PARKSTONE GROUP OF FUNDS /OH/, 485APOS, 1999-07-15

PARKSTONE GROUP OF FUNDS /OH/
485APOS, 1999-07-15

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<PAGE> 1

As filed with the Securities and Exchange Commission on July 15, 1999

Securities Act File No. 33-13283
Investment Company Act File No. 811-5105

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

---------------

FORM N - 1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

Pre-Effective Amendment No. _______ / /

Post-Effective Amendment No. 41 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/

Amendment No. 43

THE PARKSTONE GROUP OF FUNDS
----------------------------
(Exact Name of Registrant as Specified in Charter)

3435 Stelzer Road
Columbus, Ohio 43219
--------------------
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, Including Area Code: (800) 451-8377

W. Bruce McConnel, Esq.
Audrey C. Talley, Esq.
DRINKER BIDDLE & REATH LLP
One Logan Square
18th and Cherry Street
Philadelphia, PA 1913-6996
--------------------------
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: Immediately, upon effectiveness

It is proposed that this filing will become effective:

/______/ immediately upon filing pursuant to paragraph (b).
/______/ on (date) pursuant to paragraph (b).
/ x / 60 days after filing pursuant to paragraph (a) (i).
/______/ on (date) pursuant to paragraph (a) (1) of Rule 485.
/______/ 75 days after filing pursuant to paragraph (a) (2).
/______/ on (date) pursuant to paragraph (a) (2) of Rule 485.

If appropriate, check the following box:

/_____/ this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.

Registrant has registered an indefinite number or amount of securities
under the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment
Company Act of 1940.

Title of Securities Being Registered: Shares of Beneficial Interest.

<PAGE> 2
THE PARKSTONE GROUP OF FUNDS

INVESTOR A AND B SHARES

July 15, 1999

GROWTH FUNDS INCOME FUNDS
PARKSTONE INTERNATIONAL DISCOVERY FUND PARKSTONE BOND FUND
PARKSTONE SMALL CAPITALIZATION FUND PARKSTONE INTERMEDIATE GOVERNMENT
PARKSTONE MID CAPITALIZATION FUND OBLIGATIONS FUND
PARKSTONE LARGE CAPITALIZATION FUND PARKSTONE U.S. GOVERNMENT INCOME FUND
PARKSTONE LIMITED MATURITY BOND FUND
GROWTH AND INCOME FUNDS
PARKSTONE EQUITY INCOME FUND TAX-FREE INCOME FUNDS
PARKSTONE BALANCED ALLOCATION FUND PARKSTONE MICHIGAN MUNICIPAL BOND FUND
PARKSTONE NATIONAL TAX EXEMPT BOND FUND

MONEY MARKET FUNDS
PARKSTONE TAX-FREE FUND
PARKSTONE PRIME OBLIGATIONS FUND
PARKSTONE U.S. GOVERNMENT OBLIGATIONS FUND
PARKSTONE TREASURY FUND

The Securities and Exchange Commission has not approved
or disapproved these securities or passed upon the
adequacy of this prospectus. Any representation
to the contrary is a criminal offense.

<PAGE> 3

TABLE OF CONTENTS

PAGE

RISK/RETURN SUMMARY

GLOSSARY

DESCRIPTION OF THE FUNDS
Investment Objectives and Policies
Description of Investment Practices
Additional Risk Considerations

MANAGEMENT OF THE FUNDS

PURCHASE AND SALE OF SHARES
How The Funds Value Their Shares
How To Buy Shares
How to Exchange Shares
How To Sell Shares

DIVIDENDS, DISTRIBUTIONS AND TAXES

DISTRIBUTION ARRANGEMENTS

GENERAL INFORMATION

FINANCIAL HIGHLIGHTS

-2-

<PAGE> 4

RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

The following is a summary of certain key information about the Funds. You will
find additional information about the Funds, including a detailed description of
the risks of an investment in a Fund, after this summary.

In this summary, we will describe certain kinds of risks that apply to one or
more of the Funds. The summary also describes specific risks that may apply to
one Fund. These risks are:

- - MARKET RISK This is the risk that the value of a Fund's investments
will fluctuate as the stock or bond markets fluctuate and that prices
overall will decline over short or longer-term periods.

- - INTEREST RATE RISK This is the risk that changes in interest rates will
affect the value of a Fund's investments in income-producing or
fixed-income or debt securities. Increases in interest rates may cause
the value of a Fund's investments to decline.

- - CREDIT RISK This is the risk that the issuer of a security will be
unable or unwilling to make timely payments of interest or principal, or
to otherwise honor its obligations.

- - FOREIGN RISK This is the risk of investments in issuers located in
foreign countries, which may have greater price volatility and less
liquidity. Investments in foreign securities also are subject to
political, regulatory, and diplomatic risks. Foreign risk includes
currency risk, which may occur due to fluctuations in the exchange rates
between the U.S. dollar and foreign currencies. This risk could
negatively affect the value of a Fund's investments.

- - MANAGEMENT RISK This is the risk that investments selected by a Fund's
manager may not perform well and that the Fund will not perform as well
as a result.

Other important things for you to note:

- - You may lose money by investing in a Fund.

- - An investment in a Fund is not a deposit in a bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

For convenience of reference, the Funds are sometimes referred to as part of a
general grouping as described below:

- - GROWTH FUNDS (International Discovery Fund, Small Capitalization Fund,
Mid Capitalization Fund and Large Capitalization Fund)
The Growth Funds offer investors seeking growth of capital a range of
alternative approaches to investing according to risk tolerance.

- - GROWTH AND INCOME FUNDS (Equity Income Fund and Balanced Allocation
Fund)
The Growth and Income Funds offer investors seeking current income with
preservation of capital a range of alternative approaches to investing.

- - INCOME FUNDS (Bond Fund, Intermediate Government Obligations Fund, U.S.
Government Income Fund and Limited Maturity Bond Fund)
The Income Funds offer investors seeking current income with
preservation of capital a range of alternative approaches to investing.

- - TAX-FREE INCOME FUNDS (Michigan Municipal Bond Fund and National Tax
Exempt Bond Fund)
The Tax-Free Income Funds offer investors seeking income exempt from
federal income tax as well as preservation of capital a range of
alternative approaches to investing.

-3-

<PAGE> 5
- - MONEY MARKET FUNDS (Tax-Free Fund, Prime Obligations Fund, U.S.
Government Obligations Fund and Treasury Fund)
The Money Market Funds offer investors seeking current income as well as
preservation of capital a range of alternative approaches to investing.
An investment in one of the Money Market Funds is not a deposit of any
bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. Although each of the Money
Market Funds seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in one of the Money
Market Funds.

Each Fund's investment objective may be changed without shareholder
approval, except as otherwise stated.

-4-
<PAGE> 6

GROWTH FUNDS
RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE INTERNATIONAL DISCOVERY FUND

<TABLE>
<CAPTION>
<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide capital appreciation
by investing in a portfolio of equity securities of foreign
issuers.

PRINCIPAL INVESTMENT STRATEGIES The Fund normally invests at least 80% of its total assets in
equity securities of foreign issuers. The Funds' assets
normally will be invested in the securities of issuers located
in at least three foreign countries. Foreign investments also
may include debt obligations issued or guaranteed by
foreign governments or their agencies, authorities,
instrumentalities or political subdivisions, including a
foreign state, province or municipality. The Fund does not
presently intend to invest in common stock of domestic
companies.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are market risk,
foreign risk, and management risk. Because the Fund invests in
foreign securities the Fund's returns will be more volatile and
differ, sometimes significantly, from U.S. stock returns generally.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you:
[ ] ARE SEEKING INCREASED DIVERSIFICATION AND NEW
INVESTMENT OPPORTUNITIES.
[ ] CAN STAY INVESTED FOR A MINIMUM OF THREE TO FIVE
YEARS.
[ ] ARE WILLING TO ACCEPT SHORT-TERM PRICE FLUCTUATIONS
AND HIGHER THAN AVERAGE RISK.

An investment in the Fund is not a bank deposit and is
not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government
agency.
</TABLE>

-5-
<PAGE> 7
RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the International Discovery Fund has
performed and how its performance has varied from year to year. The bar chart
gives an indication of risk by showing changes in the Fund's yearly performance
over six years to demonstrate that the Fund has gained or lost value at
different times. The table below compares the Fund's average annual returns for
1 and 5 year periods and since inception to those of the Morgan Stanley Capital
International Europe, Australia and Far East (EAFE) Index, which represents the
performance of the major stock markets in those regions. Past performance does
not indicate how the Fund will perform in the future.

The returns for Investor B Shares will differ from the Investor A returns shown
in the bar chart because of differences in expenses of each class. The table
below assumes that Investor B shareholders redeem all their fund shares at the
end of the period indicated.

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INVESTOR A SHARES

1993 1994 1995 1996 1997 1998

Percentage 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

During the period shown in the bar chart, the Fund's:
- ---------------------------------------------------------------------------
Best quarter was
Worst quarter was
- ---------------------------------------------------------------------------

AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31)

Fund or Class Past Year Past 5 Years Since Inception
Inception
................ ........... .............. ..................
<S> <C>
Investor A Shares
(with 5.50% sales charge) 12/29/92
................ ........... .............. ..................
Investor B Shares
(with applicable Contingent
Deferred Sales Charge) 2/4/94
................ ........... .............. ..................
MORGAN STANLEY CAPITAL
INTERNATIONAL EAFE INDEX
................................. ................ ........... .............. ..................
</TABLE>

- ------------------

1 Both the chart and the table assume reinvestment of dividends and
distributions.

-6-
<PAGE> 8
<TABLE>
<CAPTION>
RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE SMALL CAPITALIZATION FUND

<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide capital appreciation by
investing in a diversified portfolio of publicly traded smaller cap
equity securities.

PRINCIPAL INVESTMENT STRATEGIES The Fund normally invests at least 80% of its total assets in
equity securities of companies with small stock market
capitalizations. The Fund considers a "small capitalization"
company to be one that has a comparable market capitalization to
the companies in the Russell 2000 Growth Index. The Fund may invest
up to 25% of its total assets in foreign securities.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are market risk and
management risk. The Fund's risks also include capitalization
risk, which is the risk of investing in securities of small
companies. Prices of these companies' securities tend to be more
volatile than those of large companies' securities. In addition,
small-capitalization companies may have more risk because they
often have less-seasoned management and more limited product lines,
markets, or financial resources. To the extent the Fund invests in
foreign securities, your investment may have foreign risk.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you :

[ ] WISH TO TAKE ADVANTAGE OF THE GROWTH POTENTIAL OF
SMALL COMPANY STOCKS.
[ ] CAN REMAIN INVESTED FOR A MINIMUM OF THREE TO FIVE
YEARS
[ ] ARE WILLING TO ACCEPT HIGHER THAN AVERAGE
VOLATILITY AND RISK.
</TABLE>

-7-
<PAGE> 9
<TABLE>
<S> <C>
An investment in the Fund is not a bank deposit and
is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other
government agency.
</TABLE>

-8-
<PAGE> 10
RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the Small Capitalization Fund has
performed and how its performance has varied from year to year. The bar chart
gives an indication of risk by showing changes in the Fund's yearly performance
over ten years to demonstrate that the Fund has gained or lost value at
different times. The table below compares the Fund's average annual returns for
1, 5 and 10 year periods and since inception to those of the Russell 2000 Growth
Index which is comprised of securities in the Russell 2000 Stock Index with a
greater than average growth orientation. Past performance does not indicate how
the Fund will perform in the future.

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INVESTOR A SHARES

1993 1994 1995 1996 1997 1998

Percentage 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

During the period shown in the bar chart, the Fund's:
---------------------------------------------------------------------------
Best quarter was
Worst quarter was
---------------------------------------------------------------------------

AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31)
Fund or Class Past Year Past 5 Years Past 10 Years Since Inception
Inception
................ ........... .............. ................ .................
<S> <C>
Investor A Shares
(with 5.50% sales charge) 10/31/88
................ ........... .............. ................ .................
Investor B Shares
(with applicable Contingent
Deferred Sales Charge) 2/4/94
................ ........... .............. ................ .................

RUSSELL 2000 GROWTH INDEX
................................. ................ ........... .............. ................ .................

</TABLE>

- -----------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-9-
<PAGE> 11
<TABLE>
<CAPTION>
RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE MID CAPITALIZATION FUND

<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide capital appreciation
by investing in a diversified portfolio of publicly traded mid cap
equity securities.

PRINCIPAL INVESTMENT STRATEGIES The Fund normally invests at least 80% of its total assets in
securities of companies with mid stock market capitalization. The
Fund considers a "mid capitalization" company to be one that has a
comparable market capitalization to the companies in the Russell
Mid Cap Growth Index. The Fund may invest up to 25% of its total
assets in foreign securities.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are market
risk and management risk. The Fund's risks also include
capitalization risk, which is the risk of investing in the
securities of mid-capitalization companies. Prices of
mid-capitalization companies' securities tend to be more
volatile than those of large companies' securities. In
addition, mid-capitalization companies may have more risk
because they often have less-seasoned management and more
limited product lines, markets, or financial resources.
To the extent the Fund invests in foreign securities, your
investment may have foreign risk.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you:
[ ] WANT TO TAKE ADVANTAGE OF THE LONG-TERM GROWTH
POTENTIAL HISTORICALLY PROVIDED BY STOCK INVESTMENTS
[ ] CAN REMAIN INVESTED FOR A MINIMUM OF THREE TO FIVE
YEARS
[ ] ARE WILLING TO ACCEPT SHORT-TERM PRICE
FLUCTUATIONS AND HIGHER THAN AVERAGE RISK IN
RETURN FOR POTENTIAL ABOVE AVERAGE LONG-TERM
GROWTH

An investment in the Fund is not a bank deposit and
is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other
government agency.
</TABLE>

-10-
<PAGE> 12
RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the Mid Capitalization Fund has
performed and how its performance has varied from year to year. The bar chart
gives an indication of risk by showing changes in the Fund's yearly performance
over ten years to demonstrate that the Fund has gained or lost value at
different times. The table below compares the Fund's average annual returns for
1, 5 and 10 year periods and since inception to those of the Russell Mid-Cap
Growth Index, an unmanaged index which focuses on the mid-capitalization sector
of the U.S. stock market. Past performance does not indicate how the Fund will
perform in the future.

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INVESTOR A SHARES

1993 1994 1995 1996 1997 1998

Percentage 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

RUSSELL MID-CAP GROWTH INDEX
................................. ................ ........... .............. ................ .................
</TABLE>

1 Both the chart and the table assume reinvestment of dividends and
distributions.

-11-
<PAGE> 13
<TABLE>
<CAPTION>
RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE LARGE CAPITALIZATION FUND

<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide capital appreciation by
investing in a diversified portfolio of publicly traded larger cap
equity securities.

PRINCIPAL INVESTMENT STRATEGIES The Fund normally invests at least 80% of its total assets in a
diversified portfolio of common stocks and securities convertible
into common stocks of companies with large stock market
capitalization. The Fund considers a "large capitalization" company
to be one that has a comparable market capitalization to the
companies in the S&P Barra Growth Index. The Fund may also invest
up to 25% of its total assets in foreign securities.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are market risk
and management risk. To the extent the Fund invests in
foreign securities, your investment may have foreign risk.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you:
[ ] WANT TO TAKE ADVANTAGE OF THE LONG-TERM GROWTH
POTENTIAL HISTORICALLY PROVIDED BY STOCK INVESTMENTS.
[ ] WISH TO INVEST IN LARGE COMPANIES WHOSE NAMES OR
PRODUCTS/SERVICES ARE WELL KNOWN.
[ ] CAN REMAIN INVESTED FOR A MINIMUM OF THREE TO FIVE
YEARS.
[ ] ARE WILLING TO ACCEPT SHORT-TERM PRICE
FLUCTUATIONS AND HIGHER THAN AVERAGE RISK IN
RETURN FOR POTENTIAL ABOVE-AVERAGE LONG-TERM,
GROWTH.

An investment in the Fund is not a bank deposit and
is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other
government agency.
</TABLE>

-12-
<PAGE> 14
RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the Large Capitalization Fund has
performed and how its performance has varied from year to year. The bar chart
gives an indication of risk by showing changes in the Fund's yearly performance
over three years to demonstrate that the Fund has gained or lost value at
different times. The table below compares the Fund's average annual returns for
a one year period and since inception to those of the S&P Barra Growth Index
which is comprised of securities in the Standard & Poor's 500 Stock Index that
have a higher than average price-to-book ratio. Past performance does not
indicate how the Fund will perform in the future.

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INVESTOR A SHARES

1993 1994 1995 1996 1997 1998

Percentage 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31)
Fund or Class Past Year Since Inception
Inception
................ ........... ..................
<S> <C>
Investor A Shares
(with 5.50% sales charge) 12/28/95
................ ........... ..................
Investor B Shares
(with applicable Contingent
Deferred Sales Charge) 12/28/95
................ ........... ..................

S&P BARRA GROWTH INDEX
................................. ................ ........... ..................
</TABLE>

- -----------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-13-
<PAGE> 15
FUND EXPENSES

FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
A OR B SHARES OF THE FUNDS.

Annual Fund operating expenses are paid out of Fund assets and are reflected in
the share price. The fees and expenses for each Fund and Class are based upon
the actual operating expenses of that Fund and Class for the fiscal year ended
May 31, 1999.

The Funds' Adviser has voluntarily agreed to waive a portion of its fee with
respect to certain Funds. The voluntary fee waiver will cause a Fund's return to
be higher than it would otherwise be without the fee waiver.
(See the footnotes to the Fee Table below.)
<TABLE>
<CAPTION>

FEE TABLE

INTERNATIONAL SMALL MID CAPITALIZATION LARGE CAPITALIZATION
SHAREHOLDER FEES DISCOVERY FUND CAPITALIZATION FUND FUND FUND
(FEES PAID DIRECTLY FROM
YOUR INVESTMENT) INVESTOR A INVESTOR B INVESTOR A INVESTOR B INVESTOR A INVESTOR B INVESTOR A INVESTOR B

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge
(Load)(1) Imposed on Purchases
(as a Percentage of offering
price) 5.50% None 5.50% None 5.50% None 5.50% None
............................. ...................... ..................... ..................... .............................

Maximum Deferred Sales
Charge (Load)(2)
(as a percentage of 5.00% / 5.00% / 5.00% / 5.00% /
offering price or sale None 4.00% None 4.00% None 4.00% None 4.00%
price, whichever is less)

............................. ...................... ..................... ..................... ..............................

Redemption Fee(3) None None None None None None None None
............................. ...................... ..................... ..................... ..............................

Exchange Fee(4) None None None None None None None None
............................. ...................... ..................... ..................... ..............................

ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)

Management Fees 1.16%(5) 1.16%(5) 1.00% 1.00% 1.00% 1.00% 0.80% 0.80%
............................. ...................... ..................... ..................... ..............................

Distribution and Service
(12b-1) Fees(6) 0.25% 1.00% 0.25% 1.00% 0.25% 1.00% 0.25% 1.00%
............................. ...................... ..................... ..................... ..............................

