<PAGE> 1
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED DECEMBER 13, 1996
THE PARKSTONE GROUP OF FUNDS
INSTITUTIONAL SHARES PROSPECTUS DATED DECEMBER 30, 1996
Parkstone Conservative For more information
Allocation Fund call:
Parkstone Balanced Allocation (800) 451-8377
Fund or
Parkstone Aggressive write to:
Allocation Fund 3435 Stelzer Road
Columbus, Ohio 43219
THESE SECURITIES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE
The funds listed above are three of the eighteen currently-offered series (the
"Funds") of The Parkstone Group of Funds (the "Group") which offer Institutional
Shares. This Prospectus explains concisely what you should know before investing
in the Institutional Shares of the Funds listed above. Please read it carefully
and keep it for future reference. Institutional Shares are currently offered
only to accounts that have a fiduciary or agency relationship with a financial
institution. You can find more detailed information about the Funds in the
December 30, 1996 Statement of Additional Information, as amended from time to
time. For a free copy of the Statement of Additional Information or other
information, contact the Group at the number specified above. The Statement of
Additional Information has been filed with the Securities and Exchange
Commission (the "SEC") and is incorporated into this Prospectus by reference.
THE SHARES OF THE PARKSTONE GROUP OF FUNDS ARE NOT OBLIGATIONS OR DEPOSITS OF
FIRST OF AMERICA INVESTMENT CORPORATION OR ITS PARENT, AND THE INVESTMENTS
DESCRIBED IN THIS PROSPECTUS ARE NOT ENDORSED, INSURED OR GUARANTEED BY FIRST OF
AMERICA INVESTMENT CORPORATION, ITS PARENT OR THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER AGENCY. INVESTMENTS IN THE PARKSTONE GROUP OF FUNDS
INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVOLVED.
PROSPECTUS--Institutional Shares
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
PROSPECTUS SUMMARY..............................................................................................
FEE TABLES .....................................................................................................
FINANCIAL HIGHLIGHTS............................................................................................
INVESTMENT OBJECTIVES AND POLICIES..............................................................................
RISK FACTORS AND INVESTMENT TECHNIQUES..........................................................................
INVESTMENT RESTRICTIONS.........................................................................................
MANAGEMENT OF THE FUNDS.........................................................................................
HOW TO BUY INSTITUTIONAL SHARES.................................................................................
EXCHANGE PRIVILEGE..............................................................................................
HOW TO REDEEM YOUR INSTITUTIONAL SHARES.........................................................................
HOW SHARES ARE VALUED...........................................................................................
DIVIDENDS AND TAXES.............................................................................................
PERFORMANCE INFORMATION.........................................................................................
FUNDATA(R)......................................................................................................
GENERAL INFORMATION.............................................................................................
</TABLE>
PROSPECTUS--Institutional Shares
<PAGE> 3
The Parkstone Group of Funds (the "Group") is an open-end management investment
company which offers to the public eighteen separate investment portfolios,
seventeen of which are diversified portfolios and one of which is a
non-diversified portfolio, each with different investment objectives. These
Funds enable the Group to meet a wide range of investment needs.
This Prospectus relates only to the Institutional Shares of the following Funds:
Parkstone Conservative Allocation Fund (the "Conservative Allocation Fund")
Parkstone Balanced Allocation Fund (the "Balanced Allocation Fund"),
formerly known as the Parkstone Balanced Fund
Parkstone Aggressive Allocation Fund (the "Aggressive Allocation Fund")
For convenience of reference, the above Funds are sometimes referred to as the
"LifeWorks Funds."
The Trustees of the Group have divided beneficial ownership of each of the Funds
into an unlimited number of transferable units called shares. Most Funds of the
Group offer multiple classes of shares. The Conservative Allocation Fund and the
Aggressive Allocation Fund only offer Institutional Shares, while the Balanced
Allocation Fund offers Investor A Shares, Investor B Shares, Investor C Shares
and Institutional Shares. This Prospectus describes Institutional Shares of each
of these Funds. Interested persons who wish to obtain a copy of the Prospectus
of the other classes of shares of the Group's Funds or a copy of the Group's
most recent Annual Report may contact the Group at the telephone number shown
above.
The investment objectives of each of the LifeWorks Funds are described in this
Prospectus and are summarized in the Prospectus Summary. First of America
Investment Corporation, Kalamazoo, Michigan ("First of America" or the
"Investment Adviser"), acts as the investment adviser to each of the Funds of
the Group. To provide investment advisory services for the LifeWorks Funds for
investments in foreign securities, First of America has entered into a
sub-investment advisory agreement with Gulfstream Global Investors, Ltd.,
Dallas, Texas ("Gulfstream" or the "Subadviser").
PROSPECTUS--Institutional Shares
<PAGE> 4
PROSPECTUS SUMMARY
Shares Offered
This Prospectus relates to Institutional Shares of the Balanced Allocation Fund,
the Conservative Allocation Fund and the Aggressive Allocation Fund.
These Funds represent three separate investment portfolios of The Parkstone
Group of Funds, a Massachusetts business trust which is registered as an
open-end, management investment company.
Purchase and Redemption of Shares
The public offering price of Institutional Shares of each Fund is equal to the
net asset value per share. There are no initial or contingent deferred sales
charges on Institutional Shares. Shares may be purchased through procedures
established by the Group's distributor, BISYS Fund Services, L.P. ("BISYS" or
the "Distributor"). Institutional Shares of one Fund of the Group may be
exchanged for Institutional Shares of another Fund of the Group at net asset
value, provided certain conditions are met. Shareholders may redeem their shares
by contacting their trust administrator or financial consultant responsible for
the account. See "HOW TO BUY INSTITUTIONAL SHARES," "EXCHANGE PRIVILEGE," "HOW
TO REDEEM INSTITUTIONAL SHARES" and "HOW SHARES ARE VALUED."
Minimum Purchase
For financial institutions, there is a $100,000 minimum initial purchase (based
on the public offering price) per Fund with no minimum subsequent investment.
Such minimum initial investment may be waived for certain purchasers. There is
no minimum requirement for individual shareholders on whose behalf the financial
institutions are purchasing Institutional Shares.
Investment Objectives
The Conservative Allocation Fund seeks current income and conservation of
capital, with a secondary objective of long-term capital growth. The Balanced
Allocation Fund seeks current income, long-term capital growth and conservation
of capital. The Aggressive Allocation Fund seeks capital appreciation and income
growth.
Investment Policies
Each Fund will invest in various types or classes of securities, including all
types of common stocks, fixed-income securities and securities convertible into
common stocks and cash or cash equivalents. The emphasis of investment in each
type of security varies among the LifeWorks Funds as described in this
Prospectus.
PROSPECTUS--Institutional Shares
<PAGE> 5
Risk Factors and Special Considerations
An investment in a mutual fund such as any of the Funds involves a certain
amount of risk and may not be suitable for all investors. In addition, some
investment policies of the Funds may entail certain risks. See "RISK FACTORS AND
INVESTMENT TECHNIQUES."
Management of the Funds
First of America serves as investment adviser, and, with respect to a portion of
the Funds, Gulfstream serves as subadviser. First of America also serves as
sub-administrator. BISYS, a partnership owned by The BISYS Group, Inc., serves
as distributor and administrator. BISYS Fund Services Ohio, Inc. ("BISYS Ohio"
or the "Transfer Agent") serves as transfer agent, dividend paying agent and
fund accountant. Union Bank of California, N.A. ("Union Bank" or the
"Custodian"), formerly known as The Bank of California, N.A., serves as
custodian.
Dividends and Taxes
Dividends from net income are declared and paid monthly. Net realized capital
gains are distributed at least annually. Each of the Funds is treated as a
separate entity for federal income tax purposes and intends to qualify as a
"regulated investment company." Shareholders will be advised at least annually
as to the federal income tax consequences of distributions made during the year.
PROSPECTUS--Institutional Shares
<PAGE> 6
FEE TABLES (INSTITUTIONAL SHARES)
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
<S> <C>
Maximum Sales Charge (as a percentage of the offering price)........................................... None
Sales Charge on Reinvested Distributions............................................................... None
Deferred Sales Charge on Redemptions................................................................... None
Redemption Fees........................................................................................ None
Exchange Fees.......................................................................................... None
</TABLE>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)*
<TABLE>
<CAPTION>
Total
Management 12b-1 Other Operating
Fees Fees Expenses Expenses
---------- ------ -------- ---------
<S> <C> <C> <C> <C>
Conservative Allocation Fund............................. 0.70% 0.00% 0.35% 1.05%
Balanced Allocation Fund 0.75% 0.00% 0.41% 1.16%
Aggressive Allocation Fund............................... 0.85% 0.00% 0.39% 1.24%
</TABLE>
* after expense reductions
Management Fees and Total Expenses as a percentage of average net assets for the
Balanced Allocation Fund, absent the voluntary reduction of advisory fees, would
have been 1.00% and 1.41%, respectively. The annual percentages of Other
Expenses for the Conservative Allocation Fund and Aggressive Allocation Fund are
based on expected fees and expenses and expected voluntary reductions. Absent
the expected voluntary reduction of advisory fees, Management Fees and Total
Expenses for the Conservative Allocation Fund would be 1.00% and 1.35%,
respectively. For the Aggressive Allocation Fund, they would be 1.00% and
1.39%, respectively.
EXPENSE EXAMPLES
You would pay the following expenses on a $1,000 investment in Institutional
Shares, assuming (1) 5% annual return and (2) redemption at the end of each time
period:
<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
<S> <C> <C> <C> <C>
Conservative Allocation Fund*.................................. $ 11 $ 33 -- --
Balanced Allocation Fund....................................... $ 12 $ 37 $ 64 $141
Aggressive Allocation Fund*.................................... $ 13 $ 39 -- --
</TABLE>
Because the Conservative Allocation Fund and the Aggressive Allocation Fund are
new Funds, expense example information is provided only for 1-year and 3-year
periods.
PROSPECTUS--Institutional Shares
<PAGE> 7
The information set forth in the foregoing Fee Tables and expense examples
relates only to Institutional Shares of the Funds.
The purpose of the above tables is to assist a potential purchaser of
Institutional Shares of any of the LifeWorks Funds in understanding the various
costs and expenses that an investor in a Fund will bear directly or indirectly.
Such expenses do not include any fees charged by a financial institution,
including First of America or any of its affiliates, to its customer accounts
which may invest in Institutional Shares of the Funds. See "MANAGEMENT OF THE
FUNDS" and "GENERAL INFORMATION" for a more complete discussion of the annual
operating expenses of each of the Funds. The expense information for
Institutional Shares reflects current fees. THE FOREGOING EXAMPLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS
The table on the following page sets forth certain information concerning the
investment results of the Institutional Shares of the Balanced Allocation Fund
since its inception. Further financial information regarding the Balanced
Allocation Fund is included in the Statement of Additional Information and the
Group's June 30, 1996 Annual Report to Shareholders which may be obtained free
of charge.
