investment income (0.03) (0.05) (0.01)
Distributions from net realized capital gains (0.07) (0.00) (0.00)
Total distributions (0.10) (0.05) (0.01)
Net asset value, end of period $15.05 $10.91 $10.86
TOTAL RETURN 38.90% 0.95% 8.76%(2)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $425,328 $199,205 $135,942
Ratio of expenses to average net assets 1.43% 1.43% 1.09%(3)
Ratio of net investment income/(loss) to average net assets 0.06% 0.12% 1.19%(3)
Ratio of expenses to average net assets before fee waivers 1.49% 1.43% 1.24%(3)
Ratio of net investment income/(loss) to average net assets
before fee waivers 0.00% 0.12% 1.04%(3)
Portfolio turnover rate 124% 78% 28%
</TABLE>
(1) CLASS I COMMENCED OPERATIONS ON AUGUST 1, 1997.
(2) TOTAL RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(3) ANNUALIZED.
Page 98 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA LARGE CAP ULTRA FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE ELEVEN MONTHS
ENDED MAY 31 ENDED MAY 31,
2000 1999 1998
<S> <C> <C> <C>
Net asset value, beginning of period $19.81 $16.27 $14.48
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.02) (0.06) (0.03)
Net gain (loss) on securities (realized and unrealized) 5.08 3.90 3.52
Total from investment operations 5.06 3.84 3.49
LESS DISTRIBUTIONS
Dividends from net investment income (0.00) (0.00) (0.00)
Distributions from net realized capital gains (4.78) (0.30) (1.67)
Tax return of capita (0.00) (0.00) (0.03)
Total distributions (4.78) (0.30) (1.70)
Net asset value, end of period $20.09 $19.81 $16.27
TOTAL RETURN 27.25% 23.67% 26.18%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s) $278,697 $409,107 $358,221
Ratio of expenses to average net assets 1.05% 1.10% 1.10%(b)
Ratio of net investment income/(loss) to average net assets (0.36)% (0.33)% (0.19)%(b)
Ratio of expenses to average net assets before fee waivers 1.05% 1.10% 1.10%(b)
Portfolio turnover rate 82.30% 50.51% 24.74%
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED JUNE 30, ENDED JUNE 30,
1997 1996(C)
<S> <C> <C>
Net asset value, beginning of period $11.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income/loss 0.03 0.03
Net gain (loss) on securities (realized and unrealized) 3.31 1.25
Total from investment operations 3.34 1.28
LESS DISTRIBUTIONS
Dividends from net investment income (0.03) (0.03)
Distributions from net realized capital gains (0.08) (0.00)
Tax return of capita (0.00) (0.00)
Total distributions (0.11) (0.03)
Net asset value, end of period $14.48 $11.25
TOTAL RETURN 29.81% 12.86%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s) $338,388 $274,150
Ratio of expenses to average net assets 1.12% 2.19%(b)
Ratio of net investment income/(loss) to average net assets 0.19% 1.26%(b)
Ratio of expenses to average net assets before fee waivers 1.12% 2.26%(b)
Portfolio turnover rate 48.44% 0.86%
</TABLE>
(a) NOT ANNUALIZED.
(b) ANNUALIZED.
(c) CLASS I COMMENCED OPERATIONS ON DECEMBER 28, 1995.
Page 99 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA MID CAP GROWTH FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE ELEVEN MONTHS
MAY 31, ENDED MAY 31,
2000 1999 1998
<S> <C> <C> <C>
Net asset value, beginning of period $14.27 $15.12 $15.82
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (0.12)(a) (0.14) (0.11)
Net gain/ (loss) on securities (realized and unrealized) 6.34 1.13 2.52
Total from investment operations 6.22 0.99 2.41
LESS DISTRIBUTIONS
Distributions from net realized capital gains (4.65) (1.84) (3.11)
Distributions in excess of net realized capital gains (0.00) (0.00) (0.00)
Total distributions (4.65) (1.84) (3.11)
Net asset value, end of period $15.84 $14.27 $15.12
TOTAL RETURN 51.90% 8.20% 16.98%(b)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s) $281,161 $319,733 $518,080
Ratio of expenses to average net assets 1.29% 1.32% 1.30%(c)
Ratio of net investment loss to average net assets (0.75)% (0.75)% (0.77)%(c)
Ratio of expenses to average net assets before fee waivers 1.29% 1.32% 1.30%
Ratio of net investment income to average net assets before fee waivers (0.75)% (0.75)% (0.77)%
Portfolio turnover rate 110.26% 100.19% 38.41%
<CAPTION>
FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED JUNE 30, ENDED JUNE 30, ENDED JUNE 30,
1997 1996 1995
<S> <C> <C> <C>
Net asset value, beginning of period $20.83 $16.62 $14.70
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (0.13) (0.16) (0.08)
Net gain/ (loss) on securities (realized and unrealized) 1.25 5.03 3.47
Total from investment operations 1.12 4.87 3.39
LESS DISTRIBUTIONS
Distributions from net realized capital gains (6.13) (0.66) (0.49)
Distributions in excess of net realized capital gains (0.00) (0.00) (0.98)
Total distributions (6.13) (0.66) (1.47)
Net asset value, end of period $15.82 $20.83 $16.62
TOTAL RETURN 5.58% 29.83% 25.20%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s) $544,082 $650,495 $683,320
Ratio of expenses to average net assets 1.31% 1.29% 1.29%
Ratio of net investment loss to average net assets (0.80)% (0.68)% (0.64)%
Ratio of expenses to average net assets before fee waivers 1.31% 1.29% 1.29%
Ratio of net investment income to average net assets before fee waivers (0.80)% (0.68)% (0.65)%
Portfolio turnover rate 38.47% 49.27% 46.39%
</TABLE>
(a) CALCULATED BASED ON AVERAGE SHARES OUTSTANDING.
(b) NOT ANNUALIZED.
(c) ANNUALIZED.
Page 100 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA SMALL CAP GROWTH FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE PERIOD ENDED
MAY 31, 2000 MAY 31, 1999 MAY 31, 1998(2)
<S> <C> <C> <C>
Net asset value, beginning of period $10.14 $11.69 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income loss (0.04)(4) (0.03)(4) 0.01
Net gain/(loss) on securities (realized and unrealized) 4.81 (1.41) 1.72
Total from investment operations 4.77 (1.44) 1.73
LESS DISTRIBUTIONS
Dividends from net investment income (0.00) (0.00) (0.01)
Distributions from net realized capital gains (0.00) (0.11) (0.03)
Total distributions (0.00) (0.11) (0.04)
Net asset value, end of period $14.91 $10.14 $11.69
TOTAL RETURN 47.04% (12.36)% 17.35%(1)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $157,306 $80,145 $54,476
Ratio of expenses to average net assets 1.23% 1.27% 0.98%(3)
Ratio of net investment income/(loss) to average net assets (0.28)% (0.27)% 0.14%(3)
Ratio of expenses to average net assets before fee waivers 1.29% 1.27% 1.09%(3)
Ratio of net investment income/(loss) to average net assets before
fee waivers (0.34)% (0.27)% 0.03%(3)
Portfolio turnover rate 155% 159% 31%
</TABLE>
(1) RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(2) CLASS I COMMENCED OPERATIONS ON AUGUST 1, 1997.
(3) ANNUALIZED.
(4) CALCULATED BASED UPON AVERAGE SHARES OUTSTANDING.
Page 101 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA SMALL CAP VALUE FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.65 $15.72 $15.15 $13.10 $11.38
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.27 0.09 0.06 0.09 0.08
Net gain/(loss) on securities (realized and unrealized) 1.45 (0.78) 2.87 2.90 2.41
Total from investment operations 1.72 (0.69) 2.93 2.99 2.49
LESS DISTRIBUTIONS
Dividends from net investment income (0.22) (0.05) (0.07) (0.09) (0.08)
Dividends in excess of net investment income (0.00) (0.00) (0.00) (0.00) (0.02)
Distributions from net realized capital gains (0.00) (1.33) (2.29) (0.85) (0.67)
Total distributions (0.22) (1.38) (2.36) (0.94) (0.77)
Net asset value, end of period $15.15 $13.65 $15.72 $15.15 $13.10
TOTAL RETURN 12.87% (3.67)% 19.82% 23.61% 22.64%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $354,347 $270,382 $284,295 $199,311 $99,294
Ratio of expenses to average net assets 1.21% 1.12% 0.98% 0.97% 1.05%
Ratio of net investment income/(loss) to average net assets 1.97% 0.70% 0.43% 0.83% 0.83%
Ratio of expenses to average net assets before fee waivers 1.27% 1.12% 0.98% 0.97% 1.06%
Ratio of net investment income/(loss) to average net assets before fee
waivers 1.91% 0.70% 0.43% 0.83% 0.82%
Portfolio turnover rate 120% 79% 89% 64% 106%
</TABLE>
Page 102 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA TAX MANAGED EQUITY FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR FOR THE PERIOD
ENDED ENDED ENDED
MAY 31, 2000 MAY 31, 1999 MAY 31, 1998(1)
<S> <C> <C> <C>
Net asset value, beginning of period $12.13 $9.93 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) 0.03 0.05 (0.00)
Net gain/(loss) loss on securities (realized and unrealized) 2.16 2.21 (0.07)
Total from investment operations 2.19 2.26 (0.07)
LESS DISTRIBUTIONS
Dividends from net investment income (0.02) (0.05) (0.00)
Distributions from net realized capital gains (0.01) (0.01) (0.00)
Total distributions (0.03) (0.06) (0.00)
Net asset value, end of period $14.29 $12.13 $9.93
TOTAL RETURN 18.06% 22.82% (4.81%)(2)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $257,548 $241,501 $158,867
Ratio of expenses to average net assets 0.95% 0.83% 0.29%(2)
Ratio of net investment income/(loss) to average net assets 0.19% 0.37% 0.91%(2)
Ratio of expenses to average net assets before fee waivers 1.01% 1.01% 1.02%(2)
Ratio of net investment income/(loss) to average net assets before fee waivers 0.13% 0.19% 0.18%(2)
Portfolio turnover rate 3% 5% 0%
</TABLE>
(1) CLASS I COMMENCED OPERATIONS ON APRIL 9, 1998.
(2) ANNUALIZED.
Page 103 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA BALANCED ALLOCATION FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED MAY 31, ENDED MAY
2000 31, 1999(2)
<S> <C> <C>
Net asset value, beginning of period $10.31 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.26 0.18
Net gain on securities (realized and unrealized) 1.35 0.28
Total from investment operations 1.61 0.46
LESS DISTRIBUTIONS
Dividends from net investment income (0.24) (0.15)
Total distributions (0.24) (0.15)
Net asset value, end of period $11.68 $10.31
TOTAL RETURN 15.72% 4.57%(1)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $69,517 $85,027
Ratio of expenses to average net assets 1.01% 1.06%(3)
Ratio of net investment income to average net assets 2.20% 2.25%(3)
Ratio of expenses to average net assets before fee waivers 1.07% 1.06%(3)
Ratio of investment income to average net assets before fee waivers 2.14% 2.25%(3)
Portfolio turnover rate 182% 116%
</TABLE>
(1) RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(2) CLASS I COMMENCED OPERATIONS ON JULY 10, 1998.
(3) ANNUALIZED.
Page 104 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA BOND FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
MAY 31, 2000 MAY 31, 1999
------------ -----------
<S> <C> <C>
Net Asset Value, Beginning of Period ................................. $ 9.93 $ 10.25
----------- -----------
INVESTMENT ACTIVITIES
Net investment income (loss) ......................................... 0.59 0.57
Net realized and unrealized gains (loss) on investments .............. (0.56) (0.30)
----------- -----------
Total from Investment Activitie ...................................... 0.03 0.27
----------- -----------
DISTRIBUTIONS
Net investment income ................................................ (0.59) (0.57)
Net realized gains ................................................... -- (0.02)
----------- -----------
Total Distributions .................................................. (0.59) (0.59)
----------- -----------
Net Asset Value, End of Period ....................................... $ 9.37 $ 9.93
=========== ===========
TOTAL RETURN (EXCLUDES SALES AND REDEMPTION CHARGES) ................. 0.35% 2.70%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) .................................... $ 618,172 $ 366,230
Ratio of expenses to average net assets .............................. 0.73% 0.94%
Ratio of net investment income (loss) to average net assets .......... 6.32% 5.53%
Ratio of expenses to average net assets* ............................. 0.79% 1.03%
Portfolio turnover (a) ............................................... 162.00% 268.66%
</TABLE>
The performance set forth in this table is the financial data of the
Parkstone Bond Fund, series of a predecessor company, The Partkstone Group of
Funds. Armada Bond Fund acquired the assets and assumed the liabilities of
Parkstone Bond Fund on June 9, 2000. The net asset value at the beginning of
each period and the changes in net asset values, including the net asset
values at the end of each period listed have been restated to reflect the
conversion ratio of .9799154 on the date of reorganization.
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratio would have been as indicated.
(a) Not annualized.
(b) Annualized.
Page 105 of 118
<PAGE>
<TABLE>
<CAPTION>
ELEVEN MONTHS
ENDED YEAR ENDED
MAY 31, 1998 JUNE 30, 1997
------------ -------------
<S> <C> <C>
Net Asset Value, Beginning of Period ................................. $ 9.93 $ 9.76
----------- -----------
INVESTMENT ACTIVITIES
Net investment income (loss) ......................................... 0.57 0.60
Net realized and unrealized gains (loss) on investments .............. 0.32 0.17
----------- -----------
Total from Investment Activities ..................................... 0.89 0.77
----------- -----------
DISTRIBUTIONS
Net investment income ................................................ (0.57) (0.60)
----------- -----------
Total Distributions .................................................. (0.57) (0.60)
----------- -----------
Net Asset Value, End of Period ....................................... $ 10.25 $ 9.93
=========== ===========
TOTAL RETURN (EXCLUDES SALES AND REDEMPTION CHARGES) ................. 9.15%(a) 8.20%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) .................................... $ 481,998 $ 492,102
Ratio of expenses to average net assets .............................. 0.94%(b) 0.94%
Ratio of net investment income (loss) to average net assets .......... 6.06%(b) 6.13%
Ratio of expenses to average net assets* ............................. 1.04%(b) 1.03%
Portfolio turnover (c) ............................................... 546% 827%
</TABLE>
The performance set forth in this table is the financial data of the Parkstone
Bond Fund, series of a predecessor company. The Parkstone Group of Funds. Armada
Bond Fund acquired the assets and assumed the liabilities of Parkstone Bond Fund
on June 9, 2000. The net asset value at the beginning of each period and the
changes in net asset value, including the net asset values at the end of each
period listed have been restated to reflect the conversion ration of .9799154 on
the date of reorganization.
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
Page 106 of 118
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995
------------- -------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ............. $ 9.92 $ 9.48 $ 10.75
----------- ----------- -----------
INVESTMENT ACTIVITIES
Net investment income (loss) ..................... 0.60 0.62 0.61
Net realized and unrealized gains/(loss)
on investments ................................... (0.16) 0.44 (0.74)
----------- ----------- -----------
Total from Investment Activities ................. 0.44 1.06 (0.13)
----------- ----------- -----------
DISTRIBUTIONS
Net investment income ............................ (0.60) (0.62) (0.59)
----------- ----------- -----------
Total Distributions .............................. (0.60) (0.62) (1.14)
----------- ----------- -----------
Net Asset Value, End of Period ................... $ 9.76 $ 9.92 $ 9.48
=========== =========== ===========
TOTAL RETURN (EXCLUDES SALES AND REDEMPTION
CHARGES) ......................................... 4.49% 11.78% (1.52)%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000) ................ $ 549,336 $ 509,189 $ 469,903
Ratio of expenses to average net assets .......... 0.94% 1.02% 0.88%
Ratio of net investment income (loss) to
average net assets ............................... 5.96% 6.54% 5.97%
Ratio of expenses to average net assets* ......... 1.03% 1.14% 1.02%
Portfolio turnover (a) ........................... 1189% 1011% 893.27%
</TABLE>
The performance set forth in this table is the financial data of the Parkstone
Bond Fund, series of a predecessor company. The Parkstone Group of Funds. Armada
Bond Fund acquired the assets and assumed the liabilities of Parkstone Bond Fund
on June 9, 2000. The net asset value at the beginning of each period and the
changes in net asset value, including the net asset values at the end of each
period listed have been restated to reflect the conversion ration of .9799154 on
the date of reorganization.
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
Page 107 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA GNMA FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.10 $10.36 $10.15 $10.03
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.59 0.61 0.61 0.65
Net gain/(loss) on securities (realized and unrealized) (0.36) (0.20) 0.31 0.22
Total from investment operations 0.23 0.41 0.92 0.87
LESS DISTRIBUTIONS
Dividends from net investment income (0.59) (0.60) (0.61) (0.65)
Distributions from net realized capital gains (0.00) (0.07) (0.10) (0.01)
Distributions in excess of net realized capital gains (0.00) (0.00) (0.00) (0.09)
Total distributions (0.59) (0.67) (0.71) (0.75)
Net asset value, end of period $9.74 $10.10 $10.36 $10.15
TOTAL RETURN 2.48% 4.02% 9.17% 9.03%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $119,653 $96,808 $83,624 $64,501
Ratio of expenses to average net assets 0.80% 0.78% 0.84% 0.86%
Ratio of net investment income to average net assets 6.04% 5.92% 5.83% 6.45%
Ratio of expenses to average net assets before fee waivers 0.86% 0.78% 0.84% 1.01%
Ratio of net investment income to average net assets before fee waivers 5.98% 5.92% 5.83% 6.30%
Portfolio turnover rate 79% 85% 291% 57%
<CAPTION>
FOR THE PERIOD FOR THE YEAR
ENDED MAY 1 30, ENDED APRIL 30,
1996(3) 1996(3)
<S> <C> <C>
Net asset value, beginning of period $10.12 $10.16
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.66
Net gain/(loss) on securities (realized and unrealized) (0.09) 0.14
Total from investment operations (0.04) 0.80
LESS DISTRIBUTIONS
Dividends from net investment income (0.05) (0.66)
Dividends from net realized capital gains (0.00) (0.18)
Distributions in excess of net realized capital gains (0.00) (0.00)
Total distributions (0.05) (0.84)
Net asset value, end of period $10.03 $10.12
TOTAL RETURN (0.35)%(2,4) 7.97%(4)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $60,532 $62,161
Ratio of expenses to average net assets 0.85%(1) 0.85%
Ratio of net investment income to average net assets 6.33%(1) 6.30%
Ratio of expenses to average net assets before fee waivers 1.28%(1) 1.29%
Ratio of net investment income to average net assets before fee waivers 5.90%(1) 5.86%
Portfolio turnover rate 1% 149%
</TABLE>
1 ANNUALIZED.
2 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
3 ACTIVITY FOR THE PERIOD PRESENTED INCLUDES THAT OF THE PREDECESSOR FUND
THROUGH SEPTEMBER 6, 1996. THE PREDECESSOR FUND COMMENCED OPERATIONS ON
AUGUST 10, 1994. DURING 1996, THE PREDECESSOR FUND CHANGED ITS FISCAL
YEAR-END FROM APRIL 30 TO MAY 31.
4 TOTAL RETURN EXCLUDES SALES CHARGE.
Page 108 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA INTERMEDIATE BOND FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.39 $10.59 $10.37 $10.30 $10.54
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.64 0.56 0.60 0.60 0.61
Net gain/ (loss) on securities (realized and unrealized) (0.48) (0.14) 0.22 0.07 (0.22)
Total from investment operations 0.16 0.42 0.82 0.67 0.39
LESS DISTRIBUTIONS
Dividends from net investment income (0.64) (0.56) (0.60) (0.60) (0.61)
Distributions from net realized capital gains (0.01) (0.06) (0.00) (0.00) (0.00)
Distributions in excess of net realized capital gains (0.00) (0.00) (0.00) (0.00) (0.02)
Total distributions (0.65) (0.62) (0.60) (0.60) (0.63)
Net asset value, end of period $9.90 $10.39 $10.59 $10.37 $10.30
TOTAL RETURN 1.50% 3.98% 8.09% 6.63% 3.79%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s) $294,998 $313,368 $166,710 $121,271 $111,240
Ratio of expenses to average net assets 0.58% 0.61% 0.65% 0.70% 0.80%
Ratio of net investment income to average net assets 6.22% 5.21% 5.71% 5.76% 5.78%
Ratio of expenses to average net assets before fee waivers 0.79% 0.75% 0.80% 0.79% 0.82%
Ratio of net investment income to average net assets before fee waivers 6.01% 5.07% 5.56% 5.66% 5.76%
Portfolio turnover rate 201% 256% 160% 217% 45%
</TABLE>
Page 109 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA LIMITED MATURITY BOND FUND (FORMERLY ARMADA ENHANCED INCOME FUND)-CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1998 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.96 $10.06 $9.99 $10.01 $10.16
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.57 0.56 0.57 0.58 0.58
Net gain/(loss) on securities (realized and unrealized) (0.26) (0.05) 0.08 0.01 (0.05)
Total from investment operations 0.31 0.51 0.65 0.59 0.53
LESS DISTRIBUTIONS
Dividends from net investment income (0.57) (0.56) (0.57) (0.58) (0.58)
Dividends in excess of net investment income (0.00) (0.00) (0.00) (0.00) (0.10)
Distributions of net realized capital gains (0.00) (0.05) (0.01) (0.03) (0.00)
Total distributions (0.57) (0.61) (0.58) (0.61) (0.68)
Net asset value, end of period $9.70 $9.96 $10.06 $9.99 $10.01
TOTAL RETURN 3.22% 5.14% 6.68% 6.02% 5.36%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) 93,652 $72,291 $71,888 $61,031 $66,918
Ratio of expenses to average net assets 0.54% 0.43% 0.33% 0.21% 0.23%
Ratio of net investment income to average net assets 5.84% 5.49% 5.69% 5.74% 5.72%
Ratio of expenses to average net assets before fee waivers 0.74% 0.65% 0.69% 0.66% 0.70%
Ratio of net investment income to average net assets before fee waivers 5.64% 5.27% 5.33% 5.29% 5.25%
Portfolio turnover rate 90% 190% 135% 225% 98%
</TABLE>
Page 110 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA TOTAL RETURN ADVANTAGE FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.99 $10.25 $9.89 $9.88 $10.55
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.60 0.58 0.64 0.67 0.70(1)
Net gain/(loss) on securities (realized and unrealized) (0.45) (0.22) 0.36 0.15 (0.24)
Total from investment operations 0.15 0.36 1.00 0.82 0.46
LESS DISTRIBUTIONS
Dividends from net investment income (0.60) (0.58) (0.64) (0.67) (0.70)
Dividends in excess of net investment income (0.00) (0.00) (0.00) (0.00) (0.12)
Distributions from net realized capital gains (0.06) (0.04) (0.00) (0.00) (0.31)
Distributions in excess of net realized capital gains (0.00) (0.00) (0.00) (0.14) (0.00)
Total distributions (0.66) (0.62) (0.64) (0.81) (1.13)
Net asset value, end of period $9.48 $9.99 $10.25 $9.89 $9.88
TOTAL RETURN 1.78% 3.54% 10.35% 8.51% 4.22%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $331,026 $328,417 $296,075 $259,228 $280,401
Ratio of expenses to average net assets 0.48% 0.45% 0.31% 0.16% 0.13%
Ratio of net investment income to average net assets 6.17% 5.72% 6.29% 6.70% 6.67%
Ratio of expenses to average net assets before fee waivers 0.77% 0.65% 0.72% 0.71% 0.69%
Ratio of net investment income to average net assets before fee waivers 5.88% 5.52% 5.88% 6.15% 6.11%
Portfolio turnover rate 121% 142% 170% 169% 268%
</TABLE>
1 CALCULATED BASED ON AVERAGE SHARES OUTSTANDING.
Page 111 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA U.S. GOVERNMENT INCOME FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE ELEVEN MONTHS ENDED FOR THE YEAR ENDED
MAY 31, MAY 31, JUNE 30,
2000 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.13 $9.27 $9.15 $9.25 $9.42 $9.41
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.56 0.57 0.63 0.72 0.75 0.76
Net gain/(loss) on securities (realized and unrealized) (0.36) (0.14) 0.08 (0.10) (0.17) 0.01
Total from investment operations 0.20 0.43 0.71 0.62 0.58 0.77
LESS DISTRIBUTIONS
Dividends from net investment income (0.56) (0.57) (0.55) (0.61) (0.67) (0.68)
Tax return of capital 0.00 0.00 (0.04) (0.11) (0.08) (0.08)
Total distributions (0.56) (0.57) (0.59) -0.72 (0.75) (0.76)
Net asset value, end of period $8.77 $9.13 $9.27 $9.15 $9.25 $9.42
TOTAL RETURN 2.26% 4.73% 8.04%(a) 6.91% 6.34% 8.70%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s) $134,250 $150,113 $161,567 $148,854 $130,615 $110,190
Ratio of expenses to average net assets 0.83% 0.75% 0.75%(b) 0.77% 0.76% 0.83%
Ratio of net investment income to average net assets 6.28% 6.15% 7.44%(b) 7.90% 7.94% 8.25%
Ratio of expenses to average net assets before fee waivers 0.94% 1.09% 1.09%(b) 1.11% 1.10% 1.19%
Portfolio turnover rate 73.52% 52.60% 278.94% 499.53% 348.01% 114.71%
</TABLE>
(a) NOT ANNUALIZED.
(b) ANNUALIZED.
Page 112 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA MICHIGAN MUNICIPAL BOND FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE ELEVEN MONTHS FOR THE YEAR ENDED
MAY 31, ENDED MAY 31, JUNE 30,
2000 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.91 $11.06 $10.89 $10.77 $10.76 $10.53
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.47 0.47 0.44 0.51 0.50 0.50
Net gain/(loss) on securities (realized and unrealized) (0.52) (0.08) 0.23 0.14 0.04 0.25
Total from investment operations (0.05) 0.39 0.67 0.65 0.54 0.75
LESS DISTRIBUTIONS
Dividends from net investment income (0.47) (0.47) (0.47) (0.49) (0.50) (0.50)
Distributions from net realized capital gains (0.01) (0.07) (0.03) (0.04) (0.03) (0.02)
Total distributions (0.48) (-0.54) (0.50) (-0.53) (0.53) (0.52)
Net asset value, end of period $10.38 $10.91 $11.06 $10.89 $10.77 $10.76
TOTAL RETURN (0.42)% 3.54% 6.30%(a) 6.11% 5.12% 7.33%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s) $156,734 $192,536 $206,246 $194,950 $185,191 $176,068
Ratio of expenses to average net assets 0.81% 0.76% 0.74%(b) 0.76% 0.77% 0.78%
Ratio of net investment income to average net assets 4.46% 4.21% 4.34%(b) 4.73% 4.57% 4.79
Ratio of expenses to average net assets before fee waivers 0.91% 1.05% 1.03%(b) 1.05% 1.06% 1.07%
Portfolio turnover rate 9.60% 6.52% 26.24% 28.48% 27.66% 26.06%
</TABLE>
(a) NOT ANNUALIZED.
(b) ANNUALIZED.
Page 113 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA NATIONAL TAX EXEMPT BOND FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED MAY 31, ENDED MAY 31,
2000 1999 1998(1)
<S> <C> <C> <C>
Net asset value, beginning of period $9.96 $10.03 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.42 0.45 0.07
Net gain/(loss) on securities (realized and unrealized) (0.45) (0.04) 0.03
Total from investment operations (0.03) 0.41 0.10
LESS DISTRIBUTIONS
Dividends from net investment income (0.42) (0.45) (0.07)
Distributions from net realized capital gains (0.01) (0.03) (0.00)
Total distributions (0.43) (0.48) (0.07)
Net asset value, end of period $9.50 $9.96 $10.03
TOTAL RETURN (0.24)% 4.07% 7.03%(2)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $95,634 $100,638 $80,259
Ratio of expenses to average net assets 0.54% 0.36% 0.33(2)
Ratio of net investment income to average net assets 4.37% 4.39% 4.62(2)
Ratio of expenses to average net assets before fee waivers 0.81% 0.87% 0.87(2)
Ratio of net investment income to average net assets before fee waivers 4.10% 3.88% 4.08(2)
Portfolio turnover rate 65% 23% 0%
</TABLE>
1 CLASS I COMMENCED OPERATIONS ON APRIL 9, 1998.
2 ANNUALIZED.
Page 114 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA OHIO TAX EXEMPT BOND FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.03 $11.13 $10.86 $10.70 $10.74
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.48 0.53 0.51 0.51 0.50
Net gain/(loss) on securities (realized and unrealized) (0.53) (0.09) 0.28 0.16 (0.04)
Total from investment operations (0.05) 0.44 0.79 0.67 0.46
LESS DISTRIBUTIONS
Dividends from net investment income (0.48) (0.53) (0.51) (0.51) (0.50)
Distributions from net realized capital gains (0.01) (0.01) (0.01) (0.00) (0.00)
Total distributions (0.49) (0.54) (0.52) (0.51) (0.50)
Net asset value, end of period $10.49 $11.03 $11.13 $10.86 $10.70
TOTAL RETURN (0.40)% 3.94% 7.43% 6.37% 4.36%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period in (000's) $166,164 $205,365 $165,395 $91,366 $82,886
Ratio of expenses to average net assets 0.52% 0.28% 0.25% 0.24% 0.26%
Ratio of net investment income to average net assets 4.52% 4.77% 4.67% 4.71% 4.68%
Ratio of expenses to average net assets before fee waivers 0.80% 0.78% 0.80% 0.79% 0.83%
Ratio of net investment income to average net assets before fee waivers 4.24% 4.27% 4.12% 4.16% 4.11%
Portfolio turnover rate 31% 19% 15% 23% 10%
</TABLE>
Page 115 of 118
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA PENNSYLVANIA MUNICIPAL BOND FUND - CLASS I
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE FOR THE
PERIOD ENDED YEAR ENDED
FOR THE YEAR ENDED MAY 31, MAY 31, APRIL 30,
2000 1999 1998 1997 1996(3) 1996(3)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.39 $10.45 $10.22 $10.08 $10.12 $10.04
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.45 0.51 0.46 0.44 0.04 0.43
Net gain/(loss) on securities (realized and unrealized) (0.46) (0.07) 0.24 0.17 (0.04) 0.08
Total from investment operations (0.01) 0.44 0.70 0.61 0.00 0.51
LESS DISTRIBUTIONS
Dividends from net investment income (0.47) (0.49) (0.46) (0.44) (0.04) (0.43)
Distributions from net realized capital gains (0.02) (0.01) (0.00) (0.02) (0.00) (0.00)
Distributions in excess of net realized capital gains (0.00) (0.00) (0.01) (0.01) (0.00) (0.00)
Total distributions (0.49) (0.50) (0.47) (0.47) (0.04) (0.43)
Net asset value, end of period $9.89 $10.39 $10.45 $10.22 $10.08 $10.12
TOTAL RETURN (0.06)% 4.21% 6.95% 6.21% (0.03)%(1,4) 5.06%(4)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $45,021 $40,171 $38,753 $36,769 $38,733 $38,809
Ratio of expenses to average net assets 0.53% 0.48% 0.69% 0.87% 0.85%(1) 0.85%
Ratio of net investment income to average net assets 4.55% 4.80% 4.40% 4.35% 4.32%(1) 4.16%
Ratio of expenses to average net assets before fee waivers 0.84% 0.83% 0.84% 1.02% 1.31%(1) 1.24%
Ratio of net investment income to average net assets before fee waivers 4.24% 4.45% 4.25% 4.20% 3.86%(1) 3.77%
Portfolio turnover rate 38% 15% 20% 42% 0% 22%
</TABLE>
1 ANNUALIZED.
2 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
3 ACTIVITY FOR THE PERIOD PRESENTED INCLUDES THAT OF THE PREDECESSOR FUND
THROUGH SEPTEMBER 6, 1996. DURING 1996, THE PREDECESSOR FUND CHANGED ITS
FISCAL YEAR END FROM APRIL 30 TO MAY 31.
4 TOTAL RETURN EXCLUDES SALES CHARGE.
Page 116 of 118
<PAGE>
ARMADA FUNDS
INVESTMENT ADVISER
National City Investment Management Company
1900 East Ninth Street
Cleveland, Ohio 44114
DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
LEGAL COUNSEL
Drinker Biddle & Reath LLP
One Logan Square
18th and Cherry Streets
Philadelphia, Pennsylvania 19103-6996
More information about Armada Funds is available without charge through the
following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI, as it may be amended or supplemented from time to time, includes more
detailed information about the Armada Funds. The SAI is on file with the SEC and
is incorporated by reference into this prospectus. This means that the SAI, for
legal purposes, is a part of this prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS
These reports list each Fund's holdings and contain information from the Funds'
managers about strategies, and recent market conditions and trends and their
impact on Fund performance. The reports also contain detailed financial
information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT OR MORE INFORMATION:
BY INTERNET: http://www.armadafunds.com
BY TELEPHONE: Call 1-800-622-FUND (3863)
BY MAIL:
Write to Armada Funds at:
One Freedom Valley Drive
Oaks, Pennsylvania 19456
Page 117 of 118
<PAGE>
FROM THE SEC: You can also obtain the SAI or the Annual and Semi-Annual reports,
as well as other information about the Armada Funds, from the EDGAR Database on
the SEC's website ("http://www.sec.gov"). You may review and copy documents at
the SEC Public Reference Room in Washington, DC (for information on the
operation of the Public Reference Room, call 1-202-942-8090). You may request
documents by mail from the SEC, upon payment of a duplicating fee, by writing to
Securities and Exchange Commission, Public Reference Section, Washington, DC
20549-0102. You may obtain this information upon payment of a duplication fee,
by e-mailing the SEC at the following address: [email protected].
Armada Funds' Investment Company Act registration number is 811-4416.
Page 118 of 118
<PAGE>
ARMADA MONEY MARKET FUNDS
CLASS A, B AND C SHARES (RETAIL)
PROSPECTUS
OCTOBER 2, 2000
ARMADA GOVERNMENT MONEY MARKET FUND
ARMADA MONEY MARKET FUND
ARMADA OHIO MUNICIPAL MONEY MARKET FUND
ARMADA PENNSYLVANIA TAX EXEMPT MONEY MARKET FUND
ARMADA TAX EXEMPT MONEY MARKET FUND
ARMADA TREASURY MONEY MARKET FUND
ARMADA TREASURY PLUS MONEY MARKET FUND
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENT ADVISER
NATIONAL CITY INVESTMENT MANAGEMENT COMPANY
<PAGE>
ABOUT THIS PROSPECTUS
Armada Funds (the Trust) is a mutual fund family that offers different
classes of shares in separate investment portfolios (Funds). The Funds have
individual investment goals and strategies. This prospectus gives you
important information that you should know about the Class A, Class B and
Class C Shares of the Armada money market funds before investing. The Trust
also offers Class A, Class B and Class C Shares of equity, fixed income,
balanced and tax free bond funds in a separate prospectus which is available
by calling 1-800-622-FUND (3863). Please read this prospectus and keep it for
future reference.
THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN REVIEW
THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS SOME GENERAL INFORMATION
YOU SHOULD KNOW ABOUT RISK AND RETURN THAT IS COMMON TO EACH OF THE FUNDS. FOR
MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARMADA GOVERNMENT MONEY MARKET FUND........................................ 5
ARMADA MONEY MARKET FUND................................................... 7
ARMADA OHIO MUNICIPAL MONEY MARKET FUND....................................10
ARMADA PENNSYLVANIA TAX EXEMPT MONEY MARKET FUND...........................13
ARMADA TAX EXEMPT MONEY MARKET FUND........................................16
ARMADA TREASURY MONEY MARKET FUND..........................................19
ARMADA TREASURY PLUS MONEY MARKET FUND.....................................21
MORE INFORMATION ABOUT RISK................................................27
MORE INFORMATION ABOUT FUND INVESTMENTS....................................30
THE INVESTMENT ADVISER AND INVESTMENT TEAMS................................30
PURCHASING, SELLING AND EXCHANGING FUND SHARES.............................32
DIVIDENDS AND TAXES........................................................40
FINANCIAL HIGHLIGHTS.......................................................42
</TABLE>
Page 2 of 51
<PAGE>
INTRODUCTION
Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.
Class A, Class B and Class C Shares have different expenses and other
characteristics, allowing you to choose the class that best suits your needs.
You should consider the amount you want to invest, how long you plan to have it
invested, and whether you plan to make additional investments.
CLASS A SHARES
- No front-end sales charge
- Low 12b-1 fees
- $500 minimum initial investment-no subsequent minimum
CLASS B SHARES (EXCHANGE ONLY FROM AN ARMADA NON-MONEY MARKET FUND OR
ARRANGE FOR A SYSTEMATIC EXCHANGE PROGRAM)
- No front-end sales charge
- Contingent deferred sales charge (back-end charge if you redeem
within 5 years-declining from year to year)
- Higher 12b-1 fees than Class A
- $500 minimum initial investment-no subsequent minimum
- Converts to Class A shares after eighth year
CLASS C SHARES (EXCHANGE ONLY FROM AN ARMADA NON-MONEY MARKET FUND OR
ARRANGE FOR A SYSTEMATIC EXCHANGE PROGRAM)
- No front-end sales charge
- Contingent deferred sales charge (back-end charge if you redeem
within the first 18 months)
- Higher 12b-1 fees than Class A
- $500 minimum initial investment-no subsequent minimum
- Does not convert to any other share class
Page 3 of 51
<PAGE>
RISK/RETURN INFORMATION COMMON TO THE FUNDS
Each Fund has its own investment goal and strategies for reaching that goal. The
investment managers invest Fund assets in a way that they believe will help a
Fund achieve its goal. Still, investing in each Fund involves risk and there is
no guarantee that a Fund will achieve its goal. An investment manager's
judgments about the markets, the economy, or companies may not anticipate actual
market movements, economic conditions or company performance, and these
judgments may affect the return on your investment.
No matter how good a job an investment manager does, you could lose money on
your investment in a Fund, just as you could with other investments.
An investment in a Fund is not a bank deposit and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any government
agency.
Although a money market fund seeks to keep a constant price per share of $1.00,
there is no guarantee that a money market fund will achieve this goal and it is
possible that you may lose money by investing in the fund.
Page 4 of 51
<PAGE>
ARMADA GOVERNMENT MONEY MARKET FUND
FUND SUMMARY
INVESTMENT GOAL High current income consistent
with stability of principal
while maintaining liquidity
INVESTMENT FOCUS Money market instruments issued
or guaranteed by the U.S.
Government, its agencies and
instrumentalities and
repurchase agreements
SHARE PRICE VOLATILITY Very low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in a portfolio of
high quality short-term debt
securities issued by the U.S.
Government, its agencies and
instrumentalities and
repurchase agreements related
to such securities designed to
allow the Fund to maintain a
stable net asset value of $1.00
per share
INVESTOR PROFILE Conservative investors seeking
current income through a
liquid investment
PRINCIPAL INVESTMENT STRATEGIES
The Armada Government Money Market Fund's investment objective is to provide as
high a level of current income as is consistent with liquidity and stability of
principal. The investment objective may be changed without a shareholder vote.
The Fund invests exclusively in obligations issued or guaranteed as to payment
of principal and interest by the U.S. Government, its agencies and
instrumentalities and repurchase agreements. U.S. Government securities include
direct obligations of the U.S. Treasury, and obligations of certain agencies
such as Ginnie Maes and Fannie Maes.
In managing the Fund, the Adviser actively buys throughout the money market
curve, laddering maturities to meet or exceed shareholder liquidity needs while
seeking the highest possible yield consistent with the Fund's risk profile.
As a money market fund, the Fund invests only in money market instruments with
remaining maturities of 397 days or less (or in variable or floating rate
obligations with maturities that may exceed 397 days if they meet certain
conditions) and maintains an average weighted maturity of 90 days or less.
PRINCIPAL RISKS OF INVESTING
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
Although the Fund's U.S. Government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. Government agencies and
instrumentalities are backed by the
Page 5 of 51
<PAGE>
U.S. Treasury, while others are backed solely by the ability of the agency to
borrow from the U.S. Treasury or by the agency's own resources.
The Fund is also subject to the risk that money market instruments issued or
guaranteed by the U.S. Government may underperform other segments of the fixed
income markets or the fixed income markets as a whole. For additional
information about risks, see "More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1992 3.25%
1993 2.63%
1994 3.81%
1995 5.53%
1996 5.04%
1997 5.14%
1998 4.98%
1999 4.66%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.39% 0.64%
(6/30/95) (3/31/93)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 2.77%.
THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED
DECEMBER 31, 1999.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS SINCE INCEPTION
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA GOVERNMENT MONEY MARKET FUND 4.66% 5.07% 4.43%(1)
</TABLE>
(1)Since April 1, 1991.
For current yield information on the Fund, call 1-800-622-FUND (3863) or visit
our website at www.armadafunds.com. The Fund's yield appears in THE WALL STREET
JOURNAL each Thursday.
FUND FEES AND EXPENSES
SEE PAGE 16 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 6 of 51
<PAGE>
ARMADA MONEY MARKET FUND
FUND SUMMARY
INVESTMENT GOAL High current income consistent
with stability of principal while
maintaining liquidity
INVESTMENT FOCUS Money market instruments
SHARE PRICE VOLATILITY Very low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in a portfolio of high
quality short-term debt
securities designed to allow the
Fund to maintain a stable net
asset value of $1.00 per share
INVESTOR PROFILE Conservative investors seeking
current income through a liquid
investment
PRINCIPAL INVESTMENT STRATEGIES
The Armada Money Market Fund's investment objective is to provide as high a
level of current income as is consistent with liquidity and stability of
principal. The investment objective may be changed without a shareholder vote.
The Fund invests in a variety of high quality money market securities, including
certificates of deposit and other obligations issued by domestic and foreign
banks, as well as commercial paper. Foreign government obligations are U.S.
dollar-denominated obligations (limited to commercial paper and other notes)
issued or guaranteed by a foreign government or other entity located or
organized in a foreign country that maintains a short-term foreign currency
rating in the highest short-term ratings category by the requisite number of
Nationally Recognized Statistical Rating Organizations (NRSROs).
The Adviser also invests in securities issued or guaranteed by the U.S.
Government or its agencies (government obligations) and repurchase agreements
collateralized by government obligations and issued by financial institutions
such as banks and broker-dealers. High quality money market instruments are
securities that present minimal credit risks as determined by the Adviser and
generally include securities that are rated at the time of purchase by a major
rating agency in the highest two rating categories for such securities, and
certain securities that are not rated but are of comparable quality as
determined by the Adviser.
In selecting investments for the Fund, the Adviser actively buys throughout the
money market curve, laddering maturities to meet or exceed shareholder liquidity
needs while seeking the highest possible yield consistent with the Fund's risk
profile.
As a money market fund, the Fund invests only in money market instruments with
remaining maturities of 397 days or less (or in variable or floating rate
obligations with maturities that may exceed 397 days if they meet certain
conditions) that the Adviser believes present minimal credit risk. The Fund
maintains an average weighted maturity of 90 days or less.
Page 7 of 51
<PAGE>
PRINCIPAL RISKS OF INVESTING
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
The Fund is also subject to the risk that money market securities may
underperform other segments of the fixed income markets or the fixed income
markets as a whole. For additional information about risks, see "More
Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The table measures
performance in terms of total return. However, this Fund is managed for yield
and not total return.
There is no performance information for Class C Shares because it has not yet
commenced operations.
This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1992 3.22%
1993 2.64%
1994 3.88%
1995 5.61%
1996 5.09%
1997 5.22%
1998 5.11%
1999 4.76%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.40% 0.64%
(6/30/95) (6/30/93)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 2.83%.
Page 8 of 51
<PAGE>
THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED
DECEMBER 31, 1999.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA MONEY MARKET FUND 4.76% 5.16% 4.52%(1)
<CAPTION>
CLASS B SHARES
--------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA MONEY MARKET FUND 4.08% N/A 4.33%(2)
</TABLE>
(1)Since April 1, 1991.
(2)Since January 5, 1998.
For current yield information on the Fund, call 1-800-622-FUND (3863) or visit
our website at www.armadafunds.com. The Fund's yield appears in THE WALL STREET
JOURNAL each Thursday.
FUND FEES AND EXPENSES
SEE PAGE 16 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 9 of 51
<PAGE>
ARMADA OHIO MUNICIPAL MONEY MARKET FUND
FUND SUMMARY
INVESTMENT GOAL Current income exempt from regular
federal income tax and Ohio
personal income tax, consistent
with stability of principal
INVESTMENT FOCUS Ohio municipal money market
instruments
SHARE PRICE VOLATILITY Very low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in a portfolio of high
quality short-term debt securities
designed to allow the Fund to
maintain a stable net asset value
of $1.00 per share
INVESTOR PROFILE Conservative taxable investors in
higher tax brackets seeking
current income exempt from federal
and Ohio income taxes
PRINCIPAL INVESTMENT STRATEGIES
The Armada Ohio Municipal Money Market Fund's investment objective is to provide
current income exempt from regular federal income tax and Ohio personal income
tax, consistent with stability of principal. The investment objective may be
changed without a shareholder vote.
The Fund invests primarily in high quality money market instruments issued by
or on behalf of the State of Ohio, political subdivisions thereof or agencies
or instrumentalities of Ohio or its political subdivisions, the income from
which is exempt from regular federal income tax and Ohio personal income tax
(Ohio money market instruments). However, some Fund dividends may be taxable
if the Fund, as it is permitted to do, invests some of its assets in taxable
instruments. Also, Fund dividends will generally be subject to state and
local income taxes for any shareholders who are not Ohio residents. High
quality money market instruments are securities that present minimal credit
risks as determined by the Adviser and generally include securities that are
rated at the time of purchase by a major rating agency in the two highest
rating categories for such securities, and certain securities that are not so
rated but are of comparable quality as determined by the Adviser.
The Fund may invest 100% of its assets in private activity bonds, the interest
from which is a preference item for the federal alternative minimum tax. Under
normal market conditions, at least 80% of the value of the Fund's total assets
will be invested in Ohio money market instruments. This policy is fundamental
and may not be changed without the affirmative vote of the holders of a majority
of the Fund's outstanding shares.
In managing the Fund, the Adviser assesses current and projected market
conditions, particularly interest rates. Based on this assessment and a separate
credit analysis, the Adviser uses gradual shifts in portfolio maturity to
respond to expected changes and selects securities that it believes offer the
most attractive risk/return trade off.
Page 10 of 51
<PAGE>
As a money market fund, the Fund invests only in instruments with remaining
maturities of 397 days or less (or in variable or floating rate obligations with
maturities that may exceed 397 days if they meet certain conditions) that the
Adviser believes present minimal credit risk. The Fund maintains an average
weighted maturity of 90 days or less.
PRINCIPAL RISKS OF INVESTING
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
The Fund is also subject to the risk that Ohio municipal money market securities
may underperform other segments of the fixed income markets or the fixed income
markets as a whole.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund's focus of investments in securities of issuers located in Ohio
subjects the Fund to economic and government policies of that state. For
additional information about risks, see "More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class B Shares because it has not
completed a full calendar year of operations.
This bar chart shows changes in the performance of the Fund's Class A Shares for
one year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1999 2.78%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
0.78% 0.60%
(12/31/99) (3/31/99)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 1.72%.
THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED
DECEMBER 31, 1999.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
<S> <C> <C>
ARMADA OHIO MUNICIPAL MONEY MARKET FUND 2.78% 2.78%(1)
</TABLE>
(1)Since November 2, 1998.
Page 11 of 51
<PAGE>
For current yield information on the Fund, call 1-800-622-FUND (3863) or visit
our website at www.armadafunds.com. The Fund's yield appears in THE WALL STREET
JOURNAL each Thursday.
FUND FEES AND EXPENSES
SEE PAGE 17 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 12 of 51
<PAGE>
ARMADA PENNSYLVANIA TAX EXEMPT MONEY MARKET FUND
FUND SUMMARY
INVESTMENT GOAL Current income exempt from
regular federal income tax and
Pennsylvania personal income tax,
consistent with stability of
principal
INVESTMENT FOCUS Pennsylvania municipal money market
instruments
SHARE PRICE VOLATILITY Very low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in a portfolio of high
quality short-term debt securities
designed to allow the Fund to
maintain a stable net asset value of
$1.00 per share
INVESTOR PROFILE Conservative taxable investors in
higher tax brackets seeking current
income exempt from federal and
Pennsylvania income taxes
PRINCIPAL INVESTMENT STRATEGIES
The Armada Pennsylvania Tax Exempt Money Market Fund's investment objective is
to provide current income exempt from regular federal income tax and
Pennsylvania personal income tax, consistent with stability of principal. The
investment objective may be changed without a shareholder vote.
The Fund invests primarily in high quality money market instruments issued by or
on behalf of the Commonwealth of Pennsylvania and its political subdivisions and
financing authorities, and obligations of the United States, including
territories and possessions of the United States, the income from which is
exempt from regular federal income tax and Pennsylvania income tax (Pennsylvania
municipal money market instruments). However, some Fund dividends may be taxable
if the Fund, as it is permitted to do, invests some of its assets in taxable
instruments. Also, Fund dividends will generally be subject to state and local
income taxes for any shareholders who are not Pennsylvania residents.
High quality money market instruments are securities that present minimal credit
risks as determined by the Adviser and generally include securities that are
rated at the time of purchase by a major rating agency in the two highest rating
categories for such securities, and certain securities that are not so rated but
are of comparable quality as determined by the Adviser. As a matter of
fundamental policy, the Fund invests its assets so that at least 80% of its
annual interest income is not only exempt from regular federal income tax and
Pennsylvania personal income tax, but also is not considered a preference item
for purposes of the federal alternative minimum tax.
In managing the Fund, the Adviser assesses current and projected market
conditions, particularly interest rates. Based on this assessment and a separate
credit analysis, the Adviser uses gradual shifts in portfolio maturity to
respond to expected changes and selects securities that it believes offer the
most attractive risk/return trade off.
Page 13 of 51
<PAGE>
As a money market fund, the Fund invests only in instruments with remaining
maturities of 397 days or less (or in variable or floating rate obligations with
maturities that may exceed 397 days if they meet certain conditions) that the
Adviser believes present minimal credit risk. The Fund maintains an average
weighted maturity of 90 days or less.
PRINCIPAL RISKS OF INVESTING
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
The Fund is also subject to the risk that tax exempt money market securities may
underperform other segments of the fixed income markets or the fixed income
markets as a whole.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund's focus of investments in securities of issuers located in Pennsylvania
subjects the Fund to economic and government policies of that state. For
additional information about risks, see "More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1997 3.33%
1998 2.98%
1999 2.82%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
0.87% 0.62%
(6/30/97) (3/31/99)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 1.73%.
THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED
DECEMBER 31, 1999.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
<S> <C> <C>
ARMADA PENNSYLVANIA TAX EXEMPT MONEY MARKET FUND 2.82% 3.06%(1)
</TABLE>
(1)Since September 11, 1996
For current yield information on the Fund, call 1-800-622-FUND (3863) or visit
our website at www.armadafunds.com. The Fund's yield appears in THE WALL STREET
JOURNAL each Thursday.
Page 14 of 51
<PAGE>
FUND FEES AND EXPENSES
SEE PAGE 17 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 15 of 51
<PAGE>
ARMADA TAX EXEMPT MONEY MARKET FUND
FUND SUMMARY
INVESTMENT GOAL High current interest income exempt
from federal income tax consistent with
stability of principal while
maintaining liquidity
INVESTMENT FOCUS Municipal money market instruments
SHARE PRICE VOLATILITY Very low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in a portfolio of high
quality short-term debt securities
designed to allow the Fund to maintain
a stable net asset value of $1.00 per
share
INVESTOR PROFILE Conservative taxable investors in
higher tax brackets seeking current
income exempt from federal income taxes
PRINCIPAL INVESTMENT STRATEGIES
The Armada Tax Exempt Money Market Fund's investment objective is to provide as
high a level of current interest income exempt from federal income tax as is
consistent with liquidity and stability of principal. The investment objective
may be changed without a shareholder vote.
The Fund invests primarily in high quality money market instruments issued by or
on behalf of states, territories and possessions of the United States, the
District of Columbia and their political subdivisions, agencies,
instrumentalities and authorities that pay interest exempt from federal taxes
(municipal money market instruments). However, Fund dividends will generally be
taxable for state and local income tax purposes. Also, some Fund dividends may
be taxable for federal income tax purposes if the Fund, as it is permitted to
do, invests some of its assets in taxable instruments. High quality money market
instruments are securities that present minimal credit risks as determined by
the Adviser and generally include securities that are rated at the time of
purchase by a major rating agency in the highest two rating categories for such
securities, and certain securities that are not rated but are of comparable
quality as determined by the Adviser. As a matter of fundamental policy, the
Fund invests its assets so that at least 80% of its annual interest income is
not only exempt from regular federal income tax, but is not considered a
preference item for purposes of the federal alternative minimum tax.
In managing the Fund, the Adviser assesses current and projected market
conditions, particularly interest rates. Based on this assessment and a separate
credit analysis, the Adviser uses gradual shifts in portfolio maturity to
respond to expected changes and selects securities that it believes offer the
most attractive risk/return trade off.
As a money market fund, the Fund invests only in money market instruments with
remaining maturities of 397 days or less (or in variable or floating rate
obligations with maturities that may exceed 397 days if they meet certain
conditions) that the Adviser believes present minimal credit risk. The Fund
maintains an average weighted maturity of 90 days or less.
Page 16 of 51
<PAGE>
PRINCIPAL RISKS OF INVESTING
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund is also subject to the risk that tax exempt money market instruments
may underperform other segments of the fixed income markets or the fixed income
markets as a whole. For additional information about risks, see "More
Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1992 2.41%
1993 1.90%
1994 2.41%
1995 3.46%
1996 3.11%
1997 3.27%
1998 3.08%
1999 2.80%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
0.91% 0.43%
(6/30/95) (3/31/93)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 1.73%.
Page 17 of 51
<PAGE>
THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED
DECEMBER 31, 1999.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA TAX EXEMPT MONEY MARKET FUND 2.80% 3.14% 2.89%(1)
</TABLE>
(1)Since April 1, 1991.
For current yield information on the Fund, call 1-800-622-FUND (3863) or visit
our website at www.armadafunds.com. The Fund's yield appears in THE WALL STREET
JOURNAL each Thursday.
FUND FEES AND EXPENSES
SEE PAGE 18 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 18 of 51
<PAGE>
ARMADA TREASURY MONEY MARKET FUND
FUND SUMMARY
INVESTMENT GOAL High current income consistent
with stability of principal while
maintaining liquidity
INVESTMENT FOCUS U.S. Treasury securities
SHARE PRICE VOLATILITY Very low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in a portfolio of high
quality short-term obligations
of the U.S. Treasury designed to
allow the Fund to maintain a
stable net asset value of $1.00
per share
INVESTOR PROFILE Conservative investors seeking
current income through a liquid
investment
PRINCIPAL INVESTMENT STRATEGIES
The Armada Treasury Money Market Fund's investment objective is to provide as
high a level of current income as is consistent with liquidity and stability of
principal. The investment objective may be changed without a shareholder vote.
The Fund invests exclusively in direct obligations of the U.S. Treasury, such as
Treasury bills and notes, and in other money market funds that invest
exclusively in such obligations.
In managing the Fund, the Adviser actively buys throughout the money market
curve, laddering maturities to meet or exceed shareholder liquidity needs while
seeking the highest possible yield consistent with the Fund's risk profile.
As a money market fund, the Fund invests only in money market instruments with
remaining maturities of 397 days or less and maintains an average weighted
maturity of 90 days or less.
PRINCIPAL RISKS OF INVESTING
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
The Fund is also subject to the risk that U.S. Treasury securities may
underperform other segments of the fixed income markets or the fixed income
markets as a whole. For additional information about risks, see "More
Information About Risk."
Page 19 of 51
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1995 5.27%
1996 4.75%
1997 4.81%
1998 4.54%
1999 4.18%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.36% 0.98%
(6/30/95) (3/31/99)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 2.48%.
THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED
DECEMBER 31, 1999.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA TREASURY MONEY MARKET FUND 4.18% 4.71% 4.71%(1)
</TABLE>
(1)Since December 22, 1994.
For current yield information on the Fund, call 1-800-622-FUND (3863) or visit
our website at www.armadafunds.com. The Fund's yield appears in THE WALL STREET
JOURNAL each Thursday.
FUND FEES AND EXPENSES
SEE PAGE [ ] FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 20 of 51
<PAGE>
ARMADA TREASURY PLUS MONEY MARKET FUND
FUND SUMMARY
INVESTMENT GOAL Current income consistent with
liquidity and stability of principal
INVESTMENT FOCUS U.S. Treasury securities and
repurchase agreements related to such
securities
SHARE PRICE VOLATILITY Very low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in a portfolio of high
quality short-term obligations of the
U.S. Treasury designed to allow the
Fund to maintain a stable net asset
value of $1.00 per share
INVESTOR PROFILE Investors seeking current income
through a liquid and stable investment
PRINCIPAL INVESTMENT STRATEGIES
The Armada Treasury Plus Money Market Fund's investment objective is to provide
current income with liquidity and stability of principal. The investment
objective may be changed without a shareholder vote. The Fund invests
exclusively in obligations issued or guaranteed by the U.S. Treasury and
repurchase agreements related to such securities.
In managing the Fund, the Adviser assesses current and projected market
conditions. Based on this assessment, the Adviser uses gradual shifts in
portfolio maturity to respond to expected changes and selects securities that it
believes offer the most attractive trade off between risk and return.
As a money market fund, the Fund invests only in money market instruments with
remaining maturities of 397 days or less and maintains an average weighted
maturity of 90 days or less.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes. Generally, the Fund's fixed
income securities will decrease in value if interest rates rise and vice versa.
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
Although the Fund's U.S. Treasury securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by the U.S. Treasury are backed by
the U.S. Treasury.
Page 21 of 51
<PAGE>
The Fund is also subject to the risk that U.S. Treasury securities may
underperform other segments of the fixed income markets or the fixed income
markets as a whole. For additional information about risks, see "More
Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
There is no performance information for Class B Shares because it has not
completed a full calendar year of operations.
This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year.
On June 16, 2000 the Parkstone Treasury Fund was reorganized into the similarly
managed Armada Treasury Plus Money Market Fund. Performance information before
June 16, 2000 represents performance of the Parkstone Fund while performance
after that date represents performance of the newly organized Armada Fund.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURN
<S> <C>
1994 3.60%
1995 5.31%
1996 4.77%
1997 4.95%
1998 4.86%
1999 4.34%
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.34% 0.63%
(6/30/95) (3/31/94)
</TABLE>
The Fund's performance from January 1, 2000 to June 30, 2000 was 2.63%.
THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED
DECEMBER 31, 1999.
<TABLE>
<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS SINCE INCEPTION
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ARMADA TREASURY PLUS MONEY MARKET FUND 4.34% 4.84% 4.61%(1)
</TABLE>
(1)Since December 1, 1993
For current yield information on the Fund, call 1-800-622-FUND (3863) or visit
our website at www.armadafunds.com. The Fund's yield appears in THE WALL STREET
JOURNAL each Thursday.
Page 22 of 51
<PAGE>
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE RESPECTIVE FUNDS.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES GOVERNMENT
(FEES PAID DIRECTLY FROM MONEY OHIO MUNICIPAL MONEY
YOUR INVESTMENT) MARKET FUND MONEY MARKET FUND MARKET FUND
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Class A Class B Class C Class A
------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) None None None None None
Imposed on Purchases (as a
percentage of offering price)
------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge None None 5.00%(1) 1.00%(2) None
(Load) (as a percentage of net
asset value)
------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) None None None None None
Imposed on Reinvested
Dividends and other
Distributions (as a percentage
of offering price)
------------------------------------------------------------------------------------------------------------------
Redemption Fee (as a None None None None None
percentage of amount redeemed,
if applicable)
------------------------------------------------------------------------------------------------------------------
Exchange Fee None None None None None
------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------------------------------
SHAREHOLDER FEES PENNSYLVANIA TAX
(FEES PAID DIRECTLY FROM EXEMPT MONEY TAX EXEMPT MONEY MARKET TREASURY MONEY TREASURY PLUS MONEY
YOUR INVESTMENT) MARKET FUND FUND MARKET FUND MARKET FUND
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Class A Class A Class A
------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) None None None None
Imposed on Purchases (as a
percentage of offering price)
------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge None None None None
(Load) (as a percentage of net
asset value)
------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) None None None None
Imposed on Reinvested
Dividends and other
Distributions (as a percentage
of offering price)
------------------------------------------------------------------------------------------------------------------
Redemption Fee (as a None None None None
percentage of amount redeemed,
if applicable)
------------------------------------------------------------------------------------------------------------------
Exchange Fee None None None None
------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)This amount applies to redemptions during the first and second years. The
deferred sales charge decreases to 4.0%, 3.0% and 2.0% for redemptions made
during the third through fifth years, respectively. No deferred sales charge is
charged after the fifth year. For more information see "Contingent Deferred
Sales Charges."
(2)A contingent deferred sales charge is charged only with respect to Class C
Shares redeemed prior to eighteen months from the date of purchase.
Page 23 of 51
<PAGE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)(3)
Class A Shares
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
PENNSYLVANIA
GOVERNMENT OHIO MUNICIPAL TAX EXEMPT TAX EXEMPT
MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND FUND FUND
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Advisory 0.35% 0.35% 0.35% 0.40% 0.35%
Fees
------------------------------------------------------------------------------------------------------------
Distribution and 0.10% 0.10% 0.10% 0.10% 0.10%
Service (12b-1) Fees
------------------------------------------------------------------------------------------------------------
Other Expenses 0.25% 0.26% 0.31% 0.29% 0.28%
------------------------------------------------------------------------------------------------------------
Total Annual Fund 0.70%(4) 0.71%(5) 0.76%(4) 0.79%(4) 0.73%(4)
Operating Expenses
------------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------------------
TREASURY MONEY TREASURY PLUS
MARKET FUND MARKET FUND
--------------------------------------------------------------------
<S> <C> <C>
Investment Advisory 0.30% 0.30%
Fees
--------------------------------------------------------------------
Distribution and 0.10% 0.10%
Service (12b-1) Fees
--------------------------------------------------------------------
Other Expenses 0.28% 0.31%
--------------------------------------------------------------------
Total Annual Fund 0.68%(4) 0.71%(6)
Operating Expenses
--------------------------------------------------------------------
Class B Shares
<CAPTION>
-------------------------------------------------
MONEY MARKET FUND(7)
-------------------------------------------------
<S> <C>
Investment Advisory Fees 0.35%
-------------------------------------------------
Distribution and 0.90%
Service (12b-1) Fees
-------------------------------------------------
Other Expenses 0.11%
-------------------------------------------------
Total Annual Fund 1.36%(5)
Operating Expenses
-------------------------------------------------
Class C Shares
<CAPTION>
-------------------------------------------------
MONEY MARKET FUND(7)
-------------------------------------------------
<S> <C>
Investment Advisory Fees 0.35%
-------------------------------------------------
Distribution and 1.00%
Service (12b-1) Fees
-------------------------------------------------
Other Expenses 0.11%
-------------------------------------------------
Total Annual Fund 1.46%(5)
Operating Expenses
-------------------------------------------------
</TABLE>
Page 24 of 51
<PAGE>
(3)The Trust has implemented plans imposing shareholder servicing fees with
respect to Class A Shares, Class B Shares and Class C Shares of each fund, as
applicable. Pursuant to such plans, the Trust enters into shareholder
servicing agreements with certain financial institutions under which they
agree to provide shareholder administrative services to their customers who
beneficially own Class A Shares and Class B Shares of the money market funds
and for the payment of up to 0.15% (on an annualized basis) of the net asset
value of such Class A, Class B and Class C Shares and 0.25% (on an annualized
basis) of the net asset value of Class C Shares. Shareholder servicing fees
paid by Class A Shares are included in Other Expenses and Fees paid by
Class B and Class C Shares are included in Distribution and Service (12b-1)
Fees in the table above. For further information concerning these plans, in
"Shareholder Services Plans" in the Statement of Additional Information.
(4)Each of these Funds' total actual annual operating expenses for Class A
Shares for the most recent fiscal year were less than the amounts shown above
because the Adviser and Distributor each waived a portion of the fees in
order to keep total operating expenses for Class A Shares at a specified
level. With these fee waivers, each Fund's actual total operating expenses
for Class A Shares were:
<TABLE>
<S> <C>
Armada Government Money Market Fund 0.54%
Armada Ohio Municipal Money Market Fund 0.50%
Armada Pennsylvania Tax Exempt Money Market Fund 0.48%
Armada Tax Exempt Money Market Fund 0.47%
Armada Treasury Money Market Fund 0.57%
</TABLE>
The Adviser and Distributor each expects to continue these waivers so that total
operating expenses for Class A Shares for the current fiscal year will be as
follows. These fee waivers remain in place as of the date of this prospectus,
the Adviser and/or Distributor may discontinue all or part of these waivers at
any time.
<TABLE>
<S> <C>
Armada Government Money Market Fund 0.55%
Armada Ohio Municipal Money Market Fund 0.51%
Armada Pennsylvania Tax Exempt Money Market Fund 0.49%
Armada Tax Exempt Money Market Fund 0.48%
Armada Treasury Money Market Fund 0.58%
</TABLE>
(5)The Money Market Fund's total actual annual operating expenses for Class A
and Class B Shares for the most recent fiscal year were less than the amounts
shown above because the Adviser and Distributor each waived a portion of the
fees in order to keep total operating expenses at a specified level. With
these fee waivers, the Fund's actual total operating expenses were, for Class
A and Class B Shares, 0.55% and 1.26%, respectively. The Adviser and
Distributor each expects to continue these waivers so that total operating
expenses for Class A, Class B and Class C Shares for the current fiscal year
will be 0.56%, 1.26% and 1.36% (estimated), respectively. These fee waivers
remain in place as of the date of this prospectus, the Adviser and/or
Distributor may discontinue all or part of these waivers at any time.
(6)The Treasury Plus Money Market Fund's total actual annual operating expenses
for Class A Shares for the most recent fiscal year were less than the amounts
shown above because the Distributor waived a portion of the fees in order to
keep total operating expenses for Class A Shares at a specified level. With
these fee waivers, the Fund's actual total operating expenses for Class A Shares
were 0.65%. The Distributor expects to continue these waivers so that total
operating expenses for Class A Shares for the current fiscal year will be 0.66%.
These fee waivers remain in place as of the date of this prospectus, the
Distributor may discontinue all or part of these waivers at any time.
Page 25 of 51
<PAGE>
(8)These Shares are available only through exchanges from other Funds within the
respective class. Initial purchases of Class B Shares or Class C Shares of the
Fund are not possible except by using the Systematic Exchange Program (see page
31).
EXAMPLE
These Examples are intended to help you compare the cost of investing in each
of the Funds with the cost of investing in other mutual funds. The Examples
assume that you invest $10,000 in a Fund for the time periods indicated and
that you sell your shares at the end of the period.
The Examples also assume that each year your investment has a 5% return, Fund
expenses remain the same and your Class B Shares convert to Class A Shares after
eight years. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in a Fund would be:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Government Money Market Fund
-----------------------------------------------------------------------------------------------------------------------
Class A $72 $224 $390 $871
-----------------------------------------------------------------------------------------------------------------------
Money Market Fund
-----------------------------------------------------------------------------------------------------------------------
Class A $73 $227 $395 $883
-----------------------------------------------------------------------------------------------------------------------
Class B(1) $638 $831 $945 $1,456
-----------------------------------------------------------------------------------------------------------------------
Class B(2) $138 $431 $745 $1,456
-----------------------------------------------------------------------------------------------------------------------
Class C(1) $249 $462 $797 $1,746
-----------------------------------------------------------------------------------------------------------------------
Class C(2) $149 $462 $797 $1,746
-----------------------------------------------------------------------------------------------------------------------
Ohio Municipal Money Market Fund
-----------------------------------------------------------------------------------------------------------------------
Class A $78 $243 $422 $942
-----------------------------------------------------------------------------------------------------------------------
Pennsylvania Tax Exempt Money Market
Fund
-----------------------------------------------------------------------------------------------------------------------
Class A $81 $252 $439 $978
-----------------------------------------------------------------------------------------------------------------------
Tax Exempt Money Market Fund
-----------------------------------------------------------------------------------------------------------------------
Class A $75 $233 $406 $906
-----------------------------------------------------------------------------------------------------------------------
Treasury Money Market Fund
-----------------------------------------------------------------------------------------------------------------------
Class A $69 $218 $379 $847
-----------------------------------------------------------------------------------------------------------------------
Treasury Plus Money Market Fund
-----------------------------------------------------------------------------------------------------------------------
Class A $73 $227 $395 $883
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) If you sell your shares at the end of the period.