Other Expenses 0.41% 0.40% 0.30% 0.30% 0.30% 0.30% 0.40% 0.40%
............................. ...................... ..................... ..................... ..............................

TOTAL ANNUAL FUND
OPERATING EXPENSES 1.60% 2.35% 1.55% 2.30% 1.35% 2.10% 1.80% 2.56%

............................. ...................... ..................... ..................... ...............................
<FN>

- ----------------------------------------
1 The sales charge may be reduced or eliminated under certain circumstances.
See "Distribution Arrangements / Sales Charges"
2 The CDSC on Investor B Shares declines over five years starting with year
one and ending in year six from: 5.00%, 5.00%, 4.00%, 3.00%, 2.00%.
Investor B Shares which were purchased prior to January 1, 1997, are
subject to a CDSC which declines over four years ending in year five from :
4.00%, 4.00%, 3.00%, 2.00%.
</TABLE>

-14-

<PAGE> 16
3 If you invest $1,000,000 or more in Investor A Shares of the Funds, your
shares will be subject to a redemption fee of 1.00% for redemptions of such
shares made within one year of the date of purchase. In addition, although
no such fee is currently in place the Transfer Agent has reserved the right
in the future to charge a fee for wire transfers of redemption proceeds.

4 Exchanges into the Funds from a Money Market Fund will be normally subject
to a sales charge.

5 Calculated based on 1.25% on the first $50 million, in average daily net
assets, 1.20% on the next $50 million, 1.15% on the next $300 million and
1.05% over $400 million.

6 Investor A shareholders should be aware that due to the distribution fees,
a long-term shareholder in a Fund may pay over time more than the economic
equivalent of the maximum front-end sales charge permitted under the rules
of the National Association of Securities Dealers, Inc.

RISK/RETURN SUMMARY AND FUND EXPENSES

EXAMPLE

This Example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Funds for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that
each Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>

1 3 5 10
INTERNATIONAL DISCOVERY FUND Year Years Years Years

<S> <C> <C> <C> <C>
INVESTOR A SHARES $ $ $ $

INVESTOR B SHARES
Assuming Redemption
$ $ $ $
Assuming no Redemption
$ $ $ $
............................... ......... ......... ......... .........

SMALL CAPITALIZATION FUND

INVESTOR A SHARES $ $ $ $

INVESTOR B SHARES
Assuming Redemption $ $ $ $

Assuming no Redemption $ $ $ $
............................... ......... ......... ......... .........

MID CAPITALIZATION FUND

INVESTOR A SHARES $ $ $ $

INVESTOR B SHARES
Assuming Redemption $ $ $ $

Assuming no Redemption $ $ $ $
............................... ......... ......... ......... .........

LARGE CAPITALIZATION FUND

INVESTOR A SHARES $ $ $ $

INVESTOR B SHARES
Assuming Redemption $ $ $ $

Assuming no Redemption $ $ $ $
............................... ......... ......... ......... .........
</TABLE>

-15-

<PAGE> 17
<TABLE>
<CAPTION>
RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE EQUITY INCOME FUND

<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide capital
appreciation by investing in a diversified portfolio of
publicly traded larger cap equity securities which, in the
aggregate, provide a premium current yield.

PRINCIPAL INVESTMENT STRATEGIES The Fund invests at least 80% of the value of its total
assets in income producing, large cap common stocks and securities
convertible into common stocks. The Fund considers a "large capitalization"
company to be one that has a comparable market capitalization to the
companies in the S&P Barra Value Index. The Fund expects that its core
holdings will consist of securities with a high dividend
yield, although it may balance these holdings with lower
yielding but higher-growth oriented securities.

PRINCIPAL INVESTMENT RISKS

The principal risks of investing in the Fund are market
risk, interest rate risk, credit risk and management risk.
To the extent the Fund invests in foreign securities, your
investment has foreign securities risk.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you:
[ ] WOULD LIKE TO INVEST IN THE STOCK MARKET BUT
[ ] WISH TO DO SO IN A WAY THAT HELPS REDUCE SOME
OF THE RISKS ASSOCIATED WITH OTHER TYPES OF
STOCK FUNDS.
[ ] WANT A DEPENDABLE SOURCE OF MONTHLY INCOME.
[ ] CAN STAY INVESTED FOR A MINIMUM OF THREE TO FIVE
YEARS.
[ ] ARE WILLING TO ACCEPT SOME SHORT-TERM PRICE
FLUCTUATIONS IN RETURN FOR POTENTIAL ABOVE-AVERAGE,
LONG-TERM RETURNS.

An investment in the Fund is not a bank deposit and
is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other
government agency.
</TABLE>

-16-
<PAGE> 18
RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the Equity Income Fund has performed
and how its performance has varied from year to year. The bar chart gives an
indication of risk by showing changes in the Fund's yearly performance over ten
years to demonstrate that the Fund has gained or lost value at different times.
The table below compares the Fund's average annual returns for 1, 5 and 10 year
periods and since inception to those of the S&P Barra Value Index which is
comprised of securities in the Standard & Poor's 500 Stock Index that have a
lower than average price-to-book ratio. Past performance does not indicate how
the Fund will perform in the future.

The returns for Investor B Shares will differ from the Investor A returns shown
in the bar chart because of differences in expenses of each class. The table
below that Investor B shareholders redeem all their fund shares at the end of
the period indicated.

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INVESTOR A SHARES

1993 1994 1995 1996 1997 1998

Percentage 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

S&P BARRA VALUE INDEX
................................. ................ ........... .............. ................ .................
</TABLE>

- ------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-17-
<PAGE> 19
<TABLE>
<CAPTION>
RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE BALANCED ALLOCATION FUND

<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide long term
capital appreciation and current income.

PRINCIPAL INVESTMENT STRATEGIES The Fund invests in a broad range of securities including
common stocks, convertible securities and fixed-income
securities. Normally, the Fund expects to invest 50% to
70% of its net assets in common stocks and convertible
securities and 25% to 55% of its net assets in
fixed-income securities. The Fund also may invest up to
30% of it net assets in cash and cash-equivalent
securities, which include highly liquid securities with a
maturity of less than three months. The Fund may invest up
to 20% of its net assets in foreign securities.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are market
risk, interest rate risk, credit risk and management
risk. In addition, the Fund has the risk that the
allocation of its investments between equity and fixed-
income securities may have a more significant effect on the
Fund's net asset value when one of these asset classes
is not performing as well as the other. To the extent
the Fund invests in foreign securities, your investment
has foreign risk.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you:
[ ] WANT EXPOSURE TO STOCKS, BONDS, AND CASH EQUIVALENTS
IN A SINGLE FUND.
[ ] WISH TO RELY ON PROFESSIONAL FUND MANAGERS TO
INCREASE OR DECREASE EXPOSURE TO DIFFERENT INVESTMENT
CATEGORIES AS MARKET CONDITIONS CHANGE.
[ ] CAN STAY INVESTED FOR A MINIMUM OF THREE TO FIVE
YEARS.
[ ] ARE WILLING TO ACCEPT SOME SHORT-TERM PRICE
FLUCTUATIONS IN RETURN FOR POTENTIAL ABOVE-AVERAGE
LONG-TERM RETURNS.

An investment in the Fund is not a bank deposit and
is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other
government agency.
</TABLE>

-18-
<PAGE> 20
RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the Balanced Allocation Fund has
performed and how its performance has varied from year to year. The bar chart
gives an indication of risk by showing changes in the Fund's yearly performance
over six years to demonstrate that the Fund has gained or lost value at
different times. The table below compares the Fund's average annual returns for
1 and 5 year periods and since inception to those of the Standard & Poor's 500
Stock Index ("S&P 500 Index"), a widely recognized, unmanaged index of common
stocks generally representative of the U.S. stock market as a whole and the
Lehman Aggregate Bond Index, an unmanaged, fixed income market value-weighted
index and includes treasury issues, agency issues, corporate bond issues and
mortgage backed securities. Past performance does not indicate how the Fund
will perform in the future.

PERFORMANCE BAR CHART AND TABLE(1)
----------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INVESTOR A SHARES

1993 1994 1995 1996 1997 1998

Percentage 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

S&P 500 STOCK INDEX
................................. ................ ........... .............. ..................

LEHMAN AGGREGATE BOND INDEX

</TABLE>
- -------------------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-19-
<PAGE> 21

FUND EXPENSES

FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
A OR B SHARES OF THE FUNDS.

FEE TABLE

EQUITY INCOME FUND BALANCED ALLOCATION
SHAREHOLDER FEES FUND
(FEES PAID DIRECTLY FROM
YOUR INVESTMENT) INVESTOR A INVESTOR B INVESTOR A INVESTOR B

<S> <C> <C> <C> <C>
Maximum Sales Charge
(Load)(1)
Imposed on Purchases (as
a Percentage of offering 5.50% None 4.75% None
price)
.............................. ...................... ......................

Maximum Deferred Sales
Charge (Load)(2)
(as a percentage of 5.00% / 5.00% /
offering price or sale None 4.00% None 4.00%
price, whichever is less)

.............................. ...................... ......................

Redemption Fee(3) None None None None
.............................. ...................... ......................

Exchange Fee(4) None None None None
.............................. ...................... ......................

ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)

Management Fees 1.00% 1.00% 1.00%(5) 1.00%(5)
.............................. ...................... ......................

Distribution and Service
(12b-1) Fees(6) 0.25% 1.00% 0.25% 1.00%
.............................. ...................... ......................

Other Expenses 0.33% 0.33% 0.36% 0.37%
.............................. ...................... ......................

TOTAL ANNUAL FUND
OPERATING EXPENSES 1.58% 2.33% 1.61% 2.37%

.............................. ...................... ......................

FEE WAIVERS/REIMBURSEMENTS
0.25% 0.25% 0.26% 0.25%
.............................. ...................... ......................

NET ANNUAL FUND
OPERATING EXPENSES 1.33% 2.08% 1.36% 2.12%

.............................. ...................... ......................
</TABLE>

-20-
<PAGE> 22
- ----------------------------------

1 The sales charge may be reduced or eliminated under certain circumstances.
See "Distribution Arrangements / Sales Charges"

2 The CDSC on Investor B Shares declines over five years starting with year
one and ending in year six from: 5.00%, 5.00%, 4.00%, 3.00%, 2.00%.
Investor B Shares which were purchased prior to January 1, 1997, are
subject to a CDSC which declines over four years ending in year five from :
4.00%, 4.00%, 3.00%, 2.00%.

3 If you invest $1,000,000 or more in Investor A Shares of the Funds' your
shares will be subject to a redemption fee of 1.00% and .25% for the
Limited Maturity Bond Fund for redemptions of such shares made within one
year of the date of purchase. In addition, although no such fee is
currently in place the Transfer Agent has reserved the right in the future
to charge a fee for wire transfers of redemption proceeds.

4 Exchanges into the Funds from a Money Market Fund will be normally subject
to a sales charge.

5 The Adviser is currently limiting its advisory fees paid by the Fund for
the current fiscal year to 0.75%. The Adviser may revise or cancel these
expense limitations at any time and will notify you of any material change.

RISK/RETURN SUMMARY AND FUND EXPENSES

EXAMPLE

This Example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.

1 3 5 10
EQUITY INCOME FUND Year Years Years Years

<S> <C> <C> <C> <C>
INVESTOR A SHARES $ $ $ $

INVESTOR B SHARES
Assuming Redemption $ $ $ $

Assuming no Redemption $ $ $ $
............................... ......... ......... ......... .........

BALANCED ALLOCATION FUND

INVESTOR A SHARES $ $ $ $

INVESTOR B SHARES
Assuming Redemption $ $ $ $

Assuming no Redemption $ $ $ $
............................... ......... ......... ......... .........
</TABLE>

-21-

<PAGE> 23
<TABLE>
<CAPTION>
RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE BOND FUND

<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide current income
as well as preservation of capital by investing in a portfolio
of high- and medium-grade fixed-income securities.

PRINCIPAL INVESTMENT STRATEGIES The Fund invests at least 80% of its total assets in
investment grade securities of all types. Such
securities will be rated at the time of purchase within
the four highest rating categories assigned by a
nationally recognized statistical rating organization
("NRSRO") or, if unrated, which the Adviser deems are of
comparable quality. The Fund expects to maintain a
dollar-weighted average portfolio maturity of 4 to 12
years.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are interest
rate risk, credit risk and management risk. Increases in
interest rates may cause the value of the Fund's
investments to decline and the decrease in value may not
be offset by higher interest rate income. Because the
Fund may invest in mortgage-related or asset-backed
securities, it is subject to the risk that mortgages or
other assets may be prepaid when interest rates decline,
forcing the Fund to invest in securities with lower
interest rates. For this and other reasons,
mortgage-related and asset-backed securities may have
significantly greater price and yield volatility than
traditional fixed-income securities.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you:
[ ] WISH TO PRESERVE AND PROTECT YOUR ASSETS WHILE
POTENTIALLY STAYING AHEAD OF INFLATION.
[ ] WANT A DEPENDABLE SOURCE OF MONTHLY INCOME
[ ] NEED ADDITIONAL DIVERSIFICATION IN YOUR PORTFOLIO TO
REDUCE VOLATILITY.
[ ] CAN KEEP YOUR MONEY INVESTED FOR A MINIMUM OF TWO TO
THREE YEARS.

An investment in the Fund is not a bank deposit and
is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other
government agency.
</TABLE>

-22-
<PAGE> 24
RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the Bond Fund has performed and how
its performance has varied from year to year. The bar chart gives an indication
of risk by showing changes in the Fund's yearly performance over ten years to
demonstrate that the Fund has gained or lost value at different times. The table
below compares the Fund's average annual returns for 1, 5 and 10 year periods
and since inception to those of the Lehman Brothers Aggregate Bond Index. Past
performance does not indicate how the Fund will perform in the future.

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INVESTOR A SHARES

1993 1994 1995 1996 1997 1998

Percentage 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31)
Fund or Class Past Year Past 5 Years Past 10 Years Since Inception
Inception
................ ........... .............. ................ .................
<S> <C>
Investor A Shares
(with 4.75% sales charge) 10/31/88
................ ........... .............. ................ .................
Investor B Shares
(with applicable Contingent
Deferred Sales Charge) 2/4/94
................ ........... .............. ................ .................
LEHMAN BROTHERS AGGREGATE BOND
INDEX
................................. ................ ........... .............. ................ .................
</TABLE>

1 Both the chart and the table assume reinvestment of dividends and
distributions.

-23-
<PAGE> 25
<TABLE>
<CAPTION>
RISK/RETURN SUMMARY AND FUND EXPENSES
- -------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE INTERMEDIATE GOVERNMENT OBLIGATIONS FUND

<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide current
income as well as preservation of capital by investing
primarily in U.S. government securities.

PRINCIPAL INVESTMENT STRATEGIES The Fund normally invests at least 80% of its total assets in
obligations issued or guaranteed by the U.S. government or
its agencies or instrumentalities. The Fund expects to
maintain a dollar-weighted average portfolio maturity of
two to ten years. The Fund normally invests in U.S. Treasury
bills, notes or bonds and other U.S. government
securities. The Fund also may invest in mortgage-related
securities issued or guaranteed by the U.S. government or
its agencies or instrumentalities.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are interest
rate risk, credit risk and management risk. Increases in
interest rates may cause the value of the Fund's
investments to decline and a decrease in value may not be
offset by higher interest rate income. Because the Fund
may invest in mortgage-related securities, it is subject
to the risk that mortgages may be prepaid when interest
rates decline, forcing the Fund to invest in securities
with lower interest rates. For this and other reasons,
mortgage-related securities may have significantly greater
price and yield volatility than traditional debt
securities.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you:
[ ] WISH TO PRESERVE AND PROTECT YOUR ASSETS WHILE
STAYING AHEAD OF INFLATION.
[ ] WANT A DEPENDABLE SOURCE OF MONTHLY INCOME.
[ ] NEED ADDITIONAL DIVERSIFICATION IN YOUR PORTFOLIO TO
REDUCE VOLATILITY.
[ ] CAN KEEP YOUR MONEY INVESTED FOR A MINIMUM OF TWO TO
THREE YEARS.

An investment in the Fund is not a bank deposit and
is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other
government agency.

</TABLE>

-24-
<PAGE> 26
RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the Intermediate Government
Obligations Fund has performed and how its performance has varied from year to
year. The bar chart gives an indication of risk by showing changes in the Fund's
yearly performance over ten years to demonstrate that the Fund has gained or
lost value at different times. The table below compares the Fund's average
annual returns for 1, 5 and 10 year periods and since inception to those of the
Lehman Brothers Intermediate Government Index. Past performance does not
indicate how the Fund will perform in the future.

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INVESTOR A SHARES

1993 1994 1995 1996 1997 1998

Percentage 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31)
Fund or Class Past Year Past 5 Years Past 10 Years Since Inception
Inception
................ ........... .............. ................ .................
<S> <C>
Investor A Shares
(with 4.75% sales charge) 10/31/88
................ ........... .............. ................ .................
Investor B Shares
(with applicable Contingent
Deferred Sales Charge) 2/4/94
................ ........... .............. ................ .................
LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT INDEX
................................. ................ ........... .............. ................ .................
</TABLE>

- ---------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-25-
<PAGE> 27
<TABLE>
<CAPTION>
RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE U.S. GOVERNMENT INCOME FUND

<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide current income
as well as preservation of capital by investing primarily
in U.S. government securities.

PRINCIPAL INVESTMENT STRATEGIES The Fund normally invests at least 80% of its total assets in
obligations issued or guaranteed by the U.S. government or
its agencies or instrumentalities. The Fund normally
invests up to 80% of its total assets in mortgage-related
securities that are issued or guaranteed by the U.S.
government or its agencies or instrumentalities. The Fund
also may invest up to 20% of its total assets in other
mortgage-related securities and short-term obligations.
The Fund expects to maintain a dollar-weighted average
portfolio maturity of two to ten years.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are interest
rate risk, credit risk and management risk. Increases in
interest rates may cause the value of the Fund's
investments to decline and the decrease in value may not
be offset by higher interest rate income. Because the
Fund invests primarily in mortgage-related securities, it
is subject to the risk that mortgages may be prepaid when
interest rates decline, forcing the Fund to invest in
securities with lower interest rates. For this and other
reasons, mortgage-related securities may have
significantly greater price and yield volatility than
traditional debt securities.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you:
[ ] WANT A HIGH LEVEL OF MONTHLY INCOME WITHOUT A HIGH
DEGREE OF RISK
[ ] WISH TO DIVERSIFY YOUR INVESTMENT PORTFOLIO TO REDUCE
VOLATILITY
[ ] CAN KEEP YOUR MONEY INVESTED FOR A MINIMUM OF TWO TO
THREE YEARS

An investment in the Fund is not a bank deposit and
is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other
government agency.
</TABLE>

-26-
<PAGE> 28
RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the U.S. Government Income Fund
has performed and how its performance has varied from year to year. The bar
chart gives an indication of risk by showing changes in the Fund's yearly
performance over six years to demonstrate that the Fund has gained or lost
value at different times. The table below compares the Fund's average annual
returns for 1 and 5 year periods and since inception to those of the Lehman
Brothers Mortgage-Backed Securities Index which covers all fixed-rate
securities backed by mortgage pools of the Government National Mortgage
Association (GNMA), Federal Home Loan Mortgage Corporation (FHLMC) and Federal
National Mortgage Association (FNMA). Past performance does not indicate how
the Fund will perform in the future.

