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THE PARKSTONE
GROUP OF FUNDS
LARGE CAPITALIZATION FUND
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INSTITUTIONAL SHARES
INVESTOR A SHARES
INVESTOR B SHARES
INVESTOR C SHARES
Prospectus dated December 28, 1995
As amended March 18, 1996
-------------------------
NOT FDIC INSURED
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THE PARKSTONE GROUP OF FUNDS
INSTITUTIONAL SHARES PROSPECTUS DATED DECEMBER 28, 1995
INVESTOR A SHARES
INVESTOR B SHARES
INVESTOR C SHARES
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<S> <C>
THE PARKSTONE LARGE CAPITALIZATION FUND For more information call:
(800) 451-8377
or write to:
3435 Stelzer Road
Columbus, Ohio 43219-3035
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.
</TABLE>
The Parkstone Large Capitalization Fund is one of the sixteen currently-offered
series of The Parkstone Group of Funds (the "Group"). The Large Capitalization
Fund offers Institutional Shares, Investor A Shares, Investor B Shares, and
Investor C Shares. This Prospectus explains concisely what you should know
before investing in any class of shares of The Parkstone Large Capitalization
Fund. Please read it carefully and keep it for future reference. You can find
more detailed information about the Large Capitalization Fund in the December
28, 1995 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 or address specified above. The Statement of
Additional Information has been filed with the Securities and Exchange
Commission and is incorporated into this Prospectus by reference.
THE SHARES OF THE PARKSTONE LARGE CAPITALIZATION FUND 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 LARGE
CAPITALIZATION FUND INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVOLVED.
PROSPECTUS
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TABLE OF CONTENTS
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PAGE
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Prospectus Summary........................................................... 3
Fee Tables................................................................... 5
Investment Objective and Polices............................................. 9
Risk Factors and Investment Techniques....................................... 10
Investment Restrictions...................................................... 16
Management of the Large Capitalization Fund.................................. 17
How to Buy Institutional Shares.............................................. 23
How to Buy Investor Shares................................................... 24
Sales Charges................................................................ 26
Reduced Sales Charges -- Investor A Shares................................... 27
Contingent Deferred Sales Charge -- Investor B Shares........................ 29
Contingent Deferred Sales Charge -- Investor C Shares........................ 30
Directed Dividend Option..................................................... 30
Exchange Privilege........................................................... 31
Factors to Consider When Selecting Investor Shares........................... 31
Conversion Feature -- Investor B Shares...................................... 32
Conversion Feature -- Investor C Shares...................................... 32
Parkstone Individual Retirement Accounts..................................... 32
How to Redeem Institutional Shares........................................... 33
How to Redeem Investor Shares................................................ 34
How Shares are Valued........................................................ 35
Dividends and Taxes.......................................................... 36
Performance Information...................................................... 37
Fundata(R)................................................................... 38
General Information.......................................................... 38
</TABLE>
PROSPECTUS 2
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The Parkstone Group of Funds (the "Group") is an open-end management investment
company which offers to the public sixteen separate investment portfolios,
fifteen 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 Parkstone Large Capitalization Fund (the
"Large Capitalization Fund").
The Trustees of the Group have divided the Large Capitalization Fund's
beneficial ownership into an unlimited number of transferable units called
shares (the "Shares"). The Large Capitalization Fund offers multiple classes of
Shares: Institutional Shares, Investor A Shares, Investor B Shares, and Investor
C Shares. Investor C Shares are currently offered only to employee benefit plans
qualified under Section 401 of the Internal Revenue Code, subject to the
requirements established by the Distributor. Interested persons who wish to
obtain a copy of the Group's most recent annual report may contact the Group at
the telephone number shown above.
The investment objective and policies of the Large Capitalization Fund are
described in this Prospectus and are summarized in the Prospectus Summary. First
of America Investment Corporation, Kalamazoo, Michigan ("First of America"),
acts as the investment adviser to the Large Capitalization Fund.
PROSPECTUS SUMMARY
Shares Offered
The Large Capitalization Fund offers Institutional Shares, Investor A Shares,
Investor B Shares, and Investor C Shares (collectively, the "Shares"). Investor
A Shares, Investor B Shares, and Investor C Shares are collectively referred to
as "Investor Shares."
The Large Capitalization Fund represents one of sixteen separate diversified
investment portfolios of The Parkstone Group of Funds, a Massachusetts business
trust (the "Group") which is registered as an open-end, management investment
company.
Offering Price and Sales Charges
The public offering price of Institutional Shares of the Large Capitalization
Fund is equal to the net asset value per share.
The public offering price of Investor A Shares of the Large Capitalization Fund
is equal to the net asset value per share plus a sales charge equal to 4.50% of
the public offering price (4.71% of the net amount invested). The public
offering price is reduced when the amount of the transaction at the total public
offering price is $50,000 or more (see "SALES CHARGES -- Investor A Shares").
Under certain circumstances, the sales charge may be eliminated (see "REDUCED
SALES CHARGES -- Investor A Shares").
The public offering price of Investor B Shares of the Large Capitalization Fund
is equal to the net asset value per share, but investors may be subject to a
contingent deferred sales charge of up to 4.00% when Investor B Shares are
redeemed within four years of purchase.
The public offering price of Investor C Shares of the Large Capitalization Fund
is equal to the net asset value per share, but investors may be subject to a
contingent deferred sales charge of up to 1.00% when Investor C Shares are
redeemed within one year of purchase.
Minimum Purchase
The minimum initial investment for the Large Capitalization Fund is $1,000
(based upon the public offering price) with no minimum subsequent investments.
Such minimum initial investment may be waived for certain purchasers and is
reduced to $100 for investors using the Auto Invest Plan described herein,
although such investors are subject to a $50 minimum for each subsequent
investment in the Large Capitalization Fund.
3 PROSPECTUS
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Investment Objective
The Large Capitalization Fund seeks growth of capital by investing primarily in
a diversified portfolio of common stocks and securities convertible into common
stocks of companies with large market capitalization.
Investment Policies
Under normal market conditions, the Large Capitalization Fund will invest at
least 80% of its total assets in common stocks, and securities convertible into
common stocks, of companies believed by the investment adviser to be
characterized by sound management and the ability to finance expected long-term
growth.
Risk Factors and Special Considerations
An investment in a mutual fund such as the Large Capitalization Fund involves a
certain amount of risk and may not be suitable for all investors. In addition,
some investment policies of the Large Capitalization Fund may entail certain
risks (see "RISK FACTORS AND INVESTMENT TECHNIQUES").
Investment Adviser
First of America Investment Corporation serves as investment adviser.
Dividends and Capital Gains
Dividends from net income are declared and generally paid monthly. Net realized
capital gains are distributed at least annually.
Distributor
BISYS Fund Services, formerly known as The Winsbury Company Limited Partnership
("BISYS"), a partnership owned by The BISYS Group, Inc., serves as distributor.
Transfer Agent
BISYS Fund Services Ohio, Inc., formerly known as The Winsbury Service
Corporation (the "Transfer Agent"), a subsidiary of The BISYS Group, Inc.,
serves as transfer agent.
PROSPECTUS 4
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FEE TABLES (INSTITUTIONAL SHARES)
SHAREHOLDER TRANSACTION EXPENSES
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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>
Large Capitalization Fund.......................... 0.80% 0.00% 0.28% 1.08%
</TABLE>
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
YEAR YEARS
--- ----
<S> <C> <C>
Large Capitalization Fund.......................... $11 $34
</TABLE>
The information set forth in the foregoing Fee Tables and examples relates only
to Institutional Shares of the Large Capitalization Fund. The Large
Capitalization Fund also offers other classes of Shares.
The purpose of the above tables is to assist a potential purchaser of
Institutional Shares of the Large Capitalization Fund in understanding the
various costs and expenses that an investor in the Large Capitalization Fund
will bear directly or indirectly. Such expenses do not include any fees charged
by First of America or any of its affiliates to its customer accounts which may
have invested in Institutional Shares of the Large Capitalization Fund. See
"MANAGEMENT OF THE LARGE CAPITALIZATION FUND" and "GENERAL INFORMATION" for a
more complete discussion of the annual operating expenses of the Large
Capitalization Fund. The expense information reflects estimates of anticipated
expenses. THE FOREGOING EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
5 PROSPECTUS
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FEE TABLES (INVESTOR A SHARES)
SHAREHOLDER TRANSACTION EXPENSES
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Maximum Sales Charge (as a percentage of the offering price)(1)............. 4.50%
Sales Charge on Reinvested Distributions.................................... None
Deferred Sales Charge on Redemptions........................................ None
Redemption Fees(2).......................................................... None
Exchange Fees............................................................... None
</TABLE>
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(1) The sales charge may be eliminated under certain circumstances. (See
"REDUCED SALES CHARGES -- Investor A Shares")
(2) Although no such fee currently is in place, the Transfer Agent has reserved
the right in the future to charge a fee for wire transfers of redemption
proceeds.
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>
Large Capitalization Fund.......................... 0.80% 0.25% 0.28% 1.33%
</TABLE>
EXPENSE EXAMPLES
You would pay the following expenses on a $1,000 investment in Investor A
Shares, assuming (1) 5% annual return and (2) redemption at the end of each time
period:
<TABLE>
<CAPTION>
1 3
YEAR YEARS
--- ----
<S> <C> <C>
Large Capitalization Fund.......................... $58 $85
</TABLE>
The information set forth in the foregoing Fee Tables and examples relates only
to Investor A Shares of the Large Capitalization Fund. The Large Capitalization
Fund offers other classes of Shares.
As a result of the payment of sales charges and 12b-1 fees, long-term
shareholders may pay more than the economic equivalent of the maximum front-end
sales charge permitted by the National Association of Securities Dealers, Inc.
(the "NASD"). The NASD has adopted rules effective July 7, 1993, which generally
limit the aggregate sales charges and payments under the Group's Investor A
Distribution and Shareholder Service Plan to a certain percent of total new
gross share sales, plus interest. The Large Capitalization Fund would stop
accruing 12b-1 fees if, to the extent, and for as long as, such limit would
otherwise be exceeded.
The purpose of the above tables is to assist a potential purchaser of Investor A
Shares of the Large Capitalization Fund in understanding the various costs and
expenses that an investor in the Large Capitalization Fund will bear directly or
indirectly. Such expenses do not include any fees charged by First of America or
any of its affiliates to its customer accounts which may have invested in
Investor A Shares of the Large Capitalization Fund. See "MANAGEMENT OF THE LARGE
CAPITALIZATION FUND," "GENERAL INFORMATION" and "SALES CHARGES" for a more
complete discussion of the shareholder transaction expenses and annual operating
expenses of the Large Capitalization Fund. The expense information above
reflects estimates for the anticipated expenses of the Large Capitalization
Fund. THE FOREGOING EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
PROSPECTUS 6
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FEE TABLES (INVESTOR B SHARES)
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Charge (as a percentage of the offering price)................ None
Sales Charge on Reinvested Distributions.................................... None
Deferred Sales Charge on Redemptions(1)..................................... 4.00%
Redemption Fees(2).......................................................... None
Exchange Fees............................................................... None
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(1) A Contingent Deferred Sales Load is charged only with respect to Investor B
Shares redeemed within four years of the date of purchase. (See "CONTINGENT
DEFERRED SALES CHARGE -- Investor B Shares" herein.)
(2) Although no such fee currently is in place, the Transfer Agent has reserved
the right in the future to charge a fee for wire transfers of redemption
proceeds.
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>
Large Capitalization Fund.......................... 0.80% 1.00% 0.28% 2.08%
</TABLE>
EXPENSE EXAMPLES
You would pay the following expenses on a $1,000 investment in Investor B
Shares, assuming (1) 5% annual return and (2) redemption at the end of each time
period:
<TABLE>
<CAPTION>
1 3
YEAR YEARS
--- ----
<S> <C> <C>
Large Capitalization Fund.......................... $61 $95
</TABLE>
You would pay the following expenses on a $1,000 investment in Investor B
Shares, assuming (1) 5% annual return and (2) no redemption at the end of each
time period:
<TABLE>
<CAPTION>
1 3
YEAR YEARS
--- ----
<S> <C> <C>
Large Capitalization Fund.......................... $21 $65
</TABLE>
The information set forth in the foregoing Fee Tables and examples relates only
to Investor B Shares of the Large Capitalization Fund. The Large Capitalization
Fund offers other classes of Shares.
As a result of the payment of sales charges and 12b-1 fees, long-term
shareholders may pay more than the economic equivalent of the maximum front-end
sales charge permitted by the National Association of Securities Dealers, Inc.