The Financial Highlights for the periods presented below have been derived from
financial statements audited by Coopers & Lybrand L.L.P., independent auditors
for the Group, whose report thereon is incorporated by reference in the
Statement of Additional Information.
On March 31, 1993, the shareholders of all of the then-existing Funds of the
Group, including the Balanced Allocation Fund, approved the reclassification of
such Funds' outstanding shares into Investor A Shares and Institutional Shares.
The financial information provided below and in the Annual Report includes
periods prior to such reclassification.
PROSPECTUS--Institutional Shares
<PAGE> 8
BALANCED ALLOCATION FUND - INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
================================================================================================================================
Year ended June 30,
- --------------------------------------------------------------------------------------------------------------------------------
Institutional Shares
- --------------------------------------------------------------------------------------------------------------------------------
Jan. 31,
1992
to June 30,
1996 1995(f) 1994 1993(b) 1992(a)
---- ------- ---- ------- -------
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.19 $10.67 $11.08 $9.68 $10.00
------ ------ ------ ----- ------
- --------------------------------------------------------------------------------------------------------------------------------
Income from Investment Activities
- --------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 0.36 0.31 0.27 0.28 0.14
- --------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gains (Losses) on
Investments 1.74 1.68 (0.41) 1.41 (0.34)
------ ------ ------ ------ ------
- --------------------------------------------------------------------------------------------------------------------------------
Total from Investment Activities 2.10 1.99 (0.14) 1.69 (0.20)
------ ------ ------ ------ ------
- --------------------------------------------------------------------------------------------------------------------------------
Distributions
- --------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (0.35) (0.31) (0.27) (0.29) (0.12)
- --------------------------------------------------------------------------------------------------------------------------------
Net Realized Gains (0.57) (0.03)
- --------------------------------------------------------------------------------------------------------------------------------
In Excess of Net Realized Gains (0.13)
------
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.92) (0.47) (0.27) (0.29) (0.12)
------ ------ ------ ------ ------
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $13.37 $12.19 $10.67 $11.08 $9.68
====== ====== ====== ====== =====
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Total Return (excluding sales and redemption charges) 17.81% 19.22% (1.44)% 17.66% (2.06)%(e)
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA:
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000) $113,493 $89,294 $71,427 $42,318 $38,136
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets 1.16% 1.25% 1.09% 1.15% 1.19%(c)
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average
Net Assets 2.62% 2.75% 2.49% 2.70% 3.46%(c)
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets* 1.41% 1.52% 1.39% 1.46% 1.50%(c)
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average
Net Assets* 2.37% 2.47% 2.18% 2.40% 3.13%(c)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate (d) 437.90% 250.66% 192.39% 177.99% 47.58%
- --------------------------------------------------------------------------------------------------------------------------------
Average Commission Rate Paid (g) $0.0848
================================================================================================================================
</TABLE>
PROSPECTUS--Institutional Shares
<PAGE> 9
* 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) On April 1, 1993 the shareholders of the Group exchanged their shares
for either the Group's Investor A Shares or Institutional Shares. For
the year ended June 30, 1993 the Financial Highlights ratios of
expenses, ratios of net investment income, total return and the per
share investment activities and distributions are presented on the
basis whereby the Fund's net investment income, expenses, and
distributions for the period July 1, 1992 through March 31, 1993 were
allocated to each class of shares based upon the relative net assets of
each class of shares as of April 1, 1993 and the results combined
therewith the results of operations and distributions for each
applicable class for the period April 1, 1993 through June 30, 1993.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between classes of shares issued.
(e) Not annualized.
(f) As of January 1, 1995, Gulfstream assumed the role of subadviser with
respect to the portion of the Balanced Allocation Fund invested in
foreign securities. Prior to that date the Balanced Allocation Fund had
no subadviser.
(g) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by
the Fund for which commissions were charged.
INVESTMENT OBJECTIVES AND POLICIES
GENERAL
The investment objective of each of the Funds is set forth below under the
headings describing the Funds. The investment objective of each Fund is
fundamental and may not be changed without a vote of the holders of a majority
of the outstanding shares of that Fund (as defined in the Statement of
Additional Information). The investment policies of a Fund may be changed
without a vote of the holders of a majority of outstanding shares of that Fund
unless the policy is expressly deemed to be a fundamental policy or changeable
only by such majority vote. There can be no assurance that the investment
objectives of any Fund will be achieved. Depending upon the performance of a
Fund's investments, the net asset value per share of that Fund may decrease
instead of increase.
During temporary defensive periods as determined by First of America or
Gulfstream, as the case may be, each of the Funds may hold up to 100% of its
total assets in short-term obligations including domestic bank certificates of
deposit, bankers' acceptances and repurchase agreements secured by bank
instruments. However, to the extent that a Fund is so invested, its investment
objective may not be achieved during that time. Uninvested cash reserves will
not earn income.
LIFEWORKS FUNDS
THE CONSERVATIVE ALLOCATION FUND, THE BALANCED ALLOCATION FUND AND THE
AGGRESSIVE ALLOCATION FUND
THE INVESTMENT OBJECTIVE OF THE CONSERVATIVE ALLOCATION FUND IS TO SEEK CURRENT
INCOME AND CONSERVATION OF CAPITAL, WITH A SECONDARY OBJECTIVE OF LONG-TERM
CAPITAL GROWTH. THE INVESTMENT OBJECTIVE OF THE BALANCED ALLOCATION FUND IS TO
SEEK CURRENT INCOME, LONG-TERM CAPITAL GROWTH AND CONSERVATION OF CAPITAL. THE
INVESTMENT OBJECTIVE OF THE AGGRESSIVE ALLOCATION FUND IS TO SEEK CAPITAL
APPRECIATION AND INCOME GROWTH.
PROSPECTUS--Institutional Shares
<PAGE> 10
The LifeWorks Funds may invest in any type or class of security. Under normal
market conditions the LifeWorks Funds will invest in common stocks,
fixed-income securities and securities convertible into common stocks (i.e.,
warrants, convertible preferred stock, fixed-rate preferred stock, convertible
fixed-income securities, options and rights). The Conservative Allocation Fund
anticipates investing between 25% and 35% of its total assets in common stocks
and securities convertible into common stocks, between 35% and 75% of its total
assets in fixed-income securities and up to 45% of its total assets in cash and
cash equivalents. No more than 15% of the Conservative Allocation Fund's
investments will be in foreign securities. The Balanced Allocation Fund intends
to invest 45% to 65% of its total assets in common stocks and securities
convertible into common stocks, 25% to 55% of its total assets in fixed-income
securities and up to 30% of its total assets in cash and cash equivalents. Of
these investments, no more than 20% of the Fund's total assets will be in
foreign securities. The Aggressive Allocation Fund expects to invest between 50%
and 90% of its total assets in common stocks and securities convertible into
common stocks, between 15% and 40% of its total assets in fixed-income
securities and up to 25% of its total assets in cash and cash equivalents. The
Aggressive Allocation Fund may invest up to 25% in foreign securities.
For each of the Conservative Allocation Fund and Balanced Allocation Fund,
common stocks are held primarily for the purpose of providing long-term growth
of capital. When choosing such stocks, the potential for long-term capital
appreciation will be the primary basis for selection. The Aggressive Allocation
Fund will primarily invest in common stocks for capital appreciation and growth.
Each of the LifeWorks Funds will invest in the common and preferred stocks of
companies with capitalization of at least $100 million and which are traded
either in established over-the-counter markets or on national exchanges. The
LifeWorks Funds intend to invest primarily in those companies which are
growth-oriented and have exhibited consistent, above-average growth in revenues
and earnings.
The LifeWorks Funds' fixed-income securities consist of bonds, debentures,
notes, zero-coupon securities, mortgage-related securities, state, municipal or
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 each of the LifeWorks
Funds assets may from time to time be invested 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 of the securities in
which the LifeWorks Funds invest may have warrants or options attached. The
LifeWorks Funds may also invest in repurchase agreements.
The LifeWorks Funds expect to invest in a variety of U.S. Treasury obligations,
differing in their interest rates, maturities, and times of issuance, as well as
"stripped" U.S. Treasury obligations ("Stripped Treasury Obligations"), such as
Treasury receipts issued by the U.S. Treasury representing either future
interest or principal payments and other obligations issued or guaranteed by the
U.S. government or its agencies or instrumentalities. See "RISK FACTORS AND
INVESTMENT TECHNIQUES - Government Obligations" below.
The LifeWorks Funds also expect to invest in bonds, notes and debentures of a
wide range of U.S. corporate issuers. Such obligations, in the case of
debentures, will represent unsecured
PROSPECTUS--Institutional Shares
<PAGE> 11
promises to pay, and in the case of notes and bonds, may be secured by mortgages
on real property or security interests in personal property and will in most
cases differ in their interest rates, maturities and times of issuance.
The LifeWorks Funds will invest only in corporate fixed-income securities which
are rated at the time of purchase within the four highest rating groups assigned
by a nationally-recognized statistical rating organization ("NRSRO") or, if
unrated, which First of America deems present attractive opportunities and are
of comparable quality. For a description of the rating symbols of the NRSROs,
see the Appendix to the Statement of Additional Information. For a discussion of
fixed-income securities rated within the fourth highest rating group assigned by
an NRSRO, see "RISK FACTORS AND INVESTMENT TECHNIQUES - Medium-Grade Securities"
herein.
The LifeWorks Funds may hold some short-term obligations (with maturities of 12
months or less) consisting of domestic and foreign commercial paper, variable
amount master demand notes, bankers' acceptances, certificates of deposit and
time deposits of domestic and foreign branches of U.S. banks and foreign banks,
and repurchase agreements. The LifeWorks Funds may also invest in securities of
other investment companies.
The LifeWorks Funds may also invest in obligations of the Export-Import Bank of
the United States, in U.S. dollar-denominated international bonds for which the
primary trading market is in the United States ("Yankee Bonds"), or for which
the primary trading market is abroad ("Eurodollar Bonds"), and in Canadian bonds
and bonds issued by institutions, such as the World Bank and the European
Economic Community, organized for a specific purpose by two or more sovereign
governments ("Supranational Agency Bonds"). The LifeWorks Funds' investments in
foreign securities may be made either directly or through the purchase of ADRs
and the LifeWorks Funds may also invest in securities issued by foreign
branches of U.S. banks and foreign banks, in CCP, and in Europaper.
The amount invested in stock, bonds and cash reserves may be varied from time to
time, depending upon First of America's assessment of business, economic and
market conditions, including any potential advantage of price shifts between the
stock market and the bond market. The LifeWorks Funds reserve the right to hold
short-term securities in whatever proportion deemed desirable for temporary
defensive periods during adverse market conditions as determined by First of
America. However, to the extent that any of the LifeWorks Funds are so
invested, its investment objective may not be achieved during that time.