The returns for Investor B Shares will differ from the Investor A
returns shown in the bar chart because of differences in expenses of each
class. The table below assumes that Investor B shareholders redeem all their
fund shares at the end of the period indicated.

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INVESTOR A SHARES

1993 1994 1995 1996 1997 1998

Percentage 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

LEHMAN BROTHERS MORTGAGE-BACKED
SECURITIES INDEX
................................. ................ ........... .............. ..................

</TABLE>

- -------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-27-
<PAGE> 29
<TABLE>
<CAPTION>
RISK/RETURN SUMMARY AND FUND EXPENSES
- -------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE LIMITED MATURITY BOND FUND

PRINCIPAL INVESTMENT STRATEGIES The Fund normally invests at least 80% of its total
assets in investment grade debt securities of all types.
The Fund invests primarily in corporate bonds, U.S.
government obligations, and mortgage-related and
asset-backed securities. Such securities will be rated at
the time of purchase within the four highest rating
categories assigned by a nationally recognized
statistical rating organization ("NRSRO") or, if unrated,
which the Adviser deems are of comparable quality. The
Fund expects to maintain a dollar-weighted average
portfolio maturity of one to five years.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are interest
rate risk and credit risk. Increases in interest rates
may cause the value of the Fund's investments to decline
and the decrease in value may not be offset by higher
interest rate income. Because the Fund may invest in
mortgage-related or asset-backed securities, it is subject
to the risk that mortgages or other assets may be prepaid
when interest rates decline, forcing the Fund to invest in
securities with lower interest rates. For this and other
reasons, mortgage-related and asset-backed securities may
have significantly greater price and yield volatility than
traditional debt securities.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you:
[ ] WISH TO PRESERVE AND PROTECT YOUR ASSETS WHILE
POTENTIALLY STAYING AHEAD OF INFLATION.
[ ] WANT A DEPENDABLE SOURCE OF MONTHLY INCOME.
[ ] NEED ADDITIONAL DIVERSIFICATION IN YOUR PORTFOLIO TO
REDUCE VOLATILITY.
[ ] CAN KEEP YOUR MONEY INVESTED FOR A MINIMUM OF TWO TO
THREE YEARS.

An investment in the Fund is not a bank deposit and
is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other
government agency.
</TABLE>

-28-
<PAGE> 30
RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the Limited Maturity Bond Fund has
performed and how its performance has varied from year to year. The bar chart
gives an indication of risk by showing changes in the Fund's yearly performance
over ten years to demonstrate that the Fund has gained or lost value at
different times. The table below compares the Fund's average annual returns for
1, 5 and 10 year periods and since inception to those t of the Merrill Lynch 1-3
year Government/Corporate Index, which represents the total return of short-term
government and corporate bonds. Past performance does not indicate how the Fund
will perform in the future.

PERFORMANCE BAR CHART AND TABLE(1)
----------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INVESTOR A SHARES

1993 1994 1995 1996 1997 1998

Percentage 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31)
Fund or Class Past Year Past 5 Years Past 10 Years Since Inception
Inception
................ ........... .............. ................ .................
<S> <C>
Investor A Shares
(with 2.75% sales charge) 10/31/88
................ ........... .............. ................ .................
Investor B Shares
(with applicable Contingent
Deferred Sales Charge) 2/4/94
................ ........... .............. ................ .................
MERRILL LYNCH 1-3 YEAR
GOVERNMENT/CORPORATE INDEX
................................. ................ ........... .............. ................ .................
</TABLE>

- ---------------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-29-
<PAGE> 31
FUND EXPENSES

FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
A OR B SHARES OF THE FUNDS.

FEE TABLE

BOND FUND INTERMEDIATE U.S. GOVERNMENT LIMITED MATURITY BOND
SHAREHOLDER FEES GOVERNMENT INCOME FUND FUND
(FEES PAID DIRECTLY FROM OBLIGATIONS FUND
YOUR INVESTMENT)
INVESTOR A INVESTOR B INVESTOR A INVESTOR B INVESTOR A INVESTOR B INVESTOR A INVESTOR B
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge
(Load)(1)
Imposed on Purchases (as
a percentage of offering 4.75% None 4.75% None 4.75% None 2.75% None
price)
............................. ...................... ..................... ..................... ..................................

Maximum Deferred Sales
Charge (Load)(2)
(as a percentage of 5.00% /
offering price or sale None 4.00% None 5.00% / None 5.00% / 5.00% /
price, whichever is less) 4.00% 4.00% None 4.00%

............................. ...................... ..................... ..................... ..................................

Redemption Fee(3) None None None None None None None None
............................. ...................... ..................... ..................... ..................................

Exchange Fee(4) None None None None None None None None
............................. ...................... ..................... ..................... ..................................

ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)

Management Fees(5) 0.74% 0.74% .74% .74% 0.74% 0.74% 0.74% 0.74%
............................. ...................... ..................... ..................... ..................................

Other Expenses 0.29% 0.29% 0.32% 0.32% 0.35% 0.35% 0.32% 0.32%
............................. ...................... ..................... ..................... ..................................

TOTAL ANNUAL FUND
OPERATING EXPENSES 1.28% 2.03% 1.31% 2.06% 1.34% 2.09% 1.31% 2.06%

............................. ...................... ..................... ..................... ..................................

FEE WAIVERS/REIMBURSEMENTS
0.09% 0.09% 0.09% 0.09% 0.34% 0.34% 0.24% 0.24%
............................. ...................... ..................... ..................... ..................................

NET ANNUAL FUND
OPERATING EXPENSES 1.19% 1.94% 1.22% 1.97% 1.00% 1.75% 1.07% 1.82%

............................. ...................... ..................... ..................... ..................................
</TABLE>

-30-
<PAGE> 32
- ----------------------------

1 The sales charge may be eliminated or reduced under certain circumstances.
See "Distribution Arrangements / Sales Charges"

3 If you invest $1,000,000 or more in Investor A Shares of the Funds' your
shares will be subject to a redemption fee of 1.00% (and .25% for the
Limited Maturity Bond Fund) for redemptions of such shares made within one
year of the date of purchase. In addition, although no such fee is
currently in place the Transfer Agent has reserved the right in the future
to charge a fee for wire transfers of redemption proceeds.

4 Exchanges into the Funds from a Money Market Fund will be normally subject
to a sales charge.

5 The Adviser is currently limiting its advisory fees paid by the Funds for
the current fiscal year to: 0.70%, Bond Fund; 0.70%, Intermediate
Government Obligations Fund; 0.45%, U.S. Government Income Fund; 0.55%,
Limited Maturity Bond Fund.

RISK/RETURN SUMMARY AND FUND EXPENSES

EXAMPLE

This Example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.

<TABLE>
<CAPTION>
1 3 5 10
BOND FUND Year Years Years Years

<S> <C> <C> <C> <C>
INVESTOR A SHARES $ $ $ $

INVESTOR B SHARES
Assuming Redemption $ $ $ $

Assuming no Redemption 4 $ $ $
............................... ......... ......... ......... .........

INTERMEDIATE GOVERNMENT
OBLIGATIONS FUND

INVESTOR A SHARES $ $ $ $

INVESTOR B SHARES
Assuming Redemption $ $ $ $

Assuming no Redemption $ $ $ $
............................... ......... ......... ......... .........

U.S. GOVERNMENT INCOME FUND

INVESTOR A SHARES
$ $ $ $
INVESTOR B SHARES
Assuming Redemption
$ $ $ $
Assuming no Redemption
$ $ $ $
............................... ......... ......... ......... .........

LIMITED MATURITY BOND FUND

INVESTOR A SHARES
$ $ $ $
INVESTOR B SHARES
Assuming Redemption
$ $ $ $
Assuming no Redemption
$ $ $ $
............................... ......... ......... ......... .........
</TABLE>

-31-

<PAGE> 33
<TABLE>
<CAPTION>
RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE MICHIGAN MUNICIPAL BOND FUND

<S> <C>
INVESTMENT OBJECTIVES The Fund's investment objective is to provide current
income exempt from federal income taxes and, to the
extent possible, from Michigan personal income taxes, as
is consistent with conservation of capital.

PRINCIPAL INVESTMENT STRATEGIES The Fund normally invests at least 80% of its net assets
in Michigan municipal securities and debt obligations
issued by the government of Puerto Rico, the U.S.
territories and possessions of Guam, the U.S. Virgin
Islands, or such other governmental entities whose debt
obligations, either by law or treaty, generate interest
income which is exempt from federal and Michigan State
income and intangible taxes, although such income may be
subject to the federal alternative minimum tax when
received by certain shareholders. The Fund expects to
maintain a dollar-weighted average portfolio maturity of
two to ten years.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are interest
rate risk and credit risk. The Fund's investments in
Michigan municipal income securities may also include
exposure to special factors that may adversely affect the
value of municipal securities and have a significant
effect on the value of the Fund's investments. These
factors include political or legislative changes,
uncertainties related to the tax status of municipal
securities or the rights of investors in these
securities.

Due to the level of investment in municipal obligations issued
by the State of Michigan and its political subdivisions, the
performance of the Fund will be closely tied to the economic
and political conditions in the State of Michigan, and,
therefore, an investment in the Fund may be riskier than an
investment in other types of municipal bond funds. The State's
economy is principally dependent upon manufacturing
(particularly automobiles, office equipment and other durable
goods), tourism and agriculture and historically has been
highly cyclical. When a Fund's assets are concentrated in
obligations from revenues of similar projects issued by issuers
located in the same state or in industrial development bonds,
the Fund will be subject to the particular risks (including
legal and economic conditions) related to such securities to a
greater extent than if its assets were not so concentrated.

In addition, the Fund is not "diversified," meaning that it can
invest a greater percentage of its assets in a particular
issuer. Factors affecting these issuers could have a more
significant adverse effect on the Fund's net asset value.
</TABLE>

-32-
<PAGE> 34
<TABLE>
<S> <C>
WHO MAY WANT TO INVEST? Consider investing in the Fund if you:
[ ] WISH TO EARN INVESTMENT INCOME THAT IS EXEMPT FROM
FEDERAL INCOME TAX
[ ] LIVE IN MICHIGAN AND WISH TO EARN INVESTMENT INCOME
THAT IS ALSO EXEMPT FROM STATE INCOME TAX
[ ] WANT TO SUPPORT MICHIGAN MUNICIPALITIES BY PURCHASING
THEIR DEBT SECURITIES
[ ] SEEK TO REDUCE VOLATILITY IN YOUR PORTFOLIO THROUGH
INCREASED DIVERSIFICATION
[ ] CAN KEEP YOUR MONEY INVESTED FOR A MINIMUM OF ONE TO
TWO YEARS

An investment in the Fund is not a bank deposit and
is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other
government agency.
</TABLE>

-33-
<PAGE> 35
RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the Michigan Municipal Bond Fund has
performed and how its performance has varied from year to year. The bar chart
gives an indication of risk by showing changes in the Fund's yearly performance
over eight years to demonstrate that the Fund has gained or lost value at
different times. The table below compares the Fund's average annual returns for
1 and 5 year periods and since inception to those of the Lehman Brothers Mutual
Fund Intermediate Index, which consists of the Lehman Brothers Municipal Bond
Index from 10/31/88 through 10/31/95; thereafter, the data is from the Lehman
Brothers Mutual Fund Intermediate Index, which corresponds with the inception of
the Index on 10/31/95. Past performance does not indicate how the Fund will
perform in the future.

The table measures performance in terms of total return. However, this Fund is
managed for yield and not total return.

The returns for Investor B Shares will differ from the Investor A returns shown
in the bar chart because of differences in expenses of each class. The table
assumes that Investor B shareholders redeem all their fund shares at the end of
the period indicated.

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INVESTOR A SHARES

1993 1994 1995 1996 1997 1998

Percentage 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

AVERAGE ANNUAL TOTAL RETURNS(for the periods ended December 31)
Fund or Class Past Year Past 5 Years Since Inception
Inception
................ ........... .............. ..................
<S> <C>
Investor A Shares
(with 4.75% sales charge) 7/02/90
................ ........... .............. ..................
Investor B Shares
(with applicable Contingent
Deferred Sales Charge) 2/04/94
................ ........... .............. ..................
LEHMAN BROTHERS MUTUAL FUND
INTERMEDIATE INDEX
................................. ................ ........... .............. ..................
LEHMAN BROTHERS SEVEN-YEAR MUNICIPAL INDEX
</TABLE>

- ----------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-34-

<PAGE> 36
<TABLE>
<CAPTION>
RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE NATIONAL TAX EXEMPT BOND FUND

<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide current income
exempt from federal income taxes as is consistent with
conservation of capital.

PRINCIPAL INVESTMENT STRATEGIES The Fund normally invests at least 80% of its net assets
in a diversified portfolio of municipal securities the
interest on which is both exempt from federal income
taxes and not treated as a preference item for
individuals for purposes of the federal alternative
minimum tax. Interest income from certain types of
municipal securities may be subject to federal
alternative minimum tax. These securities are not treated
as tax-exempt obligations for purposes of measuring
compliance with the 80% limitation. The Fund expects to
maintain a dollar-weighted average portfolio maturity of
two to ten years.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are interest
rate risk and credit risk. The Fund's investments in
municipal securities may also have exposure to special
factors that may adversely affect the value of these
securities, and have a significant effect on the value of
the Fund's investments. These factors include political
or legislative changes, uncertainties related to the tax
status of municipal securities or the rights of investors
in these securities.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you:
[ ] WISH TO EARN INVESTMENT INCOME THAT IS EXEMPT FROM
FEDERAL INCOME TAX
[ ] WANT TO SUPPORT U.S. CITIES AND STATES BY PURCHASING
THEIR DEBT SECURITIES
[ ] SEEK TO REDUCE VOLATILITY IN YOUR PORTFOLIO THROUGH
INCREASED DIVERSIFICATION
[ ] CAN KEEP YOUR MONEY INVESTED FOR A MINIMUM OF ONE TO
TWO YEARS

An investment in the Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
</TABLE>

-35-
<PAGE> 37
RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the National Tax Exempt Bond Fund has
performed and how its performance has varied from year to year. The bar chart
gives an indication of risk by showing changes in the Fund's yearly performance
over ten years to demonstrate that the Fund has gained or lost value at
different times. The table below compares the Fund's average annual returns for
1, 5 and 10 year periods and since inception to those of the Lehman Brothers
Mutual Fund Intermediate Index, which consists of the Lehman Brothers Municipal
Bond Index from 10/31/88 through 10/31/95; thereafter, the data is from the
Lehman Brothers Mutual Fund Intermediate Index, which corresponds with the
inception of the Index on 10/31/95. Past performance does not indicate how the
Fund will perform in the future.

This table measures performance in terms of total return. However, this Fund is
managed for yield and not total return.

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INVESTOR A SHARES

1993 1994 1995 1996 1997 1998

Percentage 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 1998)
Fund or Class Past Year Past 5 Years Past 10 Years Since Inception
Inception
................ ........... .............. ................ .................
<S> <C>
Investor A Shares
(with 4.75% sales charge) 10/31/88
................ ........... .............. ................ .................
Investor B Shares
(with applicable Contingent
Deferred Sales Charge) 2/4/94
................ ........... .............. ................ .................
LEHMAN BROTHERS MUTUAL FUND
INTERMEDIATE INDEX
................................. ................ ........... .............. ................ .................
LEHMAN BROTHERS SEVEN-YEAR MUNICIPAL INDEX
</TABLE>

- -----------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-36-
<PAGE> 38
FUND EXPENSES

FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
A OR B SHARES OF THE FUNDS.

FEE TABLE

MICHIGAN MUNICIPAL MUNICIPAL BOND FUND
SHAREHOLDER FEES BOND FUND
(FEES PAID DIRECTLY FROM
YOUR INVESTMENT) INVESTOR A INVESTOR B INVESTOR A INVESTOR B
<S> <C> <C> <C> <C>
Maximum Sales Charge
(Load)(1)
Imposed on Purchases (as
a Percentage of offering 4.75% None 4.75% None
price)
.............................. ...................... .........................

Maximum Deferred Sales
Charge (Load)(2)
(as a percentage of 5.00% / 5.00% /
offering price or sale None 4.00% None 4.00%
price, whichever is less)
................................. ...................... ......................

Redemption Fee(3) None None None None
.............................. ...................... ..........................

Exchange Fee(4) None None None None
.............................. ...................... .........................

ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)

Management Fees(5) 0.74% 0.74% 0.74% 0.74%
.............................. ...................... .........................

Distribution and Service
(12b-1) Fees(6) 0.25% 1.00% 0.25% 1.00%
.............................. ...................... .........................

Other Expenses 0.29% 0.29% 0.32% 0.32%
.............................. ...................... .........................

TOTAL ANNUAL FUND
OPERATING EXPENSES 1.28% 2.03% 1.31% 2.06%

.............................. ...................... .........................

FEE WAIVERS/REIMBURSEMENTS 0.29% 0.29% 0.29% 0.29%
.............................. ...................... .........................

NET ANNUAL FUND
OPERATING EXPENSES 0.99% 1.74% 1.02% 1.77%

.............................. ...................... .........................
</TABLE>

-37-
<PAGE> 39
- ----------------------------

1 The sales charge may be eliminated under certain circumstances. See
Distribution Arrangements / Sales Charges"

3 If you invest $1,000,000 or more in Investor A Shares of the Funds' your
shares will be subject to a redemption fee of 1.00% (.25% for Limited
Maturity Bond Fund) for redemptions of such shares made within one year of
the date of purchase. In addition, although no such fee is currently in
place the Transfer Agent has reserved the right in the future to charge a
fee for wire transfers of redemption proceeds.

4 Exchanges into the Funds from a Money Market Fund will be normally subject
to a sales charge.

5 The Adviser is currently limiting its advisory fees paid by the each Fund
for the current fiscal year to 0.55%.

RISK/RETURN SUMMARY AND FUND EXPENSES

EXAMPLE

This Example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.

INVESTOR A SHARES $ $ $ $

INVESTOR B SHARES
Assuming Redemption
$ $ $ $
Assuming no Redemption
$ $ $ $
............................... ......... ......... ......... .........

NATIONAL TAX EXEMPT BOND FUND

INVESTOR A SHARES $ $ $ $

INVESTOR B SHARES
Assuming Redemption $ $ $ $

Assuming no Redemption $ $ $ $
............................... ......... ......... ......... .........
</TABLE>

-38-
<PAGE> 40

MONEY MARKET FUNDS

<TABLE>
<CAPTION>
RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE TAX-FREE FUND

<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide current
interest income free from federal income taxes, consistent
with the preservation of capital and relative stability of
principal.