(the "NASD"). The NASD has adopted rules effective July 7, 1993, which generally
limit the aggregate sales charges and payments under the Group's Investor B
Distribution and Shareholder Service Plan to a certain percent of total new
gross share sales, plus interest. The Large Capitalization Fund would stop
accruing 12b-1 fees if, to the extent, and for as long as, such limit would
otherwise be exceeded.
The purpose of the above tables is to assist a potential purchaser of Investor B
Shares of the Large Capitalization Fund in understanding the various costs and
expenses that an investor in the Large Capitalization Fund will bear directly or
indirectly. Such expenses do not include any fees charged by First of America or
any of its affiliates to its customer accounts which may have invested in
Investor B Shares of the Large Capitalization Fund. See "MANAGEMENT OF THE LARGE
CAPITALIZATION FUND," "GENERAL INFORMATION" and "SALES CHARGES" for a more
complete discussion of the Shareholder transaction expenses and annual operating
expenses of the Large Capitalization Fund. The expense information above
reflects estimates for the anticipated expenses of the Large Capitalization
Fund. THE FOREGOING EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
7 PROSPECTUS
<PAGE> 10
FEE TABLES (INVESTOR C SHARES)
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Charge (as a percentage of the offering price)................ None
Sales Charge on Reinvested Distributions.................................... None
Deferred Sales Charge on Redemptions(1)..................................... 1.00%
Redemption Fees(2).......................................................... None
Exchange Fees............................................................... None
</TABLE>
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(1) A Contingent Deferred Sales Load is charged only with respect to Investor C
Shares redeemed within one year of the date of purchase. (See "CONTINGENT
DEFERRED SALES CHARGE -- Investor C Shares" herein.)
(2) Although no such fee currently is in place, the Transfer Agent has reserved
the right in the future to charge a fee for wire transfers of redemption
proceeds.
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>
Large Capitalization Fund.......................... 0.80% 1.00% 0.28% 2.08%
</TABLE>
EXPENSE EXAMPLES
You would pay the following expenses on a $1,000 investment in Investor C
Shares, assuming (1) 5% annual return and (2) redemption at the end of each time
period:
<TABLE>
<CAPTION>
1 3
YEAR YEARS
--- ----
<S> <C> <C>
Large Capitalization Fund.......................... $31 $65
</TABLE>
You would pay the following expenses on a $1,000 investment in Investor C
Shares, assuming (1) 5% annual return and (2) no redemption at the end of each
time period:
<TABLE>
<CAPTION>
1 3
YEAR YEARS
--- ----
<S> <C> <C>
Large Capitalization Fund.......................... $21 $65
</TABLE>
The information set forth in the foregoing Fee Tables and examples relates only
to Investor C Shares of the Large Capitalization Fund. The Large Capitalization
Fund also may offer other classes of Shares.
As a result of the payment of sales charges and 12b-1 fees, long-term
shareholders may pay more than the economic equivalent of the maximum front-end
sales charge permitted by the National Association of Securities Dealers, Inc.
(the "NASD"). The NASD has adopted rules effective July 7, 1993, which generally
limit the aggregate sales charges and payments under the Group's Investor C
Distribution and Shareholder Service Plan to a certain percent of total new
gross share sales, plus interest. The Large Capitalization Fund would stop
accruing 12b-1 fees if, to the extent, and for as long as, such limit would
otherwise be exceeded.
The purpose of the above tables is to assist a potential purchaser of Investor C
Shares of the Large Capitalization Fund in understanding the various costs and
expenses that an investor in the Large Capitalization Fund will bear directly or
indirectly. Such expenses do not include any fees charged by First of America or
any of its affiliates to its customer accounts which may have invested in
Investor C Shares of the Large Capitalization Fund. See "MANAGEMENT OF THE LARGE
CAPITALIZATION FUND," "GENERAL INFORMATION" and "SALES CHARGES" for a more
complete discussion of the shareholder transaction expenses and annual operating
expenses of the Large Capitalization Fund. The expense information above
reflects estimates for the anticipated expenses of the Large Capitalization
Fund. THE FOREGOING EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
PROSPECTUS 8
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INVESTMENT OBJECTIVE AND POLICIES
GENERAL
The investment objective of the Large Capitalization Fund is fundamental and may
not be changed without a vote of the holders of a majority of the outstanding
Shares of the Large Capitalization Fund. The investment policies of the Large
Capitalization Fund may be changed without a vote of the holders of a majority
of outstanding Shares of the Large Capitalization 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 objective of the Large
Capitalization Fund will be achieved. Depending upon the performance of the
Large Capitalization Fund's investments, the net asset value per share of the
Large Capitalization Fund may decrease instead of increase.
During temporary defensive periods as determined by First of America, the Large
Capitalization Fund 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 the Large Capitalization Fund is so invested, its investment
objective may not be achieved during that time. Uninvested cash reserves will
not earn income.
THE LARGE CAPITALIZATION FUND
The investment objective of The Large Capitalization Fund is to seek growth of
capital by investing primarily in a diversified portfolio of common stocks and
securities convertible into common stocks of companies with large market
capitalization.
Under normal market conditions, the Large Capitalization Fund will invest at
least 80% of the value of its total assets in common stocks and securities
convertible into common stocks of companies believed by First of America, the
Large Capitalization Fund's investment adviser (sometimes referred to as the
"Adviser"), to be characterized by sound management and the ability to finance
expected long-term growth. In addition, under normal market conditions, the
Large Capitalization Fund will invest at least 65% of the value of its total
assets in common stocks and securities convertible into common stocks of
companies considered by First of America to have a market capitalization of more
than $5 billion. The Large Capitalization Fund may also invest up to 20% of the
value of its total assets in preferred stocks, corporate bonds, notes, units of
real estate investment trusts, warrants, and short-term obligations (with
maturities of 12 months or less) consisting of commercial paper (including
variable amount master demand notes), bankers' acceptances, certificates of
deposit, repurchase agreements, obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, and demand and time deposits of
domestic and foreign banks and savings associations. The Large Capitalization
Fund may also hold securities of other investment companies and depository or
custodial receipts representing beneficial interests in any of the foregoing
securities.
Subject to the foregoing policies, the Large Capitalization Fund may also invest
up to 25% of its net assets in foreign securities either directly or through the
purchase of American Depository Receipts ("ADRs") or European Depository
Receipts ("EDRs"), and may also invest in securities issued by foreign branches
of U.S. banks and foreign banks, in Canadian Commercial Paper ("CCP"), and in
Europaper. For a discussion of risks associated with foreign securities, see
"RISK FACTORS AND INVESTMENT TECHNIQUES -- Foreign Securities" below.
The Large Capitalization Fund anticipates investing in growth-oriented, large
capitalization companies. For purposes of the foregoing sentence, large
capitalization companies are considered to be those with market capitalization
of more than $5 billion. These companies have typically exhibited consistent,
above average growth in revenues and earnings, strong management, and sound and
improving financial fundamentals. Often, these companies are market or industry
leaders, have excellent products and/or services, and exhibit the potential for
growth. Core holdings of the Large Capitalization Fund are equity securities of
companies that participate in long-term growth industries, although these will
be supplemented by holdings in non-growth industries that exhibit the desired
characteristics.
9 PROSPECTUS
<PAGE> 12
Consistent with the foregoing, the Large Capitalization Fund will focus its
investments in those companies and types of companies that First of America
believes will enable the Large Capitalization Fund to achieve its investment
objective.
<TABLE>
<S> <C> <C>
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THE LARGE CAPITALIZATION FUND
See the following Sections in RISK FACTORS AND INVESTMENT TECHNIQUES
-Complex Securities -Foreign Securities -Foreign Currency Transactions
-Futures Contracts -Government Obligations -Lending Portfolio Securities
-Other Mutual Funds -Put and Call Options -Repurchase Agreements
-Restricted Securities -Reverse Repurchase Agreements -When-Issued and
and Dollar Roll Agreements Delayed-Delivery
Transactions
</TABLE>
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RISK FACTORS AND INVESTMENT TECHNIQUES
Like any investment program, an investment in the Large Capitalization Fund
entails certain risks. The Large Capitalization Fund will not acquire portfolio
securities issued by, make savings deposits in, or enter into repurchase,
reverse repurchase or dollar roll agreements with First of America
Bank-Michigan, N.A. (the parent corporation of First of America), BISYS, or
their affiliates, and will not give preference to First of America
Bank-Michigan, N.A.'s correspondents with respect to such transactions,
securities, savings deposits, repurchase agreements, reverse repurchase
agreements and dollar roll agreements.
COMPLEX SECURITIES
Some of the investment techniques utilized by First of America in the management
of the Large Capitalization Fund 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 Adviser believes that such complex securities may, in some circumstances,
play a valuable role in successfully implementing the Large Capitalization
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 Adviser 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
The Large Capitalization Fund may invest in foreign securities as permitted by
the investment policies set forth above.
Investment in foreign securities is subject to special investment risks that
differ in some respects from those related to investments in securities of
United States 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 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 United States corporations or issued or
guaranteed by the United States 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 United States domiciled company. Foreign companies
generally are not subject to uniform accounting, auditing and financial
reporting standards comparable to those applicable to United States domestic
companies. There is generally less government regulation of securities
exchanges, brokers and listed companies abroad than in the United States.
Confiscatory taxation or diplomatic developments could also affect investment in
those countries. In addition, foreign
PROSPECTUS 10
<PAGE> 13
branches of United States 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 United States banks and United States domestic issuers.
For many foreign securities, U.S. dollar-denominated American Depository
Receipts, or ADR's, which are traded in the United States on exchanges or
over-the-counter, are issued by domestic banks. ADR's represent the right to
receive securities of foreign issuers deposited in a domestic bank or a
correspondent bank. ADR's do not eliminate all the risk inherent in investing in
the securities of foreign issuers. However, by investing in ADR's rather than
directly in foreign issuers' stock, the Large Capitalization 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 ADR's.
The information available for ADR's is subject to the accounting, auditing and
financial reporting standards of the domestic market or exchange on which they
are traded, which standards are more uniform and more exacting than those to
which many foreign issuers may be subject. The Large Capitalization Fund may
also invest in European Depository Receipts, or EDR's, which are receipts
evidencing an arrangement with a European bank similar to that for ADR's and are
designed for use in the European securities markets. EDR's are not necessarily
denominated in the currency of the underlying security.
Certain of the ADR's and EDR's, typically those denominated as unsponsored,
require the holders thereof to bear most of the costs of such facilities while
issuers of sponsored facilities normally pay more of the costs thereof. 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 in 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, the Large Capitalization Fund may
invest in debt securities denominated in the ECU, which is a "basket" consisting
of specified amounts of the currencies of certain of the twelve 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
The Large Capitalization Fund may utilize foreign currency transactions in its
portfolio. The value of the assets of the Large Capitalization 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 the Large
Capitalization Fund may incur costs in connection with conversions between
various currencies. The Large Capitalization 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 contract") 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 Large Capitalization Fund may enter into forward currency
contracts in order to hedge against adverse movements in exchange rates between
currencies.
For example, when the Large Capitalization 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, the Large Capitalization 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 the Large Capitalization Fund
believes that a foreign
11 PROSPECTUS
<PAGE> 14
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 the Large Capitalization Fund's
portfolio securities or other assets denominated in such foreign currency, or
when the Large Capitalization Fund believes that the U.S. dollar may suffer a
substantial decline against a foreign currency, 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. The Large Capitalization Fund
may also hedge its 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 the Large Capitalization 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 the Large
Capitalization 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 the Large Capitalization Fund is
obligated to deliver.
If the Large Capitalization Fund retains the portfolio security and engages in
an offsetting transaction, the Large Capitalization 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 Large Capitalization 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 the Large Capitalization Fund's entering into a forward currency
contract for the sale of the foreign currency and the date it enters into an
offsetting contract for the purchase of the foreign currency, the Large
Capitalization 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, the Large Capitalization 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 Large Capitalization Fund will have to
convert its 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 OBJECTIVE
AND POLICIES -- Additional Information on Portfolio Instruments" in the
Statement of Additional Information.
FUTURES CONTRACTS
The Large Capitalization Fund 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.
The Large Capitalization 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, the Large
Capitalization Fund can seek through the sale of futures contracts to offset a
decline in the value of its portfolio securities. When interest rates are
expected to fall or market values are expected to rise, the Large Capitalization
Fund, through the purchase of such contracts, can attempt to
PROSPECTUS 12
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secure better rates or prices for the Large Capitalization 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 the Large Capitalization 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 five percent of the Large Capitalization 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 the Large Capitalization Fund's total assets. Futures
transactions will be limited to the extent necessary to maintain the Large
Capitalization Fund's qualification as a regulated investment company.