(2) If you do not sell your shares at the end of the period.
Page 26 of 51
<PAGE>
MORE INFORMATION ABOUT RISK
The following chart indicates the specific investment risks associated with
each of the Funds. A description of these risks can be found on the following
pages.
<TABLE>
<S> <C>
FIXED INCOME RISK-- The market value of Armada Government Money Market Fund
fixed income investments changes in Armada Money Market Fund
response to interest rate changes and other Armada Ohio Municipal Money Market Fund
factors. During periods of falling interest Armada Pennsylvania Tax Exempt Money Market Fund
rates, the values of outstanding fixed Armada Tax Exempt Money Market Fund
income securities generally rise. Moreover, Armada Treasury Plus Money Market Fund
while securities with longer maturities Armada Treasury Money Market Fund
tend to produce higher yields, the prices
of longer maturity securities are also
subject to greater market fluctuations as a
result of changes in interest rates. In
addition to these fundamental risks,
different types of fixed income securities
may be subject to the following additional
risks:
CALL RISK -- During periods of Armada Ohio Municipal Money Market Fund
falling interest rates, certain debt Armada Pennsylvania Tax Exempt Money Market Fund
obligations with high interest rates Armada Tax Exempt Money Market Fund
may be prepaid (or "called") by the Armada Treasury Money Market Fund
issuer prior to maturity. This may
cause a Fund's average weighted
maturity to fluctuate, and may
require a Fund to invest the
resulting proceeds at lower interest
rates.
CREDIT RISK -- The possibility that Armada Money Market Fund
an issuer will be unable to make Armada Ohio Municipal Money Market Fund
timely payments of either principal Armada Pennsylvania Tax Exempt Money Market Fund
or interest. Armada Tax Exempt Money Market Fund
EVENT RISK -- Securities may suffer Armada Money Market Fund
declines in credit quality and Armada Ohio Municipal Money Market Fund
market value due to issuer Armada Pennsylvania Tax Exempt Money Market Fund
restructurings or other factors. Armada Tax Exempt Money Market Fund
This risk should be reduced because
of the diversification provided by
the Fund's multiple holdings.
</TABLE>
Page 27 of 51
<PAGE>
<TABLE>
<S> <C>
MUNICIPAL ISSUER RISK-- There may Armada Ohio Municipal Money Market Fund
be economic or political changes Armada Pennsylvania Tax Exempt Money Market Fund
that impact the ability of municipal Armada Tax Exempt Money Market Fund
issuers to repay principal and to
make interest payments on municipal
securities. Changes to the
financial condition or credit rating
of municipal issuers may also
adversely affect the value of the
Fund's municipal securities.
Constitutional or legislative limits
on borrowing by municipal issuers
may result in reduced supplies of
municipal securities. Moreover,
certain municipal securities are
backed only by a municipal issuer's
ability to levy and collect taxes.
In addition, the Fund's Armada Ohio Municipal Money Market Fund
concentration of investments in Armada Pennsylvania Tax Exempt Money Market Fund
issuers located in a single state
makes the Fund more susceptible to
adverse political or economic
developments affecting that state.
The Fund also may be riskier than
mutual funds that buy securities of
issuers in numerous states.
</TABLE>
Page 28 of 51
<PAGE>
<TABLE>
<S> <C>
LEVERAGING RISK -- Leveraging Armada Money Market Fund
activities include, among other Armada Ohio Municipal Money Market Fund
things, borrowing and the use of Armada Pennsylvania Tax Exempt Money Market Fund
short sales, options and futures.
There are risks associated with
leveraging activities, including:
- A fund experiencing losses over
certain ranges in the market
that exceed losses experienced
by a non-leveraged Fund.
- There may be an imperfect or no
correlation between the changes
in market value of the
securities held by a fund and
the prices of futures and
options on futures.
- Although the funds will only
purchase exchange-traded
futures and options, due to
market conditions there may
not be a liquid secondary
market for a futures contract
or option. As a result, the
funds may be unable to close
out their futures or options
contracts at a time which is
advantageous.
- Trading restrictions or
limitations may be imposed by
an exchange, and government
regulations may restrict
trading in futures contracts
and options.
REGIONAL RISK -- To the extent that a Fund's Armada Ohio Municipal Money Market Fund
investments are focused in a specific Armada Pennsylvania Tax Exempt Money Market Fund
geographic region, the Fund may be subject
to the political and other developments
affecting that region. Regional economies
are often closely interrelated, and political
and economic developments affecting one
region, country or state often affect other
regions, countries or states, thus subjecting
a Fund to additional risks.
</TABLE>
Page 29 of 51
<PAGE>
MORE INFORMATION ABOUT FUND INVESTMENTS
In addition to the investments and strategies described in this prospectus, each
Fund also may invest in other securities, use other strategies and engage in
other investment practices. These investments and strategies, as well as those
described in this prospectus, are described in detail in our Statement of
Additional Information.
The investments and strategies described in this prospectus are those that we
use under normal conditions. Of course, the Trust cannot guarantee that any Fund
will achieve its investment goal.
The Trust has applied for an order from the SEC that, if granted, would allow
the non-money market funds offered by the Trust to use cash balances that have
not been invested in portfolio securities and cash collateral from securities
lending programs to purchase shares of the money market funds offered by the
Trust. A non-money market fund will hold shares of money market funds only to
the extent that its total investment in the money market funds does not exceed
25% of its total assets.
INVESTMENT ADVISER AND INVESTMENT TEAMS
The Investment Adviser makes investment decisions for the Funds and continuously
reviews, supervises and administers each Fund's respective investment program.
The Board of Trustees of the Trust supervises the Adviser and establishes
policies that the Adviser must follow in its management activities.
National City Investment Management Company ("IMC"), with its principal offices
at 1900 East Ninth Street, Cleveland, Ohio 44114, serves as Adviser to the
Funds. On June 30, 2000, IMC had approximately $25.6 billion in assets under
management.
IMC utilizes a team approach for management of the Funds. No one person is
primarily responsible for making investment recommendations to the team.
The table below shows the IMC management teams responsible for each fund as well
as the advisory fees IMC received for each fund for the fiscal period ended May
31, 2000.
Page 30 of 51
<PAGE>
<TABLE>
<CAPTION>
ADVISORY FEES PAID AS A
PERCENTAGE OF AVERAGE NET
MANAGEMENT TEAM/ ASSETS FOR THE FISCAL YEAR
FUND NAME INVESTMENT ADVISER ENDED MAY 31, 2000
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Government Money Market Fund Taxable Money Market Team 0.25%
--------------------------------------------------------------------------------------------------------------------------
Money Market Fund Taxable Money Market Team 0.25%
--------------------------------------------------------------------------------------------------------------------------
Ohio Municipal Money Market Fund Tax Exempt Money Market Team 0.15%
--------------------------------------------------------------------------------------------------------------------------
Pennsylvania Tax Exempt Money Market Fund
Tax Exempt Money Market Team 0.15%
--------------------------------------------------------------------------------------------------------------------------
Tax Exempt Money Market Fund Tax Exempt Money Market Team 0.15%
--------------------------------------------------------------------------------------------------------------------------
Treasury Money Market Fund Taxable Money Market Team 0.25%
--------------------------------------------------------------------------------------------------------------------------
Treasury Plus Money Market Fund Taxable Money Market Team 0.30%(1)
</TABLE>
(1)Represents fees paid by the Parkstone Treasury Fund to IMC prior to its
reorganization into the Armada Treasury Plus Money Market Fund.
Page 31 of 51
<PAGE>
PURCHASING, SELLING AND EXCHANGING FUND SHARES
This section tells you how to purchase, sell (sometimes called "redeem") and
exchange shares of the Funds.
The classes have different expenses and other characteristics.
CLASS A SHARES
- No front-end sales charge
- Low 12b-1 fees
- $500 minimum initial investment-no subsequent minimum
CLASS B SHARES (EXCHANGE ONLY FROM AN ARMADA NON-MONEY MARKET FUND OR
ARRANGE FOR A SYSTEMATIC EXCHANGE PROGRAM)
- No front-end sales charge
- Contingent deferred sales charge (back-end charge if you
redeem within 5 years-declining from year to year)
- Higher 12b-1 fees than Class A
- $500 minimum initial investment-no subsequent minimum
- Converts to Class A shares after eighth year
CLASS C SHARES (EXCHANGE ONLY FROM AN ARMADA NON-MONEY MARKET FUND OR
ARRANGE FOR A SYSTEMATIC EXCHANGE PROGRAM)
- No front-end sales charge
- Contingent deferred sales charge (back-end charge if you
redeem within the first 18 months)
- Higher 12b-1 fees than Class A
- $500 minimum initial investment-no subsequent minimum
- Does not convert to any other share class
For investors purchasing shares through a Planned Investment Program, the
minimum initial investment is $50.
For information on how to open an account and set up procedures for placing
transactions call 1-800-622-FUND (3863).
You may not purchase Class B Shares or Class C Shares of the Armada Money
Market Fund as part of your initial investment. Class B Shares or Class C
Shares of the Armada Money Market Fund are available only via an exchange
from other funds of Class B Shares or Class C Shares, respectively, of
another Fund of the Trust or if participating in a Systematic Exchange
Program (see page 31).
Class A and Class B Shares are for individual and corporate investors and
retirement plans. Class C Shares are for individual investors and retirement
plans.
Page 32 of 51
<PAGE>
HOW TO PURCHASE FUND SHARES
You may purchase shares directly by:
- Internet
- Telephone
- Mail
- Automated Clearing House (ACH), or
- Wire
To purchase shares directly from us, please log on to our website at
www.armadafunds.com or call 1-800-622-FUND (3863). To set up a new account with
a different registration, complete and send an Armada Funds new account
application. You may complete the application directly on line through the
Armada website. Please print, sign and mail when finished. Or, you may call
1-800-622-FUND (3863) to obtain an application. Unless you arrange to pay by
wire or ACH, write your check, payable in U.S. dollars, to "Armada Funds (Fund
name)." The Trust cannot accept third-party checks, credit cards, credit card
checks or cash.
To purchase shares by wire, call 1-800-622-FUND (3863) to set up your account to
accommodate wire transactions and to receive a wire control number to be
included in the body of the wire. To initiate your wire transaction, call your
depository institution. Federal funds (monies transferred from one bank to
another through the Federal Reserve system with same-day availability) should be
wired to:
State Street Bank and Trust Company
ABA #011000028
Account
(Account Registration)
(Account Number)
(Wire Control Number)
Note: Your bank may charge you a fee for this service.
BUYING OR SELLING SHARES THROUGH A FINANCIAL INTERMEDIARY
You may also buy shares through accounts with brokers and other institutions
that are authorized to place trades in Fund shares for their customers. If you
invest through an authorized institution, you will have to follow its
procedures. Your broker or institution may charge a fee for its services, in
addition to the fees charged by the Trust. You will also generally have to
address your correspondence or questions regarding a Fund to your institution.
Your investment representative is responsible for transmitting all subscription
and redemption requests, investment information, documentation and money to the
Fund on time. Certain investment representatives have agreements with the Funds
that allow them to enter confirmed purchase or redemption orders on behalf of
clients and customers. Under this arrangement, the investment representative
must send your payment to the Funds by the time they price their shares on the
following day. If your investment representative fails to do so, it may be
responsible for any resulting fees or losses.
Page 33 of 51
<PAGE>
GENERAL INFORMATION
You may purchase shares on any day that the New York Stock Exchange is open for
business (a "Business Day").
The Trust may reject any purchase order if it is determined that accepting the
order would not be in the best interests of the Fund or its shareholders.
The price per share (the offering price) will be the net asset value per share
(NAV) next determined after a Fund receives your purchase order. The following
table shows when the daily NAV is calculated for each of the funds and the
deadline for submitting a purchase order to the Transfer Agent in order to
receive the current Business Day's NAV:
<TABLE>
<CAPTION>
DEADLINE FOR SUBMITTING PURCHASE
ORDERS TO THE TRANSFER AGENT TO
TIME OF NAV CALCULATION RECEIVE THE CURRENT DAY'S NAV
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Money Market Fund TWICE DAILY 2:30 p.m. Eastern Time
Government Money Market Fund 3:00 p.m. Eastern Time
and 4:00 p.m. Eastern
Time (close of trading on
the New York Stock
Exchange)
Ohio Municipal Money Market Fund TWICE DAILY 12:30 p.m. Eastern Time
Pennsylvania Tax Exempt Money 1:00 p.m. Eastern Time
Market Fund and 4:00 p.m. Eastern
Tax Exempt Money Market Fund Time (close of trading on
Treasury Money Market Fund the New York Stock
Treasury Plus Money Market Fund Exchange)
--------------------------------------------------------------------------------------------------------------
</TABLE>
So, for you to be eligible to receive dividends declared on the day you submit
your purchase order, a Fund generally must receive your order by the above
listed deadlines and federal funds (readily available funds) before 2:00 p.m.
Eastern Time the following day.
HOW WE CALCULATE NAV
NAV for one Fund share is the value of that share's portion of the assets of the
Fund less liabilities and class expenses.
In calculating NAV for the money market funds, a Fund generally values its
investment portfolio using the amortized cost valuation method, which is
described in detail in our Statement of Additional Information. If this method
is determined to be unreliable during certain market conditions or for other
reasons, a Fund may value its portfolio at market price or fair value prices may
be determined in good faith using methods approved by the Board of Trustees.
Page 34 of 51
<PAGE>
PLANNED INVESTMENT PROGRAM
With a $50 minimum initial investment and if you have a checking or savings
account with a bank, you may purchase Class A, Class B* or Class C* Shares
automatically through regular deductions from your account in amounts of at
least $50 per month.
You may arrange for participation in this program via the Internet at
www.armadafunds.com, by calling 1-800-622-FUND (3863) or by completing an
account application.
*Only in conjunction with a Systematic Exchange Program applicable to NAV.
SALES CHARGES
CONTINGENT DEFERRED SALES CHARGES -- CLASS B AND CLASS C SHARES
You do not pay a sales charge when you purchase Class B Shares of the Money
Market and Tax Exempt Money Market Funds or Class C Shares of the Money Market
Fund. The offering price of Class B and Class C Shares is simply the next
calculated NAV. But if you sell your Class B Shares within five years after your
purchase or your Class C Shares within eighteen months of purchase, you will pay
a contingent deferred sales charge as described in the table below for Class B
Shares or 1.00% for Class C Shares on either (1) the NAV of the shares at the
time of purchase, or (2) NAV of the shares next calculated after the Fund
receives your sale request in good order, whichever is less. The sales charge
does not apply to shares you purchase through reinvestment of dividends or
distributions. So, you never pay a deferred sales charge on any increase in your
investment above the initial offering price. This sales charge does not apply to
exchanges of Class B Shares of one Fund for Class B Shares of another Fund or to
exchanges of Class C Shares of one Fund for Class C Shares of another Fund.
After eight years, your Class B Shares are converted to Class A Shares. There is
no conversion feature for Class C Shares.
<TABLE>
<CAPTION>
CLASS B SHARES
CONTINGENT DEFERRED SALES CHARGE AS A PERCENTAGE OF
YEARS SINCE PURCHASE DOLLAR AMOUNT SUBJECT TO CHANGE
--------------------------------------------------------------------------------
<S> <C>
FIRST 5.0%
SECOND 5.0%
THIRD 4.0%
FOURTH 3.0%
FIFTH 2.0%
SIXTH NONE
SEVENTH NONE
EIGHTH NONE
</TABLE>
When an investor redeems his or her Class B Shares, the redemption order is
processed to minimize the amount of the contingent deferred sales charge that
will be charged. Class B Shares are redeemed first from those Class B Shares
that are not subject to the deferred sales load (i.e. Class B Shares that
were acquired through reinvestment of dividends or capital gain distributions)
and thereafter unless otherwise designated by the shareholder, from the
Class B Shares that have been held the longest. The contingent deferred sales
charge will be waived if you sell your Class B or Class C Shares for the
following reasons:
- redemptions following the death or disability of a shareholder;
- redemptions representing a minimum required distribution from an IRA or a
custodial account to a shareholder who has reached 70 1/2 years of age;
- minimum required distributions from an IRA or a custodial account to a
shareholder who has died or become disabled;
- redemptions by participants in a qualified plan for retirement loans,
financial hardship, certain participant expenses and redemptions due to
termination of employment with plan sponsor;
- redemptions by a settlor of a living trust;
- redemptions effected pursuant to a Fund's right to liquidate a
shareholder's account if the value of shares held in the account is less
than the minimum account size;
- returns of excess contributions;
- redemptions following the death or disability of both shareholders in the
case of joint accounts;
- exchanges of Class B or Class C Shares between Class B or Class C Shares,
respectively, of the Funds of the Trust; and
- distributions of less than 10% of the annual account value under a
Systematic Withdrawal Plan.
GENERAL INFORMATION ABOUT SALES CHARGES
When you buy Class A Shares, your securities dealer is paid a servicing fee
as long as you hold your shares. When you buy Class B or Class C Shares, your
securities dealer receives a servicing fee after 12 months and then as long
as you hold your shares.
HOW TO SELL YOUR FUND SHARES
If you own your shares directly, you may sell (sometimes called "redeem") your
shares on any Business Day through the Internet at www.armadafunds.com, by
telephone at 1-800-622-FUND (3863), or contacting a Fund by mail. The minimum
amount for Internet and telephone redemptions is $100.
If you own shares through an account with a broker or other institution, contact
that broker or institution to sell your shares. Your broker or institution may
charge a fee for its services, in addition to the fees charged by the Fund.
Page 35 of 51
<PAGE>
If you would like to sell $100,000 or more of your shares, please notify the
Fund in writing and include a signature guarantee by a bank or other financial
institution (a notarized signature is not sufficient).
The sale price of each share for redemption requests received in good order by
the Fund will be the next NAV determined less, in the case of Class B and Class
C Shares, any applicable deferred sales charge. Good order means that your
request includes complete information and legal requirements on your purchase,
exchange or redemption and that the Fund has received the appropriate assets.
When an investor redeems his or her Class B or Class C Shares, the redemption
order is processed to minimize the amount of the contingent deferred sales
charge that will be charged. Class B or Class C Shares are redeemed first from
those Class B or Class C Shares that dividends or capital gain distributions)
and thereafter, unless otherwise designated by the shareholder, from the Class B
or Class C Shares that have been held the longest.
SYSTEMATIC WITHDRAWAL PLAN
If you have at least $1,000 in your account, you may use the Systematic
Withdrawal Plan. Under the plan you may arrange periodic automatic withdrawals
of at least $100 from Class A, Class B or Class C Shares of any Fund. The
proceeds of each withdrawal will be mailed to you by check or, if you have a
checking or savings account with a bank, electronically transferred to your
account. There will be no deferred sales charge on systematic withdrawals made
on Class B or Class C Shares, as long as the amounts withdrawn do not exceed 10%
annually of the account balance. You may arrange for participation in this
program via the Internet at www.armadafunds.com, by calling 1-800-622-FUND
(3863), or by completing an account application.
CHECK WRITING AVAILABLE TO CLASS A SHARES
To apply for check writing privileges on your investment in Class A Shares of
any Armada money market fund, complete the appropriate section and the signature
card in the account application. Upon receipt of your signature card, you will
be sent checks for your account. The minimum amount for a check written from
your account is $100. However, your account cannot be closed by writing a check.
You will receive daily dividends declared on the shares to be redeemed up to the
day that a check is presented for payment. The Trust will give you at least 30
days written notice before modifying or terminating your check writing
privilege.
RECEIVING YOUR MONEY
Normally, we will send your sale proceeds within seven days after we receive
your request. Your proceeds can be wired to your bank account or sent to you by
check. Armada Funds does not charge a fee to wire your funds; however, your
institution may charge a fee. IF YOU RECENTLY PURCHASED YOUR SHARES BY CHECK OR
THROUGH ACH, REDEMPTION PROCEEDS MAY NOT BE AVAILABLE UNTIL YOUR CHECK HAS
CLEARED (WHICH MAY TAKE UP TO 15 DAYS FROM YOUR DATE OF PURCHASE). IF YOU
RECENTLY CHANGED YOUR ADDRESS, YOU MAY NOT BE ABLE TO REDEEM YOUR SHARES WITHIN
10 DAYS AFTER THE CHANGE WITHOUT A SIGNATURE GUARANTEE.
Page 36 of 51
<PAGE>
REDEMPTIONS IN KIND
We generally pay sale (redemption) proceeds in cash. However, under unusual
conditions that make the payment of cash unwise (and for the protection of a
Fund's remaining shareholders) we might pay all or part of your redemption
proceeds in liquid securities with a market value equal to the redemption price
(redemption in kind).
INVOLUNTARY SALE OF YOUR SHARES
If your account balance drops below $500 because of redemptions, you may be
required to sell your shares. But, we will always give you at least 60 days'
written notice to give you time to add to your account and avoid the sale of
your shares.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
The Fund may suspend your right to sell your shares if the New York Stock
Exchange restricts trading, the SEC declares an emergency or for other reasons.
More information about this is in our Statement of Additional Information.
HOW TO EXCHANGE YOUR SHARES
You may exchange your shares on any Business Day by contacting us directly
through the Internet at www.armadafunds.com, by telephone or by mail. Exchange
requests must be for an amount of at least $500.
The exchange privilege is a convenient way to respond to changes in
investment goals or in market conditions. This privilege is not designed for
market-timing - switching money into investments in anticipation of rising
prices or taking money out in anticipation of the market falling. As money is
shifted in and out, a Fund incurs expenses for buying and selling securities.
These costs are borne by all Fund shareholders, including the long-term
investors who do not generate the costs. Therefore, the Fund discourages
short-term trading by, among other things, limiting the number of exchanges
to one exchange every two months during a given 12-month period beginning
upon the date of the first exchange transaction. The Trust may contact a
shareholder who exceeds the limit and, if a market-timing pattern continues,
management of the Trust may revoke the shareholder's privilege to purchase
shares of a Fund through exchanges. Management of the Trust reserves the
right to limit, amend or impose charges upon, terminate or otherwise modify
the exchange privilege. You will be provided 60 days' notice before any
material action is taken. Any modification to the exchange privilege will not
otherwise affect your right to redeem shares.
IF YOU RECENTLY PURCHASED SHARES BY CHECK OR THROUGH ACH, YOU MAY NOT BE ABLE TO
EXCHANGE YOUR SHARES UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15 DAYS
FROM YOUR DATE OF PURCHASE).
When you exchange shares, you are really selling your shares and buying other
Fund shares. So, your sale price and purchase price will be based on the NAV
next calculated after the Fund receives your exchange request.
CLASS A SHARES
You may exchange Class A Shares of any Armada Fund for Class A Shares of any
other Armada Fund. If you exchange shares that you purchased without a sales
charge or with a lower sales charge into an Armada Fund with a sales charge or
with a higher sales charge, the exchange is subject to an incremental sales
charge (e.g., the difference between the lower and higher
Page 37 of 51
<PAGE>
applicable sales charges). If you exchange shares into an Armada Fund with the
same, lower or no sales charge there is no incremental sales charge for the
exchange in this manner.
CLASS B SHARES
You may exchange Class B Shares of any Armada Fund for Class B Shares of any
other Armada Fund. No contingent deferred sales charge is imposed on redemptions
of shares you acquire in an exchange, provided you hold your shares for at least
five years from your initial purchase.
CLASS C SHARES
You may exchange Class C Shares of any Armada Fund for Class C Shares of any
other Armada Fund. No contingent deferred sales charge is imposed on redemptions
of shares you acquire in an exchange in this manner, provided you hold your
shares for at least 18 months from your initial purchase.
TELEPHONE AND INTERNET TRANSACTIONS
Purchasing, selling and exchanging Fund shares over the telephone or via the
Internet is extremely convenient, but not without risk. Although the Trust has
certain safeguards and procedures to confirm the authenticity of instructions,
the Trust is not responsible for any losses or costs incurred by following
telephone or Internet instructions we reasonably believe to be genuine. If you
or your financial institution transact with the Fund over the telephone or via
the Internet, you will generally bear the risk of any loss.
SYSTEMATIC EXCHANGE PROGRAM
The Systematic Exchange Program allows you to exchange your existing shares of
an Armada money market fund for any other Armada fund of the same class
automatically, at periodic intervals. Exchanging in this manner may reduce the
average cost per share of a non-money market fund.
Because purchases of Class A Shares of non-money market funds may be subject to
an initial sales charge, it may be beneficial for you to execute a Letter of
Intent indicating an intent to purchase Class A Shares in connection with this
program.
If you would like to enter a systematic exchange program concerning B or C
shares you must exchange them within six or twelve months from the date of
purchase.
You may arrange for participation in this program via the Internet, at
www.armadafunds.com, by calling 1-800-622-FUND (3863) or by completing an
account application.
DISTRIBUTION OF FUND SHARES
Each Fund has adopted a distribution plan under Rule 12b-1, pursuant to the
Investment Company Act of 1940, as amended, that allows each Fund to pay
distribution and service fees for the sale and distribution of its shares, and
for services provided to shareholders. Because these fees are paid out of a
Fund's assets continuously, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
Page 38 of 51
<PAGE>
Distribution fees, after fee waivers, as a percentage of average daily net
assets are as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
Armada Government Money Market Fund 0.05% N/A N/A
Armada Money Market Fund 0.05% 0.75% 0.75%
Armada Ohio Municipal Money Market 0.05% N/A N/A
Armada Pennsylvania Tax Exempt Money Market Fund 0.05% N/A N/A
Armada Tax Exempt Money Market Fund 0.05% N/A N/A
Armada Treasury Plus Money Market Fund 0.05% N/A N/A
Armada Treasury Money Market Fund 0.05% N/A N/A
</TABLE>
The Distributor may, from time to time in its sole discretion, institute one or
more promotional incentive programs for dealers, which will be paid for by the
Distributor from any sales charge it receives or from any other source available
to it. Under any such program, the Distributor may provide cash or non-cash
compensation as recognition for past sales or encouragement for future sales
that may include the following: merchandise, travel expenses, prizes, meals, and
lodgings, and gifts that do not exceed $100 per year, per individual.
Page 39 of 51
<PAGE>
DIVIDENDS AND TAXES
Each Fund accrues its income daily and distributes it monthly.
Each Fund makes distributions of capital gains, if any, at least annually. If
you own Fund shares on a Fund's record date, you will be entitled to receive the
dividends and/or capital gain distribution.
You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. You may change your
distribution options directly through the Internet at www.armadafunds.com or you
must notify the Fund in writing prior to the date of the distribution. Your
election will be effective for dividends and distributions paid the next day if
done through the Internet or after the Fund receives your written notice.
FEDERAL TAXES
Fund distributions (other than exempt-interest dividends, discussed below) will
generally be taxable to you as ordinary income. You will be subject to income
tax on Fund distributions regardless of whether they are paid in cash or
reinvested in additional shares. Each Fund contemplates declaring as dividends
each year all or substantially all of its taxable income. Distributions
attributable to the net capital gain of a Fund, if any, will be taxable to you
as long-term capital gain.
The one major exception to these tax principles is that distributions on shares
held in an IRA (or other tax-qualified plan) will not be currently taxable.
The Armada Ohio Municipal Money Market Fund, Armada Pennsylvania Tax Exempt
Money Market Fund, and Armada Tax Exempt Money Market Fund (the "Tax Exempt
Funds") anticipate that substantially all of their income dividends will be
"exempt interest dividends," which are exempt from federal income taxes.
However, some dividends may be taxable, such as dividends that are derived
from occasional taxable investments or from capital gains. Interest on
indebtedness incurred by a shareholder to purchase or carry shares of any Tax
Free Bond Fund generally will not be deductible for federal income tax
purposes.
You should note that a portion of the exempt-interest dividends paid by the Tax
Exempt Funds may constitute an item of tax preference for purposes of
determining federal alternative minimum tax liability. Exempt-interest dividends
will also be considered along with other adjusted gross income in determining
whether any Social Security or railroad retirement payments received by you are
subject to federal income taxes.
The foregoing is only a summary of certain tax considerations under current law,
which may be subject to change in the future. Shareholders who are nonresident
aliens, foreign trusts or estates, or foreign corporations or partnerships, may
be subject to different United States federal income tax treatment. You should
consult your tax adviser for further information regarding federal, state, local
and/or foreign tax consequences relevant to your specific situation.
STATE AND LOCAL TAXES
Shareowners may also be subject to state and local taxes on distributions and
redemptions. State income taxes may not apply, however, to the portions of each
Fund's distributions, if any, that are
Page 40 of 51
<PAGE>
attributable to interest on federal securities or interest on securities of
the particular state or localities within the state. The Armada Pennsylvania
Tax Exempt Money Market Fund intends to distribute income that is exempt from
Pennsylvania personal income taxes. The Armada Ohio Municipal Money Market
Fund intends to distribute income that is exempt from Ohio personal income
taxes. Shareowners should consult their tax advisers regarding the tax status
of distributions in their states and localities.
MORE INFORMATION ABOUT TAXES IS IN THE STATEMENT OF ADDITIONAL INFORMATION.
Page 41 of 51
<PAGE>
FINANCIAL HIGHLIGHTS
The tables that follow present performance information about each operational
class of each Fund. This information is intended to help you understand each
Fund's financial performance for the past five years, or, if shorter, the
period of the Fund's operations. Some of this information reflects financial
information for a single Fund share. The total returns in the table represent
the rate that you would have earned (or lost) on an investment in a Fund,
assuming you reinvested all of your dividends and distributions.
Except as stated otherwise below, this information has been audited by Ernst &
Young LLP, independent auditors, whose reports, along with the Fund's
financial statements, are included in the annual report and are incorporated
by reference into the Statement of Additional Information. The financial
highlights of the Pennsylvania Tax Exempt Money Market Fund from the Fund's
commencement of operations date through May 31, 1996, were audited by the
Fund's former independent accountants.
On June 16, 2000, the Parkstone Treasury Fund was reorganized into the
similarly managed Armada Treasury Plus Money Market Fund. In connection with
this reorganization, the Armada Treasury Plus Money Market Fund adopted the
financial highlights, financial statements and performance history of the
acquired Parkstone fund. The Financial Highlights for the Armada Treasury
Plus Money Market Fund for the periods prior to its fiscal year ended May 31,
2000 were audited by PricewaterhouseCoopers LLP, former independent
accountants to the Parkstone Treasury Fund.
You can obtain the annual report, which contains more performance
information, at no charge by calling 1-800-622-FUND (3863).
Page 42 of 51
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA GOVERNMENT MONEY MARKET FUND - CLASS A
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.05 0.05
LESS DISTRIBUTIONS
Dividends from net investment income (0.05) (0.05) (0.05) (0.05) (0.05)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN 5.14% 4.70% 5.17% 5.04% 5.31%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $521,688 $565,095 $247,281 $159,129 $131,194
Ratio of expenses to average net assets 0.54% 0.57% 0.52% 0.47% 0.46%
Ratio of net investment income to average net assets 4.99% 4.61% 5.05% 4.93% 5.13%
Ratio of expenses to average net assets before fee waivers 0.70% 0.67% 0.62% 0.57% 0.57%
Ratio of net investment income to average net assets before 4.83% 4.51% 4.95% 4.83% 5.02%
fee waivers
</TABLE>
Page 43 of 51
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA MONEY MARKET FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B(1) CLASS A CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.04 0.05 0.04 0.05 0.05 0.05 0.05
LESS DISTRIBUTIONS
Dividends from net investment income (0.05) (0.04) (0.05) (0.04) (0.05) (0.05) (0.05) (0.05)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN 5.25% 4.50% 4.82% 4.21% 5.26% 5.04%(2) 5.09% 5.35%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $1,717,661 $249 $1,360,644 $27 $696,893 $5 $346,172 $343,087
Ratio of expenses to average net assets 0.55% 1.26% 0.56% 1.27% 0.51% 1.22%(2) 0.47% 0.47%
Ratio of net investment income to average 5.14% 4.43% 4.68% 3.97% 5.14% 4.39%(2) 4.97% 5.18%
net assets
Ratio of expenses to average net assets 0.71% 1.36% 0.66% 1.37% 0.61% 1.27%(2) 0.57% 0.58%
before fee waivers
Ratio of net investment income to average
net assets before fee waivers 4.98% 4.33% 4.58% 3.87% 5.08% 4.31%(2) 4.87% 5.07%
</TABLE>
(1) THE MONEY MARKET FUND CLASS B COMMENCED OPERATIONS JANUARY 5, 1998.
(2) ANNUALIZED.
Page 44 of 51
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA OHIO MUNICIPAL MONEY MARKET FUND - CLASS A
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED MAY 31, ENDED MAY 31,
2000 1999(1)
<S> <C> <C>
Net asset value, beginning of period $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.02
LESS DISTRIBUTIONS
Dividends from net investment income (0.03) (0.02)
Net asset value, end of period $1.00 $1.00
TOTAL RETURN 3.13% 1.50%(2)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $29,458 $11,019
Ratio of expenses to average net assets 0.50% 0.50%(3)
Ratio of net investment income to average net assets 3.11% 2.62%(3)
Ratio of expenses to average net assets before fee waivers 0.76% 0.70%(3)
Ratio of net investment income to average net assets before fee 2.85% 2.42%(3)
waivers
</TABLE>
(1) CLASS A COMMENCED OPERATIONS ON NOVEMBER 2, 1998.
(2) TOTAL RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(3) ANNUALIZED.
Page 45 of 51
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA PENNSYLVANIA TAX EXEMPT MONEY MARKET FUND - CLASS A
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR YEAR ENDED MAY 31,
2000 1999 1998 1997(3)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.03 0.03 0.02
LESS DISTRIBUTIONS
Dividends from net investment income (0.03) (0.03) (0.03) (0.02)
Net asset value, end of period $1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 3.15% 2.76% 3.29% 3.18%(1)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $57,941 $53,822 $33,375 $20,830
Ratio of expenses to average net assets 0.48% 0.49% 0.46% 0.46%(1)
Ratio of net investment income to average 3.11% 2.67% 3.23% 3.27%(1)
net assets
Ratio of expenses to average net assets 0.79% 0.74% 0.71% 0.71%(1)
before fee waivers
Ratio of net investment income to average
net assets before fee waivers 2.80% 2.42% 2.98% 3.02%(1)
</TABLE>
(1) ANNUALIZED.
(2) TOTAL RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(3) CLASS A COMMENCED OPERATIONS ON SEPTEMBER 11, 1996.
Page 46 of 51
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA TAX EXEMPT MONEY MARKET FUND - CLASS A
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03% 0.03 0.03 0.03 0.03
LESS DISTRIBUTIONS
Dividends from net investment income (0.03) (0.03) (0.03) (0.03) (0.03)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN 3.14% 2.85% 3.27% 3.12% 3.29%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $219,568 $190,469 $132,548 $71,917 $85,928
Ratio of expenses to average net assets 0.47% 0.44% 0.42% 0.39% 0.40%
Ratio of net investment income to average net assets 3.09% 2.78% 3.20% 3.08% 3.23%
Ratio of expenses to average net assets before fee waivers 0.73% 0.64% 0.62% 0.59% 0.61%
Ratio of net investment income to average net assets
before fee waivers 2.83% 2.58% 3.00% 2.88% 3.02%
</TABLE>
Page 47 of 51
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA TREASURY MONEY MARKET FUND - CLASS A
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.04 0.04 0.05 0.05 0.05
LESS DISTRIBUTIONS
Dividends from net investment income (0.04) (0.04) (0.05) (0.05) (0.05)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN 4.59% 4.23% 4.82% 4.79% 4.97%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $79,713 $83,020 $7,222 $5,680 $4,355
Ratio of expenses to average net assets 0.57% 0.55% 0.51% 0.47% 0.52%
Ratio of net investment income to average net assets 4.50% 4.21% 4.71% 4.68% 4.77%
Ratio of expenses to average net assets before fee waivers 0.68% 0.60% 0.56% 0.52% 0.58%
Ratio of net investment income to average net assets 4.39% 4.16% 4.66% 4.63% 4.71%
before fee waivers
</TABLE>
Page 48 of 51
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA TREASURY PLUS MONEY MARKET FUND - CLASS A
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE
ELEVEN FOR THE YEAR FOR THE YEAR
FOR THE YEAR ENDED MAY 31, MONTHS ENDED MAY 31, ENDED JUNE 30,
ENDED,
2000 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.05 0.05 0.05
LESS DISTRIBUTIONS
Dividends from net investment income (0.05) (0.05) (0.05) (0.05) (0.05) (0.05)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN 4.80% 4.51% 4.61% (a) 4.82% 5.04% 4.81%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $1,835 $9,161 $240,208 $176,006 $158,723 $105,391
Ratio of expenses to average net assets 0.66% 0.67% 0.67% (b) 0.67% 0.70% 1.75%
Ratio of net investment income to average net assets 4.67% 4.77% 4.90% (b) 4.72% 4.87% 4.82%
Ratio of expenses to average net assets before fee waivers* 0.85% 0.91% 0.92% (b) 0.92% 0.95% 1.04%
</TABLE>
* DURING THE PERIOD, CERTAIN FEES WERE VOLUNTARILY REDUCED. IF SUCH VOLUNTARY
FEE REDUCTIONS HAD NOT OCCURRED, THE RATIO WOULD HAVE BEEN AS INDICATED.
(a) NOT ANNUALIZED.
(b) ANNUALIZED.
Page 49 of 51
<PAGE>
ARMADA FUNDS
INVESTMENT ADVISER
National City Investment Management Company
1900 East Ninth Street
Cleveland, Ohio 44114
DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
LEGAL COUNSEL
Drinker Biddle & Reath LLP
One Logan Square
18th and Cherry Streets
Philadelphia, Pennsylvania 19103-6996
More information about the Funds is available without charge through the
following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI, as it may be amended or supplemented from time to time, includes more
detailed information about the Armada Funds. The SAI is on file with the SEC and
is incorporated by reference into this prospectus. This means that the SAI, for
legal purposes, is a part of this prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS
These reports list each Fund's holdings and contain information from the Fund's
managers about strategies, and recent market conditions and trends and their
impact on Fund performance. The reports also contain detailed financial
information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:
BY INTERNET: www.armadafunds.com
BY TELEPHONE: Call 1-800-622-FUND (3863)
BY MAIL:
Armada Funds
One Freedom Valley Drive
Oaks, Pennsylvania 19456
Page 50 of 51
<PAGE>
FROM THE SEC: You can also obtain the SAI or the Annual and Semi-Annual reports,
as well as other information about the Armada Funds, from the EDGAR Database on
the SEC's website ("http://www.sec.gov"). You may review and copy documents at
the SEC Public Reference Room in Washington, DC (for information on the
operation of the Public Reference Room, call 202-942-8090). You may request
documents by mail from the SEC, upon payment of a duplicating fee, by writing
to: Securities and Exchange Commission, Public Reference Section, Washington, DC
20549-0102. You may also obtain this information, upon payment of a duplicating
fee, by e-mailing the SEC at the following address: [email protected].
The Armada Funds' Investment Company Act registration number is 811-4416.
Page 51 of 51
<PAGE>
ARMADA MONEY MARKET FUNDS
CLASS I SHARES (INSTITUTIONAL)
PROSPECTUS
OCTOBER 2, 2000
ARMADA GOVERNMENT MONEY MARKET FUND
ARMADA MONEY MARKET FUND
ARMADA OHIO MUNICIPAL MONEY MARKET FUND
ARMADA PENNSYLVANIA TAX EXEMPT MONEY MARKET FUND
ARMADA TAX EXEMPT MONEY MARKET FUND
ARMADA TREASURY MONEY MARKET FUND
ARMADA TREASURY PLUS MONEY MARKET FUND
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENT ADVISER
NATIONAL CITY INVESTMENT MANAGEMENT COMPANY
Page 1 of 43
<PAGE>
ABOUT THIS PROSPECTUS
Armada Funds (the Trust) is a mutual fund family that offers different
classes of shares in separate investment portfolios (Funds). The Funds have
individual investment goals and strategies. This prospectus gives you
important information that you should know about the Class I Shares of the
Armada money market Funds before investing. The Trust also offers Class I
Shares of equity, fixed income, balanced and tax free bond funds in a
separate prospectus which is available by calling 1-800-622-FUND (3863).
Please read this prospectus and keep it for future reference.
THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN REVIEW
THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS SOME GENERAL INFORMATION
YOU SHOULD KNOW ABOUT RISK AND RETURN THAT IS COMMON TO EACH OF THE FUNDS. FOR
MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
PAGE
ARMADA GOVERNMENT MONEY MARKET FUND........................................ 4
ARMADA MONEY MARKET FUND................................................... 6
ARMADA OHIO MUNICIPAL MONEY MARKET FUND.................................... 9
ARMADA PENNSYLVANIA TAX EXEMPT MONEY MARKET FUND........................... 12
ARMADA TAX EXEMPT MONEY MARKET FUND........................................ 15
ARMADA TREASURY MONEY MARKET FUND.......................................... 18
ARMADA TREASURY PLUS MONEY MARKET FUND..................................... 20
MORE INFORMATION ABOUT RISK................................................ 24
MORE INFORMATION ABOUT FUND INVESTMENTS.................................... 27
INVESTMENT ADVISER AND INVESTMENT TEAMS.................................... 27
PURCHASING, SELLING AND EXCHANGING FUND SHARES............................. 29
DIVIDENDS AND TAXES........................................................ 32
FINANCIAL HIGHLIGHTS....................................................... 34
Page 2 of 43
<PAGE>
INTRODUCTION
Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.
CLASS I SHARES HAVE NO SALES CHARGE, NO MINIMUM INVESTMENT AND IS ONLY AVAILABLE
TO FINANCIAL INSTITUTIONS.
RISK/RETURN INFORMATION COMMON TO THE FUNDS
Each Fund has its own investment goal and strategies for reaching that goal. The
investment managers invest Fund assets in a way that they believe will help a
Fund achieve its goal. Still, investing in each Fund involves risk and there is
no guarantee that a Fund will achieve its goal. An investment manager's
judgments about the markets, the economy, or companies may not anticipate actual
market movements, economic conditions or company performance, and these
judgments may affect the return on your investment.
No matter how good a job an investment manager does, you could lose money on
your investment in a Fund, just as you could with other investments.
An investment in a Fund is not a bank deposit and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any government
agency.
Although a money market fund seeks to keep a constant price per share of $1.00,
there is no guarantee that a money market fund will achieve this goal and it is
possible that you may lose money by investing in the fund.
Page 3 of 43
<PAGE>
ARMADA GOVERNMENT MONEY MARKET FUND
FUND SUMMARY
<TABLE>
<S> <C>
INVESTMENT GOAL High current income consistent with stability of
principal while maintaining liquidity
INVESTMENT FOCUS Money market instruments issued or guaranteed by the U.S.
Government, its agencies and instrumentalities and
repurchase agreements
SHARE PRICE VOLATILITY Very low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in a portfolio of high quality short-term debt
securities issued by the U.S. Government, its agencies and
instrumentalities and repurchase agreements related to such
securities designed to allow the fund to maintain a stable net
asset value of $1.00 per share
INVESTOR PROFILE Conservative investors seeking current income through a
liquid investment
</TABLE>
PRINCIPAL INVESTMENT STRATEGIES
The Armada Government Money Market Fund's investment objective is to provide as
high a level of current income as is consistent with liquidity and stability of
principal. The investment objective may be changed without a shareholder vote.
The Fund invests exclusively in obligations issued or guaranteed as to payment
of principal and interest by the U.S. Government, its agencies and
instrumentalities and repurchase agreements. U.S. Government securities include
direct obligations of the U.S. Treasury, and obligations of certain agencies
such as Ginnie Maes and Fannie Maes.
In managing the Fund, the Adviser actively buys throughout the money market
curve, laddering maturities to meet or exceed shareholder liquidity needs while
seeking the highest possible yield consistent with the Fund's risk profile.
As a money market fund, the Fund invests only in money market instruments with
remaining maturities of 397 days or less (or in variable or floating rate
obligations with maturities that may exceed 397 days if they meet certain
conditions) and maintains an average weighted maturity of 90 days or less.
PRINCIPAL RISKS OF INVESTING
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
Although the Fund's U.S. Government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. Government agencies and
instrumentalities are backed by the
Page 4 of 43
<PAGE>
U.S. Treasury, while others are backed solely by the ability of the agency to
borrow from the U.S. Treasury or by the agency's own resources.
The Fund is also subject to the risk that money market instruments issued or
guaranteed by the U.S. Government may underperform other segments of the fixed
income markets or the fixed income markets as a whole. For additional
information about risks, see "More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.
CALENDAR YEAR TOTAL RETURN
1990 7.94%
1991 5.65%
1992 3.36%
1993 2.75%
1994 3.91%
1995 5.63%
1996 5.14%
1997 5.25%
1998 5.15%
1999 4.82%
BEST QUARTER WORST QUARTER
1.95% 0.67%
(6/30/90) (6/30/93)
The Fund's performance from January 1, 2000 to June 30, 2000 was 2.85%.
THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED
DECEMBER 31, 1999.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
-------------------------------------------------- ------------------ ----------- ----------------- ------------------
<S> <C> <C> <C> <C>
ARMADA GOVERNMENT MONEY MARKET FUND 4.82% 5.20% 4.95% 5.51%(1)
</TABLE>
(1)Since March 3, 1987.
For current yield information on the Fund, call 1-800-622-FUND (3863) or visit
our website at WWW.ARMADAFUNDS.COM. The Fund's yield appears in THE WALL STREET
JOURNAL each Thursday.
FUND FEES AND EXPENSES
SEE PAGE 16 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU
BUY AND HOLD FUND SHARES.
Page 5 of 43
<PAGE>
ARMADA MONEY MARKET FUND
FUND SUMMARY
<TABLE>
<S> <C>
INVESTMENT GOAL High current income consistent with stability of
principal while maintaining liquidity
INVESTMENT FOCUS Money market instruments
SHARE PRICE VOLATILITY Very low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in a portfolio of high quality short-term debt
securities designed to allow the Fund to maintain a stable net
asset value of $1.00 per share
INVESTOR PROFILE Conservative investors seeking current income through a
liquid investment
</TABLE>
PRINCIPAL INVESTMENT STRATEGIES
The Armada Money Market Fund's investment objective is to provide as high a
level of current income as is consistent with liquidity and stability of
principal. The investment objective may be changed without a shareholder
vote.
The Fund invests in a variety of high quality money market securities,
including certificates of deposit and other obligations issued by domestic
and foreign banks, as well as commercial paper. Foreign government
obligations are U.S. dollar-denominated obligations (limited to commercial
paper and other notes) issued or guaranteed by a foreign government or other
entity located or organized in a foreign country that maintains a short-term
foreign currency rating in the highest short-term ratings category by the
requisite number of Nationally Recognized Statistical Rating Organizations
(NRSROs).
The Adviser also invests in securities issued or guaranteed by the U.S.
Government or its agencies (government obligations) and repurchase agreements
collateralized by government obligations and issued by financial institutions
such as banks and broker-dealers. High quality money market instruments are
securities that present minimal credit risks as determined by the Adviser and
generally include securities that are rated at the time of purchase by a
major rating agency in the highest two rating categories for such securities,
and certain securities that are not rated but are of comparable quality as
determined by the Adviser.
In selecting investments for the Fund, the Adviser actively buys throughout
the money market curve, laddering maturities to meet or exceed shareholder
liquidity needs while seeking the highest possible yield consistent with the
Fund's risk profile.
As a money market fund, the Fund invests only in money market instruments
with remaining maturities of 397 days or less (or in variable or floating
rate obligations with maturities that may exceed 397 days if they meet
certain conditions) that the Adviser believes present minimal credit risk.
The Fund maintains an average weighted maturity of 90 days or less.
Page 6 of 43
<PAGE>
PRINCIPAL RISKS OF INVESTING
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
The Fund is also subject to the risk that money market securities may
underperform other segments of the fixed income markets or the fixed income
markets as a whole. For additional information about risks, see "More
Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The table
measures performance in terms of total return. However, this Fund is managed
for yield and not total return.
This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.
CALENDAR YEAR TOTAL RETURN
1990 8.16%
1991 5.67%
1992 3.33%
1993 2.76%
1994 3.98%
1995 5.72%
1996 5.19%
1997 5.32%
1998 5.25%
1999 4.92%
BEST QUARTER WORST QUARTER
2.01% 0.67%
(6/30/90) (6/30/93)
The Fund's performance from January 1, 2000 to June 30, 2000 was 2.90%.
THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
----------------------------------------- --------------- -------------- ----------------- ------------------
<S> <C> <C> <C> <C>
ARMADA MONEY MARKET FUND 4.92% 5.28% 5.02% 5.62%(1)
</TABLE>
(1)Since September 3, 1986.
For current yield information on the Fund, call 1-800-622-FUND (3863) or
visit our website at WWW.ARMADAFUNDS.COM. The Fund's yield appears in THE
WALL STREET JOURNAL each Thursday.
Page 7 of 43
<PAGE>
FUND FEES AND EXPENSES
SEE PAGE 16 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF
YOU BUY AND HOLD FUND SHARES.
Page 8 of 43
<PAGE>
ARMADA OHIO MUNICIPAL MONEY MARKET FUND
FUND SUMMARY
<TABLE>
<S> <C>
INVESTMENT GOAL Current income exempt from regular federal income tax and
Ohio personal income tax, consistent with stability of principal
INVESTMENT FOCUS Ohio municipal money market instruments
SHARE PRICE VOLATILITY Very low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in a portfolio of high quality short-term debt
securities designed to allow the Fund to maintain a
stable net asset value of $1.00 per share
INVESTOR PROFILE Conservative taxable investors in higher tax brackets
seeking current income exempt from federal and ohio
income taxes
</TABLE>
PRINCIPAL INVESTMENT STRATEGIES
The Armada Ohio Municipal Money Market Fund's investment objective is to
provide current income exempt from regular federal income tax and Ohio
personal income tax, consistent with stability of principal. The investment
objective may be changed without a shareholder vote.
The Fund invests primarily in high quality money market instruments issued by
or on behalf of the State of Ohio, political subdivisions thereof or agencies
or instrumentalities of Ohio or its political subdivisions, the income from
which is exempt from regular federal income tax and Ohio personal income tax
(Ohio money market instruments). However, some Fund dividends may be taxable
if the Fund, as it is permitted to do, invests some of its assets in taxable
instruments. Also, Fund dividends will generally be subject to state and
local income taxes for any shareholders who are not Ohio residents. High
quality money market instruments are securities that present minimal credit
risks as determined by the Adviser and generally include securities that are
rated at the time of purchase by a major rating agency in the two highest
rating categories for such securities, and certain securities that are not so
rated but are of comparable quality as determined by the Adviser.
The Fund may invest 100% of its assets in private activity bonds, the
interest from which is a preference item for the federal alternative minimum
tax. Under normal market conditions, at least 80% of the value of the Fund's
total assets will be invested in Ohio money market instruments. This policy
is fundamental and may not be changed without the affirmative vote of the
holders of a majority of the Fund's outstanding shares.
In managing the Fund, the Adviser assesses current and projected market
conditions, particularly interest rates. Based on this assessment and a
separate credit analysis, the Adviser uses gradual shifts in portfolio
maturity to respond to expected changes and selects securities that it
believes offer the most attractive risk/return trade off.
Page 9 of 43
<PAGE>
As a money market fund, the Fund invests only in instruments with remaining
maturities of 397 days or less (or in variable or floating rate obligations
with maturities that may exceed 397 days if they meet certain conditions)
that the Adviser believes present minimal credit risk. The Fund maintains an
average weighted maturity of 90 days or less.
PRINCIPAL RISKS OF INVESTING
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
The Fund is also subject to the risk that Ohio municipal money market
securities may underperform other segments of the fixed income markets or the
fixed income markets as a whole.
There may be economic or political changes that impact the ability of
municipal issuers to repay principal and to make interest payments on
municipal securities. Changes in the financial condition or credit rating of
municipal issuers also may adversely affect the value of the Fund's
securities.
The Fund's focus of investments in securities of issuers located in Ohio
subjects the Fund to economic and government policies of that state. For
additional information about risks, see "More Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in the performance of the Fund's Class I Shares
for one year.
CALENDAR YEAR TOTAL RETURN
1999 2.93%
BEST QUARTER WORST QUARTER
0.82% 0.64%
(12/31/99) (3/31/99)
The Fund's performance from January 1, 2000 to June 30, 2000 was 1.80%.
THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR SINCE INCEPTION
------------------------------------------------------- -------------- ----------------------
<S> <C> <C>
ARMADA OHIO MUNICIPAL MONEY MARKET FUND 2.93% 2.95%(1)
</TABLE>
(1)Since September 15, 1998.
For current yield information on the Fund, call 1-800-622-FUND (3863) or
visit our website at WWW.ARMADAFUNDS.COM. The Fund's yield appears in THE
WALL STREET JOURNAL each Thursday.
Page 10 of 43
<PAGE>
FUND FEES AND EXPENSES
SEE PAGE 16 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY
IF YOU BUY AND HOLD FUND SHARES.
Page 11 of 43
<PAGE>
ARMADA PENNSYLVANIA TAX EXEMPT MONEY MARKET FUND
FUND SUMMARY
<TABLE>
<S> <C>
INVESTMENT GOAL High current income exempt from regular federal income tax and
Pennsylvania personal income tax, consistent with stability of
principal
INVESTMENT FOCUS Pennsylvania municipal money market instruments
SHARE PRICE VOLATILITY Very low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in a portfolio of high quality short-term debt
securities designed to allow the Fund to maintain a stable
net asset value of $1.00 per share
INVESTOR PROFILE Conservative taxable investors in higher tax brackets
seeking current income exempt from federal and Pennsylvania
income taxes
</TABLE>
PRINCIPAL INVESTMENT STRATEGIES
The Armada Pennsylvania Tax Exempt Money Market Fund's investment objective
is to provide current income exempt from regular federal income tax and
Pennsylvania personal income tax, consistent with stability of principal. The
investment objective may be changed without a shareholder vote.
The Fund invests primarily in high quality money market instruments issued by
or on behalf of the Commonwealth of Pennsylvania and its political
subdivisions and financing authorities, and obligations of the United States,
including territories and possessions of the United States, the income from
which is exempt from regular federal income tax and Pennsylvania income tax
(Pennsylvania municipal money market instruments). However, some Fund
dividends may be taxable if the Fund, as it is permitted to do, invests some
of its assets in taxable instruments. Also, Fund dividends will generally be
subject to state and local income taxes for any shareholders who are not
Pennsylvania residents.
High quality money market instruments are securities that present minimal
credit risks as determined by the Adviser and generally include securities
that are rated at the time of purchase by a major rating agency in the two
highest rating categories for such securities, and certain securities that
are not so rated but are of comparable quality as determined by the Adviser.
As a matter of fundamental policy, the Fund invests its assets so that at
least 80% of its annual interest income is not only exempt from regular
federal income tax and Pennsylvania personal income tax, but also is not
considered a preference item for purposes of the federal alternative minimum
tax.
In managing the Fund, the Adviser assesses current and projected market
conditions, particularly interest rates. Based on this assessment and a
separate credit analysis, the Adviser uses gradual shifts in portfolio
maturity to respond to expected changes and selects securities that it
believes offer the most attractive risk/return trade off.
Page 12 of 43
<PAGE>
As a money market fund, the Fund invests only in instruments with remaining
maturities of 397 days or less (or in variable or floating rate obligations
with maturities that may exceed 397 days if they meet certain conditions)
that the Adviser believes present minimal credit risk. The Fund maintains an
average weighted maturity of 90 days or less.
PRINCIPAL RISKS OF INVESTING
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest
rates.
The Fund is also subject to the risk that tax exempt money market securities
may underperform other segments of the fixed income markets or the fixed
income markets as a whole.
There may be economic or political changes that impact the ability of
municipal issuers to repay principal and to make interest payments on
municipal securities. Changes in the financial condition or credit rating of
municipal issuers also may adversely affect the value of the Fund's
securities.
The Fund's focus of investments in securities of issuers located in
Pennsylvania subjects the Fund to economic and government policies of that
state. For additional information about risks, see "More Information About
Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.
CALENDAR YEAR TOTAL RETURN
1995 3.50%
1996 3.14%
1997 3.43%
1998 3.14%
1999 2.97%
BEST QUARTER WORST QUARTER
0.92% 0.66%
(6/30/95) (3/31/99)
The Fund's performance from January 1, 2000 to June 30, 2000 was 1.80%.
Page 13 of 43
<PAGE>
THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS SINCE INCEPTION
---------------------------------------------------------------- ---------- ---------------- ---------------
<S> <C> <C> <C>
ARMADA PENNSYLVANIA TAX EXEMPT MONEY MARKET FUND 2.97% 3.24% 3.22%(1)
</TABLE>
(1)Since August 8, 1994
For current yield information on the Fund, call 1-800-622-FUND (3863) or
visit our website at WWW.ARMADAFUNDS.COM. The Fund's yield appears in THE
WALL STREET JOURNAL each Thursday.
FUND FEES AND EXPENSES
SEE PAGE 16 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF
YOU BUY AND HOLD FUND SHARES.
Page 14 of 43
<PAGE>
ARMADA TAX EXEMPT MONEY MARKET FUND
FUND SUMMARY
<TABLE>
<S> <C>
INVESTMENT GOAL Current interest income exempt from federal income tax
consistent with stability of principal while maintaining
liquidity
INVESTMENT FOCUS Municipal money market instruments
SHARE PRICE VOLATILITY Very low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in a portfolio of high quality short-term debt
securities designed to allow the Fund to maintain a stable
net asset value of $1.00 per share
INVESTOR PROFILE Conservative taxable investors in higher tax brackets
seeking current income exempt from federal income taxes
</TABLE>
PRINCIPAL INVESTMENT STRATEGIES
The Armada Tax Exempt Money Market Fund's investment objective is to provide
as high a level of current interest income exempt from federal income tax as
is consistent with liquidity and stability of principal. The investment
objective may be changed without a shareholder vote.
The Fund invests primarily in high quality money market instruments issued by
or on behalf of states, territories and possessions of the United States, the
District of Columbia and their political subdivisions, agencies,
instrumentalities and authorities that pay interest exempt from federal taxes
(municipal money market instruments). However, Fund dividends will generally
be taxable for state and local income tax purposes. Also, some Fund dividends
may be taxable for federal income tax purposes if the Fund, as it is
permitted to do, invests some of its assets in taxable instruments. High
quality money market instruments are securities that present minimal credit
risks as determined by the Adviser and generally include securities that are
rated at the time of purchase by a major rating agency in the highest two
rating categories for such securities, and certain securities that are not
rated but are of comparable quality as determined by the Adviser. As a matter
of fundamental policy, the Fund invests its assets so that at least 80% of
its annual interest income is not only exempt from regular federal income
tax, but also is not considered a preference item for purposes of the federal
alternative minimum tax.
In managing the Fund, the Adviser assesses current and projected market
conditions, particularly interest rates. Based on this assessment and a
separate credit analysis, the Adviser uses gradual shifts in portfolio
maturity to respond to expected changes and selects securities that it
believes offer the most attractive risk/return trade off.
As a money market fund, the Fund invests only in money market instruments
with remaining maturities of 397 days or less (or in variable or floating
rate obligations with maturities that may exceed 397 days if they meet
certain conditions) that the Adviser believes present minimal credit risk.
The Fund maintains an average weighted maturity of 90 days or less.
Page 15 of 43
<PAGE>
PRINCIPAL RISKS OF INVESTING
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
There may be economic or political changes that impact the ability of
municipal issuers to repay principal and to make interest payments on
municipal securities. Changes in the financial condition or credit rating of
municipal issuers also may adversely affect the value of the Fund's
securities.
The Fund is also subject to the risk that tax exempt money market instruments
may underperform other segments of the fixed income markets or the fixed
income markets as a whole. For additional information about risks, see "More
Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.
CALENDAR YEAR TOTAL RETURN
1990 5.83%
1991 4.26%
1992 2.52%
1993 2.02%
1994 2.51%
1995 3.57%
1996 3.21%
1997 3.37%
1998 3.23%
1999 2.95%
BEST QUARTER WORST QUARTER
1.47% 0.47%
(12/31/90) (3/31/94)
The Fund's performance from January 1, 2000 to June 30, 2000 was 1.80%.
Page 16 of 43
<PAGE>
THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
----------------------------------------------------- ---------------- ------------- ----------------- ----------------
<S> <C> <C> <C> <C>
ARMADA TAX EXEMPT MONEY MARKET FUND 2.95% 3.27% 3.34% 3.68%(1)
</TABLE>
(1)Since July 20, 1988.
For current yield information on the Fund, call 1-800-622-FUND (3863) or
visit our website at WWW.ARMADAFUNDS.COM. The Fund's yield appears in THE
WALL STREET JOURNAL each Thursday.
FUND FEES AND EXPENSES
SEE PAGE 17 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF
YOU BUY AND HOLD FUND SHARES.
Page 17 of 43
<PAGE>
ARMADA TREASURY MONEY MARKET FUND
FUND SUMMARY
<TABLE>
<S> <C>
INVESTMENT GOAL High current income consistent with stability of principal
while maintaining liquidity
INVESTMENT FOCUS U.S. Treasury securities
SHARE PRICE VOLATILITY Very low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in a portfolio of high quality short-term obligations
of the U.S. Treasury designed to allow the Fund to maintain a
stable net asset value of $1.00 per share
INVESTOR PROFILE Conservative investors seeking current income through a
liquid investment
</TABLE>
PRINCIPAL INVESTMENT STRATEGIES
The Armada Treasury Money Market Fund's investment objective is to provide as
high a level of current income as is consistent with liquidity and stability
of principal. The investment objective may be changed without a shareholder
vote. The Fund invests exclusively in direct obligations of the U.S.
Treasury, such as Treasury bills and notes, and in other money market funds
that invest exclusively in such obligations.
In managing the Fund, the Adviser actively buys throughout the money market
curve, laddering maturities to meet or exceed shareholder liquidity needs
while seeking the highest possible yield consistent with the Fund's risk
profile.
As a money market fund, the Fund invests only in money market instruments
with remaining maturities of 397 days or less (or in variable or floating
rate obligations with maturities that may exceed 397 days if they meet
certain conditions) and maintains an average weighted maturity of 90 days or
less.
PRINCIPAL RISKS OF INVESTING
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
The Fund is also subject to the risk that U.S. Treasury securities may
underperform other segments of the fixed income markets or the fixed income
markets as a whole. For additional information about risks, see "More
Information About Risk."
Page 18 of 43
<PAGE>
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does
not necessarily indicate how the Fund will perform in the future.
The bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.
CALENDAR YEAR TOTAL RETURN
1995 5.38%
1996 4.86%
1997 4.92%
1998 4.70%
1999 4.34%
BEST QUARTER WORST QUARTER
1.36% 1.02%
(6/30/95) (3/31/99)
The Fund's performance from January 1, 2000 to June 30, 2000 was 2.56%.
THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETUNRS FOR THE PERIODS
ENDED DECEMBER 31, 1999.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS SINCE INCEPTION
---------------------------------------------- ----------------- ------------------- -------------------
<S> <C> <C> <C>
ARMADA TREASURY MONEY MARKET FUND 4.34% 4.84% 4.79%(1)
</TABLE>
(1)Since June 16, 1994.
For current yield information on the Fund, call 1-800-622-FUND (3863) or
visit our website at WWW.ARMADAFUNDS.COM. The Fund's yield appears in THE
WALL STREET JOURNAL each Thursday.
FUND FEES AND EXPENSES
SEE PAGE 17 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF
YOU BUY AND HOLD FUND SHARES.
Page 19 of 43
<PAGE>
ARMADA TREASURY PLUS MONEY MARKET FUND
FUND SUMMARY
<TABLE>
<S> <C>
INVESTMENT GOAL Current income consistent with liquidity and stability of
principal
INVESTMENT FOCUS U.S. Treasury securities and repurchase agreements related
to such securities
SHARE PRICE VOLATILITY Very low
(RELATIVE TO MUTUAL FUNDS GENERALLY)
PRINCIPAL INVESTMENT STRATEGY Investing in a portfolio of high quality short-term
obligations of the U.S. Treasury designed to allow the
fund to maintain a stable net asset value of $1.00 per
share
INVESTOR PROFILE Investors seeking current income through a liquid and
stable investment
</TABLE>
PRINCIPAL INVESTMENT STRATEGIES
The Armada Treasury Plus Money Market Fund's investment objective is to
provide current income with liquidity and stability of principal. The
investment objective may be changed without a shareholder vote. The Fund
invests exclusively in obligations issued or guaranteed by the U.S. Treasury
and repurchase agreements related to such securities.
In managing the Fund, the Adviser assesses current and projected market
conditions. Based on this assessment, the Adviser uses gradual shifts in
portfolio maturity to respond to expected changes and selects securities that
it believes offer the most attractive trade off between risk and return.
As a money market fund, the Fund invests only in money market instruments
with remaining maturities of 397 days or less and maintains an average
weighted maturity of 90 days or less.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes. Generally, the Fund's fixed
income securities will decrease in value if interest rates rise and vice
versa.
An investment in the Fund is subject to interest rate risk, which is the
possibility that the Fund's yield will decline due to falling interest rates.
Although the Fund's U.S. Treasury securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by the U.S. Treasury are backed
by the U.S. Treasury.
Page 20 of 43
<PAGE>
The Fund is also subject to the risk that U.S. Treasury securities may
underperform other segments of the fixed income markets or the fixed income
markets as a whole. For additional information about risks, see "More
Information About Risk."
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in the performance of the Fund's Class I Shares
from year to year.
On June 16, 2000 the Parkstone Treasury Fund was reorganized into the
similarly managed Armada Treasury Plus Money Market Fund. Performance
information before June 16, 2000 represents performance of the Parkstone Fund
while performance after that date represents performance of the newly
organized Armada Fund.
CALENDAR YEAR TOTAL RETURN
1994 3.71%
1995 5.42%
1996 4.88%
1997 5.05%
1998 4.96%
1999 4.44%
BEST QUARTER WORST QUARTER
1.36% 0.65%
(6/30/95) (3/31/94)
The Fund's performance from January 1, 2000 to June 30, 2000 was 2.69%.
THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999.
<TABLE>
<CAPTION>
CLASS I SHARES 1 YEAR 5 YEARS SINCE INCEPTION
------------------------------------------------------- -------------- ----------------- ---------------------------
<S> <C> <C> <C>
ARMADA TREASURY PLUS MONEY MARKET FUND 4.44% 4.95% 4.71%(1)
</TABLE>
(1)Since December 1, 1993
For current yield information on the Fund, call 1-800-622-FUND (3863) or
visit our website at WWW.ARMADAFUNDS.COM. The Fund's yield appears in THE
WALL STREET JOURNAL each Thursday.
FUND FEES AND EXPENSES
SEE PAGE 17 FOR A DESCRIPTION OF THE FEES AND EXPENSES THAT YOU MAY PAY IF
YOU BUY AND HOLD FUND SHARES.
Page 21 of 43
<PAGE>
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND
HOLD SHARES OF THE RESPECTIVE FUNDS.