Like any investment program, investment in any of the LifeWorks Funds entails
certain risks. As Funds investing in common stocks, the LifeWorks Funds are
subject to stock market risk, i.e., the possibility that stock prices in general
will decline over short or even extended periods.
Since the LifeWorks Funds also invest in bonds, investors in the Funds are also
exposed to bond market risk, i.e., fluctuations in the market value of bonds.
Bond prices are influenced primarily by changes in interest rate levels. When
interest rates rise, the prices of bonds generally fall; conversely, when
interest rates fall, bond prices generally rise. While bonds normally fluctuate
less in price than stock, there have been extended periods of cyclical increases
in interest rates that have caused significant declines in bond prices.
PROSPECTUS--Institutional Shares
<PAGE> 12
From time to time, the stock and bond markets may fluctuate independently of one
another. In other words, a decline in the stock market may in certain instances
be offset by a rise in the bond market, or vice versa. As a result the
LifeWorks Funds, with their balance of common stock and bond investments, are
expected to entail less investment risk (and a potentially smaller investment
return) than mutual funds investing exclusively in common stocks.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
The Conservative Allocation Fund, The Balanced Allocation Fund and The Aggressive Allocation Fund
SEE THE FOLLOWING SECTIONS IN RISK FACTORS AND INVESTMENT TECHNIQUES
<S> <C> <C>
*Complex Securities *Foreign Securities *Foreign Currency Transactions
*Futures Contracts *Government Obligations *Lending Portfolio Securities
*Medium-Grade Securities *Mortgage-Related Securities *Other Mutual Funds
*Portfolio Turnover *Put and Call Options *Repurchase Agreements
*Restricted Securities *Reverse Repurchase *When-Issued and Delayed-
Agreements and Dollar Delivery Transactions
Roll Agreements
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
RISK FACTORS AND INVESTMENT TECHNIQUES
Like any investment program, an investment in a Fund entails certain risks. The
Funds will not acquire portfolio securities issued by, make savings deposits in,
or enter into repurchase, reverse repurchase agreements with First of America
Bank-Michigan, N.A. ("FOA-Michigan," the parent corporation of First of
America), BISYS, or their affiliates, and will not give preference to FOA-
Michigan's correspondents with respect to such transactions, securities, savings
deposits, repurchase agreements and reverse repurchase agreements.
COMPLEX SECURITIES
Some of the investment techniques utilized by First of America and Gulfstream in
the management of each of the Funds involve complex securities sometimes
referred to as "derivatives." Among such securities are put and call options,
foreign currency transactions and futures contracts, all of which are described
below. The Investment Adviser and Subadviser believe that such complex
securities may, in some circumstances, play a valuable role in successfully
implementing each Fund's investment strategy and achieving its goals. However,
because complex securities and the strategies for which they are used, are by
their nature complicated, they present substantial opportunities for
misunderstanding and misuse. To guard against these risks, the Investment
Adviser and Subadviser will utilize complex securities primarily for hedging,
not speculative, purposes and only after careful review of the unique risk
factors associated with each such security.
FOREIGN SECURITIES
Each of the LifeWorks Funds may invest a portion of its total assets in foreign
securities. Investment in foreign securities is subject to special investment
risks that differ in some respects from those related to investments in
securities of U.S. domestic issuers. Such risks include political, social or
economic instability in the country of the issuer, the difficulty of predicting
international trade patterns, the possibility of the imposition of exchange
controls, expropriation, limits on removal of currency or other assets,
nationalization of assets, foreign withholding and
PROSPECTUS--Institutional Shares
<PAGE> 13
income taxation, and foreign trading practices (including higher trading
commissions, custodial charges and delayed settlements). Such securities may be
subject to greater fluctuations in price than securities issued by U.S.
corporations or issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The markets on which such securities trade may have less
volume and liquidity, and may be more volatile than securities markets in the
United States. In addition, there may be less publicly available information
about a foreign company than about a U.S.- domiciled company. Foreign companies
generally are not subject to uniform accounting, auditing and financial
reporting standards comparable to those applicable to U.S. domestic companies.
There is generally less government regulation of securities exchanges, brokers
and listed companies abroad than in the U.S. Confiscatory taxation or diplomatic
developments could also affect investment in those countries. In addition,
foreign branches of U.S. banks, foreign banks and foreign issuers 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 and U.S. domestic issuers.
In many instances, foreign debt securities may provide higher yields than
securities of domestic issuers which have similar maturities and quality. Under
certain market conditions these investments may be less liquid than the
securities of U.S. corporations and are certainly less liquid than securities
issued or guaranteed by the U.S. government, its agencies or instrumentalities.
Finally, in the event of a default of any such foreign debt obligations, it may
be more difficult for a Fund to obtain or to enforce a judgment against the
issuers of such securities. If a security is denominated in foreign currency,
the value of the security to the Fund will be affected by changes in currency
exchange rates and in exchange control regulations, and costs will be incurred
in connection with conversions between currencies. A change in the value of any
foreign currency against the U.S. dollar will result in a corresponding change
in the U.S. dollar value of a Fund's securities denominated in that currency.
Such changes will also affect a Fund's income and distributions to shareholders.
In addition, although a Fund will receive income on foreign securities in such
currencies, such Fund will be required to compute and distribute its income in
U.S. dollars. Therefore, if the exchange rate for any such currency declines
materially after such Fund's income has been accrued and translated into U.S.
dollars, the Fund could be required to liquidate portfolio securities to make
required distributions. Similarly, if an exchange rate declines between the time
a Fund incurs expenses in U.S. dollars and the time such expenses are paid, the
amount of such currency required to be converted into U.S. dollars in order to
pay such expenses in U.S. dollars will be greater.
U.S. dollar-denominated American Depository Receipts ("ADRs"), which are traded
in the United States on exchanges or over-the-counter, are issued by domestic
banks. ADRs represent the right to receive securities of foreign issuers
deposited in a domestic bank or a correspondent bank. ADRs do not eliminate all
of the risk inherent in investing in the securities of foreign issuers. However,
by investing in ADRs rather than directly in foreign issuers' stock, a Fund can
avoid currency risks during the settlement period for either purchases or sales.
In general, there is a large, liquid market in the United States for many ADRs.
The information available for ADRs is subject to the accounting, auditing and
financial reporting standards of the domestic market or exchange on which they
are traded, standards which are more uniform and more exacting than those to
which many foreign issuers may be subject. Each of the LifeWorks Funds may also
invest in European Depository Receipts ("EDRs"), which are receipts evidencing
an arrangement with a European bank similar to that for ADRs and designed for
use in the European securities markets. EDRs are not necessarily denominated in
the currency of the underlying security.
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Certain of the ADRs and EDRs, typically those categorized as unsponsored,
require their holders to bear most of the costs of such facilities while issuers
of sponsored facilities normally pay more of the costs. The depository of an
unsponsored facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited securities or to pass
through the voting rights to facility holders with respect to the deposited
securities, whereas the depository of a sponsored facility typically distributes
shareholder communications and passes through the voting rights.
Subject to its applicable investment policies, each of the LifeWorks Funds may
invest in debt securities denominated in the ECU, which is a "basket" unit of
currency consisting of specified amounts of the currencies of certain of the
member states of the European Community. The specific amounts of currencies
comprising the ECU may be adjusted by the Council of Ministers of the European
Community to reflect changes in relative values of the underlying currencies.
Such adjustments may adversely affect holders of ECU-denominated obligations or
the marketability of such securities. European governments and supranationals,
in particular, issue ECU-denominated obligations.
FOREIGN CURRENCY TRANSACTIONS
Each of the LifeWorks Funds may utilize foreign currency transactions in its
portfolio. The value of the assets of a Fund as measured in United States
dollars may be affected favorably or unfavorably by changes in foreign currency
exchange rates and exchange control regulations, and a Fund may incur costs in
connection with conversions between various currencies. A Fund will conduct its
foreign currency exchange transactions either on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market, or through
forward contracts to purchase or sell foreign currencies. A forward foreign
currency exchange contract ("forward currency contracts") involves an obligation
to purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These forward currency contracts are
traded directly between currency traders (usually large commercial banks) and
their customers. The LifeWorks Funds may enter into forward currency contracts
in order to hedge against adverse movements in exchange rates between
currencies.
For example, when a Fund enters into a contract for the purchase or sale of a
security denominated in a foreign currency, it may want to establish the United
States dollar cost or proceeds, as the case may be. By entering into a forward
currency contract in United States dollars for the purchase or sale of the
amount of foreign currency involved in an underlying security transaction, such
Fund is able to protect itself against a possible loss between trade and
settlement dates resulting from an adverse change in the relationship between
the United States dollar and such foreign currency. Additionally, for example,
when a Fund believes that a foreign currency may suffer a substantial decline
against the U.S. dollar, it may enter into a forward currency sale contract to
sell an amount of that foreign currency approximating the value of some or all
of that Fund's portfolio securities or other assets denominated in such foreign
currency, or when a Fund believes that the U.S. dollar may suffer a substantial
decline against a foreign currency. Alternatively, it may enter into a forward
currency purchase contract to buy that foreign currency for a fixed U.S. dollar
amount; however, this tends to limit potential gains which might result from a
positive change in such currency relationships. A Fund may also hedge its
PROSPECTUS--Institutional Shares
<PAGE> 15
foreign currency exchange rate risk by engaging in currency financial futures
and options transactions.
The forecasting of short-term currency market movement is extremely difficult
and whether such a short-term hedging strategy will be successful is highly
uncertain. It is impossible to forecast with precision the market value of
portfolio securities at the expiration of a forward currency contract.
Accordingly, it may be necessary for a Fund to purchase additional currency on
the spot market (and bear the expense of such purchase) if the market value of
the security is less than the amount of foreign currency such Fund is obligated
to deliver when a decision is made to sell the security and make delivery of the
foreign currency in settlement of a forward contract. Conversely, it may be
necessary to sell on the spot market some of the foreign currency received upon
the sale of the portfolio security if its market value exceeds the amount of
foreign currency such Fund is obligated to deliver.
If any of the LifeWorks Funds retains the portfolio security and engages in an
offsetting transaction, such Fund will incur a gain or a loss (as described
below) to the extent that there has been movement in forward currency contract
prices. If the Fund engages in an offsetting transaction, it may subsequently
enter into a new forward currency contract to sell the foreign currency. Should
forward prices decline during the period between a Fund's entering into a
forward currency contract for the sale of foreign currency and the date it
enters into an offsetting contract for the purchase of the foreign currency,
such Fund would realize a gain to the extent the price of the currency it has
agreed to sell exceeds the price of the currency it has agreed to purchase.
Should forward prices increase, such Fund would suffer a loss to the extent the
price of the currency it has agreed to purchase exceeds the price of the
currency it has agreed to sell. Although such contracts tend to minimize the
risk of loss due to a decline in the value of the hedged currency, they also
tend to limit any potential gain which might result should the value of such
currency increase. The Funds will have to convert their holdings of foreign
currencies into United States dollars from time to time. Although foreign
exchange dealers do not charge a fee for conversion, they do realize a profit
based on the difference (the "spread") between the prices at which they are
buying and selling various currencies.