Futures transactions involve brokerage costs and require the Large
Capitalization Fund to segregate assets to cover contracts that would require it
to purchase securities or currencies. The Large Capitalization 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 Large Capitalization
Fund had not entered into any futures transactions. In addition, the value of
the Large Capitalization 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 Large Capitalization 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.
LENDING PORTFOLIO SECURITIES
In order to generate additional income, the Large Capitalization Fund may, from
time to time, lend its portfolio securities to broker-dealers, banks or
institutional borrowers of securities. The Large Capitalization Fund must
receive 100% collateral in the form of cash or U.S. Government securities. This
collateral will be valued daily by the Adviser to confirm an adequate level of
collateral. Should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Large Capitalization Fund.
During the time portfolio securities are on loan, the borrower pays the Large
Capitalization Fund any dividends or interest received on such securities. Loans
are subject to termination by the Large Capitalization Fund or the borrower at
any time. While the Large Capitalization Fund does not have the right to vote
securities on loan, the Large Capitalization 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 the Large
Capitalization Fund, the Large Capitalization Fund bears the risk of delay in
the recovery of its portfolio securities and the risk of loss of rights in the
collateral. The Large Capitalization Fund will enter into loan agreements only
with broker-dealers, banks or other institutions that the Adviser has determined
are creditworthy under guidelines established by the Group's Board of Trustees.
OTHER MUTUAL FUNDS
The Large Capitalization Fund 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 Prime Obligations Fund, the Parkstone U S Government
Obligations Fund, the Parkstone Tax-Free Fund, the Parkstone Municipal Investor
Fund, and the Parkstone Treasury Fund), provided that no more than 10% of the
Large Capitalization 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 the Large Capitalization Fund in shares of
the money market funds of the Group, the Adviser, Administrator and their
affiliates (See "MANAGEMENT OF THE LARGE CAPITALIZATION FUND -- Investment
Adviser" 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 the Large
Capitalization Fund that are attributable to investments by the Large
Capitalization Fund in shares of those money market mutual
13 PROSPECTUS
<PAGE> 16
funds if the fee is being taken in the Large Capitalization Fund. The Adviser
and the Administrator will promptly forward such fees to the Large
Capitalization Fund. The Large Capitalization 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
Large Capitalization Fund's 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
The Large Capitalization Fund 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. The Large Capitalization Fund may also engage in writing call
options from time to time as the Adviser deems appropriate. The Large
Capitalization Fund will write only covered call options (options on securities
or currencies owned by the Large Capitalization Fund). In order to close out a
call option it has written, the Large Capitalization 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 the Large Capitalization Fund previously has written. When a
portfolio security or currency subject to a call option is sold, the Large
Capitalization Fund will effect a closing purchase transaction to close out any
existing call option on that security or currency. If the Large Capitalization
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 the Large
Capitalization Fund delivers the underlying security or currency upon exercise.
In addition, upon the exercise of a call option by the holder thereof, the Large
Capitalization Fund will forego the potential benefit represented by market
appreciation over the exercise price. Under normal conditions, it is not
expected that the Large Capitalization Fund will cause the underlying value of
portfolio securities and currencies subject to such options to exceed 50% of its
net assets.
The Large Capitalization Fund, as part of its option transactions, also may
purchase index put and call options and write index options. As with options on
individual securities, the Large Capitalization Fund will write only covered
index call options. Through the writing or purchase of index options the Large
Capitalization 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 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 the Large Capitalization Fund owns or
intends to purchase probably will not correlate perfectly with movements in the
level of an index and, therefore, the Large Capitalization 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. The Large Capitalization 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 the Large Capitalization Fund may be subject to repurchase
agreements. Under the terms of a repurchase agreement, the Large Capitalization
Fund would acquire securities from financial institutions such as member banks
of the Federal Deposit Insurance Corporation or registered broker-dealers which
the Adviser deems 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
PROSPECTUS 14
<PAGE> 17
and price. The repurchase price would generally equal the price paid by the
Large Capitalization 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 Large Capitalization 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 the Large Capitalization Fund
were delayed pending court action. Repurchase agreements are considered to be
loans by an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"). For further information about repurchase agreements,
see "INVESTMENT OBJECTIVE AND POLICIES -- Additional Information on Portfolio
Instruments -- Repurchase Agreements" in the Statement of Additional
Information.
RESTRICTED SECURITIES
Securities in which the Large Capitalization Fund 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 Large
Capitalization Fund, 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, the Adviser 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.
Thus, subject to the limitations described above, the Large Capitalization Fund
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 the Large Capitalization Fund. The price the Large
Capitalization 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. The Large Capitalization 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 AND DOLLAR ROLL AGREEMENTS
The Large Capitalization Fund may borrow funds by entering into reverse
repurchase agreements in accordance with the investment restrictions described
below. Pursuant to such agreements, the Large Capitalization 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 the Large Capitalization 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 the Large Capitalization 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. The Large Capitalization Fund may
experience a negative impact on its net asset value if interest rates rise
during the term of a reverse repurchase agreement or dollar roll agreement. The
Large Capitalization Fund generally will invest the proceeds of such borrowings
only when such borrowings will enhance the Large Capitalization Fund's
15 PROSPECTUS
<PAGE> 18
liquidity or when the Large Capitalization 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 and dollar roll agreements, see "INVESTMENT OBJECTIVE AND
POLICIES -- Additional Information on Portfolio Instruments -- Reverse
Repurchase Agreements and Dollar Roll Agreements" in the Statement of Additional
Information.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS
The Large Capitalization Fund may purchase securities on a when-issued or
delayed-delivery basis. The Large Capitalization Fund will engage in when-issued
and delayed-delivery transactions only for the purpose of acquiring portfolio
securities consistent with its investment objective 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 that available in the market
when delivery takes place. The Large Capitalization Fund will not pay for such
securities or start earning interest on them until they are received. When the
Large Capitalization 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, the
Large Capitalization Fund relies on the seller to complete the transaction; the
seller's failure to do so may cause the Large Capitalization Fund to miss a
price or yield considered to be advantageous.
The Large Capitalization Fund's commitments to purchase "when-issued" securities
will not exceed 25% of the value of its total assets under normal market
conditions, and a commitment by the Large Capitalization 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, the Large Capitalization Fund's liquidity and the Adviser's ability to
manage it might be adversely affected. The Large Capitalization Fund intends
only to purchase "when-issued" securities for the purpose of acquiring portfolio
securities, not for investment leverage, although such transactions represent a
form of leverage.
PORTFOLIO TURNOVER
The portfolio turnover rate for the Large Capitalization Fund is calculated by
dividing the lesser of the Large Capitalization Fund's purchases or sales of
portfolio securities for the year by the monthly average value of the portfolio
securities. The Securities and Exchange Commission requires that the calculation
exclude all securities whose remaining maturities at the time of acquisition are
one year or less. The portfolio turnover rate for the Large Capitalization 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 the Large Capitalization Fund and may result in
additional tax consequences to the Large Capitalization Fund's shareholders.
Portfolio turnover will not be a limiting factor in making investment decisions.
INVESTMENT RESTRICTIONS
The Large Capitalization Fund is subject to a number of investment restrictions
that may be changed only by a vote of a majority of the outstanding Shares of
the Large Capitalization Fund (as defined in the Statement of Additional
Information).
The Large Capitalization Fund will not:
1. Purchase any securities which would cause more than 25% of the value of the
Large Capitalization 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
PROSPECTUS 16
<PAGE> 19
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.
2. (a) Borrow money (not including reverse repurchase agreements or dollar roll
agreements), except that the Large Capitalization 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 and dollar roll agreements do not exceed in
the aggregate one-third of the Large Capitalization Fund's total assets less
liabilities other than the obligations represented by the bank borrowings,
reverse repurchase agreements and dollar roll agreements), or mortgage,
pledge or hypothecate any assets except in connection with a bank borrowing
in amounts not to exceed 30% of the Large Capitalization Fund's net assets at
the time of borrowing; (b) enter into reverse repurchase agreements, dollar
roll agreements and other permitted borrowings in amounts exceeding in the
aggregate one-third of the Large Capitalization Fund's total assets less
liabilities other than the obligations represented by such reverse repurchase
and dollar roll agreements; and (c) issue senior securities except as
permitted by the 1940 Act, or any rule, order or interpretation thereunder.
3. Make loans, except that the Large Capitalization 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.
4. 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 Large
Capitalization Fund's total assets would be invested in such issuer, or the
Large Capitalization Fund would hold more than 10% of the outstanding voting
securities of the issuer, except that 25% or less of the value of the Large
Capitalization 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.
The following additional investment restriction may be changed without the vote
of a majority of the outstanding Shares of The Large Capitalization Fund.
The Large Capitalization Fund may not:
1. Purchase or otherwise acquire any securities, if as a result, more than 15%
of the Large Capitalization Fund's net assets would be invested in securities
that are illiquid.
In addition to the above investment restrictions, the Large Capitalization Fund
is subject to certain other investment restrictions set forth under "INVESTMENT
OBJECTIVE AND POLICES -- Investment Restrictions" in the Statement of Additional
Information.
MANAGEMENT OF THE LARGE CAPITALIZATION FUND
TRUSTEES
Overall responsibility for management of the Large Capitalization Fund 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 five 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 Stephen G. Mintos* (Chairman), George R.
Landreth*, 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. Those Trustees
17 PROSPECTUS
<PAGE> 20
designated with an asterisk (*) are considered to be "interested persons" 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 Fund Services Ohio, Inc. 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 and may receive fees from the Large Capitalization Fund pursuant
to the Distribution and Shareholder Service Plans described below. BISYS Fund
Services Ohio, Inc., an affiliate of BISYS, receives fees from the Group for
acting as Transfer Agent and for providing certain fund accounting services. Mr.
Mintos and Mr. Landreth are employees of BISYS.
INVESTMENT ADVISER
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 First of America Bank-Michigan, N.A., which is a wholly owned
subsidiary of First of America Bank Corporation. First of America Bank
Corporation currently has over $25 billion in assets and provides financial
services to over 300 communities in Michigan, Indiana, Illinois and Florida. As
of June 30, 1995, First of America managed over $10 billion on behalf of both
taxable and tax-exempt clients, including pensions, endowments, corporations and
individual portfolios. First of America also acts as investment adviser to the
Trust Division of First of America Bank Corporation with respect to an
additional $2.3 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 one or more subadvisers, furnishes a
continuous investment program for the Large Capitalization Fund and makes
investment decisions on behalf of the Large Capitalization Fund.
First of America utilizes a team approach to the investment management of the
Large Capitalization Fund, with up to three professionals working as a team to
ensure a disciplined investment process designed to result in long-term
performance consistent with the Large Capitalization Fund's investment
objective. Roger H. Stamper, Managing Director of First of America, is primarily
responsible for the day-to-day management of the Large Capitalization Fund. Mr.
Stamper has held his current position 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 the
Large Capitalization Fund, computed daily and paid monthly, at the annual rate
of eighty one-hundredths of one percent (0.80%) of the Large Capitalization
Fund's average daily net assets. First of America may periodically voluntarily
reduce all or a portion of its advisory fee with respect to the Large
Capitalization Fund to increase the net income of the Large Capitalization Fund
available for distribution as dividends. The voluntary fee reduction will cause
the total return of the Large Capitalization Fund to be higher than it would
otherwise be in the absence of such a reduction.
ADMINISTRATOR, SUB-ADMINISTRATOR AND DISTRIBUTOR
BISYS, 3435 Stelzer Road, Columbus, Ohio 43219-3035, is the administrator for
the Large Capitalization Fund, and also acts as the Large Capitalization Fund's
principal underwriter and distributor (the "Administrator" or the "Distributor,"
as the context indicates). First of America serves as Sub-administrator for the
Large Capitalization Fund and provides certain services as may be requested by
BISYS from time to time. BISYS and its affiliated companies, including BISYS
Fund Services Ohio, Inc., 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.
PROSPECTUS 18
<PAGE> 21
The Administrator generally assists in all aspects of the Large Capitalization
Fund's 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 the Large Capitalization Fund equal to the
lesser of a fee, computed daily and paid periodically, at an annual rate of
twenty one-hundredths of one percent (.20%) of the Large Capitalization 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 five
one-hundredths of one percent (.05%) of the Large Capitalization Fund's average
daily net assets. The Administrator may periodically voluntarily reduce all or a
portion of its administrative fee with respect to the Large Capitalization Fund
to increase the net income of the Large Capitalization Fund available for
distribution as dividends. The voluntary fee reduction will cause the return of
the Large Capitalization Fund to be higher than it would otherwise be in the
absence of such reduction.