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Class I Shares
<TABLE>
<CAPTION>
------------------------ -------------- ---------------- ---------------- ------------------- ---------------
GOVERNMENT MONEY MARKET OHIO MUNICIPAL PENNSYLVANIA TAX TAX EXEMPT
MONEY MARKET FUND MONEY MARKET EXEMPT MONEY MONEY MARKET
FUND FUND MARKET FUND FUND
------------------------ -------------- ---------------- ---------------- ------------------- ---------------
<S> <C> <C> <C> <C> <C>
Investment Advisory 0.35% 0.35% 0.35% 0.40% 0.35%
Fees
------------------------ -------------- ---------------- ---------------- ------------------- ---------------
Distribution and 0.10% 0.10% 0.10% 0.10% 0.10%
Service (12b-1) Fees
------------------------ -------------- ---------------- ---------------- ------------------- ---------------
Other Expenses 0.10% 0.11% 0.16% 0.14% 0.13%
------------------------ -------------- ---------------- ---------------- ------------------- ---------------
Total Annual Fund 0.55%(1) 0.56%(1) 0.61%(1) 0.64%(1) 0.58%(1)
Operating Expenses
------------------------ -------------- ---------------- ---------------- ------------------- ---------------
------------------------ ------------------ -------------------
TREASURY MONEY TREASURY PLUS
MARKET FUND MARKET FUND
------------------------ ------------------ -------------------
Investment Advisory 0.30% 0.30%
Fees
------------------------ ------------------ -------------------
Distribution and 0.10% 0.10%
Service (12b-1) Fees
------------------------ ------------------ -------------------
Other Expenses 0.13% 0.16%
------------------------ ------------------ -------------------
Total Annual Fund 0.53%(1) 0.56%(2)
Operating Expenses
------------------------ ------------------ -------------------
</TABLE>
(1)The Fund's total actual annual operating expenses for Class I Shares for
the most recent fiscal year were less than the amounts shown above because
the Adviser and Distributor each waived a portion of the fees in order to
keep total operating expenses for Class I Shares at a specified level. With
these fee waivers, the Fund's actual total operating expenses for Class I
Shares were:
Armada Government Money Market Fund 0.39%
Armada Money Market Fund 0.40%
Armada Ohio Municipal Money Market Fund 0.35%
Armada Pennsylvania Tax Exempt Money Market Fund 0.33%
Armada Tax Exempt Money Market Fund 0.32%
Armada Treasury Money Market Fund 0.42%
The Adviser and Distributor each expects to continue these waivers so that
total operating expenses for Class I Shares for the current fiscal year will
be as follows. These fee waivers remain in place as of the date of this
prospectus, the Adviser and/or Distributor may discontinue all or part of
these waivers at any time.
Armada Government Money Market Fund 0.40%
Armada Money Market Fund 0.41%
Armada Ohio Municipal Money Market Fund 0.36%
Armada Pennsylvania Tax Exempt Money Market Fund 0.34%
Armada Tax Exempt Money Market Fund 0.33%
Armada Treasury Money Market Fund 0.43%
Page 22 of 43
<PAGE>
(2) The Distributor expects to waive fees for the Treasury Plus Money Market
Fund so that total operating expenses for Class I Shares for the current
fiscal year will be 0.51%. These fee waivers remain in place as of the date
of this prospectus, but the Distributor may discontinue all or part of these
waivers at any time.
EXAMPLES
These Examples are intended to help you compare the cost of investing in the
Funds with the cost of investing in other mutual funds. The Examples assume
that you invest $10,000 in a Fund for the time periods indicated and that you
sell your shares at the end of the period.
The Examples also assume that each year your investment has a 5% return,
Fund expenses remain the same and your Class B Shares convert to Class A
Shares after eight years. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in a Fund would be:
<TABLE>
<CAPTION>
---------------------------------------------- ----------------- ----------------- ----------------- -----------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Government Money Market Fund $56 $176 $307 $689
---------------------------------------------- ----------------- ----------------- ----------------- -----------------
---------------------------------------------- ----------------- ----------------- ----------------- -----------------
Money Market Fund $57 $179 $313 $701
---------------------------------------------- ----------------- ----------------- ----------------- -----------------
---------------------------------------------- ----------------- ----------------- ----------------- -----------------
Ohio Municipal Money Market Fund $62 $195 $340 $762
---------------------------------------------- ----------------- ----------------- ----------------- -----------------
---------------------------------------------- ----------------- ----------------- ----------------- -----------------
Pennsylvania Tax Exempt Money Market Fund $65 $205 $357 $798
---------------------------------------------- ----------------- ----------------- ----------------- -----------------
---------------------------------------------- ----------------- ----------------- ----------------- -----------------
Tax Exempt Money Market Fund $59 $186 $324 $726
---------------------------------------------- ----------------- ----------------- ----------------- -----------------
---------------------------------------------- ----------------- ----------------- ----------------- -----------------
Treasury Money Market Fund $54 $170 $296 $665
---------------------------------------------- ----------------- ----------------- ----------------- -----------------
---------------------------------------------- ----------------- ----------------- ----------------- -----------------
Treasury Plus Money Market Fund $57 $179 $313 $701
---------------------------------------------- ----------------- ----------------- ----------------- -----------------
---------------------------------------------- ----------------- ----------------- ----------------- -----------------
</TABLE>
Page 23 of 43
<PAGE>
MORE INFORMATION ABOUT RISK
The following chart indicates the specific investment risks associated with
each of the funds. A description of these risks can be found on the following
pages.
<TABLE>
<S> <C>
FIXED INCOME RISK -- The market value Armada Government Money Market Fund
of fixed income investments changes Armada Money Market Fund
in response to interest rate changes Armada Ohio Municipal Money Market Fund
and other factors. During periods of Armada Pennsylvania Tax Exempt Money Market Fund
falling interest rates, the values of Armada Tax Exempt Money Markey Fund
outstanding fixed income securities Armada Treasury Plus Money Market Fund
generally rise. Moreover, while Armada Treasury Money Market Fund
securities with longer maturities
tend to produce higher yields, the
prices of longer maturity securities
are also subject to greater market
fluctuations as a result of changes
in interest rates. In addition to
these fundamental risks, different
types of fixed income securities may
be subject to the following
additional risks:
CALL RISK-- During periods of falling Armada Ohio Municipal Money Market Fund
interest rates, certain debt Armada Pennsylvania Tax Exempt Money Market Fund
obligations with high interest rates Armada Tax Exempt Money Market Fund
may be prepaid (or "called") by the
issuer prior to maturity. this may
cause a Fund's average weighted
maturity to fluctuate, and may
require a Fund to invest the
resulting proceeds at lower interest
rates.
CREDIT RISK-- The possibility that an Armada Money Market Fund
issuer will be unable to make timely Armada Ohio Municipal Money Market Fund
payments of either principal or Armada Pennsylvania Tax Exempt Money Market Fund
interest. Armada Tax Exempt Money Markey Fund
EVENT RISK -- Securities may suffer Armada Money Market Fund
declines in credit quality and market Armada Ohio Municipal Money Market Fund
value due to issuer restructurings or Armada Pennsylvania Tax Exempt Money Market Fund
other factors. This risk should be Armada Tax Exempt Money Markey Fund
reduced because of the diversification
provided by the fund's multiple holdings.
Page 24 of 43
<PAGE>
MUNICIPAL ISSUER RISK-- There may be Armada Ohio Municipal Money Market Fund
economic or political changes that Armada Pennsylvania Tax Exempt Money Market Fund
impact the ability of municipal Armada Tax Exempt Money Markey Fund
issuers to repay principal and to
make interest payments on municipal
securities. Changes to the financial
condition or credit rating of
municipal issuers may also adversely
affect the value of the Fund's
municipal securities. Constitutional
or legislative limits on borrowing by
municipal issuers may result in
reduced supplies of municipal
securities. Moreover, certain
municipal securities are backed only
by a municipal issuer's ability to
levy and collect taxes.
In addition, the Fund's concentration Armada Ohio Municipal Money Market Fund
of investments in issuers located in Armada Pennsylvania Tax Exempt Money Market Fund
a single state makes the Fund more
susceptible to adverse political or
economic developments affecting that
state. The Fund also may be riskier
than mutual funds that buy securities
of issuers in numerous states.
LEVERAGING RISK -- Leveraging Armada Money Market Fund
activities include, among other Armada Ohio Municipal Money Market Fund
things, borrowing and the use of Armada Pennsylvania Tax Exempt Money Market Fund
short sales, options and futures.
There are risks associated with
leveraging activities, including:
- A fund experiencing losses over
certain ranges in the market that
exceed losses experienced by a
non-leveraged Fund.
- There may be an imperfect or no
correlation between the changes in
market value of the securities held
by a fund and the prices of futures
and options on futures.
- Although the funds will only purchase
exchange-traded futures and options,
due to market conditions there may
not be a liquid secondary market for
a futures contract or option. As a
result, the funds may be unable to
close out their futures or options
contracts at a time which is
advantageous.
- Trading restrictions or limitations
may be imposed by an exchange, and
government regulations may restrict
trading in futures contracts and
options.
DERIVATIVES RISK -- The Funds use Armada Money Market Fund
derivatives to attempt to achieve their Armada Ohio Municipal Money Market Fund
investment objectives, while at the same Armada Pennsylvania Tax Exempt Money Market Fund
time maintaining liquidity. To Armada Treasury Money Market Fund
collateralize (or cover) these derivatives Armada Treasury Plus Money Market Fund
transactions, the Funds hold cash or U.S.
government securities.
Page 25 of 43
<PAGE>
REGIONAL RISK -- To the extent that a Armada Ohio Municipal Money Market Fund
Fund's investments are focused in a Armada Pennsylvania Tax Exempt Money Market Fund
specific geographic region, the Fund
may be subject to the political and
other developments affecting that
region. Regional economies are often
closely interrelated, and political
and economic developments affecting
one region, country or state often
affect other regions, countries or
states, thus subjecting a Fund to
additional risks.
</TABLE>
Page 26 of 43
<PAGE>
MORE INFORMATION ABOUT FUND INVESTMENTS
In addition to the investments and strategies described in this prospectus,
each Fund also may invest in other securities, use other strategies and
engage in other investment practices. These investments and strategies, as
well as those described in this prospectus, are described in detail in our
Statement of Additional Information.
The investments and strategies described in this prospectus are those that we
use under normal conditions. Of course, the Trust cannot guarantee that any
Fund will achieve its investment goal.
The Trust has applied for an order from the SEC that, if granted, would allow
the non-money market funds offered by the Trust to use cash balances that
have not been invested in portfolio securities and cash collateral from
securities lending programs to purchase shares of the money market funds
offered by the Trust. A non-money market fund will hold shares of money
market funds only to the extent that its total investment in the money market
funds does not exceed 25% of its total assets.
INVESTMENT ADVISER AND INVESTMENT TEAMS
The Investment Adviser makes investment decisions for the Funds and
continuously reviews, supervises and administers each Fund's respective
investment program.
The Board of Trustees of the Trust supervises the Adviser and establishes
policies that the Adviser must follow in its management activities.
National City Investment Management Company ("IMC"), with its principal
offices at 1900 East Ninth Street, Cleveland, Ohio 44114, serves as Adviser
to the Funds. On June 30, 2000, IMC had approximately $25.6 billion in assets
under management.
IMC utilizes a team approach for management of the Funds. No one person is
primarily responsible for making investment recommendations to the team.
The table below shows the IMC management teams responsible for each fund as
well as the advisory fees IMC received for each fund for the fiscal period
ended May 31, 2000.
Page 27 of 43
<PAGE>
<TABLE>
<CAPTION>
FUND NAME MANAGEMENT TEAM/ ADVISORY FEES PAID AS A PERCENTAGE
INVESTMENT ADVISER OF AVERAGE NET ASSETS FOR THE FISCAL
YEAR ENDED MAY 31, 2000
--------------------------------------------- ------------------------------------- --------------------------------------
<S> <C> <C>
Government Money Market Fund Taxable Money Market Team 0.25%
--------------------------------------------- ------------------------------------- --------------------------------------
Money Market Fund Taxable Money Market Team 0.25%
--------------------------------------------- ------------------------------------- --------------------------------------
Ohio Municipal Money Market Fund Tax Exempt Money Market Team 0.15%
--------------------------------------------- ------------------------------------- --------------------------------------
Pennsylvania Tax Exempt Money Market Fund Tax Exempt Money Market Team 0.15%
--------------------------------------------- ------------------------------------- --------------------------------------
Tax Exempt Money Market Fund Tax Exempt Money Market Team 0.15%
--------------------------------------------- ------------------------------------- --------------------------------------
Treasury Money Market Fund Taxable Money Market Team 0.25%
--------------------------------------------- ------------------------------------- --------------------------------------
Treasury Plus Money Market Fund Taxable Money Market Team 0.30%(1)
</TABLE>
(1)Represents fees paid by the Parkstone Treasury Fund to IMC prior to its
reorganization into the Armada Treasury Plus Money Market Fund.
Page 28 of 43
<PAGE>
PURCHASING, SELLING AND EXCHANGING FUND SHARES
This section tells you how to purchase, sell (sometimes called "redeem") and
exchange Class I Shares of the Funds.
CLASS I SHARES HAVE NO SALES CHARGE, NO MINIMUM INITIAL INVESTMENT AND IS
ONLY AVAILABLE TO FINANCIAL INSTITUTIONS.
Class I Shares are for financial institutions investing for their own or
their customers' accounts. For information on how to open an account and
setup procedures for placing transactions call 1-800-622-FUND (3863).
From time to time, the Adviser may pay from its own resources a fee to
financial institutions that generate purchase orders.
HOW TO PURCHASE FUND SHARES
You may buy shares through accounts with brokers and other institutions that
are authorized to place trades in Fund shares for their customers. If you
invest through an authorized institution, you will have to follow its
procedures. Your broker or institution may charge a fee for its services, in
addition to the fees charged by the Trust. You will also generally have to
address your correspondence or questions regarding a fund to your institution.
GENERAL INFORMATION
You may purchase shares on any day that the New York Stock Exchange is open
for business (a "Business Day").
The Trust may reject any purchase order if it is determined that accepting
the order would not be in the best interests of the Fund or its shareholders.
Page 29 of 43
<PAGE>
The price per share (the offering price) will be the net asset value per
share (NAV) next determined after a Fund receives your purchase order. The
following table shows when the daily NAV is calculated for each of the funds
and the deadline for submitting a purchase order to the Transfer Agent in
order to receive the current Business Day's NAV:
<TABLE>
<CAPTION>
TIME OF NAV CALCULATION DEADLINE FOR SUBMITTING PURCHASE
ORDERS TO THE TRANSFER AGENT TO
RECEIVE THE CURRENT DAY'S NAV
--------------------------------------------- ---------------------------- -----------------------------------
<S> <C> <C>
Money Market Fund TWICE DAILY 2:30 p.m. Eastern Time
Government Money Market Fund 3:00 p.m. Eastern Time
and 4:00 p.m. Eastern
Time (close of trading on
the New York Stock
Exchange)
Ohio Municipal Money Market Fund TWICE DAILY 12:30 p.m. Eastern Time
Pennsylvania Tax Exempt Money Market Fund 1:00 p.m. Eastern Time
Tax Exempt Money Market Fund and 4:00 p.m. Eastern
Treasury Money Market Fund time (close of trading on
Treasury Plus Money Market Fund the New York Stock
Exchange)
--------------------------------------------- ---------------------------- -----------------------------------
</TABLE>
So, for you to be eligible to receive dividends declared on the day you
submit your purchase order, a Fund generally must receive your order by the
above listed deadlines and federal funds (readily available funds) before
2:00 p.m. Eastern Time the following day.
HOW WE CALCULATE NAV
NAV for one Fund share is the value of that share's portion of the assets of
the Fund less liabilities and class expenses.
In calculating NAV for the money market funds, a Fund generally values its
investment portfolio using the amortized cost valuation method, which is
described in detail in our Statement of Additional Information. If this
method is determined to be unreliable during certain market conditions or for
other reasons, a Fund may value its portfolio at market price or fair value
prices may be determined in good faith using methods approved by the Board of
Trustees.
HOW TO SELL YOUR FUND SHARES
Holders of Class I Shares may sell shares by following the procedures
established when they opened their account or accounts. If you have
questions, call 1-800-622-FUND (3863).
If you own shares through an account with a broker or other institution,
contact that broker or institution to sell your shares.
The sale price of each share will be the next NAV determined after the Fund
receives your request.
Page 30 of 43
<PAGE>
RECEIVING YOUR MONEY
Normally, we will send your sale proceeds within seven days after we receive
your request. Your proceeds can be wired to your bank account or sent to you
by check. Armada Funds does not charge a fee to wire your funds; however,
your institution may charge a fee. IF YOU RECENTLY PURCHASED YOUR SHARES BY
CHECK OR THROUGH ACH, REDEMPTION PROCEEDS MAY NOT BE AVAILABLE UNTIL YOUR
CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15 DAYS FROM YOUR DATE OF PURCHASE).
IF YOU RECENTLY CHANGED YOUR ADDRESS, YOU MAY NOT BE ABLE TO REDEEM YOUR
SHARES WITHIN 10 DAYS AFTER THE CHANGE WITHOUT A SIGNATURE GUARANTEE.
REDEMPTIONS IN KIND
We generally pay sale (redemption) proceeds in cash. However, under unusual
conditions that make the payment of cash unwise (and for the protection of a
Fund's remaining shareholders) we might pay all or part of your redemption
proceeds in liquid securities with a market value equal to the redemption
price (redemption in kind). It is highly unlikely that your shares would ever
be redeemed in kind, but if they were you would probably have to pay
transaction costs to sell the securities distributed to you, as well as taxes
on any capital gains from the sale as with any redemption.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
The Fund may suspend your right to sell your shares if the New York Stock
Exchange restricts trading, the SEC declares an emergency or for other
reasons. More information about this is in our Statement of Additional
Information.
HOW TO EXCHANGE YOUR SHARES
Holders of Class I Shares may exchange shares by following the procedures
established when they opened their account or accounts. If you have
questions, call 1-800-622-FUND (3863).
Page 31 of 43
<PAGE>
DISTRIBUTION OF FUND SHARES
Each Fund has adopted a distribution plan under Rule 12b-1, pursuant to the
Investment Company Act of 1940, that allows each Fund to pay distribution and
service fees for the sale and distribution of its shares, and for services
provided to shareholders. Because these fees are paid out of a Fund's assets
continuously, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
Distribution fees, after fee waivers, as a percentage of average daily net
assets are as follows:
CLASS I(1)
----------
Armada Government Money Market Fund 0.05%
Armada Money Market Fund 0.05%
Armada Ohio Municipal Money Market Fund 0.05%
Armada Pennsylvania Tax Exempt Money Market Fund 0.05%
Armada Tax Exempt Money Market Fund 0.05%
Armada Treasury Money Market Fund 0.05%
Armada Treasury Plus Money Market Fund 0.05%
(1)Each Fund is permitted to pay up to 0.10% for distribution fees on Class I
Shares.
The Distributor may, from time to time in its sole discretion, institute one
or more promotional incentive programs for dealers, which will be paid for
by the Distributor from any sales charge it receives or from any other source
available to it. Under any such program, the Distributor may provide cash or
non-cash compensation as recognition for past sales or encouragement for
future sales that may include the following: merchandise, travel expenses,
prizes, meals, and lodgings, and gifts that do not exceed $100 per year, per
individual.
DIVIDENDS AND TAXES
Each Fund accrues its income daily and distributes it monthly.
Each Fund makes distributions of capital gains, if any, at least annually.
If you own Fund shares on a Fund's record date, you will be entitled to
receive the dividends and/or capital gain distribution.
You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment you
must notify the Fund in writing prior to the date of the distribution. Your
election will be effective for dividends and distributions paid or after the
Fund receives your written notice.
FEDERAL TAXES
Fund distributions (other than exempt-interest dividends, discussed below)
will generally be taxable to you as ordinary income. You will be subject to
income tax on Fund distributions regardless of whether they are paid in cash
or reinvested in additional shares. Each Fund contemplates declaring as
dividends each year all or substantially all of its taxable income.
Page 32 of 43
<PAGE>
Distributions attributable to the net capital gain of a Fund, if any, will be
taxable to you as long-term capital gain.
The one major exception to these tax principles is that distributions on
shares held in an IRA (or other tax-qualified plan) will not be currently
taxable.
The Armada Ohio Municipal Money Market Fund, Armada Pennsylvania Tax Exempt
Money Market Fund, and Armada Tax Exempt Money Market Fund (the "Tax Exempt
Funds") anticipate that substantially all of their income dividends will be
"exempt interest dividends," which are exempt from federal income taxes.
However, some dividends may be taxable, such as dividends that are derived
from occasional taxable investments or from capital gains. Interest on
indebtedness incurred by a shareholder to purchase or carry shares of any tax
exempt Fund generally will not be deductible for federal income tax purposes.
You should note that a portion of the exempt-interest dividends paid by the
Tax Exempt Funds may constitute an item of tax preference for purposes of
determining federal alternative minimum tax liability. Exempt-interest
dividends will also be considered along with other adjusted gross income in
determining whether any Social Security or railroad retirement payments
received by you are subject to federal income taxes.
The foregoing is only a summary of certain tax considerations under current
law, which may be subject to change in the future. Shareholders who are
nonresident aliens, foreign trusts or estates, or foreign corporations or
partnerships, may be subject to different United States federal income tax
treatment. You should consult your tax adviser for further information
regarding federal, state, local and/or foreign tax consequences relevant to
your specific situation.
STATE AND LOCAL TAXES
Shareowners may also be subject to state and local taxes on distributions and
redemptions. State income taxes may not apply, however, to the portions of
each Fund's distributions, if any, that are attributable to interest on
federal securities or interest on securities of the particular state or
localities within the state. The Armada Pennsylvania Tax Exempt Money Market
Fund intends to distribute income that is exempt from Pennsylvania personal
income taxes. The Armada Ohio Municipal Money Market Fund intends to
distribute income that is exempt from Ohio personal income taxes. Shareowners
should consult their tax advisers regarding the tax status of distributions
in their states and localities.
MORE INFORMATION ABOUT TAXES IS IN THE STATEMENT OF ADDITIONAL INFORMATION.
Page 33 of 43
<PAGE>
FINANCIAL HIGHLIGHTS
The tables that follow present performance information about each operational
class of each Fund. This information is intended to help you understand each
Fund's financial performance for the past five years, or, if shorter, the
period of the Fund's operations. Some of this information reflects financial
information for a single Fund share. The total returns in the table represent
the rate that you would have earned (or lost) on an investment in a Fund,
assuming you reinvested all of your dividends and distributions.
Except as stated otherwise below, this information has been audited by Ernst
& Young LLP, independent auditor, whose reports, along with the Funds'
financial statements, are included in the annual report and are incorporated
by reference into the Statement of Additional Information. The financial
highlights of the Pennsylvania Tax Exempt Money Market Fund from the Fund's
commencement of operations date through May 31, 1996, were audited by the
Fund's former independent accountants.
On June 16, 2000, the Parkstone Treasury Fund was reorganized into the
similarly managed Armada Treasury Plus Money Market Fund. In connection with
this reorganization, the Armada Treasury Plus Money Market Fund adopted the
financial highlights, financial statements and performance history of the
acquired Parkstone Fund. The Financial Highlights for the Armada Treasury
Plus Money Market Fund for the periods prior to its fiscal year ended May 31,
2000 were audited by PricewaterhouseCoopers LLP, former independent
accountants to the Parkstone Treasury Fund.
You can obtain the annual report, which contains more performance
information, at no charge by calling 1-800-622-FUND (3863).
Page 34 of 43
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA GOVERNMENT MONEY MARKET FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.05 0.05
LESS DISTRIBUTIONS
Dividends from net investment income (0.05) (0.05) (0.05) (0.05) (0.05)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN 5.30% 4.86% 5.30% 5.15% 5.41%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $947,831 $1,094,979 $1,137,078 $811,662 $741,894
Ratio of expenses to average net assets 0.39% 0.42% 0.40% 0.36% 0.36%
Ratio of net investment income to
average net assets 5.14% 4.76% 5.17% 5.03% 5.27%
Ratio of expenses to average net assets
before fee waivers 0.55% 0.52% 0.50% 0.46% 0.47%
Ratio of net investment income to
average net assets before fee waivers 4.98% 4.66% 5.07% 4.93% 5.16%
</TABLE>
Page 35 of 43
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA MONEY MARKET FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.05 0.05
LESS DISTRIBUTIONS
Dividends from net investment income (0.05) (0.05) (0.05) (0.05) (0.05)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN 5.41% 4.96% 5.39% 5.19% 5.45%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $2,342,230 $2,133,839 $1,911,689 $1,943,021 $1,344,414
Ratio of expenses to average net assets 0.40% 0.42% 0.38% 0.37% 0.37%
Ratio of net investment income to average
net assets 5.29% 4.82% 5.27% 5.07% 5.30%
Ratio of expenses to average net assets
before fee waivers 0.56% 0.52% 0.48% 0.47% 0.48%
Ratio of net investment income to average
net assets before fee waivers 5.13% 4.72% 5.17% 4.97% 5.19%
</TABLE>
Page 36 of 43
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA OHIO MUNICIPAL MONEY MARKET FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED PERIOD ENDED
MAY 31, 2000 MAY 31, 1999(1)
<S> <C> <C>
Net asset value, beginning of period $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.02
LESS DISTRIBUTIONS
Dividends from net investment income (0.03) (0.02)
Net asset value, end of period $1.00 $1.00
TOTAL RETURN 3.28% 2.01%(2)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $129,475 $99,342
Ratio of expenses to average net assets 0.35% 0.35%(3)
Ratio of net investment income to average net assets 3.26% 2.77%(3)
Ratio of expenses to average net assets before fee waivers 0.61% 0.55%(3)
Ratio of net investment income to average net assets before
fee waivers 3.00% 2.57%(3)
</TABLE>
1 Class I commenced operations on September 15, 1998.
2 Total Returns are for the period indicated and have not been annualized.
3 Annualized.
Page 37 of 43
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA PENNSYLVANIA TAX EXEMPT MONEY MARKET FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE FOR THE
FOR YEAR PERIOD YEAR
ENDED ENDED ENDED
MAY 31, MAY 31, APRIL 30,
2000 1999 1998 1997 1996(3) 1996(3)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.03 0.03 0.03 0.00 0.03
LESS DISTRIBUTIONS
Dividends from net investment income (0.03) (0.03) (0.03) (0.03) (0.00) (0.03)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN 3.31% 2.92% 3.41% 3.26% 0.28%(2) 3.36%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $94,299 $77,214 $73,264 $60,876 $68,742 $70,422
Ratio of expenses to average net assets 0.33% 0.34% 0.34% 0.41% 0.55%(1) 0.55%
Ratio of net investment income to average net
assets 3.26% 2.82% 3.35% 3.20% 3.24%(1) 3.29%
Ratio of expenses to average net assets before
fee waivers 0.64% 0.59% 0.58% 0.74% 0.97%(1) 0.96%
Ratio of net investment income to average net
assets before fee waivers 2.95% 2.57% 3.11% 2.87% 2.82%(1) 2.88%
</TABLE>
(1)Annualized.
(2)Total returns are for the period indicated and have not been annualized.
(3)Activity for the period presented includes that of the predecessor fund
through September 6, 1996. During 1996, the predecessor fund changed its
fiscal year from April 30 to May 31.
Page 38 of 43
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA TAX EXEMPT MONEY MARKET FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.03 0.03 0.03 0.03
LESS DISTRIBUTIONS
Dividends from net investment income (0.03) (0.03) (0.03) (0.03) (0.03)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN 3.30% 3.00% 3.40% 3.23% 3.40%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $327,185 $434,178 $418,953 $370,679 $261,808
Ratio of expenses to average net assets 0.32% 0.30% 0.30% 0.29% 0.30%
Ratio of net investment income to average net
assets 3.24% 2.92% 3.32% 3.18% 3.33%
Ratio of expenses to average net assets before
fee waivers 0.58% 0.50% 0.50% 0.49% 0.51%
Ratio of net investment income to average net
assets before fee waivers 2.98% 2.72% 3.12% 2.98% 3.12%
</TABLE>
Page 39 of 43
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA TREASURY MONEY MARKET FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.04 0.05 0.05 0.05
LESS DISTRIBUTIONS
Dividends from net investment income (0.05) (0.04) (0.05) (0.05) (0.05)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN 4.75% 4.39% 4.95% 4.89% 5.07%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $409,169 $346,092 $359,605 $276,327 $312,255
Ratio of expenses to average net assets 0.42% 0.41% 0.39% 0.37% 0.41%
Ratio of net investment income to
average net assets 4.65% 4.35% 4.84% 4.79% 4.88%
Ratio of expenses to average net assets
before fee waivers 0.53% 0.46% 0.44% 0.42% 0.47%
Ratio of net investment income to
average net assets before fee waivers 4.54% 4.30% 4.79% 4.74% 4.82%
</TABLE>
Page 40 of 43
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA TREASURY PLUS MONEY MARKET FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE
ELEVEN
MONTHS ENDED
FOR THE YEAR ENDED MAY 31, MAY 31, FOR THE YEAR ENDED JUNE 30,
2000 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.05 0.05 0.05
LESS DISTRIBUTIONS
Dividends from net investment income (0.05) (0.05) (0.05) (0.05) (0.05) (0.05)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN 4.90% 4.61% 4.70%(a) 4.93% 5.14% 4.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $227,447 $269,534 $321,584 $324,377 $223,416 $192,232
Ratio of expenses to average net assets 0.56% 0.58% 0.57%(b) 0.57% 0.60% 0.64%
Ratio of net investment income to
average net assets 4.77% 4.52% 5.00%(b) 4.83% 4.98% 4.95%
Ratio of expenses to average net assets
before fee waivers* 0.60% 0.68% 0.67%(b) 0.67% 0.70% 0.78%
</TABLE>
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratio would have been as indicated.
(a) Not Annualized.
(b) Annualized.
Page 41 of 43
<PAGE>
ARMADA FUNDS
INVESTMENT ADVISER
National City Investment Management Company
1900 East Ninth Street
Cleveland, Ohio 44114
DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
LEGAL COUNSEL
Drinker Biddle & Reath LLP
One Logan Square
18th and Cherry Streets
Philadelphia, Pennsylvania 19103-6996
More information about the Funds is available without charge through the
following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI, as it may be amended or supplemented from time to time, includes
more detailed information about the Armada Funds. The SAI is on file with the
SEC and is incorporated by reference into this prospectus. This means that
the SAI, for legal purposes, is a part of this prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS
These reports list each Fund's holdings and contain information from the
Fund's managers about strategies, and recent market conditions and trends
and their impact on Fund performance. The reports also contain detailed
financial information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:
BY INTERNET: WWW.ARMADAFUNDS.COM
BY TELEPHONE: Call 1-800-622-FUND (3863)
BY MAIL:
Armada Funds
One Freedom Valley Drive
Oaks, Pennsylvania 19456
Page 42 of 43
<PAGE>
FROM THE SEC: You can also obtain the SAI or the Annual and Semi-Annual
reports, as well as other information about the Armada Funds, from the EDGAR
Database on the SEC's website ("http://www.sec.gov"). You may review and copy
documents at the SEC Public Reference Room in Washington, DC (for information
on the operation of the Public Reference Room, call 202-942-8090). You may
request documents by mail from the SEC, upon payment of a duplicating fee, by
writing to: Securities and Exchange Commission, Public Reference Section,
Washington, DC 20549-0102. You may also obtain this information, upon payment
of a duplicating fee, by e-mailing the SEC at the following
address:[email protected].
The Armada Funds' Investment Company Act registration number is 811-4416.
<PAGE> 3
ARMADA FUNDS
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER 2, 2000
ARMADA CORE EQUITY FUND
ARMADA EQUITY GROWTH FUND
ARMADA EQUITY INCOME FUND
ARMADA EQUITY INDEX FUND
ARMADA INTERNATIONAL EQUITY FUND
ARMADA LARGE CAP ULTRA FUND
ARMADA MID CAP GROWTH FUND
ARMADA SMALL CAP GROWTH FUND
ARMADA SMALL CAP VALUE FUND
ARMADA TAX MANAGED EQUITY FUND
ARMADA BALANCED ALLOCATION FUND
ARMADA BOND FUND
ARMADA GNMA FUND
ARMADA INTERMEDIATE BOND FUND
ARMADA LIMITED MATURITY BOND FUND
ARMADA STRATEGIC INCOME BOND FUND
ARMADA TOTAL RETURN ADVANTAGE FUND
ARMADA U.S. GOVERNMENT INCOME FUND
ARMADA MICHIGAN MUNICIPAL BOND FUND
ARMADA NATIONAL TAX EXEMPT BOND FUND
ARMADA OHIO TAX EXEMPT BOND FUND
ARMADA PENNSYLVANIA MUNICIPAL BOND FUND
ARMADA GOVERNMENT MONEY MARKET FUND
ARMADA MONEY MARKET FUND
ARMADA OHIO MUNICIPAL MONEY MARKET FUND
ARMADA PENNSYLVANIA TAX EXEMPT MONEY MARKET FUND
ARMADA TAX EXEMPT MONEY MARKET FUND
ARMADA TREASURY MONEY MARKET FUND
ARMADA TREASURY PLUS MONEY MARKET FUND
<PAGE> 4
This Statement of Additional Information is not a prospectus but should be read
in conjunction with the current Prospectuses listed below for the above Funds of
Armada Funds (the "Trust"), as may be amended or supplemented from time to time.
The Prospectuses as well as the annual report to shareholders dated May 31, 2000
may be obtained by calling or writing the Trust at 1-800-622-FUND (3863), One
Freedom Valley Drive, Oaks, Pennsylvania 19456.
Current Prospectuses
- Prospectus for A, B and C Shares of the Armada Ohio Municipal Money
Market, Armada Pennsylvania Tax Exempt Money Market, Armada Tax Exempt
Money Market, Armada Money Market, Armada Government Money Market,
Armada Treasury Money Market and Armada Treasury Plus Money Market
Funds (the "Money Market Funds") dated October 2, 2000.
- Prospectus for I Shares of the Money Market Funds dated October 2,
2000.
- Prospectus for A, B and C Shares of all Funds other than the Money
Market Funds dated October 2, 2000.
- Prospectus for I Shares of all Funds other than the Money Market Funds
dated October 2, 2000.
The Armada Funds' audited financial statements and the reports thereon of Ernst
& Young LLP, Armada Funds' independent auditors, included in the Armada Funds
2000 Annual Report dated May 31, 2000, and the audited financial statements and
report thereon of Ernst & Young LLP, independent auditors for the Parkstone Mid
Capitalization Fund, Parkstone Large Capitalization Fund, Parkstone U.S.
Government Income Fund, Parkstone Michigan Municipal Bond Fund and Parkstone
Treasury Fund of The Parkstone Group of Funds, predecessors to the Armada Mid
Cap Growth Fund, Armada Large Cap Ultra Fund, Armada U.S. Government Income
Fund, Armada Michigan Municipal Bond Fund and Armada Treasury Plus Money Market
Fund, respectively, included in The Parkstone Group of Funds Annual Report dated
May 31, 2000, are incorporated by reference into this Statement of Additional
Information. No other parts of the Armada Funds 2000 Annual Report or The
Parkstone Group of Funds Annual Report are incorporated herein.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
STATEMENT OF ADDITIONAL INFORMATION..............................................................................1
INVESTMENT OBJECTIVE AND POLICIES................................................................................2
INVESTMENT LIMITATIONS..........................................................................................64
NET ASSET VALUE.................................................................................................67
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION..................................................................69
DESCRIPTION OF SHARES...........................................................................................81
ADDITIONAL INFORMATION CONCERNING TAXES.........................................................................85
TRUSTEES AND OFFICERS...........................................................................................89
ADVISORY, ADMINISTRATION, DISTRIBUTION, CUSTODIAN SERVICES AND TRANSFER AGENCY AGREEMENTS.......................95
SHAREHOLDER SERVICES PLANS.....................................................................................106
PORTFOLIO TRANSACTIONS.........................................................................................107
AUDITORS...................................................................................................... 110
COUNSEL........................................................................................................111
PERFORMANCE INFORMATION........................................................................................111
MISCELLANEOUS..................................................................................................125
APPENDIX A.....................................................................................................A-1
APPENDIX B.....................................................................................................B-1
</TABLE>
<PAGE> 6
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
This Statement of Additional Information should be read in
conjunction with the Prospectuses of the Trust that describe: the Core Equity,
Equity Growth, Equity Income, Equity Index, International Equity, Large Cap
Ultra, Mid Cap Growth, Small Cap Growth, Small Cap Value and Tax Managed Equity
Funds (collectively, the "Equity Funds"); the Balanced Allocation Fund; the Bond
(formerly, Intermediate Government), GNMA, Intermediate Bond (formerly, Fixed
Income), Limited Maturity Bond (formerly, Enhanced Income), Strategic Income
Bond, Total Return Advantage and U.S. Government Income Funds (collectively, the
"Fixed Income Funds"); the Michigan Municipal Bond, National Tax Exempt Bond,
Ohio Tax Exempt Bond and Pennsylvania Municipal Bond Funds (collectively, the
"Tax Free Funds"); and the Government Money Market, Money Market, Ohio Municipal
Money Market Fund, Pennsylvania Tax Exempt Money Market, Tax Exempt Money
Market, Treasury Money Market and Treasury Plus Money Market Funds
(collectively, the "Money Market Funds"). The information contained in this
Statement of Additional Information expands upon matters discussed in the
Prospectuses. No investment in shares of a Fund should be made without first
reading a Prospectus for such Fund.
The Trust was organized as a Massachusetts business trust on
January 28, 1986. The Trust is a series fund authorized to issue the separate
classes or series of shares of beneficial interest. The Funds are registered as
open end management investment companies. Each Fund other than the Tax Free
Funds is a diversified investment company. Each Tax Free Fund is a
non-diversified investment company.
The Pennsylvania Tax Exempt Money Market, Bond, GNMA and
Pennsylvania Municipal Bond Funds commenced operations as separate investment
portfolios (the "Predecessor Pennsylvania Tax Exempt Money Market," "Predecessor
Intermediate Government Fund," "Predecessor GNMA Fund," and "Predecessor
Pennsylvania Tax Exempt Bond Fund," and collectively, the "Predecessor Funds")
of Inventor Funds, Inc. On September 9, 1996, the Predecessor Funds were
reorganized as new portfolios of the Trust. References in this Statement of
Additional Information are to a Fund's current name.
On June 9, 2000, the Enhanced Income Fund changed its name to
the "Limited Maturity Bond Fund." References in this Statement of Additional
Information are to the Fund's current name.
On June 9, 2000, the Bond Fund was reorganized with the
Parkstone Bond Fund, a separate investment portfolio offered by The Parkstone
Group of Funds ("Parkstone"). In connection with this reorganization, the
financial statements and performance history of the Parkstone Bond Fund were
adopted by the Bond Fund. Historical information concerning performance in this
Statement of Additional Information is that of the Parkstone Bond Fund.
The Mid Cap Growth, Large Cap Ultra, U.S. Government Income
and Michigan Municipal Bond Funds commenced operations as separate investment
portfolios (the "Parkstone
<PAGE> 7
Mid Capitalization Fund," "Parkstone Large Capitalization Fund," "Parkstone U.S.
Government Income Fund" and "Parkstone Michigan Municipal Bond Fund," and
collectively, the "Parkstone Continuing Funds") of Parkstone. On June 10, 2000,
the Parkstone Continuing Funds were reorganized as new portfolios of the Trust.
References in this Statement of Additional Information are to a Fund's current
name.
The Treasury Plus Money Market Fund commenced operations as a
separate investment portfolio, the Parkstone Treasury Fund, of Parkstone. On
June 16, 2000, the Parkstone Treasury Fund was reorganized as a new portfolio of
the Trust. References in this Statement of Additional Information are to the
Fund's current name.
INVESTMENT OBJECTIVE AND POLICIES
---------------------------------
ADDITIONAL INFORMATION ON FUND MANAGEMENT
-----------------------------------------
Further information on the management strategies, techniques,
policies and related matters concerning National City Investment Management
Company, the investment adviser to the Funds ("IMC" or the "Adviser"), 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 Standard &
Poor's Rating Group ("S&P"), Fitch, Thomson Financial BankWatch and Moody's
Investors Service, Inc. ("Moody's") for securities which may be held by the
Funds.
ADDITIONAL INFORMATION ABOUT THE FUNDS
--------------------------------------
The following information supplements and should be read in
conjunction with the principal strategies and risk disclosure relating to the
Funds in the Prospectuses.
ARMADA CORE EQUITY FUND
The Fund seeks to achieve its objective by investing in a
diversified portfolio of common stocks of issuers with large capitalizations
comparable to that of companies in the S&P 500 Index (the "S&P 500"). The Fund
normally invests in three types of equity securities: (i) growth securities,
defined as common stocks having a five-year annual earnings-per-share growth
rate of 10% or more, with no decline in the annual earnings-per-share rate
during the last five years; (ii) securities with low price-to-earnings ratios
(i.e., at least 20% below the average of the companies included in the S&P 500);
and (iii) securities that pay high dividend yields (i.e., at least 20% above
such average). The Fund will normally invest 20% to 50% of its total assets in
each of these three types of equity securities. The Fund is fully invested at
all times.
-2-
<PAGE> 8
The S&P 500 is an index composed of 500 common stocks, most of
which are listed on the New York Stock Exchange (the "NYSE"). The Sub-adviser
believes that the S&P 500 is an appropriate benchmark for the Fund because it is
diversified, familiar to many investors and widely accepted as a reference for
common stock investments.
Standard & Poor's Ratings Group is not a sponsor of, or in any
way affiliated with, the Fund.
ARMADA EQUITY GROWTH FUND
Under normal conditions, at least 80% of the Fund's total
assets will be invested in a diversified portfolio of common stocks and
securities convertible into common stocks with large stock market
capitalizations comparable to that of companies in the S&P 500. The Fund's
Adviser selects common stocks based on a number of factors, including historical
and projected earnings growth, earnings quality and liquidity, each in relation
to the market price of the stock. Stocks purchased for the Fund generally will
be listed on a national securities exchange or will be unlisted securities with
an established over-the-counter market.
ARMADA EQUITY INCOME FUND
The Fund will normally invest at least 80% of the value of its
total assets in common stocks and securities convertible into common stocks of
companies that pay dividends. Such convertible securities will have a rating of
Ba/BB or higher by Moody's, S&P or Fitch. The Fund's Adviser will generally
attempt to select securities that provide a higher yield than that of the
general market and will generally dispose of securities when they fail to
satisfy investment criteria.
ARMADA EQUITY INDEX FUND
The Fund is not managed in a traditional sense, that is, by
making discretionary judgments based on analysis of economic, financial and
market conditions. Under ordinary circumstances, stocks will only be eliminated
from or added to the Fund to reflect additions to or deletions from the S&P 500
(including mergers or changes in the composition of the index), to raise cash to
meet withdrawals, or to invest cash contributions. Accordingly, sales may result
in losses that may not have been realized if the Fund were actively managed and
purchases may be made that would not have been made if the Fund were actively
managed. Adverse events, such as reported losses, dividend cuts or omissions,
legal proceedings and defaults will not normally result in the sale of a common
stock. The Fund will remain substantially fully invested in common stocks and
equity derivative instruments whether stock prices are rising or falling.
The Adviser believes that the indexing approach should involve
less portfolio turnover, notwithstanding periodic additions to and deletions
from the S&P 500, and thus lower brokerage costs, transfer taxes and operating
expenses, than in more traditionally
-3-
<PAGE> 9
managed funds, although there is no assurance that this will be the case. The
costs and other expenses incurred in securities transactions, apart from any
difference between the investment results of the Fund and those of the S&P 500,
may cause the return of the Fund to be lower than the return of the index.
The S&P 500 is composed of 500 common stocks, most of which
are listed on the NYSE. S&P selects the stocks for the S&P 500 on a statistical
basis. As of July 31, 2000, the stocks in the S&P 500 had an average market
capitalization of approximately $25 billion. The range of market capitalization
for companies represented in the S&P 500 was $305 million to nearly $509
billion. "Market capitalization" of a company is the market price per share of
stock multiplied by the number of shares outstanding.
The Fund will normally invest substantially all of its total
assets in the stocks that comprise the S&P 500 in approximately the same
percentages as the stocks represent in the index. The Fund may also acquire
derivative instruments designed to replicate the performance of the S&P 500,
such as S&P 500 stock index futures contracts or Standard & Poor's Depositary
Receipts. The Fund may invest in all the approximately 500 stocks comprising the
S&P 500, or it may use a statistical sampling technique by selecting
approximately 90% of the stocks listed in the index. The Fund will only purchase
a security that is included in the S&P 500 at the time of such purchase. The
Fund, may, however, temporarily continue to hold a security that has been
deleted from the S&P 500 pending the rebalancing of the Fund's portfolio. The
Fund is not required to buy or sell securities solely because the percentage of
its assets invested in index stocks changes when the market value of its
holdings increases or decreases. In addition, the Fund may omit or remove an
index stock from its portfolio if the Adviser believes the stock to be
insufficiently liquid or believes the merit of the investment has been
substantially impaired by extraordinary events or financial conditions. With
respect to the remaining portion of its net assets, the Fund may hold temporary
cash balances which may be invested in U.S. government obligations and money
market investments. In extraordinary circumstances, the Fund may exclude a stock
listed on the index from its holdings or include a similar stock in its place if
it believes that doing so will help achieve its investment objective. The Fund
also may enter into repurchase agreements, reverse repurchase agreements, and
lend its portfolio securities.
While there can be no guarantee that the Fund's investment
results will precisely match the results of the S&P 500, the Adviser believes
that, before deduction of operating expenses, there will be a very high
correlation between the returns generated by the Fund and the S&P 500. The Fund
will attempt to achieve a correlation between the performance of its asset
portfolio and that of the S&P 500 of at least 95% before deduction of operating
expenses. A correlation of 100% would indicate perfect correlation, which would
be achieved when the Fund's net asset value, including the value of its dividend
and capital gains distributions, increases or decreases in exact proportion to
changes in the index. The Fund's ability to correlate its performance with the
S&P 500, however, may be affected by, among other things, changes in securities
markets, the manner in which S&P calculates its index, and the timing of
purchases and redemptions. The Adviser monitors
-4-
<PAGE> 10
the correlation of the performance of the Fund in relation to the index under
the supervision of the Board of Trustees. The Fund intends to actively rebalance
its portfolio to achieve high correlation of performance with the S&P 500. To
reduce transaction costs and minimize shareholders' current capital gains
liability, the Fund's investment portfolio will not be automatically rebalanced
to reflect changes in the S&P 500. In the unlikely event that a high correlation
is not achieved, the Board of Trustees will take appropriate steps based on the
reasons for the lower than expected correlation.
The inclusion of a security in the S&P 500 in no way implies
an opinion by S&P as to its attractiveness as an investment. S&P is not a
sponsor of, or in any way affiliated with, the Fund. The common stock of
National City Corporation, the parent company of the Adviser, is included in the
S&P 500. Like the other stocks in the S&P 500, the Fund will invest in the
common stock of National City Corporation in approximately the same proportion
as the percentage National City Corporation common stock represents in the S&P
500.
ARMADA INTERNATIONAL EQUITY FUND
The Fund seeks to achieve its investment objective by
investing, under normal market conditions, at least 80% of its total assets in
equity securities of foreign issuers. The Fund's assets normally will be
invested in the securities of issuers located in at least three foreign
countries. Foreign investments may also include debt obligations issued or
guaranteed by foreign governments or their agencies, authorities,
instrumentalities or political subdivisions, including a foreign state, province
or municipality. The Adviser does not presently intend to invest in common stock
of domestic companies.
The Fund will invest primarily in equity securities, including
common and preferred stocks, rights, warrants, securities convertible into
common stocks and American Depositary Receipts ("ADRs") of companies included in
the Morgan Stanley Capital International Europe, Australasia, Far East ("EAFE")
Index, a broadly diversified international index consisting of more than 1,000
equity securities of companies located in Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia, the
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland, and the
United Kingdom. The Fund, however, is not an "index" fund, and is neither
sponsored by nor affiliated with Morgan Stanley Capital International. The Fund
does not anticipate making investments in markets where, in the judgment of the
Adviser, property rights are not defined and supported by adequate legal
infrastructure.
More than 25% of the Fund's assets may be invested in the
securities of issuers located in the same country. Investment in a particular
country of 25% or more of the Fund's total assets will make the Fund's
performance more dependent upon the political and economic circumstances of that
country than a mutual fund more widely diversified among issuers in different
countries. Criteria for determining the appropriate distribution of investments
among countries may include relative valuation, growth prospects, and fiscal,
monetary, and
-5-
<PAGE> 11
regulatory government policies. See "Additional Information about Portfolio
Instruments - Foreign Securities and Currencies" below.
ARMADA LARGE CAP ULTRA FUND
The Fund normally will invest at least 80% of the value of its
total assets in common stocks and securities convertible into common stocks of
companies believed by the Adviser to be characterized by sound management and
the ability to finance expected long-term growth and with market capitalizations
comparable to companies in the S&P/BARRA Growth Index. The Fund may also invest
up to 20% of the value of its total assets in preferred stocks, corporate bonds,
notes, units of real estate investment trusts, warrants, and short-term
obligations (with maturities of 12 months or less) consisting of commercial
paper (including variable amount master demand notes), bankers' acceptances,
certificates of deposit, repurchase agreements, obligations issued or guaranteed
by the U.S. Government or its agencies or instrumentalities, and demand and time
deposits of domestic and foreign banks and savings and loan associations. The
Fund may also hold securities of other investment companies and depository or
custodial receipts representing beneficial interests in any of the foregoing
securities.
Subject to the foregoing policies, the Fund may also invest up
to 25% of its net assets in foreign securities either directly or through the
purchase of ADRs or European Depositary Receipts ("EDRs") and may also invest in
securities issued by foreign branches of U.S. banks and foreign banks, Canadian
commercial paper ("CCP"), and in U.S. dollar-denominated commercial paper of a
foreign issuer.
The Fund will invest in companies that have typically
exhibited consistent, above-average growth in revenues and earnings, strong
management, and sound and improving financial fundamentals. Often, these
companies are market or industry leaders, have excellent products and/or
services, and exhibit the potential for growth. Core holdings of the Fund are in
companies that participate in long-term growth industries, although these will
be supplemented by holdings in non-growth industries that exhibit the desired
characteristics.
Consistent with the foregoing, the Fund will focus its
investments in those companies and types of companies that the Adviser believes
will enable such Fund to achieve its investment objective.
ARMADA MID CAP GROWTH FUND
The Fund normally will invest at least 80% of the value of its
total assets in common stocks and securities convertible into common stocks of
companies believed by the Adviser to be characterized by sound management and
the ability to finance expected long-term growth. The Fund normally will invest
at least 80% of the value of its total assets in common stocks and securities
convertible into common stocks of companies with market
-6-
<PAGE> 12
capitalizations comparable to companies in the Russell Mid Cap Growth Index. The
Fund may also invest up to 20% of the value of its total assets in preferred
stocks, corporate bonds, notes, units of real estate investment trusts,
warrants, and short-term obligations (with maturities of 12 months or less)
consisting of commercial paper (including variable amount master demand notes),
bankers' acceptances, certificates of deposit, repurchase agreements,
obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities, and demand and time deposits of domestic and foreign banks
and savings and loan associations. The Fund may also hold securities of other
investment companies and depository or custodial receipts representing
beneficial interests in any of the foregoing securities.
Subject to the foregoing policies, the Fund may also invest up
to 25% of its net assets in foreign securities either directly or through the
purchase of ADRs, EDRs, Global Depositary Receipts ("GDRs") and other similar
global instruments, and may also invest in securities issued by foreign branches
of U.S. banks and foreign banks, CCP and in U.S. dollar-denominated commercial
paper of a foreign issuer.
The Fund anticipates investing in growth-oriented,
medium-sized companies. Medium-sized companies are considered to be those with a
market capitalization comparable to companies in the Russell Mid Cap Growth
Index. Investments will be in companies that have typically exhibited
consistent, above-average growth in revenues and earnings, strong management,
and sound and improving financial fundamentals. Often, these companies are
market or industry leaders, have excellent products and/or services, and exhibit
the potential for growth. Primary holdings of the Fund are in companies that
participate in long-term growth industries, although these will be supplemented
by holdings in non-growth industries that exhibit the desired characteristics.
Consistent with the foregoing, the Fund will focus its
investments in those companies and types of companies that the Adviser believes
will enable the Fund to achieve its investment objective.
ARMADA SMALL CAP GROWTH FUND
The Fund will normally invest at least 80% of its total assets
in equity securities of companies with stock market capitalizations comparable
to that of companies in the Russell 2000 Growth Index. The 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 Adviser will also
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. See "Special Risk Factors for Small Capitalization Stocks"
below.
ARMADA SMALL CAP VALUE FUND
-7-
<PAGE> 13
Under normal conditions, at least 80% of the value of the
Fund's total assets will be invested in equity securities of companies with
market capitalizations comparable to those of companies in the Russell 2000
Value Index. The Fund will be managed with a value approach, exhibiting
aggregate valuation characteristics such as price/earnings, price/book, and
price cash/flow ratios which are at a discount to the market averages.
Additional factors, such as private market value, balance sheet strength, and
long term earnings potential are also considered in stock selection. See
"Special Risk Factors for Small Capitalization Stocks" below.
Special Risk Factors for Small Capitalization Stocks
Securities held by the Small Cap Value and Small Cap Growth
Funds generally will be issued by public companies with small capitalizations
relative to those which predominate the major market indices, such as the S&P
500 or the Dow Jones Industrial Average. Securities of these small companies may
at times yield greater returns on investment than stocks of larger, more
established companies as a result of inefficiencies in the marketplace. Small
capitalization companies are generally not as well-known to investors and have
less of an investor following than larger companies.
However, the positions of small capitalization companies in
the market may be more tenuous because they typically are subject to a greater
degree of change in earnings and business prospects than larger, more
established companies. In addition, securities of small capitalization companies
are traded in lower volume than those of larger companies and may be more
volatile. As a result, the Funds may be subject to greater price volatility than
a fund consisting of large capitalization stocks. By maintaining a broadly
diversified portfolio, the sub-adviser will attempt to reduce this volatility.
ARMADA TAX MANAGED EQUITY FUND
The Fund invests primarily in common stocks. The Fund will use
several methods to reduce the impact of federal and state income taxes on
investment income and realized capital gains distributed by the Fund.
The Fund will seek to distribute relatively low levels of
taxable investment income by investing in stocks with low dividend yields.
The Fund will endeavor to hold taxes on realized capital gains
to a minimum by investing primarily in the securities of companies with above
average earnings predictability and stability which the Fund expects to hold for
several years. The Fund will generally seek to avoid realizing short-term
capital gains, and expects to have a relatively low overall portfolio turnover
rate. When the Fund sells appreciated securities, it will attempt to select the
share lots with the highest cost basis in order to hold realized capital gains
to a minimum. The Fund may, when consistent with its overall investment
approach, sell depreciated securities to offset realized capital gains.
-8-
<PAGE> 14
Although the Fund expects to use some or all of the foregoing
methods in seeking to reduce the impact of federal and state income taxes on the
Fund's dividends and distributions, portfolio management decisions will also be
based on non-tax considerations when appropriate. Certain equity and other
securities held by the Fund will produce ordinary taxable income on a regular
basis. The Fund may also sell a particular security, even though it may realize
a short-term capital gain, if the value of that security is believed to have
reached its peak or is expected to decline before the Fund would have held it
for the long-term holding period. The Fund may also be required to sell
securities in order to generate cash to pay expenses or satisfy shareholder
redemptions.
Accordingly, while the Fund seeks to minimize the effect of
taxes on its dividends and distributions, the Fund is not a tax-exempt fund, and
may be expected to distribute taxable income and realize capital gains from time
to time.
The Fund will normally invest at least 80% of its total assets
in common stocks and other equity securities. The Fund's Adviser selects common
stocks based on a number of factors, including historical and projected
long-term earnings growth, earnings quality and liquidity, each in relation to
the market price of the stock. Stocks purchased for the Fund generally will be
listed on a national securities exchange or will be unlisted securities with an
established over-the-counter market. The Fund may invest up to 5% of its net
assets in each of the following types of equity securities: preferred stocks;
securities convertible into common stocks; rights; and warrants.
The Fund's long-term investment horizon is reflected in its
low portfolio turnover investment approach. The portfolio turnover rate reflects
the frequency with which securities are purchased and sold within the Fund's
portfolio. The Fund's annual portfolio turnover is not expected to exceed 25%
under normal market conditions. (A rate of turnover of 100% could occur, for
example, if all the securities held by the Fund are replaced within a period of
one year.) When a Fund sells securities realizing gains, tax laws require that
such gains be distributed to investors every year. As a result, such investors
are taxed on their pro-rata shares of the gains. By attempting to minimize
portfolio turnover, the Fund will generally have a low turnover rate. It is
impossible to predict the impact of such a strategy on the realization of gains
or losses for the Fund. For example, the Fund may forego the opportunity to
realize gains or reduce losses as a result of this policy.
The Fund may be appropriate for investors who seek capital
appreciation and whose tax status under federal and state regulations increase
the importance of such strategies.
ARMADA BALANCED ALLOCATION FUND
The Fund may invest in any type or class of security. The Fund
normally invests in common stocks, fixed income securities, securities
convertible into common stocks (i.e., warrants, convertible preferred stock,
fixed rate preferred stock, convertible fixed income
-9-
<PAGE> 15
securities, options and rights) and cash equivalent securities. The Fund intends
to invest 45% to 75% of its net assets in common stocks and securities
convertible into common stocks, 25% to 55% of its net assets in fixed income
securities and up to 30% of its net assets in cash and cash equivalents. Of
these investments, no more than 20% of the Fund's total assets will be invested
in foreign securities.
The Fund holds common stocks primarily for the purpose of
providing long-term growth of capital. When selecting stocks for the Fund, the
Adviser will consider primarily their potential for long-term capital
appreciation. The Fund intends to invest predominantly in those companies which
are growth-oriented and have exhibited consistent, above-average growth in
revenues and earnings.
The Fund invests the fixed income portion of its portfolio of
investments in a broad range of investment grade debt securities which are rated
at the time of purchase within the four highest rating categories assigned by
Moody's, S&P or Fitch. These fixed income securities will consist of bonds,
debentures, notes, zero coupon securities, asset-backed securities, state,
municipal and industrial revenue bonds, obligations issued or guaranteed by the
U.S. government or its agencies or instrumentalities, certificates of deposit,
time deposits, high quality commercial paper, bankers' acceptances and variable
amount master demand notes. In addition, a portion of the Fund's assets may be
invested from time to time in first mortgage loans and participation
certificates in pools of mortgages issued or guaranteed by the U.S. government
or its agencies or instrumentalities. Some fixed income securities may have
warrants or options attached.
ARMADA BOND FUND
The Fund seeks to achieve its objective by normally investing
at least 80% of its total assets in investment grade fixed-income securities.
The Fund uses the Lehman Aggregate Bond Index as its performance benchmark. The
average maturity of the Fund will be from four to twelve years.
ARMADA GNMA FUND
The Fund seeks to achieve its objective by normally investing primarily
(at least 80% of its total assets under normal conditions) in mortgage
pass-through securities guaranteed by the Government National Mortgage
Association (GNMA). Any remaining assets may consist of other investment grade
fixed income securities. GNMA was established as an instrumentality of the U.S.
government to supervise and finance certain types of activities. Under normal
market conditions, the estimated average life of the GNMA Fund's holdings of
mortgage pass-through and mortgage-backed securities will range between 3 and 10
years. The Fund employs the Lehman GNMA Index as its performance benchmark.
ARMADA INTERMEDIATE BOND FUND
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<PAGE> 16
The Fund normally invests at least 80% of the value of its
total assets in debt securities of all types, although up to 20% of the value of
its total assets may be invested in preferred stocks and other investments. The
Fund normally maintains an average dollar-weighted portfolio maturity of three
to ten years. The Fund uses the Lehman Intermediate Government/Corporate Bond
Index as its performance benchmark.
ARMADA LIMITED MATURITY BOND FUND
The Fund will normally invest at least 80% of the value of its
total assets in investment grade debt securities of all types. However, up to
20% of the value of its total assets may be invested in preferred stocks and
other investments. In making investment decisions, the Fund's adviser will focus
on a number of factors, including yield to maturity, maturity, quality and the
outlook for specific issuers and market sectors. The Fund normally intends to
maintain an average dollar-weighted portfolio maturity for its debt securities
of from 1 to 5 years. The two components of total rate of return are current
income and change in the value of portfolio securities.
ARMADA STRATEGIC INCOME BOND FUND
The Fund will normally allocate between 15% and 65% of its
assets in each of the following three types of fixed income securities: domestic
investment grade fixed income securities, domestic high-yield fixed income
securities, and fixed income securities of issuers in developed foreign
countries, based on the Adviser's analysis of the fixed income markets.
Investment grade fixed income securities are those rated in one of the four
highest rating categories by a major rating agency, or determined by the Adviser
to be of equivalent quality. High-yield fixed income securities are those rated
below investment grade. Under normal market conditions, the Fund maintains an
average dollar-weighted portfolio maturity of four to twelve years.
The Fund may invest up to 65% of its net assets in non-rated
securities and securities rated below investment grade. For a discussion of risk
factors relating to such securities, see "Additional Information About
Portfolio Instruments -- Ratings Criteria," below.
ARMADA TOTAL RETURN ADVANTAGE FUND
The Fund will normally invest at least 80% of the value of its
total assets in debt securities of all types, although up to 20% of the value of
its total assets may be invested in preferred stocks and other investments.
Under normal market conditions, the Fund maintains an average dollar-weighted
portfolio maturity of four to twelve years.
Although the Fund normally invests substantially all of its
assets in investment grade debt securities, it may invest up to 15% of its net
assets in non-rated
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<PAGE> 17
securities and securities rated below investment grade (commonly referred to as
"junk bonds"). For a discussion of risk factors relating to such securities, see
"Additional Information About Portfolio Instruments -- Ratings Criteria" below.
ARMADA U.S. GOVERNMENT INCOME FUND
The Fund will normally invest at least 80% of its total assets
in obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities, although up to 20% of the value of its total assets may be
invested in debt securities and preferred stocks of non-governmental issuers.
The Fund also may invest up to 20% of its total assets in mortgage-related
securities issued by non-Governmental entities and in other securities described
below. The Fund anticipates that it will acquire securities with average
remaining maturities of 3 to 10 years.
The types of U.S. government obligations, including
mortgage-related securities, invested in by the Fund will include obligations
issued or guaranteed as to payment of principal and interest by the full faith
and credit of the U.S. Treasury, such as Treasury bills, notes and bonds,
Stripped Treasury Obligations and government securities.
The Fund may also hold short-term obligations (with maturities
of 12 months or less) consisting of domestic and foreign commercial paper
(including variable amount master demand notes), rated at the time of purchase
within the top two rating categories assigned by a Rating Agency or, if unrated,
which the Adviser deems present attractive opportunities and are of comparable
quality, bankers' acceptances, certificates of deposit and time deposits of
domestic and foreign branches of U.S. banks and foreign banks, and repurchase
and reverse repurchase agreements. The Fund may also invest in corporate debt
securities which are rated at the time of purchase within the top four rating
categories assigned by an unaffiliated nationally recognized statistical rating
organization ("Rating Agency") or, if unrated, which the Adviser deems present
attractive opportunities and are of comparable quality.
ARMADA MICHIGAN MUNICIPAL BOND FUND
As a fundamental policy, the Fund will normally invest at least 80% of
its net assets in a portfolio of securities exempt from Michigan state taxes.
Such securities include debt obligations, consisting of notes, bonds and
commercial paper, issued by or on behalf of the State of Michigan, its political
subdivisions, municipalities and public authorities, the interest on which is,
in the opinion of bond counsel to the issuer, exempt from federal income tax and
Michigan state income taxes (but may be treated as a preference item for
individuals for purposes of the federal alternative minimum tax) and debt
obligations issued by the government of Puerto Rico, the U.S. territories and
possessions of Guam, the U.S. Virgin Islands or such other governmental entities
whose debt obligations, either by law or treaty, generate interest income which
is exempt from federal and Michigan state income taxes ("Michigan Municipal
Securities"). The Fund may invest up to 100% of its
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<PAGE> 18
assets in private activity bonds which may be treated as a special tax
preference item under the federal alternative minimum tax.
The Fund normally will be invested in long-term Michigan
Municipal Securities and the average weighted maturity of such investments will
be 2 to 10 years, although the Fund may invest in Michigan Municipal Securities
of any maturity and the Adviser may extend or shorten the average weighted
maturity of its portfolio depending upon anticipated changes in interest rates
or other relevant market factors. In addition, the average weighted rating of
the Fund's portfolio may vary depending upon the availability of suitable
Michigan Municipal Securities or other relevant market factors.
The Fund invests in Michigan Municipal Securities which are
rated at the time of purchase within the four highest rating categories assigned
by a Rating Agency or, in the case of notes, tax-exempt commercial paper or
variable rate demand obligations, rated within the two highest rating categories
assigned by a Rating Agency. The Fund may also purchase Michigan Municipal
Securities which are unrated at the time of purchase but are determined to be of
comparable quality by the Adviser pursuant to guidelines approved by the Trust's
Board of Trustees.
Interest income from certain types of municipal securities may
be subject to federal alternative minimum tax. The Fund will not treat these
bonds as Michigan Municipal Securities for purposes of measuring compliance with
the 80% test described above. To the extent the Fund invests in these bonds,
individual shareholders, depending on their own tax status, may be subject to
alternative minimum tax on that part of the Fund's distributions derived from
these bonds.
The Fund may invest in taxable obligations if, for example,
suitable tax-exempt obligations are unavailable or if acquisition of U.S.
government or other taxable securities is deemed appropriate for temporary
defensive purposes as determined by the Adviser to be warranted due to market
conditions. Such taxable obligations consist of government securities,
certificates of deposit, time deposits and bankers' acceptances of selected
banks, commercial paper meeting the Fund's quality standards for tax-exempt
commercial paper (as described above), and such taxable obligations as may be
subject to repurchase agreements. Under such circumstances and during the period
of such investment, the Fund may not achieve its stated investment objective.
Because the Fund invests primarily in securities issued by the
State of Michigan and its political subdivisions, municipalities and public
authorities, the Fund's performance is closely tied to the general economic
conditions within the state as a whole and to the economic conditions within
particular industries and geographic areas represented or located within the
state. However, the Fund attempts to diversify, to the extent the Adviser deems
appropriate, among issuers and geographic areas in the State of Michigan.
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<PAGE> 19
The Fund is classified as a "non-diversified" investment
company, which means that the amount of assets of the Fund that may be invested
in the securities of a single issuer is not limited by the Investment Company
Act of 1940, as amended (the "1940 Act"). Nevertheless, the Fund intends to
conduct its operations so as to qualify as a "regulated investment company" for
purposes of the Internal Revenue Code of 1986, as amended (the "Code"). The Code
requires that, at the end of each quarter of a fund's taxable year, (i) at least
50% of the market value of its total assets be invested in cash, U.S. government
securities, securities of other regulated investment companies and other
securities, with such other securities of any one issuer limited for the
purposes of this calculation to an amount not greater than 5% of the value of
the fund's total assets and 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its total assets be invested
in the securities of any one issuer (other than U.S. government securities or
the securities of other regulated investment companies). Since a relatively high
percentage of the Fund's assets may be invested in the obligations of a limited
number of issuers, some of which may be within the same economic sector, the
Fund's portfolio securities may be more susceptible to any single economic,
political or regulatory occurrence than the portfolio securities of a
diversified investment company.
See "Special Considerations Regarding Investment in Michigan
Municipal Securities" below.
ARMADA NATIONAL TAX EXEMPT BOND FUND
The Fund will normally invest at least 80% of the value of its
total assets in Municipal Securities. This policy is fundamental and may not be
changed without the affirmative vote of the holders of a majority of the Fund's
outstanding shares (as defined under "Shareholder Vote").
ARMADA OHIO TAX EXEMPT BOND FUND
The Fund seeks to achieve its objective by investing
substantially all of its assets in a portfolio of obligations issued by or on
behalf of states, territories and possessions of the United States, the District
of Columbia and their political subdivisions, agencies, instrumentalities and
authorities, the interest on which, in the opinion of counsel issued on the date
of the issuance thereof, is exempt from regular federal income tax ("Municipal
Securities").
The Fund normally will invest at least 80% of the value of its
total assets in Municipal Securities. This policy is fundamental and may not be
changed without the affirmative vote of the holders of a majority of the Fund's
outstanding shares (as defined under "Shareholder Vote" below). In addition, the
Fund will normally invest at least 80% of the value of its total assets in
Municipal Securities issued by or on behalf of the State of Ohio, political
subdivisions thereof, or agencies or instrumentalities of the State or its
political subdivisions ("Ohio Municipal Securities"). Dividends paid by the Fund
which are derived from interest properly attributable to Ohio Municipal
Securities will be exempt from regular federal income tax and Ohio personal
income tax. Dividends derived from interest on
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<PAGE> 20
Municipal Securities of other governmental issuers will be exempt from regular
federal income tax but may be subject to Ohio personal income tax. See
"Additional Tax Information Concerning the Ohio Tax Exempt Bond, Pennsylvania
Municipal Bond, National Tax Exempt Bond and Tax Exempt Money Market Funds."