For further information about the characteristics, risks and possible benefits
of options, futures and foreign currency transactions, see "INVESTMENT
OBJECTIVES AND POLICIES - Additional Information on Portfolio Instruments" in
the Statement of Additional Information.
FUTURES CONTRACTS
The LifeWorks Funds may also enter into contracts for the future delivery of
securities or foreign currencies and futures contracts based on a specific
security, class of securities, foreign currency or an index, purchase or sell
options on any such futures contracts and engage in related closing
transactions. A futures contract on a securities index is an agreement
obligating either party to pay, and entitling the other party to receive, while
the contract is outstanding, cash payments based on the level of a specified
securities index.
A Fund may engage in such futures contracts in an effort to hedge against market
risks. For example, when interest rates are expected to rise or market values of
portfolio securities are expected to fall, a Fund can seek through the sale of
futures contracts to offset a decline in the
PROSPECTUS--Institutional Shares
<PAGE> 16
value of its portfolio securities. When interest rates are expected to fall or
market values are expected to rise, a Fund, through the purchase of such
contracts, can attempt to secure better rates or prices for the Fund than might
later be available in the market when it effects anticipated purchases.
The acquisition of put and call options on futures contracts will, respectively,
give a Fund the right (but not the obligation), for a specified price, to sell
or to purchase the underlying futures contract, upon exercise of the option, at
any time during the option period.
Aggregate initial margin deposits for futures contracts, and premiums paid for
related options, may not exceed 5% of a Fund's total assets, and the value of
securities that are the subject of such futures and options (both for receipt
and delivery) may not exceed one-third of the market value of a Fund's total
assets. Futures transactions will be limited to the extent necessary to maintain
each Fund's qualification as a regulated investment company.
Futures transactions involve brokerage costs and require a Fund to segregate
assets to cover contracts that would require it to purchase securities or
currencies. A Fund may lose the expected benefit of futures transactions if
interest rates, exchange rates or securities prices move in an unanticipated
manner. Such unanticipated changes may also result in poorer overall performance
than if the Fund had not entered into any futures transactions. In addition, the
value of a Fund's futures positions may not prove to be perfectly or even highly
correlated with the value of its portfolio securities or foreign currencies,
limiting the Fund's ability to hedge effectively against interest rate, exchange
rate and/or market risk and giving rise to additional risks. There is no
assurance of liquidity in the secondary market for purposes of closing out
futures positions.
GOVERNMENT OBLIGATIONS
Each of the LifeWorks Funds may invest in obligations issued or guaranteed by
the U.S. government or its agencies or instrumentalities.
The types of U.S. government obligations in which each of the LifeWorks Funds
may invest include U.S. Treasury notes, bills, bonds, and any other securities
directly issued by the U.S. government for public investment, which differ only
in their interest rates, maturities, and times of issuance. Stripped Treasury
Obligations are also permissible investments. Stripped securities are issued at
a discount to their "face value" and may exhibit greater price volatility than
ordinary debt securities because of the manner in which their principal and
interest are returned to investors.
Obligations of certain agencies and instrumentalities of the U.S. government,
such as the Government National Mortgage Association ("GNMA"), are supported by
the full faith and credit of the U.S. Treasury; others, such as those of the
Federal National Mortgage Association ("FNMA"), are supported by the right of
the issuer to borrow from the Treasury; others, such as those of the Student
Loan Marketing Association ("SLMA"), are supported by the discretionary
authority of the U.S. government to purchase the agency's obligations; still
others, such as those of the Federal Farm Credit Banks or the Federal Home Loan
Mortgage Corporation ("FHLMC"), are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. government would
provide financial support to U.S. government-sponsored agencies or
instrumentalities if it is not obligated to do so by law. The LifeWorks Funds
will invest in the
PROSPECTUS--Institutional Shares
<PAGE> 17
obligations of such agencies or instrumentalities only when First of America
believes that the credit risk with respect thereto is minimal.
MEDIUM-GRADE SECURITIES
Each of the LifeWorks Funds may invest in fixed-income securities rated within
the fourth highest rating group assigned by an NRSRO (i.e., BBB or Baa by S&P
and Moody's, respectively) and comparable unrated securities as determined by
the Investment Adviser. These types of fixed-income securities are considered by
the NRSROs to have some speculative characteristics, and are more vulnerable to
changes in economic conditions, higher interest rates or adverse issuer-specific
developments which are more likely to lead to a weaker capacity to make
principal and interest payments than comparable higher rated debt securities.
Should subsequent events cause the rating of a fixed-income security purchased
by any of the Funds listed above to fall below the fourth highest rating, First
of America will consider such an event in determining whether the Fund should
continue to hold that security. In no event, however, would the Fund be required
to liquidate any such portfolio security where the Fund would suffer a loss on
the sale of such security.
MORTGAGE-RELATED SECURITIES
Each of the LifeWorks Funds may invest in mortgage-related securities issued or
guaranteed by the U.S. government or its agencies or instrumentalities. Such
agencies or instrumentalities include GNMA, FNMA and FHLMC. Each of the
LifeWorks Funds may also invest in mortgage-related securities issued by
non-governmental entities which are rated, at the time of purchase, within the
three highest bond rating categories assigned by an NRSRO or, if unrated, which
First of America deems present attractive opportunities and are of comparable
quality.
The mortgage-related securities in which the these Funds may invest have
mortgage obligations backing such securities, consisting of conventional
thirty-year fixed-rate mortgage obligations, graduated payment mortgage
obligations, fifteen-year mortgage obligations and adjustable-rate mortgage
obligations. All of these mortgage obligations can be used to create
pass-through securities. A pass-through security is created when mortgage
obligations are pooled together and undivided interests in the pool or pools are
sold. The cash flow from the mortgage obligations is passed through to the
holders of the securities in the form of periodic payments of interest,
principal and prepayments (net of a service fee). Prepayments occur when the
holder of an individual mortgage obligation prepays the remaining principal
before the mortgage obligation's scheduled maturity date. As a result of the
pass-through of prepayments of principal on the underlying securities,
mortgage-backed securities are often subject to more rapid prepayment of
principal than their stated maturity would indicate. Because the prepayment
characteristics of the underlying mortgage obligations vary, it is not possible
to predict accurately the realized yield or average life of a particular issue
of pass-through certificates. Prepayment rates are important because of their
effect on the yield and price of the securities. Accelerated prepayments have an
adverse impact on yields for pass-throughs purchased at a premium (i.e., a price
in excess of principal amount) and may involve additional risk of loss of
principal because the premium may not have been fully amortized at the time the
obligation is repaid. The opposite is true for pass-throughs purchased at a
discount. The Funds may purchase mortgage-related securities at a premium or at
a discount.
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If a Fund purchases a mortgage-related security at a premium, that portion may
be lost if there is a decline in the market value of the security, whether
resulting from changes in interest rates or prepayments in the underlying
mortgage collateral. As with other interest-bearing securities, the prices of
such securities are inversely affected by changes in interest rates. However,
though the value of a mortgage-related security may decline when interest rates
rise, the converse is not necessarily true, since in periods of declining
interest rates the mortgages underlying the securities are prone to prepayment,
thereby shortening the average life of the security and shortening the period of
time over which income at the higher rate is received. When interest rates are
rising, though, the rate of prepayment tends to decrease, thereby lengthening
the period of time over which income at the lower rate is received. For these
and other reasons, a mortgage-related security's average maturity may be
shortened or lengthened as a result of interest rate fluctuations and,
therefore, it is not possible to predict accurately the security's return to the
Fund. In addition, regular payments received with respect to mortgage-related
securities include both interest and principal. No assurance can be given as to
the return a Fund will receive when these amounts are reinvested.
The principal governmental (i.e., backed by the full faith and credit of the
United States government) guarantor of mortgage-related securities is GNMA. GNMA
is a wholly-owned United States government corporation within the Department of
Housing and Urban Development. GNMA is authorized to guarantee, with the full
faith and credit of the United States government, the timely payment of
principal and interest on securities issued by institutions approved by GNMA
(such as savings and loan institutions, commercial banks and mortgage bankers)
and backed by pools of mortgages insured by the Federal Housing Administration
or guaranteed by the Veterans Administration.
Government-related (i.e., not backed by the full faith and credit of the United
States government) guarantors include FNMA and FHLMC. FNMA is a
government-sponsored corporation owned entirely by private stockholders.
Pass-through securities issued by FNMA are guaranteed as to timely payment of
principal and interest by FNMA but are not backed by the full faith and credit
of the United States government. FHLMC is a corporate instrumentality of the
United States government whose stock is owned by the twelve Federal Home Loan
Banks. Participation certificates issued by FHLMC are guaranteed as to the
timely payment of interest and ultimate collection of principal but are not
backed by the full faith and credit of the United States government.
Mortgage-related securities in which the LifeWorks Funds may invest may also
include collateralized mortgage obligations ("CMOs"). CMOs are debt obligations
issued generally by finance subsidiaries or trusts that are secured by
mortgage-backed certificates, including, in many cases, certificates issued by
government-related guarantors, including GNMA, FNMA and FHLMC, together with
certain funds and other collateral. Although payment of the principal of and
interest on the mortgage-backed certificates pledged to secure the CMOs may be
guaranteed by GNMA, FNMA or FHLMC, the CMOs represent obligations solely of the
issuer and are not insured or guaranteed by GNMA, FHLMC, FNMA or any other
governmental agency, or by any other person or entity. The issuers of the CMOs
typically have no significant assets other than those pledged as collateral for
the obligations.
PROSPECTUS--Institutional Shares
<PAGE> 19
OTHER MUTUAL FUNDS
Each of the LifeWorks Funds may invest up to 5% of the value of its total
assets in the securities of any one money market mutual fund (including shares
of the Parkstone Money Market Funds, provided that no more than 10% of a Fund's
total assets may be invested in the securities of mutual funds in the aggregate.
In order to avoid the imposition of additional fees as a result of investments
by a Fund in shares of the Money Market Funds of the Group, the Investment
Adviser, Administrator and their affiliates (See "MANAGEMENT OF THE FUNDS
- -Investment Adviser and Subadviser" and "Administrator, Sub-Administrator and
Distributor" and "GENERAL INFORMATION - Transfer Agency and Fund Accounting
Services") will not retain any portion of their usual asset-based service fees
from a Fund that is attributable to investments by the Fund in shares of those
Money Market Funds if the fee is being taken in the LifeWorks Funds. The
Investment Adviser and the Administrator will promptly forward such fees to the
appropriate Fund. Each Fund will incur additional expenses due to the
duplication of expenses as a result of any investment in securities of
unaffiliated mutual funds. Additional restrictions regarding the Funds'
investments in securities of unaffiliated mutual funds and/or Money Market Funds
of the Group are contained in the Statement of Additional Information.