The Distributor acts as agent for the Large Capitalization Fund in the
distribution of its 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. The Distributor may retain some
or all of any sales charges imposed upon the Investor Shares and may receive
compensation under the Distribution and Shareholder Service Plans described
below.
EXPENSES
The Adviser and the Administrator each bear all expenses in connection with the
performance of its services as investment adviser and administrator,
respectively, other than the cost of securities (including brokerage
commissions) purchased for the Group. The Large Capitalization Fund will bear
the following expenses relating to its operation: organizational expenses,
taxes, interest, brokerage fees and commissions, fees of the Trustees of the
Group, Securities and Exchange Commission 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 maintenance of the Group's existence, costs of shareholders' reports and
meetings, and any extraordinary expenses incurred in the Large Capitalization
Fund's operation. As a general matter, expenses are allocated to the separate
classes of Shares of the Large Capitalization Fund on the basis of the relative
net asset value of each class.
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 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; Securities and Exchange Commission 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.
DISTRIBUTION PLAN FOR INVESTOR A SHARES
Rule 12b-1 adopted by the Securities and Exchange Commission under the 1940 Act
permits an investment company to pay directly or indirectly expenses associated
with the distribution of its shares in accordance with a plan adopted by an
investment company's trustees and approved by its shareholders. Pursuant to such
Rule, the Group has adopted an Investor A Distribution and Shareholder Service
Plan (the "Investor A Plan") with respect to the Investor A Shares of the Large
Capitalization Fund. Pursuant to the Investor A Plan, the Large Capitalization
Fund is authorized to pay or reimburse BISYS, as
19 PROSPECTUS
<PAGE> 22
Distributor of the Investor A Shares, for certain expenses that are incurred in
connection with shareholder and distribution services. Payments under the
Investor A Plan will be calculated daily and paid monthly at an annual rate not
to exceed twenty-five one-hundredths of one percent (.25%) of the average daily
net asset value of Investor A Shares of the Large Capitalization Fund. Such
amount may be used by BISYS to pay banks and their affiliates (including First
of America Bank-Michigan, N.A., and its affiliates), and other institutions,
including broker-dealers (a "Participating Organization") for administration,
distribution, and/or shareholder service assistance pursuant to an agreement
between BISYS and the Participating Organization. Under the Investor A Plan, a
Participating Organization may include a subsidiary or affiliate of BISYS.
Payments to the Distributor pursuant to the Investor A Plan will be used (i) to
compensate Participating Organizations for providing distribution assistance
relating to Investor A Shares, (ii) for promotional activities intended to
result in the sale of Investor A Shares such as to pay for the preparation,
printing and distribution of prospectuses to other than current shareholders,
and (iii) to compensate Participating Organizations for providing shareholder
services with respect to their customers who are, from time to time, beneficial
and record holders of Investor A Shares.
Fees paid pursuant to the Investor A Plan are accrued daily and paid monthly,
and are charged as expenses of Investor A Shares of the Large Capitalization
Fund as accrued.
Pursuant to the Investor A Plan, the Distributor may enter into Rule 12b-1
Agreements with Participating Organizations for providing shareholder and
distribution services to their customers who are the record or beneficial owners
of Investor A Shares. Such Participating Organizations will be compensated at
the annual rate of up to .25% of the average daily net asset value of the
Investor A Shares held of record of beneficially by such customers. The
shareholder and distribution services provided by Participating Organizations
may include promoting the purchase of Investor A Shares of the Large
Capitalization Fund by its customers; processing purchase, exchange, and
redemption requests for customers and placing orders with the Distributor or the
Transfer Agent; processing dividend and distribution payments from the Large
Capitalization Fund on behalf of customers; providing information periodically
to customers, including information showing their positions in Investor A
Shares; providing sub-accounting with respect to Investor A Shares beneficially
owned by customers or the information necessary for sub-accounting, responding
to inquiries from customers concerning their investment in Investor A Shares.
Institutions, including banks regulated by the Comptroller of the Currency, the
Federal Reserve Board, or the Federal Deposit Insurance Corporation, and
investment advisers and other money managers subject to the jurisdiction of the
Securities and Exchange Commission (the "Commission"), the Department of Labor,
or state securities commissions, are urged to consult their legal advisers
before investing such assets in Investor A Shares.
DISTRIBUTION PLAN FOR INVESTOR B SHARES
Pursuant to Rule 12b-1, the Group has adopted an Investor B Distribution and
Shareholder Service Plan (the "Investor B Plan") with respect to the Investor B
Shares of the Large Capitalization Fund. Pursuant to the Investor B Plan, the
Large Capitalization Fund is authorized to pay or reimburse BISYS, as
Distributor of the Investor B Shares, for certain expenses that are incurred in
connection with shareholder and distribution services. Pursuant to the Investor
B Plan, the Large Capitalization Fund is authorized to pay or reimburse BISYS,
as Distributor of Investor B Shares, (a) a distribution fee in an amount not to
exceed on an annual basis seventy-five one-hundredths of one percent (.75%) of
the average daily net asset value of Investor B Shares of the Large
Capitalization Fund (the "Distribution Fee") and (b) a service fee in an amount
not to exceed on an annual basis twenty-five one-hundredths of one percent
(.25%) of the average daily net asset value of the Investor B Shares of the
Large Capitalization Fund (the "Service Fee"). Payments under the Investor B
Plan will be calculated daily and paid monthly at a rate not to exceed the
limits described above, which rates are set from time to time by the Board of
Trustees. The Distribution Fee and/or the Service Fee with respect to Investor B
Shares may be used by BISYS to pay Participating Organizations for
administration, distribution, and/or shareholder service assistance
PROSPECTUS 20
<PAGE> 23
pursuant to an agreement between BISYS and the Participating Organization. Under
the Investor B Plan, a Participating Organization may include a subsidiary or
affiliate of BISYS.
Payments of the Distribution Fee to the Distributor pursuant to the Investor B
Plan will be used (i) to compensate Participating Organizations for providing
distribution assistance relating to Investor B Shares, and (ii) for promotional
activities intended to result in the sale of Investor B Shares such as to pay
for the preparation, printing and distribution of prospectuses to other than
current shareholders, and payments of the Service Fee to the Distributor
pursuant to the Investor B Plan will be used to compensate Participating
Organizations for providing shareholder services with respect to their customers
who are, from time to time, beneficial and record holders of Investor B Shares.
Fees paid pursuant to the Investor B Plan are accrued daily and paid monthly,
and are charged as expenses of Investor B Shares of the Large Capitalization
Fund as accrued.
Pursuant to the Investor B Plan, the Distributor may enter into Rule 12b-1 and
Shareholder Servicing Agreements with Participating Organizations for providing
distribution assistance and shareholder services with respect to the Investor B
Shares. Such Participating Organizations will be compensated at the annual rate
of up to 1.00% of the average daily net asset value of the Investor B Shares
held of record or beneficially by such customers. The distribution services
provided by Participating Organizations for which the Distribution Fee may be
paid may include promoting the purchase of Investor B Shares of the Large
Capitalization Fund by their customers; processing purchase, exchange, and
redemption requests from customers and placing orders with the Distributor or
the Transfer Agent; processing dividend and distribution payments from the Large
Capitalization Fund on behalf of customers; providing information periodically
to customers, including information showing their positions in Investor B
Shares; responding to inquiries from customers concerning their investment in
Investor B Shares; and providing other similar services as may be reasonably
requested. The shareholder services provided by Participating Organizations for
which the Service Fee may be paid may include providing sub-accounting with
respect to Investor B Shares beneficially owned by customers or the information
necessary for sub-accounting; arranging for bank wires; and other continuing
personal services to holders of Investor B Shares.
Actual distribution expenses for Investor B Shares at any given time may exceed
the Rule 12b-1 fees and payments received pursuant to contingent deferred sales
charges. These unrecovered amounts plus interest thereon will be carried forward
and paid from future Rule 12b-1 fees and payments received from contingent
deferred sales charges. If the Investor B Plan were terminated or not continued,
the Group would not be contractually obligated to pay for any expenses not
previously reimbursed by the Group or recovered through contingent deferred
sales charges.
Conflicts of interest restrictions, as described under "Distribution Plan for
Investor A Shares," may apply to the receipt by Participating Organizations of
compensation from BISYS in connection with the investment of fiduciary assets in
Investor B Shares.
DISTRIBUTION PLAN FOR INVESTOR C SHARES
Pursuant to Rule 12b-1, the Group has adopted an Investor C Distribution and
Shareholder Service Plan (the "Investor C Plan") with respect to the Investor C
Shares of the Large Capitalization Fund. Pursuant to the Investor C Plan, the
Large Capitalization Fund is authorized to pay or reimburse BISYS, as
Distributor of the Investor C Shares, for certain expenses that are incurred in
connection with shareholder and distribution services. Pursuant to the Investor
C Plan, the Large Capitalization Fund is authorized to pay or reimburse BISYS,
as Distributor of Investor C Shares, (a) a distribution fee in an amount not to
exceed on an annual basis seventy-five one-hundredths of one percent (.75%) of
the average daily net asset value of Investor C Shares of the Large
Capitalization Fund (the "Distribution Fee") and (b) a service fee in an amount
not to exceed on an annual basis twenty-five one-hundredths of one percent
(.25%) of the average daily net asset value of the Investor C Shares of the
Large Capitalization Fund (the "Service Fee"). Payments under the Investor C
Plan will be calculated daily and paid monthly at a rate not to exceed the
limits described above, which rates are set from time to time by the Board of
Trustees. The Distribution Fee and/or the Service Fee with respect to Investor C
Shares may be used by BISYS to pay
21 PROSPECTUS
<PAGE> 24
Participating Organizations for administration, distribution, and/or shareholder
service assistance pursuant to an agreement between BISYS and the Participating
Organization. Under the Investor C Plan, a Participating Organization may
include a subsidiary or affiliate of BISYS.
Payments of the Distribution Fee to the Distributor pursuant to the Investor C
Plan will be used (i) to compensate Participating Organizations for providing
distribution assistance relating to Investor C Shares, and (ii) for promotional
activities intended to result in the sale of Investor C Shares such as to pay
for the preparation, printing and distribution of prospectuses to other than
current shareholders, and payments of the Service Fee to the Distributor
pursuant to the Investor C Plan will be used to compensate Participating
Organizations for providing shareholder services with respect to their customers
who are, from time to time, beneficial and record holders of Investor C Shares.
Fees paid pursuant to the Investor C Plan are accrued daily and paid monthly,
and are charged as expenses of Investor C Shares of the Large Capitalization
Fund as accrued.
Pursuant to the Investor C Plan, the Distributor may enter into Rule 12b-1 and
Shareholder Servicing Agreements with Participating Organizations for providing
distribution assistance and shareholder services with respect to the Investor C
Shares. Such Participating Organizations will be compensated at the annual rate
of up to 1.00% of the average daily net asset value of the Investor C Shares
held of record or beneficially by such customers. The distribution services
provided by Participating Organizations for which the Distribution Fee may be
paid may include promoting the purchase of Investor C Shares of the Large
Capitalization Fund by their customers; processing purchase, exchange, and
redemption requests from customers and placing orders with the Distributor or
the Transfer Agent; processing dividend and distribution payments from the Large
Capitalization Fund on behalf of customers; providing information periodically
to customers, including information showing their positions in Investor C
Shares; responding to inquiries from customers concerning their investment in
Investor C Shares; and providing other similar services as may be reasonably
requested. The shareholder services provided by Participating Organizations for
which the Service Fee may be paid may include providing sub-accounting with
respect to Investor C Shares beneficially owned by customers or the information
necessary for sub-accounting; arranging for bank wires; and other continuing
personal services to holders of Investor C Shares.
Actual distribution expenses for Investor C Shares at any given time may exceed
the Rule 12b-1 fees and payments received pursuant to contingent deferred sales
charges. These unrecovered amounts plus interest thereon will be carried forward
and paid from future Rule 12b-1 fees and payments received from contingent
deferred sales charges. If the Investor C Plan were terminated or not continued,
the Group would not be contractually obligated to pay for any expenses not
previously reimbursed by the Group or recovered through contingent deferred
sales charges.
Conflicts of interest restrictions, as described under "Distribution Plan for
Investor A Shares," may apply to the receipt by Participating Organizations of
compensation from BISYS in connection with the investment of fiduciary assets in
Investor C Shares.