PRINCIPAL INVESTMENT STRATEGIES The Fund is a money market fund that seeks to maintain a
stable net asset value of $1.00 per share, although there is
no guarantee that the net asset value will not vary. The
Fund normally invests at least 80% of its total assets in
municipal obligations with interest that is exempt from
federal income tax and not subject to the federal
alternative minimum tax. These securities will have
short-term debt ratings in the two highest rating categories
of at least two nationally recognized statistical rating
organizations, or will be unrated securities of comparable
quality. The Fund's dollar-weighted average portfolio
maturity will not exceed 90 days. The Fund will not purchase
any security which matures in more than 397 days.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are interest
rate risk, credit risk and management risk. The Fund's
investments in municipal securities may also have exposure
to special factors that may adversely affect the value of
municipal securities, and have a significant effect on the
value of the Fund's investments. These factors include
political or legislative changes, uncertainties related to
the tax status of municipal securities or the rights of
investors in these securities. An investment in the Fund
is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you are:
[ ] AN INVESTOR IN A HIGH TAX BRACKET
[ ] SEEKING LIQUIDITY
[ ] SEEKING CURRENT INCOME EXEMPT FROM FEDERAL INCOME
TAXES
</TABLE>

-39-
<PAGE> 41
RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the Tax-Free Fund has performed and
how its performance has varied from year to year. The bar chart gives an
indication of risk by showing changes in the Fund's yearly performance over ten
years to demonstrate that the Fund's return has varied at different times. The
Fund does not offer Investor B Shares. Past performance does not indicate how
the Fund will perform in the future.

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

Year-by-Year Total Returns as of 12/31 for Investor A Shares

1993 1994 1995 1996 1997 1998

Percentage 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31)
Inception Past Year Past 5 Years Past 10 Years Since Inception
Date (7/30/87)
<S> <C> <C> <C> <C> <C>
............. .................. ............... ................

Investor A Shares
............. .................. ............... ................
</TABLE>

For current yield information on the Fund, call 1-800-451-8377. The Tax-Free
Fund's yield appears in the Wall Street Journal each Thursday.

- ---------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-40-
<PAGE> 42
<TABLE>
<CAPTION>
RISK/RETURN SUMMARY AND FUND EXPENSES
- -------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE PRIME OBLIGATIONS FUND

<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide current
income with liquidity and stability of principal.

PRINCIPAL INVESTMENT STRATEGIES The Fund is a money market fund that seeks to maintain a
stable net asset value of $1.00 per share, although there
is no guarantee that the net asset value per share will
not vary. The Fund invests in high-quality money market
instruments including municipal securities and other
instruments deemed to be of comparable high quality as
determined by the Board of Trustees. These securities will
have short-term debt ratings in the two highest rating
categories of at least two nationally recognized
statistical rating organizations, or will be unrated
securities of comparable quality. The Fund's
dollar-weighted average portfolio maturity will not exceed
90 days. The Fund will not purchase any security which
matures in more than 397 days.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are interest
rate risk, credit risk and management risk. An investment in
the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you are:
[ ] SEEKING CURRENT INCOME THROUGH A LIQUID INVESTMENT
[ ] LOOKING FOR A CONSERVATIVE INVESTMENT TO BALANCE OUT
MORE AGGRESSIVE INVESTMENTS
</TABLE>

-41-
<PAGE> 43
RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the Prime Obligations Fund has
performed and how its performance has varied from year to year. The bar chart
gives an indication of risk by showing changes in the Fund's yearly performance
over ten years. Past performance does not indicate how the Fund will perform in
the future.

PERFORMANCE BAR CHART AND TABLE(1)

Year-by-Year Total Returns as of 12/31 for Investor A Shares

1993 1994 1995 1996 1997 1998

Percentage 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31, 1998)

Class Since
Inception Past Year Past 5 Years Past 10 Years Inception
.......... ............. .................. ................ ..........

<S> <C> <C> <C> <C> <C>
Investor A Shares 8/24/87
............. .................. ................ ..........
Investor B Shares
(with applicable ) 9/30/97
............. .................. ................ ..........
</TABLE>

For current yield information on the Fund, call 1-800-451-8377. The Prime
Obligations Fund's yield appears in the Wall Street Journal each Thursday.

The table above reflects the impact of any contingent deferred sales charges
that apply to Investor B Shares of the Prime Obligations Fund.

- ---------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-42-

<PAGE> 44
<TABLE>
<CAPTION>
RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE U.S. GOVERNMENT OBLIGATIONS FUND

<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide current
income with liquidity and stability of principal.

PRINCIPAL INVESTMENT STRATEGIES The Fund is a money market fund that seeks to maintain a
stable net asset value of $1.00 per share, although there
is no guarantee that the net asset value per share will
not vary. The Fund normally invests at least 65% of its
total assets in short-term U.S. Treasury bills, notes and
other obligations issued or guaranteed by the U.S.
government or its agencies or instrumentalities. Other
securities purchased by the Fund will be high quality money
market and comparable investments. These securities will have
short-term debt ratings in the two highest rating categories
of at least two nationally recognized statistical rating
organizations or will be unrated securities of comparable
quality. The Fund's dollar-weighted average portfolio maturity
will not exceed 90 days. The Fund will not purchase any
security which matures in more than 397 days.

PRINCIPAL INVESTMENT RISKS

The principal risks of investing in the Fund are interest
rate risk, credit risk and management risk. An investment in
the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you are:
[ ] SEEKING CURRENT INCOME THROUGH A LIQUID INVESTMENT
[ ] SEEKING CURRENT INCOME
[ ] LOOKING FOR A CONSERVATIVE INVESTMENT TO BALANCE OUT
MORE AGGRESSIVE INVESTMENTS
</TABLE>

-43-
<PAGE> 45
RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the U.S. Government Obligations Fund
has performed and how its performance has varied from year to year. The bar
chart gives an indication of risk by showing changes in the Fund's yearly
performance over ten years to demonstrate that the Fund's return has varied at
different times. The Fund does not offer Investor B Shares. Past performance
does not indicate how the Fund will perform in the future.

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

Year-by-Year Total Returns as of 12/31 for Investor A Shares

1993 1994 1995 1996 1997 1998

Percentage 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31)

Class Past Year Past 5 Years Past 10 Years Since Inception
Inception
............. .................. ............... ................

<S> <C> <C> <C> <C> <C>
Investor A Shares 8/24/87
............. .................. ............... ................
</TABLE>

For current yield information on the Fund, call 1-800-451-8377. The U.S.
Government Obligations Fund's yield appears in the Wall Street Journal each
Thursday.

- --------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-44-
<PAGE> 46
<TABLE>
<CAPTION>
RISK/RETURN SUMMARY AND FUND EXPENSES
- -------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE TREASURY FUND

<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide current
income with liquidity and stability of principal.

PRINCIPAL INVESTMENT STRATEGIES The Fund is a money market fund that seeks to maintain a
stable net asset value of $1.00 per share. The Fund normally
invests exclusively in obligations issued or guaranteed by
the U.S. Treasury, its agencies or instrumentalities and
repurchase agreements related to these securities. The
Fund's dollar-weighted average portfolio maturity will not
exceed 90 days. The Fund will not purchase any security
which matures in more than 397 days. Other securities
purchased by the Fund will be high quality money market
instruments and other comparable investments. These
securities will have short-term debt ratings in the two
highest rating categories of at least two nationally
recognized statistical rating organizations, or will be
unrated securities of comparable quality.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are interest
rate risk and management risk. An investment in the Fund is
not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.

-45-
<PAGE> 47
RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the Treasury Fund has performed and
how its performance has varied from year to year. The bar chart gives an
indication of risk by showing changes in the Fund's yearly performance over five
years to demonstrate that the Fund's return has varied at different times. The
Fund does not offer Investor B Shares. Past performance does not indicate how
the Fund will perform in the future.

PERFORMANCE BAR CHART AND TABLE
-------------------------------

Year-by-Year Total Returns as of 12/31 for Investor A Shares

1993 1994 1995 1996 1997 1998

Percentage 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31)

Class
Inception Past Year Past 5 Years Since Inception
......... ............. .................. ...................

<S> <C> <C> <C> <C>
Investor A Shares 12/1/93
............. .................. ...................
</TABLE>

For current yield information on the Fund, call 1-800-451-8377. The Treasury
Fund's yield appears in the Wall Street Journal each Thursday.

-46-
<PAGE> 48
FUND EXPENSES

FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
A OR B SHARES OF THE MONEY MARKET FUNDS.

FEE TABLE

TAX-FREE FUND PRIME OBLIGATIONS U.S. GOVERNMENT TREASURY FUND
SHAREHOLDER FEES FUND OBLIGATIONS FUND
(FEES PAID DIRECTLY FROM
YOUR INVESTMENT) INVESTOR A INVESTOR A INVESTOR B INVESTOR A INVESTOR A

<S> <C> <C> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases (as
a Percentage of offering
price) None None None None None

.............................. ................... .......................... ...................... .....................

Maximum Deferred Sales
Charge (Load)
(as a percentage of
offering price or sale None None 5.00%(1) None None
price, whichever is less)

.............................. ................... .......................... ...................... .....................

Redemption Fee(2) None None None None None
.............................. ................... .......................... ...................... .....................

Exchange Fee None None None None None
.............................. ................... .......................... ...................... .....................

ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)

Management Fees 0.40% 0.40% 0.40% 0.40% 0.40%
.............................. ................... .......................... ...................... .....................

Distribution and Service
(12b-1) Fees(3) 0.25% 0.25% 1.00% 0.25% 0.25%
.............................. ................... .......................... ...................... .....................

Other Expenses 0.28% 0.28% 0.28% 0.28% 0.27%
.............................. ................... .......................... ...................... .....................

TOTAL ANNUAL FUND
OPERATING EXPENSES 0.93% 0.93% 1.68% 0.93% 0.92%

.............................. ................... .......................... ...................... .....................

FEE WAIVERS/REIMBURSEMENTS
0.17% 0.17% 0.02% 0.17% 0.25%

.............................. ................... .......................... ...................... .....................

NET ANNUAL FUND
OPERATING EXPENSES 0.76% 0.76% 1.66% 0.76% 0.67%

.............................. ................... .......................... ...................... .....................
</TABLE>

-47-
<PAGE> 49

- -----------------------

1 The CDSC on Investor B Shares declines over five years starting with year
one and ending in year six from: 5.00%, 5.00%, 4.00%, 3.00%, 2.00%.

2 If you invest $1,000,000 or more in Investor A Shares of the Funds' your
shares will be subject to a redemption fee of 1.00% for redemptions of such
shares made within one year of the date of purchase. In addition, although
no such fee is currently in place the Transfer Agent has reserved the right
in the future to charge a fee for wire transfers of redemption proceeds.

3 The Distributor is currently limiting the 12b-1 fees for Investor A Shares
to 0.10%. Investor A shareholders should be aware that due to the
distribution fees, a long-term shareholder in a Fund may pay over time more
than the economic equivalent of the maximum front-end sales charge
permitted under the rules of the National Association of Securities
Dealers, Inc.

RISK/RETURN SUMMARY AND FUND EXPENSES

EXAMPLE

This Example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.

1 3 5 10
TAX-FREE FUND Year Years Years Years

<S> <C> <C> <C> <C>
INVESTOR A SHARES $ $ $ $
............................... ......... ......... ......... .........

PRIME OBLIGATIONS FUND

INVESTOR A SHARES $ $ $ $

INVESTOR B SHARES
Assuming Redemption $ $ $ $

Assuming no Redemption $ $ $ $

............................... ......... ......... ......... .........

U.S. GOVERNMENT OBLIGATIONS
FUND

INVESTOR A SHARES $ $ $ $

............................... ......... ......... ......... .........

TREASURY FUND

INVESTOR A SHARES $ $ $ $

............................... ......... ......... ......... .........
</TABLE>

-48-
<PAGE> 50

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

This section of the Prospectus provides a more complete description of the
Funds' principal investment objectives strategies and risks. Of course, there
can be no assurance that the Funds will achieve their investment objectives.
Additional descriptions of the Funds' risks, strategies, and investments, as
well as other strategies and investments not described below may be found in the
Funds' Statement of Additional Information or SAI.

This section describes risks that affect the Funds' portfolios as a whole.
Certain of these risks may apply to one or more of the Funds. These risks are:

- Market Risk This is the risk that market influences will affect
expected returns of all equities and bonds in ways that were not
anticipated.

- Interest Rate Risk This is the risk that returns will be better or
worse than expected because of changes in the level of interest rates.

- Credit Risk This is the risk associated with the ability of the firm
or institution that issues securities to meet its obligations on those
securities.

- Management Risk This risk is the possibility that investments selected
by the Funds' managers may not perform well and that the Funds will
not perform as well as a result.

THIS SECTION ALSO DESCRIBES SPECIFIC RISKS THAT MAY AFFECT A PARTICULAR FUND'S
PORTFOLIO.

-49-
<PAGE> 51
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Investor A Shares PIDAX Investor B Shares PIDBX

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY

The Fund's investment objective is to provide capital appreciation by investing
in a portfolio of equity securities of foreign issuers. The Fund normally
invests at least 80% of its total assets in equity securities of foreign
issuers. The Fund's assets normally will be invested in the securities of
issuers located in at least three foreign countries. Foreign investments also
may include debt obligations issued or guaranteed by foreign governments or
their agencies, authorities, instrumentalities or political subdivisions,
including a foreign state, province or municipality. The Fund does not
presently intend to invest in common stock of domestic companies.

The Fund will invest primarily in equity securities, including common and
preferred stocks, rights, warrants, securities convertible into common stocks
and American Depository Receipts ("ADRs") of companies included in the Morgan
Stanley Capital International Europe, Australia, Far East ("EAFE") Index, a
broadly diversified international index consisting of more than 1,000 equity
securities of companies located in Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia, the
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland, and the
United Kingdom. The Fund, however, will not be an "index" fund, and is neither
sponsored by nor affiliated with Morgan Stanley Capital International. The Fund
will not presently make investments in markets where, in the judgement of the
Adviser, property rights are not defined and supported by adequate legal
infrastructure. More than 25% of the Fund's assets may be invested in the
securities or issuers located in the same country. Criteria for determining the
appropriate distribution of investments among countries may include relative
valuation, growth prospects and fiscal, monetary and regulatory governmental
policies.

The Fund normally invests at least 65% of its total assets in at least three
foreign countries. Although not currently anticipated, the Fund may invest up to
35% of its assets in U.S. companies. The Fund may temporarily invest cash in
short-term debt instruments of U.S. and foreign issuers for cash management
purposes or pending investment.

-50-
<PAGE> 52

During temporary defensive periods as determined by the Adviser, the 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 Fund is so
invested, its investment objective may not be achieved during that time.
Uninvested cash reserves will not earn income.

-51-

<PAGE> 53
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE SMALL CAPITALIZATION FUND
- -------------------------------------------------------------------------------

Ticker Symbol: Investor A Shares PKSAX Investor B Shares PKSBX

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY

The Fund's investment objective is to provide capital appreciation by investing
in a diversified portfolio of publicly traded smaller cap equity securities.
The Fund normally invests at least 80% of its total assets in equity securities
of companies with small stock market capitalization. The Fund considers a
"small capitalization" company as one that has a comparable market
capitalization as the companies in the Russell 2000 Growth Index.

The Fund's Adviser assesses a company's growth potential by evaluating the
management team, examining products and services, analyzing financial
statements, reviewing earnings models with Wall Street analysts, and studying
company fundamentals. Companies that participate in sectors that are identified
as having long-term growth potential generally make up a substantial portion of
the Fund's holdings. These companies often have established the market niche or
have developed the unique products or technologies that are expected to produce
superior growth in revenues and earnings. The Fund's Adviser constantly reviews
the Fund's securities holdings and sells stocks when there is a breakdown in
company or industry group fundamentals or when a company's market capitalization
exceeds that of companies represented in the Russell 2000 Growth Index.

The Fund also may invest:

o up to 25% of its net assets in foreign securities either directly or
through the purchase of American Depository Receipts ("ADRs") and European
Depository Receipts ("EDRs");

o up to 20% of the value of its total assets in preferred stocks, corporate
bonds, notes, units of real estate investment trusts, warrants, and
short-term obligations (with maturities of 12 months or less) consisting of
commercial paper (including variable amount master demand notes), bankers'
acceptances, certificates of deposit, repurchase agreements, obligations
issued or guaranteed by the U.S. government or its agencies or
instrumentalities, and demand and time deposits of domestic and foreign
banks and savings and loan associations;

o securities of other investment companies and depository or custodial
receipts representing beneficial interests in any of the foregoing
securities; and

o in securities issued by foreign branches of U.S. banks and foreign banks,
CCP and in U.S. dollar-denominated commercial paper of a foreign issuer.

-52-
<PAGE> 54
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE MID CAPITALIZATION FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Investor A Shares PKEAX Investor B Shares PQIBX

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY

The Fund's investment objective is to provide capital appreciation by investing
in a diversified portfolio of publicly traded mid cap equity securities. The
Fund normally invests at least 80% of its total assets in securities of
companies with mid stock market capitalization. The Fund considers a "mid
capitalization" company as one that has a comparable market capitalization to
the companies in the Russell Mid Cap Growth Index. The Fund normally invests
80% of its total assets in common stocks and convertible securities.

The Fund's Adviser assesses a company's growth potential by evaluating the
management team, examining products and services, analyzing financial
statements, reviewing earnings models with Wall Street analysts, and studying
company fundamentals. The Fund invests in companies that typically have
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. The Fund's core holdings are
companies that participate in long-term growth industries, although the Fund
also may invest in companies in non-growth industries that exhibit the desired
characteristics. The Fund's Adviser constantly reviews the Fund's securities
holdings and sells stocks when there is a breakdown in company or industry
group fundamentals or when a company's market capitalization which exceeds that
of companies represented in the Russell Mid Cap Growth Index.

The Fund also may invest:

o up to 25% of its net assets in foreign securities either directly or
through the purchase of ADRs or EDRs;

o securities of other investment companies and depository or custodial
receipts representing beneficial interests in any of the foregoing
securities; and

o in securities issued by foreign branches of U.S. banks and foreign banks,
CCP and in U.S. dollar-denominated commercial paper of a foreign issuer.

-53-
<PAGE> 55
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE LARGE CAPITALIZATION FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Investor A Shares PLCAX Investor B Shares PKLCX

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY

The Fund's investment objective is to provide capital appreciation by investing
in a diversified portfolio of publicly traded larger cap equity securities.
The Fund normally invests at least 80% of its total assets in a diversified
portfolio of common stocks and securities convertible into common stocks of
companies with large stock market capitalization. The Fund considers a "large
capitalization" company as one that has a comparable market capitalization as
the companies in S&P Barra Growth Index.

The Fund invests in companies that typically have 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. The Fund's core holdings are companies that participate in long-term
growth industries, although the Fund also may invest in companies in non-growth
industries that exhibit the desired characteristics.

The Fund also may invest:

o up to 25% of its net assets in foreign securities either directly or
through the purchase of ADRs or EDRs; and

o in securities of other investment companies and depository or custodial
receipts representing beneficial interests in any of the foregoing
securities; and

o in securities issued by foreign branches of U.S. banks and foreign banks,
CCP and in U.S. dollar-denominated commercial paper of a foreign issuer.