PUT AND CALL OPTIONS
Each of the LifeWorks Funds may purchase put and call options on securities and
on foreign currencies, subject to its applicable investment policies, for the
purposes of hedging against market risks related to its portfolio securities and
adverse movements in exchange rates between currencies, respectively. Purchasing
options is a specialized investment technique that entails a substantial risk of
a complete loss of the amounts paid as premiums to writers of options. Each of
the LifeWorks Funds may also engage in writing call options from time to time
as First of America or Gulfstream deem appropriate. The Funds will write only
covered call options (options on securities or currencies owned by the
particular Fund). In order to close out a call option it has written, the Fund
will enter into a "closing purchase transaction" (the purchase of a call option
on the same security or currency with the same exercise price and expiration
date as the call option which such Fund previously has written). When a
portfolio security or currency subject to a call option is sold, the Fund will
effect a closing purchase transaction to close out any existing call option on
that security or currency. If such Fund is unable to effect a closing purchase
transaction, it will not be able to sell the underlying security or currency
until the option expires or that Fund delivers the underlying security or
currency upon exercise. In addition, upon the exercise of a call option by the
option holder, the Fund will forego the potential benefit represented by market
appreciation over the exercise price. Under normal conditions, it is not
expected that the Funds will cause the underlying value of portfolio securities
and currencies subject to such options to exceed 20% of its net assets.
Each of the LifeWorks Funds, as part of its options transactions, also may
purchase index put and call options and write index options. As with options on
individual securities, a Fund will write only covered index call options.
Through the writing or purchase of index options a Fund can achieve many of the
same objectives as through the use of options on individual securities. Options
on securities indices are similar to options on a security except that, rather
than the right to take or make delivery of a security at a specified price, an
option on a securities index gives the holder the right to receive, upon
exercise of the option, an amount of cash if the closing level
PROSPECTUS--Institutional Shares
<PAGE> 20
of the securities index upon which the option is based is greater than, in the
case of a call, or less than, in the case of a put, the exercise price of the
option.
Price movements in securities which a Fund owns or intends to purchase probably
will not correlate perfectly with movements in the level of an index and,
therefore, a Fund bears the risk of a loss on an index option that is not
completely offset by movements in the price of such securities. Because index
options are settled in cash, a call writer cannot determine the amount of its
settlement obligations in advance and, unlike call writing on specific
securities, cannot provide in advance for, or cover, its potential settlement
obligations by acquiring and holding the underlying securities. A Fund may be
required to segregate assets or provide an initial margin to cover index options
that would require it to pay cash upon exercise.
REPURCHASE AGREEMENTS
Securities held by each of the LifeWorks Funds may be subject to repurchase
agreements. Under the terms of a repurchase agreement, a Fund would acquire
securities from financial institutions such as member banks of the Federal
Deposit Insurance Corporation or registered broker-dealers which First of
America or Gulfstream, as the case may be, deem creditworthy under guidelines
approved by the Group's Board of Trustees, subject to the seller's agreement to
repurchase such securities at a mutually agreed upon date and price. The
repurchase price would generally equal 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. Securities subject to
repurchase agreements will be held in a segregated account. If the seller were
to default on its repurchase obligation or become insolvent, the Fund 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 that Fund were delayed
pending court action. Repurchase agreements are considered to be loans by an
investment company under the Investment Company Act of 1940 (the "1940 Act").
For further information about repurchase agreements, see "INVESTMENT OBJECTIVES
AND POLICIES - Additional Information on Portfolio Instruments-Repurchase
Agreements" in the Statement of Additional Information.
RESTRICTED SECURITIES
Securities in which each of the LifeWorks Funds may invest include securities
issued by corporations without registration under the Securities Act of 1933, as
amended (the "1933 Act"), in reliance on the exemption from such registration
afforded by Section 3(a)(3) thereof, and securities issued in reliance on the
so-called "private placement" exemption from registration which is afforded by
Section 4(2) of the 1933 Act ("Section 4(2) securities"). Section 4(2)
securities are restricted as to disposition under the federal securities laws,
and generally are sold to institutional investors such as the Funds who agree
that they are purchasing the securities for investment and not with a view to
public distribution. Any resale must also generally be made in an exempt
transaction. Section 4(2) securities are normally resold to other institutional
investors through or with the assistance of the issuer or investment dealers who
make a market in such Section 4(2) securities, thus providing liquidity.
Pursuant to procedures adopted by the Board of Trustees of the Group, First of
America may determine Section 4(2) securities to be liquid if such securities
are eligible for resale under Rule 144A under the 1933 Act and are readily
saleable.
PROSPECTUS--Institutional Shares
<PAGE> 21
Subject to the limitations described above, the LifeWorks Funds may acquire
investments that are illiquid or of limited liquidity, such as private
placements or investments that are not registered under the 1993 Act. An
illiquid investment is any investment that cannot be disposed of within seven
(7) days in the normal course of business at approximately the amount at which
it is valued by a Fund. The price a Fund pays for illiquid securities or
receives upon resale may be lower than the price paid or received for similar
securities with a more liquid market. Accordingly, the valuation of these
securities will reflect any limitations on their liquidity. A Fund may not
invest in additional illiquid securities if, as a result, more than 15% of the
market value of its net assets would be invested in illiquid securities.
REVERSE REPURCHASE AGREEMENTS
Each of the LifeWorks Funds may borrow money by entering into reverse
repurchase agreements in accordance with the investment restrictions described
below. Pursuant to reverse repurchase agreements, a Fund would sell certain of
its securities to financial institutions such as banks and broker-dealers, and
agree to repurchase the securities at a mutually agreed upon date and price. 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 its investment restrictions
having a value equal to the repurchase price (including accrued interest), and
will subsequently continually monitor the account to ensure that such equivalent
value is maintained at all times. Reverse repurchase agreements involve the risk
that the market value of securities sold by a Fund may decline below the price
at which it is obligated to repurchase the securities. Reverse repurchase
agreements are considered to be borrowings by an investment company under the
1940 Act and therefore a form of leverage. A Fund may experience a negative
impact on its net asset value if interest rates rise during the term of a
reverse repurchase agreement. A Fund generally will invest the proceeds of such
borrowings only when such borrowings will enhance a Fund's liquidity or when the
Fund reasonably expects that the interest income to be earned from the
investment of the proceeds is greater than the interest expense of the
transaction. For further information about reverse repurchase agreements, see
"INVESTMENT OBJECTIVES AND POLICIES - Additional Information on Portfolio
Instruments-Reverse Repurchase Agreements" in the Statement of Additional
Information.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS
Each of the LifeWorks Funds may purchase securities on a when-issued or
delayed-delivery basis. Such Funds will engage in when-issued and
delayed-delivery transactions only for the purpose of acquiring portfolio
securities consistent with its investment objectives and policies, not for
investment leverage although such transactions represent a form of leveraging.
When-issued securities are securities purchased for delivery beyond the normal
settlement date at a stated price and yield and thereby involve a risk that the
yield obtained in the transaction will be less than those available in the
market when delivery takes place. A Fund will not pay for such securities or
start earning interest on them until they are received. When a Fund agrees to
purchase such securities, its Custodian will set aside cash or liquid securities
equal to the amount of the commitment in a separate account. Securities
purchased on a when-issued basis are recorded as an asset and are subject to
changes in the value based upon changes in the general level of interest rates.
In when-issued and delayed-delivery transactions, a Fund relies on the seller to
complete the transaction; the seller's failure to do so may cause such Fund to
miss a price or yield considered to be advantageous.
PROSPECTUS--Institutional Shares
<PAGE> 22
No Fund's commitments to purchase "when-issued" securities will exceed 25% of
the value of its total assets under normal market conditions, and a commitment
by a Fund to purchase "when-issued" securities will not exceed 60 days. In the
event its commitments to purchase "when-issued" securities ever exceeded 25% of
the value of its assets, a Fund's liquidity and the ability of First of America
or Gulfstream, as the case may be, to manage it might be adversely affected. The
LifeWorks Funds intend only to purchase "when-issued" securities for the
purpose of acquiring portfolio securities, not for investment leverage although
such transactions represent a form of leveraging.
LENDING PORTFOLIO SECURITIES
In order to generate additional income, each of the LifeWorks Funds may, from
time to time, lend its portfolio securities to broker-dealers, banks, or
institutional borrowers of securities. A Fund must receive 100% collateral in
the form of cash or U.S. government securities. This collateral will be valued
daily by First of America or by Gulfstream, as the case may be. Should the
market value of the loaned securities increase, the borrower must furnish
additional collateral to that Fund. During the time portfolio securities are on
loan, the borrower pays that Fund any dividends or interest received 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, each Fund
intends to terminate the loan and regain the right to vote if that is considered
important with respect to the investment. In the event the borrower defaults in
its obligation to a Fund, such Fund bears the risk of delay in the recovery of
its portfolio securities and the risk of loss of rights in the collateral. The
LifeWorks Funds will enter into loan agreements only with broker-dealers,
banks, or other institutions that First of America or Gulfstream, as the case
may be, have determined are creditworthy under guidelines established by the
Group's Board of Trustees.
PORTFOLIO TURNOVER
The portfolio turnover rate for each Fund is calculated by dividing the lesser
of a Fund's purchases or sales of portfolio securities for the year by the
monthly average value of the portfolio securities. The SEC requires that the
calculation exclude all securities whose remaining maturities at the time of
acquisition are one year or less. For portfolio turnover rates for the
Balanced Allocation Fund, see "FINANCIAL HIGHLIGHTS" above. During their
initial year of operation, the Conservative Allocation Fund and the Aggressive
Allocation Fund do not anticipate that their turnover rates will not exceed
600% and 500%, respectively.
The portfolio turnover rate for a Fund 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. High portfolio turnover rates will generally result
in higher transaction costs, including brokerage commissions, to a Fund and may
result in additional tax consequences to a Fund's shareholders. Portfolio
turnover will not be a limiting factor in making investment decisions.
INVESTMENT RESTRICTIONS
Each of the LifeWorks Funds is subject to a number of investment restrictions
that may be changed only by a vote of a majority of the outstanding shares of
that Fund (as defined in the Statement of Additional Information).
PROSPECTUS--Institutional Shares
<PAGE> 23
None of the LifeWorks Funds will:
1. Purchase securities of any one issuer, other than obligations 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 the outstanding voting securities of the issuer,
except that 25% or less of the value of such Fund's total assets may be
invested without regard to such limitations. There is no limit to the
percentage of assets that may be invested in U.S. Treasury bills,
notes, or other obligations issued or guaranteed by the U.S. government
or its agencies or instrumentalities.
2. Purchase any securities which would cause more than 25% of the value of
the Fund's total assets at the time of purchase to be invested in
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 or its agencies or instrumentalities and repurchase
agreements secured by obligations of the U.S. government or its
agencies or instrumentalities; (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 their
parents; and (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.