INVESTOR A PLAN, INVESTOR B PLAN, AND INVESTOR C PLAN
As authorized by the Investor A Plan, the Investor B Plan, and Investor C Plan,
BISYS has entered into a Participating Organization Agreement with First of
America Securities, Inc., a wholly owned subsidiary of First of America Bank
Corporation ("FSI"), pursuant to which FSI has agreed to provide certain
shareholder and distribution services in connection with Investor Shares of the
Large Capitalization Fund purchased and held by FSI for the accounts of its
customers and Investor Shares of the Large Capitalization Fund purchased and
held by customers of FSI directly, including, but not limited to, printing and
distributing prospectuses to persons other than holders of Investor Shares of
the Large Capitalization Fund and printing and distributing advertising and
sales literature in connection with the sale of Investor Shares; answering
routing customer questions concerning the Large Capitalization Fund and
providing such personnel and communication equipment as is necessary and
appropriate to accomplish such matters. In consideration of such services BISYS
has agreed to pay FSI a monthly fee, computed at the annual rate of .25% of the
average aggregate net asset value of Investor Shares held during the period in
PROSPECTUS 22
<PAGE> 25
customer accounts for which FSI has provided services under this Agreement.
BISYS will be compensated by the Large Capitalization Fund in an amount equal to
its payments to FSI under the Participating Organization Agreement. Such fee may
exceed the actual costs incurred by FSI in providing such services.
The Group understands that Participating Organizations may charge fees to their
customers who are the owners of Investor Shares for additional services provided
in connection with their customer accounts. These fees would be in addition to
any amounts which may be received by a Participating Organization under its
Agreement with BISYS. Customers of Participating Organizations should read this
Prospectus in light of the terms governing their accounts with their
Participating Organizations.
The Investor A Plan, Investor B Plan, and Investor C Plan (the "Plans") require
the officers of the Group to provide the Board of Trustees at least quarterly
with a written report of the amounts expended pursuant to the Plans and the
purposes for which such expenditures were made. The Board reviews these reports
in connection with their decisions with respect to the Plans.
As required by Rule 12b-1, each Plan was approved by the Trustees of the Group,
including a majority of the trustees who are not "interested persons" (as
defined in the 1940 Act) of the Group and who have no direct or indirect
financial interest in the operation of the Plans or in any agreements related to
the Plans ("Independent Trustees"). The Plans continue in effect as long as such
continuance is specifically approved at least annually by the Group's Trustees,
including a majority of the Independent Trustees.
The Plans may be terminated by a vote of a majority of the Independent Trustees,
or by a vote of a majority of the holders of the outstanding voting securities
of the class of Shares subject thereto. Any change in the Plans that would
increase materially the distribution expenses paid by the Large Capitalization
Fund requires shareholder approval; otherwise, the Plans may be amended by the
Trustees, including a majority of the Independent Trustees, by a vote cast in
person at a meeting called for the purpose of voting upon the amendment. As long
as any Plan is in effect, the selection or nomination of the Independent
Trustees is committed to the discretion of the Independent Trustees.
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 persons ("Institutional Customers") by Banks.
Institutional Shares of the Large Capitalization Fund sold to the Banks acting
in a fiduciary, advisory, custodial, or other similar capacity on behalf of
Institutional Customers will normally be held of record by the Banks. With
respect to Institutional Shares of the Large Capitalization Fund so sold, it is
the responsibility of the particular Bank 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 Large Capitalization
Fund will be recorded by the Banks and reflected in the account statements
provided by the Banks to Institutional Customers. A Bank may exercise voting
authority for those Institutional Shares for which it is granted authority by
the Institutional Customer.
Institutional Shares of the Large Capitalization Fund 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
23 PROSPECTUS
<PAGE> 26
Institutional Shares. An order to purchase Institutional Shares will be deemed
to have been received by the Distributor only when federal funds with respect
thereto 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 Large Capitalization
Fund'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.
Purchases of Institutional Shares of the Large Capitalization Fund will be
effected only on a Business Day (as defined in "HOW SHARES ARE VALUED") of the
Large Capitalization 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 the Group.
Institutional Shares purchased before 12:00 noon, Eastern Time, begin earning
dividends on the same Business Day. All Institutional Shares continue to earn
dividends through the day before their redemption.
There is no sales charge imposed by the Group in connection with the purchase of
Institutional Shares in the Large Capitalization Fund. Depending upon the terms
of a particular Institutional Customer Account, the Banks may charge an
Institutional 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 Banks.
The Group reserves the right to reject any order for the purchase of
Institutional Shares in whole or in part.
Confirmations of purchases and redemptions of Institutional Shares of the Large
Capitalization Fund by Banks on behalf of their Institutional Customers may be
obtained from the Banks. Shareholders may rely on these statements in lieu of
certificates. Certificates representing Institutional Shares of the Large
Capitalization Fund will not be issued.
HOW TO BUY INVESTOR SHARES
Investor Shares of the Large Capitalization Fund are continuously offered and
may be purchased directly either by mail, by telephone, or by wire. Investor
Shares may also be purchased through a broker-dealer who has established a
dealer agreement with the Distributor. Except as otherwise discussed below under
"Other Information Regarding Purchases" and "Auto Invest Plan," the minimum
initial investment in the Large Capitalization Fund, based upon the public
offering price, is $1,000; however, there is no minimum subsequent purchase.
Shareholders will pay the next calculated net asset value after the receipt by
the Distributor of an order to purchase Investor Shares, plus any applicable
sales charge as described below (see "SALES CHARGES"). In the case of an order
for the purchase of Investor Shares placed through a broker-dealer, it is the
responsibility of the broker-dealer to transmit the order to the Distributor
promptly. Investor C Shares are currently offered only to employee benefit plans
qualified under Section 401 of the Internal Revenue Code, subject to the
requirements established by the Distributor.
BY MAIL
To purchase Investor Shares of the Large Capitalization Fund by mail, complete
an Account Application Form and return it along with a check or money order made
payable to The Parkstone Group of Funds at the following address:
The Parkstone Group of Funds
c/o BISYS Fund Services Ohio, Inc.
Dept. L-1270
Columbus, Ohio 43260-1270
An Account Application Form can be obtained by calling the Group at (800)
451-8377.
PROSPECTUS 24
<PAGE> 27
BY TELEPHONE OR BY WIRE
To purchase Investor Shares of the Large Capitalization Fund by telephone or by
wire, your Account Application Form must have been previously received by the
Distributor. To place an order by telephone or by wire call the Group's
toll-free number (800) 451-8377. Payment for Investor Shares ordered by
telephone may be made by check and must be received by the Group's custodian
within seven calendar days of the telephone order. If payment for Investor
Shares is not received within seven days, or if a check timely received does not
clear, the purchase may be canceled and the investor could be liable for any
losses or fees incurred. When purchasing Investor Shares by wire, contact the
Distributor for wire instructions.
OTHER INFORMATION REGARDING PURCHASES
Investor Shares may also be purchased through procedures established by the
Distributor in connection with the requirements of qualified accounts maintained
by or on behalf of certain persons ("Investor Shares Customers") by First of
America Bank Corporation or one of its affiliates. Investor Shares of the Large
Capitalization Fund sold to First of America Bank Corporation or the affiliate
acting in a fiduciary, advisory, custodial, or other similar capacity on behalf
of Investor Shares Customers will normally be held of record by First of America
Bank Corporation or the affiliate. With respect to Investor Shares so sold, it
is the responsibility of the holder of record to transmit purchase or redemption
orders to the Distributor and to deliver funds for the purchase thereof on a
timely basis. Beneficial ownership of Investor Shares of the Large
Capitalization Fund will be recorded by First of America Bank Corporation or one
of its affiliates and reflected in the account statements provided to Investor
Shares Customers. First of America Bank Corporation or one of its affiliates may
exercise voting authority for those Investor Shares for which it has been
granted authority by the Investor Shares Customer.
Investor Shares of the Large Capitalization Fund 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 Investor Shares plus any applicable
sales charge as described below. Purchases of Investor Shares of the Large
Capitalization Fund will be effected only on a Business Day (as defined in "HOW
SHARES ARE VALUED") of the Large Capitalization Fund. An order received prior to
the Valuation Time on any Business Day will be executed at the net asset value
determined as of the Valuation Time on the date of receipt. An order received
after the 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 the
Large Capitalization Fund.
The minimum initial investment amount referred to above may be waived if
purchases are made in connection with Individual Retirement Accounts (IRAs),
Keoghs or similar plans. For information on IRAs, Keoghs or similar plans,
contact First of America Bank Corporation at (800) 544-6155. Due to the
relatively high cost of handling small investments, the Group reserves the right
to redeem involuntarily, at net asset value, the Investor Shares of any
shareholder if, because of redemptions of Investor Shares by or on behalf of the
shareholder (but not as a result of a decrease in the market price of such
Investor Shares, the deduction of any sales charge or the establishment of an
account with less than $1,000 using the Auto Invest Plan), the account of such
shareholder in the Large Capitalization Fund has a value of less than $1,000.
Accordingly, an investor purchasing Investor Shares of the Large Capitalization
Fund in only the minimum investment amount may be subject to such involuntary
redemption if the investor thereafter redeems any such Investor Shares. Before
the Group exercises its right to redeem such Investor Shares and to send the
proceeds to the shareholder, the shareholder will be given notice that the value
of the Investor Shares in the shareholder's account is less than the minimum
amount and will be allowed 60 days to make an additional investment in the Large
Capitalization Fund in an amount which will increase the value of the account to
at least $1,000.
Depending upon the terms of a particular Investor Shares Customer account, First
of America Bank Corporation or one of its affiliates may charge an Investor
Shares Customer account fees for services provided in connection with investment
in the Large Capitalization Fund. Information concerning these services and any
charges may be obtained from First of America Bank Corporation or the affiliate.
This Prospectus should be read in conjunction with any such information so
received.
25 PROSPECTUS
<PAGE> 28
The Group reserves the right to reject any order for the purchase of Investor
Shares in whole or in part.
Every shareholder will receive a confirmation of each new transaction in the
shareholder's account, which will also show the total number of Investor A
Shares, Investor B Shares or Investor C Shares of the Large Capitalization Fund
owned by the shareholder. Confirmation of purchases and redemptions of Investor
Shares of the Large Capitalization Fund by First of America Bank Corporation or
one of its affiliates on behalf of an Investor Shares Customer may be obtained
from First of America Bank Corporation or the affiliate. Shareholders may rely
on these statements in lieu of certificates. Certificates representing Investor
Shares of the Large Capitalization Fund will not be issued.
AUTO INVEST PLAN
The Parkstone Group of Funds Auto Invest Plan enables shareholders to make
regular monthly or quarterly purchases of Investor Shares through automatic
deduction from their bank accounts. With shareholder authorization, the Group's
Transfer Agent will deduct the amount specified (subject to the applicable
minimums) from the shareholder's bank account which will automatically be
invested in Investor Shares at the public offering price on the date of such
deduction (or the next Business Day thereafter, as defined under "HOW SHARES ARE
VALUED" below). The required minimum initial investment when opening an account
using the Auto Invest Plan is $100; the minimum amount for subsequent
investments in the Large Capitalization Fund is $50. To participate in the Auto
Invest Plan, shareholders should complete the appropriate section of the account
application or a supplemental Auto Invest application that can be acquired by
calling the Group at (800) 451-8377. For a shareholder to change the Auto Invest
instructions, the request must be made in writing to the Group's distributor,
BISYS, 3435 Stelzer Road, Columbus, Ohio 43219-3035, and may take up to 15 days
to implement.
SALES CHARGES
INVESTOR A SHARES
The public offering price of Investor A Shares of the Large Capitalization Fund
equals net asset value plus the applicable sales charge. BISYS receives this
sales charge as Distributor and may reallow it as dealer discounts and brokerage
commissions as follows:
<TABLE>
<CAPTION>
SALES CHARGE DEALER DISCOUNTS
SALES CHARGE AS % OF AND BROKERAGE
AS % OF PUBLIC COMMISSIONS AS %
AMOUNT OF TRANSACTION AT NET AMOUNT OFFERING OF PUBLIC
PUBLIC OFFERING PRICE INVESTED PRICE OFFERING PRICE
- ---------------------------------------------------- ------------ ------------ ----------------
<S> <C> <C> <C>
Less than $50,000................................... 4.71% 4.50% 4.00%
$50,000 but less than $100,000...................... 4.17 4.00 3.50
$100,000 but less than $250,000..................... 3.09 3.00 2.50
$250,000 but less than $500,000..................... 2.04 2.00 1.50
$500,000 but less than $1,000,000................... 1.01 1.00 1.00
$1,000,000 or more.................................. 0.00 0.00 0.00
</TABLE>
INVESTOR B SHARES
Investor B Shares may be purchased only in amounts of less than $250,000. There
is no sales charge imposed upon purchases of Investor B Shares, but investors
may be subject to a contingent deferred sales charge of up to 4.00% when
Investor B Shares are redeemed within four years after purchase. See "CONTINGENT
DEFERRED SALES CHARGE -- Investor B Shares" below.