-54-
<PAGE> 56

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

RISK FACTORS FOR THE GROWTH FUNDS

The principal risks of the Growth Funds are market risk and management risk. To
the extent that the Funds may invest in small- to mid-capitalization companies,
they may have capitalization risk. These investments tend to be more volatile
than investments in large-cap companies. In addition, small-cap companies may
have more risk because they often have limited product lines, markets, or
financial resources. To the extent that the Funds may invest in foreign
securities, they may have foreign risk. This is the risk of investments in
issuers located in foreign countries, which may have greater price volatility
and less liquidity. Investments in foreign securities also are subject to
political, regulatory, and diplomatic risks. Foreign risk includes currency
risk, which may occur due to fluctuations in the exchange rates between the U.S.
dollar and foreign currencies. This risk could negatively affect the value of a
Fund's investments.

-55-
<PAGE> 57
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE EQUITY INCOME FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Investor A Shares PKHAX Investor B Shares PKHBX

INVESTMENT OBJECTIVES, POLICIES AND STRATEGY

The Fund's investment objective is to provide capital appreciation by investing
in a diversified portfolio of publicly traded larger cap equity securities
which, in the aggregate, provide a premium current yield. The Fund invests at
least 80% of the value of its total assets in income-producing large cap common
stocks and securities convertible into common stocks. The Fund considers a
"large capitalization" company as one that has a comparable market
capitalization to the companies in the Standard & Poor's BARRA Value Index. The
Fund expects that its core holdings will consist of securities with a high
dividend yield, although it may balance these holdings with lower yielding but
higher-growth oriented securities.

The Fund also may invest:

o up to 20% of its total assets in preferred stocks, corporate bonds or
notes;

o in units of real estate investment trusts, warrants, and short-term
obligations (with maturities of 12 months or less) consisting of commercial
paper (including variable amount master demand notes), bankers'
acceptances, certificates of deposit, repurchase agreements, obligations
issued or guaranteed by the U.S. government or its agencies or
instrumentalities, and demand and time deposits of domestic and foreign
banks and savings and loan associations;

o in securities of other investment companies and depository or custodial
receipts representing beneficial interests in any of the foregoing
securities; and

o up to 25% of its net assets in foreign securities either directly or
through the purchase of ADRs, securities issued by foreign branches of U.S.
banks and foreign banks, in CCP, and in Europaper.

-56-
<PAGE> 58
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE BALANCED ALLOCATION FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Investor A Shares PKBFX Investor B Shares PKBBX

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY

The Fund's investment objective is to provide long-term capital appreciation
and current income. The Fund invests in a broad range of securities including
common stocks, convertible securities and fixed-income securities. Normally,
the Fund expects to invest 50% to 70% of its net assets in common stocks and
convertible securities and 25% to 55% of its net assets in fixed-income
securities. The Fund also may invest up to 30% of it net assets in cash and
cash-equivalent securities, which include highly liquid securities with a
maturity of less than three months.

The Fund's investments in common stocks, debt securities, and cash equivalents
may vary from time to time depending on the Adviser's assessment of business,
economic, and market conditions, including potential advantages of price shifts
between the stock and bond markets. The Fund invests in stocks for growth and in
debt securities for stability. The Fund's Adviser adjusts the mix of stocks,
bonds, and cash equivalents periodically to take advantage of rising markets or
decrease exposure to declining markets.

The Fund holds common stocks primarily for the purpose of providing long-term
growth of capital. When choosing such stocks, the potential for long-term
capital appreciation will be the primary basis for selection. The Fund invests
primarily in those companies that are growth-oriented and have exhibited
consistent, above-average growth in revenues and earnings.

The fixed-income portion of the Fund's portfolio consists of bonds, debentures,
notes, zero-coupon securities, mortgage-related securities, state, municipal or
industrial revenue bonds, obligations issued or guaranteed by the U.S.
government or its agencies or instrumentalities, certificates of deposit, time
deposits, high quality commercial paper, bankers' acceptances and variable
amount master demand notes. In addition, a portion of the Fund's assets may,
from time to time, be invested in first mortgage loans and participation
certificates in pools of mortgages issued or guaranteed by the U.S. government
or its agencies or instrumentalities. Some of the securities in which the Fund
invests may have warrants or options attached. The Fund may also invest in
repurchase agreements.

The Fund expects to invest in a variety of U.S. Treasury obligations, differing
in their interest rates, maturities, and time of issuance, as well as "stripped"
U.S. Treasury obligations such as Treasury receipts issued by the U.S. Treasury
representing either future interest or principal payments, and other obligations
issued or guaranteed by the U.S. government or its agencies or
instrumentalities.

The Fund will invest only in corporate fixed-income securities which are rated
at the time of purchase within the four highest rating categories assigned by a
nationally recognized statistical rating organization ("NRSRO") or, if unrated,
which the Adviser deems present attractive opportunities and are of comparable
quality.

-57-
<PAGE> 59
The Fund also may invest in:

o short-term obligations (with maturities of 12 months or less) consisting of
domestic and foreign commercial paper, variable amount master demand notes,
bankers' acceptances, certificates of deposit and time deposits of domestic
and foreign branches of U.S. banks and foreign banks, and repurchase
agreements. The Fund may also invest in securities of other investment
companies;

o obligations of the Export-Import Bank of the United States, in U.S.
dollar-denominated international bonds for which the primary trading market
is the United States ("Yankee Bonds"), or for which the primary trading
market is abroad ("Eurodollar Bonds"), and in Canadian bonds and bonds
issued by institutions, such as the World Bank and the European Economic
Community, organized for a specific purpose by two or more foreign
governments ("Supranational Agency Bonds"). The Fund's investments in
foreign securities may be made either directly or through the purchase of
ADRs and the Fund may also invest in securities issued by foreign branches
of U.S. banks and foreign banks, in CCP, and in Europaper; and

o short-term securities in whatever proportion deemed desirable for temporary
defensive periods during adverse market conditions as determined by the
Adviser. However, to the extent that the Fund is so invested, its
investment objective may not be achieved during that time.

-58-
<PAGE> 60

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

RISK FACTORS FOR THE GROWTH AND INCOME FUNDS

The principal risks of the Growth and Income Funds are market risk, interest
rate risk, credit risk and management risk. The Balanced Allocation Fund has the
risk that the allocation of its investments between equity and debt securities
may have a more significant effect on the Fund's net asset value when one of
these asset classes is performing more poorly than the other. To the extent that
the Funds may invest in foreign securities, they may have foreign risk. This is
the risk of investments in issuers located in foreign countries, which may have
greater price volatility and less liquidity. Investments in foreign securities
also are subject to political, regulatory, and diplomatic risks. Foreign risk
includes currency risk, which may occur due to fluctuations in the exchange
rates between the U.S. dollar and foreign currencies. This risk could negatively
affect the value of a Fund's investments.

-59-
<PAGE> 61
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE BOND FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Investor A Shares PBOAX Investor B Shares PKBIX

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY

The Fund's investment objective is to provide current income as well as
preservation of capital by investing in high- and medium-grade fixed-income
securities. The Fund invests at least 80% of its total assets in investment
grade securities of all types. The Fund expects to maintain a dollar-weighted
average portfolio maturity of 4 to 12 years. The Fund also expects to invest in
U.S. Treasury obligations with different interest rates and maturities, as well
as "stripped" U.S. Treasury obligations and other U.S. government obligations.

Fixed-income securities include bonds, debentures, notes with remaining
maturities at the time of purchase of one year or more, zero-coupon securities,
mortgage-related securities, state, municipal or industrial revenue bonds,
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities, debt securities convertible into, or exchangeable for, common
stocks, first mortgage loans and participation certificates in pools of
mortgages issued or guaranteed by the U.S. government or its agencies or
instrumentalities.

The Fund will invest in state and municipal securities when, in the opinion of
the Adviser, their yields are competitive with comparable taxable debt
obligations.

In making investment decisions for the Fund, the Adviser will consider many
factors other than current yield, including the preservation of capital, the
potential for realizing capital appreciation, maturity and yield to maturity.
The Fund will invest only in corporate debt securities which are rated at the
time of purchase within the four highest rating categories assigned by a
nationally recognized statistical rating organization ("NRSRO") or, if unrated,
of comparable quality.

The Fund also may invest:

- up to 20% of its assets in preferred stocks and notes with remaining
maturities at the time or purchase of less than one year, short-term
debt obligations consisting of domestic and foreign commercial paper
(including variable amount master demand notes), banker's acceptances,
certificates of deposit and time deposits of domestic and foreign
branches of U.S. banks and foreign banks, repurchase agreements,
securities of other investment companies, and guaranteed investment
contracts ("GICs") issued by insurance companies. Some of the
securities in which the Fund invests may have warrants or options
attached;

- up to 25% of its net assets in foreign securities either directly or
through the purchase of ADRs and securities issued by foreign branches
of U.S. banks and foreign banks, in CCP, and in Europaper;

- in Stripped Treasury Obligations, and other obligations issued or
guaranteed by the U.S. government or its agencies or
instrumentalities;

-60-
<PAGE> 62
- corporate debt securities which are rated at the time of purchase
within the four highest rating categories assigned by an NRSRO or, if
unrated, which the Adviser deems present attractive opportunities and
are of comparable quality;

- obligations of the Export-Import Bank of the United States, in Yankee
Bonds, in Eurodollar Bonds, in Canadian Bonds and in Supranational
Agency Bonds.

During temporary defensive periods as determined by the Adviser, the
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 Fund is so invested, its investment objective may not
be achieved during that time. Uninvested cash reserves will not earn
income.

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<PAGE> 63
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE INTERMEDIATE GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Investor A Shares PKIAX Investor B Shares PIOGX

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY

The Fund's investment objective is to provide current income as well as
preservation of capital by investing primarily in U.S. government securities.
The Fund normally invests at least 80% of it total assets in U.S. government
debt securities. The Fund expects to maintain a dollar-weighted average
portfolio maturity of two to ten years.

The Fund normally invests in U.S. Treasury bills, notes or bonds and other U.S.
government securities. The Fund also may invest in mortgage-related securities
issued or guaranteed by the U.S. government or its agencies or
instrumentalities. The Fund may invest up to 20% of its total assets in debt
securities, preferred stocks and other investments without regard to maturity.

The Fund also may:

During temporary defensive periods as determined by the Adviser, 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 Fund is so invested, its
investment objective may not be achieved during that time. Uninvested cash
reserves will not earn income.

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<PAGE> 64
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE U.S. GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Investor A Shares PKGAX Investor B Shares PKGBX

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY

The Fund's investment objective is to provide current income as well as
preservation of capital by investing primarily in U.S. government securities.
The Fund normally invests at least 80% of its total assets in obligations
issued or guaranteed by the U.S. government or its agencies or
instrumentalities. The Fund also may invest up to 20% of its total assets in
mortgage-related securities, debt securities and preferred stock of
non-governmental entities. The Fund expects to maintain a dollar-weighted
average portfolio maturity of two to ten years. Normally, the Fund invests in a
variety of U.S. government obligations, including mortgage-related securities,
U.S. Treasury bills, notes and bonds, "stripped" U.S. Treasury obligations and
other U.S. government securities.

The Fund also may invest in:

- invest in short-term obligations (with maturities of 12 months or
less) consisting of domestic and foreign commercial paper (including
variable amount master demand notes), rated at the time of purchase
within the top two rating categories assigned by an NRSRO or, if
unrated, which the Adviser deems present attractive opportunities and
are of comparable quality, bankers' acceptances, certificates of
deposit and time deposits of domestic and foreign branches of U.S.
banks and foreign banks, and repurchase and reverse repurchase
agreements. The Fund may also invest in corporate debt securities
which are rated at the time of purchase within the top three rating
categories assigned by an NRSRO or, if unrated, which the Adviser
deems present attractive opportunities and are of comparable quality.

During temporary defensive periods as determined by the Adviser, the
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 Fund is so invested, its investment objective may not
be achieved during that time. Uninvested cash reserves will not earn
income.

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<PAGE> 65
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE LIMITED MATURITY BOND FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Investor A Shares PLMAX Investor B Shares PLMBX

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY

The Fund's investment objective is to provide current income as well as
preservation of capital by investing in a portfolio of high- and medium-grade
fixed-income securities. The Fund normally invests at least 80% of the value of
its total assets in investment grade debt securities of all types. The Fund
invests primarily in corporate bonds, U.S. government obligations, and
mortgage-related securities. The Fund expects to maintain a dollar- weighted
average portfolio maturity of one to five years. The Fund also expects to
invest in U.S. Treasury obligations with different interest rates and
maturities, as well as "stripped" U.S. Treasury obligations and other U.S.
government obligations.

Fixed-income securities consist of bonds, debentures, notes with remaining
maturities at the time of purchase of one year or more, zero-coupons securities,
mortgage-related securities, state, municipal or industrial revenue bonds,
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities, debt securities convertible into, or exchangeable for, common
stocks, first mortgage loans and participation certificates in pools of
mortgages issued or guaranteed by the U.S. government or its agencies or
instrumentalities.

In making investment decisions for the Fund, the Adviser considers many factors
other than current yield, including the preservation of capital, maturity, and
yield to maturity. By doing so, the Fund attempts to minimize the fluctuation in
its shares' net asset value relative to those funds which invest in longer-term
obligations. The Fund may invest in state and municipal securities when, in the
opinion of the Adviser, their yields are competitive with comparable taxable
debt obligations. The Fund will invest only in corporate debt securities that
are rated at the time of purchase within the four highest rating groups or, if
unrated, of comparable quality.

The Fund also may invest:

up to 20% of its total assets in the debt securities without regard to maturity,
preferred stocks and short-term debt obligations consisting of domestic and
foreign commercial paper (including variable amount master demand notes),
banker's acceptances, certificates of deposit and time deposits of domestic and
foreign branches of U.S. banks and foreign banks, repurchase agreements,
securities of other investment companies and GICs.; and

up to 25% of its net assets in foreign securities either directly or through the
purchase of ADRs and securities issued by foreign branches of U.S. banks and
foreign banks, in CCP, and in Europaper;

In Stripped Treasury Obligations, and other obligations issued or guaranteed by
the U.S. government or its agencies or instrumentalities;

-64-
<PAGE> 66
corporate debt securities which are rated at the time of purchase within the
four highest rating categories assigned by an NRSRO or, if unrated, which the
Adviser deems present attractive opportunities and are of comparable quality;
and

obligations of the Export-Import Bank of the United States, in Yankee Bonds, in
Eurodollar Bonds, in Canadian Bonds and in Supranational Agency Bonds.

Some of the securities listed above may have options or warrants attached.

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<PAGE> 67

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

RISK FACTORS FOR THE INCOME FUNDS

The principal risks of the Income Funds are market risk, interest rate risk,
credit risk and management risk. Changes in interest rates may significantly
affect the Funds. Increases in interest rates will cause a decline in the value
of your investment.

The Income Funds may invest a significant portion of their assets in
mortgage-related securities. These securities have sensitivities to changes in
interest rates that are different from many other types of debt securities. When
interest rates rise, the maturities of these types of securities tend to
lengthen and the value of the securities decreases more significantly. In
addition, these types of securities are subject to prepayment when interest
rates fall, which generally results in lower returns because the Funds must
reinvest their assets in debt securities with lower interest rates.

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<PAGE> 68
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Investor A Shares PMMAX Investor B Shares PMMBX

INVESTMENT OBJECTIVES, POLICIES AND STRATEGY

The Fund's investment objective is to provide current income exempt from
federal income taxes and, to the extent possible, from Michigan personal income
taxes, as is consistent with convervation of capital. The Fund normally invests
at least 80% of its net assets in a portfolio of Michigan municipal securities.
The Fund's primary consideration in selecting Michigan municipal securities is
quality.

The Fund normally invests in Michigan municipal securities with a
dollar-weighted average portfolio maturity of two to ten years. However, the
Fund may invest in Michigan municipal securities of any maturity and the Adviser
may extend or shorten the average weighted maturity of its portfolio depending
upon anticipated changes in interest rates or other relevant market factors. In
addition, the average weighted rating of the Fund's portfolio may vary depending
upon the availability of suitable municipal securities or other relevant market
factors.

The Fund invests in Michigan municipal securities that are rated at the time of
purchase within the four highest rating categories assigned by an NRSRO or, in
the case of notes, tax-exempt commercial paper or variable rate demand
obligations, rated within the two highest rating categories by an NRSRO. The
Fund also may purchase Michigan municipal securities which are unrated at the
time of purchase but are determined to be of comparable quality by the Adviser
pursuant to guidelines approved by the Board of Trustees.

Interest income from certain types of municipal securities may be subject to
federal alternative minimum tax. The Fund will not treat these bonds as
municipal securities for purposes of measuring compliance with the 80% tests
described above.

Investments of the Fund may be made in taxable obligations if, for example,
suitable tax-exempt obligations are unavailable or if acquisition of U.S.
government or other taxable securities is deemed appropriate for temporary
defensive purposes as determined by the Adviser to be warranted due to market
conditions. Such taxable obligations consist of government securities,
certificates of deposit, time deposits and bankers' acceptances of selected
banks, commercial paper meeting the Fund's quality standards for tax-exempt
commercial paper (as described above), and such taxable obligations as may be
subject to repurchase agreements.

-67-
<PAGE> 69

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE NATIONAL TAX EXEMPT BOND FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Investor A Shares PMUAX Investor B Shares PKBMX

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY

The Fund's investment objective is to provide current income exempt from
federal income taxes as is consistent with conservation of capital. The Fund
normally invests at least 80% of its assets in a diversified portfolio of
municipal securities the interest on which is both exempt from federal income
taxes and not treated as a preference item for individuals for the purpose of
the federal alternative minimum tax.

The Fund normally invests in long-term municipal securities and will maintain
dollar-weighted average portfolio maturity of two to ten years. The Fund
intends, under normal market conditions, to maintain an average weighted credit
rating of Aa/AA. The average weighted rating of the Fund's portfolio may vary
depending upon the availability of suitable municipal securities or other
relevant market factors. Although it does not intend to do so on a regular
basis, the Fund may invest more than 25% of its net assets in (i) municipal
securities whose issuers are in the same state and (ii) municipal securities the
interest on which is paid solely from revenues of similar projects.

The Fund may invest up to 20% of its total assets in private activity bonds
which may be treated as a specific tax preference item under the federal
alternative minimum tax.

-68-
<PAGE> 70

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

RISK FACTORS FOR THE TAX-FREE INCOME FUNDS

The Tax-Free Income Funds have interest rate risk and credit risk. In addition
the Funds have municipal market risk. This is the risk that special factors may
adversely affect the value of municipal securities and have a significant
adverse effect on the value of the Fund's investments. These factors include
political or legislative changes, uncertainties related to the tax status of
municipal securities, or the rights of investors in these securities. The
Michigan Municipal Bond Fund is not "diversified," meaning that it can invest in
a relatively small number of issuers. Factors affecting these issuers could have
a more significant adverse effect on this Fund's net asset value.