3. (a) Borrow money (not including reverse repurchase agreements), except
that each Fund may borrow from banks for temporary or emergency
purposes and then only in amounts up to 30% of its total assets at the
time of borrowing (and provided that such bank borrowings and reverse
repurchase agreements do not exceed in the aggregate one-third of the
Fund's total assets less liabilities other than the obligations
represented by the bank borrowings, reverse repurchase agreements), or
mortgage, pledge or hypothecate any assets except in connection with a
bank borrowing in amounts not to exceed 30% of the Fund's net assets at
the time of borrowing; (b) enter into reverse repurchase agreements and
other permitted borrowings in amounts exceeding in the aggregate
one-third of the Fund's total assets less liabilities other than the
obligations represented by such reverse repurchase agreements; and (c)
issue senior securities except as permitted by the 1940 Act rule, order
or interpretation thereunder.
4. Make loans, except that a Fund may purchase or hold debt instruments
and lend portfolio securities in accordance with its investment
objective and policies, make time deposits with financial institutions
and enter into repurchase agreements.
The following additional investment restriction may be changed without the vote
of a majority of the outstanding shares of a Fund.
Each LifeWorks Fund will not:
1. Purchase or otherwise acquire any securities, if as a result, more than
15% of the Fund's net assets would be invested in securities that are
illiquid.
PROSPECTUS--Institutional Shares
<PAGE> 24
In addition to the above investment restrictions, the LifeWorks Funds are
subject to certain other investment restrictions set forth under "INVESTMENT
OBJECTIVES AND POLICIES - Investment Restrictions" in the Statement of
Additional Information.
MANAGEMENT OF THE FUNDS
TRUSTEES
Overall responsibility for management of the Group rests with its Board of
Trustees, who are elected by the shareholders of all of the Group's Funds. The
Group will be managed by the Trustees in accordance with the laws of the
Commonwealth of Massachusetts governing business trusts. There are currently
four Trustees, three of whom are not "interested persons" of the Group within
the meaning of that term under the 1940 Act. The Trustees, in turn, elect the
officers of the Group to supervise actively its day-to-day operations.
The Trustees of the Group are George R. Landreth* (Chairman), Robert M. Beam,
Lawrence D. Bryan and Adrian Charles Edwards. The addresses, and principal
occupations during the past five years of the Trustees are set forth in the
Statement of Additional Information. The Trustee designated with an asterisk (*)
is considered to be an "interested person" of the Group as defined in the 1940
Act.
The Trustees of the Group receive quarterly fees and fees and expenses for each
meeting of the Board of Trustees attended. However, no officer or employee of
BISYS, The BISYS Group, Inc. or BISYS Ohio receives any compensation from the
Group for acting as a Trustee of the Group. The officers of the Group receive no
compensation directly from the Group for performing the duties of their offices.
BISYS receives fees from the Group for acting as Administrator. BISYS Ohio, an
affiliate of BISYS, receives fees from the Group for acting as Transfer Agent
and for providing certain fund accounting services. Mr. Landreth is an employee
of BISYS.
INVESTMENT ADVISER AND SUBADVISER
First of America was established in 1932 and is the investment adviser of the
Group. First of America, a registered investment adviser, is a wholly-owned
subsidiary of FOA-Michigan, which is a wholly-owned subsidiary of First of
America Bank Corporation ("FABC"). FABC currently has over $22 billion in assets
and provides financial services to over 300 communities in Michigan, Indiana,
Illinois and Florida. As of June 30, 1996, First of America managed over $13
billion on behalf of both taxable and tax-exempt clients, including pensions,
endowments, corporations and individual portfolios. First of America acts as
subadviser to the Trust Division of FABC with respect to $5.7 billion in
discretionary assets, providing equity, fixed income, balanced and money
management services.
Subject to such policies as the Group's Board of Trustees may determine, First
of America, either directly or through Gulfstream, furnishes a continuous
investment program for each of the LifeWorks Funds and makes investment
decisions on behalf of each Fund.
First of America utilizes a team approach to the investment management of the
Funds, with up to three professionals working as a team to ensure a disciplined
investment process designed to result in long-term performance consistent with
each Fund's investment objectives. Roger H.
PROSPECTUS--Institutional Shares
<PAGE> 25
Stamper, Managing Director of First of America, is primarily responsible for the
day-to-day management of each of the LifeWorks Funds . Mr. Stamper has been
with First of America since 1988.
For the services provided and expenses assumed pursuant to its Investment
Advisory Agreement with the Group, First of America receives a fee from each of
the LifeWorks Funds, computed daily and paid monthly, at the annual rate of
1.00% of the Fund's average daily net assets. First of America may periodically
voluntarily reduce all or a portion of its advisory fee with respect to a Fund
to increase the net income of that Fund available for distribution as dividends.
The voluntary fee reduction will cause the yield of that Fund to be higher than
it would otherwise be in the absence of such a reduction.
Pursuant to the terms of its Investment Advisory Agreement with the Group, First
of America has entered into a Sub-Investment Advisory Agreement with Gulfstream,
100 Crescent Court, Suite 550, Dallas, Texas 75201. Pursuant to the terms of
such Sub-Investment Advisory Agreement, Gulfstream has been retained by First of
America to manage the investment and reinvestment of those assets of the
LifeWorks Funds which are invested in foreign securities, subject to the
direction and control of the Group's Board of Trustees.
Under this arrangement, Gulfstream is responsible for day-to-day management of
the applicable portion of the LifeWorks Funds, reviewing investment performance
policies and guidelines and maintaining certain books and records, and First of
America is responsible for selecting and monitoring the performance of
Gulfstream and for reporting the activities of Gulfstream in managing these
Funds to the Group's Board of Trustees. Gulfstream utilizes a team approach to
investment management to ensure a disciplined investment process designed to
result in long-term performance consistent with a Fund's investment objective.
No one person is responsible for a Fund's management.
For its services provided and expenses assumed pursuant to its Sub-Investment
Advisory Agreement with First of America, Gulfstream receives from First of
America a fee, computed daily and paid monthly, at the annual rate of 0.50% of
the first $50 million of the average daily net assets of each of the LifeWorks
Funds which are invested in foreign securities, 0.45% of such average daily net
assets between $50 million and $100 million, 0.40% of such average daily net
assets between $100 million and $400 million and 0.30% of such average daily net
assets above $400 million, provided the minimum annual fee shall be $75,000.
Gulfstream was organized in 1991 as a Texas limited partnership by Tull, Doud,
Marsh & Triltsch, Inc., a Texas corporation ("TDMT"). TDMT is the sole general
partner of Gulfstream. TDMT is owned by C. Thomas Tull, Stephen C. Doud, James
P. Marsh and Reiner M. Triltsch. Messrs. Tull, Doud and Triltsch are the
portfolio managers and Mr. Marsh is responsible for client services with
Gulfstream. First of America is the sole limited partner, and as of August 31,
1996 exercised options to increase its interest in Gulfstream from 49% to 72%.
As of June 30, 1996, Gulfstream had over $596 million in international assets of
institutional, investment company, governmental, pension fund and high net worth
individual clients under its investment management. Gulfstream's portfolio
management personnel average 20 years of investment experience and 9 years of
international investment experience.
PROSPECTUS--Institutional Shares
<PAGE> 26
Under Gulfstream's partnership agreement, First of America possesses veto
authority over the general budgetary affairs of Gulfstream. Because of its
current 72% ownership interest, First of America is deemed to control Gulfstream
for purposes of the 1940 Act.
For further information regarding the relationship between Gulfstream and First
of America, see "MANAGEMENT OF THE GROUP - Investment Adviser" in the Statement
of Additional Information.
ADMINISTRATOR, SUB-ADMINISTRATOR AND DISTRIBUTOR
BISYS, 3435 Stelzer Road, Columbus, Ohio 43219, is the administrator for each of
the LifeWorks Funds, and also acts as the Group's principal underwriter and
distributor (the "Administrator" or the "Distributor," as the context
indicates). First of America serves as Sub- Administrator for each Fund of the
Group and provides certain services as may be requested by BISYS from time to
time. BISYS and its affiliated companies, including BISYS Ohio are wholly-owned
by The BISYS Group, Inc., a publicly-held company which is a provider of
information processing, loan servicing and 401(k) administration and
recordkeeping services to and through banking and other financial organizations.
The Administrator generally assists in all aspects of the LifeWorks Funds'
administration and operation. For expenses assumed and services provided as
administrator pursuant to its Administration Agreement with the Group, the
Administrator receives a fee from each Fund equal to the lesser of a fee,
computed daily and paid periodically at an annual rate of 0.20% of the Fund's
average daily net assets, or such other fee as may be agreed upon from time to
time in writing by the Group and the Administrator. For its services as
Sub-Administrator, First of America receives, from the Administrator, pursuant
to its Sub-Administration Agreement with BISYS, a fee not to exceed 0.05% of
each Fund's average daily net assets. The Administrator may periodically
voluntarily reduce all or a portion of its administrative fee with respect to a
Fund to increase the net income of that Fund available for distribution as
dividends. The voluntary fee reduction will cause the return of that Fund to be
higher than it would otherwise be in the absence of such reduction.
The Distributor acts as agent for the LifeWorks Funds in the distribution of
each of their shares and, in such capacity, solicits orders for the sale of
shares, advertises, and pays the cost of advertising, office space and its
personnel involved in such activities. The Distributor receives no compensation
under its Distribution Agreement with the Group.
EXPENSES
First of America, Gulfstream and BISYS each bear all expenses in connection with
the performance of its services as Investment Adviser, Subadviser and
Administrator, respectively, other than the cost of securities (including
brokerage commissions) purchased for the Group. Each of the LifeWorks Funds
will bear the following expenses relating to its operation: organizational
expenses, taxes, interest, brokerage fees and commissions, fees of the Trustees
of the Group, SEC fees, state securities qualification fees, costs of preparing
and printing prospectuses for regulatory purposes and for distribution to
current shareholders, outside auditing and legal expenses, advisory and
administration fees, fees and out-of-pocket expenses of the Custodian, Transfer
Agent and Fund Accountant, certain insurance premiums, costs of
PROSPECTUS--Institutional Shares
<PAGE> 27
maintenance of the Group's existence, costs of shareholders' reports and
meetings, and any extraordinary expenses incurred in each Fund's operation. As a
general matter, expenses are allocated to the Institutional Shares and the other
classes of shares of the LifeWorks Funds on the basis of the relative net asset
value of each class. The various classes may bear certain additional retail
transfer agency expenses and may also bear certain additional shareholder
service and distribution costs incurred pursuant to a Distribution and
Shareholder Service Plan.