ARMADA PENNSYLVANIA MUNICIPAL BOND FUND
The Fund seeks to achieve its objective by investing
substantially all of its assets in Municipal Securities issued by or on behalf
of the Commonwealth of Pennsylvania and its political subdivisions and financing
authorities, obligations of the United States, including territories and
possessions of the United States, the income from which is, in the opinion of
counsel, exempt from regular federal income tax and Pennsylvania state income
tax imposed upon non-corporate taxpayers, and securities of money market
investment companies that invest primarily in such securities ("Pennsylvania
Municipal Securities").
The Fund will normally be fully invested in Pennsylvania
Municipal Securities. This policy is fundamental and may not be changed without
the affirmative vote of the holders of a majority of the Fund's outstanding
shares (as defined under "Shareholder Vote" below). Dividends paid by the Fund
which are derived from interest properly attributable to Pennsylvania Municipal
Securities will be exempt from regular federal income tax and Pennsylvania
personal income tax. Dividends derived from interest on Municipal Securities of
other governmental issuers will be exempt from regular federal income tax but
may be subject to Pennsylvania personal income tax. See "Additional Tax
Information Concerning the Ohio Tax Exempt Bond, Pennsylvania Municipal Bond,
National Tax Exempt Bond and Tax Exempt Money Market Funds."
Special Considerations - Armada National Tax Exempt Bond, Ohio Tax
Exempt Bond and Pennsylvania Municipal Bond Funds
Although each Fund's average weighted maturity will vary in
light of current market and economic conditions, the comparative yields on
instruments with different maturities, and other factors, the Ohio Tax Exempt
Bond, Pennsylvania Municipal Bond and National Tax Exempt Bond Funds anticipate
that they will maintain a dollar-weighted average portfolio maturity of three to
ten years.
For temporary defensive or liquidity purposes when, in the
opinion of the Funds' Adviser, Ohio Municipal Securities or Pennsylvania
Municipal Securities of sufficient quality, as the case may be, are not readily
available, the Ohio Tax Exempt Bond and Pennsylvania Municipal Bond Funds may
invest up to 100% of their assets in other Municipal Securities and in taxable
securities.
All Funds may hold up to 100% of their assets in uninvested
cash reserves, pending investment, during temporary defensive periods; however,
uninvested cash reserves will not earn income.
Each Fund may invest in other investments as described below
under "Additional Information About Portfolio Investments" including stand-by
commitments, variable and floating rate obligations, certificates of
participation, other investment companies, illiquid securities, Taxable
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Money Market Instruments (as defined below), zero coupon obligations and
repurchase agreements and engage in when-issued transactions.
The Ohio Tax Exempt and Pennsylvania Tax Exempt Bond Funds are
classified as non-diversified under the 1940 Act. Investment return on a
non-diversified portfolio typically is dependent upon the performance of a
smaller number of securities relative to the number held in a diversified
portfolio. Consequently, the change in value of any one security may affect the
overall value of a non-diversified portfolio more than it would a diversified
portfolio, and thereby subject the market-based net asset value per share of the
non-diversified portfolio to greater fluctuations. In addition, a
non-diversified portfolio may be more susceptible to economic, political and
regulatory developments than a diversified investment portfolio with similar
objectives may be.
Although (i) all of the Funds may invest 25% or more of their
respective net assets in Municipal Securities the interest on which is paid
solely from revenues of similar projects, (ii) the Ohio Tax Exempt Bond and
National Tax Exempt Bond Funds may invest up to 20% of their respective total
assets in private activity bonds and taxable investments, (iii) the Pennsylvania
Municipal Bond Fund may invest up to 100% of its total assets in Pennsylvania
private activity bonds and (iv) the National Tax Exempt Bond Fund may invest 25%
or more of its net assets in Municipal Securities whose issues are in the same
state, the Funds do not presently intend to do so unless, in the opinion of the
adviser, the investment is warranted. To the extent that a Fund's assets are
invested in such investments, the Fund will be subject to the peculiar risks
presented by the laws and economic conditions relating to such projects and
private activity bonds to a greater extent than it would be if its assets were
not so invested.
See "Municipal Securities," "Special Considerations Regarding
Investment in Ohio Municipal Securities," and "Special Considerations Regarding
Investment in Pennsylvania Municipal Securities" below.
ARMADA GOVERNMENT MONEY MARKET FUND
The Fund seeks to achieve its objective by investing in
obligations issued or guaranteed as to payment of principal and interest by the
U.S. government, its agencies or instrumentalities, and repurchase agreements
issued by financial institutions such as banks and broker-dealers. The Fund is
currently rated by S&P.
ARMADA MONEY MARKET FUND
The Fund seeks to achieve its objective by investing in "money
market" instruments such as certificates of deposit and other obligations issued
by domestic and foreign banks, and commercial paper (including variable and
floating rate instruments) rated high quality by a Rating Agency, or determined
to be of comparable quality by the Adviser. The Fund may also invest in
obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities, and repurchase agreements issued by financial institutions
such as banks and broker-dealers.
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<PAGE> 22
ARMADA OHIO MUNICIPAL MONEY MARKET FUND
The Fund seeks to achieve its objective by investing
substantially all of its assets in Ohio Municipal Securities.
The Fund will normally invest at least 80% of the value of its
total assets in Ohio Municipal Securities. This policy is fundamental and may
not be changed without the affirmative vote of the holders of a majority of the
Fund's outstanding shares (as defined under "Shareholder Vote"). Dividends paid
by the Fund which are derived from interest properly attributable to Ohio
Municipal Securities will be exempt from regular federal income tax and Ohio
personal income tax. Dividends derived from interest on Municipal Securities of
other governmental issuers will be exempt from regular federal income tax but
may be subject to Ohio personal income tax. The Fund may invest up to 100% of
its assets in Municipal Securities known as private activity bonds the interest
on which is an item of tax preference for purposes of the federal alternative
minimum tax. The Fund may also invest up to 100% of its assets in non-Ohio
Municipal Securities and in taxable securities, during temporary defensive
periods when, in the opinion of the Adviser, Ohio Municipal Securities of
sufficient quality are unavailable.
The Fund's assets are concentrated in securities issued by the
State of Ohio or entities within the State of Ohio and, therefore, investment in
the Fund may be riskier than an investment in other types of money market funds.
See "Special Risk Considerations - Ohio Municipal Money
Market, Pennsylvania Tax Exempt Money Market and Tax Exempt Money Market Funds"
below.
ARMADA PENNSYLVANIA TAX EXEMPT MONEY MARKET FUND
The Fund seeks to achieve its objective by investing
substantially all of its assets in Pennsylvania Municipal Securities.
As a matter of fundamental policy, the Fund normally invests
its assets so that at least 80% of its annual interest income is not only exempt
from regular federal income tax and Pennsylvania personal income taxes, but is
not considered a preference item for purposes of the federal alternative minimum
tax. However, the Fund may invest up to 100% of its assets in non-Pennsylvania
Municipal Securities and in taxable securities during temporary defensive
periods when, in the opinion of the Adviser, Pennsylvania Municipal Securities
of sufficient quality are unavailable.
The Fund's assets are concentrated in securities issued by the
Commonwealth of Pennsylvania or entities within the Commonwealth of Pennsylvania
and, therefore, investment in the Fund may be riskier than an investment in
other types of money market funds.
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<PAGE> 23
See "Special Risk Considerations - Ohio Municipal Money
Market, Pennsylvania Tax Exempt Money Market and Tax Exempt Money Market Funds"
below.
ARMADA TAX EXEMPT MONEY MARKET FUND
The Fund seeks to achieve its objective by investing
substantially all of its assets in a diversified portfolio of Municipal
Securities. The Fund will normally invest at least 80% of the value of its total
assets in Municipal Securities. This policy is fundamental and may not be
changed without the affirmative vote of the holders of a majority of the Fund's
outstanding shares.
See "Special Risk Considerations - Ohio Municipal Money
Market, Pennsylvania Tax Exempt Money Market and Tax Exempt Money Market Funds
below."
Special Risk Considerations -- Ohio Municipal Money Market,
Pennsylvania Tax Exempt Money Market and Tax Exempt Money Market Funds
Although the Tax Exempt Money Market Fund may invest 25% or
more of its net assets in Municipal Securities whose issuers are in the same
state and the Ohio Municipal Money Market, Pennsylvania Tax Exempt Money Market
and Tax Exempt Money Market Funds may invest 25% or more of their respective net
assets in Municipal Securities the interest on which is paid solely from
revenues of similar projects, the Funds do not presently intend to do so unless
in the opinion of the Adviser the investment is warranted. The Ohio Municipal
Money Market Fund may invest up to 100% of its assets in private activity bonds.
In addition, although the Pennsylvania Tax Exempt Money Market and Tax Exempt
Money Market Funds may invest up to 20% of their respective total assets in
private activity bonds and taxable investments, these Funds do not currently
intend to do so unless in the opinion of the Adviser the investment is
warranted. To the extent that a Fund's assets are invested in Municipal
Securities that are payable from the revenues of similar projects or are issued
by issuers located in the same state or are invested in private activity bonds,
the Fund will be subject to the peculiar risks presented by the laws and
economic conditions relating to such states, projects and bonds to a greater
extent than it would be if its assets were not so invested.
ARMADA TREASURY MONEY MARKET FUND
The Fund seeks to achieve its objective by investing
exclusively in direct obligations of the U.S. Treasury, such as Treasury bills
and notes, and investment companies that invest exclusively in such obligations.
The Fund is currently rated by S&P.
ARMADA TREASURY PLUS MONEY MARKET FUND
The Fund will only purchase "eligible securities" that present
minimal credit risks as determined by the Adviser pursuant to guidelines
established by the Trust's Board of Trustees.
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<PAGE> 24
Eligible securities generally include (i) U.S. government obligations, (ii)
securities that are rated (at the time of purchase) by Rating Agencies in the
two highest rating categories for such securities, and (iii) certain securities
that are not so rated but are of comparable quality to rated securities as
determined by the Adviser.
The Fund's assets have remaining maturities of 397 calendar
days or less (except for certain variable and floating rate instruments and
securities underlying certain repurchase agreements) as defined by the
Securities and Exchange Commission ("SEC"), and the Fund's dollar-weighted
average portfolio maturity may not exceed 90 days.
SHAREHOLDER VOTE
----------------
As used in this Statement of Additional Information, a "vote
of the holders of a majority of the outstanding shares" of the Trust or a
particular investment 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 such fund or (b) 67% or more of the shares of the Trust
or such fund present at a meeting if more than 50% of the outstanding shares of
the Trust or such fund are represented at the meeting in person or by proxy.
ADDITIONAL INFORMATION ABOUT PORTFOLIO INSTRUMENTS
--------------------------------------------------
RATINGS CRITERIA
----------------
Investment grade debt securities in which the Funds invest are
those securities rated at the time of purchase by a Fund within the four highest
ratings groups assigned by Moody's (Aaa, Aa, A and Baa), S&P (AAA, AA, A and
BBB) or Fitch (AAA, AA, A and BBB), or, if unrated, which are determined by the
Adviser or Sub-Adviser to be of comparable quality pursuant to guidelines
approved by the Trust's Board of Trustees. Debt securities rated in the lowest
investment grade debt category (Baa by Moody's or BBB by S&P or Fitch) have
speculative characteristics; changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than is the case with higher grade securities.
The Strategic Income Bond and Total Return Advantage Funds may
also invest in debt securities rated below investment grade. While any
investment carries some risk, certain risks associated with lower rated
securities are different than those for investment grade securities. The risk of
loss through default is greater because lower rated securities are usually
unsecured and are often subordinate to an issuer's other obligations.
Additionally, the issuers of these securities frequently have high debt levels
and are thus more sensitive to difficult economic conditions, individual
corporate developments and rising interest rates. Consequently, the market price
of these securities may be quite volatile and may result in wider fluctuations
in a Fund's net asset value per share.
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<PAGE> 25
In addition, an economic downturn or increase in interest
rates could have a negative impact on both the markets for lower rated
securities (resulting in a greater number of bond defaults) and the value of
lower rated securities held by a Fund. Current laws, such as those requiring
federally insured savings and loan associations to remove investments in lower
rated securities from their funds, as well as other pending proposals, may also
have a material adverse effect on the market for lower rated securities.
The economy and interest rates may affect lower rated
securities differently than other securities. For example, the prices of lower
rated securities are more sensitive to adverse economic changes or individual
corporate developments than are the prices of higher rated investments. In
addition, during an economic downturn or period in which interest rates are
rising significantly, highly leveraged issuers may experience financial
difficulties, which, in turn, would adversely affect their ability to service
their principal and interest payment obligations, meet projected business goals
and obtain additional financing.
If an issuer of a security held by a Fund defaults, the Fund
may incur additional expenses to seek recovery. In addition, periods of economic
uncertainty would likely result in increased volatility for the market prices of
lower rated securities as well as the Fund's net asset value. In general, both
the prices and yields of lower rated securities will fluctuate.
In certain circumstances it may be difficult to determine a
security's fair value due to a lack of reliable objective information. Such
instances occur where there is no established secondary market for the security
or the security is lightly traded. As a result, a Fund's valuation of a security
and the price it is actually able to obtain when it sells the security could
differ.
Adverse publicity and investor perceptions, whether or not
based on fundamental analysis, may decrease the value and liquidity of lower
rated securities held by a Fund, especially in a thinly traded market. Illiquid
or restricted securities held by a Fund may involve special registration
responsibilities, liabilities and costs, and could involve other liquidity and
valuation difficulties.
The ratings of Moody's, S&P and Fitch evaluate the safety of a
lower rated security's principal and interest payments, but do not address
market value risk. Because the ratings of the Rating Agencies may not always
reflect current conditions and events, in addition to using recognized Rating
Agencies and other sources, the Adviser and Sub-Adviser perform their own
analysis of the issuers of lower rated securities purchased by a Fund. Because
of this, a Fund's performance may depend more on its own credit analysis than is
the case for mutual funds investing in higher rated securities.
The Adviser and Sub-Adviser continuously monitor the issuers
of lower rated securities held by a Fund for their ability to make required
principal and interest
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<PAGE> 26
payments, as well as in an effort to control the liquidity of the Fund so that
it can meet redemption requests.
ELIGIBLE SECURITIES
-------------------
The Money Market Funds may purchase "eligible securities" (as
defined by Rule 2a-7 under the 1940 Act) that present minimal credit risks as
determined by the Adviser pursuant to guidelines established by the Trust's
Board of Trustees. Eligible securities generally include: (1) securities that
are rated by two or more Rating Agencies (or the only Rating Agency which has
issued a rating) in one of the two highest rating categories for short term debt
securities; (2) securities that have no short term rating, if the issuer has
other outstanding short term obligations that are comparable in priority and
security as determined by the Adviser ("Comparable Obligations") and that have
been rated in accordance with (1) above; (3) securities that have no short term
rating, but are determined to be of comparable quality to a security satisfying
(1) or (2) above, and the issuer does not have Comparable Obligations rated by a
Rating Agency; and (4) securities with credit supports that meet specified
rating criteria similar to the foregoing and other criteria in accordance with
applicable SEC regulations. Securities issued by a money market fund and
securities issued by the U.S. Government may constitute eligible securities if
permitted under applicable SEC regulations and Trust procedures. The Board of
Trustees will approve or ratify any purchases by the Money Market Funds of
securities that are rated by only one Rating Agency or that qualify under (3)
above as long as required by applicable regulations or Trust procedures.
VARIABLE AND FLOATING RATE INSTRUMENTS
--------------------------------------
Each Fund (other than the Equity Index, Treasury Money Market
and Treasury Plus Money Market Funds) 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, a 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 Adviser. In the
event an issuer of a variable or floating rate obligation defaulted on its
payment obligation, a 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.
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<PAGE> 27
The Adviser will consider the earning power, cash flows and
other liquidity ratios of the issuers and guarantors of variable and floating
rate obligations and will continuously monitor their financial status to meet
payment on demand. In determining average weighted portfolio maturity, a
variable or floating rate instrument issued or guaranteed by the U.S. government
or an agency or instrumentality thereof will be deemed to have a maturity equal
to the period remaining until the obligation's next interest rate adjustment.
Other variable and floating rate obligations will be deemed to have a maturity
equal to the longer or shorter of the periods remaining to the next interest
rate adjustment or the demand notice period in accordance with applicable
regulations or Trust procedures.
With respect to the Money Market Funds, variable and floating
rate obligations held by a Fund may have maturities of more than 397 days,
provided: (a) (i) the Fund is entitled to payment of principal and accrued
interest upon not more than 30 days' notice or at specified intervals not
exceeding one year (upon not more than 30 days' notice) and (ii) the rate of
interest on such instrument is adjusted automatically at periodic intervals
which normally will not exceed 31 days, but may extend up to one year, or (b) if
the obligation is an asset-backed security, and if permitted under Trust
procedures and applicable regulations, the security has a feature permitting the
holder unconditionally to receive principal and interest within 13 months of
making demand.
GUARANTEED INVESTMENT CONTRACTS
-------------------------------
The International Equity, Small Cap Value, Small Cap Growth,
Equity Growth, Tax Managed Equity, Core Equity, Equity Income, Balanced
Allocation, Total Return Advantage, Intermediate Bond, Limited Maturity Bond,
Strategic Income Bond Funds and the Money Market Funds may make limited
investments in Guaranteed Investment Contracts ("GICs") issued by U.S. insurance
companies. When investing in GICs a Fund makes cash contributions to a deposit
fund or an insurance company's general account. The insurance company then
credits to that Fund monthly a guaranteed minimum interest which is based on an
index. The GICs provide that this guaranteed interest will not be less than a
certain minimum rate. 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. GICs may provide a lower rate of
return then may be available to a Fund through other types of investments the
Fund is permitted to make. A GIC is backed only by the insurance company that
issued the GIC and, therefore, payments on the GIC are subject to the insurance
company's capacity to pay. Failure of the issuing company could result in a
default on a GIC. A Fund will purchase a GIC only when its Adviser or
Sub-Adviser has 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. For the Money Market Fund, the Fund's investments in GICs will
not exceed 10% of the Fund's net assets. In addition, because each Fund may not
receive the principal amount of a GIC from the insurance company on seven days'
notice or less, the GIC is considered an illiquid investment, and, together with
other instruments in the
-22-
<PAGE> 28
Fund which are not readily marketable, will not exceed 15% (10% in the case of
the Money Market Funds) of the Fund's net assets.
The term of a GIC will be one year or less. In determining
average weighted portfolio maturity, a GIC will be deemed to have a maturity
equal to the period of time remaining until the next readjustment of the
guaranteed interest rate.
BANK OBLIGATIONS AND COMMERCIAL PAPER
-------------------------------------
The Ohio Municipal Money Market, Pennsylvania Tax Exempt Money
Market, Money Market, Mid Cap Growth and Michigan Municipal Bond Funds may
invest in bank obligations. Bank obligations include bankers' acceptances
generally having a maturity of six months or less and negotiable certificates of
deposit. Bank obligations also include U.S. dollar denominated bankers'
acceptances and certificates of deposit. 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. These bank obligations are not insured
by the Federal Deposit Insurance Corporation. For purposes of the Money Market
Fund's investment policy with respect to bank obligations, the assets of a bank
or savings institution will be deemed to include the assets of its domestic and
foreign branches.
Investments by the Ohio Municipal, Pennsylvania Tax Exempt
Money Market, Mid Cap Growth and Michigan Municipal Bond Funds in commercial
paper and other short term promissory notes issued by corporations,
municipalities and other entities (including variable and floating rate
instruments) must be rated at the time of purchase "A-2" or better by S&P,
"Prime-2" or better by Moody's, "F2" or better by Fitch, or if not rated,
determined by the Adviser to be of comparable quality pursuant to guidelines
approved by the Trust's Board of Trustees. Investments may also include
corporate notes. In addition, the Mid Cap Growth Fund may invest in Canadian
commercial paper, which is U.S. dollar denominated commercial paper issued by a
Canadian corporation or a Canadian counterpart of a U.S. corporation.
REPURCHASE AGREEMENTS
---------------------
Securities held by the International Equity, Small Cap Growth,
Tax Managed Equity, Core Equity, Equity Index, Balanced Allocation, Total Return
Advantage, Bond, Intermediate Bond, GNMA, Limited Maturity Bond, Strategic
Income Bond, Ohio Municipal Money Market, Pennsylvania Tax-Exempt Money Market,
Money Market, Government Money Market, Treasury Plus Money Market, Mid Cap
Growth, U.S. Government Income and Michigan Municipal Bond Funds may be subject
to repurchase agreements. Under the terms of a repurchase agreement, a Fund
purchases securities from financial institutions such as banks and
broker-dealers which the Fund's Adviser or Sub Adviser deems 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.
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<PAGE> 29
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.
With respect to the Ohio Municipal Money Market, Pennsylvania
Tax Exempt Money Market, Tax Exempt Money Market, Money Market, Government Money
Market and Treasury Plus Money Market Funds, although the securities subject to
repurchase agreements may bear maturities exceeding 397 days, the Funds
presently intend to enter only into repurchase agreements which terminate within
seven days after notice by the Funds. If a Fund were to enter into repurchase
agreements which provide for a notice period greater than seven days in the
future, the Fund would do so only if such investment, together with other
illiquid securities, did not exceed 10% of the Fund's net assets.
REVERSE REPURCHASE AGREEMENTS
-----------------------------
The International Equity, Small Cap Value, Small Cap Growth,
Equity Growth, Tax Managed Equity, Core Equity, Equity Index, Equity Income,
Balanced Allocation, Total Return Advantage, Strategic Income Bond, Ohio
Municipal Money Market, Pennsylvania Tax Exempt Money Market, Money Market and
Mid Cap Growth Funds may enter into reverse repurchase agreements in accordance
with its investment restrictions. Pursuant to such agreements, a 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. A Fund
intends to enter into reverse repurchase agreements only to avoid otherwise
selling securities during unfavorable market conditions to meet redemptions. At
the time a 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 at least equal to the repurchase price (including
accrued interest), and will subsequently monitor the account to ensure that such
equivalent value is maintained. Whenever the Ohio Municipal Money Market,
Pennsylvania Tax-Exempt Money Market and Money Market Funds enter into a reverse
repurchase agreement, it will place in a segregated custodial account liquid
assets at least equal to the repurchase price marked to market daily (including
accrued interest) and will subsequently monitor the account to ensure 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
-24-
<PAGE> 30
repurchase the securities. Reverse repurchase agreements are considered to be
borrowings by the Fund under the 1940 Act.
LENDING OF PORTFOLIO SECURITIES
-------------------------------
The International Equity, Small Cap Value, Small Cap Growth,
Equity Growth, Tax Managed Equity, Core Equity, Equity Index, Equity Income,
Balanced Allocation, Total Return Advantage, Bond, Intermediate Bond, GNMA,
Limited Maturity Bond, Strategic Income Bond, Money Market, Mid Cap Growth and
U.S. Government Income Funds may lend securities to broker-dealers, banks or
other institutional borrowers pursuant to agreements requiring that the loans be
continuously secured by cash, securities of the U.S. government or its agencies,
or any combination of cash and such securities, as collateral equal to 100% of
the market value at all times of the securities lent. Such loans will not be
made if, as a result, the aggregate amount of all outstanding securities loans
combined with any other outstanding loans for a Fund exceed one-third of the
value of its total assets taken at fair market value. Collateral must be valued
daily by the Fund's Adviser or Sub-adviser 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. A Fund will only enter into loan arrangements with
broker-dealers, banks or other institutions which its Adviser or Sub-adviser has
determined are creditworthy under guidelines established by the Trust's Board of
Trustees.
A Fund will continue to receive interest on the securities
lent while simultaneously earning interest on the investment of the cash
collateral in U.S. government securities. However, a Fund will normally pay
lending fees to such broker-dealers and related expenses from the interest
earned on invested collateral. There may be risks of delay in receiving
additional collateral or risks of delay in recovery of the securities or even
loss of rights in the collateral should the borrower of the securities fail
financially. However, loans are made only to borrowers deemed by the Adviser to
be of good standing and when, in the judgment of the adviser, the consideration
which can be earned currently from such securities loans justifies the attendant
risk. Any loan may be terminated by either party upon reasonable notice to the
other party.
ILLIQUID SECURITIES
-------------------
The International Equity, Small Cap Value, Small Cap Growth,
Equity Growth, Tax Managed Equity, Core Equity, Equity Index, Equity Income,
Total Return Advantage, Bond, Intermediate Bond, GNMA, Limited Maturity Bond,
Strategic Income Bond, Ohio Tax Exempt Bond, Pennsylvania Municipal Bond,
National Tax Exempt Bond, Mid Cap Growth, U.S. Government Income and Michigan
Municipal Bond Funds will not invest more than 15% of their respective net
assets in securities that are illiquid.
-25-
<PAGE> 31
The Money Market Funds will not knowingly invest more than 10% of the value of
their respective net assets in securities that are illiquid. Illiquid securities
would generally include repurchase agreements and GICs with notice/termination
dates in excess of seven days and certain securities which are subject to
trading restrictions because they are not registered under the Securities Act of
1933, as amended (the "1933 Act").
Each 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 Adviser or 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 a Fund during any period that qualified institutional buyers become
uninterested in purchasing these restricted securities.
TAXABLE MONEY MARKET INSTRUMENTS
--------------------------------
The Ohio Tax Exempt Bond, Pennsylvania Municipal, National Tax
Exempt Bond and Michigan Municipal Bond Funds may invest, from time to time, a
portion of its assets for temporary defensive or liquidity purposes in
short-term money market instruments, the income from which is subject to federal
income tax ("Taxable Money Market Instruments"). Taxable Money Market
Instruments may include: obligations of the U.S. government and its agencies and
instrumentalities; debt securities (including commercial paper) of issuers
having, at the time of purchase, a quality rating within the highest rating
category of S&P, Fitch or Moody's; certificates of deposit; bankers'
acceptances; and repurchase agreements with respect to such obligations.
FOREIGN SECURITIES AND CURRENCIES
---------------------------------
Each of the International Equity, Small Cap Value, Small Cap
Growth, Equity Growth, Tax Managed Equity, Core Equity, Equity Income, Balanced
Allocation, Mid Cap Growth, Total Return Advantage, Intermediate Bond, Limited
Maturity Bond, Strategic Income Bond and U.S. Government Income Funds may invest
in securities issued by foreign issuers either directly or indirectly through
investments in ADRs, EDRs or GDRs (see "American, European and Global Depositary
Receipts" below). Such securities may or may not be listed on foreign or
domestic stock exchanges.
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
-26-
<PAGE> 32
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.
Since the Funds will invest substantially in securities
denominated in or quoted in currencies other than the U.S. dollar, changes in
currency exchange rates (as well as changes in market values) will affect the
value in U.S. dollars of securities held by the Funds. Foreign exchange rates
are influenced by trade and investment flows, policy decisions of governments,
and investor sentiment about these and other issues. In addition, costs are
incurred in connection with conversions between various currencies.
Many European countries have adopted a single European
currency, the euro. On January 1, 1999, the euro became legal tender for all
countries participating in the Economic and Monetary Union ("EMU"). A new
European Central Bank has been created to manage the monetary policy of the new
unified region. On the same date, the exchange rates were irrevocably fixed
between the EMU member countries. National currencies will continue to circulate
until they are replaced by euro coins and bank notes by the middle of 2002.
This change is likely to significantly impact the European
capital markets in which the Funds (particularly the International Equity Fund)
may invest and may result in a Fund facing additional risks in pursuing its
investment objective. These risks, which include, but are not limited to,
volatility of currency exchange rates as a result of the conversion, uncertainty
as to capital market reaction, conversion costs that may affect issuer
profitability and creditworthiness, and lack of participation by some European
countries, may increase the volatility of a Fund's net asset value per share.
The expense ratio of a Fund can be expected to be higher than
that of funds investing in domestic securities. The costs of investing abroad
are generally higher for several reasons, including the cost of investment
research, increased costs of custody for foreign securities, higher commissions
paid for comparable transactions involving foreign securities, and costs arising
from delays in settlements of transactions involving foreign securities.
Interest and dividends payable on the Fund's foreign portfolio
securities may be subject to foreign withholding taxes. To the extent such taxes
are not offset by tax credits or deductions allowed to investors under U.S.
federal income tax provisions, they may reduce the return to the Fund's
shareholders.
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<PAGE> 33
AMERICAN, EUROPEAN AND GLOBAL DEPOSITARY RECEIPTS
-------------------------------------------------
The International Equity, Small Cap Value, Small Cap Growth,
Equity Growth, Tax Managed Equity, Core Equity, Equity Income, Balanced
Allocation, Mid Cap Growth, Total Return Advantage, Intermediate Bond, Limited
Maturity Bond, Strategic Income Bond and U.S. Government Income Funds may invest
in ADRs, EDRs, GDRs and other similar global instruments. ADRs are receipts
issued in registered form by a U.S. 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 be traded in the over-the-counter markets.
ADR prices are denominated in U.S. dollars although the underlying securities
may be denominated in a foreign currency. EDRs, which are sometimes referred to
as Continental Depositary Receipts, are receipts issued in Europe typically by
non-U.S. banks or trust companies and foreign branches of U.S. banks that
evidence ownership of foreign or U.S. securities. EDRs are designed for use in
European exchange and over-the-counter markets. GDRs are receipts structured
similarly to EDRs and are marketed globally. GDRs are designed for trading in
non-U.S. securities markets. Investments in ADRs, EDRs and GDRs involve risks
similar to those accompanying direct investments in foreign securities, but
those that are traded in the over-the-counter market which do not have an active
or substantial secondary market will be considered illiquid and, therefore, will
be subject to a Fund's limitation with respect to illiquid securities.
The principal difference between sponsored and unsponsored
ADR, EDR and GDR programs is that unsponsored ones are organized independently
and without the cooperation of the issuer of the underlying securities.
Consequently, available information concerning the issuer may not be as current
as for sponsored ADRs, EDRs and GDRs, and the prices of unsponsored ADRs, EDRs
and GDRs may be more volatile.
FOREIGN GOVERNMENT OBLIGATIONS
------------------------------
The International Equity, Balanced Allocation, Strategic
Income Bond, Mid Cap Growth and U.S. Government Income Funds may purchase debt
obligations issued or guaranteed by governments (including states, provinces or
municipalities) of countries other than the United States, or by their agencies,
authorities or instrumentalities. The percentage of assets invested in
securities of a particular country or denominated in a particular currency will
vary in accordance with the Adviser's assessment of gross domestic product in
relation to aggregate debt, current account surplus or deficit, the trend of the
current account, reserves available to defend the currency, and the monetary and
fiscal policies of the government. Certain foreign governments may be less
capable of meeting repayment obligations on debt on a timely basis than, for
example, the United States government.
FOREIGN CURRENCY TRANSACTIONS
-----------------------------
In order to protect against a possible loss on investments
resulting from a decline or appreciation in the value of a particular foreign
currency against the U.S. dollar or another foreign currency or for other
reasons, the International Equity, Equity Income, Balanced
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<PAGE> 34
Allocation, Total Return Advantage, Strategic Income Bond, Limited Maturity
Bond, Mid Cap Growth and U.S. Government Income Funds are authorized to enter
into forward currency exchange contracts. These contracts involve an obligation
to purchase or sell a specified currency at a future date at a price set at the
time of the contract. Forward currency contracts do not eliminate fluctuations
in the values of portfolio securities but rather allow the Funds to establish a
rate of exchange for a future point in time.
When entering into a contract for the purchase or sale of a
security, these Funds may enter into a forward foreign currency exchange
contract for the amount of the purchase or sale price to protect against
variations, between the date the security is purchased or sold and the date on
which payment is made or received, in the value of the foreign currency relative
to the U.S. dollar or other foreign currency.
When the Adviser or Sub-Adviser anticipates that a particular
foreign currency may decline substantially relative to the U.S. dollar or other
leading currencies, in order to reduce risk, the Fund may enter into a forward
contract to sell, for a fixed amount, the amount of foreign currency
approximating the value of some or all of the Fund's securities denominated in
such foreign currency. Similarly, when the obligations held by the Fund create a
short position in a foreign currency, the Fund may enter into a forward contract
to buy, for a fixed amount, an amount of foreign currency approximating the
short position. With respect to any forward foreign currency contract, it will
not generally be possible to match precisely the amount covered by that contract
and the value of the securities involved due to the changes in the values of
such securities resulting from market movements between the date the forward
contract is entered into and the date it matures. In addition, while forward
contracts may offer protection from losses resulting from declines or
appreciation in the value of a particular foreign currency, they also limit
potential gains which might result from changes in the value of such currency. A
Fund will also incur costs in connection with forward foreign currency exchange
contracts and conversions of foreign currencies and U.S. dollars.
A separate account consisting of liquid assets, such as cash,
U.S. Government securities or other liquid high grade debt obligations equal to
the amount of the International Equity, Equity Income, Balanced Allocation,
Total Return Advantage and Limited Maturity Bond Funds' assets that could be
required to consummate forward contracts will be established with the Trust's
custodian except to the extent the contracts are otherwise "covered." For the
purpose of determining the adequacy of the securities in the account, the
deposited securities will be valued at market or fair value. If the market or
fair value of such securities declines, additional cash or liquid securities
will be placed in the account daily so that the value of the account will equal
the amount of such commitments by the Funds. A forward contract to sell a
foreign currency is "covered" if the Fund owns the currency (or securities
denominated in the currency) underlying the contract, or holds a forward
contract (or call option) permitting the Fund to buy the same currency at a
price no higher than the Fund's price to sell the currency. A forward contract
to buy a foreign currency is "covered" if the Fund holds a forward contract (or
call option) permitting the Fund to sell the same currency at a price as high as
or higher than the Fund's price to buy the currency.
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<PAGE> 35
EXCHANGE RATE-RELATED SECURITIES
--------------------------------
The International Equity, Equity Income, Balanced Allocation,
Total Return Advantage, Limited Maturity Bond and Strategic Income Bond Funds
may invest in debt securities for which the principal due at maturity, while
paid in U.S. dollars, is determined by reference to the exchange rate between
the U.S. dollar and the currency of one or more foreign countries ("Exchange
Rate-Related Securities"). The interest payable on these securities is also
denominated in U.S. dollars and is not subject to foreign currency risk and, in
most cases, is paid at rates higher than most other similarly rated securities
in recognition of the risks associated with these securities. There is the
possibility of significant changes in rates of exchange between the U.S. dollar
and any foreign currency to which an Exchange Rate-Related Security is linked.
In addition, there is no assurance that sufficient trading interest to create a
liquid secondary market will exist for a particular Exchange Rate-Related
Security due to conditions in the debt and foreign currency markets. Illiquidity
in the forward foreign exchange market and the high volatility of the foreign
exchange market may, from time to time, combine to make it difficult to sell an
Exchange Rate-Related Security prior to maturity without incurring a significant
price loss.
CONVERTIBLE SECURITIES
----------------------
The Core Equity, Equity Growth, Equity Income, International
Equity, Large Cap Ultra, Tax Managed Equity, Balanced Allocation, Strategic
Income Bond and Mid Cap Growth Funds may invest in convertible securities
entitling 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 market risk
than the corporation's common stock. Convertible securities will not normally
decrease significantly below their conversion value. 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 Adviser or
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
Adviser or Sub-Adviser will consider whether such issuers will have sufficient
cash flow and profits to meet required principal and interest payments. A Fund
may retain a portfolio security whose rating has been changed if the Adviser
deems that retention of such security is warranted.
-30-
<PAGE> 36
CORPORATE DEBT OBLIGATIONS
--------------------------
The Balanced Allocation, Total Return Advantage, Bond,
Intermediate Bond, GNMA, Limited Maturity Bond, Strategic Income Bond, Mid Cap
Growth, U.S. Government Income, Michigan Municipal Bond and the Money Market
Funds may invest in corporate debt obligations. In addition to obligations of
corporations, corporate debt obligations include securities issued by banks and
other financial institutions. Corporate debt obligations are subject to the risk
of an issuer's inability to meet principal and interest payments on the
obligations.
OTHER DEBT SECURITIES
---------------------
The Balanced Allocation, Total Return Advantage, Strategic
Income Bond, Intermediate Bond and Limited Maturity Bond Funds may also invest
in debt securities which may include: equipment lease and trust certificates;
collateralized mortgage obligations; state, municipal and private activity
bonds; obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities; securities of supranational organizations such as the World
Bank; participation certificates in pools of mortgages, including mortgages
issued or guaranteed by the U.S. government, its agencies or instrumentalities;
asset-backed securities such as mortgage backed securities, Certificates of
Automobile Receivables ("CARS") and Certificates of Amortizing Revolving Debts
("CARDS"); private placements; and income participation loans. Some of the
securities in which the Fund invests may have warrants or options attached.
The Balanced Allocation, Total Return Advantage, Strategic
Income Bond, Intermediate Bond and Limited Maturity Bond Funds' appreciation may
result from an improvement in the credit standing of an issuer whose securities
are held or a general decline in the level of interest rates or a combination of
both. An increase in the level of interest rates generally reduces the value of
the fixed rate debt instruments held by the Fund; conversely, a decline in the
level of interest rates generally increases the value of such investments. An
increase in the level of interest rates may temporarily reduce the value of the
floating rate debt instruments held by the Fund; conversely, a decline in the
level of interest rates may temporarily increase the value of those investments.
The Balanced Allocation, Intermediate Bond, and Limited
Maturity Bond Funds invest only in investment grade debt securities which are
rated at the time of purchase within the four highest ratings groups assigned by
Moody's (Aaa, Aa, A and Baa), S&P (AAA, AA, A and BBB), or Fitch (AAA, AA, A and
BBB), or, if unrated, which are determined by the Adviser to be of comparable
quality pursuant to guidelines approved by the Trust's Board of Trustees. The
Total Return Advantage Fund normally invests substantially all of its assets in
investment grade debt securities but may invest up to 15% of its securities in
lower grade securities. See "Ratings Criteria" above.
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<PAGE> 37
In the event that subsequent to its purchase by the Fund, a
rated security ceases to be rated or its rating is reduced below investment
grade, the adviser will consider whether the Fund should continue to hold the
security.
WARRANTS
--------
The International Equity, Small Cap Value, Small Cap Growth,
Equity Growth, Tax Managed Equity, Core Equity, Equity Income, Balanced
Allocation and Mid Cap Growth Funds may invest in 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.
FUTURES AND RELATED OPTIONS
---------------------------
The International Equity, Small Cap Value, Small Cap Growth,
Equity Growth, Tax Managed Equity, Core Equity, Equity Index, Equity Income and
Mid Cap Growth Funds may invest in stock index futures contracts and options on
futures contracts in attempting to hedge against changes in the value of
securities that it holds or intends to purchase. The Balanced Allocation Fund
may invest in stock index, interest rate, bond index and foreign currency
futures contracts and options on these futures contracts. The Total Return
Advantage, Bond, Limited Maturity Bond and Strategic Income Bond Funds may
invest in interest rate and Bond index futures contracts and options on futures
contracts and the Bond and GNMA Funds may invest in futures contracts on U.S.
Treasury Obligations in order to offset an expected decrease in the value of
their respective portfolios that might otherwise result from a market decline.
The International Equity, Small Cap Value, Small Cap Growth,
Equity Growth, Tax Managed Equity, Equity Index and Equity Income Funds may
invest in stock index futures contracts in attempting to hedge against changes
in the value of securities that it holds or intends to purchase or to maintain
liquidity. The International Equity Fund may also invest in foreign currency
futures contracts and options in anticipation of changes in currency exchange
rates. The U.S. Government Income Fund may invest in futures contracts on U.S.
Treasury obligations. A Fund might sell a futures contract in order to offset an
expected decrease in the value of its portfolio that might otherwise result from
a market decline. Each of these Funds may invest in the instruments described
either to hedge the value of their respective portfolio 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, a Fund may purchase a futures
contract in anticipation of purchases of securities. In addition, each of these
Funds may utilize futures contracts in
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anticipation of changes in the composition of its holdings for hedging purposes
or to maintain liquidity.
Futures contracts obligate a Fund, at maturity, to take or
make delivery of certain securities or the cash value of an index or the cash
value of a stated amount of a foreign currency. When interest rates are rising,
futures contracts can offset a decline in value of the securities held by a
Fund. When rates are falling or prices of securities are rising, these contracts
can secure higher yields for securities a Fund intends to purchase.
Each of the International Equity, Small Cap Value, Small Cap
Growth, Equity Growth, Tax Managed Equity, Equity Index, Equity Income, Balanced
Allocation, Strategic Income Bond, Total Return Advantage, Bond, GNMA, Limited
Maturity Bond, Mid Cap Growth and U.S. Government Income Funds intend to comply
with the regulations of the Commodity Futures Trading Commission (CFTC)
exempting it from registration as a "commodity pool operator." A Fund's
commodities transactions must constitute bona fide hedging or other permissible
transactions pursuant to such regulations. In addition, a 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 is
in-the-money at the time of purchase, the in-the-money amount may be excluded in
calculating the percentage limitation. In connection with a 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 International Equity, Small Cap Value, Small Cap Growth,
Equity Growth, Tax Managed Equity, Equity Index, Equity Income, Balanced
Allocation, Strategic Income Bond, Total Return Advantage, Limited Maturity
Bond, Mid Cap Growth and U.S. Government Income Funds may purchase and sell call
and put options on futures contracts traded on an exchange or board of trade.
When a 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 a 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, a Fund
may purchase call options on futures contracts as a substitute for the purchase
of futures contracts to hedge against a possible increase in the price of
securities which the Fund intends to purchase. Similarly, if the value of a
Fund's securities is expected to decline, it might purchase put options or sell
call options on futures contracts rather than sell futures contracts.
The Funds 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. Such options may relate to particular securities, stock or bond
indices,
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financial instruments or foreign currencies. Purchasing options is a
specialized investment 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 or only at 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.
Each 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, a 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 a 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. A 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 a 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, each Fund may write covered call and secured put
options. A covered call option means that a 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 a 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.
The aggregate value of the securities subject to options
written by a Fund will not exceed 33 1/3% (20% with respect to the Equity Index
Fund) of the value of its net assets. In order to close out an option position
prior to maturity, a 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
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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, a 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 a
Fund closes out the option. In writing a secured put option, a 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 a Fund. For a detailed description of these
investments and related risks, see Appendix B attached to this Statement of
Additional Information.
Risk Factors Associated with Futures and Related Options
To the extent the Total Return Advantage, Bond, Strategic
Income Bond, GNMA and Limited Maturity Bond Funds are engaging in a futures
transaction as a hedging device, due to the risk of an imperfect correlation
between securities in their funds that are the subject of a hedging transaction
and the futures contract used as a hedging device, it is possible that the hedge
will not be fully effective in that, for example, losses on the portfolio
securities may be in excess of gains on the futures contract or losses on the
futures contract may be in excess of gains on the portfolio securities that were
the subject of the hedge. In futures contracts based on indices, the risk of
imperfect correlation increases as the composition of the Funds varies from the
composition of the index. In an effort to compensate for the imperfect
correlation of movements in the price of the securities being hedged and
movements in the price of futures contracts, the Funds may buy or sell futures
contracts in a greater or lesser dollar amount than the dollar amount of the
securities being hedged if the historical volatility of the futures contract has
been less or greater than that of the securities. Such "over hedging" or "under
hedging" may adversely affect a Fund's net investment results if market
movements are not as anticipated when the hedge is established.
Successful use of futures by the Funds also are subject to the
Adviser's or Sub-adviser's ability to predict correctly movements in the
direction of securities prices, interest rates and other economic factors. For
example, if the Funds have hedged against the possibility of a decline in the
`market adversely affecting the value of securities held in their funds and
prices increase instead, the Funds will lose part or all of the benefit of the
increased value of securities which they have hedged because they will have
offsetting losses in their futures positions. In addition, in such situations,
if a Fund has insufficient cash, it may have to sell securities to meet daily
variation margin requirements. Such sales of securities may, but will not
necessarily, be at increased prices which reflect the rising market. The Funds
may have to sell securities at a time when it may be disadvantageous to do so.
Although the Strategic Income Bond, Total Return Advantage,
Bond, GNMA and Limited Maturity Bond Funds intend to enter into futures
contracts and the Strategic Income Bond, Total Return Advantage and Limited
Maturity Bond Funds into options transactions only if there is an active market
for such investments, no assurance can be given that a liquid market will exist
for any particular contract or transaction at any particular time. See
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<PAGE> 41
"Illiquid Securities." Many futures exchanges and boards of trade limit the
amount of fluctuation permitted in futures contract prices during a single
trading day. Once the daily limit has been reached in a particular contract, no
trades may be made that day at a price beyond that limit or trading may be
suspended for specified periods during the trading day. Futures contracts prices
could move to the limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions and
potentially subjecting the Funds to substantial losses. If it is not possible,
or a Fund determines not, to close a futures position in anticipation of adverse
price movements, it will be required to make daily cash payments of variation
margin. In such circumstances, an increase in the value of the portion of the
Fund being hedged, if any, may offset partially or completely losses on the
futures contract.
The primary risks associated with the use of futures contracts
and options are:
1. the imperfect correlation between the change in market
value of the securities held by a Fund and the price of the futures contract or
option;
2. possible lack of a liquid secondary market for a futures
contract and the resulting inability to close a futures contract when desired;
3. losses greater than the amount of the principal invested as
initial margin due to unanticipated market movements which are potentially
unlimited; and
4. the Adviser's or Sub-adviser's, in the case of the Total
Return Advantage Fund, ability to predict correctly the direction of securities
prices, interest rates and other economic factors.
DOLLAR ROLLS
------------
The Balanced Allocation, U.S. Government Income, Strategic
Income Bond and Michigan Municipal Bond Funds may invest in reverse repurchase
agreements in the form of Dollar Rolls. Dollar Rolls are transactions in which
securities are sold by a Fund for delivery in the current month and the Fund
simultaneously contracts to repurchase substantially similar securities on a
specified future date. Any difference between the sale price and the purchase
price is netted against the interest income foregone on the securities sold to
arrive at an implied borrowing rate. Alternatively, the sale and purchase
transactions can be executed at the same price, with the Fund being paid a fee
as consideration for entering into the commitment to purchase. Dollar Rolls may
be renewed prior to cash settlement and initially may involve only a firm
commitment agreement by the Fund to buy a security. If the broker-dealer to
which the Fund sells the security becomes insolvent, the Fund's right to
repurchase the security may be restricted. Other risks involved in entering into
Dollar Rolls include the risk that the value of the security may change
adversely over the term of the Dollar Roll and that the security the Fund is
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required to repurchase may be worth less than the security that the Fund
originally held. At the time a Fund enters into a Dollar Roll, 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.
SHORT SALES
-----------
The Tax Managed Equity, Balanced Allocation, GNMA, Mid Cap
Growth, U.S. Government Income and Michigan Municipal Bond Funds may engage in
short sales of their securities. Selling securities short involves selling
securities the seller does not own (but has borrowed) in anticipation of a
decline in the market price of such securities. To deliver the securities to the
buyer, the seller must arrange through a broker to borrow the securities and, in
so doing, the seller becomes obligated to replace the securities borrowed at
their market price at the time of replacement. In a short sale, the proceeds the
seller receives from the sale are retained by a broker until the seller replaces
the borrowed securities. The seller may have to pay a premium to borrow the
securities and must pay any dividends or interest payable on the securities
until they are replaced.
A Fund may only sell securities short "against the box." A
short sale is "against the box" if, at all times during which the short position
is open, the Fund owns at least an equal amount of the securities or securities
convertible into, or exchangeable without further consideration for, securities
of the same issuer as the securities that are sold short.
ASSET-BACKED SECURITIES
-----------------------
The Balanced Allocation Fund, the Fixed Income Funds and, to
the extent permitted by Rule 2a-7 under the 1940 Act and as is consistent with
their investment objective and policies, the Money Market Funds may purchase
asset-backed securities, which are securities backed by mortgages, installment
contracts, credit card receivables or other assets. Asset-backed securities
represent interests in "pools" of assets in which payments of both interest and
principal on the securities are made monthly, thus in effect "passing through"
monthly payments made by the individual borrowers on the assets that underlie
the securities, net of any fees paid to the issuer or guarantor of the
securities. The average life of asset-backed securities varies with the
maturities of the underlying instruments, and the average life of a
mortgage-backed instrument, in particular, is likely to be substantially less
than the original maturity of the mortgage pools underlying the securities as a
result of mortgage prepayments. For this and other reasons, an asset-backed
security's stated maturity may be shortened, and the security's total return may
be difficult to predict precisely. Asset-backed securities acquired by a Fund
may include collateralized mortgage obligations (CMOs) issued by private
companies.
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In general, the collateral supporting non-mortgage,
asset-backed securities is of shorter maturity than mortgage loans and is less
likely to experience substantial prepayments. Such securities may also be debt
instruments, which are also known as collateralized obligations and are
generally issued as the debt of a special purpose entity organized solely for
the purpose of owning such assets and issuing such debt. Asset-backed securities
are not issued or guaranteed by the U.S. government or its agencies or
instrumentalities.
Each Fund may purchase securities that are secured or backed
by mortgages and are issued by entities such as GNMA, Federal National Mortgage
Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC), or private
mortgage conduits. The market value and interest yield of these instruments can
vary due to market interest rate fluctuations and early prepayments of
underlying mortgages. Except for private mortgage conduits, these securities
represent ownership in a pool of federally insured mortgage loans. The yield and
average life characteristics of mortgage-backed securities differ from
traditional debt securities. A major difference is that the principal amount of
the obligations may be prepaid at any time because the underlying assets (i.e.,
loans) generally may be prepaid at any time. As a result, if a mortgage-backed
security is purchased at a premium, a prepayment rate that is faster than
expected will reduce the expected yield to maturity and average life, while a
prepayment rate that is slower than expected will have the opposite effect of
increasing yield to maturity and average life. Conversely, if a mortgage-backed
security is purchased at a discount, faster than expected prepayments will
increase, while slower than expected prepayments will decrease, the expected
yield to maturity and average life. There can be no assurance that the Trust's
estimation of the duration of mortgage-backed securities it holds will be
accurate or that the duration of such instruments will always remain within the
maximum target duration. In calculating the average weighted maturity of the
Funds, the maturity of mortgage-backed securities will be based on estimates of
average life.
Prepayments on mortgage-backed securities generally increase
with falling interest rates and decrease with rising interest rates;
furthermore, prepayment rates are influenced by a variety of economic and social
factors. Like other fixed income securities, when interest rates rise, the value
of mortgage-backed securities generally will decline; however, when interest
rates decline, the value of mortgage-backed securities may not increase as much
as that of other similar duration fixed income securities, and, as noted above,
changes in market rates of interest may accelerate or retard prepayments and
thus affect maturities.
These characteristics may result in a higher level of price
volatility for these assets under certain market conditions. In addition, while
the market for mortgage-backed securities is ordinarily quite liquid, in times
of financial stress the market for these securities can become restricted.
There are a number of important differences among the agencies
and instrumentalities of the U.S. Government that issue mortgage-related
securities and among the securities that they issue. Mortgage-related securities
guaranteed by GNMA include GNMA
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Mortgage Pass-Through Certificates (also known as Ginnie Maes) which are
guaranteed as to the timely payment of principal and interest by GNMA and such
guarantee is backed by the full faith and credit of the United States. GNMA is a
wholly-owned U.S. Government corporation within the Department of Housing and
Urban Development. GNMA certificates also are supported by the authority of GNMA
to borrow funds from the U.S. Treasury to make payments under its guarantee.
Mortgage-backed securities issued by FNMA include FNMA Guaranteed Mortgage
Pass-Through Certificates (also known as "Fannie Maes") which are solely the
obligations of FNMA and are not backed by or entitled to the full faith and
credit of the United States, but are supported by the right of the issuer to
borrow from the Treasury. FNMA is a government-sponsored organization owned
entirely by private stockholders. Fannie Maes are guaranteed as to timely
payment of the principal and interest by FNMA. Mortgage-related securities
issued by FHLMC include FHLMC Mortgage Participation Certificates (also known as
"Freddie Macs" or "Pcs"). FHLMC is a corporate instrumentality of the United
States, created pursuant to an Act of Congress, which is owned entirely by
Federal Home Loan Banks. Freddie Macs are not guaranteed by the United States or
by any Federal Home Loan Banks and do not constitute a debt or obligation of the
United States or of any Federal Home Loan Bank. Freddie Macs entitle the holder
to timely payment of interest, which is guaranteed by FHLMC. FHLMC guarantees
either ultimate collection or timely payment of all principal payments on the
underlying mortgage loans. When FHLMC does not guarantee timely payment of
principal, FHLMC may remit the amount due on account of its guarantee of
ultimate payment of principal at any time after default on an underlying
mortgage, but in no event later than one year after it becomes payable.
Privately issued mortgage backed securities will carry an
investment grade rating at the time of purchase by S&P or by Moody's or, if
unrated, will be in the adviser's opinion equivalent in credit quality to such
rating. Mortgage-backed securities issued by private issuers, whether or not
such obligations are subject to guarantees by the private issuer, may entail
greater risk than obligations directly or indirectly guaranteed by the U.S.
government.
CMOs may be issued by the U.S. Government, its agencies,
instrumentalities or sponsored enterprises, including FNMA and FHLMC or by
trusts formed by private originators of, or investors in, mortgage loans. In
general, CMOs represent direct ownership interests in a pool of residential
mortgage loans or mortgage pass-through securities (the "Mortgage Assets"), the
payments on which are used to make payments on the CMOs.
Each class of a CMO, often referred to as a "tranche," is
issued at a specific adjustable or fixed interest rate and must be fully retired
no later than its final distribution date. Principal prepayments on the Mortgage
Assets underlying a CMO may cause some or all of the classes of the CMO to be
retired substantially earlier than its final distribution date.
The principal of and interest on the Mortgage Assets may be
allocated among the several classes of a CMO in various ways. In certain
structures (known as "sequential
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pay" CMOs), payments of principal, including any principal prepayments, on the
Mortgage Assets generally are applied to the classes of the CMO in the order of
their respective final distribution dates. Thus, no payment of principal will be
made on any class of sequential pay CMOs until all other classes having an
earlier final scheduled distribution date have been paid in full.
Additional structures of CMOs include, among others, "parallel
pay" CMOs. Parallel pay CMOs are those which are structured to apply principal
payments and prepayments of the Mortgage Assets to two or more classes
concurrently on a proportionate or disproportionate basis. These simultaneous
payments are taken into account in calculating the final distribution date of
each class.
Non-mortgage asset-backed securities involve certain risks
that are not presented by mortgage-backed securities. Primarily, these
securities may not have the benefit of the same security interest in the
underlying collateral. Credit card receivables are generally unsecured and the
debtors are entitled to the protection of a number of state and federal consumer
credit laws, many of which have given debtors the right to set off certain
amounts owed on the credit cards, thereby reducing the balance due. Most issuers
of automobile receivables permit the servicers to retain possession of the
underlying obligations. If the servicer were to sell these obligations to
another party, there is a risk that the purchaser would acquire an interest
superior to that of the holders of the related automobile receivables. In
addition, because of the large number of vehicles involved in a typical issuance
and technical requirements under state laws, the trustee for the holders of the
automobile receivables may not have an effective security interest in all of the
obligations backing such receivables. Therefore, there is a possibility that
recoveries on repossessed collateral may not, in some cases, be able to support
payments on these securities.
INTEREST RATE AND TOTAL RETURN SWAPS
------------------------------------
The Balanced Allocation, Total Return Advantage, GNMA, Limited
Maturity Bond, Strategic Income Bond and U.S. Government Income Funds may enter
into interest rate swaps for hedging purposes and not for speculation. The
Balanced Allocation Fund may also use total return swaps for the same purposes.
The Fund will typically use interest rate or total return swaps to preserve a
return on a particular investment or portion of its portfolio or to shorten the
effective duration of its investments. Swaps involve the exchange by a Fund with
another party of their respective commitments to pay or receive interest or the
total return of a predefined "index," such as an exchange of fixed rate payments
for floating rate payments or an exchange of a floating rate payment for the
total return on an index.
The net amount of the excess, if any, of a Fund's obligations
over its entitlements with respect to each interest rate swap will be accrued on
a daily basis and an amount of liquid assets, such as cash, U.S. government
securities or other liquid high grade debt securities, having an aggregate net
asset value at least equal to such accrued excess will be maintained in a
segregated account by the Fund's custodian. A Fund will not enter into any
interest rate swap unless the unsecured commercial paper, senior debt, or claims
paying ability of the other party is rated, with respect to the Limited Maturity
Bond, Strategic Income Bond and
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Total Return Advantage Funds, either "A" or "A-1" or better by S&P or Fitch, or
"A" or "P-1" or better by Moody's or, with respect to the GNMA Fund, the claims
paying ability of the other party is deemed creditworthy and any such obligation
the GNMA Fund may have under such an arrangement will be covered by setting
aside liquid high grade securities in a segregated account.
The Balanced Allocation, Total Return Advantage, GNMA, Limited
Maturity Bond and Strategic Income Bond Funds will only enter into swaps on a
net basis, (i.e., the two payment streams are netted out, with the Fund
receiving or paying, as the case may be, only the net amount of the two
payments). Inasmuch as these transactions are entered into for good faith
hedging purposes, the Funds and their respective Adviser or Sub-Adviser believe
that such obligations do not constitute senior securities as defined in the 1940
Act and, accordingly, will not treat them as being subject to the Fund's
borrowing restrictions. The net amount of the excess, if any, of the Fund's
obligations over their entitlements with respect to each swap will be accrued on
a daily basis and an amount of liquid assets, such as cash, U.S. government
securities or other liquid high grade debt securities, having an aggregate net
asset value at least equal to such accrued excess will be maintained in a
segregated account by the Fund's custodian.
If there is a default by the other party to a swap
transaction, the Fund involved will have contractual remedies pursuant to the
agreements related to the transaction. The swap market has grown substantially
in recent years with a large number of banks and investment banking firms acting
both as principals and as agents utilizing standardized swap documentation. As a
result, the swap market has become relatively liquid in comparison with markets
for other similar instruments which are traded in the Interbank market.
ZERO COUPON OBLIGATIONS
-----------------------
The Ohio Tax Exempt Bond, Strategic Income Bond, U.S.
Government Income and Michigan Municipal Bond Funds may invest in zero coupon
obligations. Zero coupon obligations are discount debt obligations that do not
make periodic interest payments although income is generally imputed to the
holder on a current basis. Such obligations may have higher price volatility
than those which require the payment of interest periodically. The Adviser will
consider the liquidity needs of the Fund when any investment in zero coupon
obligations is made.
INCOME PARTICIPATION LOANS
--------------------------
The Balanced Allocation, Total Return Advantage, Intermediate
Bond, Limited Maturity Bond and Strategic Income Bond Funds may make or acquire
participations in privately negotiated loans to borrowers. Frequently, such
loans have variable interest rates and may be backed by a bank letter of credit;
in other cases they may be unsecured. Such transactions may provide an
opportunity to achieve higher yields than those that may be available from other
securities offered and sold to the general public.
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<PAGE> 47
Privately arranged loans, however, will generally not be rated
by a credit rating agency and will normally be liquid, if at all, only through a
provision requiring repayment following demand by the lender. Such loans made by
a Fund may have a demand provision permitting the Fund to require repayment
within seven days. Participations in such loans, however, may not have such a
demand provision and may not be otherwise marketable. Recovery of an investment
in any such loan that is illiquid and payable on demand will depend on the
ability of the borrower to meet an obligation for full repayment of principal
and payment of accrued interest within the demand period, normally seven days or
less (unless the Fund determines that a particular loan issue, unlike most such
loans, has a readily available market). As it deems appropriate, the Board of
Trustees of the Trust will establish procedures to monitor the credit standing
of each such borrower, including its ability to honor contractual payment
obligations.
CERTIFICATES OF PARTICIPATION
-----------------------------
The Michigan Municipal Bond Fund may purchase Michigan
Municipal Securities in the form of "certificates of participation" which
represent undivided proportional interests in lease payments by a governmental
or nonprofit entity. The other Tax Free Funds may also purchase certificates of
participation. The municipal leases underlying the certificates of participation
in which the Funds invest will be subject to the same quality rating standards
applicable to Municipal Securities. Certificates of participation may be
purchased from a bank, broker-dealer or other financial institution. The lease
payments and other rights under the lease provide for and secure the payments on
the certificates.
Lease obligations may be limited by law, municipal charter or
the duration or nature of the appropriation for the lease and may be subject to
periodic appropriation. In particular, lease obligations, may be subject to
periodic appropriation. If the entity does not appropriate funds for future
lease payments, the entity cannot be compelled to make such payments.
Furthermore, a lease may provide that the certificate trustee cannot accelerate
lease obligations upon default; in such event, the trustee would only be able to
enforce lease payments as they became due. In the event of a default or failure
of appropriation, it is unlikely that the trustee would be able to obtain an
acceptable substitute source of payment. In addition, certificates of
participation are less liquid than other bonds because there is a limited
secondary trading market for such obligations.
WHEN-ISSUED SECURITIES
----------------------
The International Equity, Large Cap Ultra, Small Cap Value,
Small Cap Growth, Equity Growth, Tax Managed Equity, Core Equity, Equity Income,
Balanced Allocation, Total Return Advantage, Bond, Intermediate Bond, GNMA,
Limited Maturity Bond, Strategic Income Bond, Ohio Tax Exempt Bond, Pennsylvania
Municipal Bond, National Tax Exempt Bond, Michigan Municipal Bond, Ohio
Municipal Money Market, Pennsylvania Tax Exempt Money Market, Tax Exempt Money
Market, Mid Cap Growth and U.S. Government Income Funds may purchase securities
on a "when-issued" basis (i.e., for delivery beyond the normal settlement date
at a stated price and yield). The Funds do not intend to
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purchase when-issued securities for speculative purposes but only for the
purpose of acquiring portfolio securities. In when-issued and delayed delivery
transactions, a Fund relies on the seller to complete the transaction; its
failure to do so may cause the Fund to miss a price or yield considered to be
attractive. One form of when-issued or delayed delivery security that the GNMA
and Bond Funds may purchase is a "to be announced" (TBA) mortgage-backed
security. A TBA transaction arises when a mortgage-backed security, such as a
GNMA pass-through security, is purchased or sold with the specific pools that
will constitute that GNMA pass-through security to be announced on a future
settlement date.
When a Fund agrees to purchase when-issued securities, the
custodian sets aside cash or liquid portfolio securities equal to the amount of
the commitment in a separate account. Normally, the custodian will set aside
portfolio securities to satisfy a purchase commitment, and in such a case a Fund
may be required subsequently to place additional assets in the separate account
in order to ensure that the value of the account remains equal to the amount of
the Fund's commitment, marked to market daily. It is likely that a Fund's net
assets will fluctuate to a greater degree when it sets aside portfolio
securities to cover such purchase commitments than when it sets aside cash.
Because a Fund will set aside cash or liquid assets to satisfy its purchase
commitments in the manner described, the Fund's liquidity and ability to manage
its portfolio might be affected in the event its commitments to purchase
when-issued securities ever exceeded 25% of the value of its total assets.
When a Fund engages in when-issued transactions, it relies on
the seller to consummate the trade. Failure of the seller to do so may result in
the Fund's incurring a loss or missing an opportunity to obtain a price
considered to be advantageous. A Fund receives no income from when-issued or
delayed settlement securities prior to delivery of such securities.
SHORT-TERM OBLIGATIONS
----------------------
The International Equity, Small Cap Value, Small Cap Growth,
Equity Growth, Mid Cap Growth, Tax Managed Equity, Core Equity, Equity Index,
Equity Income, Balanced Allocation, Total Return Advantage, Bond, Intermediate
Bond, GNMA, Limited Maturity Bond, Strategic Income Bond, and U.S. Government
Income Funds may hold temporary cash balances which may be invested in various
short-term obligations (with maturities of 18 months or less, 12 months or less
in the case of the Mid Cap Growth and U.S. Government Income Funds) such as
domestic and foreign commercial paper, bankers' acceptances, certificates of
deposit and demand and time deposits of domestic and foreign branches of U.S.
banks and foreign banks, U.S. government securities, repurchase agreements,
reverse repurchase agreements and GICs. The Equity Index Fund cannot invest in
foreign commercial paper and GICs. A Fund may invest no more than 5% of its net
assets in variable and floating rate obligations. During temporary defensive
periods, each Fund may hold up to 100% of its total assets in these types of
obligations.
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 a Fund would be
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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 a Fund may
decline below the price of the securities it is obligated to repurchase. See
"Repurchase Agreements" and "Reverse Repurchase Agreements" above.
Investments include commercial paper and other short-term
promissory notes issued by corporations (including variable and floating rate
instruments) must be rated at the time of purchase "A-2" or better by S&P,
"Prime-2" or better by Moody's, "F2" or better by Fitch or, determined by the
adviser to be of comparable quality pursuant to guidelines approved by the
Trust's Board of Trustees. In addition, the International Equity, Small Cap
Growth, Tax Managed Equity, Core Equity, Balanced Allocation, Total Return
Advantage, Intermediate Bond, Limited Maturity Bond and Strategic Income Bond
Funds may invest in Canadian Commercial Paper (CCP), which is commercial paper
issued by a Canadian corporation or a Canadian counterpart of a U.S.
corporation, and in Europaper, which is U.S. dollar denominated commercial paper
of a foreign issuer. Each Fund may also acquire zero coupon obligations, which
have greater price volatility than coupon obligations and which will not result
in the payment of interest until maturity.
Bank obligations include bankers' acceptances and 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. Bank obligations also include U.S.
dollar denominated bankers' acceptances and 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. These bank
obligations are not insured by the Federal Deposit Insurance Corporation. Each
of the International Equity, Small Cap Growth, Tax Managed Equity, Core Equity,
Balanced Allocation, Total Return Advantage, Intermediate Bond, Limited Maturity
Bond and Strategic Income Bond Funds 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.
MONEY MARKET INSTRUMENTS
------------------------
The Money Market Fund may invest in "money market"
instruments, including bank obligations and commercial paper. The Ohio Municipal
Money Market and Pennsylvania Tax Exempt Money Market Funds may also invest,
from time to time, a portion of their assets for temporary defensive or other
purposes in such taxable money market instruments.
Bank obligations include bankers' acceptances, negotiable
certificates of deposit, and non-negotiable 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. 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
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<PAGE> 50
obligations is limited to the obligations of financial institutions having more
than $1 billion in total assets at the time of purchase. These bank obligations
are not issued by the Federal Deposit Insurance Corporation. The Money Market
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 the Fund's total assets at the time of
purchase.
Investments in commercial paper and other short-term
promissory notes issued by corporations (including variable and floating rate
instruments) must be rated at the time of purchase "A-2" or better by S&P,
"Prime-2" or better by Moody's, "F2" or better by Fitch or, if not rated,
determined by the Adviser to be of comparable quality pursuant to guidelines
approved by the Trust's Board of Trustees. Investments may also include
corporate notes. In addition, the Money Market Fund may invest in Canadian
Commercial Paper ("CCP"), which is U.S. dollar denominated commercial paper
issued by a Canadian corporation or a Canadian counterpart of a U.S.
corporation, and in Europaper, which is U.S. dollar denominated commercial paper
of a foreign issuer. The Money Market Fund may acquire zero coupon obligations,
which have greater price volatility than coupon obligations and which will not
result in the payment of interest until maturity.
Investments in the obligations of foreign branches of U.S.
banks, foreign banks and other foreign issuers may subject the Money Market Fund
to additional investment risks, including future political and economic
developments, the possible imposition of withholding taxes on interest income,
possible seizure or nationalization of foreign deposits, the possible
establishment of exchange controls, or the adoption of other foreign
governmental restrictions which might adversely affect the payment of principal
and interest on such obligations. In addition, foreign branches of U.S. banks
and foreign banks may be subject to less stringent reserve requirements and to
different accounting, auditing, reporting, and recordkeeping standards than
those applicable to domestic branches of U.S. banks. The Money Market Fund will
invest in the obligations of foreign banks or foreign branches of U.S. banks
only when the Adviser believes that the credit risk with respect to the
instrument is minimal.
The Money Market Fund may also make limited investments in
GICs issued by U.S. insurance companies. The Fund will purchase a GIC only when
the Adviser has 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 certain
nationally recognized statistical rating organizations.