INVESTOR C SHARES
There is no sales charge imposed upon purchases of Investor C Shares, but
investors may be subject to a contingent deferred sales charge of up to 1.00%
when Investor C Shares are redeemed within one year after purchase. See
"CONTINGENT DEFERRED SALES CHARGE -- Investor C Shares" below.
PROSPECTUS 26
<PAGE> 29
IN GENERAL
From time to time dealers who receive dealer discounts and brokerage commissions
from the Distributor may reallow all or a portion of such dealer discounts and
brokerage commissions to other dealers or brokers.
In addition to amounts paid to dealers as a dealer concession out of the sales
charge paid by investors, if any, the Distributor may, from time to time, at its
expense or as an expense for which it may be reimbursed under the Plans, pay a
bonus or other consideration or incentive to dealers who sell a minimum dollar
amount of the Large Capitalization Fund during a specified period of time. The
Distributor also may, from time to time, arrange for the payment of additional
consideration to dealers not to exceed 4.00% of the offering price per share on
all sales of Investor B Shares or Investor C Shares as an expense of the
Distributor or for which the Distributor may be reimbursed under the Investor B
Plan or Investor C Plan or upon receipt of a contingent deferred sales charge.
Any such additional consideration or incentive program may be terminated at any
time by the Distributor.
The dealer discounts and brokerage commissions schedule above applies to all
dealers who have agreements with the Distributor except FSI, to which the
Distributor reallows all of the sales charge on the Investor Shares sold by FSI.
The Distributor, at its expense, may also provide additional compensation to
dealers in connection with sales of Investor Shares of the Large Capitalization
Fund. Compensation may include financial assistance to dealers in connection
with conferences, sales or training programs for their employees, seminars for
the public, advertising campaigns regarding one or more Funds of the Group,
and/or other dealer-sponsored special events. In some instances, this
compensation may be made available only to certain dealers whose representatives
have sold or are expected to sell a significant amount of Shares. Compensation
may include payment for travel expenses, including lodging, incurred in
connection with trips taken by invited registered representatives and members of
their families to exotic locations within or outside of the United States for
meetings or seminars of a business nature. The Distributor, at its expense,
currently conducts an annual sales contest for dealers, including FSI, in
connection with their sales of Shares of Funds of the Group. Dealers may not use
sales of a Fund's Shares to qualify for this compensation to the extent such may
be prohibited by the laws of any state or any self-regulatory agency, such as
the National Association of Securities Dealers, Inc.
REDUCED SALES CHARGES -- INVESTOR A SHARES
SALES CHARGE WAIVERS
The Distributor may waive sales charges for the purchase of Investor A Shares of
the Large Capitalization Fund by or on behalf of (1) employees and retired
employees (including spouses, children and parents of employees and retired
employees) of First of America Bank Corporation, BISYS and any affiliates
thereof, (2) Trustees of the Group, (3) directors and retired directors
(including spouses and children of directors and retired directors) of First of
America Bank Corporation and any affiliate thereof, (4) employees (and their
spouses and children under the age of 21) of any broker-dealer with which the
Distributor enters into an agreement to sell Shares of the Large Capitalization
Fund, (5) orders placed on behalf of other investment companies distributed by
the Distributor, and (6) qualified orders placed by broker-dealers, investment
advisers, or financial planners who place trades for their own accounts or the
accounts of their clients and who charge a management, consulting, or other fee
for their services; and clients of such broker-dealers, investment advisers, or
financial planners who place trades for their own accounts if the accounts are
linked to the master account of such broker-dealer, investment adviser, or
financial planner on the books and records of the broker or agent. Investors may
be charged a fee if they effect transactions in Investor A Shares through a
broker or agent. In addition, the Distributor may waive sales charges for the
purchase of the Large Capitalization Fund's Investor A Shares with the proceeds
from the recent redemption of shares of a non-money market mutual fund
(including the Investor A Shares of the other non-money market funds of the
Group, but excluding the Investor B and Investor C Shares of such funds). The
purchase must be made within 60 days of the redemption, and the Distributor must
be notified in writing by the investor, or by his financial institution, at the
time the purchase is made. A copy of the investor's account statement showing
such redemption must accompany such notice.
27 PROSPECTUS
<PAGE> 30
The Distributor may also waive sales charges for the purchase of Investor A
Shares of the Large Capitalization Fund by employee benefit plans qualified
under Section 401 of the Internal Revenue Code, including salary reduction plans
qualified under Section 401(k) of the Internal Revenue Code, subject to minimum
requirements with respect to number of employees or amount of purchase, which
may be established by the Distributor. Currently, those criteria require that
the employer establishing the plan have 200 or more employees or that the amount
invested or to be invested during the subsequent thirteen-month period in the
Large Capitalization Fund or the Investor A Shares of the other Funds of the
Group totals at least $1,000,000.00. Participating Organizations through which
employee benefit plans purchase Investor A Shares may be compensated by the
Distributor under the Investor A Plan.
CONCURRENT PURCHASES
For purposes of qualifying for a lower sales charge, investors have the
privilege of combining "concurrent purchases" of Investor A Shares of the Large
Capitalization Fund and of one or more of the other Funds of the Group sold with
a sales charge. For example, if a shareholder concurrently purchases Investor A
Shares in one of the other Funds of the Group sold with a sales charge at the
total public offering price of $25,000 and Investor A Shares in the Large
Capitalization Fund at the total public offering price of $25,000, the sales
charge would be that applicable to a $50,000 purchase as shown in the
appropriate table above. The investor's "concurrent purchases" described above
shall include the combined purchases of the investor, the investor's spouse and
children under the age of 21 and the purchaser's retirement plan accounts. To
receive the applicable public offering price pursuant to this privilege,
shareholders must, at the time of purchase, give the Transfer Agent or the
Distributor sufficient information to permit confirmation of qualification. This
privilege, however, may be modified or eliminated at any time or from time to
time by the Group without notice thereof.
LETTER OF INTENT
An investor may obtain a reduced sales charge by means of a written Letter of
Intent which expresses the intention of such investor to purchase Investor A
Shares of the Large Capitalization Fund at a designated total public offering
price within a designated 13-month period. Each purchase of Investor A Shares
under a Letter of Intent will be made at the net asset value plus the sales
charge applicable at the time of such purchase to a single transaction of the
total dollar amount indicated in the Letter of Intent (the "Applicable Sales
Charge"). A Letter of Intent may include purchases of Investor A Shares made not
more than 90 days prior to the date such investor signs a Letter of Intent;
however, the 13-month period during which the Letter of Intent is in effect will
begin on the date of the earliest purchase to be included. An investor will
receive as a credit against his/her initial purchase(s) of Shares at the end of
the 13-month period, the difference, if any, between the sales load paid on
previous purchases qualifying under the Letter of Intent and the Applicable
Sales Charge.
A Letter of Intent is not a binding obligation upon the investor to purchase the
full amount indicated. The minimum initial investment under a Letter of Intent
is 5% of such amount. Investor A Shares purchased with the first 5% of such
amount will be held in escrow (while remaining registered in the name of the
investor) to secure payment of the higher sales charge applicable to the
Investor A Shares actually purchased if the full amount indicated is not
purchased, and such escrowed Investor A Shares will be involuntarily redeemed to
pay the additional sales charge, if necessary. Dividends on escrowed Investor A
Shares, whether paid in cash or reinvested in additional Investor A Shares, are
not subject to escrow. The escrowed Investor A Shares will not be available for
disposal by the investor until all purchases pursuant to the Letter of Intent
have been made or the higher sales charge has been paid. When the full amount
indicated has been purchased, the escrow will be released. To the extent that an
investor purchases more than the dollar amount indicated on the Letter of Intent
and qualifies for a further reduced sales charge, the sales charge will be
adjusted for the entire amount purchased, along with any purchases made during
the 90 days prior to the date such investor signs the Letter of Intent, at the
applicable public offering price at the end of the 13-month period. The
difference in sales charge will be used to purchase additional Investor A Shares
of the Large Capitalization Fund subject to the rate of sales charge applicable
to the actual amount of the aggregate purchases.
PROSPECTUS 28
<PAGE> 31
For further information about Letters of Intent, interested investors should
contact the Distributor at (800) 451-8377. This program, however, may be
modified or eliminated at any time or from time to time by the Group without
notice.
RIGHTS OF ACCUMULATION
Pursuant to the right of accumulation, investors are permitted to purchase
Investor A Shares of the Large Capitalization Fund at the public offering price
applicable to the total of (a) the total public offering price of the Investor A
Shares of the Large Capitalization Fund then being purchased plus (b) an amount
equal to the then current net asset value of the "purchaser's combined holdings"
of the Investor A Shares of all of the Funds of the Group sold with a sales
charge. The "purchaser's combined holdings" described in the preceding sentence
shall include the combined holdings of the purchaser, the purchaser's spouse and
children under the age of 21 and the purchaser's retirement plan accounts. To
receive the applicable public offering price pursuant to the right of
accumulation, shareholders must, at the time of purchase, give the Transfer
Agent or the Distributor sufficient information to permit confirmation of
qualification. This right of accumulation, however, may be modified or
eliminated at any time or from time to time by the Group without notice.
CONTINGENT DEFERRED SALES CHARGE -- INVESTOR B SHARES
Investor B Shares which are redeemed within four years of purchase will be
subject to a contingent deferred sales charge equal to a percentage of the
lesser of the net asset value at the time of purchase of the Investor B Shares
being redeemed or the net asset value of such Investor B Shares at the time of
redemption, as set froth in the chart below.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
YEAR OF REDEMPTION SALES CHARGE
-------------------------------------------------------------- -------------------
<S> <C>
First......................................................... 4.00%
Second........................................................ 4.00%
Third......................................................... 3.00%
Fourth........................................................ 2.00%
</TABLE>
Accordingly, a contingent deferred sales charge will not be imposed on amounts
representing increases in net asset value above the net value at the time of
purchase. In addition, a charge will not be assessed on Investor B Shares
purchased through reinvestment of dividends or capital gains distributions.
Solely for purposes of determining the number of years which have elapsed from
the time of purchase of any Investor B Shares, all purchases during a month will
be aggregated and deemed to have been made on the last day of the month. In
determining whether a contingent deferred sales charge is applicable to a
redemption, the calculation will be made in the manner that results in the
lowest possible charge being assessed. In this regard, it will be assumed that
the redemption is first of Investor B Shares held for more than four years or
Investor B Shares acquired pursuant to reinvestment of dividends or
distributions. The charge will not be applied to dollar amounts representing an
increase in the net asset value since the time of purchase.
For example, assume an investor purchased 100 Investor B Shares with a net asset
value of $10 per share (i.e., at an aggregate net asset value of $1,000) and in
the eleventh month after purchase, the net asset value per share is $12 and,
during such time, the investor has acquired five additional Investor B Shares
through dividend reinvestment. If at such time the investor makes his first
redemption of 50 Investor B Shares (producing proceeds of $600), five of such
Investor B Shares will not be subject to the charge because of dividend
reinvestment. With respect to the remaining 45 Investor B Shares being redeemed,
the charge will be applied only to the original cost of $10 per share and not to
the increase in net asset value of $2 per share. Therefore, $450 of the $600
redemption proceeds will be subject to the charge of 4.00% ($18.00).
29 PROSPECTUS
<PAGE> 32
The contingent deferred sales charge is waived on redemptions of Investor B
Shares (i) following the death or disability (as defined in the Internal Revenue
Code of 1986, as amended, (the "Code")) of a shareholder, (ii) to the extent
that the redemption represents a minimum required distribution from an IRA or a
Custodial Account under Code Section 403(b)(7) to a shareholder who has reached
age 70 1/2, and (iii) to the extent the redemption represents the minimum
distribution from retirement plans under Code Section 401(a) where such
redemptions are necessary to make distributions to plan participants.
CONTINGENT DEFERRED SALES CHARGE -- INVESTOR C SHARES
Investor C Shares which are redeemed within one year of purchase will be subject
to a contingent deferred sales charge equal to one percent of an amount equal to
the lesser of the net asset value at the time of purchase of the Investor C
Shares being redeemed or the net asset value of such Investor C Shares at the
time of redemption.