The Trustees reserve the right, subject to the receipt of relevant regulatory
approvals or rulings, if needed, to allocate certain other expenses to the
shareholders of a particular class, including Institutional Shares, on a basis
other than relative net asset value, as they deem appropriate ("Class
Expenses"). In such event, Class Expenses would be limited to: transfer agency
fees identified by the Transfer Agent as attributable to a specific class;
printing and postage expenses related to preparing and distributing materials
such as shareholder reports, prospectuses and proxies to current shareholders;
Blue Sky registration fees incurred by a class of shares; SEC registration fees
incurred by a class of shares; expenses related to administrative personnel and
services as required to support the shareholders of a specific class; litigation
or other legal expenses relating solely to one class of shares; and Trustees'
fees incurred as a result of issues relating solely to one class of shares.
TRANSFER AGENCY AND FUND ACCOUNTING SERVICES
BISYS Ohio, 3435 Stelzer Road, Columbus, Ohio 43219, serves as the Group's
transfer agent pursuant to a Transfer Agency Agreement with the Group and
receives a fee for such services. BISYS Ohio also provides certain accounting
services for each of the LifeWorks Funds and receives a fee for such services.
See "MANAGEMENT OF THE GROUP - Custodian, Transfer Agent and Fund Accounting
Services" in the Statement of Additional Information for further information.
While BISYS Ohio is a distinct legal entity from BISYS (the Group's
administrator and distributor), BISYS Ohio is considered to be an affiliated
person of BISYS under the 1940 Act due to, among other things, the fact that
BISYS Ohio and BISYS are both owned by The BISYS Group, Inc.
BANKING LAWS
First of America believes that it may perform the investment advisory services
for the Group's Funds contemplated by the Investment Advisory Agreement and by
this Prospectus without violating applicable banking laws or regulations. Future
changes in federal or state statutes and regulations relating to permissible
activities of banks or bank holding companies and their subsidiaries and
affiliates as well as further judicial or administrative decisions or
interpretations of present and future statutes and regulations could change the
manner in which First of America could continue to perform such services for the
Group. See the Statement of Additional Information ("MANAGEMENT OF THE GROUP -
Glass-Steagall Act") for further discussion.
HOW TO BUY INSTITUTIONAL SHARES
Institutional Shares may be purchased through procedures established by the
Distributor in connection with the requirements of customer accounts maintained
by or on behalf of certain
PROSPECTUS--Institutional Shares
<PAGE> 28
bank or other institutional investor customers ("Customer Accounts"). These
procedures may include instructions under which a Customer Account is "swept"
automatically no less frequently than weekly and amounts in excess of a minimum
amount agreed upon by the institutional investor and the customer are invested
by the Distributor in Institutional Shares of the Money Market Funds, depending
upon the type of Customer Account and/or the instructions of the customer.
Institutional Shares of the Group sold to institutional investors acting in a
fiduciary, advisory, custodial, or other similar capacity on behalf of customers
will normally be held of record by the institutional investor. With respect to
Institutional Shares of the Group so sold, it is the responsibility of the
particular institutional investor to transmit purchase or redemption orders to
the Distributor and to deliver federal funds for purchase on a timely basis.
Beneficial ownership of Institutional Shares of the Group will be recorded by
the institutional investor and reflected in the account statements provided by
the institutional investor to customers. An institutional investor may exercise
voting authority for those Institutional Shares for which it is granted
authority by the customer.
Institutional Shares of each of the LifeWorks Funds are purchased at the net
asset value per share (see "HOW SHARES ARE VALUED") next determined after
receipt by the Distributor of an order to purchase Institutional Shares.
Purchases of Institutional Shares of a Fund will be effected only on a Business
Day (as defined in "HOW SHARES ARE VALUED") of the applicable Fund. An order
received prior to a Valuation Time on any Business Day will be executed at the
net asset value determined as of the next Valuation Time on the date of receipt.
An order received after the last Valuation Time on any Business Day will be
executed at the net asset value determined as of the next Valuation Time on the
next Business Day of that Fund. Institutional Shares of the LifeWorks Funds are
eligible to earn dividends on the first Business Day following the execution of
the purchase. All Institutional Shares continue to be eligible to earn dividends
through the day before their redemption.
An order to purchase Institutional Shares will be deemed to have been received
by the Distributor only when federal funds are available to the Group's
Custodian for investment. Federal funds are monies credited to a bank's account
within a Federal Reserve Bank. Payment for an order to purchase Institutional
Shares which is transmitted by federal funds wire will be available the same day
for investment by the Group's Custodian, if received prior to the last Valuation
Time (see "HOW SHARES ARE VALUED"). Payments transmitted by other means (such as
by check drawn on a member of the Federal Reserve System) will normally be
converted into federal funds within two banking days after receipt. The Group
strongly recommends that investors of substantial amounts use federal funds to
purchase Institutional Shares.
There is no sales charge imposed by the Group in connection with the purchase of
Institutional Shares of the LifeWorks Funds. Depending upon the terms of a
particular Customer Account, the bank or other institutional investor may charge
a customer account fees for automatic investment and other cash management
services provided in connection with investment in the Group. Information
concerning these services and any charges may be obtained from the banks. This
Prospectus should be read in conjunction with any such information received from
the bank or other institutional investor.
PROSPECTUS--Institutional Shares
<PAGE> 29
The Group reserves the right to reject any order for the purchase of
Institutional Shares in whole or in part.
Confirmations of purchases and redemption of Institutional Shares of the Group
by institutional investors on behalf of their customers may be obtained from the
institutional investors. Shareholders may rely on these statements in lieu of
certificates. Certificates representing Institutional Shares of the LifeWorks
Funds will not be issued.
EXCHANGE PRIVILEGE
The exchange privilege enables shareholders of Institutional Shares to acquire
Institutional Shares that are offered by another Fund of the Group with a
different investment objective. This exchange privilege does not apply to other
classes of shares of a Fund. For example, holders of a Fund's Investor B Shares
may not exchange their shares for Investor A Shares, and holders of Investor A
Shares may not exchange their shares for Investor B Shares.
Holders of Institutional Shares of any of the Group's Funds may exchange those
Institutional Shares at net asset value without any sales charge for
Institutional Shares offered by any of the Group's other Funds, provided that
the shareholder making the exchange is eligible on the date of the exchange to
purchase Institutional Shares and the exchange is made in states where it is
legally authorized.
An institutional investor should notify the Group of its desire to make an
exchange on behalf of a customer, and the Distributor will furnish the
shareholder with a current Prospectus of the Group and the appropriate
authorization form. Shareholders wishing to exercise their exchange privilege
should contact their trust administrator or financial consultant responsible for
the account. An exchange is considered to be a sale of Institutional Shares on
which a shareholder may realize a capital gain or loss for federal income tax
purposes.
HOW TO REDEEM YOUR INSTITUTIONAL SHARES
Shareholders may redeem their Institutional Shares without charge on any day
that net asset value is calculated (see "HOW SHARES ARE VALUED"). Redemptions
will be effected at the net asset value per share next determined after receipt
of a redemption request. Shareholders may request redemptions by contacting
their trust administrator or other financial consultant responsible for the
account.
OTHER INFORMATION REGARDING REDEMPTION OF SHARES
All or part of a customer's Institutional Shares may be redeemed in accordance
with instructions and limitations pertaining to his or her account with an
institutional investor. For example, if a customer has agreed with a bank to
maintain a minimum balance in his or her account with the bank, and the balance
in that account falls below that minimum, the customer may be obliged to redeem,
or the bank may redeem for and on behalf of the customer, all or part of the
customer's Institutional Shares of a Fund of the Group to the extent necessary
to maintain the required minimum balance.
PROSPECTUS--Institutional Shares
<PAGE> 30
Redemption orders are effected at the net asset value per share next determined
after the Institutional Shares are properly tendered for redemption, as
described above. Payment to shareholders for Institutional Shares redeemed will
be made within seven days after receipt by the Transfer Agent of the request for
redemption. However, to the greatest extent possible, requests from
institutional investors for the next day payments upon redemption of
Institutional Shares will be honored if the request for redemption is received
by the Transfer Agent before 4:00 p.m., (Eastern Time), on a Business Day or, if
received after 4:00 p.m., (Eastern Time), within two Business Days, unless it
would be disadvantageous to the Group or the shareholders of a Fund to sell or
liquidate portfolio securities in an amount sufficient to satisfy requests for
payments in that manner. Shareholders should contact their trust administrator
or other financial consultant responsible for the account to determine the
institutional investor's requirements for effectuating redemptions.
See "ADDITIONAL PURCHASE AND REDEMPTION INFORMATION in the Statement of
Additional Information for examples of when the Group may suspend the right of
redemption or redeem Institutional Shares involuntarily if it appears
appropriate to do so in light of the Group's responsibilities under the 1940
Act.
HOW SHARES ARE VALUED
The net asset value of Institutional Shares of the LifeWorks Funds is
determined and priced as of the close of trading on the New York Stock Exchange
("NYSE") on each Business Day (generally 4:00 p.m. Eastern Time). A "Business
Day" is a day on which the NYSE is open for trading and any other day (other
than a day on which no shares are tendered for redemption and no order to
purchase any shares is received) during which there is sufficient trading in a
Fund's portfolio instruments that its net asset value per share might be
materially affected. Currently, the NYSE will not open in observance of the
following holidays: New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
Net asset value per share for a particular class for purposes of pricing sales
and redemptions is calculated by dividing the value of all securities and other
assets belonging to a Fund allocable to such class, less the liabilities charged
to that Fund allocable to such class and any liabilities charged directly to
that class, by the number of outstanding shares of such class. The net asset
value per share will fluctuate as the value of the investment portfolio of a
Fund changes.
The securities in each Fund will be valued at market value. If market quotations
are not available, the securities will be valued by a method which the Board of
Trustees believes accurately reflects fair value. Foreign securities are valued
based on quotations from the primary market in which they are traded and are
translated from the local currency into U.S. dollars using current exchange
rates. For further information about valuation of investments, see "NET ASSET
VALUE" in the Statement of Additional Information.
PROSPECTUS--Institutional Shares
<PAGE> 31
DIVIDENDS AND TAXES
GENERAL
Net income for each of the LifeWorks Funds is declared monthly as a dividend to
shareholders at the close of business on the day of declaration and is generally
paid monthly. Distributable net realized capital gains are distributed at least
annually. A shareholder will automatically receive all income dividends and
capital gains distributions in additional full and fractional shares at net
asset value as of the date of declaration, unless the shareholder elects to
receive dividends or distributions in cash. Such election, or any revocation
thereof, must be made in writing to the Transfer Agent at 3435 Stelzer Road,
Columbus, Ohio 43219, and will become effective with respect to dividends and
distributions having record dates after its receipt by the Transfer Agent.
Each of the LifeWorks Funds is treated as a separate entity for federal income
tax purposes. Each of the LifeWorks Funds intends to qualify as a "regulated
investment company" under the Code for so long as such qualification is in the
best interest of its shareholders and each intends to distribute all of its net
income and capital gains so that it is not required to pay federal income taxes
on amounts so distributed to shareholders.