GOVERNMENT SECURITIES
---------------------
The Treasury Money Market and Treasury Plus Money Market Funds
may only invest in direct obligations of the U.S. Treasury and investment
companies that invest only in such obligations. In addition to such investments,
the Balanced Allocation, Total Return Advantage, Bond, Intermediate Bond, GNMA,
Limited Maturity Bond, Strategic Income Bond, Ohio Municipal Money Market,
Pennsylvania Tax Exempt Money Market, Tax Exempt Money Market, Money Market,
Government Money Market, Mid Cap Growth, U.S. Government
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<PAGE> 51
Income, and Michigan Municipal Bond Funds may invest in U.S. government agency
obligations, examples of which include the obligations of Federal Home Loan
Banks, Federal Farm Credit Banks, Federal Land Banks, the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, Government National Mortgage Association,
General Services Administration, Student Loan Marketing Association, Central
Bank for Cooperatives, Federal Home Loan Mortgage Corporation, Federal
Intermediate Credit Banks and Maritime Administration. 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. Some of these investments may be variable or floating
rate instruments. See "Variable and Floating Rate Obligations." The Ohio
Municipal Money Market, Pennsylvania Tax Exempt Money Market, Tax Exempt Money
Market, Money Market and Government Money Market Funds will invest in the
obligations of such agencies or instrumentalities only when the Adviser believes
that the credit risk with respect thereto is minimal.
U.S. TREASURY OBLIGATIONS AND RECEIPTS
--------------------------------------
The Balanced Allocation, Total Return Advantage, Bond,
Intermediate Bond, GNMA, Limited Maturity Bond, Strategic Income Bond, Money
Market, Mid Cap Growth, U.S. Government Income and Michigan Municipal Bond Funds
may invest in U.S. Treasury obligations consisting of bills, notes and bonds
issued by the U.S. Treasury, and separately traded interest and principal
component parts of such obligations that are transferable through the Federal
book-entry system known as STRIPS (Separately Traded Registered Interest and
Principal Securities).
The Funds may invest in separately traded interest and
principal component parts of the U.S. Treasury obligations that are issued by
banks or brokerage firms and are created by depositing U.S. Treasury obligations
into a special account at a custodian bank. The custodian holds the interest and
principal payments for the benefit of the registered owners of the certificates
or receipts. The custodian arranges for the issuance of the certificates or
receipts evidencing ownership and maintains the register. Receipts include
Treasury Receipts (TRs), Treasury Investment Growth Receipts (TIGRs), Liquid
Yield Option Notes (LYONs), and Certificates of Accrual on Treasury Securities
(CATS). TIGRs, LYONs and CATS are interests in private proprietary accounts
while TR's are interests in accounts sponsored by the U.S. Treasury. The private
proprietary accounts underlying TIGRs, LYONs and CATS are not government
guaranteed.
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<PAGE> 52
Securities denominated as TRs, TIGRs, LYONs and CATS are sold
as zero coupon securities which means that they are sold at a substantial
discount and redeemed at face value at their maturity date without interim cash
payments of interest or principal. This discount is accreted over the life of
the security, and such accretion will constitute the income earned on the
security for both accounting and tax purposes. Because of these features, such
securities may be subject to greater interest rate volatility than interest
paying investments.
STAND-BY COMMITMENTS
--------------------
The Tax Free Funds, Ohio Municipal Money Market, Pennsylvania
Tax Exempt Money Market, and Tax Exempt Money Market Funds may acquire stand-by
commitments. Under a stand-by commitment, a dealer agrees to purchase at a
Fund's option specified Municipal Securities at a specified price. Stand-by
commitments acquired by a Fund must be of high quality as determined by any
Rating Agency, or, if not rated, must be of comparable quality as determined by
the Adviser. A Fund acquires stand-by commitments solely to facilitate portfolio
liquidity and does not intend to exercise its rights thereunder for trading
purposes.
DERIVATIVE INSTRUMENTS
----------------------
The International Equity, Small Cap Value, Small Cap Growth,
Equity Growth, Tax Managed Equity, Core Equity, Equity Index, Equity Income,
Balanced Allocation, Total Return Advantage, Bond, Intermediate Bond, GNMA,
Limited Maturity Bond, Strategic Income Bond, Money Market, Mid Cap Growth, and
U.S. Government Income Funds may purchase certain "derivative" instruments.
Derivative instruments are instruments that derive value from the performance of
underlying securities, interest or currency exchange rates, or indices, and
include (but are not limited to) futures contracts, options, forward currency
contracts and structured debt obligations (including collateralized mortgage
obligations ("CMOs"), various floating rate instruments and other types of
securities).
Like all investments, derivative instruments involve several
basic types of risks which must be managed in order to meet investment
objectives. The specific risks presented by derivatives include, to varying
degrees, market risk in the form of underperformance of the underlying
securities, exchange rates or indices; credit risk that the dealer or other
counterparty to the transaction will fail to pay its obligations; volatility and
leveraging risk that, if interest or exchange rates change adversely, the value
of the derivative instrument will decline more than the securities, rates or
indices on which it is based; liquidity risk that the Fund will be unable to
sell a derivative instrument when it wants because of lack of market depth or
market disruption; pricing risk that the value of a derivative instrument (such
as an option) will not correlate exactly to the value of the underlying
securities, rates or indices on which it is based; extension risk that the
expected duration of an instrument may increase or decrease; and operations risk
that loss will occur as a result of inadequate systems and controls, human error
or otherwise. Some derivative instruments are more complex than others, and for
those instruments that have been developed recently, data are lacking regarding
their actual performance over complete market cycles.
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<PAGE> 53
TAX-EXEMPT DERIVATIVES AND OTHER MUNICIPAL SECURITIES
-----------------------------------------------------
The Ohio Municipal Money Market, Pennsylvania Tax Exempt Money
Market and Tax Exempt Money Market Funds may invest in tax-exempt derivative
securities relating to Municipal Securities, including tender option bonds,
participations, beneficial interests in trusts and partnership interests. (See
generally "Derivative Instruments" above.)
Opinions relating to the validity of Municipal Securities and
to the exemption of interest thereon from federal income tax are rendered by
bond counsel to the respective issuers at the time of issuance, and opinions
relating to the validity of and the tax-exempt status of payments received by
the Ohio Municipal Money Market, Pennsylvania Tax Exempt Money Market and Tax
Exempt Money Market Funds from tax-exempt derivative securities are rendered by
counsel to the respective sponsors of such securities. The Funds and the Adviser
will rely on such opinions and will not review independently the underlying
proceedings relating to the issuance of Municipal Securities, the creation of
any tax-exempt derivative securities, or the bases for such opinions.
SECURITIES OF OTHER INVESTMENT COMPANIES
----------------------------------------
Subject to 1940 Act limitations and pursuant to applicable SEC
requirements, each 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. Each 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. With
regard to the Tax Free Funds and the Money Market Funds, not more than 10% of
the outstanding voting stock of any one investment company will be owned in the
aggregate by the Fund and other investment companies advised by the Adviser.
The Equity Funds and the Balanced Allocation Fund may invest
in Standard & Poor's Depositary Receipts ("SPDRs") and similar index tracking
stocks as is consistent with their investment objectives and policies. SPDRs
represent interests in the SPDR Trust, a unit investment trust that holds shares
of all the companies in the S&P 500. The SPDR Trust closely tracks the price
performance and dividend yield of the S&P 500. Other index tracking stocks are
structured similarly to SPDRs but track the price performance and dividend yield
of different indices. SPDRs and other index tracking stocks can be expected to
increase and decrease in value in proportion to increases and decreases in the
indices that they are designed to track. The volatility of different index
tracking stocks can be expected to vary in proportion to the volatility of the
particular index they track. For example, stocks that track an index comprised
of Nasdaq traded
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<PAGE> 54
stocks, or stocks that track an index comprised of stocks of foreign companies
(such as iShares which are described below), may be expected to fluctuate in
value more widely the SPDRs (which track the S&P 500) or stocks that track other
less volatile indices. Index tracking stocks are traded similarly to stocks of
individual companies. Although an index tracking stock is designed to provide
investment performance corresponding to its index, it may not be able to exactly
replicate the performance because of trust expenses and other factors. The SPDR
Trust and trusts underlying other index tracking stocks are structured to be
regulated investment companies and may make distributions to a Fund that may not
be characterized entirely as ordinary income for tax purposes. Such
distributions will be passed through to Fund investors in the character as
received by the Fund. Because investments in SPDRs and other index tracking
stocks represent interests in unit investment trusts, such investments are
subject to the 1940 Act's limitations on investments in other investment
companies.
In addition, the International Equity Fund may purchase shares
of investment companies investing primarily in foreign securities, including
"country funds" which have portfolios consisting exclusively of securities of
issuers located in one foreign country. Such "country funds" may be either
open-end or closed-end investment companies.
The International Equity Fund may also purchase iShares
(formerly, WEBS) issued by iShares, Inc. (formerly WEBS Index Fund, Inc.) and
similar securities of other issuers. iShares are shares of an investment company
that invests substantially all of its assets in securities included in the
Morgan Stanley Capital International indices for specific countries. Because the
expense associated with an investment in iShares can be substantially lower than
the expense of small investments directly in the securities comprising the
indices it seeks to track, the Adviser believes that investments in iShares of
countries that are included in the EAFE Index can provide a cost-effective means
of diversifying the Fund's assets across a broader range of equity securities.
Shares are listed on the American Stock Exchange (AMEX), and
were initially offered to the public in 1996. The market prices of iShares are
expected to fluctuate in accordance with both changes in the net asset values of
their underlying indices and supply and demand of iShares on the AMEX. To date,
iShares have traded at relatively modest discounts and premiums to their net
asset values. However, iShares have a limited operating history, and information
is lacking regarding the actual performance and trading liquidity of iShares for
extended periods or over complete market cycles. In addition, there is no
assurance that the requirements of the AMEX necessary to maintain the listing of
iShares will continue to be met or will remain unchanged.
In the event substantial market or other disruptions affecting
iShares or CountryBaskets should occur in the future, the liquidity and value of
the International Equity Fund's shares could also be substantially and adversely
affected, and the Fund's ability to provide investment results approximating the
performance of securities in the EAFE could be
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<PAGE> 55
impaired. If such disruptions were to occur, the Fund could be required to
reconsider the use of iShares, CountryBaskets or other "country funds" as part
of its investment strategy.
As a shareholder of another investment company, a 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 a Fund and, therefore, will be borne indirectly by
its shareholders.
MUNICIPAL SECURITIES
--------------------
The Ohio Tax Exempt Bond, Pennsylvania Municipal Bond,
National Tax Exempt Bond and Michigan Municipal Bond Funds may invest in
Municipal Securities. The two principal classifications of Municipal Securities
consist of "general obligation" and "revenue" issues. Municipal Bonds include
debt obligations issued by governmental entities to obtain funds for various
public purposes, including the construction of a wide range of public
facilities, the refunding of outstanding obligations, and the extension of loans
to public institutions and facilities.
Municipal Securities that are payable only from the revenues
derived from a particular facility may be adversely affected by federal or state
laws, regulations or court decisions which make it more difficult for the
particular facility to generate revenues sufficient to pay such interest and
principal, including, among others, laws, decisions and regulations which limit
the amount of fees, rates or other charges which may be imposed for use of the
facility or which increase competition among facilities of that type or which
limit or otherwise have the effect of reducing the use of such facilities
generally, thereby reducing the revenues generated by the particular facility.
Municipal Securities, the payment of interest and principal on which is insured
in whole or in part by a governmentally created fund, may be adversely affected
by laws or regulations which restrict the aggregate proceeds available for
payment of principal and interest in the event of a default on such municipal
securities. Similarly, the payment of interest and principal on Municipal
Securities may be adversely affected by respective state laws which limit the
availability of remedies or the scope of remedies available in the event of a
default on such municipal securities. Because of the diverse nature of such laws
and regulations and the impossibility of either predicting in which specific
Municipal Securities the Funds will invest from time to time or predicting the
nature or extent of future judicial interpretations or changes in existing laws
or regulations or the future enactment or adoption of additional laws or
regulations, it is not presently possible to determine the impact of such laws,
regulations and judicial interpretations on the securities in which the Funds
may invest and, therefore, on the shares of the Fund.
There are, of course, variations in the quality of Municipal
Securities both within a particular classification and between classifications,
and the yields on Municipal Securities
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<PAGE> 56
depend upon a variety of factors, including the financial condition of the
issuer, the general conditions of the municipal bond market, the size of a
particular offering, the maturity of the obligation and the rating of the issue.
The ratings of rating agencies represent their opinions as to the quality of
Municipal Securities. It should be emphasized, however, that ratings are general
and are not absolute standards of quality, and Municipal Securities with the
same maturity, interest rate and rating may have different yields while
Municipal Securities of the same maturity and interest rate with different
ratings may have the same yield. Subsequent to its purchase by a Fund, an issue
of Municipal Securities may cease to be rated or its rating may be reduced below
the minimum rating required for purchase by the Funds. The Funds' adviser will
consider such an event in determining whether they should continue to hold the
obligation.
The payment of principal and interest on most Municipal
Securities purchased by the Funds will depend upon the ability of the issuers to
meet their obligations. An issuer's obligations under its Municipal Securities
are subject to the provisions of bankruptcy, insolvency and other laws affecting
the rights and remedies of creditors, such as the Federal Bankruptcy Code, and
laws, if any, which may be enacted by federal or state legislatures extending
the time for payment of principal or interest, or both, or imposing other
constraints upon enforcement of such obligations or upon the ability of
municipalities to levy taxes. The power or ability of an issuer to meet its
obligations for the payment of interest or the principal of its Municipal
Securities may be materially adversely affected by litigation or other
conditions.
Certain Municipal Securities held by the Funds may be insured
at the time of issuance as to the timely payment of principal and interest. The
insurance policies will usually be obtained by the issuer or original purchaser
of the Municipal Securities at the time of their original issuance. In the event
that the issuer defaults on interest or principal payments, the insurer of the
obligation is required to make payment to the bondholders upon proper
notification. There is, however, no guarantee that the insurer will meet its
obligations. In addition, such insurance will not protect against market
fluctuations caused by changes in interest rates and other factors.
Municipal notes in which the Funds may invest include, but are
not limited to, general obligation notes, tax anticipation notes (notes sold to
finance working capital or capital facilities needs of the issuer in
anticipation of receiving taxes on a future date), revenue anticipation notes
(notes sold to provide needed cash prior to receipt of expected non-tax revenues
from a specific source), bond anticipation notes, certificates of indebtedness,
demand notes and construction loan notes.
The Funds invest in Municipal Securities which at the time of
purchase are rated in one of the four highest rating categories by a Rating
Agency for bonds and in one of the two highest rating categories by a Rating
Agency for money market securities.
Securities that are unrated at the time of purchase will be
determined to be of comparable quality by the Funds' adviser pursuant to
guidelines approved by the Trust's Board of Trustees. If the rating of an
obligation held by a Fund is reduced below its rating
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<PAGE> 57
requirements, the Fund will sell the obligation when the adviser believes that
it is in the best interests of the Fund to do so. The applicable ratings are
more fully described in Appendix A.
Special Considerations Regarding Investment in Ohio Municipal Securities
As described in the Prospectuses, each of the Ohio Tax Exempt
Bond and Ohio Municipal Money Market Funds will invest most of its net assets in
Ohio Municipal Securities. The Funds are therefore susceptible to general or
particular economic, political or regulatory factors that may affect issuers of
Ohio Municipal Securities. The Funds are therefore susceptible to general or
particular economic, political or regulatory factors that may affect issuers of
Ohio Municipal Securities. The following information constitutes only a brief
summary of some of the many complex factors that may have an effect. The
information does not apply to "conduit" obligations on which the public issuer
itself has no financial responsibility. This information is derived from
official statements of certain Ohio issuers published in connection with their
issuance of securities and from other publicly available information, and is
believed to be accurate. No independent verification has been made of any of the
following information.
Generally, the creditworthiness of Ohio Municipal Securities
of local issuers is unrelated to that of obligations of the State itself, and
the State has no responsibility to make payments on those local obligations.
There may be specific factors that at particular times apply
in connection with investment in particular Ohio Municipal Securities or in
those obligations of particular Ohio issuers. It is possible that the investment
may be in particular Ohio Municipal Securities, or in those of particular
issuers, as to which those factors apply. However, the information below is
intended only as a general summary, and is not intended as a discussion of any
specific factors that may affect any particular obligation or issuer.
Ohio is the seventh most popular state. The 1990 Census count
of 10,847,000 indicated a 0.5% population increase from 1980. The Census
estimate for 1999 was 11,256,700.
While diversifying more into the service and other
non-manufacturing areas, the Ohio economy continues to rely in part on durable
goods manufacturing largely concentrated in motor vehicles and equipment, steel,
rubber products and household appliances. As a result, general economic
activity, as in many other industrially-developed states, tends to be more
cyclical than in some other states and in the nation as a whole. Agriculture is
an important segment of the economy, with over half the State's area devoted to
farming and approximately 16% of total employment in agribusiness.
In earlier years, the State's overall unemployment rate was
commonly somewhat higher than the national figure. For example, the reported
1990 average monthly State rate was 5.7%, compared to the 5.5% national figure.
However, in recent years except 1999, the State rates were below the national
rates (4.3% versus 4.5% in 1998, 4.3% versus 4.2% in
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<PAGE> 58
1999, and with State rates slightly higher than national rates in January,
February and March 2000 but slightly lower in April and May). The unemployment
rate and its effects vary among geographic areas of the State.
There can be no assurance that future national, regional or
state-wide economic difficulties, and the resulting impact on State or local
government finances generally, will not adversely affect the market value of
Ohio Municipal Securities held in the Funds or the ability of particular
obligors to make timely payments of debt service on (or lease payments relating
to) those obligations.
The State operates on the basis of a fiscal biennium for its
appropriations and expenditures, and is precluded by law from ending its July 1
to June 30 fiscal year (FY) or fiscal biennium in a deficit position. Most State
operations are financed through the General Revenue Fund (GRF), for which the
personal income and sales-use taxes are the major sources. Growth and depletion
of GRF ending fund balances show a consistent pattern related to national
economic conditions, with the ending FY balance reduced during less favorable
and increased during more favorable economic periods. The State has
well-established procedures for, and has timely taken, necessary actions to
ensure resource/expenditure balances during less favorable economic periods.
Those procedures included general and selected reductions in appropriations
spending.
The 1992-93 biennium presented significant challenges to State
finances, successfully addressed. To allow time to resolve certain budget
differences an interim appropriations act was enacted effective July 1, 1991; it
included GRF debt service and lease rental appropriations for the entire
biennium, while continuing most other appropriations for a month. Pursuant to
the general appropriations act for the entire biennium, passed on July 11, 1991,
$200 million was transferred from the Budget Stabilization Fund (BSF, a cash and
budgetary management fund) to the GRF in FY 1992.
Based on updated results and forecasts in the course of that
FY, both in light of a continuing uncertain nationwide economic situation, there
was projected, and then timely addressed, an FY 1992 imbalance in GRF resources
and expenditures. In response, the Governor ordered most State agencies to
reduce GRF spending in the last six months of FY 1992 by a total of
approximately $184 million; the $100.4 million BSF balance and additional
amounts from certain other funds were transferred late in the FY to the GRF, and
adjustments were made in the timing of certain tax payments.
A significant GRF shortfall (approximately $520 million) was
then projected for FY 1993. It was addressed by appropriate legislative and
administrative actions, including the Governor's ordering $300 million in
selected GRF spending reductions and subsequent executive and legislative action
(a combination of tax revisions and additional spending reductions). The June
30, 1993 ending GRF fund balance was approximately $111 million, of which, as a
first step to replenishment, $21 million was deposited in the BSF.
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None of the spending reductions were applied to appropriations
needed for debt service on or lease rentals relating to any State obligations.
The 1994-95 biennium presented a more affirmative financial
picture. Based on June 30, 1994 balances, an additional $260 million was
deposited in the BSF. The biennium ended June 30, 1995 with a GRF ending fund
balance of $928 million, of which $535.2 million was transferred into the BSF.
The significant GRF fund balance, after leaving in the GRF an unreserved and
undesignated balance of $70 million, was transferred to the BSF and other funds
including school assistance funds and, in anticipation of possible federal
program changes, a human services stabilization fund.
From a higher than forecast 1996-97 mid-biennium GRF fund
balance, $100 million was transferred for elementary and secondary school
computer network purposes and $30 million to a new State transportation
infrastructure fund. Approximately $400.8 million served as a basis for
temporary 1996 personal income tax reductions aggregating that amount. Of the
1996-97 biennium-ending $834.9 million GRF fund balance, $250 million went to
school building construction and renovation, $94 million to the school computer
network, $44.2 million for school textbooks and instructional materials and a
distance learning program, and $34 million to the BSF, and the $263 million
balance to a State income tax reduction fund.
The 1998-99 biennium ending CRF balances were $1.5 billion
(cash) and $976 million (fund). Of that fund balance, $325.7 million was
transferred to school building assistance, $46.3 million to BSF, $90 million to
supply classroom computers for interactive video distance learning, and the
remaining amount to the State income tax reduction fund.
The GRF appropriations acts for the current 2000-01 biennium
(one for all education purposes, and one for general GRF purposes) were passed
in June 1999 and promptly signed (after selective vetoes) by the Governor. Those
acts provided for total GRF biennial expenditures of over $39.8 billion.
Necessary GRF debt service and lease-rental appropriations for the entire
biennium were requested in the Governor's proposed budget and incorporated in
the appropriations bills as introduced, and were included in the bill versions
as passed by the House and Senate and in the acts as passed and signed.
From the June 30, 2000 FY ending GRF fund balance of over $855
million, transfers were made in amounts of $610 million to the income reduction
fund and $49 million to BSF. The BSF had a September 1, 2000 balance of slightly
over $1 billion.
The State's incurrence or assumption of debt without a vote of
the people is, with limited exceptions noted below, prohibited by current State
constitutional provisions. The State may incur debt, limited in amount to
$750,000, to cover casual deficits or failures in revenues or to meet expenses
not otherwise provided for. The Constitution expressly precludes the State from
assuming the debts of any local government or corporation. (An exception is made
in both cases for any debt incurred to repel invasion, suppress insurrection or
defend the State in war.)
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By 16 constitutional amendments approved from 1921 to date
(the latest adopted in 1999) Ohio voters authorized the incurrence of State debt
and the pledge of taxes or excises to its payment. At June 15, 2000, almost
$1.51 billion (excluding certain highway bonds payable primarily from highway
use receipts) of this debt was outstanding or awaiting delivery. The only such
State debt currently at that date authorized to be incurred were portions of the
highway bonds, and the following: (a) up to $100 million of obligations for coal
research and development may be outstanding at any one time ($31.3 million
outstanding); (b) $240 million of obligations previously authorized for local
infrastructure improvements, no more than $120 million of which may be issued in
any calendar year (over $1.06 billion outstanding) and (c) up to $200 million in
general obligation bonds for parks, recreation and natural resources purposes
which may be outstanding at any one time ($135.3 million outstanding or awaiting
delivery, with no more than $50 million to be issued in any one year).
The electors in 1995 approved a constitutional amendment
extending the local infrastructure bond program (authorizing an additional $1.2
billion of State full faith and credit obligations to be issued over 10 years
for the purpose), and authorizing additional highway bonds (expected to be
payable primarily from highway use receipts). The latter authorizes not more
than $220 million to be issued in a fiscal year.
A constitutional amendment approved by the voters in 1999
authorizes State general obligation debt to pay costs of facilities for a system
of common schools throughout the State ($130.1 million outstanding as of June
15, 2000) and facilities for state supported and assisted institutions of higher
education ($150 million outstanding).
That 1999 amendment also provided that State general
obligation debt and other debt represented by direct obligations of the State
(including that authorized by the Ohio Public Facilities Commission and Ohio
Building Authority, and some authorized by the Treasurer), may not be issued if
future FY total debt service on those direct obligations to be paid from the GRF
or net lottery proceeds exceeds 5% of total estimated revenues of the State for
the GRF and from net State lottery proceeds during the FY of issuance.
The General Assembly has placed on the November 2000 ballot a
proposed constitutional amendment that would authorize the issuance of State
bonds for land conservation and revitalization purposes (including statewide
brownfields clean-up). For each of the two purposes, not more than $50,000,000
in principal amount may be issued in any Fiscal Year and not more than
$200,000,000 in principal amount may be outstanding in accordance with their
terms at any time. The bonds for conservation purposes would be State general
obligations, and those for revitalization purposes would be special obligations
of the State payable from revenues and receipts designated by the General
Assembly.
The Constitution also authorizes the issuance of State
obligations for certain purposes, the owners of which do not have the right to
have excises or taxes levied to pay debt service. Those special obligations
include obligations issued by the Ohio Public Facilities Commission and the Ohio
Building Authority, and certain obligations issued by the State Treasurer, over
$5.1 billion of which were outstanding at June 15, 2000.
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In recent years, State agencies have participated in
transportation and office building projects that may have some local as well as
State use and benefit, in connection with which the State enters into lease
purchase agreements with terms ranging from 7 to 20 years. Certificates of
participation, or special obligation bonds of the State or a local agency, are
issued that represent fractionalized interests in or are payable from the
State's anticipated payments. The State estimates highest future FY payments
under those agreements (as of June 15, 2000) to be approximately $28.5 million
(of which $23.9 million is payable from sources other than the GRF, such as
federal highway money distributions). State payments under all those agreements
are subject to biennial appropriations, with the lease terms being two years
subject to renewal if appropriations are made.
A 1990 constitutional amendment authorizes greater State and
political subdivision participation (including financing) in the provision of
housing. The General Assembly may for that purpose authorize the issuance of
State obligations secured by a pledge of all or such portion as it authorizes of
State revenues or receipts (but not by a pledge of the State's full faith and
credit).
A 1994 constitutional amendment pledges the full faith and
credit and taxing power of the State to meeting certain guarantees under the
State's tuition credit program which provides for purchase of tuition credits,
for the benefit of State residents, guaranteed to cover a specified amount when
applied to the cost of higher education tuition. (A 1965 constitutional
provision that authorized student loan guarantees payable from available State
moneys has never been implemented, apart from a "guarantee fund" approach funded
essentially from program revenues.)
State and local agencies issue obligations that are payable
from revenues from or relating to certain facilities (but not from taxes). By
judicial interpretation, these obligations are not "debt" within constitutional
provisions. In general, payment obligations under lease-purchase agreements of
Ohio public agencies (in which certificates of participation may be issued) are
limited in duration to the agency's fiscal period, and are renewable only upon
appropriations being made available for the subsequent fiscal period.
Local school districts in Ohio receive a major portion
(state-wide aggregate approximately 50% in FY 1999) of their operating moneys
from State subsidies, but are dependent on local property taxes, and in 127
districts (as of June 15, 2000) from voter-authorized income taxes, for
significant portions of their budgets. Litigation, similar to that in other
states, has been pending questioning the constitutionality of Ohio's system of
school funding and compliance with the constitutional requirement that the State
provide a "thorough and efficient system of common schools." In May 2000, the
Ohio Supreme Court in a 4-3 decision concluded, as it had in 1997, that the
State, even after crediting significant gubernatorial and legislative steps in
recent years, did not comply with that requirement. It set as general base
threshold requirements that every school district have
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enough funds to operate, an ample number of teachers, sound and safe buildings,
and equipment sufficient for all students to be afforded an educational
opportunity. The Court maintains continuing jurisdiction, and has scheduled for
June 2001 further review by it of State responses to its ruling. With particular
respect to funding sources, the Supreme Court repeated its conclusion that
property taxes no longer may be the primary means of school funding in Ohio,
noting that recent efforts to reduce that historic reliance have been laudable
but in the Court's view insufficient. After a further hearing, the trial court
has decided that steps taken to date by the State to enhance school funding have
not met the requirements of the Supreme Court decision; the State has filed a
notice of appeal with the Supreme Court, and that Court has issued a stay,
pending appeal, of the implementation of the trial court's order.
A small number of the State's 611 local school districts have
in any year required special assistance to avoid year-end deficits. A now
superseded program provided for school district cash need borrowing directly
from commercial lenders, with diversion of State subsidy distributions to
repayment if needed. Recent borrowings under this program totalled, $87.2
million for 20 districts in FY 1996 (including $42.1 million for one), $113.2
million for 12 districts in FY 1997 (including $90 million to one for
restructuring its prior loans), and $23.4 million for 10 districts in FY 1998.
Ohio's 943 incorporated cities and villages rely primarily on
property and municipal income taxes for their operations. With other
subdivisions, they also receive local government support and property tax relief
moneys distributed by the State.
For those few municipalities and school districts that on
occasion have faced significant financial problems, there are statutory
procedures for a joint State/local commission to monitor the fiscal affairs and
for development of a financial plan to eliminate deficits and cure any defaults.
(Similar procedures have recently been extended to counties and townships.) As
of June 15, 2000, five municipalities were in "fiscal emergency" status and two
in preliminary "fiscal watch" status, and a school district "fiscal emergency"
provision was applied to 12 districts, and four were on preliminary "fiscal
watch" status.
At present the State itself does not levy ad valorem taxes on
real or tangible personal property. Those taxes are levied by political
subdivisions and other local taxing districts. The Constitution has since 1934
limited to 1% of true value in money the amount of the aggregate levy (including
a levy for unvoted general obligations) of property taxes by all overlapping
subdivisions, without a vote of the electors or a municipal charter provision,
and statutes limit the amount of that aggregate levy to 10 mills per $1 of
assessed valuation (commonly referred to as the "ten-mill limitation"). Voted
general obligations of subdivisions are payable from property taxes that are
unlimited as to amount or rate.
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Special Risk Considerations Regarding Investment in Pennsylvania Municipal
Securities
Potential shareholders should consider the fact that the
investment portfolio of each of the Pennsylvania Municipal Bond and Pennsylvania
Tax Exempt Money Market Fund consists primarily of securities issued by the
Commonwealth of Pennsylvania (the "Commonwealth"), its municipalities and
authorities and should realize that each Fund's performance is closely tied to
general economic conditions within the Commonwealth as a whole and to economic
conditions within particular industries and geographic areas located within the
Commonwealth.
Although the General Fund of the Commonwealth (the principal
operating fund of the Commonwealth) experienced deficits in fiscal 1990 and
1991, tax increases and spending decreases have resulted in surpluses the last
six years; as of June 30, 1998, the General Fund had a surplus of $1,364.9
million.
Pennsylvania's economy historically has been dependent upon
heavy industry, but has diversified recently into various services, particularly
into medical and health services, education and financial services. Agricultural
industries continue to be an important part of the economy, including not only
the production of diversified food and livestock products, but substantial
economic activity in agribusiness and food-related industries. Service
industries currently employ the greatest share of non-agricultural workers,
followed by the categories of trade and manufacturing. Future economic
difficulties in any of these industries could have an adverse impact on the
finances of the Commonwealth or its municipalities, and could adversely affect
the market value of the Bonds in the Pennsylvania Trust or the ability of the
respective obligors to make payments of interest and principal due on such
Bonds.
Certain litigation is pending against the Commonwealth that
could adversely affect the ability of the Commonwealth to pay debt service on
its obligations including as of June 1, 1999, suits relating to the following
matters: (i) In February 1999, a taxpayer filed a petition for review in the
Commonwealth Court of Pennsylvania asking the court to declare that Chapter 5
(relating to Sports Facilities Financing) of the Capital Facilities Debt
Enabling Act is in violation of the Pennsylvania Constitution. Commonwealth
Court denied the taxpayer's motion for a preliminary injunction and the Supreme
Court denied an appeal of such denial. The respondents have filed preliminary
objections in the nature of a demurrer, requesting the Court dismiss the case
with prejudice. Oral arguments before the Commonwealth Court regarding the
preliminary objections were scheduled for May 19, 1999, (ii) The American Civil
Liberties Union ("ACLU") filed suit in federal court demanding additional
funding for child welfare services; the Commonwealth settled a similar suit in
the Commonwealth Court of Pennsylvania and is seeking the dismissal of the
federal suit, among other things, because of that settlement. After its earlier
denial of class certification was reversed by the Third Circuit Court of
Appeals, the district court granted class certification to the ACLU, and the
parties are proceeding with discovery. In July 1998, a settlement agreement was
reached with the City of Philadelphia. The Commonwealth has agreed to pay
$100,000 to settle plaintiffs' $1.4 million claim for attorney's fees and to
take other actions in exchange for a full and final release and dismissal of
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the case against the Commonwealth parties. The settlement was approved by the
district court on February 1, 1999, and the case was dismissed; (iii) In 1987,
the Supreme Court of Pennsylvania held the statutory scheme for county funding
of the judicial system to be in conflict with the constitution of the
Commonwealth, but it stayed judgment pending enactment by the legislature of
funding consistent with the opinion, and the legislature has yet to consider
legislation implementing the judgment. In 1992, a new action in mandamus was
filed seeking to compel the Commonwealth to comply with the original decision.
The Court issued a writ in mandamus and appointed a special master in 1996 to
submit a plan for implementation, which it intended to require by January 1,
1998. In January 1997, the Court established a committee, consisting of the
special master and representatives of the Executive and Legislative branches, to
develop an implementation plan; an implementation plan was filed in July 1997.
In April 1998 the General Assembly appropriated approximately $12 million for
the funding of county court administrator, under the implementation plan.
However, no legislation has been approved for the payment of Commonwealth
compensation county court administrators. In May 1998, an action was filed by
the Administrative Governing Board of the First Judicial District claiming the
city government has failed to provide adequate Funds for the Operation of the
courts of the First Judicial District. In November 1998, the First Judicial
District Governing Board filed with the Supreme Court a renewed motion for entry
of an order providing emergency relief, which requests the City of Philadelphia
to provide funds to the First Judicial District Courts, in order to maintain
necessary judicial operations throughout the end of the fiscal year. Although
the Supreme Court issued no order, the City is apparently continuing its funding
of the courts; (iv) Litigation was filed in both state and federal court by an
association of rural and small schools and several individual school districts
and parents challenging the constitutionality of the Commonwealth's system for
funding local school districts -- the federal case has been stayed pending the
resolution of the state case; a trial in the state case commenced in January
1997 and has recessed; no briefing schedule or date for oral argument has yet
been set; On July 9, 1998 the state court issued an opinion dismissing the
petitioners' claim in its entirety. On July 20, 1998 the petitioner filed a
timely motion for post-trial relief, taking exception to the state court's
findings of fact and conclusions of law. The Supreme Court, after assuming
jurisdiction in the case directed that all parties submit briefs on all issues
presented in the petitioners' motion for post-trial relief; and (v) In 1995, the
Commonwealth, the Governor of Pennsylvania, the City of Philadelphia and the
Mayor of Philadelphia were joined as additional respondents in an enforcement
action commenced in Commonwealth Court in 1973 by the Pennsylvania Human
Relations Commission against the School District of Philadelphia pursuant to the
Pennsylvania Human Relations Act. The Commonwealth and the City were joined to
determine their liability, if any, to pay additional costs necessary to remedy
segregation-related conditions found to exist in Philadelphia public schools. In
January 1997, the Pennsylvania Supreme Court ordered the parties to brief
certain issues. The Supreme Court heard oral argument on the issues in February
1998 but no decision has been issued, (vi) In February 1997, five residents of
the City of Philadelphia, joined by the City, the School District and others,
filed a civil action in the Commonwealth Court for declaratory judgment against
the Commonwealth and certain Commonwealth officers and officials that the
defendants had failed to provide an adequate quality of education in
Philadelphia, as required by the Pennsylvania Constitution. In March 1998, the
Commonwealth Court dismissed the case on the grounds that the issues prescribed
are not justifiable. An appeal to the Supreme Court of Pennsylvania is pending,
(vii) In April 1995,
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the Commonwealth reached a settlement agreement with Fidelity Bank and certain
other banks with respect to the constitutional validity of the Amended Bank
Shares Act and related legislation; although this settlement agreement did not
require expenditure of Commonwealth funds, the petitions of other banks are
currently pending with the Commonwealth Court; In January 1998 a panel of the
Commonwealth Court ruled in favor of the Commonwealth, finding no constitutional
violation. Royal Bank filed exceptions, which the Commonwealth Court en banc
denied. Royal Bank appealed to the Supreme Court and briefing has been
completed. The Court has not yet scheduled oral arguments. (viii) Suit has been
filed in state court against the State Employees' Retirement Board claiming that
the use of gender district actuarial factors to compute benefits received before
August 1, 1983 violates the Pennsylvania Constitution (gender-neutral factors
have been used since August 1, 1983, the date on which the U.S. Supreme Court
held in Arizona Governing Committee v. Norris that the use of such factors
violated the Federal Constitution); in 1996, the Commonwealth Court heard oral
argument en banc, and in 1997 denied the plaintiff's motion for judgement on the
pleading. The case is currently in discovery. (ix) In March 1997, Rite Aid of
Pennsylvania, Inc. filed in the United States District Court for the Eastern
District of Pennsylvania, a civil action against the Secretary of Public Welfare
alleging that regulations promulgated in October 1995 governing payment rates
for prescription drugs and related services provided to recipients of benefits
under the Pennsylvania Medical Assistance Program violated provisions of Title
XIX of the Social Security Act and regulations of the U.S. Department of Health
and Human Services, as well as provisions of State law and Federal
constitutional due process. In August 1998, the court declared that certain
pharmacy reimbursement rates were in violation of the Medicaid Act and enjoined
the Secretary from using these rates to reimburse for any prescription drugs and
related services provided to Medicaid recipients on and after October 1, 1998.
The Secretary filed motions for appeal and in March 1999, the U.S. Court of
Appeals for the Third Circuit reversed the district court's order and remanded
the case for further proceedings. The plaintiffs on April 5, 1999 filed an
application for rehearing. (x) On March 9, 1998 several residents of the City of
Philadelphia along with the School District of Philadelphia and others brought
suit in the United States District Court for the Eastern District of
Pennsylvania against the Governor, the Secretary of Education and others
alleging that the defendants are violating a regulation of the U.S. Department
of Education promulgated under Title VI of the Civil Rights Act of 1964 in that
the Commonwealth's system for funding public schools has the effect of
discrimination on the basis of race. On November 18, 1998, the district court
dismissed the action with prejudice. An appeal by the plaintiffs was filed and
the parties are awaiting the scheduling of oral argument.
Although there can be no assurance that such conditions will
continue, the Commonwealth's general obligation bonds are currently rated AA by
S&P and A3 and A1 by Moody's and Philadelphia's and Pittsburgh's general
obligation bonds are currently rated BBB and BBB, respectively, by S&P and Baa2
and Baa1, respectively, by Moody's.
The City of Philadelphia (the "City") experienced a series of
General Fund deficits for fiscal years 1988 through 1992 and, while its general
financial situation has improved, the City is still seeking a long-term solution
for its economic difficulties. The audited balance of the City's General Fund as
of June 30, 1998 was a surplus of $169.2 million.
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In recent years an authority of the Commonwealth, the
Pennsylvania Intergovernmental Cooperation Authority ("PICA"), has issued
approximately $1.76 billion of special revenue bonds on behalf of the City to
cover budget shortfalls, to eliminate projected deficits and to fund capital
spending. As one of the conditions of issuing bonds on behalf of the City, PICA
exercises oversight of the City's finances. The City is currently operating
under a five year plan approved by PICA in 1996. PICA's power to issue further
bonds to finance capital projects expired on December 31, 1994. PICA's authority
to issue bonds to finance cash flow deficits expired on December 31, 1996, but
its authority to refund existing debt will not expire. PICA had approximately
$1.1 billion in special revenue bonds outstanding as of April 15, 1999.
Special Considerations Regarding Investment in Michigan
Municipal Securities. The following information is drawn from various Michigan
governmental publications, particularly the Governor's Executive Budget for
fiscal year 2000-2001, and from other sources relating to securities offerings
of the State and its political subdivisions. While the Trust has not
independently verified such information, it has no reason to believe that it is
not correct in all material respects.
The State of Michigan's economy is principally dependent on
manufacturing (particularly automobiles, office equipment and other durable
goods), tourism and agriculture, and historically has been highly cyclical.
Total State wage and salary employment is estimated to have
grown by 1.2% in 1999. The rate of unemployment is estimated to have been 3.6%
in 1999, below the national average for the sixth consecutive year. Personal
income grew at an estimated 4.5% annual rate in 1999.
During the past five years, improvements in the Michigan
economy have resulted in increased revenue collections which, together with
restraints on the expenditure side of the budget, have resulted in State General
Fund budget surpluses, most of which were transferred to the State's
Counter-Cyclical Budget and Economic Stabilization Fund. The balance of that
Fund as of September 30, 1999 is estimated to have been in excess of $1.1
billion.
The Michigan Constitution limits the amount of total State
revenues that can be raised from taxes and certain other sources. State revenues
(excluding federal aid and revenues for payment of principal and interest on
general obligation bonds) in any fiscal year are limited to a fixed percentage
of State personal income in the prior calendar year or the average of the prior
three calendar years, whichever is greater, and this fixed percentage equals the
percentage of the 1978-79 fiscal year state government revenues to total
calendar year 1977 State personal income (which was 9.49%). The State may raise
taxes in excess of the limit for emergencies through action by the Governor and
two-thirds of the members of each house of the Legislature.
The Michigan Constitution also provides that the proportion of
State spending paid to all units of local government to total State spending may
not be reduced below the
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proportion in effect in the 1978-79 fiscal year. The State originally determined
that portion to be 41.6%. If such spending does not meet the required level in a
given year, an additional appropriation for local governmental units is required
by the following fiscal year; which means the year following the determinations
of the shortfall, according to an opinion issued by the State's Attorney
General. Spending for local units met this requirement for fiscal years 1986-87
through 1991-92. As the result of litigation, the State agreed to reclassify
certain expenditures, beginning with fiscal year 1992-93, and has recalculated
the required percentage of spending paid to local government units to be 48.97%.
The State has issued and has outstanding general obligation
full faith and credit bonds for Water Resources, Environmental Protection
Program, Recreation Program and School Loan purposes. As of September 30, 1999,
the State had approximately $870 million of general obligation bonds
outstanding.
The State may issue notes or bonds without voter approval for
the purposes of making loans to school districts. The proceeds of such notes or
bonds are deposited in the School Bond Loan Fund maintained by the State
Treasurer and used to make loans to school districts for payment of debt on
qualified general obligation bonds issued by local school districts.
The State is a party to various legal proceedings seeking
damages or injunctive or other relief. In addition to routine litigation,
certain of these proceedings could, if unfavorably resolved from the point of
view of the State, substantially affect State programs or finances. These
lawsuits involved programs generally in the areas of corrections, tax
collection, commerce, and proceedings involving budgetary reductions to school
districts and governmental units, and court funding.
The State Constitution limits the extent to which
municipalities or political subdivisions may levy taxes upon real and personal
property through a process that regulates assessments.
On March 15, 1994, Michigan voters approved a property tax and
school finance reform measure commonly known as Proposal A. Under Proposal A, as
approved, effective May 1, 1994, the State sales and use tax increased from 4%
to 6%, the State income tax decreased from 4.6% to 4.4% (since reduced to 4.3%
in 2000 and 4.2% in 2001), the cigarette tax increased from $.25 to $.75 per
pack and an additional tax of 16% of the wholesale price began to be imposed on
certain other tobacco products. A .75% real estate transfer tax became effective
January 1, 1995. Beginning in 1994, a state property tax of 6 mills began to be
imposed on all real and personal property currently subject to the general
property tax. All local school boards are authorized, with voter approval, to
levy up to the lesser of 18 mills or the number of mills levied in 1993 for
school operating purposes on nonhomestead property and nonqualified agricultural
property. Proposal A contains additional provisions regarding the ability of
local school districts to levy taxes, as well as a limit on assessment increases
for each parcel of property, beginning in 1995. Such increases for each parcel
of property are limited to the lesser of 5% or the rate of inflation. When
property is subsequently sold, its assessed value
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will revert to the current assessment level of 50% of true cash value. Under
Proposal A, much of the additional revenue generated by the new taxes will be
dedicated to the State School Aid Fund.
Proposal A and its implementing legislation shifted
significant portions of the cost of local school operations from local school
districts to the State and raised additional State revenues to fund these
additional State expenses. These additional revenues will be included within the
State's constitutional revenue limitations and may impact the State's ability to
raise additional revenues in the future.
A state economy during a recessionary cycle would also, as a separate
matter, adversely affect the capacity of users of facilities constructed or
acquired through the proceeds of private activity bonds or other "revenue"
securities to make periodic payments for the use of those facilities.
OTHER TAX-EXEMPT INSTRUMENTS
----------------------------
Investments by the Ohio Tax Exempt Bond, Pennsylvania
Municipal Bond, National Tax Exempt Bond, Ohio Municipal Money Market,
Pennsylvania Tax Exempt Money Market and Tax Exempt Money Market Funds in
tax-exempt commercial paper will be limited to investments in obligations which
are rated at least A-2 or SP-2 by S&P, F2 by Fitch or Prime-2, MIG-2 or VMIG-2
by Moody's at the time of investment or which are of equivalent quality as
determined by the Adviser. Investments in floating rate instruments will
normally involve industrial development or revenue bonds which provide that the
investing Fund can demand payment of the obligation at all times or at
stipulated dates on short notice (not to exceed 30 days) at par plus accrued
interest. A Fund must use the shorter of the period required before it is
entitled to prepayment under such obligations or the period remaining until the
next interest rate adjustment date for purposes of determining the maturity.
Such obligations are frequently secured by letters of credit or other credit
support arrangements provided by banks. The quality of the underlying credit or
of the bank, as the case may be, must, in the opinion of the Adviser be
equivalent to the commercial paper ratings stated above. The Adviser will
monitor the earning power, cash flow and liquidity ratios of the issuers of such
instruments and the ability of an issuer of a demand instrument to pay principal
and interest on demand. Other types of tax-exempt instruments may also be
purchased as long as they are of a quality equivalent to the bond or commercial
paper ratings stated above.
PORTFOLIO TURNOVER
------------------
The portfolio turnover rate for each 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 Trust to receive
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certain favorable tax treatment. Portfolio turnover will not be a limiting
factor in making decisions.
The Strategic Income Bond Fund had not commenced operations as
of the date of this Statement of Additional and, consequently, has no portfolio
turnover history. The Balanced Allocation, U.S. Government Income and Strategic
Income Bond Funds 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. The
object of such short-term trading is to increase the potential for capital
appreciation and/or income by making portfolio changes in anticipation of
expected movements in interest rates or security prices or in order to take
advantage of what the Funds' Adviser believes is a temporary disparity in the
normal yield relationship between two securities. Any such trading would
increase a Fund's turnover rate and its transaction costs. Higher portfolio
turnover may result in increased taxable gains to shareholders (see "Additional
Information Concerning Taxes" below) and increased expenses paid by the Fund due
to transaction costs. Under normal rates market conditions, the Balanced
Allocation and U.S. Government Income Funds' portfolio turnover rates are not
expected to exceed 200%, and the Strategic Income Bond Fund's portfolio turnover
rate is not expected to exceed 100% but these rates could be higher.
INVESTMENT LIMITATIONS
----------------------
Each Fund is subject to a number of investment limitations.
The following investment limitations are matters of fundamental policy and may
not be changed with respect to a particular Fund without the affirmative vote of
the holders of a majority of the Fund's outstanding shares.
No Fund may:
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 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;
-64-
<PAGE> 70
(d) personal credit and business credit businesses
will be considered separate industries.
2. Make loans, except that the Fund 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 or sell real estate, except that the Fund may
purchase securities of issuers which deal in real estate and may purchase
securities which are secured by interests in real estate.
5. Invest in commodities, except that as consistent with its
investment objective and policies the Fund may: (a) purchase and sell options,
forward contracts, futures contracts, including without limitation, those
relating to indices; (b) purchase and sell options on futures contracts or
indices; (c) purchase publicly traded securities of companies engaging in whole
or in part in such activities. For purposes of this investment limitation,
"Commodities" includes Commodity Contracts.
6. Act as an underwriter of securities within the meaning of
the Securities Act of 1933 except insofar as the Fund 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.
With respect to investment limitation No. 1 above, the
National Tax Exempt Bond Fund may not 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.
With respect to investment limitation No. 1 above, the Equity
Funds, the Balanced Allocation Fund and the Fixed Income Funds may not purchase
securities of any one issuer, other than securities issued or guaranteed by the
U.S. government or its agencies or instrumentalities or, in the case of the
International Equity Fund, securities issued or guaranteed by any foreign
government, 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.
-65-
<PAGE> 71
With respect to investment limitation No. 3 above, the 1940
Act prohibits a Fund from issuing senior securities, except that a Fund may
borrow from banks, and may mortgage, pledge or hypothecate its assets in
connection with such borrowings, provided that immediately after any such
borrowing the Fund has 300% asset coverage for all borrowings.
For purposes of the above investment limitations, a security
is considered to be issued by the governmental entity (or entities) whose assets
and revenues back the security, or, with respect to a private activity bond that
is backed only by the assets and revenues of a nongovernmental user, a security
is considered to be issued by such nongovernmental user.
Except for the Funds' policy on illiquid securities and
borrowing, 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 of a Fund's portfolio securities will not constitute a violation of such
limitation for purposes of the 1940 Act.
Opinions relating to the validity of Municipal Securities and
to the exemption of interest thereon from federal and state income taxes are
rendered by qualified legal counsel to the respective issuers at the time of
issuance. Neither the Funds nor their adviser will review the proceedings
relating to the issuance of Municipal Securities or the basis for such opinions.
In addition, the Funds are subject to the following
non-fundamental limitations, which may be changed without the vote of
shareholders:
No Fund may:
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, as consistent with a
Fund's investment objective and policies, (a) this investment limitation shall
not apply to the Fund's 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% (10% in the case of the Money Market
Funds) of its net assets in illiquid securities.
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<PAGE> 72
6. Purchase securities while its outstanding borrowings
(including reverse repurchase agreements) are in excess of 5% of its total
assets. Securities held in escrow or in separate accounts in connection with a
Fund's investment practices described in its Prospectus or Statement of
Additional Information are not deemed to be pledged for purposes of this
limitation.
With respect to investment limitation No. 1 above, see
"Securities of Other Investment Companies" above for the 1940 Act's limitations
on a Fund's investments in other investment companies.
With respect to each of the Ohio Tax Exempt and Pennsylvania
Municipal Bond Funds, at the end of each quarter of its taxable year, (i) at
least 50% of the market value of its total assets will be invested in cash, U.S.
Government securities, securities of other regulated investment companies and
other securities, with such other securities of any one issuer limited for the
purposes of this calculation to an amount not greater than 5% of the value of
its total assets and 10% of the outstanding voting securities of such issuer,
and (ii) not more than 25% of the value of its total assets will be invested in
the securities of any one issuer (other than U.S. Government securities or the
securities of other regulated investment companies).
The Funds do not intend to acquire securities issued by the
Adviser, Sub-Adviser, Distributor and their affiliates.
NET ASSET VALUE
---------------
VALUATION OF THE MONEY MARKET FUNDS
-----------------------------------
The Trust uses the amortized cost method to value shares in
the Money Market Funds. Pursuant to this method, a security is valued at its
cost initially and thereafter a constant amortization to maturity of any
discount or premium is assumed, regardless of the impact of fluctuating interest
rates on the market value of the security. Where it is not appropriate to value
a security by the amortized cost method, the security will be valued either by
market quotations, or by fair value as determined by the Board of Trustees.
While this method provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is higher or lower than the
price each respective Fund would receive if it sold the security. The value of
the portfolio securities held by each respective Fund will vary inversely to
changes in prevailing interest rates. Thus, if interest rates have increased
from the time a security was purchased, such security, if sold, might be sold at
a price less than its cost. Similarly, if interest rates have declined from the
time a security was purchased, such security, if sold, might be sold at a price
greater than its purchase cost. In either instance, if the security is held to
maturity, no gain or loss will be realized.
The Money Market Funds invest only in high-quality instruments
and maintains a dollar-weighted average portfolio maturity appropriate to its
objective of maintaining a stable net asset value per share, provided that a
Fund will neither purchase any security deemed to have a
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<PAGE> 73
remaining maturity of more than 397 calendar days within the meaning of the 1940
Act nor maintain a dollar-weighted average portfolio maturity which exceeds 90
days. The Trust's Board of Trustees has established procedures pursuant to rules
promulgated by the SEC, that are intended to help stabilize the net asset value
per share of each Fund for purposes of sales and redemptions at $1.00. These
procedures include review by the Board of Trustees, at such intervals as it
deems appropriate, to determine the extent, if any, to which the net asset value
per share of each Fund calculated by using available market quotations deviates
from $1.00 per share. In the event such deviation exceeds one-half of one
percent, the Board of Trustees will promptly consider what action, if any,
should be initiated. If the Board of Trustees believes that the extent of any
deviation from a Fund's $1.00 amortized cost price per share may result in
material dilution or other unfair results to investors or existing shareholders,
it has agreed to take such steps as it considers appropriate to eliminate or
reduce, to the extent reasonably practicable, any such dilution or unfair
results. These steps may include selling portfolio instruments prior to
maturity; shortening the average portfolio maturity; withholding or reducing
dividends; redeeming shares in kind; reducing the number of a Fund's outstanding
shares without monetary consideration; or utilizing a net asset value per share
determined by using available market quotations.
VALUATION OF THE FIXED INCOME FUNDS AND THE TAX FREE FUNDS
----------------------------------------------------------
The assets of the Fixed Income Funds and the Tax Free Funds are valued
for purposes of pricing sales and redemptions by an independent pricing service
("Service") approved by the Board of Trustees. When, in the judgment of the
Service, quoted bid prices for portfolio securities are readily available and
are representative of the bid side of the market, these investments are valued
at the mean between quoted bid prices (as obtained by the Service from dealers
in such securities) and asked prices (as calculated by the Service based upon
its evaluation of the market for such securities). Other investments are carried
at fair value as determined by the Service, based on methods which include
consideration of yields or prices of bonds of comparable quality, coupon,
maturity and type; indications as to values from dealers; and general market
conditions. The Service may also employ electronic data processing techniques
and matrix systems to determine value. Short-term securities are valued at
amortized cost, which approximates market value. The amortized cost method
involves valuing a security at its cost on the date of purchase and thereafter
assuming a constant amortization to maturity of the difference between the
principal amount due at maturity and cost.
VALUATION OF THE BALANCED ALLOCATION FUND AND THE EQUITY FUNDS
--------------------------------------------------------------
In determining market value, the assets in the Balanced Allocation Fund
and the Equity Funds which are traded on a recognized stock exchange are valued
at the last sale price on the securities exchange on which such securities are
primarily traded or at the last sale price on the national securities market.
Securities quoted on the NASD National Market System are also valued at the last
sale price. Other securities traded on over-the-counter markets are valued on
the basis of their closing over-the-counter bid prices. Securities for which
there were no transactions are valued at the average of the most recent bid and
asked prices. Investments in debt securities with remaining maturities of 60
days or less are valued based upon the amortized
-68-
<PAGE> 74
cost method. Restricted securities, securities for which market quotations are
not readily available, and other assets are valued at fair value using methods
determined by or under the supervision of the Board of Trustees. An option is
generally valued at the last sale price or, in the absence of a last sale price,
the last offer price. See "Valuation of International Equity Fund" below for a
description of the valuation of certain foreign securities held by these Funds.
VALUATION OF THE INTERNATIONAL EQUITY FUND
------------------------------------------
In determining market value, the International Equity Fund's portfolio
securities which are primarily traded on a domestic exchange are valued at the
last sale price on that exchange or, if there is no recent sale, at the last
current bid quotation. Portfolio securities which are primarily traded on
foreign securities exchanges are generally valued at the preceding closing
values of such securities on their respective exchanges, except when an
occurrence subsequent to the time a value was so established is likely to have
changed such value, then the fair value of those securities may be determined
through consideration of other factors by or under the direction of the Board of
Trustees. A security which is listed or traded on more than one exchange is
valued at the quotation on the exchange determined to be the primary market for
such security. Investments in debt securities having a remaining maturity of 60
days or less are valued based upon the amortized cost method. All other
securities are valued at the last current bid quotation if market quotations are
available, or at fair value as determined in accordance with policies
established in good faith by the Board of Trustees. For valuation purposes,
quotations of foreign securities in foreign currency are converted to U.S.
dollars equivalent at the prevailing market rate on the day of valuation. An
option is generally valued at the last sale price or, in the absence of a last
sale price, the last offer price.
Certain of the securities acquired by the International Equity Fund may
be traded on foreign exchanges or over-the-counter markets on days on which the
Fund's net asset value is not calculated. In such cases, the net asset value of
the Fund's shares may be significantly affected on days when investors can
neither purchase nor redeem shares of the Fund.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
----------------------------------------------
Shares in the Trust are sold on a continuous basis by SEI
Investments Distribution Co. (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 or directly to the
Trust at P.O. Box 8421, Boston, MA 02266-8421. 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.
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<PAGE> 75
The Trust may suspend the right of redemption or postpone the
date of payment for shares for more than seven days during any period when (a)
trading on the Exchange is restricted by applicable rules and regulations of the
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.
As described in the applicable Prospectuses, Class I Shares of
the Funds are sold to certain qualified investors at their net asset value
without a sales charge. Class A Shares of the Fund are sold to public investors
at the public offering price based on a Fund's net asset value plus a front-end
load or sales charge as described in the Prospectus for Class A, Class B and
Class C Shares. Class B Shares of the Money Market Fund and Tax Exempt Money
Market Fund are available only to the holders of Class B Shares of another Fund
who wish to exchange their Class B Shares of such other Fund for Class B Shares
of the Money Market Fund and/or the Tax Exempt Money Market Fund. Class B Shares
of the Funds are sold to public investors at net asset value but are subject to
a contingent deferred sales charge which is payable upon redemption of such
shares as described in the Prospectus for Class A, Class B and Class C Shares.
Class C Shares of the Money Market Fund are available only to the holders of
Class C Shares of another Fund who wish to exchange their Class C Shares of
another Fund for Class C Shares of the Money Market Fund. Class C Shares of the
Funds are sold to public investors at net asset value but are subject to a 1.00%
contingent deferred sales charge which is payable upon redemption of such shares
within the first eighteen months after purchase, as described in the Prospectus
for Class A, Class B and Class C Shares. There is no sales load or contingent
deferred sales charge imposed for shares acquired through the reinvestment of
dividends or distributions on such shares.
The Trust has authorized one or more brokers to receive
purchase and redemption orders on behalf of the Funds. Such brokers are
authorized to designate other intermediaries to receive purchase and redemption
orders on a Fund's behalf. A Fund will be deemed to have received a purchase or
redemption order when an authorized broker or the broker's authorized designee
receives the order. Orders will be priced at the net asset value next computed
after they are received by an authorized broker or the broker's authorized
designee and accepted by a Fund.
From time to time, shares may be offered as an award in
promotions sponsored by the Distributor or other parties. The promotions may be
limited to certain classes of shareholders such as the employees of the Adviser
or its affiliates. As stated in the prospectus, the Distributor may institute
certain promotional incentive programs for dealers. Such incentive programs may
include cash incentive programs specific to NatCity Investments, Inc. under
which NatCity Investments, Inc. or its associated persons may receive cash
incentives in connection with the sale of the Funds.
For the last two fiscal years, sales loads paid by
shareholders of Class A Shares were as follows:
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<PAGE> 76
FOR THE FISCAL YEAR ENDED MAY 31:
FUND 2000 1999
---- ---- ----
Core Equity Fund................................ $ 43,066 $ 25,206
Equity Growth Fund.............................. $ 62,504 $102,093
Equity Income Fund.............................. $ 34,826 $ 87,943
Equity Index Fund............................... $ 59,426 $ 44,677(1)
International Equity Fund....................... $ 15,979 $ 11,506
Large Cap Ultra Fund(2)......................... $ 13,501 *
Mid Cap Growth Fund(2).......................... $ 7,333 *
Small Cap Growth Fund........................... $ 12,023 $ 30,753
Small Cap Value Fund............................ $ 17,231 $ 51,484
Tax Managed Equity Fund........................ $145,508 $193,147
Balanced Allocation Fund........................ $ 14,481 $ 29,030(1)
Bond Fund....................................... $ 3,909 $ 21,248
GNMA Fund....................................... $ 5,314 $ 19,732
Intermediate Bond Fund.......................... $ 1,890 $ 12,524
Limited Maturity Bond Fund ..................... $ 117 $ 965
Total Return Advantage Fund..................... $ 2,656 $ 50,583
U.S. Government Income Fund(2) ................. $ 175 *
Michigan Municipal Bond Fund(2)................. $ 1,331 *
National Tax Exempt Bond Fund .................. $ 0 $ 3,898
Ohio Tax Exempt Bond Fund....................... $ 2,234 $ 8,032
Pennsylvania Municipal Bond Fund ............... $ 0 $ 3,797
Money Market Fund .............................. $ 0 $ 246
* Information not available.
(1) For the period July 10, 1998 (commencement of operations) to May 31,
1999.
(2) Reflects sales charges paid by shareholders of the corresponding
Parkstone Continuing Funds.
During the fiscal year ended May 31, 2000, contingent deferred
sales charges paid by Class B shareholders on redemptions of Class B Shares were
as follows:
FUND CDSCS PAID
---- ----------
Core Equity Fund.................................................... $17,826
Equity Growth Fund.................................................. $ 8,350
Equity Income Fund.................................................. $ 5,740
Equity Index Fund................................................... $ 0(1)
International Equity Fund........................................... $ 69
Large Cap Ultra Fund(2)............................................. $51,816
Mid Cap Growth Fund(2).............................................. $41,896
Small Cap Growth Fund............................................... $ 2,098
Small Cap Value Fund................................................ $ 910
Tax Managed Equity Fund............................................. $46,891
Balanced Allocation Fund............................................ $ 2,585
Bond Fund........................................................... $ 6,941
GNMA Fund........................................................... $ 0(3)
Intermediate Bond Fund.............................................. $ 6,191
Limited Maturity Bond Fund.......................................... $ 0(3)
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<PAGE> 77
<TABLE>
<CAPTION>
FUND CDSCS PAID
---- ----------
<S> <C>
Total Return Advantage Fund......................................... $ 0(4)
U.S. Government Income Fund(2)...................................... $85,391
Michigan Municipal Bond Fund(2)..................................... $20,640
National Tax Exempt Bond Fund....................................... $ 487
Money Market Fund................................................... $ 599
</TABLE>
(1) For the period January 4, 2000 (commencement of operations) through
May 31, 2000.
(2) Reflects sales charges paid by shareholders of the corresponding
Parkstone Continuing Funds.
(3) For the period August 11, 1999 (commencement of operations) through
May 31, 2000.
(4) For the period September 29, 1999 (commencement of operations) through
May 31, 2000.
During the fiscal year ended May 31, 2000, contingent deferred
sales charges paid by Class Cshareholders on redemptions of Class B Shares were
as follows:
FUND CDSCS PAID
---- ----------
Core Equity Fund.................................................... $ 0(1)
Equity Growth Fund.................................................. $ 0(2)
Equity Income Fund.................................................. $ 0(2)
Equity Index Fund................................................... $ 19(3)
International Equity Fund........................................... $ 0(4)
Small Cap Growth Fund............................................... $ 24(1)
Small Cap Value Fund................................................ $ 0(2)
Tax Managed Equity Fund............................................. $ 0(5)
Balanced Allocation Fund............................................ $ 0(6)
GNMA Fund........................................................... $ 0(3)
Intermediate Bond Fund.............................................. $ 0(7)
Limited Maturity Bond Fund.......................................... $ 0(2)
National Tax Exempt Bond Fund....................................... $1,000(8)
Pennsylvania Municipal Bond Fund.................................... $ 0(8)
Money Market Fund................................................... $ 0
(1) For the period January 20, 2000 (commencement of operations) through
May 31, 2000.
(2) For the period January 27, 2000 (commencement of operations) through
May 31, 2000.
(3) For the period January 17, 2000 (commencement of operations) through
May 31, 2000.
(4) For the period January 5, 2000 (commencement of operations) through
May 31, 2000.
(5) For the period January 10, 2000 (commencement of operations) through
May 31, 2000.
(6) For the period April 20, 2000 (commencement of operations) through May
31, 2000.
(7) For the period May 30, 2000 (commencement of operations) through May
31, 2000.
(8) For the period February 24, 2000 (commencement of operations) through
May 31, 2000.
Automatic investment programs such as the Planned Investment
Program ("Program") described in the Prospectus offered by the Funds 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
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<PAGE> 78
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 or her shares at
a price which is lower than their purchase price. An investor may want to
consider his or her 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 S&P 500 or Lehman Intermediate Government Index.