Accordingly, a contingent deferred sales charge will not be imposed on amounts
representing increases in net asset value above the net asset value at the time
of purchase. In addition, a charge will not be assessed on Investor C Shares
purchased through reinvestment of dividends or capital gains distributions.
Solely for purposes of determining the number of years which have elapsed from
the time of purchase of any Investor C Shares, all purchases during a month will
be aggregated and deemed to have been made on the last day of the month. In
determining whether a contingent deferred sales charge is applicable to a
redemption, the calculation will be made in the manner that results in the
lowest possible charge being assessed. In this regard, it will be assumed that
the redemption is first of Investor C Shares held for more than one year or
Investor C Shares acquired pursuant to reinvestment of dividends or
distributions. The charge will not be applied to dollar amounts representing an
increase in the net asset value since the time of purchase.
For example, assume an investor purchased 100 Investor C Shares with a net asset
value of $10 per share (i.e., at an aggregate net asset value of $1,000) and in
the eleventh month after purchase, the net asset value per share is $12 and,
during such time, the investor has acquired five additional Investor C Shares
through dividend reinvestment. If at such time the investor makes his first
redemption of 50 Investor C Shares (producing proceeds of $600), five of such
Investor C Shares will not be subject to the charge because of dividend
reinvestment. With respect to the remaining 45 Investor C Shares being redeemed,
the charge will be applied only to the original cost of $10 per share and not to
the increase in net asset value of $2 per share. Therefore, $450 of the $600
redemption proceeds will be subject to the charge of 1.00% ($4.50).
The contingent deferred sales charge is waived on redemptions of Investor C
Shares (i) following the death or disability of a shareholder, (ii) to the
extent that the redemption represents a minimum required distribution from an
IRA or a Custodial Account under Code Section 403(b)(7) to a shareholder who has
reached age 70 1/2, and (iii) to the extent the redemption represents the
minimum distribution from retirement plans under Code Section 401(a) where such
redemptions are necessary to make distributions to plan participants.
DIRECTED DIVIDEND OPTION
A shareholder may elect to have all income dividends and capital gains
distributions paid by check, reinvested in the Large Capitalization Fund or
reinvested in any of the Group's other Funds, without the payment of a sales
charge (provided the other Fund is maintained at the minimum required balance).
The Directed Dividend Option may be modified or terminated by the Group at any
time after notice to participating shareholders. Participation in the Directed
Dividend Option may be terminated or changed by the shareholder at any time by
writing the Distributor. The Directed Dividend Option is not available to
participants in any of the Parkstone IRA's.
PROSPECTUS 30
<PAGE> 33
EXCHANGE PRIVILEGE
The exchange privilege enables shareholders of Shares to acquire Shares of the
same class that are offered by another Fund of the Group with a different
investment objective. For example, holders of the Large Capitalization Fund
Investor B Shares may not exchange their Shares for Investor A Shares, and
holders of the Large Capitalization Fund Investor A Shares may not exchange
their Shares for Investor B Shares.
Holders of Shares of the Large Capitalization Fund (including Shares acquired
through reinvestment of dividends and distributions on such shares) may exchange
those Shares at net asset value without any sales charge for Shares of the same
class offered by any of the Group's other Funds, provided that the amount to be
exchanged meets the applicable minimum investment requirements and the exchange
is made in states where it is legally authorized.
An exchange is considered a sale of Shares and will result in a capital gain or
loss for federal income tax purposes. A shareholder may not include any sale
charge on Shares of the Large Capitalization Fund as a part of the cost of those
Shares for purposes of calculating the gain or loss realized on an exchange of
those Shares within 90 days of their purchase.
A shareholder wishing to exchange his or her Shares may do so by contacting the
Group at (800) 451-8377 or by providing written instructions to the Transfer
Agent. Any shareholder who wishes to make an exchange should obtain and review
the current prospectus of the Fund of the Group in which the shareholder wishes
to invest before making the exchange. For a discussion of risks associated with
unauthorized telephone exchanges, see "HOW TO REDEEM SHARES -- By Telephone"
below.
FACTORS TO CONSIDER WHEN SELECTING INVESTOR SHARES
Before purchasing Investor Shares of the Large Capitalization Fund, investors
should consider whether, during the anticipated life of their investment in the
Large Capitalization Fund, the accumulated Rule 12b-1 fee and potential
contingent deferred sales charges on Investor B or Investor C Shares prior to
conversion (as described below) would be less than the initial sales charge and
accumulated Rule 12b-1 fee on Investor A Shares purchased at the same time, and
to what extent such differential would be offset by the higher yield of Investor
A Shares. In this regard, to the extent that the sale charge for the Investor A
Shares is waived or reduced by one of the methods described above, investments
in Investor A Shares become more desirable. The Group will refuse all purchase
orders for Investor B Shares of over $250,000.
Although Investor A Shares are subject to a Rule 12b-1 fee, they are not subject
to the higher Rule 12b-1 fee applicable to Investor B Shares. For this reason,
Investor A Shares can be expected to pay correspondingly higher dividends per
share. However, because initial sales charges are deducted at the time of
purchase, purchasers of Investor A Shares that do not qualify for waivers of or
reductions in the initial sales charge would have less of their purchase price
initially invested in the Large Capitalization Fund than purchasers of Investor
B Shares.
As described above, purchasers of Investor B Shares will have more of their
initial purchase price invested. Any positive investment return on this
additional invested amount would partially or wholly offset the expected higher
annual expenses borne by Investor B Shares. Because the Large Capitalization
Fund's future returns cannot be predicted, there can be no assurance that this
will be the case. Investors in Investor B Shares would, however, own Shares that
are subject to higher annual expenses and, for a four-year period, such Investor
B Shares would be subject to a contingent deferred sale charge of up to 4.00%
upon redemption, depending upon the year of redemption. Investors expecting to
redeem during this four-year period should compare the cost of the contingent
deferred sales charge plus the aggregate annual Investor B Shares' Rule 12b-1
fees to the cost of the initial sales charge and Rule 12b-1 fee on the Investor
A Shares. Over time, the expenses of the annual Rule 12b-1 fee on the Investor B
Shares may equal or exceed the initial sales charge and annual Rule 12b-1 fee
applicable to Investor A Shares. For example, if net asset value remains
constant, the aggregate rule 12b-1 fees with respect to Investor B Shares on the
Large Capitalization Fund would equal or exceed the initial sales charge and
aggregate Rule 12b-1 fees of Investor A Shares approximately eight years after
the purchase. In order to reduce such fees
31 PROSPECTUS
<PAGE> 34
of investors that hold Investor B Shares for more than eight years, Investor B
Shares will be automatically converted to Investor A Shares, as described below,
at the end of such eight-year period. This example assumes that the initial
purchase of Investor A Shares would be subject to the maximum initial sales
charge of 4.50%. This example does not take into account the time value of money
which reduces the impact of the Investor B Shares' administrative and Rule 12b-1
fee on the investment, the benefit of having the additional initial purchase
price invested during the period before it is effectively paid out as an
administrative and Rule 12b-1 fee, fluctuations in net asset value or the effect
of different performance assumptions.
Investor C Shares are subject to a level of Rule 12b-1 fees which is identical
to that of the Investor B Shares. Consequently, Investor C Shares may generally
be compared to Investor A Shares in the same manner as that set forth above.
However, as noted above, Investor B Shares are subject to a contingent deferred
sales charge of up to 4.00% for a period of four years. Investor C Shares may
therefore be more appropriate for investors who expect to redeem Shares within
this four year period. Conversely, because Investor B Shares convert to Investor
A Shares after an eight-year holding period, Investor B Shares may be
appropriate for investors who expect to hold their investments for more than
eight years.
CONVERSION FEATURE -- INVESTOR B SHARES
Investor B Shares which have been outstanding for eight years after the end of
the month in which the Shares were initially purchased will automatically
convert to Investor A Shares and, consequently, will no longer be subject to the
higher Rule 12b-1 fee of the Investor B Plan. Such conversion will be on the
basis of the relative net asset values of the two classes, without the
imposition of any sales charge or other charge except that the Rule 12b-1 fees
applicable to Investor A Shares shall thereafter be applied to such converted
Shares. Such investors will then benefit from the lower Rule 12b-1 fees of
Investor A Shares. Because the per share net asset value of the Investor A
Shares may be higher than that of the Investor B Shares at the time of
conversion, a shareholder may receive fewer Investor A Shares that the number of
Investor B Shares converted, although the dollar value will be the same.
Reinvestments of dividends and distributions in Investor B Shares will not be
considered a new purchase for purposes of the conversion feature.
If a shareholder effects one or more exchanges among Investor B Shares of the
Parkstone Group of Funds during the eight-year period, the holding period for
Investor B Shares so exchanged will be counted toward such period.
CONVERSION FEATURE -- INVESTOR C SHARES
Investor C Shares which have been outstanding for nine years after the end of
the month in which the Shares were initially purchased will automatically
convert to Investor A Shares and, consequently, will no longer be subject to the
higher Rule 12b-1 fee. Such conversion will be on the basis of the relative net
asset values of the two classes, without the imposition of any sales charge or
other charge except that the Rule 12b-1 fees applicable to Investor A Shares
shall thereafter be applied to such converted Shares. Such investors will then
benefit from the lower Rule 12b-1 fees of Investor A Shares. Because the per
share net asset value of the Investor A Shares may be higher than that of the
Investor C Shares at the time of conversion, a shareholder may receive fewer
Investor A Shares than the number of Investor C Shares converted, although the
dollar value will be the same. Reinvestments of dividends and distributions in
Investor C Shares will not be considered a new purchase for purposes of the
conversion feature.
If a shareholder effects one or more exchanges among Investor C Shares of the
Parkstone Group of Funds during the nine-year period, the holding period for
Investor C Shares so exchanged will be counted toward such period.
PARKSTONE INDIVIDUAL RETIREMENT ACCOUNTS
Investor Shares of the Large Capitalization Fund are available to shareholders
on a tax-deferred basis through the following retirement plans:
PROSPECTUS 32
<PAGE> 35
INDIVIDUAL RETIREMENT ACCOUNT ("IRA")
A Parkstone IRA enables individuals, even if they participate in an
employer-sponsored retirement plan, to establish their own retirement program.
Parkstone IRA contributions may be tax-deductible and earnings are tax-deferred.
Under the Tax Reform Act of 1986, the tax deductibility of IRA contributions is
restricted or eliminated for individuals who participate in certain employer
pension plans and whose annual income exceeds certain limits. Existing IRA's and
future contributions up to the IRA maximums, whether deductible or not, still
earn income on a tax-deferred basis.
SIMPLIFIED EMPLOYEES PENSION PLAN ("SEP/IRA")
A Parkstone SEP/IRA may be established on a group basis by an employer who
wishes to sponsor a tax-sheltered retirement program by making contributions
into IRA's on behalf of all eligible employees.
SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLAN ("SAR-SEP/IRA")
A Parkstone SAR-SEP/IRA offers employers with 25 or fewer eligible employees the
ability to establish a SEP/IRA that permits salary reduction contributions.
All Parkstone IRA distribution requests must be made in writing to BISYS Fund
Services Ohio, Inc. Any additional deposits to a Parkstone IRA must distinguish
the type and year of the contribution.
For more information on any of the Parkstone IRA's or other retirement plan
options available (401(k) Defined Contribution Plans, 403(b)(7) Defined
Compensation Plans, etc.), call the Group at (800) 451-8377. Shareholders are
advised to consult a tax adviser on Parkstone IRA contribution and withdrawal
requirements and restrictions.
HOW TO REDEEM INSTITUTIONAL SHARES
Institutional Shares may ordinarily be redeemed by mail or by telephone.
However, all or part of a Customer's Institutional Shares may be redeemed in
accordance with instructions and limitations pertaining to his or her account at
a Bank. For example, if an Institutional 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 Institutional Customer may be
obliged to redeem, or the Bank may redeem for and on behalf of the Institutional
Customer, all or part of the Customer's Institutional Shares of the Large
Capitalization Fund to the extent necessary to maintain the required minimum
balance.
REDEMPTION BY MAIL
A written request for redemption must be received by the Transfer Agent in order
to honor the request. Such a request must be sent to:
The Parkstone Group of Funds
c/o BISYS Fund Services Ohio, Inc.
Department L-1270
Columbus, Ohio 43260-1270
PAYMENTS TO SHAREHOLDERS
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, the Group will attempt to
honor requests from Banks for the same day payments upon redemption of
Institutional Shares if the request for redemption is received by the Transfer
Agent before 12:00 noon, Eastern Time, on a Business Day or, if the request for
redemption is received after 12:00 noon, Eastern Time, to honor requests for
payment on the next Business Day, unless it would be disadvantageous to the
Group or the shareholders of the Large
33 PROSPECTUS
<PAGE> 36
Capitalization Fund to sell or liquidate portfolio securities in an amount
sufficient to satisfy requests for payments in that manner.