-69-

<PAGE> 71

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

MONEY MARKET FUNDS

All of the Money Market Funds seek to maintain a stable net asset value of $1.00
per share and invest exclusively in United States dollar-denominated instruments
that the Board of Trustees and the Adviser determine present minimal credit
risks and which at the time of acquisition are (a) U.S. government securities,
(b) money market fund shares, or (c) rated by at least two NRSROs or by the only
NRSRO providing a rating in one of the two highest rating categories for
short-term debt obligations or, if unrated, which the Adviser deems to be of
comparable quality. There is no assurance, however, that they will be able to
maintain the $1.00 net asset value per share on a continuous basis. Each Fund
pursues its strategy by maintaining a portfolio of high-quality money market
investments. As money market funds, the Funds must meet the requirements of SEC
Rule 2a-7. The Rule imposes strict requirements on the investment quality,
maturity and diversification of the Funds' investments. Under Rule 2a-7, the
Funds' investments must each have a remaining maturity of no more than 397 days
and each Money Market Fund must maintain an a dollar-weighted average portfolio
maturity that does not exceed 90 days.

-70-
<PAGE> 72
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE TAX-FREE FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Investor A Shares PFAXX

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY

The Fund's investment objective is to provide as high a level of current
interest income free from federal income taxes with liquidity and stability of
principal. The Fund normally invests at least 80% of its total assets in
municipal securities. The Fund may invest up to 20% of its total assets in
obligations the interest on which is either subject to federal income taxation
or treated as a preference item for purposes of the federal alternative minimum
tax.

The Fund also may: invest in commercial paper (subject to the quality standards
for tax-exempt commercial paper).

If the Adviser deems it appropriate for temporary defensive purposes, the Fund
may increase its holdings in taxable obligations to over 20% of its total assets
and may also hold uninvested cash reserves pending investment. Taxable
obligations may include obligations issued or guaranteed by the U.S. government,
its agencies or instrumentalities (some of which may be subject to repurchase
agreements), certificates of deposit and bankers' acceptances of selected banks,
and commercial paper meeting the Fund's quality standards for tax-exempt
commercial paper.

During the temporary defensive periods as determined by the Adviser, the Fund
may hold up to 100% of its total assets in short-term obligations including
domestic bank certificates of deposit, bankers' acceptances and repurchase
agreement secured by bank instruments. However, to the extent that the Fund is
so invested, its investment objective may not be achieved during that time.
Uninvested cash reserves will not earn income.

The most recent information about the Fund's portfolio holdings can be found in
its annual or semi-annual report. For information about receiving this report,
see the back cover.

-71-
<PAGE> 73
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Investor A Shares POAXX Investor B Shares Not Yet Available

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY

The Fund's investment objective is to seek to provide current income with
liquidity and stability of principal. The Fund invests in high-quality money
market instruments, including municipal securities and other instruments of
comparable high quality. The Fund also may invest in commercial paper, other
short-term promissory notes issued by corporations (including variable amount
master demand notes), rated at the time of purchase within the two highest
rating categories assigned by at least two NRSROs or by the only NRSRO providing
a rating or, if not rated, which the Adviser deems to be of comparable quality
bankers' acceptances, CCP, Europaper, certificates of deposit and time deposits.

The most recent information about the Fund's portfolio holdings can be found in
its annual or semi-annual report. For information about receiving this report,
see the back cover.

-72-
<PAGE> 74
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE U.S. GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Investor A Shares PGAXX

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY

The Fund's investment objective is to provide current income with liquidity and
stability of principal. The Fund normally invests at least 65% of its total
assets in short-term U.S. Treasury bills, notes, and other government
obligations and agency securities. The Fund may invest up to 35% of its total
assets in high-quality money market instruments, including:

municipal securities;

bankers' acceptances;

certificates of deposit, time deposits, and other instruments deemed to be of
comparable high quality.

The Fund also may invest in commercial paper and other short-term promissory
notes issued by corporations (including variable amount master demand notes)
rated at the time of purchase within the two highest rating categories assigned
by at least two NRSROs or by the only NRSRO providing a rating or, if not rated,
which the Adviser deems to be of comparable quality.

The most recent information about the Fund's portfolio holdings can be found in
its annual or semi-annual report. For information about receiving this report,
see the back cover.

-73-
<PAGE> 75
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE TREASURY FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Investor A Shares PTUXX

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY

The Fund's investment objective is to provide current income with liquidity and
stability of principal. The Fund normally invests exclusively in U.S.
government obligations and in repurchase agreements backed by these securities.

The most recent information about the Fund's portfolio holdings can be found in
its annual or semi-annual report. For information about receiving this report,
see the back cover.

-74-
<PAGE> 76
RISK FACTORS FOR THE MONEY MARKET FUNDS

The Money Market Funds are subject to management risk. In addition, specific
risks of the Funds' portfolios include:

Interest Rate Risk - Because the Funds invest in short-term securities, a
decline in interest rates will affect the Funds' yields as these securities
mature or are sold and the Funds purchase new short-term securities with lower
yields. Generally, an increase in interest rates causes the value of a debt
instrument to decrease. The change in value for shorter-term securities is
usually smaller than for securities with longer maturities. Because the Funds
invest in securities with short maturities and seek to maintain a stable net
asset value of $1.00 per share, it is possible, though very unlikely, that an
increase in interest rates would change the value of your investment.

Credit Risk - This is the risk that a security's credit rating will be
downgraded or that the issuer of a security will default (fail to make scheduled
interest and principal payments).

Municipal Market Risk - The Tax-Free Fund faces the risk that special factors
may adversely affect the value of municipal securities and have a significant
effect on the value of the Fund's investments. These factors include political
or legislative changes, uncertainties related to the tax status of municipal
securities, or the rights of investors in these securities. Investments in
certain municipal securities with principal or interest payments that are made
from a specific project or facility, and not from general tax revenues, may have
increased risks. Factors affecting the project or facility, such as local or
economic conditions, could have significant effect on the project's ability to
make payments of principal and interest on these securities.

-75-
<PAGE> 77
FUND MANAGEMENT

THE INVESTMENT ADVISER

National City Investment Management Company, ("IMC" or the "Adviser"),
1900 East Ninth Street, Cleveland, Ohio 44114 is the adviser for the Funds. IMC,
founded in 1998, manages more than $23.7 billion in assets, including $4.3
billion in the Parkstone Group of Funds. Through its portfolio management teams,
IMC makes the day-to-day investment decisions and continuously reviews,
supervises and administers the Funds' investment programs.

For these advisory services, the Funds paid as follows during their fiscal year
ended May 31, 1999:
<TABLE>
<CAPTION>

- --------------------------------------------------------------------------------- --------------------------
PERCENTAGE OF AVERAGE
NET ASSETS
- --------------------------------------------------------------------------------- --------------------------
<S> <C>
Parkstone International Discovery Fund 1.16%*
- --------------------------------------------------------------------------------- --------------------------
Parkstone Small Capitalization Fund 1.00%
- --------------------------------------------------------------------------------- --------------------------
Parkstone Mid Capitalization Fund 1.00%
- --------------------------------------------------------------------------------- --------------------------
Parkstone Large Capitalization Fund 0.80%
- --------------------------------------------------------------------------------- --------------------------
Parkstone Equity Income Fund 1.00%
- --------------------------------------------------------------------------------- --------------------------
Parkstone Balanced Allocation Fund 0.75%**
- --------------------------------------------------------------------------------- --------------------------
Parkstone Bond Fund 0.70%**
- --------------------------------------------------------------------------------- --------------------------
Parkstone Intermediate Government Obligations Fund 0.70%**
- --------------------------------------------------------------------------------- --------------------------
Parkstone U.S. Government Income Fund 0.45%**
- --------------------------------------------------------------------------------- --------------------------
Parkstone Limited Maturity Bond Fund 0.55%**
- --------------------------------------------------------------------------------- --------------------------
Parkstone Michigan Municipal Bond Fund 0.55%**
- --------------------------------------------------------------------------------- --------------------------
Parkstone National Tax Exempt Bond Fund 0.55%**
- --------------------------------------------------------------------------------- --------------------------
Parkstone Tax-Free Fund 0.40%
- --------------------------------------------------------------------------------- --------------------------
Parkstone Prime Obligations Fund 0.40%
- --------------------------------------------------------------------------------- --------------------------
Parkstone U.S. Government Obligations Fund 0.40%
- --------------------------------------------------------------------------------- --------------------------
Parkstone Treasury Fund 0.40%
- --------------------------------------------------------------------------------- --------------------------
</TABLE>

* Calculated based on 1.25% on the first $50 million, in average daily net
assets, 1.20% on the next $50 million, 1.15% on the next $300 million and 1.05%
over $400 million.

** IMC waived a portion of its contractual fees with the Funds for the most
recent fiscal year. Contractual fees (without waivers) are: Balanced Allocation
Fund, 1.00%; Bond Fund, 0.74%; Limited Maturity Bond Fund, 0.74%; Intermediate
Government Obligations Fund, 0.74%; U.S. Government Income Fund, 0.74%;
National Tax Exempt Bond Fund, 0.74%; Michigan Municipal Bond Fund, 0.74%.

-76-
<PAGE> 78
Portfolio Management Team

IMC utilizes a team approach for management of the funds. No one person is
primarily responsible for making investment recommendations to the team. The
table below shows the IMC management team responsible for each fund.

Portfolio Portfolio Management Team

Parkstone International Discovery Fund International Equity Team

Parkstone Small Capitalization Fund Small Cap Growth Team

Parkstone Mid Capitalization Fund Mid Cap Growth Team

Parkstone Large Capitalization Fund Large Cap Growth Team

Parkstone Equity Income Fund Equity Value Team

Parkstone Balanced Allocation Fund Large Cap Growth and Fixed Income
Teams

Parkstone Bond Fund Fixed Income Team

Parkstone Intermediate Government Fixed Income Team
Obligations Fund
Parkstone U.S. Government Income Fund Fixed Income Team

Parkstone Limited Maturity Bond Fund Fixed Income Team

Parkstone Michigan Municipal Bond Fund Tax-Free Fixed Income Team

Parkstone National Tax Exempt Bond Fund Tax-Free Fixed Income Team

Parkstone Tax-Free Fund Fixed Income Team

Parkstone Prime Obligations Fund Fixed Income Team

Parkstone U.S. Government Obligations Fixed Income Team
Fund
Parkstone Treasury Fund Fixed Income Team

-77-
<PAGE> 79

THE DISTRIBUTOR AND ADMINISTRATOR

SEI Investments Distribution Company (the "Distributor"), a wholly-owned
subsidiary of SEI Investments distributes the Trust's Shares to the separate
accounts, which purchase and redeem these shares at the net asset value without
sales or redemption charges. The Trust reserves the right to reject a purchase
order when the Trust determines that it is not in the best interest of the Trust
to accept such order.

BISYS Fund Services ("BISYS"), whose address is 3435 Stelzer Road, Columbus,
Ohio 43219-3035, serves as the Fund's administrator.

The Statement of Additional Information has more detailed information
about the Investment Adviser and other service providers.

YEAR 2000

Like other funds and business organizations around the world, the Funds
could be adversely affected if the computer systems used by the Adviser and the
Funds' other service providers do not properly process and calculate
date-related information for the year 2000 and beyond. In addition, Year 2000
issues may adversely affect companies in which the Funds invest where, for
example, such companies incur substantial costs to address Year 2000 issues or
suffer losses caused by the failure to adequately or timely do so.

The Funds have been assured that the Adviser and the Funds' other
service providers (i.e., Administrator, Transfer Agent, Fund Accounting Agent,
Custodian and Distributor) have developed and are implementing clearly-defined
and documented plans intended to minimize risks to services critical to the
Funds' operations associated with Year 2000 issues. Internal efforts include a
commitment to dedicate adequate staff and funding to identify and remedy Year
2000 issues, and specific actions such as inventorying software systems,
determining inventory items that may not function properly after December 31,
1999, reprogramming or replacing such systems, and retesting for Year 2000
readiness. The Funds' Adviser and service providers are likewise seeking
assurances from their respective vendors and suppliers that such entities are
addressing any Year 2000 issues, and each provider intends to engage, where
appropriate, in private and/or industry interface testing of systems for Year
2000 readiness.

In the event that any systems upon which the Funds are dependent are
not Year 2000 ready by December 31, 1999, administrative errors and account
maintenance failures may occur. While the ultimate costs or consequences of
incomplete or untimely resolution of Year 2000 issues by the Adviser or the
Funds' service providers cannot be accurately assessed at this time, the Funds
currently have no reason to believe that the Year 2000 plans of the Adviser and
the Funds' service providers will not be completed by December 31, 1999, or that
the anticipated costs associated with full implementation of their plans will
have a material adverse impact on either their business operations or financial
condition or those of the Funds. The Funds and the

-78-

<PAGE> 80

Adviser will continue to closely monitor developments relating to this issue,
and the Adviser and the Funds' service providers are developing contingency
plans for providing back-up computer services in the event of a systems failure
or the inability of any provider to achieve Year 2000 readiness. Separately, the
Adviser will monitor potential investment risk related to Year 2000 issues.

-79-
<PAGE> 81
SHAREHOLDER INFORMATION

PRICING OF FUND SHARES

MONEY MARKET FUNDS
HOW NAV IS CALCULATED

Each of the Money Market Funds seeks to maintain an NAV of $1.00 per share by
valuing the obligations in accordance with SEC regulations. Amortized cost will
normally approximate market value.

The NAV is calculated by adding the total value of a Fund's investments and
other assets, subtracting its liabilities and then dividing that figure by the
number of outstanding shares of the Fund:

NAV =

TOTAL ASSETS - LIABILITIES
Number of Shares
Outstanding

You can find most Funds' NAV daily in The Wall Street Journal and other
newspapers. NAV is calculated separately for each class of shares.

The net asset value, or NAV, of the Treasury and Tax-Free Funds is determined
and the shares are priced as of 1:00 p.m. Eastern time and as of the close of
trading on the New York Stock Exchange ("NYSE"), normally at 4 p.m. Eastern time
on each Business Day. The net asset value of the Prime Obligations and U.S.
Government Obligations Funds is determined and the shares are priced as of 3:00
p.m. Eastern time and as of the close of trading on the NYSE on each Business
Day. The Money Market Funds value their securities at their amortized cost. The
amortized cost method involves valuing a portfolio security initially at its
cost on the date of the purchase and thereafter assuming a constant amortization
to maturity of the difference between the principal amount due at maturity and
initial cost.

OTHER FUNDS

The per share NAV for each non-Money Market Fund is determined and its shares
are priced at the close of regular trading on the New York Stock Exchange,
normally at 4:00 p.m. Eastern time on each Business Day.

Your order for purchase of shares is priced at the next NAV calculated after
your order is received by the Distributor. Your order for redemption of shares
is priced at the next NAV calculated after shares are properly tendered for
redemption.

The Funds' securities are generally valued at current market prices. If market
quotations are not available, prices will be based on fair value as determined
by a method which the Funds' 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.

Some of the Funds have portfolio securities that are primarily listed on foreign
exchanges that trade on weekends or other days when these Funds do not price
their shares. As a result, the net asset value of a Fund's shares may change on
days when shareholders will not be able to purchase or redeem the Fund's shares.

BUSINESS DAYS DEFINED

A business day for the Funds is generally a day that the New York Stock Exchange
is open for business. The Funds will not be open in observance of the following
holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Columbus Day (Money Market
Funds only), Veterans Day (Money Market Funds only), Thanksgiving and Christmas
Day.

-80-
<PAGE> 82

SHAREHOLDER INFORMATION

PURCHASING AND ADDING TO YOUR SHARES

You may purchase Funds through the Funds' Distributor or through banks, brokers
and other investment representatives, which may charge additional fees and may
require higher minimum investments or impose other limitations on buying and
selling shares. If you purchase shares through an investment representative, the
investment representative is responsible for transmitting orders by close of
business and may have an earlier cut-off time for purchase and sale requests.
Consult your investment representative or institution for specific information.

<TABLE>

ACCOUNT TYPE MINIMUM MINIMUM
INITIAL INVESTMENT SUBSEQUENT

INVESTOR A OR B
SHARES
<S> <C> <C>
Regular
(non-retirement) $ 500 $ None
.................. ..................... ...............
Retirement (IRA $ -0- $ None
.................. ..................... ...............
Automatic
Investment Plan) $ 50 $ 50
.................. ..................... ...............

</TABLE>

- All purchases must be in U.S. dollars.
- A fee will be charged for any checks that do not clear.
- Third-party checks are not accepted.

A Fund may waive its minimum purchase requirement and the Distributor may reject
a purchase order if it considers it in the best interest of a Fund and its
shareholders.

Investor A Shares and Investor B Shares of the Michigan Municipal Bond Fund may
only be sold in those states where the Fund has filed the required notification
documents, currently only Colorado, District of Columbia, Florida, Georgia,
Hawaii, Illinois, Indiana, Michigan, Mississippi, New Jersey, Ohio, and
Virginia.

The Group reserves the right to reject all or part of any order for the purchase
of Investor A Shares or Investor B Shares.

- --------------------------------------------------------------------------------
Avoid 31% Tax Withholding

Each Fund is required to withhold 31% of taxable dividends, capital gains
distributions and redemptions paid to shareholders who have not provided the
Fund with their certified taxpayer identification number in compliance with IRS
rules. To avoid this, make sure you provide your correct Tax Identification
Number (Social Security Number for most investors) on your account application.
- --------------------------------------------------------------------------------

-81-
<PAGE> 83

SHAREHOLDER INFORMATION

PURCHASING AND ADDING TO YOUR SHARES - CONTINUED

INSTRUCTIONS FOR OPENING OR ADDING TO AN ACCOUNT

BY REGULAR MAIL

If purchasing through your financial advisor or brokerage account, simply tell
your advisor or broker that you wish to purchase shares of the Funds and he or
she will take care of the necessary documentation. For all other purchases,
follow the instructions below.

Initial Investment:
1. Carefully read and complete an account application. Establishing your
account privileges now saves you the inconvenience of having to add them
later.
2. Make check, bank draft or money order payable to "The Parkstone Group of
Funds" and include the name of the appropriate Fund(s) on the check.
3. Mail to: The Parkstone Group of Funds, P.O. Box 8590, Boston, MA 02266-8590

Subsequent:
1. Use the investment slip attached to your account statement, or
2. Include the following information on a piece of paper:
- Fund name
- Share class
- Amount invested
- Account name
- Account number
Include your account number on your check.

3. Mail to: The Parkstone Group of Funds, P.O. Box 8590, Boston, MA 02266-8590.

Note: If you pay by check, the transaction will not be processed until the check
is received by the Group's Custodian. If a check received to purchase Investor A
Shares or Investor B Shares does not clear within three Business Days of the
purchase order, the purchase may be canceled. You could be liable for any losses
or fees incurred.

BY OVERNIGHT SERVICE

See instructions 1-2 above for subsequent investments and
Send to: The Parkstone Group of Funds
c/o Boston Financial
66 Brooks Drive
Braintree, MA 02184

-82-
<PAGE> 84
ELECTRONIC PURCHASES

Your bank must participate in the Automated Clearing House (ACH) and must be a
U. S. Bank. Your bank or broker may charge for this service.