OFFERING PRICE PER CLASS A SHARE OF THE FUND
--------------------------------------------
An illustration of the computation of the offering price per
Class A Share of the Funds, based on the value of each Fund's net assets and
number of outstanding shares on May 31, 2000, are as follows:
CORE EQUITY FUND
----------------
Net Assets of A Shares........................................ $4,146,601
Outstanding A Shares.......................................... 280,201
Net Asset Value Per Share..................................... $14.80
Sales Charge, 5.50% of
offering price (5.81% of
net asset value per share).................................... $.86
Offering to Public............................................ $15.66
EQUITY GROWTH FUND
------------------
Net Assets of A Shares........................................ $180,000,002
Outstanding A Shares.......................................... 6,259,636
Net Asset Value Per Share..................................... $28.76
Sales Charge, 5.50% of
offering price (5.81% of
net asset value per share).................................... $1.67
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<PAGE> 79
Offering to Public............................................ $30.43
EQUITY INCOME FUND
------------------
Net Assets of A Shares........................................ $9,070,401
Outstanding A Shares.......................................... 566,935
Net Asset Value Per Share..................................... $16.00
Sales Charge, 5.50% of
offering price (5.81% of
net asset value per share).................................... $.93
Offering to Public............................................ $16.93
EQUITY INDEX FUND
-----------------
Net Assets of A Shares........................................ $8,253,628
Outstanding A Shares.......................................... 675,278
Net Asset Value Per Share..................................... $12.22
Sales Charge, 3.75% of
offering price (3.93% of
net asset value per share).................................... $.48
Offering to Public............................................ $12.70
INTERNATIONAL EQUITY FUND
-------------------------
Net Assets of A Shares........................................ $3,618,163
Outstanding A Shares.......................................... 241,735
Net Asset Value Per Share..................................... $14.97
Sales Charge, 5.50% of
offering price (5.81% of
net asset value per share).................................... $.87
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<PAGE> 80
Offering to Public............................................ $15.84
LARGE CAP ULTRA FUND
--------------------
Net Assets of A Shares........................................ $21,549,937
Outstanding A Shares.......................................... 1,087,565
Net Asset Value Per Share..................................... $19.81
Sales Charge, 5.50% of
offering price (5.81% of
net asset value per share).................................... $1.15
Offering to Public............................................ $20.96
MID CAP GROWTH FUND
-------------------
Net Assets of A Shares........................................ $46,182,829
Outstanding A Shares.......................................... 2,973,929
Net Asset Value Per Share..................................... $15.53
Sales Charge, 5.50% of
offering price (5.80% of
net asset value per share).................................... $.90
Offering to Public............................................ $16.43
SMALL CAP GROWTH FUND
---------------------
Net Assets of A Shares........................................ $2,709,986
Outstanding A Shares.......................................... 182,994
Net Asset Value Per Share..................................... $14.81
Sales Charge, 5.50% of
offering price (5.81% of
net asset value per share).................................... $.86
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<PAGE> 81
Offering to Public............................................ $15.67
SMALL CAP VALUE FUND
--------------------
Net Assets of A Shares........................................ $9,727,131
Outstanding A Shares.......................................... 658,595
Net Asset Value Per Share..................................... $14.77
Sales Charge, 5.50% of
offering price (5.82% of
net asset value per share).................................... $.86
Offering to Public............................................ $15.63
TAX MANAGED EQUITY FUND
-----------------------
Net Assets of A Shares........................................ $17,372,038
Outstanding A Shares.......................................... 1,212,239
Net Asset Value Per Share..................................... $14.33
Sales Charge, 5.50% of
offering price (5.79% of
net asset value per share).................................... $.83
Offering to Public............................................ $15.16
BALANCED ALLOCATION FUND
------------------------
Net Assets of A Shares........................................ $3,965,338
Outstanding A Shares.......................................... 339,609
Net Asset Value Per Share..................................... $11.68
Sales Charge, 4.75% of
offering price (4.97% of
net asset value per share).................................... $.58
Offering to Public............................................ $12.26
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<PAGE> 82
BOND FUND
---------
Net Assets of A Shares........................................ $3,786,481
Outstanding A Shares.......................................... 402,987
Net Asset Value Per Share..................................... $9.40
Sales Charge, 4.75% of
offering price (5.00% of
net asset value per share).................................... $.47
Offering to Public............................................ $9.87
GNMA FUND
---------
Net Assets of A Shares........................................ $1,231,254
Outstanding A Shares.......................................... 126,252
Net Asset Value Per Share..................................... $9.75
Sales Charge, 4.75% of
offering price (5.02% of
net asset value per share).................................... $.49
Offering to Public............................................ $10.24
INTERMEDIATE BOND FUND
----------------------
Net Assets of A Shares........................................ $3,873,901
Outstanding A Shares.......................................... 390,590
Net Asset Value Per Share..................................... $9.92
Sales Charge, 4.75% of
offering price (4.94% of
net asset value per share).................................... $.49
Offering to Public............................................ $10.41
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<PAGE> 83
LIMITED MATURITY BOND FUND
--------------------------
Net Assets of A Shares........................................ $873,064
Outstanding A Shares.......................................... 89,671
Net Asset Value Per Share..................................... $9.74
Sales Charge, 2.75% of
offering price (2.87% of
net asset value per share).................................... $.28
Offering to Public............................................ $10.02
TOTAL RETURN ADVANTAGE FUND
---------------------------
Net Assets of A Shares........................................ $5,035,296
Outstanding A Shares.......................................... 531,780
Net Asset Value Per Share..................................... $9.47
Sales Charge, 4.75% of
offering price (4.97% of
net asset value per share).................................... $.47
Offering to Public............................................ $9.94
U.S. GOVERNMENT INCOME FUND
---------------------------
Net Assets of A Shares........................................ $20,789,805
Outstanding A Shares.......................................... 2,371,319
Net Asset Value Per Share..................................... $8.77
Sales Charge, 4.75% of
offering price (5.02% of
net asset value per share)*................................... $.44
Offering to Public............................................ $9.21
-78-
<PAGE> 84
MICHIGAN MUNICIPAL BOND FUND
----------------------------
Net Assets of A shares........................................ $14,798,963
Outstanding A shares.......................................... 1,425,893
Net Asset Value Per Share..................................... $10.38
Sales Charge, 4.75% of
offering price (5.00% of
net asset value per share).................................... $.52
Offering to Public............................................ $10.90
NATIONAL TAX EXEMPT BOND FUND
-----------------------------
Net Assets of A shares........................................ $4,009,327
Outstanding A shares.......................................... 420,467
Net Asset Value Per Share..................................... $9.54
Sales Charge, 4.75% of
offering price (5.03% of
net asset value per share).................................... $.48
Offering to Public............................................ $10.02
OHIO TAX EXEMPT BOND FUND
-------------------------
Net Assets of A shares........................................ $5,172,791
Outstanding A shares.......................................... 494,593
Net Asset Value Per Share..................................... $10.46
Sales Charge, 3.00% of
offering price (3.06% of
net asset value per share).................................... $.32
Offering to Public............................................ $10.78
-79-
<PAGE> 85
PENNSYLVANIA MUNICIPAL BOND FUND
--------------------------------
Net Assets of A shares........................................ $215,881
Outstanding A shares.......................................... 21,791
Net Asset Value Per Share..................................... $9.91
Sales Charge, 3.00% of
offering price (3.13% of
net asset value per share).................................... $.31
Offering to Public............................................ $10.22
An illustration of the computation of the offering price per Class A
share of the Strategic Income Bond Fund, based on the estimated value of its net
assets and number of outstanding shares on its commencement date, is as follows:
STRATEGIC INCOME BOND FUND
--------------------------
Net Assets of A Shares........................................ $10.00
Outstanding A Shares.......................................... 1
Net Asset Value Per Share..................................... $10.00
Sales Charge, 4.75% of
offering price (5.00% of
net asset value per share).................................... $ .50
Offering to Public............................................ $10.50
EXCHANGE PRIVILEGE
------------------
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<PAGE> 86
Investors may exchange all or part of their Class A Shares,
Class B Shares or Class C Shares as described in the applicable Prospectus. Any
rights an investor may have (or have waived) to reduce the sales load applicable
to an exchange, as may be provided in a Prospectus, will apply in connection
with any such exchange. 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
Transfer Agent's financial institution or his or her financial institution to
act on telephonic, website 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 or her financial
institution must notify the Transfer Agent of his or her prior ownership of
Class A Shares, Class B Shares or Class C Shares and the account number. The
Transfer Agent's records of such instructions are binding.
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 the classes
or series of shares set forth in the Prospectuses, including classes or series,
which represent interests in the Funds as follows, and as further described in
this Statement of Additional Information and the related Prospectuses:
Money Market Fund
Class A Class I Shares
Class A - Special Series 1 Class A Shares
Class A - Special Series 2 Class B Shares
Class A - Special Series 3 Class C Shares
Government Money Market Fund
Class B Class I Shares
Class B - Special Series 1 Class A Shares
Treasury Money Market Fund
Class C Class I Shares
Class C - Special Series 1 Class A Shares
Tax Exempt Money Market Fund
Class D Class I Shares
Class D - Special Series 1 Class A Shares
Class D - Special Series 2 Class B Shares
Equity Growth Fund
Class H Class I Shares
Class H - Special Series 1 Class A Shares
-81-
<PAGE> 87
Class H - Special Series 2 Class B Shares
Class H - Special Series 3 Class C Shares
Intermediate Bond Fund
Class I Class I Shares
Class I - Special Series 1 Class A Shares
Class I - Special Series 2 Class B Shares
Class I - Special Series 3 Class C Shares
Ohio Tax Exempt Bond Fund
Class K Class I Shares
Class K - Special Series 1 Class A Shares
Class K - Special Series 2 Class B Shares
Class K - Special Series 3 Class C Shares
National Tax Exempt Bond Fund
Class L Class I Shares
Class L - Special Series 1 Class A Shares
Class L - Special Series 2 Class B Shares
Class L - Special Series 3 Class C Shares
Equity Income Fund
Class M Class I Shares
Class M - Special Series 1 Class A Shares
Class M - Special Series 2 Class B Shares
Class M - Special Series 3 Class C Shares
Small Cap Value Fund
Class N Class I Shares
Class N - Special Series 1 Class A Shares
Class N - Special Series 2 Class B Shares
Class N - Special Series 3 Class C Shares
Limited Maturity Bond Fund
Class O Class I Shares
Class O - Special Series 1 Class A Shares
Class O - Special Series 2 Class B Shares
Class O - Special Series 3 Class C Shares
Total Return Advantage Fund
Class P Class I Shares
Class P - Special Series 1 Class A Shares
Class P - Special Series 2 Class B Shares
Class P - Special Series 3 Class C Shares
Pennsylvania Tax Exempt Money Market Fund
Class Q Class I Shares
Class Q - Special Series 1 Class A Shares
Bond Fund
Class R Class I Shares
Class R - Special Series 1 Class A Shares
Class R - Special Series 2 Class B Shares
Class R - Special Series 3 Class C Shares
-82-
<PAGE> 88
GNMA Fund
Class S Class I Shares
Class S - Special Series 1 Class A Shares
Class S - Special Series 2 Class B Shares
Class S - Special Series 3 Class C Shares
Pennsylvania Tax Exempt Bond Fund
Class T Class I Shares
Class T - Special Series 1 Class A Shares
Class T - Special Series 2 Class B Shares
Class T - Special Series 3 Class C Shares
International Equity Fund
Class U Class I Shares
Class U - Special Series 1 Class A Shares
Class U - Special Series 2 Class B Shares
Class U - Special Series 3 Class C Shares
Equity Index Fund
Class V Class I Shares
Class V - Special Series 1 Class A Shares
Class V - Special Series 2 Class B Shares
Class V - Special Series 3 Class C Shares
Core Equity Fund
Class W Class I Shares
Class W - Special Series 1 Class A Shares
Class W - Special Series 2 Class B Shares
Class W - Special Series 3 Class C Shares
Small Cap Growth Fund
Class X Class I Shares
Class X - Special Series 1 Class A Shares
Class X - Special Series 2 Class B Shares
Class X - Special Series 3 Class C Shares
Tax Managed Equity Fund
Class Z Class I Shares
Class Z - Special Series 1 Class A Shares
Class Z - Special Series 2 Class B Shares
Class Z - Special Series 3 Class C Shares
Balanced Allocation Fund
Class AA Class I Shares
Class AA - Special Series 1 Class A Shares
Class AA - Special Series 2 Class B Shares
Class AA - Special Series 3 Class C Shares
Ohio Municipal Money Market Fund
Class BB Class I Shares
Class BB - Special Series 1 Class A Shares
Treasury Plus Money Market Fund
Class CC Class I Shares
-83-
<PAGE> 89
Class CC - Special Series 1 Class A Shares
U.S. Government Income Fund
Class DD Class I Shares
Class DD - Special Series 1 Class A Shares
Class DD - Special Series 2 Class B Shares
Class DD - Special Series 3 Class C Shares
Mid Cap Growth Fund
Class GG Class I Shares
Class GG - Special Series 1 Class A Shares
Class GG - Special Series 2 Class B Shares
Class GG - Special Series 3 Class C Shares
Michigan Municipal Bond Fund
Class HH Class I Shares
Class HH - Special Series 1 Class A Shares
Class HH - Special Series 2 Class B Shares
Class HH - Special Series 3 Class C Shares
Large Cap Ultra Fund
Class II Class I Shares
Class II - Special Series 1 Class A Shares
Class II - Special Series 2 Class B Shares
Class II - Special Series 3 Class C Shares
Strategic Income Bond Fund
Class JJ Class I Shares
Class JJ - Special Series 1 Class A Shares
Class JJ - Special Series 2 Class B Shares
Class JJ - Special Series 3 Class C Shares
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 Prospectuses, 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 a Fund are entitled to receive
the assets available for distribution belonging to the particular 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
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<PAGE> 90
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 Class I Shares and Class A Shares of an
investment fund will be entitled to vote on matters submitted to a vote of
shareholders (if any) relating to a distribution plan for such shares, only
Class B Shares of a Fund will be entitled to vote on matters relating to a
distribution plan with respect to Class B Shares, and only Class C Shares of a
Fund will be entitled to vote on matters relating to a distribution plan with
respect to Class C 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 or her original
investment due to changes in the market prices of the fund's securities. The
exercise of such authority by the Board of Trustees will be subject to the
provisions of the 1940 Act, and the Board of Trustees will not take any action
described in this paragraph unless the proposed action has been disclosed in
writing to the fund's shareholders at least 30 days prior thereto.
ADDITIONAL INFORMATION CONCERNING TAXES
---------------------------------------
The following summarizes certain additional tax considerations
generally affecting the Trust and its shareholders that are not described in the
Prospectuses. 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.
-85-
<PAGE> 91
Each Fund of the Trust will be treated as a separate corporate
entity under the Internal Revenue Code of 1986, as amended (the "Code"), and
intends to qualify and continue to qualify as a regulated investment company. In
order to qualify and continue to qualify for tax treatment as a regulated
investment company under the Code, the Fund must satisfy, in addition to the
distribution requirement described in the Prospectuses, certain requirements
with respect to the source of its income during a taxable year. At least 90% of
the gross income of the 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 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 the 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.
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 the Fund does not qualify for federal
tax treatment as a regulated investment company, all of the Fund's taxable
income will be subject to federal and, potentially, state 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 Securities) 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.
A 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."
The tax principles applicable to transactions in financial
instruments and futures contacts and options that may be engaged in by a Fund,
and investments in passive foreign investment companies ("PFICs"), are complex
and, in some cases, uncertain. Such transactions and investments may cause a
Fund to recognize taxable income prior to the receipt of cash, thereby requiring
the Fund to liquidate other positions, or to borrow money, so as to make
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<PAGE> 92
sufficient distributions to shareholders to avoid corporate-level tax. Moreover,
some or all of the taxable income recognized may be ordinary income or
short-term capital gain, so that the distributions may be taxable to
shareholders as ordinary income.
In addition, in the case of any shares of a PFIC in which a
Fund invests, the Fund may be liable for corporate-level tax on any ultimate
gain or distributions on the shares if the Fund fails to make an election to
recognize income annually during the period of its ownership of the shares.
Although each Fund expects to qualify as a regulated
investment company and to be relieved of all or substantially all federal income
taxes, depending upon the extent of its activities in states and localities in
which its offices are maintained, in which its agents or independent contractors
are located, or in which it is otherwise deemed to be conducting business, a
Fund may be subject to the tax laws of such states or localities.
ADDITIONAL TAX INFORMATION CONCERNING THE TAX FREE BOND FUNDS, AND THE TAX FREE
-------------------------------------------------------------------------------
MONEY MARKET FUNDS.
-------------------
As described above and in the Prospectuses, the Michigan
Municipal Bond, Ohio Tax Exempt Bond, Pennsylvania Municipal Bond, National Tax
Exempt Bond, Ohio Municipal Money Market, Pennsylvania Tax Exempt Money Market
and Tax Exempt Money Market Funds are designed to provide investors with
tax-exempt interest income. The Funds are not intended to constitute a balanced
investment program and are not designed for investors seeking capital
appreciation or maximum tax-exempt income irrespective of fluctuations in
principal. Shares of the Funds would not be suitable for tax-exempt institutions
and may not be suitable for retirement plans qualified under Section 401 of the
Code, H.R. 10 plans and IRAs since such plans and accounts are generally
tax-exempt and, therefore, would not gain any additional benefit from the Funds'
dividends being tax-exempt.
The policy of the Funds is to pay each year as federal
exempt-interest dividends substantially all the Funds' Municipal Securities
interest income net of certain deductions. In order for the Funds to pay federal
exempt-interest dividends with respect to any taxable year, at the close of each
taxable quarter at least 50% of the aggregate value of their respective
portfolios must consist of tax-exempt obligations. An exempt-interest dividend
is any dividend or part thereof (other than a capital gain dividend) paid by a
Fund and designated as an exempt-interest dividend in a written notice mailed to
shareholders not later than 60 days after the close of the Fund's taxable year.
However, the aggregate amount of dividends so designated by the Funds cannot
exceed the excess of the amount of interest exempt from tax under Section 103 of
the Code received by the Funds during the taxable year over any amounts
disallowed as deductions under Sections 265 and 171(a)(2) of the Code. The
percentage of total dividends paid by the Funds with respect to any taxable year
which qualifies as federal exempt-interest dividends will be the same for all
shareholders receiving dividends from the Funds with respect to such year.
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<PAGE> 93
Shareholders are advised to consult their tax advisers with
respect to whether exempt-interest dividends would retain the exclusion under
Section 103(a) if the shareholder would be treated as a "substantial user" or a
"related person" to such user with respect to facilities financed through any of
the tax-exempt obligations held by the Funds. A "substantial user" is defined
under U.S. Treasury Regulations to include a non-exempt person who regularly
uses a part of such facilities in his or her trade or business and whose gross
revenues derived with respect to the facilities financed by the issuance of
bonds are more than 5% of the total revenues derived by all users of such
facilities, or who occupies more than 5% of the usable area of such facilities
or for whom such facilities or a part thereof were specifically constructed,
reconstructed or acquired. A "related person" includes certain related natural
persons, affiliated corporations, partners and partnerships, and S corporations
and their shareholders.
ADDITIONAL TAX INFORMATION CONCERNING THE OHIO TAX EXEMPT BOND AND OHIO
-----------------------------------------------------------------------
MUNICIPAL MONEY MARKET FUNDS
----------------------------
The Ohio Tax Exempt Bond and Ohio Municipal Money Market Funds
are not subject to the Ohio personal income or school district or municipal
income taxes in Ohio. The Funds are not subject to the Ohio corporation
franchise tax or the Ohio dealers in intangibles tax, provided that, if there is
a sufficient nexus between the State of Ohio and such entity that would enable
the State to tax such entity, the Funds timely file the annual report required
by Section 5733.09 of the Ohio Revised Code. The Ohio Tax Commissioner has
waived the annual filing requirement for every tax year since 1990, the first
year to which such requirement applied.
Shareholders of the Funds otherwise subject to Ohio personal
income tax or municipal or school district income taxes in Ohio imposed on
individuals and estates will not be subject to such taxes on distributions with
respect to shares of the Funds ("Distributions") to the extent that such
Distributions are properly attributable to interest on or gain from the sale of
Ohio Municipal Securities.
Shareholders otherwise subject to the Ohio corporation
franchise tax will not be required to include Distributions in their tax base
for purposes of calculating the Ohio corporation franchise tax on the net income
basis to the extent that such Distributions either (a) are properly attributable
to interest on or gain from the sale of Ohio Municipal Securities, (b) represent
"exempt-interest dividends" for federal income tax purposes, or (c) are
described in both (a) and (b). Shares of the Fund will be included in a
shareholder's tax base for purposes of computing the Ohio corporation franchise
tax on the net worth basis.
Distributions that consist of interest on obligations of the
United States or its territories or possessions or of any authority, commission,
or instrumentality of the United States that is exempt from state income taxes
under the laws of the United States (including obligations issued by the
governments of Puerto Rico, the Virgin Islands or Guam and their authorities or
municipalities) ("Territorial Obligations") are exempt from the Ohio personal
income tax, and municipal and school district income taxes in Ohio, and,
provided, in the case of Territorial
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<PAGE> 94
Obligations, such interest is excluded from gross income for federal income tax
purposes, are excluded from the net income base of the Ohio corporation
franchise tax.
It is assumed for purposes of this discussion of State and
Local Taxes that each Fund will continue to qualify as a regulated investment
company under the Code, and that at all times at least 50% of the value of the
total assets of the Fund consists of Ohio Municipal Securities or similar
obligations of other states or their subdivisions.
* * * * *
The foregoing is only a summary of some of the important tax
considerations generally affecting purchasers of shares of the Funds. No attempt
has been made to present a detailed explanation of the federal income tax
treatment of the Funds or their shareholders or of state tax treatment of the
Funds or their shareholders, and this discussion is not intended as a substitute
for careful tax planning. Accordingly potential purchasers of shares of the
Funds are urged to consult their own tax advisers with specific reference to
their own tax situation. In addition, the foregoing discussion is based on tax
laws and regulations which are in effect on the date of this Statement of
Additional Information; such laws and regulations may be changed by legislative
or administrative action.
TRUSTEES AND OFFICERS
---------------------
The business and affairs of the Trust are managed under the
direction of the Trust's Board of Trustees in accordance with the laws of the
Commonwealth of Massachusetts and the Trust's Declaration of Trust. The trustees
and executive officers of the Trust, their ages, addresses, principal
occupations during the past five years, and other affiliations are as follows:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
POSITION WITH DURING PAST 5 YEARS
NAME AND ADDRESS THE TRUST AND OTHER AFFILIATIONS
---------------- --------- ----------------------
<S> <C> <C>
Robert D. Neary Chairman of the Board and Trustee Retired Co-Chairman of Ernst & Young,
32980 Creekside Drive April 1984 to September 1993; Director,
Pepper Pike, OH 44124 Cold Metal Products, Inc., since March
Age 67 1994; Director, Strategic Distribution,
Inc., since January 1999. Trustee, The
Armada Advantage Fund, since 1998.
</TABLE>
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<PAGE> 95
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
POSITION WITH DURING PAST 5 YEARS
NAME AND ADDRESS THE TRUST AND OTHER AFFILIATIONS
---------------- --------- ----------------------
<S> <C> <C>
Herbert R. Martens, Jr.* President and Trustee Executive Vice President, National City
c/o NatCity Investments, Inc. Corporation (bank holding company),
1965 East Sixth Street since July 1997; Chairman, President and
Cleveland, OH 44114 Chief Executive Officer, NatCity
Age 48 Investments, Inc. (investment banking),
since July 1995; President and Chief
Executive Officer, Raffensberger, Hughes
& Co. (broker-dealer) from 1993 until
1995; President, Reserve Capital Group,
from 1990 until 1993. President and Trustee,
The Armada Advantage Fund, since 1998
John F. Durkott Trustee President and Chief Operating Officer,
8600 Allisonville Road Kittle's Home Furnishings Center, Inc., since
Indianapolis, IN 46250 January 1982; partner, Kittle's Bloomington
Age 56 Properties LLC, since January 1981; partner,
KK&D LLC, since January 1989; partner, KK&D II
LLC, (affiliated real estate companies of
Kittle's Home Furnishings Center, Inc.) since
February 1998; Trustee, The Armada Advantage
Fund, since 1998
Robert J. Farling Trustee Retired Chairman, President and Chief
1608 Balmoral Way Executive Officer, Centerior Energy
Westlake, OH 44145 (electric utility), March 1992 to
Age 62 October 1997; Director, National City
Bank until October 1997; Director,
Republic Engineered Steels, October 1997
to September 1998. Trustee, The Armada
Advantage Fund, since 1998
</TABLE>
-90-
<PAGE> 96
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
POSITION WITH DURING PAST 5 YEARS
NAME AND ADDRESS THE TRUST AND OTHER AFFILIATIONS
---------------- --------- ----------------------
<S> <C> <C>
Richard W. Furst Trustee Garvice D. Kincaid Professor of Finance
2133 Rothbury Road and Dean, Gatton College of Business and
Lexington, KY 40515 Economics, University of Kentucky, since
Age 62 1981; Director, The Seed Corporation
(restaurant group), since 1990;
Director; Foam Design, Inc.,
(manufacturer of industrial and
commercial foam products), since 1993;
Director, Office Suites Plus, Inc.
(office buildings) since 1998; Director,
ihigh.com, Inc., (Internet company)
since 1999; Trustee, The Armada
Advantage Fund, since 1998
Gerald L. Gherlein Trustee Retired; formerly, the Executive
3679 Greenwood Drive Vice-President and General Counsel,
Pepper Pike, OH 44124 Eaton Corporation (global manufacturing),
Age 62 from 1991 to March, 2000; Trustee,
The Armada Advantage Fund, since 1998
J. William Pullen Trustee President and Chief Executive Officer,
Whayne Supply Company Whayne Supply Co. (engine and heavy
1400 Cecil Avenue equipment distribution), since 1986;
P.O. Box 35900 Trustee, The Armada Advantage Fund, since 1998
Louisville, KY 40232-5900
Age 61
W. Bruce McConnel, III Secretary Partner, Drinker Biddle & Reath LLP,
One Logan Square Philadelphia, Pennsylvania (law firm).
18th and Cherry Streets
Philadelphia, PA 19103-6996
Age 57
</TABLE>
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<PAGE> 97
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
POSITION WITH DURING PAST 5 YEARS
NAME AND ADDRESS THE TRUST AND OTHER AFFILIATIONS
---------------- --------- ----------------------
<S> <C> <C>
John Leven Treasurer Director of Funds Accounting of SEI
One Freedom Valley Drive Investments since March 1999; Division
Oaks, PA 19456 Controller, First Data Corp.,
Age 42 February 1998 to March 1999; Corporate
Controller, FPS Services (mutual funds
servicing company), February 1993 to
February 1998; Treasurer, FPS Broker
Services, Inc. from March 1993 to
December 1998.
Timothy D. Barto Assistant Treasurer Vice President and Assistant Secretary,
One Freedom Valley Drive SEI Investments Mutual Funds Services
Oaks, PA 19456 and SEI Investments Distribution Co.,
Page 32 since 1999; Associate, Dechert Price &
Rhoads (law firm), 1997 to 1999;
Associate, Richter, Miller & Finn, 1994
to 1997.
</TABLE>
---------------
*Mr. Martens is considered by the Trust to be an "interested person"
of the Trust as defined in the 1940 Act.
As of the date of this Statement of Additional Information,
the trustees of the Trust as a group owned beneficially less than 1% of the
outstanding shares of each of the Funds of the Trust, and less than 1% of the
outstanding shares of all of the Funds of the Trust in the aggregate.
Mr. Martens is an "interested person" because (1) he is an
Executive Vice President of National City Corporation, the parent corporation to
IMC, which receives fees as investment adviser to the Trust, (2) he owns shares
of common stock and options to purchase common stock of National City
Corporation, and (3) he is the Chief Executive Officer of NatCity Investments,
Inc., a broker-dealer affiliated with National City Investment Management
Company.
Mr. Leven and Mr. Barto are employed by SEI Investments Mutual
Funds Services, which receives fees as Administrator to the Trust. Mr. Barto is
also employed by SEI Investments Distribution Co., which receives fees as
Distributor to the Trust. Mr. McConnel is a partner of the law firm, Drinker
Biddle & Reath LLP, which receives fees as counsel to the Trust.
With respect to the Trust and The Armada Advantage Fund
("Armada Advantage"), each trustee receives an annual fee of $15,000 plus $3,000
for each Board meeting attended and reimbursement of expenses incurred in
attending meetings. The two fund
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<PAGE> 98
companies generally hold concurrent Board meetings. The Chairman of the Board
is entitled to receive an additional $5,000 per annum for services in such
capacity.
The following table summarizes the compensation for each of
the Trustees of the Trust for the fiscal year ended May 31, 2000:
<TABLE>
<CAPTION>
Pension or Estimated
Aggregate Retirement Benefits Approval Total Compensation
Name of Compensation Accrued as Part of Benefits Upon from the Trust and
Person, Position from the Trust the Trust's Expense Retirement Fund Complex*
---------------- -------------- -------------------- ---------- -------------
<S> <C> <C> <C> <C>
Robert D. Neary, $29,634.18 $0 $0 $35,000
Chairman and Trustee
Leigh Carter, Trustee $25,400.73 $0 $0 $30,000
John F. Durkott, Trustee $25,400.73 $0 $0 $30,000
Robert J. Farling, Trustee $25,400.73 $0 $0 $30,000
Richard W. Furst, Trustee $25,400.73 $0 $0 $30,000
Gerald L. Gherlein, Trustee $25,400.73 $0 $0 $30,000
Herbert R. Martens, Jr., $0 $0 $0 $0
President and Trustee
J. William Pullen, Trustee $25,400.73 $0 $0 $30,000
</TABLE>
---------------------
* The "Fund Complex" consists of the Trust and Armada Advantage (formerly
known as The Parkstone Advantage Fund) and, until June 16, 2000, the
Parkstone Group of Funds ("Parkstone"). Each of the Trustees serves as
Trustee to both investment companies. The Trustees became trustees of
Parkstone and Armada Advantage effective August 14, 1998.
The Trustees may elect to defer payment of 25% to 100% of the
fees they receive in accordance with a Trustee Deferred Compensation Plan (the
"Plan"). Under the Plan, a Trustee may elect to have his or her deferred fees
treated as if they had been invested by the Trust in the shares of one or more
portfolios of the Trust and the amount paid to the Trustee under the Plan will
be determined based on the performance of such investments. Distributions are
generally of equal installments over a period of 2 to 15 years. The Plan will
remain unfunded for federal income tax purposes under the Code. Deferral of
Trustee fees in accordance with
-93-
<PAGE> 99
the Plan will have a negligible impact on portfolio assets and liabilities and
will not obligate the Trust to retain any trustee or pay any particular level of
compensation.
CODE OF ETHICS
--------------
The Trust, IMC, the Sub-Adviser and the Distributor have each
adopted codes of ethics under Rule 17j-1 of the 1940 Act that (i) establish
procedures for personnel with respect to personal investing, (ii) prohibit or
restrict certain transactions that may be deemed to create a conflict of
interest between personnel and the Funds, and (iii) permit personnel to invest
in securities, including securities that may be purchased or held by the Funds.
The codes of ethics are on file with, and available from, the SEC's Public
Reference Room in Washington, D.C.
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 or her being or having been a
shareholder and not because of his or her 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 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 or her
own bad faith, willful misfeasance, gross negligence, or reckless disregard of
his or her 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 or she may be involved or
with which he or she may be threatened by reason of his or her 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 or she been a trustee.
-94-
<PAGE> 100
ADVISORY, ADMINISTRATION, DISTRIBUTION, CUSTODIAN
-------------------------------------------------
SERVICES AND TRANSFER AGENCY AGREEMENTS
---------------------------------------
ADVISORY AGREEMENTS
-------------------
IMC serves as investment adviser to the: (a) International Equity, Small
Cap Value, Small Cap Growth, Equity Index, Tax Managed Equity, Balanced
Allocation and Ohio Municipal Money Market Funds under an Advisory Agreement
dated April 9, 1998; (b) Money Market, Treasury Money Market, Government Money
Market, Tax Exempt Money Market, Pennsylvania Municipal Bond, National Tax
Exempt Bond, Intermediate Bond, GNMA, Bond, Equity Growth, Equity Income, Ohio
Tax Exempt Bond and Pennsylvania Municipal Money Market Funds under an Advisory
Agreement dated November 19, 1997; (c) Core Equity, Limited Maturity Bond and
Total Return Advantage Funds under an Advisory Agreement dated March 6, 1998;
(d) Mid Cap Growth, Large Cap Ultra, U.S. Government Income, Michigan Municipal
Bond and Treasury Plus Money Market Funds under an Advisory Agreement dated June
9, 2000. The Strategic Income Bond Fund will enter into an Advisory Agreement
with IMC effective at the time the Fund commences operations. Prior to such
dates, National City Bank or an affiliate served as adviser to the Funds other
than the Core Equity Fund.
National Asset Management Corporation ("NAM") serves as investment
sub-adviser to the Core Equity and Total Return Advantage Funds (the
"Sub-Adviser") pursuant to a Sub-Advisory Agreement dated March 6, 1998. Prior
to June 29, 1998, NAM served as adviser to the Core Equity, Total Return
Advantage and Limited Maturity Bond (formerly, Enhanced Income) Funds. IMC is a
wholly owned subsidiary of National City Corporation, a bank holding company
with $85 billion in assets, and headquarters in Cleveland, Ohio and over 1,300
branch offices in six states. From time to time, the Adviser may voluntarily
waive fees or reimburse the Trust for expenses.
During the last three fiscal years, the Trust incurred advisory fees as set
forth below:
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED MAY 31:
------------------------------------------
FUND 2000 1999 1998
---- ---- ---- ----
<S> <C> <C> <C>
Core Equity Fund.....................................................$ 1,178,813 $ 947,557 $ 608,222(1)
Equity Growth Fund...................................................$11,127,549 $ 8,840,432 $ 2,395,579
Equity Income Fund...................................................$ 3,920,942 $ 3,169,439 $ 1,237,195
Equity Index Fund....................................................$ 719,779 $ 0(2) (*)
International Equity Fund............................................$ 3,743,257 $ 1,723,308 $ 570,684(1)
Large Cap Ultra Fund(3)..............................................$ 3,313,382 $ 3,460,325 $ 2,681,620
Mid Cap Growth Fund(3)...............................................$ 3,834,987 $ 4,989,834 $ 6,103,574
Small Cap Growth Fund................................................$ 1,304,010 $ 611,655 $ 208,833(1)
Small Cap Value Fund.................................................$ 2,991,781 $ 2,360,071 $ 1,989,606
Tax Managed Equity Fund..............................................$ 2,069,464 $ 1,302,931 $ 0(4)
Balanced Allocation Fund.............................................$ 592,684 $ 422,2782 (*)
Bond Fund............................................................$ 3,833,002 $ 3,589,348 $ 574,688
</TABLE>
-95-
<PAGE> 101
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED MAY 31:
------------------------------------------
FUND 2000 1999 1998
---- ---- ---- ----
<S> <C> <C> <C>
GNMA Fund............................................................$ 587,315 $ 491,789 $ 395,769
Intermediate Bond Fund...............................................$1,231,299 $ 1,057,813 $ 593,301
Limited Maturity Bond Fund...........................................$ 304,231 $ 172,808 $ 65,970
Total Return Advantage Fund..........................................$1,154,130 $ 1,105,774 $ 404,823
U.S. Government Income Fund(3).......................................$ 950,408 $ 991,623 $ 1,002,856
Michigan Municipal Bond Fund(3)......................................$1,074,133 $ 1,310,099 $ 1,267,497
National Tax Exempt Bond Fund........................................$ 341,765 $ 36,100 $ 0(4)
Ohio Tax Exempt Bond Fund............................................$ 640,475 $ 71,985 $ 0
Pennsylvania Municipal Bond Fund.....................................$ 147,815 $ 78,742 $ 150,120
Government Money Market Fund.........................................$3,949,786 $ 3,699,448 $ 2,815,875
Money Market Fund....................................................$9,565,355 $ 8,013,996 $ 6,126,877
Ohio Municipal Money Market Fund.....................................$ 237,022 $ 103,978(5) (*)
Pennsylvania Tax Exempt Money Market Fund............................$ 200,000 $ 203,004 $ 142,220
Tax Exempt Money Market Fund.........................................$ 890,875 $ 924,937 $ 742,324
Treasury Money Market Fund...........................................$1,072,558 $ 980,380 $ 766,895
Treasury Plus Money Market Fund(3)...................................$ 864,032 $ 1,656,809 $ 1,905,446
</TABLE>
------------------------
(*) Not in operation during the period.
(1) For the period August 1, 1997 (commencement of operations) to May 31, 1998.
(2) For the period July 10, 1998 (commencement of operations) to May 31, 1999.
(3) Advisory fees shown in the tables above for the Large Cap Ultra, Mid Cap
Growth, Michigan Municipal Bond, U.S. Government Income and Treasury Plus
Money Market Funds were paid by to the corresponding Parkstone Continuing
Funds.
(4) For the period April 9, 1998 (commencement of operations) to May 31, 1998.
(5) For the period September 15, 1998 (commencement of operations) to May 31,
1999.
During the last three fiscal years, advisory fees were waived as set forth
below:
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED MAY 31:
----------------------------------------
FUND 2000 1999 1998
---- ---- ---- ----
<S> <C> <C> <C>
Core Equity Fund................................................... $ 0 $ 0 $ 64,683(1)
Equity Growth Fund................................................. $ 0 $ 0 $ 0
Equity Income Fund................................................. $ 0 $ 0 $ 0
Equity Index Fund.................................................. $ 619,477 $ 503,834(2) (*)
International Equity Fund.......................................... $ 0 $ 0 $ 50,784(1)
Large Cap Ultra Fund(3)............................................ $ 0 $ 0 $ 0
Mid Cap Growth Fund(3)............................................. $ 0 $ 0 $ 0
Small Cap Growth Fund.............................................. $ 0 $ 0 $ 18,000(1)
Small Cap Value Fund............................................... $ 0 $ 0 $ 0
Tax Managed Equity Fund............................................ $ 0 $ 308,130 $ 173,851(4)
Balanced Allocation Fund........................................... $ 0 $ 0(2) (*)
Bond Fund.......................................................... $ 0 $ 0 $ 0
GNMA Fund.......................................................... $ 0 $ 0 $ 0
</TABLE>
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<PAGE> 102
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED MAY 31:
----------------------------------------
FUND 2000 1999 1998
---- ---- ---- ----
<S> <C> <C> <C>
Intermediate Bond Fund............................................. $ 461,741 $ 396,680 $ 222,488
Limited Maturity Bond Fund......................................... $ 86,921 $ 173,823 $ 264,973
Total Return Advantage Fund........................................ $ 659,510 $ 634,144 $1,133,101
U.S. Government Income Fund(3)..................................... $ 191,061 $ 639,043 $ 646,269
Michigan Municipal Bond Fund(3).................................... $ 134,996 $ 452,581 $ 437,864
National Tax Exempt Bond Fund...................................... $ 222,217 $ 492,594 $ 62,113(4)
Ohio Tax Exempt Bond Fund.......................................... $ 426,963 $1,060,233 $ 649,247
Pennsylvania Municipal Bond Fund................................... $ 91,469 $ 137,798 $ 56,245
Government Money Market Fund....................................... $1,579,899 $1,479,779 $1,126,349
Money Market Fund.................................................. $3,827,616 $3,205,598 $2,451,233
Ohio Municipal Money Market Fund................................... $ 316,036 $ 157,160(5) (*)
Pennsylvania Tax Exempt Money Market Fund.......................... $ 333,324 $ 338,340 $ 237,029
Tax Exempt Money Market Fund....................................... $1,189,864 $1,233,250 $ 989,768
Treasury Money Market Fund......................................... $ 214,514 $ 196,076 $ 153,379
Treasury Plus Money Market Fund(3)................................. $ 0 $ 0 $ 0
</TABLE>
-----------------------------
(*) Not in operation during the period.
(1) For the period August 1, 1997 (commencement of operations) to May 31, 1998.
(2) For the period July 10, 1998 (commencement of operations) to May 31, 1998.
(3) Advisory fee waivers shown in the table above for the Large Cap Ultra, Mid
Cap Growth, Michigan Municipal Bond, U.S. Government Income and Treasury
Plus Money Market Funds applied to the corresponding Parkstone Continuing
Funds.
(4) For the period April 9, 1998 (commencement of operations) to May 31, 1998.
(5) For the period September 15, 1998 (commencement of operations) to May 31,
1999.
Subject to the supervision of the Trust's Board of Trustees, IMC or NAM, as
applicable, will provide a continuous investment program for each Fund,
including investment research and management with respect to all securities and
investments and cash equivalents in each Fund. IMC or NAM will determine from
time to time what securities and other investments will be purchased, retained
or sold by each Fund. IMC or NAM will provide the services under this Agreement
in accordance with each Fund's investment objective, policies, and restrictions
as stated in the Prospectus and resolutions of the Trust's Board of Trustees
applicable to such Fund.
Each Advisory and Sub-Advisory Agreement provides that the Adviser and
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 the
Advisory or Sub-Advisory Agreements, 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 or Sub-adviser in the performance of their duties or from
reckless disregard by them of their duties and obligations thereunder.
Unless sooner terminated, the Advisory Agreements will continue in effect
with respect to the Funds to which they relate until September 30, 1999 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 such Funds (as
defined in the Funds' Prospectus) and a
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<PAGE> 103
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 Agreements and Sub-Advisory
Agreement may be terminated by the Trust or the Adviser or sub-advisers on 60
days written notice, and will terminate immediately in the event of its
assignment.
ADMINISTRATION SERVICES
-----------------------
The Trust has entered into a co-administration agreement with SEI
Investments Mutual Fund Services ("SIMFS") and National City Bank ("NCB" and,
together with SIMFS, the "Co-Administrators") effective as of August 1, 2000
(the "Co-Administration Agreement"), pursuant to which SIMFS and NCB have agreed
to serve as Co-Administrators to the Trust. Prior to August 1, 2000, SIMFS
served as sole administrator to the Trust pursuant to an advisory agreement
dated as of May 1, 1998 (the "SIMFS Administration Agreement"). Also prior to
August 1, 2000, NCB provided sub-administration services to the Trust pursuant
to a sub-administration agreement between SIMFS and NCB dated as of May 1, 1998
(the "Sub-Administration Agreement"). SIMFS paid NCB fees for its services under
the Sub-Administration Agreement. The Trust paid no fees directly to NCB for
sub-administration services. Prior to May 1, 1998, PFPC, Inc. ("PFPC") served as
administrator and accounting agent to each Fund other than the Tax Managed
Equity and National Tax Exempt Bond Funds (for which SIMFS served as
administrator) and the Parkstone Continuing Funds. Prior to January 1, 2000,
BISYS Fund Services served as administrator to the Parkstone Continuing Funds.
On January 1, 2000, SIMFS became administrator to the Parkstone Continuing
Funds. BISYS continued to provide fund accounting services to the Parkstone
Continuing Funds until April 3, 2000 when SIMFS assumed full responsibilities as
administrator.
The Co-Administrators provide a wide variety of accounting, shareholder and
administrative services to the Trust under the Co-Administration Agreement. The
Co-Administration Agreement provides that the Co-Administrators 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 matters to which the Co-Administration
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or negligence on the part of the Co-Administrators in the performance of their
duties or from reckless disregard by them of their duties and obligations
thereunder. The Co-Administration Agreement also provides that the
Co-Administration Agreement creates no joint and/or several liability among the
Co-Administrators with respect to any loss arising out of services provided by a
specific Co-Administrator.
SIMFS, a Delaware business trust, has its principal business offices at One
Freedom Valley Drive, Oaks, Pennsylvania 19456. SEI Investments Management
Corporation, a wholly-owned subsidiary of SEI Investments Company ("SEI
Investments"), is the owner of all beneficial interests in SIMFS. SEI
Investments and its affiliates, including SIMFS, are leading providers of funds
evaluation services, trust accounting systems, and brokerage and information
services to financial institutions, institutional investors, and money managers.
NCB,
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<PAGE> 104
which is a wholly owned subsidiary of National City Corporation and an affiliate
of the Adviser, has its principal offices at 1900 East Ninth Street, Cleveland,
Ohio, 04414.
Under the Co-Administration Agreement, the Co-Administrators are entitled
to receive administration fees, computed daily and paid monthly, at the
following annual rates based on the aggregate average daily net assets of all of
the Funds:
<TABLE>
<CAPTION>
AGGREGATE PORTION ALLOCATED PORTION ALLOCATED
COMBINED AVERAGE DAILY NET ASSETS ANNUAL RATE TO SIMFS TO NCB
--------------------------------- ----------- -------- ------
<S> <C> <C> <C> <C>
Up to $16 billion........................... 0.070% 0.050% 0.020%
From $16 to 20 billion...................... 0.070% 0.040% 0.030%
Over $20 billion............................ 0.065% 0.035% 0.030%
</TABLE>
Under the SIMFS Administration Agreement, SIMFS was entitled to receive
administration fees, computed daily and paid monthly, at the following annual
rates based on the aggregate average daily net assets of all of the Funds:
COMBINED AVERAGE DAILY NET ASSETS ANNUAL RATE
Up to $18 billion........................... 0.070%
Over $18 billion............................ 0.060%
During the fiscal years ended May 31, 2000 and 1999, and the period May 1,
1998 through May 31, 1998, the Trust paid to SIMFS administration fees as set
forth below:
<TABLE>
<CAPTION>
FUND 2000 1999 1998
---- ---- ---- ----
<S> <C> <C> <C>
Core Equity Fund .................. $ 110,023 $ 89,073 $ 6,096(1)
Equity Growth Fund ................ $1,038,577 $ 830,212 $ 19,814
Equity Income Fund ................ $ 365,957 $ 295,814 $ 10,576
Equity Index Fund ................. $ 267,854 $ 100,767(2) (*)
International Equity Fund ......... $ 227,436 $ 116,269 $ 8,857(1)
Large Cap Ultra Fund(3) ........... $ 168,898(4) N/A N/A
Mid Cap Growth Fund(3) ............ $ 170,367(4) N/A N/A
Small Cap Growth Fund ............. $ 91,281 $ 45,999 $ 4,252(1)
Small Cap Value Fund .............. $ 209,426 $ 180,236 $ 16,100
Tax Managed Equity Fund ........... $ 193,152 $ 150,366 $ 15,886(5)
Balanced Allocation Fund .......... $ 55,317 $ 41,193(2) (*)
Bond Fund ......................... $ 487,839 $ 457,444 $ 6,901
GNMA Fund ......................... $ 74,749 $ 62,591 $ 4,405
Intermediate Bond Fund ............ $ 215,479 $ 185,117 $ 8,873
Limited Maturity Bond Fund ........ $ 60,845 $ 54,342 $ 4,081
Total Return Advantage Fund ....... $ 230,828 $ 223,081 $ 13,648
U.S. Government Income Fund(3)..... $ 76,176(4) N/A N/A
Michigan Municipal Bond Fund(3).... $ 79,077(4) N/A N/A
National Tax Exempt Bond Fund...... $ 71,780 $ 67,288 $ 8,247(5)
Ohio Tax Exempt Bond Fund ......... $ 135,856 $ 144,100 $ 9,113
</TABLE>
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<PAGE> 105
<TABLE>
<CAPTION>
FUND 2000 1999 1998
---- ---- ---- ----
<S> <C> <C> <C>
Pennsylvania Municipal Bond Fund............... $ 30,455 $ 27,560 $ 2,069
Government Money Market Fund................... $1,105,946 $1,035,845 $ 68,224
Money Market Fund.............................. $2,677,878 $2,261,919 $ 138,647
Ohio Municipal Money Market Fund............... $ 110,613 $ 74,228(6) (*)
Pennsylvania Tax Exempt Money Market Fund...... $ 93,331 $ 94,553 $ 5,562
Tax Exempt Money Market Fund................... $ 416,452 $ 431,637 $ 29,782
Treasury Money Market Fund..................... $ 300,318 $ 274,506 $ 18,670
Treasury Plus Money Market Fund(3)............. $ 106,823(4) N/A N/A
</TABLE>
-----------------------
(*) Not in operation during the period.
(1) For the period August 1, 1997 (commencement of operations) through May 31,
1998.
(2) For the period July 10, 1998 (commencement of operations) through May 31,
1999.
(3) Administration fees shown for the Large Cap Ultra, Mid Cap Growth, U.S.
Government Income, Michigan Municipal Bond and Treasury Plus Money Market
Funds were paid by the corresponding Parkstone Continuing Funds.
(4) For the period January 1, 2000 through May 31, 2000.
(5) For the period April 9, 1998 (commencement of operations) through May 31,
1998.
(6) For the period September 15, 1998 (commencement of operations) through May
31, 1999.
For the fiscal years ended May 31, 2000, 1999 and 1998, SIMFS waived no
administration fees.
For the period June 1, 1997 through April 30, 1998, the Trust paid PFPC
administration and accounting fees after fee waivers as set forth below:
FUND
----
Core Equity Fund...................................... $ 0(1)
Equity Growth Fund.................................... $ 264,998
Equity Income Fund.................................... $ 148,763
Equity Index Fund..................................... (*)
International Equity Fund............................. $ 0(1)
Small Cap Growth Fund................................. $ 7,970(1)
Small Cap Value Fund.................................. $ 227,796
Balanced Allocation Fund.............................. (*)
Bond Fund............................................. $ 94,631
GNMA Fund............................................. $ 65,665
Intermediate Bond Fund................................ $ 135,648
Limited Maturity Bond Fund............................ $ 67,984
Total Return Advantage Fund........................... $ 241,258
Ohio Tax Exempt Bond Fund............................. $ 105,026
Pennsylvania Municipal Bond Fund...................... $ 36,010
Government Money Market Fund.......................... $ 239,017
Money Market Fund..................................... $ 523,266
Ohio Municipal Money Market Fund...................... (*)
Pennsylvania Tax Exempt Money Market Fund............. $ 36,010
Tax Exempt Money Market Fund.......................... $ 187,219
Treasury Money Market Fund............................ $ 65,115
-----------------------------
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<PAGE> 106
(*) Not in operation during the period.
(1) For the period August 1, 1997 (commencement of operations) through April
30, 1998.
For the period June 1, 1997 through April 30, 1998, PFPC waived
administration and accounting fees as set forth below:
FUND
----
Core Equity Fund ........................... $80,647(1)
Equity Growth Fund ......................... $ 0
Equity Income Fund ......................... $ 0
Equity Index Fund .......................... (*)
International Equity Fund .................. $71,716(1)
Small Cap Growth Fund ...................... $17,789(1)
Small Cap Value Fund ....................... $ 0
Balanced Allocation Fund ................... (*)
Bond Fund .................................. $ 0
GNMA Fund .................................. $ 0
Intermediate Bond Fund ..................... $ 0
Limited Maturity Bond Fund ................. $ 0
Total Return Advantage Fund ................ $ 0
Ohio Tax Exempt Bond Fund .................. $ 0
Pennsylvania Municipal Bond Fund ........... $ 0
Government Money Market Fund ............... $ 0
Money Market Fund .......................... $ 0
Ohio Municipal Money Market Fund ........... (*)
Pennsylvania Tax Exempt Money Market Fund... $ 0
Tax Exempt Money Market Fund ............... $ 0
Treasury Money Market Fund ................. $ 0
-----------------------------
(*) Not in operation during the period.
(1) For the period August 1, 1997 (commencement of operations) through April
30, 1998.
For the fiscal years ended May 31, 1998 and 1999, and the period June 1,
1999 through April 3, 2000, the Parkstone Continuing Funds paid BISYS
administration fees as follows:
<TABLE>
<CAPTION>
FUND 2000 1999 1998
---- ---- ---- ----
<S> <C> <C> <C>
Large Cap Ultra Fund........................................ $ 643,324 $ 865,089 $ 670,411
Mid Cap Growth Fund......................................... $ 535,346 $ 997,974 $ 1,220,724
U.S. Government Income Fund................................. $ 294,191 $ 440,724 $ 445,707
Michigan Municipal Bond Fund................................ $ 311,111 $ 476,403 $ 460,912
Treasury Plus Money Market Fund............................. $ 355,292 $ 828,412 $ 952,742
</TABLE>
For the fiscal years ended May 31, 1998 and 1999, and the period June 1,
1999 through April 3, 2000, BISYS waived administration fees for the Parkstone
Continuing Funds as follows:
<TABLE>
<CAPTION>
FUND 2000 1999 1998
---- ---- ---- ----
<S> <C> <C> <C>
Large Cap Ultra Fund........................................ $ 0 $ 0 $ 0
Mid Cap Growth Fund......................................... $ 0 $ 0 $ 0
</TABLE>
-101-
<PAGE> 107
<TABLE>
<CAPTION>
FUND 2000 1999 1998
---- ---- ---- ----
<S> <C> <C> <C>
U.S. Government Income Fund................................. $ 191,061 $ 103,020 $ 111,428
Michigan Municipal Bond Fund................................ $ 61,721 $ 230,331 $ 230,452
Treasury Plus Money Market Fund............................. $ 108,862 $ 405,054 $ 476,362
</TABLE>
DISTRIBUTION PLANS AND RELATED AGREEMENT
----------------------------------------
The Distributor acts as distributor of the Fund's shares pursuant to its
Distribution Agreement with the Trust. Shares are sold on a continuous basis.
Pursuant to Rule 12b-1 of the 1940 Act, the Trust has adopted a Service and
Distribution Plan for A and I Share Classes (the "A and I Shares Plan"), a B
Shares Distribution and Servicing Plan ("B Shares Plan"), and a C Shares
Distribution and Servicing Plan (the "C Shares Plan," and, collectively, the
"Plans") which permit the Trust to bear certain expenses in connection with the
distribution of I Shares and A Shares, B Shares, or C Shares, respectively. As
required by Rule 12b-1, the Trust's Plans and related agreements 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 Plans
or any agreement relating to the Plans, by vote cast in person at a meeting
called for the purpose of voting on the Plans and related agreements. In
compliance with the Rule, the trustees requested and evaluated information they
thought necessary to an informed determination of whether the Plans and related
agreements 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 Plans and related agreements 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 quarterly reports on the amounts expended and the
purposes for the expenditures.
Any change in a Plan that would materially increase the distribution
expenses of a class would require approval by the shareholders of such class,
but otherwise, such 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 particular Plan or related agreements. The Plans and related
agreements may be terminated as to a particular Fund or class by a vote of the
Trust's disinterested trustees or by vote of the shareholders of the Fund or
class in question, 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 A and I Shares Plan provides that each Fund will reimburse the
Distributor for distribution expenses related to the distribution of Class A
shares and Class I shares in an amount not to exceed .10% per annum of the
average aggregate net assets of such shares. Costs and expenses reimbursable
under the A and I Shares Plan are (a) direct and indirect costs and expenses
incurred in connection with the advertising and marketing of a Fund's A and I
shares, including but not limited to any advertising or marketing via radio,
-102-
<PAGE> 108
television, newspapers, magazines, or direct mail solicitation, and (b) direct
and indirect costs and expenses incurred in preparing, printing and distributing
a Fund's prospectus for such shares (except those used for regulatory purposes
or for distribution to existing shareholders) and in implementing and operating
the A and I Shares Plan.
The B Shares Plan provides that each B share class will compensate the
Distributor for distribution of Class B shares in an amount not to exceed .75%
per annum of the average daily net assets of such class. The C Shares Plan
provides that a Fund may compensate the Distributor for distribution of Class C
shares in an amount not to exceed .75% per annum of the average daily net assets
of such shares. Payments to the Distributor under the B Shares Plan and C Shares
Plan are to be used by the Distributor to cover expenses and activities
primarily intended to result in the sale of a Fund's B shares and C shares,
respectively. Such expenses and activities may include but are not limited to:
(a) direct out-of-pocket promotional expenses incurred by the Distributor in
advertising and marketing B shares and C shares; (b) expenses incurred in
connection with preparing, printing, mailing, and distributing or publishing
advertisements and sales literature; (c) expenses incurred in connection with
printing and mailing Prospectuses and Statements of Additional Information to
other than current shareholders; (d) periodic payments or commissions to one or
more securities dealers, brokers, financial institutions or other industry
professionals, such as investment advisers, accountants, and estate planning
firms (severally, "a Distribution Organization") with respect to a Fund's B
shares or C shares beneficially owned by customers for whom the Distribution
Organization is the dealer of record or holder of record of such B shares or C
shares; (e) the direct or indirect cost of financing the payments or expenses
included in (a) and (d) above; or (e) for such other services as may be
construed, by any court or governmental agency or commission, including the SEC,
to constitute distribution services under the 1940 Act or rules and regulations
thereunder.
The Plans have been approved by the Board of Trustees, 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 any Plan or interested persons of any such party and who have no
direct or indirect financial interest in any Plan and (2) the vote of a majority
of the entire Board of Trustees.
During the fiscal year ended May 31, 2000, the Trust paid the Distributor
the following approximate amounts under the A and I Shares Plan, B Shares Plan
and C Shares Plan for its distribution services and shareholder service
assistance:
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<PAGE> 109
<TABLE>
<CAPTION>
FISCAL YEAR 2000 DISTRIBUTION FEES
PORTFOLIO DISTRIBUTION MARKETING/ TOTAL FEES
SERVICES CONSULTATION
<S> <C> <C> <C>
Core Equity Fund $ 15,005 $ 35,013 $ 50,018
Equity Growth Fund $ 208,503 $ 486,506 $ 695,009
Equity Income Fund $ 63,195 $ 147,454 $ 210,649
Equity Index Fund $ 334 $ 778 $ 1,112
International Equity Fund $ 32,791 $ 76,511 $ 109,302
Large Cap Ultra Fund(*) $ 33,183 $ 77,426 $ 110,609
Mid Cap Growth Fund(*) $ 63,405 $ 147,944 $ 211,349
Small Cap Growth Fund $ 14,999 $ 34,998 $ 49,997
Small Cap Value Fund $ 36,268 $ 84,624 $ 120,892
Tax Managed Equity Fund $ 32,135 $ 74,980 $ 107,115
Balanced Allocation Fund $ 9,661 $ 22,543 $ 32,204
Bond Fund $ 82,881 $ 193,389 $ 276,270
GNMA Fund $ 12,416 $ 28,970 $ 41,386
Intermediate Bond Fund $ 36,460 $ 85,074 $ 121,534
Limited Maturity Bond Fund $ 61 $ 142 $ 203
Total Return Advantage Fund $ 1,049 $ 2,446 $ 3,495
U.S. Government Income Fund(*) $ 22,855 $ 53,327 $ 76,182
Michigan Municipal Bond Fund(*) $ 17,448 $ 40,711 $ 58,159
National Tax Exempt Bond Fund $ 12,417 $ 28,974 $ 41,391
Ohio Tax Exempt Bond Fund $ 23,364 $ 54,517 $ 77,881
Pennsylvania Municipal Bond Fund $ 21 $ 48 $ 69
Government Money Market Fund $ 181,060 $ 422,473 $ 603,553
</TABLE>
-104-
<PAGE> 110
<TABLE>
<CAPTION>
PORTFOLIO DISTRIBUTION MARKETING/ TOTAL FEES
SERVICES CONSULTATION
<S> <C> <C> <C>
Money Market Fund $ 445,373 $1,039,202 $1,484,575
Ohio Municipal Money Market Fund $ 20,792 $ 48,514 $ 69,306
Pennsylvania Tax Exempt Money $ 22,633 $ 52,809 $ 75,442
Market Fund
Tax Exempt Money Market Fund $ 92,372 $ 215,536 $ 307,908
Treasury Money Market Fund $ 57,731 $ 134,704 $ 192,435
Treasury Plus Money Market Fund(*) $ 2,215 $ 5,167 $ 7,382
</TABLE>
(*)Distribution fees shown for the Large Cap Ultra, Mid Cap Growth, U.S.
Government Income, Michigan Municipal Bond and Treasury Plus Money Market Funds
were paid by the corresponding Parkstone Continuing Funds.
Distribution services include broker/dealer and investor support, voice
response development, wholesaling services, legal review and NASD filings and
transfer agency management. Marketing/Consultation includes planning and
development, market and industry research and analysis and marketing strategy
and planning.
CUSTODIAN SERVICES AND TRANSFER AGENCY AGREEMENTS
-------------------------------------------------
NCB, with offices at 1900 East Ninth Street, Cleveland, Ohio 44114, serves
as the Trust's custodian with respect to the Funds. Under its Custodian Services
Agreement, National City Bank has agreed to:
(i) maintain a separate account or accounts in the name of each Fund;
(ii) hold and disburse portfolio securities on account of the Funds;
(iii) collect and make disbursements of money on behalf of the Funds;
(iv) collect and receive all income and other payments and distributions on
account of the Funds' portfolio securities;
(v) respond to correspondence by security brokers and others relating to
its duties;
(vi) make periodic reports to the Board of Trustees concerning the Funds'
operations.
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<PAGE> 111
NCB is authorized to select one or more banks or trust companies to serve
as sub-custodian on behalf of the Funds, provided that it shall remain
responsible for the performance of all of its duties under the Custodian
Services Agreement and shall hold the Funds harmless from the acts and omissions
of any bank or trust company serving as sub-custodian. Each Fund reimburses
National City Bank for its direct and indirect costs and expenses incurred in
rendering custodial services.
State Street Bank and Trust Company (the "Transfer Agent"), P.O. Box 8421
Boston, Massachusetts 02266-8421 serves as the Trust's transfer agent and
dividend disbursing agent with respect to the Funds. 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;
(v) make periodic reports to the Board of Trustees concerning the Fund's
operations.
The Transfer Agent sends each shareholder of record periodic statements
showing the total number of shares owned as of the last business day of the
period (as well as the dividends paid during the current period 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 each Fund.
SHAREHOLDER SERVICES PLANS
--------------------------
The Trust has implemented a Shareholder Services Plan with respect to each
Fund's A Shares and has implemented the B Shares Plan pursuant to which 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 A Shares or B Shares in consideration for the payment of up to .25%
(on an annualized basis) for the International Equity, Small Cap Value, Small
Cap Growth, Equity Growth, Tax Managed Equity, Core Equity, Equity Index, Equity
Income, Balanced Allocation, Total Return Advantage, Bond, Intermediate Bond,
GNMA, Mid Cap Growth, U.S. Government Income, Large Cap Ultra and Strategic
Income Bond Funds of the net asset value of such shares.
Pursuant to the Shareholder Services Plan and B Shares 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 A
Shares or B Shares in consideration for the payment of up to .15% (on an
annualized basis) for the Ohio Municipal Money Market,
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<PAGE> 112
Pennsylvania Tax Exempt Money Market, Tax Exempt Money Market, Money Market,
Government Money Market, Treasury Money Market and Treasury Plus Money Market
Funds of the net asset value of such shares.
Pursuant to the Shareholder Services Plan and B Shares 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 A
Shares or B Shares in consideration for the payment of up to .10% (on an
annualized basis), in the case of the Limited Maturity Bond, Ohio Tax Exempt
Bond, Pennsylvania Municipal Bond, National Tax Exempt Bond and Michigan
Municipal Bond Funds of the net asset value of such shares.
Pursuant to the C Shares 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 C Shares in consideration for
the payment of up to .25% (on an annualized basis), of the net asset value of
such shares. Services under the Shareholder Services Plan, B Shares Plan and C
Shares Plan 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 Class A Shares, Class B Shares or Class C Shares;
(iii) processing dividend payments from the Funds;
(iv) providing information periodically to customers showing their position
in Class A Shares, Class B Shares or Class C Shares;
(v) arranging for bank wires;
(vi) responding to customer inquiries relating to the services performed
with respect to Class A Shares, Class B Shares or Class C Shares
beneficially owned by customers;
(vii) providing subaccounting for customers or providing information to the
transfer agent for subaccounting;
(viii) forwarding shareholder communications; and
(ix) 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.
PORTFOLIO TRANSACTIONS
----------------------
Pursuant to its Advisory Agreement with the Trust, IMC is responsible for
making decisions with respect to and placing orders for all purchases and sales
of portfolio securities for the Funds. The Adviser or 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
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<PAGE> 113
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.
For the last three fiscal years, the Trust paid brokerage commissions as
follows:
<TABLE>
<CAPTION>
FUND 2000 1999 1998
---- ---- ---- ----
<S> <C> <C> <C>
Core Equity Fund............................ $ 116,186 $ 0 $ 0(1)
Equity Growth Fund.......................... $ 877,246 $1,271,614 $1,398,444
Equity Income Fund.......................... $ 541,396 $ 249,890 $ 86,349
Equity Index Fund........................... $ 172,962 $ 93,484(2) (*)
International Equity Fund................... $1,361,482 $ 726,464 $ 290,141(1)
Large Cap Ultra Fund(3)..................... $ 839,727 $ 414,931 $ 279,187
Mid Cap Growth Fund(3)...................... $1,061,836 $1,208,884 $ 599,906
Small Cap Growth Fund....................... $ 677,189 $ 503,450 $ 51,366(1)
Small Cap Value Fund........................ $1,892,956 $1,102,442 $ 780,933
Tax Managed Equity Fund..................... $ 24,414 $ 26,801 $ 0(4)
Balanced Allocation Fund.................... $ 110,235 $ 33,019(2) (*)
Bond Fund................................... $ 0 $ 0 $ 0
GNMA Fund................................... $ 0 $ 0 $ 0
Intermediate Bond Fund...................... $ 0 $ 0 $ 0
Limited Maturity Bond Fund.................. $ 0 $ 0 $ 0
Total Return Advantage Fund................. $ 0 $ 0 $ 0
U.S. Government Income Fund(3).............. $ 0 $ 0 $ 0
Michigan Municipal Bond Fund(3)............. $ 0 $ 0 $ 0
National Tax Exempt Bond Fund............... $ 0 $ 0 $ 0(4)
Ohio Tax Exempt Bond Fund................... $ 0 $ 0 $ 0
Pennsylvania Municipal Bond Fund............ $ 0 $ 0 $ 0
</TABLE>
------------------------------
(*) Not in operation during the period.
(1) For the period August 9, 1997 (commencement of operations) through May 31,
1998.
(2) For the period July 10, 1998 (commencement of operations) through May 31,
1999.
(3) Brokerage commissions shown for the Large Cap Ultra, Mid Cap Growth, U.S.
Government Income and Michigan Municipal Bond Funds were paid by the
corresponding Parkstone Continuing Funds.
(4) For the period April 9, 1998 (commencement of operations) through May 31,
1998.
While the Adviser (including 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 the Adviser in its best judgment and in a manner deemed
fair and reasonable to shareholders. Under the Advisory Agreements, pursuant to
Section 28(e) of the Securities Exchange Act of 1934, as amended, the Adviser is
authorized to negotiate and pay higher brokerage commissions in exchange for
research services rendered by broker-dealers. Subject to this consideration,
broker-dealers who provide supplemental investment research to the Adviser may
receive orders for transactions by
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<PAGE> 114
the Funds. Information so received is in addition to and not in lieu of services
required to be performed by the Adviser and does not reduce the fees payable to
the Adviser by the Funds. Such information may be useful to the 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 in carrying out its obligations to the Trust.
Portfolio securities will not be purchased from or sold to the Trust's
Adviser, 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
correspondents with respect to such transactions, securities, savings deposits,
repurchase agreements and reverse repurchase agreements.
The Trust is required to identify any securities of its "regular brokers or
dealers" that it has acquired during its most recent fiscal year. At May 31,
2000, (a) the Equity Index Fund had acquired securities of: Bear Stearns, J.P.
Morgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, Dean Witter Discover and
Paine Webber; (b) the Mid Cap Growth Fund had entered into repurchase
transactions with: Prudential Bache Securities; (c) the Small Cap Growth Fund
had entered into repurchase transactions with: Prudential Bache Securities; (d)
the Small Cap Value Fund had entered into repurchase transactions with:
Prudential Bache Securities; (e) the Balanced Allocation Fund had entered into
repurchase transactions with: Prudential Bache Securities; and had acquired
securities of: Credit Suisse First Boston and Prudential Bache Securities; (f)
the Bond Fund had acquired securities of: Credit Suisse First Boston and
Prudential Bache Securities; (g) the GNMA Fund had acquired securities of:
Credit Suisse First Boston; (h) the Intermediate Bond Fund had acquired
securities of: Credit Suisse First Boston, Merrill Lynch and Prudential Bache
Securities; (i) the Limited Maturity Bond Fund had acquired securities of:
Merrill Lynch; (j) the Total Return Advantage Fund had acquired securities of:
Bear Stearns, Morgan Stanley, Dean Witter Discover and Merrill Lynch; (k) the
Money Market Fund had entered into repurchase transactions with: Credit Suisse
First Boston, Prudential Bache Securities and Salomon Smith Barney; and had
acquired the securities of: Merrill Lynch; (l) the Government Money Market Fund
had entered into repurchase transactions with: Credit Suisse First Boston,
Prudential Bache Securities and Salomon Smith Barney; and (m) the Treasury Plus
Money Market Fund had entered into repurchase transactions with Goldman Sachs,
J.P.Morgan, Merrill Lynch, Morgan Stanley and Prudential Bache Securities.
The Adviser has agreed to maintain a policy and practice of conducting its
investment management activities independently of its respective commercial
departments of all of the Adviser's affiliates. In making investment
recommendations for the Trust, the Adviser's personnel will not inquire or take
into consideration whether the issuer of securities proposed for purchase or
sale for the Trusts' accounts are customers of the commercial departments of all
of the Adviser's affiliates.
Investment decisions for a Fund are made independently from those for the
other Funds and for other investment companies and accounts advised or managed
by the
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<PAGE> 115
Adviser. Such other Funds, investment companies and accounts may also invest in
the same securities as the Fund. When a purchase or sale of the same security is
made at substantially the same time on behalf 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 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.
In connection therewith, and to the extent permitted by law, and by the Advisory
Agreement, the 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
advisory clients.
During the last fiscal year, the following Funds engaged in directed
brokerage transactions in the following amounts and for the following
commissions: the Equity Growth Fund, $159,039,207 in transactions and $207,427
in commissions; the Small Cap Value Fund, $49,370,926 in transactions and
$144,081 in commissions; the Equity Income Fund, $242,237,943 in transactions
and $145,649 in commissions; the Small Cap Growth Fund, $21,711,113 in
transactions and $25,843 in commissions; the Core Equity Fund, $43,188,494 in
transactions and $52,770 in commissions; the Tax Managed Equity Fund, $1,831,251
in transactions and $1,960 in commissions; the Equity Index Fund, $31,242,436 in
transactions and $5,576 in commissions; the Balanced Allocation Fund, $4,946,375
in transactions and $349 in commissions; the International Equity Fund, $656,980
in transactions and $814 in commissions; the Large Cap Ultra Fund, $28,654,031
in transactions and $169,684 in commissions; the Mid Cap Growth Fund,
$19,805,534 in transactions and $120,993 in commissions.
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. The financial highlights for the Funds
included in the Prospectuses and the financial statements for the Funds
contained in the Armada Funds 2000 Annual Report (the "Annual Report") and
incorporated by reference into this Statement of Additional Information have
been audited by Ernst & Young LLP, except as described below.
The financial highlights for the Armada GNMA Fund, Armada Pennsylvania
Municipal Bond Fund, and Armada Pennsylvania Tax Exempt Money Market Fund from
April 30, 1995 through May 31, 1996 included in the Prospectuses were audited by
such Funds' former independent accountants.
The financial highlights for the Armada Bond Fund included in the
Prospectuses represent the financial highlights of the Parkstone Bond Fund,
whose financial statements and performance history were adopted by the Armada
Bond Fund described on page 1 of this Statement of Additional Information. The
financial highlights for the Parkstone Bond Fund for the periods prior to the
fiscal year ended May 31, 2000 were
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<PAGE> 116
audited by PricewaterhouseCoopers LLP, former independent accountants to the
Parkstone Group of Funds.