See "ADDITIONAL PURCHASE AND REDEMPTION INFORMATION -- Matters Affecting
Redemption" and "NET ASSET VALUE" in the Statement of Additional Information for
examples of when the Group may suspend the right of redemption or redeem
Institutional Shares of the Large Capitalization Fund involuntarily if it
appears appropriate to do so in light of the Group's responsibilities under the
1940 Act.
HOW TO REDEEM INVESTOR SHARES
Shareholders of Investor Shares may redeem their Investor A Shares without
charge and their Investor B and Investor C Shares, subject to the contingent
deferred sales charge described above, 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.
Redemptions of Investor Shares may be requested by mail or by telephone.
BY MAIL
A written request for redemption must be received by the Transfer Agent in order
to honor the request. The Transfer Agent's address is: BISYS Fund Services Ohio,
Inc., Department L-1270, Columbus, Ohio 43260-1270. The Transfer Agent will
require a signature guarantee by an eligible guarantor institution. The
signature guarantee requirement will be waived if all of the following
conditions apply: (1) the redemption check is payable to the shareholder(s) of
record, and (2) the redemption check is mailed to the shareholder(s) at the
address of record. The shareholder may also have the proceeds mailed to a
commercial bank account previously designated on the Account Application. There
is no charge for having redemption proceeds mailed to a designated bank account.
To change the address to which a redemption check is to be mailed, a written
request therefor must be received by the Transfer Agent. In connection with such
request, the Transfer Agent will require a signature guarantee by an eligible
guarantor institution.
For purposes of this policy, the term "eligible guarantor institution" shall
include banks, brokers, dealers, credit unions, securities exchanges and
associations, clearing agencies and savings associations as those terms are
defined in the Securities Exchange Act of 1934. The Transfer Agent reserves the
right to reject any signature guarantee if (1) it has reason to believe that the
signature is not genuine, (2) it has reason to believe that the transaction
would otherwise be improper, or (3) the guarantor institution is a broker or
dealer that is neither a member of a clearing corporation nor maintains net
capital of at least $100,000.
BY TELEPHONE
Investor Shares may be redeemed by telephone if the Account Application Form
reflects that the shareholder has that capability. The shareholder may have the
proceeds mailed to his or her address or mailed or wired to a commercial bank
account previously designated on the Account Application Form. Under most
circumstances, payments will be transmitted on the next Business Day. Wire
redemption requests may be made by the shareholder by telephone to the Group at
(800) 451-8377. While the Transfer Agent currently does not charge a wire
redemption fee, the Transfer Agent reserves the right to impose such a fee in
the future.
The Group's Account Application Form provides that none of BISYS, the Transfer
Agent, the Group or any of their affiliates or agents will be liable for any
loss, expense or cost when acting upon any oral, wired or electronically
transmitted instructions or inquiries believed by them to be genuine. While
precautions will be taken, shareholders bear the risk of any loss as the result
of unauthorized telephone redemptions or exchanges believed by the Transfer
Agent to be genuine. If the telephone feature was not originally selected, the
shareholder must provide written instructions to the Group to add it. The Group
will employ reasonable procedures to confirm that instructions communicated by
telephone are genuine; if these procedures are not followed, the Group may be
liable for any losses due to unauthorized or fraudulent instructions. These
procedures include recording all phone conversations, sending confirmations to
shareholders within 72 hours of the telephone transaction, verifying the account
name and a shareholder's
PROSPECTUS 34
<PAGE> 37
account number or tax identification number and sending redemption proceeds only
to the address of record or to a previously authorized bank account. If, due to
temporary adverse conditions, investors are unable to effect telephone
transactions, shareholders may mail the request to the Transfer Agent.
AUTO WITHDRAWAL PLAN
The Auto Withdrawal Plan enables shareholders of the Large Capitalization Fund
to make regular monthly or quarterly redemptions of Investor Shares. With
shareholder authorization, the Transfer Agent will automatically redeem such
Investor Shares at the net asset value on the fifteenth day of the month or
quarter (or the next Business Day thereafter) and have the amount specified
transferred according to the written instructions of the shareholder.
Shareholders participating in this Plan must maintain a minimum account balance
of $1,000. The required minimum withdrawal is $100, monthly or quarterly.
The Auto Withdrawal Plan may be modified or terminated without notice. In
addition, the Group may suspend a shareholder's withdrawal plan without notice
if the account contains insufficient funds to effect a withdrawal or in the
event that the account balance is less than the minimum $1,000 amount.
To participate in the Auto Withdrawal Plan, shareholders should call (800)
451-8377 for more information. Purchases of additional Investor Shares
concurrently with withdrawals may be disadvantageous to certain shareholders
because of tax liabilities and sales charges. For a shareholder to change the
Auto Withdrawal instructions, the request must be made in writing to the
Distributor and may take up to 15 days to implement.
OTHER INFORMATION REGARDING REDEMPTIONS OF INVESTOR SHARES
All or part of a Customer's Investor Shares may be redeemed in accordance with
instructions and limitations pertaining to his or her account at First of
America Bank Corporation or one of its affiliates.
All redemption orders are effected at the net asset value per share next
determined after the Investor Shares are properly tendered for redemption, as
described above. The proceeds paid upon redemption of such Investor Shares in
the Large Capitalization Fund, less any applicable contingent deferred sales
charge, may be more or less than the amount invested. Payment to shareholders
for such Investor 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 shareholders for next day payments upon
redemption of Investor Shares will be honored if 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 Large Capitalization Fund or its shareholders to sell or
liquidate portfolio securities in an amount sufficient to satisfy requests for
payments in that manner.
At various times, the Group may be requested to redeem Investor Shares for which
it has not yet received good payment. In such circumstances, the forwarding of
proceeds may be delayed until payment has been collected for the purchase of
such Investor Shares which delay may be for 15 days or more. Such delay may be
avoided if such Investor Shares are purchased by wire transfer of federal funds.
The Group intends to pay cash for all Investor Shares of the Large
Capitalization Fund redeemed, but under abnormal conditions which make payment
in cash unwise, payment may be made wholly or partly in portfolio securities at
their then market value equal to the redemption price. In such cases, an
investor may incur brokerage costs in converting such securities to cash.
See the Statement of Additional Information ("ADDITIONAL PURCHASE AND REDEMPTION
INFORMATION") for examples of when the right of redemption may be suspended.
HOW SHARES ARE VALUED
The net asset value of each class of Shares of the Large Capitalization Fund is
determined and priced as of the close of trading on the New York Stock Exchange
on each Business Day. A "Business Day" is a day on which the New York Stock
Exchange 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
35 PROSPECTUS
<PAGE> 38
there is sufficient trading in its portfolio instruments that its net asset
value per share might be materially affected. The New York Stock Exchange 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 the Large Capitalization Fund allocable to such class, less
the liabilities charged to the Large Capitalization 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 the Large Capitalization Fund changes.
The securities in the Large Capitalization 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.
DIVIDENDS AND TAXES
GENERAL
Net income 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 of the class in which he or she is an
investor at net asset value as of the date of declaration, unless the
shareholder elects to receive dividends or distributions in cash or elects to
participate in the Parkstone Directed Dividend Option. Such election, or any
revocation thereof, must be made in writing to the Transfer Agent at 3435
Stelzer Road, Columbus, Ohio 43219-3035, and will become effective with respect
to dividends and distributions having record dates after its receipt by the
Transfer Agent.
Each of the Funds of the Group, including the Large Capitalization Fund, is
treated as a separate entity for Federal income tax purposes, intends to qualify
as a "regulated investment company" under the Internal Revenue Code of 1986, as
amended (the "Code"), for so long as such qualification is in the best interest
of its shareholders and 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 the Large Capitalization Fund 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 nondeductible 4% excise tax, the Large Capitalization 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 the
Large Capitalization 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 the Large Capitalization 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.
PROSPECTUS 36
<PAGE> 39
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 tax.
Taxes may be imposed on the Large Capitalization Fund by foreign countries with
respect to income received on foreign securities. If more than 50% of the value
of the Large Capitalization Fund's assets at the close of its taxable year
consists of stocks or securities of foreign corporations, the Large
Capitalization 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 Large Capitalization Fund will
report to its shareholders each year the amount, if any, of foreign taxes per
share that it has elected to have treated as paid by its 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 Large Capitalization Fund
showing its 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
the Large Capitalization Fund will be calculated for the period since the
establishment of the Large Capitalization Fund and will reflect the imposition
of the maximum sales charge, if any. Average annual total return is measured by
comparing the value of an investment in a class of Shares in the Large
Capitalization 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. The Large
Capitalization 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 Large Capitalization Fund may present its
distribution rates for a class of Shares in supplemental sales literature which
is accompanied or preceded by a prospectus and in shareholder reports
Distribution rates will be computed by dividing the distribution per Share of a
class made by the Large Capitalization 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 gain dividends and does not reflect
unrealized gains or losses, although the Large Capitalization 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.
Total return quotations will be computed separately for Institutional Shares,
Investor A Shares, Investor B Shares, and Investor C Shares of the Large
Capitalization Fund. Because of differences in the fees and/or expenses borne by
different classes of Shares of the Large Capitalization Fund, the net yield and
total return on each class may be different from that for another class of the
Large Capitalization Fund.
Investors may also judge the performance of any class of Shares of the Large
Capitalization Fund by comparing or referencing it to the performance of other
mutual funds with comparable investment
37 PROSPECTUS
<PAGE> 40
objectives and policies through various mutual fund or market indices such as
those prepared by various services which indices may be 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 Large Capitalization Fund 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, operating expenses, and market conditions. Consequently, total
return and yield will fluctuate and are not necessarily representative of future
results. Any fees charged by First of America Bank Corporation or any of its
affiliates with respect to customer accounts for investing in Shares of the
Large Capitalization Fund 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 below the total return of each class
of shares of the Large Capitalization 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, including the Large Capitalization
Fund, 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 sixteen Funds. The shares of each of the Funds of the Group, other than
its four Money Market Funds, are offered in four separate classes: Institutional
Shares, Investor A Shares, Investor B Shares, Investor C Shares. Shares of each
of the four Money Market Funds of the Group are offered in two separate classes:
Institutional Shares and Investor A 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 are without 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 not by Fund except as otherwise
expressly required by law. For example, shareholders of the Large Capitalization
Fund 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 Commission 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.
PROSPECTUS 38
<PAGE> 41
TRANSFER AGENCY AND FUND ACCOUNTING SERVICES
BISYS Fund Services Ohio, Inc, formerly known as The Winsbury Service
Corporation, 3435 Stelzer Road, Columbus, Ohio 43219-3035, serves as the Group's
Transfer Agent pursuant to a Transfer Agency Agreement with the Group and
receives a fee for such services. BISYS Fund Services Ohio, Inc. also provides
certain accounting services for the Large Capitalization Fund 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 Fund Services Ohio, Inc. is a distinct legal entity from BISYS (the
Group's Administrator and Distributor), BISYS Fund Services Ohio, Inc. is
considered to be an affiliated person of BISYS under the 1940 Act due to, among
other things, the fact that BISYS Fund Services Ohio, Inc. and BISYS are both
owned by The BISYS Group, Inc.
MISCELLANEOUS
Shareholders will receive unaudited semi-annual reports and annual reports
audited by independent public accountants.
Inquiries regarding the Large Capitalization Fund may be directed in writing to
The Parkstone Group of Funds at 3435 Stelzer Road, Columbus, Ohio 43219-3035, 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 by the Large
Capitalization Fund or its Distributor. This Prospectus does not constitute an
offering by the Large Capitalization Fund or by their Distributor in any
jurisdiction in which such offering may not lawfully be made.
39 PROSPECTUS
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THE PARKSTONE GROUP OF FUNDS
Large Capitalization Fund
Institutional Shares
Investor A Shares
Investor B Shares
Investor C Shares
INVESTMENT ADVISER (AND SUB-ADMINISTRATOR)
First of America Investment Corporation
Suite 500
303 North Rose Street
Kalamazoo, Michigan 49007
DISTRIBUTOR AND ADMINISTRATOR
BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, Ohio 43219-3035
TRANSFER AGENT
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219-3035
CUSTODIAN
The Bank of California, N.A.
400 California Street
San Francisco, California 94145
LEGAL COUNSEL
Howard & Howard Attorneys, P.C.
Suite 400
107 E. Michigan Avenue
Kalamazoo, Michigan 49007