To avoid federal income tax, the Code requires each of the LifeWorks Funds to
distribute each taxable year at least 90% of its investment company taxable
income and at least 90% of its exempt-interest income. In addition, to avoid
imposition of a non-deductible 4% excise tax, each Fund is required annually to
distribute, prior to calendar year end, 98% of taxable ordinary income on a
calendar year basis, 98% of capital gain net income realized in the twelve
months preceding October 31, and the balance of undistributed taxable ordinary
income and capital gain net income from the prior calendar year.
A shareholder receiving a distribution of ordinary income and/or an excess of
short-term capital gain over net long-term loss would treat it as a receipt of
ordinary income. The dividends-received deduction for corporations will apply to
the aggregate of such ordinary income distributions in the same proportion as
the aggregate dividends from domestic corporations, if any, received by that
Fund bear to its gross income. A shareholder will not be able to take the
dividends-received deduction unless that shareholder holds the shares for at
least 46 days.
Distribution by a Fund of the excess of net long-term capital gain over net
short-term capital loss is taxable to its shareholders as long-term capital gain
in the year in which it is received, regardless of how long the shareholder has
held shares. Such distributions are not eligible for the dividends-received
deduction.
Prior to purchasing shares, the impact of dividends or capital gains
distributions which are expected to be declared or have been declared, but have
not been paid, should be carefully considered. Any such dividends or capital
gains distributions paid shortly after a purchase of shares prior to the record
date will have the effect of reducing the per share net asset value of the
shares by the amount of the dividends or distributions. All or a portion of such
dividends or distributions, although in effect a return of capital, is subject
to taxation.
Taxes may be imposed on the LifeWorks Funds by foreign countries with respect
to income received on foreign securities. If more than 50% of the value of a
Fund's assets at the close of
PROSPECTUS--Institutional Shares
<PAGE> 32
its taxable year consists of stocks or securities of foreign corporations, the
Fund may elect to treat any foreign income taxes it paid as paid by its
shareholders. In this case, shareholders generally will be required to include
in income their pro rata share of such taxes, but will then be entitled to claim
a credit or deduction for their share of such taxes. However, a particular
shareholder's ability to utilize such a credit will be subject to certain
limitations imposed by the Code. The LifeWorks Funds will report to their
shareholders each year the amount, if any, of foreign taxes per share that they
have elected to have treated as paid by their shareholders.
Shareholders will be advised at least annually as to the federal income tax
consequences of distributions made during the year.
PERFORMANCE INFORMATION
From time to time performance information for the LifeWorks Funds showing their
average annual total return, aggregate total return and/or yield may be
presented in advertisements, sales literature and shareholder reports. Such
performance figures are based on historical earnings and are not intended to
indicate future performance. Average annual total return of a class of shares in
any of the LifeWorks Funds will be calculated for the period since the
establishment of the Fund and will reflect the imposition of the maximum sales
charge, if any. Currently, only the Balanced Allocation Fund of the LifeWorks
Funds is offered with multiple classes of shares. Average annual total return is
measured by comparing the value of an investment in a class of shares in a Fund
at the beginning of the relevant period to the redemption value of the
investment at the end of the period (assuming immediate reinvestment of any
dividends or capital gains distributions) and annualizing the result. Aggregate
total return is calculated similarly to average annual total return except that
the return figure is aggregated over the relevant period instead of annualized.
Yield of a class of shares will be computed by dividing a class of shares' net
investment income per share earned during a recent one-month period by that
class of shares' per share maximum offering price (reduced by any undeclared
earned income expected to be paid shortly as a dividend) on the last day of the
period and annualizing the result. Each LifeWorks Fund may also present its
average annual total return, aggregate total return and yield, as the case may
be, excluding the effect of a sales charge, if any.
In addition, from time to time the LifeWorks Funds may present their respective
distribution rates for a class of shares in shareholder reports and in
supplemental sales literature which is accompanied or preceded by a prospectus.
Distribution rates will be computed by dividing the distribution per share of a
class made by a Fund over a twelve-month period by the maximum offering price
per share. The calculation of income in the distribution rate includes both
income and capital gains dividends and does not reflect unrealized gains or
losses, although a Fund may also present a distribution rate excluding the
effect of capital gains. The distribution rate differs from the yield, because
it includes capital gains which are often non-recurring in nature, whereas yield
does not include such items. Distribution rates may also be presented excluding
the effect of a sales charge, if any.
Standardized yield and total return quotations will be computed separately for
Institutional Shares and the other classes of the LifeWorks Funds, if any.
Because of differences in the fees and/or expenses borne by different classes of
shares of the LifeWorks Funds, if any, the net yield and total return on
Institutional Shares may be different from that for another class of the same
Fund.
PROSPECTUS--Institutional Shares
<PAGE> 33
For example, net yield and total return on Investor A Shares is expected, at any
given time, to be lower than the net yield and total return on Institutional
Shares for the same period.
Investors may also judge the performance of any class of shares or Fund by
comparing or referencing it to the performance of other mutual funds with
comparable investment objectives and policies through various mutual fund or
market indices such as those prepared by various services and published by such
services or by other services or publications, including, but not limited to,
ratings published by Morningstar, Inc. In addition to performance information,
general information about the Funds that appears in such publications may be
included in advertisements, in sales literature and in reports to shareholders.
For further information regarding such services and publications, see
"ADDITIONAL INFORMATION - Performance Comparisons" in the Statement of
Additional Information.
Total return and yield are functions of the type and quality of instruments held
in the portfolio, levels of operating expenses and changes in market conditions.
Consequently, total return and yield will fluctuate and are not necessarily
representative of future results. Any fees charged by FABC or any of its
affiliates with respect to customer accounts for investing in shares of the
Funds will not be included in performance calculations; such fees, if charged,
will reduce the actual performance from that quoted. In addition, if First of
America and BISYS voluntarily reduce all or a part of their respective fees, as
further discussed above, the total return of such Fund will be higher than it
would otherwise be in the absence of such voluntary fee reductions.
FUNDATA(R)
Shareholders of the Group may obtain current price, yield and other performance
information on any of the Group's Funds through FUNDATA(R), an Automated Voice
Response System, 24 hours a day by calling (800) 451-8377 from any touch-tone
phone. Shareholders may also speak directly with a Group representative,
employed by BISYS, during regular business hours.
GENERAL INFORMATION
ORGANIZATION OF THE GROUP
The Group was organized as a Massachusetts business trust in 1987 and currently
offers eighteen Funds. The shares of each of the Funds of the Group, other than
its four Money Market Funds, two Tax-Free Income Funds, the Conservative
Allocation Fund and the Aggressive Allocation Fund, are offered in four separate
classes: Investor A Shares, Investor B Shares, Investor C Shares and
Institutional Shares. Shares of each of the two Tax-Free Income Funds are
offered in three separate classes: Investor A Shares, Investor B Shares and
Institutional Shares. Shares of each of the four Money Market Funds of the Group
are offered in two separate classes: Investor A Shares and Institutional Shares.
Shares of the Conservative Allocation Fund and the Aggressive Allocation Fund
currently only offer Institutional Shares. Each share represents an equal
proportionate interest in a Fund with other shares of the same Fund, and is
entitled to such dividends and distributions out of the income earned on the
assets belonging to that Fund as are declared at the discretion of the Trustees.
Shares do not have a par value.
Shareholders are entitled to one vote for each dollar of value invested and a
proportionate fractional vote for any fraction of a dollar invested.
Shareholders will vote in the aggregate and
PROSPECTUS--Institutional Shares
<PAGE> 34
not by Fund except as otherwise expressly required by law. For example,
shareholders of the Funds will vote in the aggregate with other shareholders of
the Group with respect to the election of Trustees and ratification of the
selection of independent accountants. However, shareholders of a Fund will vote
as a fund, and not in the aggregate with other shareholders of the Group, for
purposes of approval of that Fund's investment advisory agreement.
An annual or special meeting of shareholders to conduct necessary business is
not required by the Declaration of Trust, the 1940 Act or other authority
except, under certain circumstances, to elect Trustees, amend the Declaration of
Trust, approve an investment and sub-investment advisory agreements and to
satisfy certain other requirements. To the extent that such a meeting is not
required, the Group may elect not to have an annual or special meeting.
The Group has represented to the SEC that the Trustees will call a special
meeting of shareholders for purposes of considering the removal of one or more
Trustees upon written request therefor from shareholders holding not less than
10% of the outstanding votes of the Group. At such a meeting, a quorum of
shareholders (constituting a majority of votes attributable to all outstanding
shares of the Group), by majority vote, has the power to remove one or more
Trustees.
As of June 30, 1996, FABC, through its wholly-owned subsidiaries, possessed on
behalf of its underlying accounts voting or investment power with respect to
more than 25% of the shares of the Balanced Allocation Fund, and therefore may
be presumed to control such Fund within the meaning of the 1940 Act.
MULTIPLE CLASSES OF SHARES
In addition to Institutional Shares, the Group also offers Investor A Shares,
Investor B Shares and Investor C Shares of certain Funds, including the
Balanced Allocation Fund, pursuant to a Multiple Class Plan adopted by the
Group's Trustees under Rule 18f-3 of the 1940 Act. A salesperson or other person
entitled to receive compensation for selling or servicing shares may receive
different compensation with respect to one particular class of shares over
another in the same Fund. The amount of dividends payable with respect to other
classes of shares will differ from dividends on Institutional Shares as a result
of the Distribution and Shareholder Service Plan fees applicable to such other
classes of shares and because the different classes of shares may bear different
retail transfer agency expenses. For further details regarding these other
classes of Shares, call the Group at (800) 451-8377.
MISCELLANEOUS
Shareholders will receive unaudited semi-annual reports and annual reports
audited by independent public accountants.
Inquiries regarding the Group may be directed in writing to The Parkstone Group
of Funds at 3435 Stelzer Road, Columbus, Ohio 43219, or by calling toll free
(800) 451-8377.
No person has been authorized to give any information or to make any
representations not contained in this Prospectus in connection with the offering
made by this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized
PROSPECTUS--Institutional Shares
<PAGE> 35
by the Funds or their Distributor. This Prospectus does not constitute an
offering by the Funds or by their Distributor in any jurisdiction in which such
offering may not lawfully be made.
PROSPECTUS--Institutional Shares
<PAGE> 36
THE PARKSTONE GROUP OF FUNDS
Institutional Shares
INVESTMENT ADVISER (AND SUB-ADMINISTRATOR)
First of America Investment Corporation
Suite 500
303 North Rose Street
Kalamazoo, Michigan 49007
SUBADVISER
Gulfstream Global Investors, Ltd.
Suite 550
100 Crescent Court
Dallas, Texas 75201
DISTRIBUTOR AND ADMINISTRATOR
BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, Ohio 43219
TRANSFER AGENT
BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
CUSTODIAN
Union Bank of California, N.A.
475 Sansome Street
San Francisco, California 94111
LEGAL COUNSEL
Howard & Howard Attorneys, P.C.
Suite 400
107 West Michigan Avenue
Kalamazoo, Michigan 49007
PROSPECTUS--Institutional Shares