The financial highlights and financial statements for the fiscal years
ended prior to May 31, 2000, included in the Prospectuses and the Annual Report
for the Armada Bond Fund, Armada Mid Cap Growth Fund, Armada Large Cap Ultra
Fund, Armada U.S. Government Income Fund, Armada Michigan Municipal Bond Fund
and Armada Treasury Plus Money Market Fund, which are incorporated by reference
into this Statement of Additional Information, are of each Fund's corresponding
Parkstone Continuing Fund, and were audited by PricewaterhouseCoopers LLP,
Parkstone's former independent accountants.
COUNSEL
-------
Drinker Biddle & Reath LLP (of which Mr. McConnel, Secretary of the Trust,
is a partner), with offices at One Logan Square, 18th and Cherry Streets,
Philadelphia, Pennsylvania 19103-6996, is counsel to the Trust and will pass
upon the legality of the shares offered hereby. Squire, Sanders & Dempsey,
L.L.P. with offices at 4900 Key Center, 127 Public Square, Cleveland, Ohio
44114-1304 acts as special Ohio tax counsel for the Trust and has reviewed the
section of this Statement of Additional Information entitled "Additional Tax
Information concerning the Ohio Tax Exempt Bond and Ohio Municipal Money Market
Funds." Dickinson Wright PLLC, with offices at 38525 Woodward Ave., Suite 2000,
Bloomfield Hills, Michigan 48304-2970, acts as special Michigan counsel for the
Trust and has reviewed the sections of the Statement of Additional Information
involving matters related to the Michigan Municipal Bond Fund.
PERFORMANCE INFORMATION
-----------------------
YIELD FOR THE FIXED INCOME FUNDS AND TAX FREE FUNDS
---------------------------------------------------
Each Fund's "yield" is calculated by dividing the Fund's net
investment income per share earned during a 30-day period (or another period
permitted by the rules of the SEC) by the net asset value per share on the last
day of the period and annualizing the result on a semi-annual basis by adding
one to the quotient, raising the sum to the power of six, subtracting one from
the result and then doubling the difference. The Fund's net investment income
per share earned during the period is based on the average daily number of
shares outstanding during the period entitled to receive dividends and includes
dividends and interest earned during the period minus expenses accrued for the
period, net of reimbursements. This calculation can be expressed as follows:
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<PAGE> 117
Yield = 2 [([(a-b)/cd] + 1) to the 6th power) - 1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends.
d = maximum offering price per share on the last day of
the period.
The Fixed Income Funds and Tax Free Funds calculate interest earned on debt
obligations held in their portfolios by computing the yield to maturity of each
obligation held by it based on the market value of the obligation (including
actual accrued interest) at the close of business on the last business day of
each 30-day period, or, with respect to obligations purchased during the 30-day
period, the purchase price (plus actual accrued interest) and dividing the
result by 360 and multiplying the quotient by the market value of the obligation
(including actual accrued interest) in order to determine the interest income on
the obligation for each day of the subsequent 30-day period that the obligation
is in the Fund. The maturity of an obligation with a call provision is the next
call date on which the obligation reasonably may be expected to be called or, if
none, the maturity date. With respect to debt obligations purchased by the Fund
at a discount or premium, the formula generally calls for amortization of the
discount or premium. The amortization schedule will be adjusted monthly to
reflect changes in the market values of such debt obligations.
Interest earned on tax-exempt obligations that are issued without original
issue discount and have a current market discount is calculated by using the
coupon rate of interest instead of the yield to maturity. In the case of
tax-exempt obligations that are issued with original issue discount but which
have discounts based on current market value that exceed the then-remaining
portion of the original issue discount (market discount), the yield to maturity
is the imputed rate based on the original issue discount calculation. On the
other hand, in the case of tax-exempt obligations that are issued with original
issue discount but which have discounts based on current market value that are
less than the then-remaining portion of the original issue discount (market
premium), the yield to maturity is based on the market value.
Expenses accrued for the period (variable "b" in the formula) include all
recurring fees charged by the Fund to all shareholder accounts in proportion to
the length of the base period and the Fund's mean (or median) account size.
Undeclared earned income will be subtracted from the net asset value per share
(variable "d" in the formula). Undeclared earned income is the net investment
income which, at the end of the 30-day base period, has not been declared as a
dividend, but is reasonably expected to be and is declared as a dividend shortly
thereafter. For applicable sales charges, see "Sales Charges - Front-End Sales
Charges -
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<PAGE> 118
Class A Shares" and "Sales Charges - Contingent Deferred Sales Charges - Class B
Shares and Class C Shares" in the Prospectuses.
The "tax-equivalent yield" is computed by dividing the portion of a Fund's
yield (calculated as above) that is exempt from federal income tax by one minus
a stated federal income tax rate and adding that figure to that portion, if any,
of the Fund's yield that is not exempt from federal income tax.
For the 30-day period ended May 31, 2000, the yields and, as applicable,
the tax-equivalent yields of the Class I Shares of each of the Fixed Income
Funds (except the Strategic Income Bond Fund) and the Tax Free Funds were:
TAX-EQUIVALENT
FUND YIELD YIELD
---- ----- -----
Bond.................................... 7.06% (*)
GNMA.................................... 5.97% (*)
Intermediate Bond....................... 7.16% (*)
Limited Maturity Bond................... 7.27% (*)
Total Return Advantage.................. 6.90% (*)
U.S. Government Income.................. 6.31% (*)
Michigan Municipal Bond................. 4.50% 7.98%
National Tax Exempt Bond................ 4.55% 7.53%
Ohio Tax Exempt Bond.................... 4.50% 8.40%
Pennsylvania Municipal Bond............. 3.87% 6.72%
----------------------
(*) Not applicable
For the 30-day period ended May 31, 2000, the yields and, as applicable,
the tax-equivalent yields of the Class A Shares of each of the Fixed Income
Funds (other than the Strategic Income Bond Fund) and the Tax Free Funds were:
TAX-EQUIVALENT
FUND YIELD YIELD
---- ----- -----
Bond.................................... 6.48% (*)
GNMA.................................... 5.44% (*)
Intermediate Bond....................... 6.56% (*)
Limited Maturity Bond................... 6.96% (*)
Total Return Advantage.................. 6.33% (*)
U.S. Government Income.................. 5.73% (*)
Michigan Municipal Bond................. 4.04% 7.14%
National Tax Exempt Bond................ 4.23% 7.00%
Ohio Tax Exempt Bond.................... 4.27% 7.97%
Pennsylvania Municipal Bond............. 3.67% 6.37%
----------------------
(*) Not applicable
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<PAGE> 119
For the 30-day period ended May 31, 2000, the yields and, as applicable,
the tax-equivalent yields of the Class B Shares of each of the Fixed Income
Funds (other than the Strategic Income Bond Fund) and the Tax Free Funds were:
TAX-EQUIVALENT
FUND YIELD YIELD
---- ----- -----
Bond.................................... 6.11% (*)
GNMA.................................... 5.01% (*)
Intermediate Bond....................... 6.19% (*)
Limited Maturity Bond................... 6.28% (*)
Total Return Advantage.................. 5.91% (*)
U.S. Government Income.................. 5.29% (*)
Michigan Municipal Bond................. 3.50% 6.20%
National Tax Exempt Bond................ 3.73% 6.18%
Ohio Tax Exempt Bond.................... (**) (**)
Pennsylvania Municipal Bond............. (**) (**)
----------------------
(*) Not applicable
(**) Class B Shares not offered as of May 31, 2000.
For the 30-day period ended May 31, 2000, the yields and, as applicable,
the tax-equivalent yields of the Class C Shares of each of the Fixed Income
Funds (other than the Strategic Income Bond Fund) and the Tax Free Funds were:
TAX-EQUIVALENT
FUND YIELD YIELD
---- ----- -----
Bond.................................... 6.11% (*)
GNMA.................................... 5.01% (*)
Intermediate Bond....................... (**) (*)
Limited Maturity Bond................... 6.28% (*)
Total Return Advantage.................. (**) (*)
U.S. Government Income.................. (**) (*)
Michigan Municipal Bond................. (**) (**)
National Tax Exempt Bond................ (**) (**)
Ohio Tax Exempt Bond.................... (**) (**)
Pennslyvania Municipal Bond............. (**) (**)
----------------------
(*) Not applicable
(**) Class C Shares not offered as of May 31, 2000.
The tax equivalent yields provided in the tables above assumed a 39.6%
federal tax rate for each Fund; and a 6.799% Ohio tax rate for the Ohio Tax
Exempt Bond Fund; a 2.8% Pennsylvania tax rate for the Pennsylvania Tax Exempt
Bond Fund; and a 4.4% Michigan tax rate for the Michigan Municipal Bond Fund.
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<PAGE> 120
YIELDS FOR THE MONEY MARKET FUNDS
---------------------------------
Yields for the Money Market Funds are computed by: (1) determining the net
change, exclusive of capital changes and income other than investment income, in
the value of a hypothetical pre-existing account in a Money Market Fund having a
balance of one share at the beginning of a seven-day period, for which the yield
is to be quoted, (2) dividing the net change in account value by the value of
the account at the beginning of the base period to obtain the base period
return, and (3) annualizing the results (i.e., multiplying the base period
return by (365/7)). The net change in the value of the account in each Money
Market Fund includes the value of additional shares purchased with dividends
from the original share and dividends declared on both the original share and
any such additional shares, and all fees that are charged by a Money Market Fund
to all shareholder accounts in proportion to the length of the base period,
other than non-recurring account and sales charges. For any account fees that
vary with the size of the account, the amount of fees charged is computed with
respect to the Money Market Fund's mean (or median) account size. The capital
changes to be excluded from the calculation of the net change in account value
are realized gains and losses from the sale of securities and unrealized
appreciation and depreciation. The effective compound yield quotation for each
Money Market Fund is computed by adding 1 to the base period return (calculated
as described above), raising the sum to a power equal to 365 divided by 7, and
subtracting 1 from the result.
The Ohio Municipal Money Market Fund, Pennsylvania Tax Exempt Money Market
and Tax Exempt Money Market Fund may calculate a "tax equivalent yield." The tax
equivalent yield is computed by dividing that portion of a Fund's yield which is
tax-exempt by one minus a stated income tax rate and adding the product to that
portion, if any, of the Fund's computed yield that is not tax-exempt. Tax
equivalent yields assume the payment of federal income taxes at a rate of 39.6%.
For the seven-day period ended May 31, 2000, the yields and effective
yields for Class A Shares of the Money Market Funds, and the tax-equivalent
yield for Class A Shares of the Tax-Exempt Money Market, Ohio Municipal Money
Market and Pennsylvania Tax Exempt Money Market Funds were:
<TABLE>
<CAPTION>
TAX-EQUIVALENT
FUND YIELD EFFECTIVE YIELD YIELD
---- ----- --------------- -----
<S> <C> <C> <C>
Government Money Market.................... 5.80% 5.97% (*)
Money Market............................... 5.96% 6.14% (*)
Ohio Municipal Money Market................ 3.69% 3.76% 6.57%
Pennsylvania Tax Exempt Money Market....... 3.75% 3.82% 6.39%
Tax-Exempt Money Market.................... 3.70% 3.77% 6.13%
Treasury Money Market...................... 5.10% 5.23% (*)
Treasury Plus Money Market................. 5.64% 5.80% (*)
</TABLE>
----------------------
(*) Not applicable
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<PAGE> 121
For the seven-day period ended May 31, 2000, the yield and effective yield
for Class I Shares of the Money Market Funds, and the tax-equivalent yields for
Class I Shares of the Tax Exempt Money Market, Ohio Municipal Money Market and
Pennsylvania Tax-Exempt Money Market Funds were:
<TABLE>
<CAPTION>
TAX-EQUIVALENT
FUND YIELD EFFECTIVE YIELD YIELD
---- ----- --------------- -----
<S> <C> <C> <C>
Government Money Market..................... 5.95% 6.13% (*)
Money Market................................ 6.11% 6.30% (*)
Ohio Municipal Money Market................. 3.84% 3.91% 6.84%
Pennsylvania Tax Exempt Money Market........ 3.90% 3.98% 6.65%
Tax Exempt Money Market..................... 3.85% 3.92% 6.38%
Treasury Money Market....................... 5.25% 5.39% (*)
Treasury Plus Money Market.................. 5.74% 5.90% (*)
</TABLE>
----------------------
* Not applicable
For the seven-day period ended May 31, 2000, the yield and effective yield
for Class B Shares of the Money Market Fund were 5.15% and 5.29%, respectively.
The tax equivalent yields provided in the tables above assumed a 39.6%
federal tax rate for each Fund; and a 6.799% Ohio tax rate for the Ohio
Municipal Money Market Fund; and a 2.8% Pennsylvania tax rate for the
Pennsylvania Tax Exempt Money Market Fund.
TOTAL RETURN
------------
Each Fund (other than the Money Market Funds) 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:
T = [(ERV to the power 1/n / P) - 1]
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
-116-
<PAGE> 122
P = hypothetical initial payment of $1,000
n = period covered by the computation, expressed in
terms of years
Each 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:
T = (ERV/P) - 1
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 contingent
deferred sales charges and other nonrecurring charges at the end of the
measuring period covered by the computation.
The following table shows the average annual total returns since inception
for the Funds (other than the Money Market Funds) as of May 31, 2000, both with
and without deduction of any applicable sales charges:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
AVERAGE ANNUAL TOTAL RETURN RETURN FROM INCEPTION
FROM INCEPTION THROUGH THROUGH 5/31/00 (WITHOUT
5/31/00 (WITH DEDUCTION OF DEDUCTION FOR
MAXIMUM SALES CHARGE) ANY SALES CHARGE) INCEPTION DATE
--------------------------- ------------------------ --------------
<S> <C> <C> <C>
Armada Core Equity Fund
Class A 15.81% 18.14% 08/01/97
Class B 18.41% 19.71% 01/06/98
Class C(1) -0.45% 0.55% 01/20/00
Class I N/A 18.43% 08/01/97
</TABLE>
-117-
<PAGE> 123
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
AVERAGE ANNUAL TOTAL RETURN RETURN FROM INCEPTION
FROM INCEPTION THROUGH THROUGH 5/31/00 (WITHOUT
5/31/00 (WITH DEDUCTION OF DEDUCTION FOR
MAXIMUM SALES CHARGE) ANY SALES CHARGE) INCEPTION DATE
--------------------------- ------------------------ --------------
<S> <C> <C> <C>
Armada Equity Growth Fund
Class A 15.33% 16.04% 04/15/91
Class B 18.27% 19.58% 01/06/98
Class C(1) 0.21% 1.21% 01/27/00
Class I N/A 16.55% 12/20/89
Armada Equity Income Fund
Class A 12.35% 13.46% 08/22/94
Class B 2.04% 3.63% 01/06/98
Class C(1) 3.65% 4.65% 01/27/00
Class I N/A 13.89% 07/01/94
Armada Equity Index
Class A 18.52% 21.31% 10/15/98
Class B(1) -3.54% 1.46% 01/04/00
Class C(1) -4.14% -3.17% 01/17/00
Class I N/A 12.74% 07/10/98
Armada International Equity Fund
Class A 13.44% 15.72% 08/01/97
Class B 20.49% 21.77% 01/06/98
Class C(1) -4.48% -3.51% 01/05/00
Class I N/A 16.07% 08/01/97
Armada Large Cap Ultra Fund(2)
Class A 25.05% 26.70% 02/01/96
Class B 25.59% 25.80% 02/01/96
Class C (*) (*) (*)
Class I N/A 27.36% 12/28/95
Armada Mid Cap Growth Fund(2)
Class A 16.45% 17.02% 10/31/88
Class B 17.36% 17.36% 02/04/94
Class C (*) (*) (*)
Class I N/A 17.11% 10/31/88
Armada Small Cap Growth Fund
Class A 13.15% 15.42% 08/01/97
Class B 13.13% 14.52% 01/06/98
Class C -10.96% -10.06% 01/20/00
Class I N/A 15.72% 08/01/97
</TABLE>
-118-
<PAGE> 124
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
AVERAGE ANNUAL TOTAL RETURN RETURN FROM INCEPTION
FROM INCEPTION THROUGH THROUGH 5/31/00 (WITHOUT
5/31/00 (WITH DEDUCTION OF DEDUCTION FOR
MAXIMUM SALES CHARGE) ANY SALES CHARGE) INCEPTION DATE
--------------------------- ------------------------ --------------
<S> <C> <C> <C>
Armada Small Cap Value Fund
Class A 13.12% 14.22% 08/15/94
Class B 1.36% 2.90% 01/06/98
Class C(1) 10.86% 11.86% 01/27/00
Class I N/A 14.99% 07/26/94
Armada Tax Managed Equity Fund(3)
Class A 17.27% 17.68% 05/11/98
Class B N/A 17.57% 05/04/98
Class C(1) N/A N/A 01/10/00
Class I N/A 17.67% 04/09/98
Armada Balanced Allocation Fund
Class A 9.40% 12.36% 07/31/98
Class B 10.49% 13.51% 11/11/98
Class C(1) -2.50% -1.52% 04/20/00
Class I N/A 10.60% 07/10/98
Armada Bond Fund
Class A 6.38% 6.83% 10/31/88
Class B 3.91% 3.91% 02/04/94
Class C (*) (*) (*)
Class I N/A 7.02% 10/31/88
Armada GNMA Fund
Class A 4.53% 5.91% 09/11/96
Class B(1) -0.93% 4.07% 08/11/99
Class C(1) 1.16% 2.16% 01/27/00
Class I N/A 6.69% 08/10/94
Armada Intermediate Bond Fund
Class A 5.42% 5.99% 04/15/91
Class B 0.44% 1.96% 01/06/98
Class C(1) -0.78% 0.22% 05/30/00
Class I N/A 6.67% 12/20/89
Armada Limited Maturity Bond Fund
Class A 4.90% 5.42% 09/09/94
Class B(1) -2.69% 2.22% 08/11/99
Class C -0.42% 0.56% 01/27/00
Class I N/A 5.44% 07/07/94
</TABLE>
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<PAGE> 125
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
AVERAGE ANNUAL TOTAL RETURN RETURN FROM INCEPTION
FROM INCEPTION THROUGH THROUGH 5/31/00 (WITHOUT
5/31/00 (WITH DEDUCTION OF DEDUCTION FOR
MAXIMUM SALES CHARGE) ANY SALES CHARGE) INCEPTION DATE
--------------------------- ------------------------ --------------
<S> <C> <C> <C>
Armada Total Return Advantage Fund
Class A 5.30% 6.21% 09/06/94
Class B(1) -2.71% 2.17% 09/29/99
Class C (*) (*) (*)
Class I N/A 6.63% 07/07/94
Armada U.S. Government Income Fund(2)
Class A 4.81% 5.49% 11/12/92
Class B 4.46% 4.46% 02/04/94
Class C (*) (*) (*)
Class I N/A 5.70% 11/12/92
Armada Michigan Municipal Bond Fund(2)
Class A 4.79% 5.30% 07/02/90
Class B 2.81% 2.81% 02/04/94
Class C (*) (*) (*)
Class I N/A 5.48% 07/02/90
Armada National Tax Exempt Bond Fund(4)
Class A 6.20% 6.59% 06/22/98
Class B N/A 6.50% 01/28/99
Class C(1) N/A 6.46% 02/24/00
Class I N/A 6.57% 04/09/98
Armada Ohio Tax Exempt Bond Fund
Class A 4.83% 5.18% 04/15/91
Class B (*) (*) (*)
Class C (*) (*) (*)
Class I N/A 5.22% 01/05/90
Armada Pennsylvania Municipal Bond Fund
Class A 3.28% 4.12% 09/11/96
Class B (*) (*) N/A
Class C(1) -1.05% -0.06% 02/24/00
Class I N/A 4.40% 08/10/94
</TABLE>
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<PAGE> 126
N/A Not applicable.
(*) Share class not offered as of May 31, 2000.
(1) Share class had been in operation for less than one year as of May 31,
2000. Performance quoted is cumulative since inception.
(2) Total returns shown for the Mid Cap Growth, Large Cap Ultra, U.S.
Government Income and Michigan Municipal Bond Funds are those of the
corresponding Parkstone Continuing Funds.
(3) Includes the history of a predecessor common trust fund which commenced
operations June 30, 1984.
(4) Includes the history of a predecessor common trust fund which commenced
operations on July 31, 1984.
The following table shows the one year, five year and ten year returns for
the Funds (other than the Money Market Funds) for the respective periods ended
May 31, 2000:
<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS TEN YEARS INCEPTION DATE
<S> <C> <C> <C> <C>
Armada Core Equity Fund
Class A 11.98% (*) (*) 08/01/97
Class B 11.31% (*) (*) 01/06/98
Class C (*) (*) (*) 01/20/00
Class I 12.31% (*) (*) 08/01/97
Armada Equity Growth Fund
Class A 18.22% 23.92% (*) 04/15/91
Class B 17.68% (*) (*) 01/06/98
Class C (*) (*) (*) 01/27/00
Class I 18.49% 24.22% 16.41% 12/20/89
Armada Equity Income Fund
Class A -8.30% 13.51% (*) 08/22/94
Class B -8.77% (*) (*) 01/06/98
Class C (*) (*) (*) 01/27/00
Class I -7.95% 13.81% (*) 07/01/94
Armada Equity Index
Class A 9.70% (*) (*) 10/15/98
Class B (*) (*) (*) 01/04/00
Class C (*) (*) (*) 01/17/00
Class I 9.92% (*) (*) 07/10/98
Armada International Equity Fund
Class A 38.50% (*) (*) 08/01/97
Class B 37.61% (*) (*) 01/06/98
Class C (*) (*) (*) 01/05/00
Class I 38.90% (*) (*) 08/01/97
</TABLE>
-121-
<PAGE> 127
<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS TEN YEARS INCEPTION DATE
<S> <C> <C> <C> <C>
Armada Large Cap Ultra Fund(1)
Class A 26.66% (*) (*) 02/01/96
Class B 25.81% (*) (*) 02/01/96
Class C N/A N/A N/A N/A
Class I 27.25% (*) (*) 12/28/95
Armada Mid Cap Growth Fund(1)
Class A 51.48% 23.02% 16.26%
Class B 50.40% 22.13% (*) 10/31/88
Class C N/A N/A N/A 02/04/94
Class I 51.90% 23.16% 16.36% N/A
10/31/88
Armada Small Cap Growth Fund
Class A 46.49% (*) (*) 08/01/97
Class B 45.65% (*) (*) 01/06/98
Class C (*) (*) (*) 01/20/00
Class I 47.04% (*) (*) 08/01/97
Armada Small Cap Value Fund
Class A 12.59% 14.16% (*) 08/15/94
Class B 11.87% (*) (*) 01/06/98
Class C (*) (*) (*) 01/27/00
Class I 12.87% 14.58% (*) 07/26/94
Armada Tax Managed Equity Fund(2)
Class A 18.01% (*) (*) 05/11/98
Class B 16.95% (*) (*) 05/04/98
Class C (*) (*) (*) 01/10/00
Class I 18.06% (*) (*) 04/09/98
Armada Balanced Allocation Fund
Class A 15.48% (*) (*) 07/31/98
Class B 14.79% (*) (*) 11/11/98
Class C (*) (*) (*) 04/20/00
Class I 15.72% (*) (*) 07/10/98
Armada Bond Fund
Class A 0.05% 4.80% 6.74% 10/31/88
Class B -0.58% 4.03% (*) 02/04/94
Class C N/A N/A N/A N/A
Class I 0.35% 5.06% 6.96% 10/31/88
Armada GNMA Fund
Class A 2.33% (*) (*) 09/11/96
Class B (*) (*) (*) 08/11/99
Class C (*) (*) (*) 01/27/00
Class I 2.48% 5.85% (*) 08/10/94
</TABLE>
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<PAGE> 128
<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS TEN YEARS INCEPTION DATE
<S> <C> <C> <C> <C>
Armada Intermediate Bond Fund
Class A 1.25% 4.44% (*) 04/15/91
Class B 0.64% (*) (*) 01/06/98
Class C (*) (*) (*) 05/30/00
Class I 1.50% 4.77% 6.88% 12/20/89
Armada Limited Maturity Bond Fund
Class A 3.47% 5.22% (*) 09/09/94
Class B (*) (*) (*) 08/11/99
Class C (*) (*) (*) 01/27/00
Class I 3.22% 5.27% (*) 07/07/94
Armada Total Return Advantage Fund
Class A 1.41% 5.30% (*) 09/06/94
Class B (*) (*) (*) 09/29/99
Class C N/A N/A N/A N/A
Class I 1.78% 5.63% (*) 07/07/94
Armada U.S. Government Income Fund(1)
Class A 1.96% 5.47% (*) 11/12/92
Class B 1.10% 4.68% (*) 02/04/94
Class C N/A N/A N/A N/A
Class I 2.26% 5.72% (*) 11/12/92
Armada Michigan Municipal Bond Fund(1)
Class A -0.68% 3.71% (*) 07/02/90
Class B -1.41% 2.94% (*) 02/04/94
Class C N/A N/A N/A N/A
Class I -0.42% 3.96% (*) 07/02/90
Armada National Tax Exempt Bond
Fund(3)
Class A -0.02% (*) (*) 06/22/98
Class B -1.05% (*) (*) 01/28/99
Class C (*) (*) (*) 02/24/00
Class I -0.24% (*) (*) 04/09/98
</TABLE>
-123-
<PAGE> 129
<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS TEN YEARS INCEPTION DATE
<S> <C> <C> <C> <C>
Armada Ohio Tax Exempt Bond Fund
Class A -0.51% 4.27% (*) 04/15/91
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class I -0.40% 4.30% 5.37% 01/05/90
Armada Pennsylvania Municipal Bond Fund
Class A -0.05% (*) (*) 09/11/96
Class B N/A N/A N/A N/A
Class C (*) (*) (*) 02/24/00
Class I -0.06% 4.08% (*) 08/10/94
</TABLE>
N/A Share class not offered as of May 31, 2000.
(*) Not in operation during the entire period.
(1) Total returns shown for the Mid Cap Growth, Large Cap Ultra, U.S.
Government Income and Michigan Municipal Bond Funds are those of the
corresponding Parkstone Continuing Funds. Not in operation during the
entire period.
(2) Does not include the history of a predecessor common trust fund which
commenced operations on June 30, 1984.
(3) Does not include the history of a predecessor common trust fund which
commenced operations July 31, 1984.
PERFORMANCE REPORTING
From time to time, in advertisements or in reports to shareholders,
the performance of the Funds may be quoted and compared to that of other
mutual funds with similar investment objectives, to stock or other relevant
indices, to other investments or to rankings prepared by independent
services or other financial or industry publications that monitor the
performance of mutual funds. For example, the performance of the Funds may
be compared to data prepared by Lipper Analytical Services, Inc., a widely
recognized independent service which monitors the performance of mutual
funds. The performance of the Balanced Allocation Fund and the Equity Funds
may also be compared to data prepared by the S&P 500 Index, an unmanaged
index of groups of common stocks, the Consumer Price Index, or the Dow
Jones Industrial Average, a recognized unmanaged index of common stocks of
30 industrial companies listed on the New York Stock Exchange. In addition,
the performance of the International Equity Fund may be compared to the
Morgan Stanley Capital International Index or the FT World Actuaries Index.
Performance data as reported in national financial publications including,
but not limited to, Money Magazine, Forbes, Barron's, The Wall Street Journal
and The New York Times, or publications of a local or regional nature may also
be used in comparing the performance of the Funds. The Money Market Funds may
also be compared to the average yields reported by the Bank Rate Monitor for
money market deposit accounts offered by the 50 leading banks and thrift
institutions in the top five standard metropolitan statistical areas.
-124-
<PAGE> 130
Performance data will be calculated separately for each class of shares of
the Funds.
The performance of the Funds will fluctuate and any quotation of
performance should not be considered as representative of the future performance
of the Funds. Since yields fluctuate, yield data cannot necessarily be used to
compare an investment in a Fund's shares with bank deposits, savings accounts
and similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that
performance data are generally functions of the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any additional fees charged by institutions with respect to
accounts of customers that have invested in shares of a Fund will not be
included in performance calculations.
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.
MISCELLANEOUS
-------------
The Trust 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.
As used in the Prospectus, "assets belonging to the Fund" means the
consideration received by the Trust upon the issuance of shares in that 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 the Fund. In
determining the Fund's net asset value, assets belonging to a Fund are charged
with the liabilities in respect of that Fund.
As of September 1, 2000, the following persons owned of record 5 percent or
more of the shares of the Funds of the Trust:
<TABLE>
<CAPTION>
<S> <C> <C>
CORE EQUITY FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS B SHARES) SHARES OWNED
</TABLE>
-125-
<PAGE> 131
<TABLE>
<S> <C> <C>
First Clearing Corporation 6,793.4780 5.35%
A/C 8406-2776
Trionix Research Lab Inc.
8037 Bavaria Road
Twinsburg, OH 44087-2261
CORE EQUITY FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
Bill Bartley 161.4180 40.32%
476 Baldwin Heights Cir
Howard, OH 43028-9505
SEI Trust Company CUST 39.7880 9.94%
Roth Contribution IRA
Kathleen O'Connor
1365 Clarence Avenue #101
Lakewood, OH 44107-2862
First Clearing Corporation 192.3080 48.03%
A/C 2121-4057
Patricia Ann Cartmille &
Denise C. Costilow JT TEN
14351 Concord Trl
Middleburg Hts, OH 44130-7065
CORE EQUITY FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
Sheldon & Co. TTEE 549,451.7810 6.18%
c/o National City Bank
Trust Mutual Funds
P.O. Box 94777
Cleveland, OH 44101-4777
C/O National City Bank 8,029,364.6280 90.31%
Sheldon & Co.
Trust Mutual Funds
PO Box 94777
Cleveland, OH 44101-4777
EQUITY GROWTH FUND
(CLASS A SHARES) OUTSTANDING SHARES PERCENTAGE OF FUND
SHARES OWNED
State Street Bank & Trust TTEE 4,683,460.2620 75.83%
FBO First Energy Corp.
Savings Plan
DTD 7/1/98
105 Rosemont Ave. WES/IN
Westwood, MA 02090-2318
</TABLE>
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<PAGE> 132
<TABLE>
<CAPTION>
EQUITY GROWTH FUND
(CLASS C SHARES) OUTSTANDING SHARES PERCENTAGE OF FUND
SHARES OWNED
<S> <C> <C>
First Clearing Corporation 1,277.5060 13.86%
A/C 7081-0852
Ridgway Community Nurses Srvcs
ATTN: Lori MacDonald
20 North Broad Street
Ridgway, PA 15853-1002
First Clearing Corporation 589.6640 6.40%
A/C 4858-4008
Mary S. Kowtun IRA
FCC as Custodian
6417 Rousseau Drive
Parma, OH 44129-6306
First Clearing Corporation 645.2610 7.10%
A/C 4089-7903
Hart Road Pathology SC PS
FBO Dr. James Larson
1205 Main Street
Cross Plains, WI 53528-9479
First Clearing Corporation 850.4610 9.23%
A/C 6490-8961
Homer M. Osborne IRA
FCC as Custodian
5 Patricia St
Charleroi, PA 15022-9439
First Clearing Corporation 4,140.2400 44.93%
A/C 1294-3972
Robert Henry Baker Jr IRA
FCC as Custodian
834 Georgiana St
Port Angeles, WA 98362-3512
EQUITY GROWTH FUND
(CLASS I SHARES) OUTSTANDING SHARES PERCENTAGE OF FUND
SHARES OWNED
Sheldon & Co. (Cash/Reinv) 11,927,839.4070 28.39%
C/o National City Bank
ATTN: Trust Mutual Funds
P.O. Box 94777
Cleveland, OH 44101-4777
Sheldon & Co. 6,607,391.6850 15.72%
P.O. Box 94984
ATTN: Trust Mutual Funds
Cleveland, OH 44101-4984
</TABLE>
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<PAGE> 133
<TABLE>
<S> <C> <C>
C/O National City Bank 22,326,613.7250 53.13%
Sheldon & Co.
Trust Mutual Funds
P.O. Box 94777
Cleveland, OH 44101-4777
EQUITY INCOME FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
SEI Trust Company 2,987.5040 37.65%
Cust for the Rollover IRA of
Wallace Strickland
3337 E. 149th St
Cleveland, OH 44128
First Clearing Corporation 2,354.5990 29.67%
A/C 7081-0852
Ridgway Community Nurses Srvcs
ATTN: Lori MacDonald
20 North Broad Street
Ridgway, PA 15853-1002
First Clearing Corporation 625.9390 7.89%
A/C 4858-4008
Mary S. Kowtun IRA
FCC as Custodian
6417 Rousseau Dr
Parma, OH 44129-6306
First Clearing Corporation 975.3820 12.29%
A/C 7194-4927
Wayne A. Ruhlman IRA R/O
FCC as Custodian
4376 Porter Road
North Olmsted, OH 44070-2520
</TABLE>
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<PAGE> 134
<TABLE>
<S> <C> <C>
First Clearing Corporation 650.1950 8.19%
A/C 7974-6105
Gregory S. Spudic and
Rebecca D Spudic
10434 Starboard Way
Indianapolis, IN 46256-9514
EQUITY INCOME FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
Sheldon & Co. (Reinv) 17,698,977.7570 42.35%
Attn: Trust Mutual Funds
Account #10023342
P.O. Box 94777
Cleveland, OH 44101-4777
Sheldon & Co. 8,820,848.0200 21.11%
Attn: Trust Mutual Funds
P.O. Box 94984
Cleveland, OH 44101-4984
Sheldon & Co. (Cash/Reinv) 13,242,982.6440 31.69%
c/o National City Bank
Attn: Trust Mutual Funds
P.O. Box 94777
Cleveland, OH 44101-4777
</TABLE>
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<PAGE> 135
<TABLE>
<CAPTION>
EQUITY INDEX FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS A SHARES) SHARES OWNED
<S> <C> <C>
First Clearing Corporation 44,094.8420 6.39%
A/C 6956-888
Dr. Frank Radosevich IRA
FCC as Custodian
5632 N. Isabell
Peoria, IL 61614-4135
EQUITY INDEX FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS B SHARES) SHARES OWNED
S & H Machine Product Inc. PSP 4,669.9310 7.55%
Stanimir M. Vitkovic
6180 West Smith Road
Medina, OH 44256-8949
First Clearing Corporation 8,074.6900 13.06%
A/C 8406-2776
Trionix Research Lab Inc
8037 Bavaria Road
Twinsburg, OH 44087-2261
First Clearing Corporation 4,032.0120 6.52%
A/C 5236-4538
James T. Lange IRA R/O
FCC as Custodian
5197 E. Farnhurst
Lyndhurst, OH 44124-1237
First Clearing Corporation 7,211.1360 11.67%
A/C 3672-7085
Kevin J Gray TTEE
FBO Kevin J Gray Trust
410 Ryder Road
Toledo, OH 43607-3106
First Clearing Corporation 3,987.6540 6.45%
A/C 8887-2618
Paul Yacobian IRA
FCC as Custodian
6759 Winward Hills
Brecksville, OH 44141-2469
</TABLE>
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<PAGE> 136
<TABLE>
<CAPTION>
EQUITY INDEX FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
<S> <C> <C>
First Clearing Corporation 7,996.869 23.26%
A/C 5911-3463
Lyman F. Narten IRA R/O
FCC as Custodian
15155 Heritage Lane
Chagrin Falls, OH 44022-2674
First Clearing Corporation 3,304.3170 9.61%
A/C 8645-8446
Ronald W. Watt
127 Public Sq #5200
Cleveland, OH 44114-1216
First Clearing Corporation 1,930.8130 5.62%
A/C 6785-6053
John Potochick
10889 Gordon Drive
Parma, OH 44130-5142
First Clearing Corporation 2,660.9880 7.74%
A/C 6835-6607
Betty J. Powers IRA R/O
FCC as Custodian
9838 Burton Dr.
Twinsburg, OH 44087-3206
First Clearing Corporation 9,623.0950 27.99%
A/C 4509-9613
Industrial Power Systems, Inc.
ATTN: Ron Keister &
410 Ryder Road
Toledo, OH 43607-3106
EQUITY INDEX FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
Sheldon & Co. (Reinv) 22,523,337.4230 83.37%
Attn: Trust Mutual Funds
Account #1023342
P.O. Box 94777
Cleveland, OH 44101-4777
Sheldon & Co. TTEE 1,989,539.8540 7.36%
C/O National City Bank
Trust Mutual Funds
P.O. Box 94777
Cleveland, OH 44101-4777
</TABLE>
-131-
<PAGE> 137
<TABLE>
<S> <C> <C>
Sheldon & Co. (Cash/Reinv) 1,595,025.2390 5.90%
c/o National City Bank
Attn: Trust Mutual Funds
P.O. Box 94777
Cleveland, OH 44101-4777
INTERNATIONAL EQUITY FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS A SHARES) SHARES OWNED
Trust Company of America 181,442.4970 10.09%
FBO TCA
7103 S. Revere Pkwy
Englewood, CO 80112-3936
INTERNATIONAL EQUITY FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
First Clearing Corporation 1,141.8370 8.92%
A/C 8327-1306
Janyce K White SEP IRA
FCC As Custodian
P.O. Box 831
Logansport, IN 46947-0831
First Clearing Corporation 2,774.0320 21.68%
A/C 2125-0724
Keven Crawford IRA
FCC as Custodian
1111 E St Rd 14
Winamac, IN 46996
First Clearing Corporation 692.6090 5.41%
A/C 1147-1851
Michael C Anderson
4301 East Market
PO Box 179
Logansport, IN 46947-0179
First Clearing Corporation 848.9520 6.64%
A/C 7081-0852
Ridgway Community Nurses Srvcs
ATTN: Lori MacDonald
20 North Broad Street
Ridgway, PA 15853-1002
First Clearing Corporation 1,360.5290 10.63%
A/C 8645-8446
Ronald W Watt
127 Public Sq #5200
Cleveland, OH 44114-1216
</TABLE>
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<PAGE> 138
<TABLE>
<S> <C> <C>
First Clearing Corporation 1,259.5110 9.84%
A/C 4824-4290
John P Klingbeil &
Georgann Klingbeil
26924 Westwood Lane
Olmsted Falls, OH 44138-1159
First Clearing Corporation 1,196.3010 9.35%
A/C 6604-3812
Janet M. Reed IRA
FCC as Custodian
330 Haney Avenue
Logansport, IN 46947-2118
First Clearing Corporation 1,261.1050 9.86%
A/C 1294-3972
Robert Henry Baker Jr IRA
FCC as Custodian
834 Georgiana St
Port Angeles, WA 98362-3512
First Clearing Corporation 1,066.5620 8.34%
A/C 2144-8605
Thomas L Curry JR IRA R/O
FCC as Custodian
20571 Ellacott Pkway #527
Cleveland, OH 44128-4457
INTERNATIONAL EQUITY FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
Sheldon & Co. (Reinv) 20,321,544.1590 41.50%
Attn: Trust Mutual Funds
Account #100023342
P.O. Box 94777
Cleveland, OH 44101-4777
Sheldon & Co. TTEE 17,939,544.1180 36.64%
C/o National City Bank
Trust Mutual Fds
P.O. Box 94984
Cleveland, OH 44101-4984
National City Bank 8,220,958.1710 16.79%
C/o Sheldon & Co.
Trust Mutual Fds
P.O. Box 94777
Cleveland, OH 44101-4777
</TABLE>
-133-
<PAGE> 139
<TABLE>
<CAPTION>
LARGE CAP ULTRA FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS A SHARES) SHARES OWNED
<S> <C> <C>
Soy Capital AG Services & Trust Co 75,877.4420 7.41%
455 N. Main Street
Decatur, IL 62523-1103
LARGE CAP ULTRA FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
First Clearing Corporation 11.3080 95.92%
A/C 1208-9952
Arzon & Fior Profit Sharing PL
Mayra Arzon & Carlos Fior TTEE
101 Benton Dr
Decatur, IL 62526-1407
LARGE CAP ULTRA FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
Sheldon & Co (Reinv) 7,131,080.7620 51.75%
ATTN: Trust Mutual Funds
Account #10023342
P.O. Box 94777
Cleveland, OH 44101-4777
Sheldon & Co TTEE 5,676,800.5270 41.19%
C/o National City Bank
Trust Mutual Funds
P.O. Box 94777
Cleveland, OH 44101-4777
MID CAP GROWTH FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
First Clearing Corporation 152.8900 95.85%
A/C 1208-9952
Arzon & Fior Profit Sharing PL
Mayra Arzon & Carlos Fior TTEE
101 Benton Drive
Decatur, IL 62526-1407
MID CAP GROWTH FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
Sheldon & Co (Reinv) 12,020,613.8840 68.54%
ATTN: Trust Mutual Funds
Account #10023342
P.O. Box 94777
Cleveland, OH 44101-4777
</TABLE>
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<PAGE> 140
<TABLE>
<S> <C> <C>
Sheldon & Co TTEE 4,505,581.5000 25.69%
C/o National City Bank
ATTN: Trust Mutual Funds
P.O. Box 94777
Cleveland, OH 44101-4777
SMALL CAP GROWTH FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
First Clearing Corporation 1,209.3140 15.76%
A/C 7081-0852
Ridgeway Community Nurses Srvcs
ATTN: Lori MacDonald
20 North Broad Street
Ridgway, PA 15853-1002
First Clearing Corporation 643.8910 8.39%
A/C 7194-4927
Wayne A. Ruhlman IRA R/O
FCC as Custodian
4376 Porter Road
North Olmsted, OH 44070-2520
First Clearing Corporation 1,311.1030 17.09%
A/C 4089-7903
Hart Road Pathology SC PS
FBO Dr. James Larson
1205 Main Street
Cross Plains, WI 53528-9479
First Clearing Corporation 780.1900 10.17%
A/C 4089-7905
Hart Road Pathology SC PS
FBO Dr. James Larson
1205 Main Street
Cross Plains, WI 53528-9479
First Clearing Corporation 1,270.6570 16.56%
A/C 1294-3972
Robert Henry Baker Jr IRA
FCC as Custodian
834 Georgiana St
Port Angeles, WA 98362-3512
</TABLE>
-135-
<PAGE> 141
<TABLE>
<S> <C> <C>
First Clearing Corporation 1,590.3310 20.73%
A/C 3978-1578
William H Hassall IRA
FCC as Custodian
207 Guy St
Walbridge, OH 43465-1126
SMALL CAP GROWTH FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
Sheldon & Co (Reinv) 11,338,379.5070 47.29%
Attn: Trust Mutual Funds
Acccount #10023342
P.O. Box 94777
Cleveland, OH 44101-4777
Sheldon & Co. TTEE 8,015,754.0630 33.43%
c/o National City Bank
Trust Mutual Fds
P.O. Box 94984
Cleveland, OH 44101-4984
National City Bank 3,656,485.9550 15.25%
c/o Sheldon & Co
Trust Mutual FDS
P.O. Box 94777
Cleveland, OH 44101-4777
SMALL CAP VALUE FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS B SHARES) SHARES OWNED
First Clearing Corporation 2,918.6850 5.65%
A/C 5072-0540
Judith E. Lewis IRA R/O
FCC as Custodian
1800 W. Wallings Road
Broadview Hts., OH 44147-1137
SMALL CAP VALUE FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
First Clearing Corporation 949.3690 20.14%
A/C 7081-0852
Ridgway Community Nurses Srvcs
ATTN: Lori MacDonald
20 North Broad Street
Ridgway, PA 15853-1002
</TABLE>
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<PAGE> 142
<TABLE>
<S> <C> <C>
First Clearing Corporation 1,282.8840 27.21%
A/C 4089-7903
Hart Road Pathology SC PS
FBO Dr. James Larson
1205 Main St
Cross Plains, WI 53528-9479
First Clearing Corporation 762.5910 16.18%
A/C 4089-7905
Hart Road Pathology SC PS
FBO Dr. James Larson
1205 Main St
Cross Plains, WI 53528-9479
First Clearing Corporation 1,647.2200 34.94%
A/C 6490-8961
Homer M. Osborne IRA
FCC as Custodian
5 Patricia St.
Charleroi, PA 15022-9439
SMALL CAP VALUE FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
Sheldon & Co. (Reinv) 13,392,460.1860 51.93%
Attn: Trust Mutual Funds
Account #100023342
P.O. Box 94777
Cleveland, OH 44101-4777
Sheldon & Co. 7,520,145.0250 31.51%
P.O. Box 94984
ATTN: Trust Mutual Funds
Cleveland, OH 44101-4984
Sheldon & Co. (Cash/Reinv) 2,668,291.7120 11.18%
C/o National City Bank
ATTN: Trust Mutual Funds
P.O. Box 94777
Cleveland, OH 44101-4984
TAX MANAGED EQUITY OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS A SHARES) SHARES OWNED
First Clearing Corporation 67,470.7440 5.21%
A/C 2403-5876
Cathleen A. Conry
PO Box 567
Aurora, OH 44202-0567
NFSC FEBO #Z41-257923 79,923.4880 6.17%
Allison P. Vanhartesveldt
3141 N. Quincy St.
Arlington, VA 22207-4144
</TABLE>
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<PAGE> 143
<TABLE>
<CAPTION>
TAX MANAGED EQUITY FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
<S> <C> <C>
First Clearing Corporation 3,925.7670 9.05%
A/C 2809-5755
Florence Dixon
P.O. Box 119
Cooksburg, PA 16217-0119
First Clearing Corporation 7,793.4590 17.97%
A/C 8650-9893
Maryla F. White
1313 Lance Drive
Louisville, KY 40216-3930
First Clearing Corporation 1,770.5380 5.28%
A/C 3762-1128
Richard L. Gump &
Marla K. Gump
4718 Dennison Avenue
Cleveland, OH 44102-6019
First Clearing Corporation 2,932.5510 6.76%
A/C 3281-7977
Edward Folkman
Carol Folkman
7897 Oakhurst Drive
Brecksville, OH 44141-1123
First Clearing Corporation 3,199.8580 7.38%
A/C 3204-6205
Anna I. Fierle
Margaret M. Meder
6513 Dennison Blvd.
Parma Heights, OH 44130-4104
First Clearing Corporation 7,331.3780 16.90%
A/C 6108-1699
Kenneth A. Otto &
Merilee W. Otto
1710 Rood Point Road
Muskegon, MI 49441-4849
First Clearing Corporation 2,795.2480 6.44%
A/C 6960-1719
Piertro Ragone Trust
Domenico Ragone TTEE
3321 Friar Drive
Parma, OH 44134-5518
</TABLE>
-138-
<PAGE> 144
<TABLE>
<S> <C> <C>
First Clearing Corporation 2,768.1660 6.38%
A/C 5311-9558
Linda M. Lupear
2919 N County Rd 425 E
Danville, IN 46122-8383
TAX MANAGED EQUITY FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
Sheldon & Co TTEE 8,937,241.4940 50.82%
C/O National City Bank
Trust Mutual Fds
P.O. Box 94777
Cleveland, OH 44101-4777
Sheldon & Co. TTEE 8,097,497.3570 46.04%
C/O National City Bank
P.O. Box 94777
ATTN: Trust Mutual Funds
Cleveland, OH 44101-4777
BALANCED ALLOCATION FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
SEI Trust Company 115.9370 37.06%
Cust for the IRA of
FBO Karen Sherer
2113 Wilkes Way
Lexington, KY 40505-4847
SEI Trust Company Cust 187.2820 59.87%
Roth Contribution IRA
Thomas D. Keller
14422 Orchard Park Avenue
Cleveland, OH 44111-2115
BALANCED ALLOCATION FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
Sheldon & Co. TTEE 933,742.3860 5.00%
C/o National City Bank
P.O. Box 94777
Cleveland, OH 44101-4777
Sheldon & Co. (Reinv) 17,701,922.7690 94.82%
Attn: Trust Mutual Funds
Account #10023342
P.O. Box 94777
Cleveland, OH 44101-4777
</TABLE>
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<PAGE> 145
<TABLE>
<CAPTION>
BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS A SHARES) SHARES OWNED
<S> <C> <C>
Soy Capital AG Services & Trust Co 362,854.8090 29.96%
455 N Main St
Decatur IL 62523-1103
BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
First Clearing Corporation 4,381.4830 99.75%
A/C 7081-0852
Ridgway Community Nurses Srvcs
ATTN: Lori MacDonald
20 North Broad Street
Ridgway, PA 15853-1002
BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
C/O National City Bank 26,399,496.8300 27.45%
Sheldon & Co
Attn: Trust Mutual Funds
P.O. Box 94777
Cleveland, OH 44101-4777
Sheldon & Co. 33,187,855.3970 34.51%
P.O. Box 94984
Attn: Trust Mutual Funds
Cleveland, OH 44101-4984
Sheldon & Co. (Cash/Reinv) 35,714,348.3970 37.14%
c/o National City Bank
Attn: Trust Mutual Funds
P.O. Box 94777
Cleveland, OH 44101-4777
</TABLE>
-140-
<PAGE> 146
<TABLE>
<CAPTION>
GNMA FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS A SHARES) SHARES OWNED
<S> <C> <C>
Post & Co A/C #356678 12,334.2530 9.19%
C/O The Bank of New York
ATTN: Mutual Funds/Reorg Dept
P.O. Box 1066 Wall St Sta
New York, NY 10286
Schweizer Dipple Inc 401K Plan 9,672.9920 7.20%
Dennis J Clark, Sr.
ATTN; Lynn E. Ulrich
Personal and Confidential
7227 Division Street
Oakwood Village, OH 44146-5405
GNMA FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS B SHARES) SHARES OWNED
Shore West Construction 401(k) Plan 2,188.8220 12.58%
Kenneth M. Sokol
Attn: Barbara Beyer
Personal and Confidential
23826 Lorain Rd
North Olmsted, OH 44070-2226
Shore West Construction 401(k) Plan 1,766.9870 10.15%
Audrey M. Sokol
Attn: Barbara Byer
Personal and Confidential
23826 Lorain Rd
North Olmsted, OH 44070-2226
First Clearing Corporation 4,184.2980 24.05%
A/C 6379-0631
Jane Obodzinski
1205 Brookpark Road
Cleveland, OH 44109-5827
First Clearing Corporation 1,037.1070 5.96%
A/C 2054-0408
Clifton Christian Church
ATTN: Elliott Morris
131 Vernon Avenue
Louisville, KY 40206-2036
First Clearing Corporation 2,059.3600 11.84%
A/C 3204-6207
Anne I Fierle
Margaret M. Meder
6513 Dennison Blvd.
Parma Heights, OH 44130-4104
</TABLE>
-141-
<PAGE> 147
<TABLE>
<S> <C> <C>
First Clearing Corporation 1,572.5730 9.04%
A/C 4176-6737
Doris J Hoel IRA
FCC as Custodian
13646 Crestway Dr.
Brookpark, OH 44142-2656
First Clearing Corporation 1,113.5080 6.40%
A/C 7782-3187
Robert L Scarbro IRA R/O
FCC as Custodian
4763 Brookhigh Dr
Brooklyn, OH 44144-3158
James N Weyer Jr 2,517.5530 14.47%
Helen M Weyer JT TEN
2600 Mohawk Street
McKeesport, PA 15131-3121
GNMA FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
First Clearing Corporation 1,880.0130 21.57%
A/C 7081-0852
Ridgway Community Nurses Srvcs
ATTN: Lori MacDonald
20 North Broad Street
Ridgway, PA 15853-1002
First Clearing Corporation 4,779.3480 54.83%
A/C 3204-6205
Anna I Fierle
Margaret M Meder
6513 Dennison Blvd
Parma Heights, OH 44130-4104
First Clearing Corporation 1,004.1990 11.52%
A/C 8763-2694
Stanley Woo SEP IRA
FCC as Custodian
3448 W 99th St
Cleveland, OH 44102-4614
First Clearing Corporation 1,042.1330 11.96%
A/C 4568-3896
Robert A Joyce IRA
FCC as Custodian
4709 Wetzel Avenue
Cleveland, OH 44109-5351
</TABLE>
-142-
<PAGE> 148
<TABLE>
<CAPTION>
GNMA FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
<S> <C> <C>
C/o National City Bank 1,100,209.0970 9.07%
Sheldon & Co.
Trust Mutual Funds
P.O. Box 94777
Cleveland, OH 44101-4777
Sheldon & Co. TTEE 8,443,419.6750 69.60%
C/O National City Bank
Trust Mutual Funds
P.O. Box 94984
Cleveland, OH 44101-4984
National City Bank 2,522,982.9670 20.80%
C/O Sheldon & Co.
Trust Mutual Funds
P.O. Box 94777
Cleveland, OH 44101-4777
INTERMEDIATE BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS A SHARES) SHARES OWNED
Soy Capital AG Services & Trust Co. 75,442.5690 7.42%
455 N. Main Street
Decatur, IL 62523-1103
INTERMEDIATE BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS B SHARES) SHARES OWNED
First Clearing Corporation 16,295.0320 11.13%
A/C 1202-4114
Eugene Arrigoni IRA
FCC as Custodian
4101 Grady Smith Road
Loganville, GA 30052-3650
</TABLE>
-143-
<PAGE> 149
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
<S> <C> <C>
SEI Trust Company 4,655.7890 23.02%
Cust for the Rollover IRA of
Wallace Strickland
3337 E 149th Street
Cleveland, OH 44128
First Clearing Corporation 15,561.9560 76.93%
A/C 1294-3972
Robert Henry Baker Jr IRA
FCC as Custodian
834 Georgiana St
Port Angeles, WA 98362-3512
INTERMEDIATE BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
Sheldon & Co. (Reinv) 4,193,031.0750 11.53%
Attn: Trust Mutual Funds
Account #10023342
P.O. Box 94984
Cleveland, OH 44101-4984
Sheldon & Co. 14,915,821.0800 41.02%
P.O. Box 94984
Attn: Trust Mutual Funds
Cleveland, OH 44101-4984
Sheldon & Co. 12,231,143.5400 33.64%
Attn: Trust Mutual Funds
P.O. Box 94984
Cleveland, OH 44101-4984
SEI Trust Company 4,585,275.2250 12.61%
Attn: Mutual Fund Administrator
One Freedom Valley Drive
Oaks, PA 19456
LIMITED MATURITY BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS A SHARES) SHARES OWNED
Soy Capital AG Services & Trust Co. 151,860.9000 19.51%
455 N. Main Street
Decatur, IL 62523-1103
BISYS BD Services, Inc. 111,869.2380 14.37%
P.O. Box 4054
Concord, CA 94524-4054
</TABLE>
-144-
<PAGE> 150
<TABLE>
<CAPTION>
LIMITED MATURITY BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS B SHARES) SHARES OWNED
<S> <C> <C>
Shore West Construction 401(k) Plan 4,417.3860 6.43%
Gary Scothon
Attn: Barbara Beyer
Personal and Confidential
23826 Lorain Rd
North Olmsted, OH 44070-2226
First Clearing Corporation 4,354.8580 6.34%
A/C 4753-9962
Larry D. Kiefer IRA R/O
FCC as Custodian
RR 2 Box 118
Gridley, IL 61744-9304
First Clearing Corporation 4,201.0850 6.12%
A/C 6379-0631
Jane F. Obodzinski
1205 Brookpark Road
Cleveland, OH 44109-5827
First Clearing Corporation 3,960.7070 5.77%
A/C 4296-9582
C Edward Howerton
4721 Willowbrook Lane
Decatur, IL 62521-4266
First Clearing Corporation 4,277.4260 6.23%
A/C 6309-4604
Marianne Peterson
957 St. John
Lincoln Park, MI 48146
LIMITED MATURITY BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
First Clearing Corporation 1856.2590 99.44%
A/C 7081-0852
Ridgway Community Nurses Svcs
Attn: Lori MacDonald
20 North Broad Street
Ridgway, PA 15853-1002
</TABLE>
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<PAGE> 151
<TABLE>
<CAPTION>
LIMITED MATURITY BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
<S> <C> <C>
Sheldon & Co. (Reinv) 7,205,898.3150 36.15%
Future Quest
c/o National City Bank
Attn: Trust Mutual Funds/01-999999774
P.O. Box 94777
Cleveland, OH 44101-4777
Sheldon & Co. (Reinv) 11,340,284.2160 56.89%
Future Quest
c/o National City Bank
Attn: Trust Mutual Funds/01-999999774
P.O. Box 94777
Cleveland, OH 44101-4777
Sheldon & Co. TTEE 1,055,879.8980 5.30%
Future Quest
c/o National City Bank
Attn: Trust Mutual Funds/01-999999774
P.O. Box 94984
Cleveland, OH 44101-4984
TOTAL RETURN ADVANTAGE FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS A SHARES) SHARES OWNED
Fifth Third Bank TTEE 210,944.0530 36.71%
FBO IBEW 688 RET SA NAMCO
5/3 a/C # 52-52-002-7034614
P.O. Box 630074
Cincinnati, OH 45263-0001
Fifth Third Bank TTEE 222,512.2020 38.72%
FBO IBEW 688 Pension NAMCO
5/3 A/C #52-52-002-7034515
P.O. Box 630074
Cincinnati, OH 45263-0001
TOTAL RETURN ADVANTAGE FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS B SHARES) SHARES OWNED
First Clearing Corporation 2,429.9320 68.52%
A/C 3816-3066
Claude Hall IRA
FCC as Custodian
416 Skylark Drive
Winchester, KY 40391-2902
</TABLE>
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<PAGE> 152
<TABLE>
<S> <C> <C>
First Clearing Corporation 1,033.0580 29.15%
A/C 4155-6883
Rheta P Histed
Tod Franklin T Histed
2525 N Alamando Rd
Coleman, MI 48618-9732
TOTAL RETURN ADVANTAGE FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
SEI Investments Co 10.6160 100%
Attn: Rob Silverstri
One Freedom Valley Drive
Oaks, PA 19456
TOTAL RETURN ADVANTAGE FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
Sheldon & Co. (Reinv) 17,331,774.8000 49.61%
Attn: Trust Mutual Funds
P.O. Box 94984
Cleveland, OH 44101-4984
Sheldon & Co. 8,192,109.1010 23.45%
P.O. Box 94777
Attn: Trust Mutual Funds
Cleveland, OH 44101-4777
Sheldon & Co. TTEE 6,068,462.1640 17.37%
c/o National City Bank
P.O. Box 94777
Attn: Trust Mutual Funds
Cleveland, OH 44101-4777
U.S. GOVERNMENT INCOME FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS A SHARES) SHARES OWNED
Soy Capital AG Services & Trust Co 447,792.3950 21.62%
455 N. Main Street
Decatur, IL 62523-1103
</TABLE>
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<PAGE> 153
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
<S> <C> <C>
First Clearing Corporation 1,710.7880 99.34%
A/C 3978-1578
William H Hassall IRA
FCC as Custodian
207 Guy St
Walbridge, OH 43465-1126
U.S. GOVERNMENT INCOME FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
Sheldon & Co. (Reinv) 1,172,017.8680 8.07%
Attn: Trust Mutual Funds
Account #10023342
P.O. Box 94777
Cleveland, OH 44101-4777
Sheldon & Co. TTEE 12,609,399.4330 86.87%
c/o National City Bank
Attn: Trust Mutual Funds
P.O. Box 94777
Cleveland, OH 44101-4777
MICHIGAN MUNICIPAL BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS B SHARES) SHARES OWNED
First Clearing Corporation 15,342.5690 9.06%
A/C 1474-8811
Marion E. Belloni
27715 Alger Lane
Madison Heights, MI 48071-4523
First Clearing Corporation 9,914.5200 5.85%
A/C 6338-8396
Betty May Nicholas
866 Dursley
Bloomfield, MI 48304-2010
First Clearing Corporation 9,496.6760 5.61%
A/C 8304-7634
Emily T. Wheeler TTEE
Emily T. Wheeler Trust
1632 Tawas Beach Road
East Tawas, MI 48730-9330
</TABLE>
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<TABLE>
<S> <C> <C>
First Clearing Corporation 9,155.7770 5.41%
A/C 6852-6451
Marylee A. Roven &
Sheryl C Roven
13644 Wesley
Southgate, MI 48195-1719
MICHIGAN MUNICIPAL BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
SEI Investments Co 9.4880 100%
ATTN Rob Silvestri
1 Freedom Valley Road
Oaks, PA 19456
MICHIGAN MUNICIPAL BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
Sheldon & Co. (Reinv) 1,613,457.6740 11.20%
Attn: Trust Mutual Funds
Account #10023342
P.O. Box 94777
Cleveland, OH 44101-4777
Sheldon & Co. TTEE 15,513,027.7220 86.88%
c/o National City Bank
Attn: Trust Mutual Funds
P.O. Box 94777
Cleveland, OH 44101-4777
NATIONAL TAX EXEMPT BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS A SHARES) SHARES OWNED
Soy Capital AG Services & Trust Co 71,204.7790 9.74%
455 N Main Street
Decatur, IL 62523-1103
First Clearing Corporation 355,904.0450 48.70%
A/C 1143-7442
Bill Anest
400 S. Curran
Grayslake, IL 60030-9784
</TABLE>
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<TABLE>
<CAPTION>
NATIONAL TAX EXEMPT BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS B SHARES) SHARES OWNED
<S> <C> <C>
Donaldson Lufkin Jenrette 6,000.7000 11.16%
Securities Corporation Inc.
P. O. Box 2052
Jersey City, NJ 07303-2052
Harlan Hawkins & 13,420.2570 24.95%
Mark Hawkins TTEE
U/A DTD May 21, 1992
Cecil C Hawkins Trust
4412 George Ave
Cortland IL 60112
First Clearing Corporation 4,660.4300 8.67%
A/C 2099-9089
James E. Chenault &
Judith E. Chenault
8609 Cool Brook Ct.
Louisville, KY 40291-1501
First Clearing Corporation 5,223.9620 9.71%
A/C 5482-0768
Theodore R. McDonald &
Rose Ann McDonald
7712 St. Bernard Ct.
Louisville, KY 40291-2462
First Clearing Corporation 7,346.6360 13.66%
A/C 7309-7317
Howard B. Smith, Jr.
545 Country Manor Lane
Shepherdsville, KY 40165-9543
First Clearing Corporation 2,703.7200 5.03%
A/C 3132-5861
Anne B Farkas and
Robert S Farkas
279 S Oakland Ave
Sharon, PA 16146-4049
</TABLE>
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<PAGE> 156
<TABLE>
<CAPTION>
NATIONAL TAX EXEMPT BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
<S> <C> <C>
First Clearing Corporation 9,255.8630 99.89%
A/C 2146-8768
P Brian Coleman
RR #1
PO Box 254
Flemingsburg, KY 41041-0254
NATIONAL TAX EXEMPT BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
Sheldon & Co. TTEE 13,329,598.6740 82.31%
c/o National City Bank
Trust Mutual Funds
P.O. Box 94777
Cleveland, OH 44101-4777
National City Bank 1,993,452.5810 12.31%
c/o Sheldon & Co.