Establish the electronic purchase option on your account application or call
1-800-451-8377. Your account can generally be set up for electronic purchases
within 15 days.

Call 1-800-451-8377 to arrange a transfer from your bank account.

-83-
<PAGE> 85

SHAREHOLDER INFORMATION

PURCHASING AND ADDING TO YOUR SHARES - CONTINUED

ELECTRONIC VS. WIRE TRANSFER
...............................................................................

Wire transfers allow financial
institutions to send funds to each
other almost instantaneously. With
an electronic purchase or sale, the
transaction is made through ACH and
may take up to eight days to clear.
There is generally no fee for ACH
transactions.
................................................................................

BY WIRE TRANSFER

NOTE: YOUR BANK MAY CHARGE A WIRE TRANSFER FEE.

Once your account has been established and you have an account number follow the
instructions below:

For initial and subsequent investments:
Instruct your bank to wire transfer your investment to:
Name of Bank
Routing Number: ABA #000000
DDA#
Include:
Your name
Your account number
After instructing your bank to wire the funds, call 800-451-8377 to advise us of
the amount being transferred and the name of your bank.

Note: If the wire transfer is not received by the Fund's Custodian within three
Business Days of the purchase order, the purchase may be cancelled and you could
be liable for fees incurred.

...............................................................................
You can add to your account by using the convenient options described below. The
Fund reserves the right to change or eliminate these privileges at any time with
60 days notice.
...............................................................................

-84-
<PAGE> 86

SHAREHOLDER INFORMATION

PURCHASING AND ADDING TO YOUR SHARES - CONTINUED

AUTO INVEST PLAN

You can make automatic investments in the Funds from your bank account, through
payroll deduction or from your federal employment, Social Security or other
regular government checks. Your Auto Invest Plan can be started with a minimum
initial investment of $50.

To invest regularly from your bank account:

- Complete the appropriate portion on your Account Application or the
supplemental Auto Invest Plan which can be acquired by calling the
Funds at 1-800-451-8377. Make sure you note:

- Your bank name, address and account number
- The amount you wish to invest automatically (minimum $50)
- How often you want to invest (monthly or quarterly)
- Attach a voided personal check.

DIRECTED DIVIDEND OPTION

- --------------------------------------------------------------------------------
By selecting the appropriate box in the Account Application, you can elect to
receive your distributions in cash (check) or have distributions (capital gains
and dividends) reinvested in the Fund you are currently invested in or another
Parkstone Fund without a sales charge. You must maintain the minimum balance in
each Fund into which you plan to reinvest dividends or the reinvestment will be
suspended and your dividends paid to you. The Fund may modify or terminate this
reinvestment option without notice. You can change or terminate your
participation in the reinvestment option at any time by writing the Distributor.
- --------------------------------------------------------------------------------

-85-
<PAGE> 87
SHAREHOLDER INFORMATION

SELLING YOUR SHARES

You may sell your shares at any time. Your sales price will be the next NAV
after your sell order is received by the Fund, its transfer agent, or your
investment representative. Normally you will receive your proceeds within a week
after your request is received. See section on "General Policies on Selling
Shares below."

- --------------------------------------------------------------------------------
WITHDRAWING MONEY FROM YOUR
FUND INVESTMENT
- --------------------------------------------------------------------------------

As a mutual fund shareholder, you are technically selling shares when you
request a withdrawal in cash. This is also known as redeeming shares or a
redemption of shares.

CONTINGENT DEFERRED SALES CHARGE
When you sell Investor B Shares, you will be charged a fee for any shares that
have not been held for a sufficient length of time. These fees will be deducted
from the money paid to you. See the section on "Distribution Arrangements/Sales
Charges" below for details.

INSTRUCTIONS FOR SELLING SHARES

If selling your shares through your financial adviser or broker, ask him or her
for redemption procedures. Your adviser and/or broker may have transaction
minimums and/or transaction times which will affect your redemption. For all
other sales transactions, follow the instructions below.

By telephone Call 1-800-451-8377 with instructions as to how
(unless you have declined you wish to receive your funds (mail, wire,
telephone sales privileges) electronic transfer). (See "General Policies on
Selling Shares--Verifying Telephone
Redemptions" below)
- --------------------------------------------------------------------------------
By mail 1. Call 1-800-451-8377 to request redemption forms
or write a letter of instruction indicating:
- your Fund and account number
- amount you wish to redeem
- address where your check should be sent
- account owner signature or signature of
eligible guarantor institution

2. Mail to:
State Street Bank and Trust Company
c/o The Parkstone Group of Funds
P.O. Box 8590
Boston, MA 02266-8590
- --------------------------------------------------------------------------------
By overnight service See instruction 1 above.
(See "General Policies on 2. Send to
Selling Shares--Redemptions The Parkstone Group of Funds
in Writing Required" below) c/o Boston Financial
66 Brooks Drive
Braintree, MA 02184

-86-
<PAGE> 88

<TABLE>

<S> <C>
SHAREHOLDER INFORMATION

SELLING YOUR SHARES - CONTINUED

Wire transfer Call 1-800-451-8377 to request a wire
You must indicate this option transfer.
on your application.
If you call by 4 p.m. Eastern time, your
payment will normally be wired to your
bank on the next business day.

The Fund may charge a wire
transfer fee. Note: Your
financial institution may
charge a wire transfer fee.

- --------------------------------------------------------------------------------
Electronic Redemptions Call 1-800-451-8377 to request an
electronic redemption.

Your bank must participate in If you call by 4 p.m. Eastern time, the NAV
the Automated Clearing House of your shares will normally be determined on
(ACH) and must be a U.S. bank. the same day and the proceeds credited within
8 days.
</TABLE>

Your bank may charge for this
service.

AUTO WITHDRAWAL PLAN
You can receive automatic payments from your account on a monthly or quarterly
basis. The minimum withdrawal is $100. Investor B Shares are subject to
contingent deferred sales charges. To activate this feature:

- - Make sure you've checked the appropriate box on the Account Application.
Or call 1-800-451-8377.
- - Include a voided personal check.
- - Your account must have a value of $500 or more to start withdrawals.
- - If the value of your account falls below $500, you may be asked to add
sufficient funds to bring the account back to $500, or the Fund may close
your account and mail the proceeds to you.

-87-

<PAGE> 89
SHAREHOLDER INFORMATION

SELLING YOUR SHARES - CONTINUED

REDEMPTION BY CHECK WRITING - THE MONEY MARKET FUNDS (INVESTOR A SHARES)

You may write checks in amounts of $100 or more on your account in the Money
Market Funds. To obtain checks, complete the signature card section of the
Account Application or contact the Fund to obtain a signature card. Dividends
and distributions will continue to be paid up to the day the check is presented
for payment. The check writing feature may be modified or terminated upon
30-days' written notice. You must maintain the minimum required account balance
of $500. You may not close a Money Market Fund account by writing a check.

GENERAL POLICIES ON SELLING SHARES

REDEMPTIONS IN WRITING REQUIRED
You must request redemption in writing in the following situations:
1. Redemptions from Individual Retirement Accounts ("IRAs").
2. Redemption requests requiring a signature guarantee, which include each of
the following:

- Your account registration or the name(s) in your account has changed
within the last 15 days

- The check is not being mailed to the address on your account

- The check is not being made payable to the owner of the account

- The redemption proceeds are being transferred to another fund account
with a different registration.

A signature guarantee can be obtained from a financial institution, such
as a bank, broker-dealer, or credit union, or from members of the STAMP
(Securities Transfer Agents Medallion Program), MSP (New York Stock
Exchange Signature Program) or SEMP (Stock Exchanges Medallion Program).
Members are subject to dollar limitations which must be considered when
requesting their guarantee. The Transfer Agent may reject any signature
guarantee if it believes the transaction would otherwise be improper.

VERIFYING TELEPHONE REDEMPTIONS
The Fund makes every effort to insure that telephone redemptions are only made
by authorized shareholders. All telephone calls are recorded for your protection
and you will be asked for information to verify your identity. Given these
precautions, unless you have specifically indicated on your application that you
do not want the telephone redemption feature, you may be responsible for any
fraudulent telephone orders.

-88-
<PAGE> 90

SHAREHOLDER INFORMATION

SELLING YOUR SHARES - CONTINUED

REDEMPTIONS WITHIN 15 DAYS OF INITIAL INVESTMENT
When you have made your initial investment by check, the proceeds of your
redemption may be held up to 15 calendar days until the Transfer Agent is
satisfied that the check has cleared. You can avoid this delay by purchasing
shares by federal funds, bank wire, certified or cashier's check.

REFUSAL OF REDEMPTION REQUEST
Payment for shares may be delayed under extraordinary circumstances or as
permitted by the Securities and Exchange Commission in order to protect
remaining shareholders.

REDEMPTION IN KIND
Each Fund reserves the right to make payment in securities rather than cash,
known as "redemption in kind." This could occur under extraordinary
circumstances, such as a very large redemption that could affect Fund
operations. If the Fund deems it advisable for the benefit of all shareholders,
redemption in kind will consist of securities equal in market value to your
shares. When you convert these securities to cash, you will pay brokerage
charges.

CLOSING OF SMALL ACCOUNTS
If your account falls below $500, a Fund may ask you to increase your balance.
If it is still below $500 after 60 days, the Fund may close your account and
send you the proceeds at the current NAV.

UNDELIVERABLE REDEMPTION CHECKS
For any shareholder who chooses to receive distributions in cash:
If distribution checks (1) are returned and marked as "undeliverable" or (2)
remain uncashed for six months, your account will be changed automatically so
that all future distributions are reinvested in your account. Checks that remain
uncashed for six months will be canceled and the money reinvested in the
appropriate Fund.

MONEY MARKET FUNDS
To the extent possible, requests for same day payments upon redemption of
Investor A Shares and Investor B Shares of the Money Market Funds will be
honored if the request for redemption is received by the Transfer Agent before
1:00 p.m. Eastern time, for the Tax-Free and Treasury Funds or 3:00 p.m. Eastern
time for the Prime Obligations and U.S. Government Obligations Funds on a
Business Day. If the request for a redemption is received after 1:00 p.m. or
3:00 p.m. Eastern time respectively, payments will be made on the next Business
Day to the extent possible.

NON-MONEY MARKET FUNDS
Payment to shareholders redeeming Investor A Shares will be made within seven
days after the Transfer Agent receives the request for redemption. To the extent
possible, payments upon redemption of Investor A Shares will be made the same
day if received by the Transfer Agent before 4:00 p.m. (Eastern Time) on a
Business Day. If received after 4:00 p.m. (Eastern Time), payments will be made
within two Business Days to the extent possible.

-89-
<PAGE> 91

SHAREHOLDER INFORMATION

DISTRIBUTION ARRANGEMENTS/SALES CHARGES

This section describes the sales charges and fees you will pay as an investor in
different share classes offered by the Funds and ways to qualify for reduced
sales charges.
<TABLE>
<CAPTION>

- ------------------------------------- ----------------------------------- -----------------------------------------
INVESTOR A SHARES INVESTOR B SHARES
- ------------------------------------- ----------------------------------- -----------------------------------------
<S> <C> <C>
Sales Charge (Load) Front-end sales charge (not No front-end sales charge. A
applicable to money market contingent deferred sales
funds); reduced sales charge (CDSC) may be imposed
charges available. on shares redeemed within five
or six years after purchase
(depending on the date purchased);
shares automatically convert to
Investor A Shares after 8 years.
Maximum investment is $250,000.

- ------------------------------------- ----------------------------------- ------------------------------------
Distribution and Service Subject to annual Subject to annual distribution
(12b-1) Fee distribution and shareholder and shareholder servicing fees
servicing fees of up to of up to 1.00% of the average
0.25% of the average daily daily net assets of each
net assets of each Fund's Fund's Investor B Shares.
Investor A Shares.

- ------------------------------------- ----------------------------------- ------------------------------------
Fund Expenses Lower annual expenses than Higher annual expenses than
Investor B Shares. Investor A Shares.

- ------------------------------------- ----------------------------------- ------------------------------------
</TABLE>

Certain qualified institutional buyers are eligible to purchase Institutional
Shares of the Funds. Institutional Shares are offered by another prospectus
which is available by calling (800) 451-8377.

-90-
<PAGE> 92
SHAREHOLDER INFORMATION

DISTRIBUTION ARRANGEMENTS/SALES CHARGES - CONTINUED

CALCULATION OF SALES CHARGES

INVESTOR A SHARES

Investor A Shares are sold at their public offering price. This price includes
the initial sales charge. Therefore, part of the money you invest will be used
to pay the sales charge. The remainder is invested in Fund shares. The sales
charge decreases with larger purchases. There is no sales charge on reinvested
dividends and distributions.

The current sales charge rates are as follows:
<TABLE>
<CAPTION>

GROWTH FUNDS
EQUITY INCOME FUND
SALES CHARGE SALES CHARGE
AS A % OF AS A % OF
If your investment is: OFFERING PRICE NET AMOUNT INVESTED
- ---------------------------------------- ---------------------- -------------------------
<S> <C> <C>
Less than $25,000 5.50% 5.80%
- ---------------------------------------- ---------------------- -------------------------
$25,000 but less than $50,000 5.25% 5.50%
- ---------------------------------------- ---------------------- -------------------------
$50,000 but less than $100,000 4.75% 5.00%
- ---------------------------------------- ---------------------- -------------------------
$100,000 but less than $250,000 3.75% 3.90%
- ---------------------------------------- ---------------------- -------------------------
$250,000 but less than $500,000 3.00% 3.10%
- ---------------------------------------- ---------------------- -------------------------
$500,000 but less than $1,000,000 2.00% 2.00%
- ---------------------------------------- ---------------------- -------------------------
$1,000,000 or more(1) 0.00% 0.00%
- ---------------------------------------- ---------------------- -------------------------
<CAPTION>

BALANCED ALLOCATION FUND
INCOME FUNDS (EXCEPT LIMITED MATURITY BOND FUND)
TAX-FREE INCOME FUNDS
SALES CHARGE SALES CHARGE
AS A % OF AS A % OF
If your investment is: OFFERING PRICE NET AMOUNT INVESTED
- ---------------------------------------- ---------------------- -------------------------
<S> <C> <C>
Less than $50,000 4.75% 5.00%
- ---------------------------------------- ---------------------- -------------------------
$50,000 but less than $100,000 4.00% 4.20%
- ---------------------------------------- ---------------------- -------------------------
$100,000 but less than $250,000 3.75% 3.90%
- ---------------------------------------- ---------------------- -------------------------
$250,000 but less than $500,000 2.50% 2.80%
- ---------------------------------------- ---------------------- -------------------------
$500,000 but less than $1,000,000 2.00% 2.00%
- ---------------------------------------- ---------------------- -------------------------
$1,000,000 or more(1) 0.00% 0.00%
- ---------------------------------------- ---------------------- -------------------------
</TABLE>

-91-
<PAGE> 93

LIMITED MATURITY BOND FUND
SALES CHARGE SALES CHARGE
AS A % OF AS A % OF
If your investment is: OFFERING PRICE NET AMOUNT INVESTED
- ---------------------------------------- ---------------------- -------------------------
<S> <C> <C>
Less than $100,000 2.75% 2.83%
- ---------------------------------------- ---------------------- -------------------------
$100,000 but less than $250,000 1.75% 1.78%
- ---------------------------------------- ---------------------- -------------------------
$250,000 but less than $500,000 1.00% 1.01%
- ---------------------------------------- ---------------------- -------------------------
$500,000 but less than $1,000,000 0.50% 0.50%
- ---------------------------------------- ---------------------- -------------------------
$1,000,000 or more(1) 0.00% 0.00%
- ---------------------------------------- ---------------------- -------------------------
</TABLE>

(1) A Fund will assess a 1.00% redemption fee (0.25% in the case of the Limited
Maturity Bond Fund) against a shareholder's fund account if its value falls
below $1,000,000 due to a redemption by the shareholder within the first
year following the initial investment of $1,000,000 or more. With respect to
purchases of $1,000,000 or more of a Fund, the Adviser may pay from its own
funds a fee of 1.00% (.25% in case of the Limited Maturity Bond Fund) of the
amount invested to the financial institution placing the purchase order.

-92-
<PAGE> 94

SHAREHOLDER INFORMATION

DISTRIBUTION ARRANGEMENTS/SALES CHARGES - CONTINUED

INVESTOR B SHARES

Investor B Shares are offered at NAV, without any up-front sales charge.
Therefore, all the money you invest is used to purchase Fund shares. However, if
you sell your Investor B Shares of the Fund before the fifth anniversary of
purchase (or the fourth anniversary if purchased prior to January 1, 1997), you
will have to pay a contingent deferred sales charge (CDSC) at the time of
redemption. The CDSC will be based upon the lower of the NAV at the time of
purchase or the NAV at the time of redemption according to the schedule below.
There is no CDSC on reinvested dividends or distributions.
<TABLE>
<CAPTION>

INVESTOR B SHARES PURCHASED AFTER JANUARY 1, 1997
- ------------------------------------------------------- ------------------------------------------------------
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
- ------------------------------------------------------- ------------------------------------------------------
<S> <C> <C>
0-1 5.00%
1-2 5.00%
2-3 4.00%
3-4 3.00%
4-5 2.00%
more than 5 None
<CAPTION>
- ------------------------------------------------------- ------------------------------------------------------

INVESTOR B SHARES PURCHASED PRIOR TO JANUARY 1, 1997
- ------------------------------------------------------- ------------------------------------------------------
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
- ------------------------------------------------------- ------------------------------------------------------
<S> <C> <C>
0-1 4.00%
1-2 4.00%
2-3 3.00%
3-4 2.00%
more than 4 None
- ------------------------------------------------------- ------------------------------------------------------
</TABLE>

If you sell some but not all of your Investor B Shares, certain shares not
subject to the CDSC (i.e., shares purchased with reinvested dividends) will be
redeemed first, followed by shares subject to the lowest CDSC (typically shares
held for the longest time).

CONVERSION FEATURE - INVESTOR B SHARES
- - Investor B Shares automatically convert to Investor A Shares of the same
Fund after eight years from the end of the month of purchase. The dollar
value of Investor A Shares you receive will equal the dollar value of the
Investor B Shares converted although the number of shares you receive may
differ.

- - After conversion, your shares will be subject to the lower distribution and
shareholder servicing fees charged on Investor A Shares which will increase
your investment return compared to the Investor B Shares.

- - You will not pay any sales charge or fees when your shares convert, nor
will the transaction be subject to any tax.

- - If you purchased Investor B Shares of one Parkstone Fund which you
exchanged for Investor B Shares of another Parkstone Fund, your holding
period will be calculated from the time of your original purchase of
Investor B Shares.

-93-
<PAGE> 95
SHAREHOLDER INFORMATION

DISTRIBUTION ARRANGEMENTS/SALES CHARGES - CONTINUED

SALES CHARGE REDUCTIONS - INVESTOR A SHARES
You may qualify for reduced sales charges under the following circumstances.

- - Letter of Intent. You inform the Fund in writing that you intend to
purchase enough shares over a 13-month period to qualify for a reduced
sales charge. You must invest a minimum of 4% of the total amount you
intend to purchase with your letter of intent.