Trust Mutual Funds
P.O. Box 94777
Cleveland, OH 44101-4777
OHIO TAX EXEMPT BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS A SHARES) SHARES OWNED
Evern Securities C/O BNY Clearing Services 28,219.4520 6.71%
Cust FBO
FFC Ellen Stirn MAVEC S/D IRA UA
A/C OL58-4485-3981
111 E. Kilbourn Ave
Milwaukee, WI 53202-6611
First Clearing Corporation 52,435.1170 12.48%
A/C 1528-5380
David J. Beverly &
Pamela C. Beverly
1128 Laguna Drive
Huron, OH 44839-2605
First Clearing Corporation 51,986.6140 12.37%
A/C 1750-2503
Edward B. Brandon &
Phyllis P. Brandon JTWROS
Lakepoint Office Park Ste. 470
3201 Enterprise Pkwy.
</TABLE>
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<TABLE>
<CAPTION>
OHIO TAX EXEMPT BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
<S> <C> <C>
First Clearing Corporation 1,659.0750 29.14%
A/C 2936-8883
Samuel J Durham, MD
AMA Account
1005 Country View Lane, Apt. 13G
Toledo, OH 43615-8306
First Clearing Corporation 4,024.0470 70.69%
A/C 3027-4828
William G Ely
1309 Shanley Drive
Columbus, OH 43224-2066
OHIO TAX EXEMPT BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
Sheldon and Co. (Cash) 13,335,366.8290 86.42%
National City Bank
Trust Mutual Funds - 5312
P.O. Box 94984
Cleveland, OH 44101-4984
Sheldon and Co. (Cash/Reinv) 1,579,323.9600 10.24%
National City Bank
Trust Mutual Funds-5312
P.O. Box 94777
Cleveland, OH 44101-4777
PENNSYLVANIA MUNICIPAL BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS A SHARES) SHARES OWNED
National Financial Services Corp 5,167.1760 19.09%
FBO Gary S Lengel
Bin #TGA 100897
200 Liberty St #FL
New York, NY 10281-1003
First Clearing Corporation 10,262.7520 37.91%
FBO Sara Zimmer
ACCT # 8963-5901
PO Box 1357
Richmond, VA 23218-1357
</TABLE>
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<PAGE> 158
<TABLE>
<S> <C> <C>
First Clearing Corporation 8,587.1490 31.72%
A/C 7618-3716
Helga A. Suhr
750 Sharter Dr #E-11
Longs, SC 29568
First Clearing Corporation 2,287.2830 8.45%
A/C 4267-7452
John M. Hankey
2430 Renton Road
Pittsburgh, PA 15239-1227
PENNSYLVANIA MUNICIPAL BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS B SHARES) SHARES OWNED
SEI Investments Co 10.0900 100.0%
ATTN Rob Silvestri
One Freedom Valley Drive
Oaks, PA 19456
PENNSYLVANIA MUNICIPAL BOND FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
Sheldon and Co. 4,122,675.7280 94.21%
P.O. Box 94984
ATTN: Trust Mutual Funds
Cleveland, OH 44101-4984
GOVERNMENT MONEY MARKET FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS A SHARES) SHARES OWNED
National City MI/IL 191,022,000.0000 34.23%
FBO Corporate Sweep Customer
Cash Management Operations
770 W. Broad Street Loc. 16-0347
Columbus, OH 43222-1419
Pennsylvania 241,726,000.0000 43.31%
FBO Corporate Autosweep Customers
c/o National City Bank of PA
300 Fourth Street 2-191
Pittsburgh, PA 15222-2003
Wheat First Securities 65,283,149.7500 11.70%
P.O. Box 6629
Glen Allen, VA 23058-6629
</TABLE>
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<PAGE> 159
<TABLE>
<S> <C> <C>
National City Bank 37,337,000.0000 6.69%
FBO PCG/Retail Sweep Customer
770 W Broad Street Loc 16-0347
Columbus, OH 43222-1419
GOVERNMENT MONEY MARKET FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
National City Bank 79,786,973.6000 7.49%
Trust Operations
Operations Center
3rd Floor, North Annex
4100 West 150th Street
Cleveland, OH 44135-1389
National City Bank 258,110,968.7000 24.24%
Operations Center
3rd Floor, North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
National City Bank 244,674,568.3200 22.98%
Trust Operations
Operations Center
3rd Floor, North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
National City Bank 83,458,563.2200 7.84%
Operations Center
Attn: Trust Operations Funds
3rd Floor, North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
National City Bank 119,077,061.4300 11.18%
Money Market Unit/Loc 5312
4100 W. 150th St
Cleveland, OH 44135-1389
National City Bank 181,901,254.5900 17.08%
Trust Operations
Operations Center
3rd Floor, North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
</TABLE>
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<TABLE>
<CAPTION>
MONEY MARKET FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS A SHARES) SHARES OWNED
<S> <C> <C>
National City MI/IL 145,213,000.0000 8.31%
FBO Corporate Sweep Customer
Cash Management Operations
770 W. Broad Street Loc. 16-0347
Columbus, OH 43222-1419
Pennsylvania 324,323,000.0000 18.55%
FBO Corporate Autosweep Customers
C/o National Bank of PA
300 Fourth Street 2-191
Pittsburgh, PA 15222-2003
Wheat First Securities 768,456,867.7500 43.96%
P.O. Box 6629
Glen Allen, VA 23058-6629
National City Bank 287,970,000.0000 16.47%
FBO PCG/Retail Sweep Customer
770 W. Broad St. Location 16-0347
Columbus, OH 43222-1419
MONEY MARKET FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS B SHARES) SHARES OWNED
Truck Equip & Body Co Inc PSP 842,763.9100 64.10%
Conversion Holding Account
PO Box 8705
Boston, MA 02266-0001
First Clearing Corporation 87,437.5400 6.65%
A/C 2065-0386
Carborundum Grinding Wheel Co Savings Plan
1011 E. Front Street
P.O Box 759
MONEY MARKET FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS C SHARES) SHARES OWNED
SEI Investments Co. 100.0000 100.00%
ATTN: Rob Silvestri
One Freedom Valley Road
Oaks, PA 19456
</TABLE>
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<TABLE>
<CAPTION>
MONEY MARKET FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
<S> <C> <C>
National City Bank 794,759,661.0600 26.05%
Operations Center
3rd Floor, North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
National City Bank 231,251,013.1800 7.58%
Trust Operations
Operations Center
3rd Floor, North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
National City Bank 320,536,627.1500 10.51%
Operations Center
Attn: Trust Operations Funds
3rd Floor, North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
National City Bank 528,182,730.9700 17.31%
Money Market Unit/Loc 5312
4100 W. 150th Street
Cleveland, OH 44135-1389
Sheldon & Co 221,924,893.7160 7.27%
PO Box 94984
ATTN: Trust Mutual Funds
Cleveland, OH 44101-4984
National City Bank 309,623,445.1200 10.15%
Trust Operations
Operations Center
3rd Floor, North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
OHIO MUNICIPAL MONEY MARKET FUND (CLASS A OUTSTANDING SHARES PERCENTAGE OF FUND
SHARES) SHARES OWNED
National City Bank 3,523,097.2800 9.41%
FBO PCG/Retail Sweep Customer
770 W. Broad Street, Location 16-0347
Columbus, OH 43222-1419
</TABLE>
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<PAGE> 162
<TABLE>
<S> <C> <C>
National City Bank 30,532,657.5300 81.51%
FBO PCG/Retail Sweep Customers
770 W. Broad Street, Location 16-0347
Columbus, OH 43222-1419
OHIO MUNICIPAL MONEY MARKET FUND (CLASS I OUTSTANDING SHARES PERCENTAGE OF FUND
SHARES) SHARES OWNED
National City Bank 26,571,978.5700 18.44%
Trust Operations
Operations Center
3rd Floor North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
National City Bank 23,527,221.1400 16.33%
Trust Operations
Operations Center
3rd Floor North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
National City Bank 77,236,752.0900 53.60%
Operations Center
3rd Floor North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
National City Bank 8,193,251.6600 5.69%
Trust Operations
Operations Center
3rd Floor North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
PENNSYLVANIA TAX EXEMPT MONEY MARKET FUND OUTSTANDING SHARES PERCENTAGE OF FUND
CLASS (A SHARES) SHARES OWNED
Pennsylvania 30,949,000.0000 51.92%
FBO Corporate Autosweep Customers
c/o National City Bank of PA
300 Fourth Street 2-191
Pittsburgh, PA 15222-2003
Pennsylvania 24,708,226.2700 41.45%
National City Bank of Pennsylvania
FBO PCG/Retail Sweep Customers
Cash Management Operations
770 W. Broad Street 16-0347
Columbus, OH 43222-1419
</TABLE>
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<PAGE> 163
<TABLE>
<CAPTION>
PENNSYLVANIA TAX EXEMPT MONEY MARKET FUND
(CLASS I SHARES) OUTSTANDING SHARES PERCENTAGE OF FUND
SHARES OWNED
<S> <C> <C>
National City Bank 95,480,377.2300 97.43%
Trust Operations
Operations Center
3rd Floor, North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
TAX EXEMPT MONEY MARKET FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS A SHARES) SHARES OWNED
National City MI/IL 11,691,160.4300 5.18%
FBO Corporate PCG/Retail Sweep Cust
Cash Management Operations
770 W. Broad Street LOC 16-0347
Columbus, OH 43222-1419
National City MI/IL 18,184,000.0000 8.06%
FBO Corporate PCG/Retail Sweep Customer
Cash Management Operations
770 W. Broad Street LOC 16-0347
Columbus, OH 43222-1419
First Clearing Corporation 108,253,514.5300 47.96%
P.O. Box 6629
Glen Allen, VA 23058-6629
Indiana 14,468,019.6200 6.41%
National City Bank of Indiana
FBO PCG/Retail Sweep Customers
Cash Management Operations
770 W. Broad St. LOC. 16-0347
Columbus, OH 43222-1419
National City Bank 21,974,000.0000 9.74%
FBO PCG/Retail Sweep Customer
770 W. Broad Street, Location 16-0347
Columbus, OH 43222-1419
National City Bank 36,431,044.1700 16.14%
FBO PCG/Retail Sweep Customer
770 W. Broad Street, Location 16-0347
Columbus, OH 43222-1419
</TABLE>
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<PAGE> 164
<TABLE>
<CAPTION>
TAX EXEMPT MONEY MARKET FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
<S> <C> <C>
National City Bank 62,277,050.4800 12.74%
Trust Operations
Operations Center
3rd Floor, North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
National City Bank 110,158,831.4700 22.54%
Operations Center
3rd Floor, North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
National City Bank 34,804,043.2400 7.12%
Trust Operations
Operations Center
3rd Floor, North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
National City Bank 82,991,808.7800 16.98%
Operations Center
ATTN: Trust Operations Funds
3rd Floor, North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
National City Bank 87,806,059.2900 17.96%
Money Market Unit/Loc. 5312
4100 W. 150th Street
Cleveland, OH 44135-1389
National City Bank 39,479,083.5700 8.08%
Trust Operations
Operations Center
3rd floor North Annex
4100 W 150th Street
Cleveland, OH 44135-1389
TREASURY MONEY MARKET FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS A SHARES) SHARES OWNED
National City Bank MI/IL 39,728,000.0000 66.39%
FBO Corporate Sweep Customer
Cash Management Operations
770 W. Broad St. Location 16-0347
Columbus, OH 43222-1419
</TABLE>
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<PAGE> 165
<TABLE>
<S> <C> <C>
Wheat First Securities 13,383,918.2000 22.37%
P.O. Box 6629
Glen Allen, VA 23058-6629
TREASURY MONEY MARKET FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
National City Bank 33,218.592.4200 9.60%
Trust Operations
Operations Center
3rd Floor, North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
National City Bank 50,740,025.5100 14.67%
Operations Center
3rd Floor, North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
National City Bank 39,248,517.6600 11.35%
Operations Center
3rd Floor, North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
National City Bank 18,212,441.5300 5.27%
Trust Operations
Operations Center
3rd Floor, North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
National City Bank 114,660,431.6800 33.15%
Trust Operations
Operations Center
3rd Floor, North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
National City Bank 32,720,867.5400 9.46%
Money Market Unit/Loc. 5312
4100 W 150th St
Cleveland, OH 44135-1389
National City Bank 21,685,147.0200 6.27%
Trust Operations
Operations Center
3rd Floor North Annex
4100 W. 150th Street
Cleveland, OH 44135-1389
</TABLE>
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<PAGE> 166
<TABLE>
<CAPTION>
TREASURY PLUS MONEY MARKET FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS A SHARES) SHARES OWNED
<S> <C> <C>
Sarasota Sailing Squadron Inc 83,689.5700 6.87%
PO Box 1927
Sarasota, FL 34230-1927
Sarasota Sailing Squadron Inc 61,290.1600 5.03%
PO Box 1927
Sarasota, FL 34230-1927
The Bank of New York 1,058,747.4600 86.96%
TRST FOA CCMT Series 1995-2
Attn: Craig Phildius
101 Barclay Street 12E
New York, NY 10286-0099
TREASURY PLUS MONEY MARKET FUND OUTSTANDING SHARES PERCENTAGE OF FUND
(CLASS I SHARES) SHARES OWNED
National City Bank 177,356,408.2100 89.86%
Money Market Unit / Loc 5312
4100 W. 150th Street
Cleveland, OH 44135-1389
</TABLE>
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<PAGE> 167
APPENDIX A
----------
CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS
----------------------------------------------
The following summarizes the ratings used by Standard & Poor's for
corporate and municipal debt:
"AAA" - An obligation rated "AAA" has the highest rating assigned by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.
"AA" - An obligation rated "AA" differs from the highest rated obligations
only in small degree. The obligor's capacity to meet its financial commitment on
the obligation is very strong.
"A" - An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
"BBB" - An obligation rated "BBB" exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
Obligations rated "BB," "B," "CCC," "CC" and "C" are regarded as having
significant speculative characteristics. "BB" indicates the least degree of
speculation and "C" the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.
"BB" - An obligation rated "BB" is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.
"B" - An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet its
financial commitment on the obligation. Adverse business, financial or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.
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"CCC" - Debt is currently vulnerable to nonpayment, and is dependent upon
favorable business, financial and economic conditions for the obligor to meet
its financial commitment on the obligation. In the event of adverse business,
financial or economic conditions, the obligor is not likely to have the capacity
to meet its financial commitment on the obligation.
"CC" - An obligation rated "CCC" is currently highly vulnerable to
nonpayment.
"C" - The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action taken, but payments on this obligation
are being continued.
"D" - An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The "D"
rating also will be used upon the filing of a bankruptcy petition or the taking
of a similar action if payments on an obligation are jeopardized.
PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be modified
by the addition of a plus or minus sign to show relative standing within the
major rating categories.
"r" - The `r' highlights obligations that Standard & Poor's believes may
have significant noncredit risks. Examples of such obligations are securities
with principal or interest return is indexed to equities, commodities, or
currencies; certain swaps and options; and interest-only and principal-only
mortgage securities. The absence of an "r" symbol should not be taken as an
indication that an obligation will exhibit no volatility or variability in total
return.
N.R. Indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular obligation as a matter of policy.
The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:
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"Aaa" - Bonds are judged to be of the best quality. They carry the smallest
degree of investment risk and are generally referred to as "gilt edged."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
"Aa" - Bonds are judged to be of high quality by all standards. Together
with the "Aaa" group they comprise what are generally known as high-grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in "Aaa" securities or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which make the
long-term risk appear somewhat larger than the "Aaa" securities.
"A" - Bonds possess many favorable investment attributes and are to be
considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
"Baa" - Bonds are considered as medium-grade obligations, (i.e., they are
neither highly protected nor poorly secured). Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
"Ba" - Bonds are judged to have speculative elements; their future cannot
be considered as well-assured. Often the protection of interest and principal
payments may be very moderate, and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.
"B" - Bonds are generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
"Caa" - Bonds are of poor standing. Such issues may be in default or there
may be present elements of danger with respect to principal or interest.
"Ca" - Bonds represent obligations which are speculative in a high degree.
Such issues are often in default or have other marked shortcomings.
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"C" - Bonds are the lowest rated class of bonds, and issues so rated can be
regarded as having extremely poor prospects of ever attaining any real
investment standing.
Con. (---) - Bonds for which the security depends upon the completion of
some act or the fulfillment of some condition are rated conditionally. These are
bonds secured by (a) earnings of projects under construction, (b) earnings of
projects unseasoned in operating experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting condition
attaches. Parenthetical rating denotes probable credit stature upon completion
of construction or elimination of basis of condition.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic
rating classification from "Aa" through "Caa." The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the modifier
2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the
lower end of its generic rating category.
The following summarizes the ratings used by Fitch for corporate and
municipal bonds:
"AAA" - Bonds considered to be investment grade and of the highest credit
quality. These ratings denote the lowest expectation of credit risk and are
assigned only in case of exceptionally strong capacity for timely payment of
financial commitments. This capacity is highly unlikely to be affected by
reasonably foreseeable events.
"AA" - Bonds considered to be investment grade and of very high credit
quality. These ratings denote a very low expectation of credit risk and indicate
very strong capacity for timely payment of financial commitments. This capacity
is not significantly vulnerable to foreseeable events.
"A" - Bonds considered to be investment grade and of high credit quality.
These ratings denote a low expectation of credit risk and indicate strong
capacity for timely payment of financial commitments. This capacity may,
nevertheless, be more vulnerable to changes in circumstances or in economic
conditions than is the case for higher ratings.
"BBB" - Bonds considered to be investment grade and of good credit quality.
These ratings denote that there is currently a low expectation of credit risk.
The capacity for timely payment of financial commitments is considered adequate,
but adverse changes in circumstances and in economic conditions are more likely
to impair this capacity. This is the lowest investment grade category.
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"BB" - Bonds considered to be speculative. These ratings indicate that
there is a possibility of credit risk developing, particularly as the result of
adverse economic change over time; however, business or financial alternatives
may be available to allow financial commitments to be met. Securities rated in
this category are not investment grade.
"B" - Bonds are considered highly speculative. These ratings indicate that
significant credit risk is present, but a limited margin of safety remains.
Financial commitments are currently being met; however, capacity for continued
payment is contingent upon a sustained, favorable business and economic
environment.
"CCC," "CC" and "C" - Bonds have high default risk. Default is a real
possibility, and capacity for meeting financial commitments is solely reliant
upon sustained, favorable business or economic developments. "CC" ratings
indicate that default of some kind appears probable, and "C" ratings signal
imminent default.
"DDD," "DD" and "D" - Bonds are in default. The ratings of obligations in
this category are based on their prospects for achieving partial or full
recovery in a reorganization or liquidation of the obligor. While expected
recovery values are highly speculative and cannot be estimated with any
precision, the following serve as general guidelines. "DDD" obligations have the
highest potential for recovery, around 90%-100% of outstanding amounts and
accrued interest. "DD" indicates potential recoveries in the range of 50%-90%,
and "D" the lowest recovery potential, i.e., below 50%.
Entities rated in this category have defaulted on some or all of their
obligations. Entities rated "DDD" have the highest prospect for resumption of
performance or continued operation with or without a formal reorganization
process. Entities rated "DD" and "D" are generally undergoing a formal
reorganization or liquidation process; those rated "DD" are likely to satisfy a
higher portion of their outstanding obligations, while entities rated "D" have a
poor prospect for repaying all obligations.
To provide more detailed indications of credit quality, the Fitch ratings
from and including "AA" to "CCC" may be modified by the addition of a plus (+)
or minus (-) sign to denote relative standing within these major rating
categories.
`NR' indicates that Fitch does not rate the issuer or issue in question.
`Withdrawn': A rating is withdrawn when Fitch deems the amount of
information available to be inadequate for rating purposes, or when an
obligation matures, is called, or refinanced.
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RatingAlert: Ratings are placed on RatingAlert to notify investors that
there is a reasonable probability of a rating change and the likely direction of
such change. These are designated as "Positive," indicating a potential upgrade,
"Negative," for a potential downgrade, or "Evolving," if ratings may be raised,
lowered or maintained. RatingAlert is typically resolved over a relatively short
period.
Thomson Financial BankWatch assesses the likelihood of an untimely
repayment of principal or interest over the term to maturity of long term debt
and preferred stock which are issued by United States commercial banks, thrifts
and non-bank banks; non-United States banks; and broker-dealers. The following
summarizes the rating categories used by Thomson BankWatch for long-term debt
ratings:
"AAA" - This designation indicates that the ability to repay principal and
interest on a timely basis is extremely high.
"AA" - This designation indicates a very strong ability to repay principal
and interest on a timely basis, with limited incremental risk compared to issues
rated in the highest category.
"A" - This designation indicates that the ability to repay principal and
interest is strong. Issues rated "A" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.
"BBB" - This designation represents the lowest investment-grade category
and indicates an acceptable capacity to repay principal and interest. Issues
rated "BBB" are, however, more vulnerable to adverse developments (both internal
and external) than obligations with higher ratings.
"BB" - A rating of BB suggests that the likelihood of default is
considerably less than for lower-rated issues, although there are significant
uncertainties that could affect the ability to adequately service debt
obligations.
"B" - Issues rated B show a higher degree of uncertainty and therefore
greater likelihood of default than higher-rated issues. Adverse developments
could negatively affect the payment of interest and principal on a timely basis.
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"CCC" - Issues rated CCC clearly have a high likelihood of default, with
little capacity to address further adverse changes in financial circumstances.
"CC" - This rating is applied to issues that are subordinate to other
obligations rated CCC and are afforded less protection in the event of
bankruptcy or reorganization.
"D" - This designation indicates that the long-term debt is in default.
PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC" may include a
plus or minus sign designation which indicates where within the respective
category the issue is placed.
COMMERCIAL PAPER RATINGS
------------------------
A Standard & Poor's ("S&P") commercial paper rating is a current opinion of
the creditworthiness of an obligor with respect to financial obligations having
an original maturity of no more than 365 days. The following summarizes the
rating categories used by Standard & Poor's for commercial paper:
"A-1" - Obligations are rated in the highest category indicating that the
obligor's capacity to meet its financial commitment on the obligation is strong.
Within this category, certain obligations are designated with a plus sign (+).
This indicates that the obligor's capacity to meet its financial commitment on
these obligations is extremely strong.
"A-2" - Obligations are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher
rating categories. However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.
"A-3" - Obligations exhibit adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
"B" - Obligations are regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
"C" - Obligations are currently vulnerable to nonpayment and are dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation.
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"D" - Obligations are in payment default. The "D" rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The "D" rating will be used
upon the filing of a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.
LOCAL CURRENCY AND FOREIGN CURRENCY RISKS
-----------------------------------------
Country risk considerations are a standard part of Standard & Poor's analysis
for credit ratings on any issuer or issue. Currency of repayment is a key factor
in this analysis. An obligor's capacity to repay foreign obligations may be
lower than its capacity to repay obligations in its local currency due to the
sovereign government's own relatively lower capacity to repay external versus
domestic debt. These sovereign risk considerations are incorporated in the debt
ratings assigned to specific issues. Foreign currency issuer ratings are also
distinguished from local currency issuer ratings to identify those instances
where sovereign risks make them different for the same issuer.
Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually senior debt obligations not having an original maturity in
excess of one year, unless explicitly noted. The following summarizes the rating
categories used by Moody's for commercial paper:
"Prime-1" - Issuers (or supporting institutions) have a superior ability
for repayment of senior short-term debt obligations. Prime-1 repayment ability
will often be evidenced by many of the following characteristics: leading market
positions in well-established industries; high rates of return on funds
employed; conservative capitalization structure with moderate reliance on debt
and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.
"Prime-2" - Issuers (or supporting institutions) have a strong ability for
repayment of senior short-term debt obligations. This will normally be evidenced
by many of the characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
"Prime-3" - Issuers (or supporting institutions) have an acceptable ability
for repayment of senior short-term debt obligations. The effects of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
"Not Prime" - Issuers do not fall within any of the Prime rating
categories.
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Fitch short-term ratings apply to debt obligations that have time horizons
of less than 12 months for most obligations, or up to three years for U.S.
public finance securities. The following summarizes the rating categories used
by Fitch for short-term obligations:
"F1" - Securities possess the highest credit quality. This designation
indicates the best capacity for timely payment of financial commitments and may
have an added "+" to denote any exceptionally strong credit feature.
"F2" - Securities possess good credit quality. This designation indicates a
satisfactory capacity for timely payment of financial commitments, but the
margin of safety is not as great as in the case of the higher ratings.
"F3" - Securities possess fair credit quality. This designation indicates
that the capacity for timely payment of financial commitments is adequate;
however, near-term adverse changes could result in a reduction to non-investment
grade.
"B" - Securities possess speculative credit quality. This designation
indicates minimal capacity for timely payment of financial commitments, plus
vulnerability to near-term adverse changes in financial and economic conditions.
"C" - Securities possess high default risk. This designation indicates
capacity for meeting financial commitments which is highly uncertain and solely
reliant upon a sustained, favorable business and economic environment.
"D" - Securities are in actual or imminent payment default.
Thomson Financial BankWatch short-term ratings assess the likelihood of an
untimely payment of principal and interest of debt instruments with original
maturities of one year or less. The following summarizes the ratings used by
Thomson Financial BankWatch:
"TBW-1" - This designation represents Thomson Financial BankWatch's highest
category and indicates a very high likelihood that principal and interest will
be paid on a timely basis.
"TBW-2" - This designation represents Thomson Financial BankWatch's
second-highest category and indicates that while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1."
"TBW-3" - This designation represents Thomson Financial BankWatch's lowest
investment-grade category and indicates that while the obligation is more
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susceptible to adverse developments (both internal and external) than those with
higher ratings, the capacity to service principal and interest in a timely
fashion is considered adequate.
"TBW-4" - This designation represents Thomson Financial BankWatch's lowest
rating category and indicates that the obligation is regarded as non-investment
grade and therefore speculative.
MUNICIPAL NOTE RATINGS
----------------------
A Standard & Poor's note rating reflects the liquidity factors and market
access risks unique to notes due in three years or less. The following
summarizes the ratings used by Standard & Poor's for municipal notes:
"SP-1" - The issuers of these municipal notes exhibit a strong capacity to
pay principal and interest. Those issues determined to possess very strong
capacity to pay debt service are given a plus (+) designation.
"SP-2" - The issuers of these municipal notes exhibit satisfactory capacity
to pay principal and interest, with some vulnerability to adverse financial and
economic changes over the term of the notes.
"SP-3" - The issuers of these municipal notes exhibit speculative capacity
to pay principal and interest.
Moody's ratings for state and municipal notes and other short-term loans
are designated Moody's Investment Grade ("MIG") and variable rate demand
obligations are designated Variable Moody's Investment Grade ("VMIG"). Such
ratings recognize the differences between short-term credit risk and long-term
risk. The following summarizes the ratings by Moody's Investors Service, Inc.
for short-term notes:
"MIG-1"/"VMIG-1" - This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
"MIG-2"/"VMIG-2" - This designation denotes high quality. Margins of
protection ample although not so large as in the preceding group.
"MIG-3"/"VMIG-3" - This designation denotes favorable quality, with all
security elements accounted for but lacking the undeniable strength of the
preceding grades. Liquidity and cash flow protection may be narrow and market
access for refinancing is likely to be less well established.
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"MIG-4"/"VMIG-4" - This designation denotes adequate quality. Protection
commonly regarded as required of an investment security is present and although
not distinctly or predominantly speculative, there is specific risk.
"SG" - This designation denotes speculative quality. Debt instruments in
this category lack of margins of protection.
Fitch uses the short-term ratings described under Commercial
Paper Ratings for municipal notes.
TAX-EXEMPT COMMERCIAL PAPER RATINGS
-----------------------------------
A Standard & Poor's commercial paper rating is a current opinion of the
creditworthiness of an obligor with respect to financial obligations having an
original maturity of no more than 365 days. The following summarizes the rating
categories used by Standard & Poor's for commercial paper:
"A-1" - Obligations are rated in the highest category indicating that the
obligor's capacity to meet its financial commitment on the obligation is strong.
Within this category, certain obligations are designated with a plus sign (+).
This indicates that the obligor's capacity to meet its financial commitment on
these obligations is extremely strong.
"A-2" - Obligations are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher
rating categories. However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.
"A-3" - Obligations exhibit adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
"B" - Obligations are regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
"C" - Obligations are currently vulnerable to nonpayment and are dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation.
"D" - Obligations are in payment default. The "D" rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The "D" rating will be used
upon the filing of a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.
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Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually senior debt obligations not having an original maturity in
excess of one year, unless explicitly noted. The following summarizes the rating
categories used by Moody's for commercial paper:
"Prime-1" - Issuers (or supporting institutions) have a superior ability
for repayment of senior short-term debt obligations. Prime-1 repayment ability
will often be evidenced by many of the following characteristics: leading market
positions in well-established industries; high rates of return on funds
employed; conservative capitalization structure with moderate reliance on debt
and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.
"Prime-2" - Issuers (or supporting institutions) have a strong ability for
repayment of senior short-term debt obligations. This will normally be evidenced
by many of the characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
"Prime-3" - Issuers (or supporting institutions) have an acceptable ability
for repayment of senior short-term debt obligations. The effects of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
"Not Prime" - Issuers do not fall within any of the Prime rating
categories.
The three rating categories of Duff & Phelps for investment grade
commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff & Phelps
employs three designations, "D-1+," "D-1" and "D-1-," within the highest rating
category. The following summarizes the rating categories 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.
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"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.
"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.
"D-2" - Debt possesses good certainty of timely payment. Liquidity factors
and company fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good. Risk factors
are small.
"D-3" - Debt possesses satisfactory liquidity and other protection factors
qualify issues as investment grade. Risk factors are larger and subject to more
variation. Nevertheless, timely payment is expected.
"D-4" - Debt possesses speculative investment characteristics. Liquidity is
not sufficient to ensure against disruption in debt service. Operating factors
and market access may be subject to a high degree of variation.
"D-5" - Issuer has failed to meet scheduled principal and/or interest
payments.
Fitch IBCA short-term ratings apply to debt obligations that have time
horizons of less than 12 months for most obligations, or up to three years for
U.S. public finance securities. The following summarizes the rating categories
used by Fitch IBCA for short-term obligations:
"F1" - Securities possess the highest credit quality. This designation
indicates the best capacity for timely payment of financial commitments and may
have an added "+" to denote any exceptionally strong credit feature.
"F2" - Securities possess good credit quality. This designation indicates a
satisfactory capacity for timely payment of financial commitments, but the
margin of safety is not as great as in the case of the higher ratings.
"F3" - Securities possess fair credit quality. This designation indicates
that the capacity for timely payment of financial commitments is adequate;
however, near-term adverse changes could result in a reduction to non-investment
grade.
"B" - Securities possess speculative credit quality. This designation
indicates minimal capacity for timely payment of financial commitments, plus
vulnerability to near-term adverse changes in financial and economic conditions.
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"C" - Securities possess high default risk. This designation indicates that
default is a real possibility and that the capacity for meeting financial
commitments is solely reliant upon a sustained, favorable business and economic
environment.
"D" - Securities are in actual or imminent payment default.
Thomson Financial BankWatch short-term ratings assess the likelihood of an
untimely payment of principal and interest of debt instruments with original
maturities of one year or less. The following summarizes the ratings used by
Thomson Financial BankWatch:
"TBW-1" - This designation represents Thomson Financial BankWatch's highest
category and indicates a very high likelihood that principal and interest will
be paid on a timely basis.
"TBW-2" - This designation represents Thomson Financial BankWatch's
second-highest category and indicates that while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1."
"TBW-3" - This designation represents Thomson Financial BankWatch's lowest
investment-grade category and indicates that while the obligation is more
susceptible to adverse developments (both internal and external) than those with
higher ratings, the capacity to service principal and interest in a timely
fashion is considered adequate.
"TBW-4" - This designation represents Thomson Financial BankWatch's lowest
rating category and indicates that the obligation is regarded as non-investment
grade and therefore speculative.
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APPENDIX B
----------
As stated in the Prospectus, the Small Cap Value, Equity Growth, Equity
Income, Small Cap Growth, International Equity, Equity Index, Tax Managed Equity
and Balanced Allocation Funds (the "Funds") may enter into certain futures
transactions and options for hedging purposes. Such transactions are described
in this Appendix.
INTEREST RATE FUTURES CONTRACTS
USE OF INTEREST RATE FUTURES CONTRACTS. Bond prices are established in both
the cash market and the futures market. In the cash market, bonds are purchased
and sold with payment for the full purchase price of the bond being made in
cash, generally within five business days after the trade. In the futures
market, only a contract is made to purchase or sell a bond in the future for a
set price on a certain date. Historically, the prices for bonds established in
the futures markets have tended to move generally in the aggregate in concert
with the cash market prices and have maintained fairly predictable
relationships. Accordingly, the Fund may use interest rate futures contracts as
a defense, or hedge, against anticipated interest rate changes and not for
speculation. As described below, this would include the use of futures contract
sales to protect against expected increases in interest rates and futures
contract purchases to offset the impact of interest rate declines.
The Fund presently could accomplish a similar result to that which it hopes
to achieve through the use of futures contracts by selling bonds with long
maturities and investing in bonds with short maturities when interest rates are
expected to increase, or conversely, selling short-term bonds and investing in
long-term bonds when interest rates are expected to decline. However, because of
the liquidity that is often available in the futures market, the protection is
more likely to be achieved, perhaps at a lower cost and without changing the
rate of interest being earned by the Fund, through using futures contracts.
DESCRIPTION OF INTEREST RATE FUTURES CONTRACTS. An interest rate futures
contract sale would create an obligation by the Fund, as seller, to deliver the
specific type of financial instrument called for in the contract at a specific
future time for a specified price. A futures contract purchase would create an
obligation by the Fund, as purchaser, to take delivery of the specific type of
financial instrument at a specific future time at a specific price. The specific
securities delivered or taken, respectively, at settlement date, would not be
determined until at or near that date. The determination would be in accordance
with the rules of the exchange on which the futures contract sale or purchase
was made.
Although interest rate futures contracts by their terms call for actual
delivery or acceptance of securities, in most cases the contracts are closed out
before the settlement date without the making or taking of delivery of
securities. Closing out a futures contract sale is effected by the Fund's
entering into a futures contract purchase for the same aggregate amount of the
specific type of financial instrument and the same delivery date. If the price
of the sale exceeds the price of the offsetting purchase, the Fund is
immediately paid the difference and thus realizes a gain. If the offsetting
purchase price exceeds the sale price, the Fund pays the
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difference and realizes a loss. Similarly, the closing out of a futures contract
purchase is effected by the Fund entering into a futures contract sale. If the
offsetting sale price exceeds the purchase price, the Fund realizes a gain, and
if the purchase price exceeds the offsetting sale price, the Fund realizes a
loss.
Interest rate futures contracts are traded in an auction environment on the
floors of several exchanges -- principally, the Chicago Board of Trade, the
Chicago Mercantile Exchange and the New York Futures Exchange. The Fund would
deal only in standardized contracts on recognized exchanges. Each exchange
guarantees performance under contract provisions through a clearing corporation,
a nonprofit organization managed by the exchange membership.
A public market now exists in futures contracts covering various financial
instruments including long-term United States Treasury Bonds and Notes;
Government National Mortgage Association (GNMA) modified pass-through mortgage
backed securities; three-month United States Treasury Bills; and ninety-day
commercial paper. The Fund may trade in any interest rate futures contracts for
which there exists a public market, including, without limitation, the foregoing
instruments.
EXAMPLE OF FUTURES CONTRACT SALE. The Fund may engage in an interest rate
futures contract sale to maintain the income advantage from continued holding of
a long-term bond while endeavoring to avoid part or all of the loss in market
value that would otherwise accompany a decline in long-term securities prices.
Assume that the market value of a certain security held by the Fund tends to
move in concert with the futures market prices of long-term United States
Treasury bonds ("Treasury bonds"). The adviser wants to fix the current market
value of this fund security until some point in the future. Assume the fund
security has a market value of 100, and the adviser believes that because of an
anticipated rise in interest rates, the value will decline to 95. The Fund might
enter into futures contract sales of Treasury bonds for a equivalent of 98. If
the market value of the fund security does indeed decline from 100 to 95, the
equivalent futures market price for the Treasury bonds might also decline from
98 to 93.
In that case, the five point loss in the market value of the fund security
would be offset by the five point gain realized by closing out the futures
contract sale. Of course, the futures market price of Treasury bonds might well
decline to more than 93 or to less than 93 because of the imperfect correlation
between cash and futures prices mentioned below.
The adviser could be wrong in its forecast of interest rates and the
equivalent futures market price could rise above 98. In this case, the market
value of the fund securities, including the fund security being protected, would
increase. The benefit of this increase would be reduced by the loss realized on
closing out the futures contract sale.
If interest rate levels did not change, the Fund in the above example might
incur a loss (which might be reduced by a offsetting transaction prior to the
settlement date). In each transaction, transaction expenses would also be
incurred.
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EXAMPLE OF FUTURES CONTRACT PURCHASE. The Fund may engage in an interest
rate futures contract purchase when it is not fully invested in long-term bonds
but wishes to defer for a time the purchase of long-term bonds in light of the
availability of advantageous interim investments, e.g., shorter term securities
whose yields are greater than those available on long-term bonds. The Fund's
basic motivation would be to maintain for a time the income advantage from
investing in the short-term securities; the Fund would be endeavoring at the
same time to eliminate the effect of all or part of a expected increase in
market price of the long-term bonds that the Fund may purchase.
For example, assume that the market price of a long-term bond that the Fund
may purchase, currently yielding 10%, tends to move in concert with futures
market prices of Treasury bonds. The adviser wishes to fix the current market
price (and thus 10% yield) of the long-term bond until the time (four months
away in this example) when it may purchase the bond. Assume the long-term bond
has a market price of 100, and the adviser believes that, because of an
anticipated fall in interest rates, the price will have risen to 105 (and the
yield will have dropped to about 9 1/2%) in four months. The Fund might enter
into futures contractS purchases of Treasury bonds for an equivalent price of
98. At the same time, the Fund would assign a pool of investments in short-term
securities that are either maturing in four months or earmarked for sale in four
months, for purchase of the long-term bond at an assumed market price of 100.
Assume these short-term securities are yielding 15%. If the market price of the
long-term bond does indeed rise from 100 to 105, the equivalent futures market
price for Treasury bonds might also rise from 98 to 103. In that case, the 5
point increase in the price that the Fund pays for the long-term bond would be
offset by the 5 point gain realized by closing out the futures contract
purchase.
The adviser could be wrong in its forecast of interest rates; long-term
interest rates might rise to above 10%; and the equivalent futures market price
could fall below 98. If short-term rates at the same time fall to 10% or below,
it is possible that the Fund would continue with its purchase program for
long-term bonds. The market price of available long-term bonds would have
decreased. The benefit of this price decrease, and thus yield increase, will be
reduced by the loss realized on closing out the futures contract purchase.
If, however, short-term rates remained above available long-term rates, it
is possible that the Fund would discontinue its purchase program for long-term
bonds. The yield on short-term securities in the Fund, including those
originally in the pool assigned to the particular long-term bond, would remain
higher than yields on long-term bonds. The benefit of this continued incremental
income will be reduced by the loss realized on closing out the futures contract
purchase. In each transaction, expenses would also be incurred.
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INDEX FUTURES CONTRACTS
GENERAL. A bond or stock index assigns relative values to the bonds or
stocks included in the index which fluctuates with changes in the market values
of the bonds or 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 fund 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 may 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.
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MARGIN PAYMENTS
Unlike purchase or sales of fund 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 or a subcustodian 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 the 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.
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RISKS OF TRANSACTIONS IN FUTURES CONTRACTS
There are several risks in connection with the use of futures by the Fund
as hedging devices. 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 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 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 advisers. 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.
Where 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 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
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trends or interest rate movements by the advisers 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 would continue to be required to make daily cash payments of
variation margin. However, in the event futures contracts have been used to
hedge fund 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 adviser's
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. 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.
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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.
OTHER MATTERS
Accounting for futures contracts will be in accordance with generally
accepted accounting principles.
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FORM N-1A
PART C - OTHER INFORMATION
ITEM 23. EXHIBITS.
(a) Declaration of Trust dated January 28, 1986 is incorporated
herein by reference to Exhibit (a) to Post-Effective Amendment
No. 48 to Registrant's Registration Statement on Form N-1A
(File Nos. 33-488/811-4416) filed on October 6, 1999 ("PEA No.
48").
1. Amendment No. 1 to Declaration of Trust is
incorporated herein by reference to Exhibit a.1 to
PEA No. 48.
2. Amendment No. 2 to Declaration of Trust is
incorporated herein by reference to Exhibit a.2 to
PEA No. 48.
3. Certificate of Classification of Shares reflecting
the creation of Class A, Class B, Class C, Class D,
Class E and Class F Shares of beneficial interest as
filed with the Office of the Secretary of State of
Massachusetts on September 30, 1985 is incorporated
herein by reference to Exhibit a.3. to Post-Effective
Amendment No. 47 to Registrant's Registration
Statement on Form N-1A (File Nos. 33-488/811-4416)
filed on September 10, 1999 ("PEA No. 47").
4. 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").
5. Certificate of Classification of Shares reflecting
the creation of Special Series 1 in the Money Market,
Government Money Market, Treasury Money Market, Tax
Exempt Money Market, Equity Growth, Bond and Ohio Tax
Exempt Bond Funds 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.
6. Certificate of Classification of Shares reflecting
the creation of Special Series 1 in the Money Market,
Government Money Market, Treasury Money Money, Tax
Exempt Money Market,
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Equity Growth, Bond and Ohio Tax Exempt Bond Funds 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.
7. 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 shares,
Class N and Class N-Special Series 1 shares, Class O
and Class O-Special Series 1 shares, and Class P and
Class P-Special Series 1 shares representing
interests in the National Tax Exempt Bond Fund,
Equity Income Fund, Small Cap Value Fund (formerly
known as the Mid Cap Regional Fund), Limited Maturity
Bond (formerly known as the 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.
8. 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 shares,
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
Money Market Fund, Bond Fund (formerly known as the
Intermediate Government Fund), GNMA Fund and
Pennsylvania Municipal Bond Fund, 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").
9. 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 is incorporated herein
by reference to Exhibit 1(h) to Post-Effective
Amendment No. 35 to Registrant's Registration
Statement filed on July 22, 1997 ("PEA No. 35").
10. 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 Fund, respectively, as
filed with the Office of the Secretary of State of
Massachusetts on
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June 27, 1997 is incorporated herein by reference to
Exhibit 1(i) to PEA No. 35.
11. Certificate of Classification of Shares reflecting
the creation of Special Series 2 Shares representing
interests in the Money Market, Government Money
Market, Treasury Money Market, Tax-Exempt Money
Market, Equity Growth, Equity Income, Small Cap Value
(formerly known as the Mid Cap Regional), Limited
Maturity Bond (formerly known as the Enhanced
Income), Total Return Advantage, Intermediate Bond
(formerly known as the Fixed Income), Ohio Tax-Exempt
Bond, National Tax-Exempt Bond, Pennsylvania
Tax-Exempt Money Market, Bond (formerly known as the
"Intermediate Government Fund), GNMA, Pennsylvania
Municipal Bond, International Equity, Equity Index,
Core Equity, Small Cap Growth and Real Return
Advantage Funds, as filed with the Office of the
Secretary of State of Massachusetts on December 29,
1997 and with the City of Boston, Office of the City
Clerk on December 26, 1997, is incorporated herein by
reference to Exhibit 1(j) to Post-Effective Amendment
No. 44 to Registrant's Registration Statement filed
on September 18, 1998 ("PEA No 44").
12. Certificate of Classification of Shares reflecting
the creation of Class Z, Class Z - Special Series 1
and Class Z - Special Series 2, Class AA, Class AA -
Special Series 1 and Class AA - Special Series 2
Shares representing interests in the Tax Managed
Equity and Balanced Allocation Funds, respectively,
as filed with the Office of the Secretary of State of
Massachusetts and with the City of Boston, Office of
the City Clerk on July 13, 1998 is incorporated
herein by reference to Exhibit (1)(k) to PEA No. 44.
13. Certificate of Classification of Shares reflecting
the creation of Class BB and Class BB - Special
Series 1 shares in the Ohio Municipal Money Market
Fund, as filed with the Office of the Secretary of
State and with the City of Boston, Office of the City
Clerk on September 15, 1998, is incorporated herein
by reference to Exhibit 1(k) to Post-Effective
Amendment No. 43 to Registrant's Registration
Statement filed on September 15, 1998 ("PEA No. 43").
14. Certificate of Classification of Shares reflecting
the creation of Special Series 3 Shares representing
interests in the International Equity, Small Cap
Value, Small Cap Growth, Equity Growth, Tax Managed
Equity, Core Equity, Equity Index, Equity Income,
Balanced Allocation, Total Return Advantage, Bond,
Intermediate Bond, GNMA, Enhanced Income, Ohio Tax
Exempt, Pennsylvania Municipal, National Tax Exempt,
Mid Cap Growth, Large Cap
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Ultra, U.S. Government Income, Michigan Municipal
Bond and Money Market Funds.
15. Certificate of Classification of Shares representing
interests in the Treasury Plus Money Market, U.S.
Government Income, Mid Cap Growth and Michigan
Municipal Bond Funds.
16. Certificate of Classification of Shares reflecting
the creation of Class MM, Class MM-Special Series 1,
Class MM-Special Series 2 and Class MM-Special Series
3 Shares representing interests in the Strategic
Income Bond Fund.
(b) Code of Regulations as approved and adopted by Registrant's
Board of Trustees on January 28, 1986 is incorporated herein
by reference to Exhibit b. to PEA No. 48.
1. Amendment No. 1 to Code of Regulations is
incorporated herein by reference to Exhibit b.1 to
PEA No. 48.
2. Amendment No. 2 to Code of Regulations as approved
and adopted by Registrant's Board of Trustees on July
17, 1997 is incorporated herein by reference to
Exhibit 2(b) to PEA No. 35.
3. Amendment No. 3 to Code of Regulations as adopted by
Registrant's Board of Trustees on August 5, 1998 is
incorporated herein by reference to Exhibit (b)(3) to
Post-Effective Amendment No. 52 to Registrant's
Registration Statement filed on July 18, 2000 ("PEA
No. 52").
4. Amendment No. 4 to Code of Regulations as adopted by
Registrant's Board of Trustees on July 17, 1997 is
incorporated herein by reference to Exhibit (b)(4) to
PEA No. 52.
(c) See Article V, Section 5.1, and Article V, Section 5.4, of
Registrant's Declaration of Trust, which is incorporated
herein by reference as Exhibit a to PEA No. 48.
(d) 1. Advisory Agreement for the Money Market, Treasury
Money Market, Government Money Market, Tax Exempt
Money Market, Pennsylvania Tax Exempt Money Market,
National Tax Exempt Bond, Intermediate Bond, GNMA,
Bond, Equity Growth, Equity Income, Small Cap Value,
Ohio Tax Exempt Bond and Pennsylvania Municipal Bond
Funds between Registrant and National City Bank,
dated November 19, 1997 is incorporated herein by
reference to Exhibit 5 (a) to PEA No. 44.
2. Interim Advisory Agreement for the Limited Maturity
Bond (formerly known as the Enhanced Income) and
Total Return
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Advantage Funds between Registrant and National Asset
Management Corporation dated March 6, 1998 is
incorporated herein by reference to Exhibit 5(b) to
PEA No. 44.
3. Interim Advisory Agreement for the Core Equity Fund
between Registrant and National Asset Management
Corporation dated March 6, 1998 is incorporated
herein by reference to Exhibit 5(c) to PEA No. 44.
4. New Advisory Agreement for the Core Equity, Limited
Maturity Bond (formerly known as the Enhanced Income)
and Total Return Advantage Funds between Registrant
and National City Bank dated March 6, 1998 is
incorporated herein by reference to Exhibit 5(d) to
PEA No. 44.
5. Sub-Advisory Agreement for the Core Equity and Total
Return Advantage Funds between National City Bank and
National Asset Management Corporation dated March 6,
1998 is incorporated herein by reference to Exhibit
5(e) to PEA No. 44.
6. Advisory Agreement for the International Equity,
Small Cap Value, Small Cap Growth, Equity Index, Real
Return Advantage, Tax Managed Equity, Balanced
Allocation and Ohio Municipal Money Market Funds
between Registrant and National City Bank dated April
9, 1998 is incorporated herein by reference to
Exhibit 5(m) Post-Effective Amendment No. 43 filed on
July l, 1998 ("PEA No. 42").
7. Assumption Agreement between National City Bank,
National City Investment Management Company, Armada
Funds, National Asset Management Corporation and SEI
Fund Resources, dated August 5, 1998, is incorporated
herein by reference to Exhibit (h)(8) to
Post-Effective Amendment No. 46 to Registrant's
Registration Statement filed on July 15, 1999 ("PEA
No. 46").
8. Advisory Agreement for the Mid Cap Growth, Large Cap
Ultra, U.S. Government Income, Michigan Municipal
Bond and Treasury Plus Money Market Funds between
Registrant and National City Investment Management
Company.
9. Form of Advisory Agreement for the Strategic Income
Bond Fund between Registrant and National City
Investment Management Company is incorporated herein
by reference to Exhibit (d)(9) to PEA No. 52.
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(e) Distribution Agreement between Registrant and SEI
Investments Distribution Co., dated May 1, 1998 is
incorporated herein by reference to Exhibit 6 to PEA
No. 44.
(f) None.
(g) 1. Custodian Services Agreement between
Registrant and National City Bank, dated
November 7, 1994 is incorporated herein by
reference to Exhibit g.1 to PEA No. 48.
2. 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 g.2 to PEA No. 48.
3. Amended Exhibit A, dated June 16, 2000, to
the Custodian Services Agreement between
Registrant and National City Bank, dated
November 7, 1994 is incorporated herein by
reference to Exhibit (g)(3) to PEA No. 52.
(h) 1. Form of Co-Administration Agreement among
Registrant, SEI Investments Mutual Funds
Services and National City Bank, effective
as of August 1, 2000.
2. 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.
3. Form of Addendum No. 1 to Amended and
Restated Transfer Agency and Dividend
Disbursement Agreement between Registrant
and State Street Bank and Trust Company is
incorporated herein by reference to Exhibit
9(d) to PEA No. 41.
4. Letter amendment, dated March 26, 1999, to
Transfer Agency and Service Agreement
between Registrant and State Street Bank and
Trust Company, dated March 1, 1997 is
incorporated herein by reference to Exhibit
No. (h)(7) to PEA No. 52.
5. Amendment dated June 16, 2000 to Transfer
Agency and Service Agreement dated March 1,
1997 between Registrant and State Street
Bank and Trust Company.
6. Revised Shareholder Services Plan adopted by
the Board of Trustees on February 15, 1997,
is incorporated herein by reference to
Exhibit 9(e) to PEA No. 33.
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7. Form of Servicing Agreement is incorporated
herein by reference to Exhibit (h)(9) to PEA
No. 52.
8. Assumption Agreement between National City
Bank, National City Investment Management
Company, Armada Funds, National Asset
Management Corporation and SEI Fund
Resources, dated August 5, 1998 is
incorporated herein by reference to Exhibit
(h)(8) to PEA No. 46.
(i) Opinion of Drinker Biddle and Reath LLP as counsel to
Registrant.
(j) 1. Consent of Drinker Biddle & Reath LLP.
2. Consent of Ernst & Young LLP.
3. Consent of PricewaterhouseCoopers LLP.
4. Consent of Squire Sanders & Dempsey LLP.
5. Consent of Dickinson Wright PLLC.
(k) None.
(l) 1. Purchase Agreement between Registrant and
McDonald & Company Securities, Inc. dated
January 28, 1986 is incorporated herein by
reference to Exhibit l.1 to PEA No. 48.
2. Purchase Agreement between Registrant and
McDonald & Company Securities, Inc. with
respect to the Tax Exempt Money Market
Portfolio dated July 19, 1988 is
incorporated herein by reference to Exhibit
l.2 to PEA No. 48.
3. Purchase Agreement between Registrant and
McDonald & Company Securities, Inc. with
respect to the Tax Exempt Money Market
Portfolio (Trust), dated October 17, 1989 is
incorporated herein by reference to Exhibit
l.3 to PEA No. 48.
4. Purchase Agreement between Registrant and
McDonald & Company Securities, Inc. with
respect to the Equity Growth Portfolio and
Bond Portfolio, dated December 20, 1989 is
incorporated herein by reference to Exhibit
l.4 to PEA No. 48.
5. Purchase Agreement between Registrant and
McDonald & Company Securities, Inc. with
respect to the Ohio Tax Exempt Bond
Portfolio, dated January 5, 1990 is
incorporated herein by reference to Exhibit
l.5 to PEA No. 48.
6. Purchase Agreement between Registrant and
Allmerica Investments, Inc. with respect to
the Limited Maturity Bond Fund
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(formerly known as the Enhanced Income
Fund), dated July 5, 1994 is incorporated
herein by reference to Exhibit 1.6 to PEA
No. 48.
7. 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 l.7 to PEA No. 48.
8. Purchase Agreement between Registrant and
Allmerica Investments, Inc. with respect to
the Small Cap Value Fund (formerly known as
the Mid Cap Regional Equity Portfolio),
dated July 25, 1994 is incorporated herein
by reference to Exhibit l.8 to PEA No. 48.
9. 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 l.9 to PEA No. 48.
10. Purchase Agreement between Registrant and
Allmerica Investments, Inc. with respect to
the National Tax Exempt Bond Fund is
incorporated herein by reference to Exhibit
l.10 to PEA No. 48.
11. Purchase Agreement between Registrant and
440 Financial Distributors, Inc. with
respect to the Pennsylvania Tax Exempt Money
Market Fund, dated September 6, 1996, is
incorporated herein by reference to Exhibit
13(j) to PEA No. 33.
12. Purchase Agreement between Registrant and
440 Financial Distributors, Inc. with
respect to the Intermediate Government Money
Market Fund, dated September 6, 1996, is
incorporated herein by reference to Exhibit
13(k) to PEA No. 33.
13. 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.
14. Purchase Agreement between Registrant and
440 Financial Distributors, Inc. with
respect to the Pennsylvania Municipal Bond
Fund, dated September 6, 1996, is
incorporated herein by reference to Exhibit
13(m) to PEA No. 33.
15. Purchase Agreement between Registrant and
SEI Investments Distribution Co. with
respect to the Core Equity Fund is
incorporated herein by reference to Exhibit
13(n) to PEA No. 36.
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16. Purchase Agreement dated August 1, 1997
between Registrant and SEI Investments
Distribution Co. with respect to the
International Equity Fund (Class U - Special
Series 1) is incorporated herein by
reference to Exhibit (l)(16) to PEA No. 52.
17. Purchase Agreement between Registrant and
SEI Investments Distribution Co. with
respect to the Equity Index Fund.
18. Form of Purchase Agreement between
Registrant and SEI Investments Distribution
Co. with respect to the Real Return
Advantage Fund is incorporated herein by
reference to Exhibit 13(q) to PEA No. 33.
19. Purchase Agreement between Registrant and
SEI Investments Distribution Co. with
respect to the Small Cap Growth Fund is
incorporated herein by reference to Exhibit
13(r) to PEA No. 36.
20. Purchase Agreement between Registrant and
SEI Investments Distribution Co. with
respect to Special Series 2 shares for each
Fund.
21. Purchase Agreement between Registrant and
SEI Investments Distribution Co. with
respect to the Balanced Allocation Fund.
22. Purchase Agreement dated September 14, 1998
between Registrant and SEI Investments
Distribution Co. with respect to the Ohio
Municipal Money Market Fund (Class BB and
Class BB - Special Series 1) is incorporated
herein by reference to Exhibit (l)(22) to
PEA No. 52.
23. Purchase Agreement dated April 9, 1998
between Registrant and SEI Investments
Distribution Co. with respect to the Tax
Managed Equity Fund (Class Z, Class Z -
Special Series 1 and Class Z - Special
Series 2) and the National Tax-Exempt Fund
(Class L, Class L - Special Series 1 and
Class L - Special Series 2) is incorporated
herein by reference to Exhibit (l)(23) to
PEA No. 52.
24. Purchase Agreement dated August 1, 1997
between Registrant and SEI Investments
Distribution Co. with respect to the
International Equity Fund (Class U) is
incorporated herein by reference to Exhibit
(l)(24) to PEA No. 52.
25. Purchase Agreement dated January 2, 1998
between Registrant and SEI Investments
Distribution Co. with respect to Special
Series 2 shares of the Money Market, Small
Cap Value, Equity Growth, Equity Income,
Small Cap Growth, International Equity, Core
Equity, Intermediate Bond and Bond Funds is
incorporated herein by reference to Exhibit
(l)(25) to PEA No. 52.
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26. Purchase Agreement dated January 11, 2000
between Registrant and SEI Investments
Distribution Co. with respect to Special
Series 2 shares of the Equity Index, Total
Return Advantage, Enhanced Income and GNMA
Funds and Special Series 3 Shares of the
Money Market, Small Cap Value, Equity
Growth, Equity Income, Small Cap Growth,
International Equity, Core Equity, Tax
Managed Equity, Equity Index, Enhanced
Income, Total Return Advantage, GNMA,
Intermediate Bond, Bond, National Tax-Exempt
Bond, Ohio Tax-Exempt Bond and Pennsylvania
Municipal Bond Funds.
27. Form of Purchase Agreement between
Registrant and SEI Investments Distribution
Co. with respect to the Strategic Income
Bond Fund (Class MM, Class MM - Special
Series 1, Class MM - Special Series 2 and
Class MM - Special Series 3) is incorporated
herein by reference to Exhibit (l)(26) to
PEA No. 52.
(m) 1. Service and Distribution Plan for the A
(formerly, Retail) and I (formerly,
Institutional) Share Classes is incorporated
herein by reference to Exhibit 15(a) to PEA
No. 38.
2. B Shares Distribution and Servicing Plan is
incorporated herein by reference to Exhibit
15(b) to PEA No. 38.
3. C Shares Distribution and Servicing Plan is
incorporated herein by reference to Exhibit
m.3. to PEA No. 47.
(n) None.
(o) Revised Plan Pursuant to Rule 18f-3 for Operation of
a Multi-Class System is incorporated herein by
reference to Exhibit (n) to PEA No. 47.
(p) 1. Code of Ethics of Armada Funds.
2. Code of Ethics of SEI Investments
Distribution Co is incorporated herein by
reference to Exhibit (p)(2) to PEA No. 52.
3. Code of Ethics of National City Investment
Management Company.
4. Code of Ethics of National Asset Management
Corporation.
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ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Registrant is controlled by its Board of Trustees.
ITEM 25. 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 (e) hereto, and Sections 12 and 6, respectively, of the
Custodian Services and Transfer Agency Agreements, incorporated by reference as
Exhibits g.1 and h.4 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 (a) hereto,
provides as follows:
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
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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 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.
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<PAGE> 201
(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.
(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 under this Agreement, and the Bank and its
agents or subcontractors shall not be liable and
shall be indemnified by the Fund on 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 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
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<PAGE> 202
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, 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.
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<PAGE> 203
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
(a) Investment Adviser: National City Investment Management
Company ("IMC")
IMC performs investment advisory services for Registrant and
certain other investment advisory customers. IMC is an indirect wholly owned
subsidiary of National City Corporation (the "Corporation"). In 1998, the
Corporation consolidated its mutual fund investment management operations under
IMC, a registered investment adviser. As of August 5, 1998, IMC assumed National
City Bank's rights, responsibilities, liabilities and obligations under its
Advisory Agreements with the Registrant relating to each of the Funds, its
Sub-Advisory Agreement with National Asset Management Corporation relating to
the Core Equity Fund, and its Sub-Administration Agreement with SEI Fund
Resources relating to each of the Funds. As of August 1, 1998, Wellington
Management Company LLP (the "sub-adviser") ceased serving as the sub-adviser to
the Small Cap Growth Fund under a sub-advisory agreement with National City Bank
and the Small Cap Growth Team of IMC began making the investment decisions for
the Fund.
To the knowledge of Registrant, none of the directors or
officers of IMC, 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, the
Corporation, which owns all the outstanding stock of National City Bank of
Michigan/Illinois (formerly, First of America Bank, N.A.), which in turn owns
all the outstanding stock of IMC, or other subsidiaries of the Corporation. Set
forth below are the names and principal businesses of the directors and certain
of the senior executive officers of IMC who are engaged in any other business,
profession, vocation or employment of a substantial nature.
NATIONAL CITY INVESTMENT MANAGEMENT COMPANY
<TABLE>
<CAPTION>
Position with National
City Investment
Management Other Business Type of
Name Company Connections Business
---- ----------------- ---------------- --------
<S> <C> <C> <C>
Kathleen T. Barr Managing Director of National City Bank Bank affiliate
Proprietary Mutual
Funds
Michael Minnaugh Chairman of the Board National City Bank Bank affiliate
</TABLE>
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<PAGE> 204
<TABLE>
<CAPTION>
Position with National
City Investment
Management Other Business Type of
Name Company Connections Business
---- ----------------- ---------------- --------
<S> <C> <C> <C>
Joseph C. Penko Vice President and National City Bank Bank affiliate
Treasurer
Donald L. Ross President, Chief National City Bank Bank affiliate
Investment Officer and
Managing Director
Sandra I. Kiely Managing Director National City Bank Bank affiliate
Timothy F. McDonough Managing Director of National City Bank Bank affiliate
Client Services
Mark R. Kummerer Managing Director of National City Bank Bank affiliate
Fixed Income
Investments
</TABLE>
(b) Sub-Investment Adviser: National Asset Management
Corporation ("NAM").
NAM performs sub-investment advisory services for the
Registrant's Total Return Advantage and Core Equity Funds. NAM is an investment
adviser registered under the Investment Advisers Act of 1940 (the "Advisers
Act").
To the knowledge of Registrant, none of the directors or
officers of NAM, 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. Set forth below are the names and
principal business of the directors and certain of the senior executive officers
of NAM who are engaged in any other business, profession, vocation, or
employment of a substantial nature.
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<PAGE> 205
NATIONAL ASSET MANAGEMENT CORPORATION
<TABLE>
<CAPTION>
Position with Other
National Asset Business Type of
Name Management Connections Business
---- ---------- ----------- --------
<S> <C> <C> <C>
William F. Chandler Founder and Principal
Carl W. Hafele CEO and Principal None
Michael C. Heyman Principal None
David B. Hiller Principal None
Stephen G. Mullins Principal None
Larry J. Walker Principal None
John W. Ferreby Principal None
Catherine R. Stodghill Principal None
Erik N. Evans Principal None
Brent A. Bell Principal None
Randall T. Zipfel COO and Principal None
Matt Bevin Principal None
Dave Chick Principal None
Mark Lattis Principal None
</TABLE>
ITEM 27. 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.
(the "Distributor"), acts as distributor for:
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<PAGE> 206
SEI Daily Income Trust
SEI Liquid Asset Trust
SEI Tax Exempt Trust
SEI Index Funds
SEI Institutional Managed Trust
SEI Institutional International Trust
The Advisors' Inner Circle Fund
The Pillar Funds
CUFUND
STI Classic Funds
First American Funds, Inc.
First American Investment Funds, Inc.
The Arbor Fund
The PBHG Funds, Inc.
The Achievement Funds Trust
Bishop Street Funds
STI Classic Variable Trust
ARK Funds
Huntington Funds
SEI Asset Allocation Trust
TIP Funds
SEI Institutional Investments Trust
First American Strategy Funds, Inc
HighMark Funds
Armada Funds
PBHG Insurance Series Fund, Inc.
The Expedition Funds
Alpha Select Funds
Oak Associates Funds
The Nevis Fund, Inc.
CNI Charter Funds
The Armada Advantage Fund
Amerindo Funds Inc.
Huntington VA Funds
Friends Ivory Funds
SEI Insurance Products Trust
Pitcairn Funds
The Distributor 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
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<PAGE> 207
the answer to Item 21 of Part B. Unless otherwise noted, the
principal business address of each director or officer is
Oaks, PA 19456.
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name With Underwriter With Registrant
---- ---------------- ---------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman of the Board of --
Directors
Richard B. Lieb Director, Executive Vice President --
Carmen V. Romeo Director --
Mark J. Held President & Chief Operating Officer --
Gilbert L. Beebower Executive Vice President --
Dennis J. McGonigle Executive Vice President --
Robert M. Silvestri Chief Financial Officer & Treasurer --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Jack May Senior Vice President --
Hartland J. McKeown Senior Vice President --
Kevin P. Robins Senior Vice President --
Patrick K. Walsh Senior Vice President --
Robert Aller Vice President --
Todd Cipperman Senior Vice President & General Counsel --
S. Courtney E. Collier Vice President & Assistant Secretary --
Robert Crudup Vice President & Managing Director --
Richard A. Deak Vice-President & Assistant Secretary --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
James R. Foggo Vice-President & Assistant Secretary --
Vic Galef Vice President & Managing Director --
Lydia A. Gavalis Vice President & Assistant Secretary --
Greg Gettinger Vice President & Assistant Secretary --
Kathy Heilig Vice President --
Jeff Jacobs Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
</TABLE>
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<PAGE> 208
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name With Underwriter With Registrant
---- ---------------- ---------------
<S> <C> <C>
John Krzeminski Vice President & Managing Director --
Christine M. McCullough Vice President & Assistant Secretary --
Carolyn McLaurin Vice President & Managing Director --
Mark Nagle Vice President --
Joanne Nelson Vice President --
Cynthia M. Parrish Vice President & Secretary
Rob Redican Vice President --
Maria Rinehart Vice President --
Daniel Spaventa Vice President --
Lynda J. Striegel Vice President & Assistant Secretary --
Lori L. White Vice President & Assistant Secretary --
Timothy D. Barto Vice President & Assistant Secretary Assistant Treasurer
</TABLE>
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
(a) National City Investment Management Company ("IMC"), 1900 East
Ninth Street, Cleveland, Ohio, 44114-3484; and National City
Bank, Trust Operations, 4100 West 150th Street, Cleveland,
Ohio 44135; (records relating to their functions as investment
adviser and custodian); National City Bank, Columbus Plaza,
155 E. Broad Street, Columbus, Ohio 43251 (records relating to
IMC's former function as investment adviser to the predecessor
Parkstone Group of Funds); and National Asset Management
Corporation, 101 South Fifth Street, Louisville, KY 40202
(records relating to its function as sub-adviser to the Core
Equity and Total Return Advantage Funds).
(b) SEI Investments Distribution Co., One Freedom Valley Drive,
Oaks, Pennsylvania 19456 (records relating to its function as
distributor, accounting agent and administrator).
(c) Drinker Biddle & Reath LLP, One Logan Square, 18th and Cherry
Streets, Philadelphia, Pennsylvania 19103-6996 (Registrant's
Declaration of Trust, Code of Regulations and Minute Books).
(d) State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110 (records relating to its function
as transfer agent).
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<PAGE> 209
ITEM 29. MANAGEMENT SERVICES.
Inapplicable.
ITEM 30. UNDERTAKINGS.
None.
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<PAGE> 210
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, Registrant certifies that it
meets all of the requirements for effectiveness of this registration statement
under Rule 485(b) under the Securities Act and has duly caused this
Post-Effective Amendment No. 53 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 29th day of September, 2000.
ARMADA FUNDS
Registrant
*Robert D. Neary
----------------------------------
Trustee and Chairman of the Board
Robert D. Neary
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 53 to Registrant's Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ John H. Leven Treasurer September 29, 2000
------------------
John H. Leven
*John F. Durkott Trustee September 29, 2000
--------------------
John F. Durkott
*Robert J. Farling Trustee September 29, 2000
---------------------
Robert J. Farling
*Richard W. Furst Trustee September 29, 2000
--------------------
Richard W. Furst
*Gerald Gherlein Trustee September 29, 2000
--------------------
Gerald Gherlein
*Herbert Martens President and Trustee September 29, 2000
--------------------
Herbert Martens
* Robert D. Neary Trustee and Chairman September 29, 2000
------------------- of the Board
Robert D. Neary
* J. William Pullen Trustee September 29, 2000
--------------------
J. William Pullen
</TABLE>
*By: /S/ W. Bruce McConnel
----------------------------
W. Bruce McConnel
Attorney-in-fact
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<PAGE> 211
ARMADA FUNDS
CERTIFICATE OF SECRETARY
The following resolution was duly adopted by the Board of Trustees of
Armada Funds on May 11, 2000 and remains in effect on the date hereof:
FURTHER RESOLVED, that the officers of Armada and the Group
required to execute amendments to Armada's and the Group's Registration
Statements be, and hereby are, authorized to execute a Power of Attorney
appointing Herbert R. Martens, Jr. and W. Bruce McConnel, III, and either of
them, their true and lawful attorney or attorneys, to execute in their name,
place and stead, any and all amendments to the Registration Statements, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission; and either of said attorneys
shall have full power of substitution and resubstitution; and to do in the name
and on behalf of said officers, 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 each or any of said officers might or could do in person.
ARMADA FUNDS
By: /s/ W. Bruce McConnel
---------------------------------
W. Bruce McConnel
Secretary
Dated: September 29, 2000
<PAGE> 212
ARMADA FUNDS
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, Robert
D. Neary, hereby constitutes and appoints Herbert R. Martens, Jr. 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: September 17, 1997
/s/ Robert D. Neary
-------------------
Robert D. Neary
<PAGE> 213
ARMADA FUNDS
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, John F.
Durkott, hereby constitutes and appoints Herbert R. Martens, Jr. 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: September 17, 1997
/s/ John F. Durkott
-------------------
John F. Durkott
<PAGE> 214
ARMADA FUNDS
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, Richard
W. Furst, hereby constitutes and appoints Herbert R. Martens, Jr. 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: September 17, 1997
/s/Richard W. Furst
-------------------
Richard W. Furst
<PAGE> 215
ARMADA FUNDS
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, Robert
J. Farling, hereby constitutes and appoints Herbert R. Martens, Jr. 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: November 19, 1997
/s/ Robert J. Farling
---------------------
Robert J. Farling
<PAGE> 216
ARMADA FUNDS
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned, J.
William Pullen, hereby constitutes and appoints Herbert R. Martens, Jr. 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: September 17, 1997
/s/ J. William Pullen
---------------------
J. William Pullen
<PAGE> 217
ARMADA FUNDS
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, Herbert
R. Martens, Jr. , 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: September 17, 1997
/s/ Herbert R. Martens, Jr.
---------------------------
Herbert R. Martens, Jr.
<PAGE> 218
ARMADA FUNDS
POWER OF ATTORNEY
-----------------
Know All Men by These Presents, that the undersigned, Gerald
L. Gherlein, hereby constitutes and appoints Herbert R. Martens, Jr. 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: September 17, 1997
/s/ Gerald L. Gherlein
----------------------
Gerald L. Gherlein
<PAGE> 219
EXHIBIT INDEX
(a)(14) Certificate of Classification of Shares reflecting the creation of
Special Series 3 Shares representing interests in the International
Equity, Small Cap Value, Small Cap Growth, Equity Growth, Tax Managed
Equity, Core Equity, Equity Index, Equity Income, Balanced Allocation,
Total Return Advantage, Bond, Intermediate Bond, GNMA, Enhanced Income,
Ohio Tax Exempt, Pennsylvania Municipal, National Tax Exempt, Mid Cap
Growth, Large Cap Ultra, U.S. Government Income, Michigan Municipal
Bond and Money Market Funds.
(a)(15) Classification of Shares representing interests in the Treasury Plus
Money Market, U.S. Government Income, Aggressive Allocation,
Conservative Allocation, Mid Cap Growth and Michigan Municipal Bond
Funds.
(a)(16) Certificate of Classification of Shares reflecting the creation of
Class MM - Special Series 1, Class MM - Special Series 2 and Class MM -
Special Series 3 Shares representing interests in the Strategic Income
Bond Fund.
(d)(8) Advisory Agreement for the Mid Cap Growth, Large Cap Ultra, U.S.
Government Income, Michigan Municipal Bond and Treasury Money Market
Funds between Registrant and National City Investment Management
Company.
(h)(1) Form of Co-Administration Agreement among Registrant, SEI Investments
Mutual Funds Services and National City Bank effective as of August
1, 2000.
(h)(5) Amendment dated June 16, 2000 to Transfer Agency and Service Agreement
dated March 1, 1997 between Registrant and State Street Bank and Trust
Company.
(i) Opinion of Counsel.
(j)(1) Consent of Drinker Biddle & Reath LLP.
(j)(2) Consent of Ernst & Young LLP.
(j)(3) Consent of PricewaterhouseCoopers LLP.
(j)(4) Consent of Squire Sanders & Dempsey LLP.
(j)(5) Consent of Dickinson Wright PLLC.
(l)(17) Purchase Agreement between Registrant and SEI Investments Distribution
Co. with respect to the Equity Index Fund.
<PAGE> 220
(l)(20) Purchase Agreement between Registrant and SEI Investments Distribution
Co. dated January 2, 1998 with respect to Special Series 2 of each
Fund.
(l)(21) Purchase Agreement between Registrant and SEI Investments Distribution
Co. with respect to the Balanced Allocation Fund.
(l)(26) Purchase Agreement dated January 11, 2000 between Registrant and SEI
Investments Distribution Co. with respect to Special Series 2 shares of
the Equity Index, Total Return Advantage, Enhanced Income and GNMA
Funds and Special Series 3 Shares of the Money Market, Small Cap Value,
Equity Growth, Equity Income, Small Cap Growth, International Equity,
Core Equity, Tax Managed Equity, Equity Index, Enhanced Income, Total
Return Advantage, GNMA, Intermediate Bond, Bond, National Tax Exempt
Bond, Ohio Tax Exempt Bond and Pennsylvania Municipal Bond Funds.
(p)(1) Code of Ethics of Armada Funds and The Armada Advantage Fund.
(p)(3) Code of Ethics of National City Investment Management Company.
(p)(4) Code of Ethics of National Asset Management Corporation.
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