- - Right of Accumulation. When the value of shares you already own plus the
amount you intend to invest reaches the amount needed to qualify for
reduced sales charges, your added investment will qualify for the reduced
sales charge.

- - Combination Privilege. Combine concurrent purchases of Investor A Shares of
one Fund and of one or more of the other Funds of the Group and of Armada
Funds that are sold with a sales charge.

- - Concurrent Purchases. Accounts of multiple Funds or accounts of immediate
family household members (spouse and children under 21) and the purchaser's
retirement plan account to achieve reduced sales charges. To qualify for
this privilege, the purchaser must, at the time of purchase, give the
Transfer Agent or Distributor sufficient information to permit confirmation
of qualification.

SALES CHARGE WAIVERS

INVESTOR A SHARES
The following may qualify for waivers of sales charges:

- - Certain orders placed by investment representatives through fee-based
investment products or accounts.

- - Proceeds from redemptions from a fund other than Parkstone or Armada within
60 days after redemption, if you paid a sales load or commission for those
shares.

- - Reinvestment of distributions from a deferred compensation plan, agency,
trust, or custody account that was maintained by the Adviser or its
affiliates or invested in any Parkstone Fund.

- - Shares purchased for trust or other advisory accounts established with the
Adviser or its affiliates.

- - Shares purchased by (1) trustees and retired trustees of the Trust, (2)
officers of the Trust; (3) directors, retired directors, employees and
retired employees of the Adviser and its affiliates; and (4) family members
of (1), (2) and (3).

- - Purchases by certain qualified employee benefit plans.

- - Investors who place trades for their own accounts and are clients of
qualified broker-dealers, investment advisers or financial planners who
charge a management fee for these services.

-94-
<PAGE> 96
SHAREHOLDER INFORMATION

DISTRIBUTION ARRANGEMENTS/SALES CHARGES - CONTINUED

INVESTOR B SHARES

The CDSC may be waived under certain circumstances, including the following:

- - Distributions from retirement plans if the distributions are made following
the death or disability of shareholders or plan participants.

- - Redemptions from accounts other than retirement accounts following the
death or disability of the shareholder and/or joint shareholders.

- - Returns of excess contributions to retirement plans.

- - Distributions of less than 12% of the annual account value under an
Automatic Withdrawal Plan.

- - Shares issued in a plan of reorganization sponsored by the Adviser, or
shares redeemed involuntarily in a similar situation.

- - Redemptions by participants in a qualified plan for retirement loans,
financial hardship, termination and certain participant expenses.

- - Purchases by certain qualified employee benefit plans.

- - Distributions for participants in a qualified plan whose employment with
the plan sponsor has been terminated.

- - Certain orders placed by investment representatives through fee-based
investment products or accounts.

- - Shares purchased by (1) trustees and retired trustees of the Trust; (2)
officers of the Trust; (3) directors, retired directors, employees and
retired employees of the Adviser and its affiliates; and (4) family members
of (1), (2) and (3).

- - Investors who place trades for their own accounts and are clients of
qualified broker-dealers, investment advisers or financial planners who
charge a management fee for their services.

DISTRIBUTION AND SERVICE (12b-1) FEES

The Funds have adopted plans under Rule 12b-1 that allow the Funds to pay
distribution fees for the sale and distribution of 12b-1 fees compensate the
Distributor and other dealers and investment representatives for services and
expenses relating to the sale and distribution of the Fund's shares and/or for
providing shareholder services. 12b-1 fees are paid from Fund assets on an
ongoing basis, and will increase the cost of your investment.

- The 12b-1 fees vary by share class as follows:
- Investor A Shares pay a 12b-1 fee of up to .25% of the
average daily net assets of a Fund.
- Investor B Shares pay a 12b-1 fee of up to 1.00% of the average
daily net assets of the applicable Fund. This will cause expenses
for Investor B Shares to be higher and dividends to be lower than
for Investor A Shares.

- The higher 12b-1 fee on Investor B Shares, together with the CDSC,
help the Distributor sell Investor B Shares without an "up-front"
sales charge. In particular, these fees help to defray the
Distributor's costs of advancing brokerage commissions to investment
representatives.

- The Distributor may use up to .25% of the 12b-1 fee for Investor B
Shares for shareholder servicing and up to .75% for distribution.

-95-
<PAGE> 97

Over time, shareholders may pay more than the equivalent of the maximum
permitted front-end sales charge because 12b-1 distribution and service fees are
paid out of a Fund's assets on an on-going basis.

-96-
<PAGE> 98

SHAREHOLDER INFORMATION

EXCHANGING YOUR SHARES

INVESTOR A SHARES

If you own Investor A Shares, you may acquire in an exchange Investor A Shares
that are offered by another Fund of the Group or fund of Armada with a different
investment objective. The exchange must occur on the same Business Day.

To Exchange a Money Market Fund for another. If you own Investor A Shares of any
of the Group's Money Market Funds or a money market fund of Armada you may
exchange those Investor A Shares at net asset value without any sales charge for
Investor A Shares offered by any of the Group's other Money Market Funds or an
Armada Money Market Fund. The amount to be exchanged must meet the applicable
minimum investment requirements and the exchange must be made in states where it
is legally authorized.

To Exchange a Non-Money Market Fund for Another Non-Money Market Fund. If you
own Investor A Shares of any of the Group's non-Money Market Funds or any fund
of Armada which is not an Armada Money Market Fund you may exchange those
Investor A Shares at net asset value without any sales charge for Investor A
Shares offered by any Fund of the Group and any fund of Armada. If you paid a
sales charge on the Investor A Shares that you are to exchange that is less than
the sales charge applicable to the Investor A Shares you would like to acquire,
you must pay a sales charge on the exchange equal to the difference between the
two sales charges.

To Exchange a Money Market Fund for a Non-Money Market Fund. If you own Investor
A Shares of a Parkstone or Armada Money Market Fund, you may exchange those
Investor A Shares for Investor A Shares of a Parkstone or Armada non-Money
Market Fund, but a sales load will be charged on the exchange.

INVESTOR B SHARES

If you own Investor B Shares, you may acquire in an exchange Investor B Shares
that are offered by another Fund of the Group or A Shares of a Fund of Armada
Funds. The exchange must occur on the same Business Day.

If you own Investor B Shares of one Fund of the Group, you may exchange your
Investor B Shares for A Shares of a Fund of Armada at net asset value. You are
no longer eligible for a waiver of the contingent deferred sales charge that may
occur when redeeming B Shares of the Parkstone Funds. These exchanges will be
executed only if they meet the applicable minimum investment requirements within
states where the exchanges are authorized.

If you own Investor B Shares of the Prime Obligations Fund and have been
invested in such Fund for 18 consecutive months, you must redeem such shares and
incur any applicable contingent deferred sales charges, or exchange your shares
for Investor B Shares of another Fund.

-97-
<PAGE> 99
You may exchange shares only once every two months during a given 12-month
period beginning upon the date of the first exchange transaction. The exchange
privilege may be modified or terminated at any time upon 60 days notice.

The Group does not charge an exchange fee. If you would like to exchange your
shares you may contact the Group at (800) 451-8377 or write to the Transfer
Agent. You should obtain and review the current Prospectus of the Fund of the
Group or the fund of Armada in which you wish to invest before making the
exchange. To obtain an Armada Prospectus please call 1-800-622-FUND (3863).

The registration and tax identification numbers of the two accounts involved in
the exchange must be identical.

INSTRUCTIONS FOR EXCHANGING SHARES
Exchanges may be made by sending a written request to The Parkstone Group of
Funds, P.O. Box 8590, Boston, MA 02266-8590, or by calling 1-800-451-8377.
Please provide the following information:
- Your name and telephone number
- The exact name on your account and account number
- Taxpayer identification number (usually your Social Security
number)
- Dollar value or number of shares to be exchanged
- The name of the Fund from which the exchange is to be made
- The name of the Fund into which the exchange is being made.

See "Selling your Shares" for important information about telephone
transactions.

AUTO EXCHANGE PLAN

You can use the Funds' Auto Exchange Plan to purchase Investor A Shares or
Investor B Shares of the Funds at monthly or quarterly intervals through
automatic redemptions from any of the Money Market Funds. If you invest directly
in one of these classes of Money Market Funds, as opposed to obtaining shares
through an exchange, you will be asked to participate in the Auto Exchange Plan
and to establish the time and amount of your automatic exchanges so that all of
the shares of the Money Market Fund purchased initially will be exchanged for
shares of other non-Money Market Funds within two years of purchase.

To participate in the Auto Exchange Plan:

- - Complete the appropriate section of the "Account Application."

- - Keep a minimum of $10,000 in a Money Market Fund and $500 in the Fund whose
shares you are buying.

-98-
<PAGE> 100
To change the Auto Exchange Plan instructions or to discontinue the feature, you
must send a written request to The Parkstone Group of Funds, P.O. Box 8590,
Boston, MA 02266-8590.

SYSTEMATIC EXCHANGE PROGRAM

The Systematic Exchange Program enables you to purchase Investor A Shares or
Investor B Shares through automatic monthly or quarterly deductions from any
account invested in one of the Parkstone Money Market Funds. Under the program,
you will enter into an agreement to purchase shares of one or more specified
Funds over a specified period of time. The program requires you to:

- - Initially purchase shares of one of the Group's money market funds in
an amount equal to the total amount of your investment.

- - Specify an amount to be deducted on a monthly or quarterly basis from
your Money Market Fund and exchanged for shares of specified funds you
have chosen.

An investment program, in which a fixed dollar amount is invested at regular
intervals over time has the effect of reducing the average cost per share of the
Funds. Because Investor A Shares are subject to an initial sales charge, it may
be beneficial for you to execute a Letter of Intent indicating an intent to
purchase Investor A Shares in connection with the Systematic Exchange Program.
In order to participate in the Systematic Exchange Program contact your
financial representative or call 1-800-451-8377.

-99-
<PAGE> 101

SHAREHOLDER INFORMATION

- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS

All dividends and distributions will be automatically reinvested unless you
request otherwise. There are no sales charges for reinvested distributions.
Dividends are higher for Investor A Shares than for Investor B Shares, because
Investor A Shares have lower distribution expenses. Capital gains are
distributed at least annually.

Investor A Shares and Investor B Shares of all Funds, except the Money Market
Funds, are eligible to earn dividends on the first Business Day following the
execution of the purchase. Investor A Shares and Investor B Shares of the
Treasury and Tax-Free Funds purchased before 1 p.m., Eastern Time begin earning
dividends on the same Business Day. Investor A Shares and Investor B Shares of
the Prime Obligations Fund and the U.S. Government Obligations Fund purchased
before 3:00 p.m. Eastern Time begin earning dividends on the same Business Day.
Investor A Shares and Investor B Shares of the Funds continue to be eligible to
earn dividends through the day before their redemption.

DISTRIBUTIONS ARE MADE ON A PER SHARE BASIS REGARDLESS OF HOW LONG YOU'VE OWNED
YOUR SHARES. THEREFORE, IF YOU INVEST SHORTLY BEFORE THE DISTRIBUTION DATE, SOME
OF YOUR INVESTMENT WILL BE RETURNED TO YOU IN THE FORM OF A DISTRIBUTION.

- -------------------------------------------------------------------------------

FEDERAL TAXES

Each Fund contemplates declaring as dividends each year all or substantially all
of its taxable income, including its net capital gain (the excess of long-term
capital gain over short-term capital loss). Distributions attributable to the
net capital gain of a Fund will be taxable to you as long-term capital gain,
regardless of how long you have held your shares. Other Fund distributions
(other than exempt-interest dividends, discussed below) will generally be
taxable as ordinary income. You will be subject to income tax on Fund
distributions regardless of whether they are paid in cash or reinvested in
additional shares. You will be notified annually of the tax status of
distributions to you.

In the case of any fund other than a money-market Fund, you should note that if
you purchase shares just before a distribution, the purchase price will reflect
the amount of the upcoming distribution, but you will be taxed on the entire
amount of the distribution received, even though, as an economic matter, the
distribution simply constitutes a return of capital. This is known as "buying
into a dividend."

You will recognize taxable gain or loss on a sale, exchange or redemption of
your shares, including an exchange for shares of another Fund, based on the
difference between your tax basis in the shares and the amount you receive for
them. (To aid in computing your tax basis, you generally should retain your
account statements for the periods during which you held shares.)

-100-
<PAGE> 102
Any loss realized on shares held for six months or less will be treated as a
long-term capital loss to the extent of any capital gain dividends that were
received on the shares.

The one major exception to these tax principles is that distributions on, and
sales, exchanges and redemptions of, shares held in an IRA (or other
tax-qualified plan) will not be currently taxable.

It is expected that the Parkstone International Discovery Fund will be subject
to foreign withholding taxes with respect to dividends or interest received from
sources in foreign countries. The Parkstone International Discovery Fund may
make an election to treat a proportionate amount of such taxes as constituting a
distribution to each shareholder, which would allow each shareholder either (1)
to credit such proportionate amount of taxes against U.S. federal income tax
liability or (2) to take such amount as an itemized deduction.

The Parkstone National Tax Exempt Bond Fund, Parkstone Michigan Municipal Bond
Fund and Parkstone Tax-Free Fund (the "Exempt Funds") anticipate that
substantially all of their income dividends will be "exempt interest dividends,"
which are exempt from federal income taxes. However, some dividends will be
taxable, such as dividends that are derived from occasional taxable investments,
and in the case of other than the Parkstone Tax-Free Fund, distributions of
short and long-term capital gains.

Interest on indebtedness incurred by a shareholder to purchase or carry shares
of the Exempt Funds generally will not be deductible for federal income tax
purposes.

You should note that a portion of the exempt-interest dividends paid by the
Exempt Funds may constitute an item of tax preference for purposes of
determining federal alternative minimum tax liability. Exempt-interest dividends
will also be considered along with other adjusted gross income in determining
whether any Social Security or railroad retirement payments received by you are
subject to federal income taxes.

If you receive an exempt-interest dividend with respect to any share and the
share is held by you for six months or less, any loss on the sale or exchange of
the share will be disallowed to the extent of such dividend amount.

The Parkstone Michigan Municipal Bond Fund intends to distribute income that is
exempt from Michigan income taxes.

The foregoing is only a summary of certain tax considerations under current law,
which may be subject to change in the future. Shareholders who are nonresident
aliens, foreign trusts or estates, or foreign corporations or partnerships, may
be subject to different United States federal income tax treatment. You should
consult your tax adviser for further information regarding federal, state, local
and/or foreign tax consequences relevant to your specific situation.

STATE AND LOCAL TAXES

Shareowners may also be subject to state and local taxes on distributions and
redemptions. State income taxes may not apply however, to the portions of each
Fund's distributions, if any, that are attributable to interest on federal
securities or interest on securities of the particular state or localities
within the state. Shareowners should consult their tax advisers regarding the
tax status

-101-
<PAGE> 103
of distributions in their state and locality.

-102-
<PAGE> 104

FINANCIAL HIGHLIGHTS

THE FINANCIAL HIGHLIGHTS TABLE IS INTENDED TO HELP YOU UNDERSTAND THE FUNDS'
FINANCIAL PERFORMANCE FOR THE PAST FIVE YEARS [OR, IF SHORTER, THE PERIOD OF THE
FUNDS' OPERATIONS]. CERTAIN INFORMATION REFLECTS FINANCIAL RESULTS FOR A SINGLE
FUND SHARE. THE TOTAL RETURNS IN THE TABLE REPRESENT THE RATE THAT AN INVESTOR
WOULD HAVE EARNED [OR LOST] ON AN INVESTMENT IN THE FUND (ASSUMING REINVESTMENT
OF ALL DIVIDENDS AND DISTRIBUTIONS). THIS INFORMATION HAS BEEN AUDITED BY
PRICEWATERHOUSECOOPERS LLP, WHOSE REPORT, ALONG WITH THE FUNDS' FINANCIAL
STATEMENTS, ARE INCLUDED IN [THE SAI OR ANNUAL REPORT], WHICH IS AVAILABLE UPON
REQUEST.

INSERT PAST 5 YEARS'
FINANCIAL HIGHLIGHTS
FROM ANNUAL REPORT.

-103-
<PAGE> 105

For more information about the Funds, the following documents are available free
upon request:

ANNUAL/SEMI-ANNUAL REPORTS (REPORTS):
The Funds' annual and semi-annual reports to shareholders contain additional
information on the Funds' investments. In the annual report, you will find a
discussion of the market conditions and investment strategies that significantly
affected a Fund's performance during its last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Funds, including its operations and investment policies.
It is incorporated by reference and is legally considered a part of this
prospectus.

- --------------------------------------------------------------------------------
YOU CAN GET FREE COPIES OF ANNUAL/SEMI-ANNUAL REPORTS AND THE SAI, OF THE
PARKSTONE GROUP OF FUNDS, OR REQUEST OTHER INFORMATION AND DISCUSS YOUR
QUESTIONS ABOUT THE FUNDS BY CONTACTING A BROKER OR BANK THAT SELLS THE FUNDS.
OR CONTACT THE FUND AT:

THE PARKSTONE GROUP OF FUNDS
P.O. BOX 8590
BOSTON, MASSACHUSETTS 02266-8590
TELEPHONE: 1-800-451-8377

- --------------------------------------------------------------------------------

You can review information about the Funds and SAI at the Public Reference Room
of the Securities and Exchange Commission in Washington D.C. You can get copies:

- For a duplicating fee, by writing the Public Reference Section of the
Securities and Exchange Commission, Washington, D.C. 20549-6009 or
calling 1-800-SEC-0330.

- Free from the Commission's Website at http://www.sec.gov

Investment Company Act file no. 811-5105.

-104-
<PAGE> 106

THE PARKSTONE GROUP OF FUNDS

INSTITUTIONAL SHARES

July 15, 1999

GROWTH AND INCOME FUNDS TAX-FREE INCOME FUNDS
PARKSTONE EQUITY INCOME FUND PARKSTONE MICHIGAN MUNICIPAL BOND FUND
PARKSTONE BALANCED ALLOCATION FUND PARKSTONE NATIONAL TAX EXEMPT BOND FUND

MONEY MARKET FUNDS
PARKSTONE TAX-FREE FUND
PARKSTONE PRIME OBLIGATIONS FUND
PARKSTONE U.S. GOVERNMENT OBLIGATIONS FUND
PARKSTONE TREASURY FUND

The Securities and Exchange Commission has not approved
or disapproved these securities or passed upon the
adequacy of this prospectus. Any representation
to the contrary is a criminal offense.

<PAGE> 107

TABLE OF CONTENTS

PAGE

RISK/RETURN SUMMARY

GLOSSARY

DESCRIPTION OF THE FUNDS
Investment Objectives and Policies
Description of Investment Practices
Additional Risk Considerations

MANAGEMENT OF THE FUNDS

PURCHASE AND SALE OF SHARES
How The Funds Value Their Shares
How To Buy Shares
How to Exchange Shares
How To Sell Shares

DIVIDENDS, DISTRIBUTIONS AND TAXES

DISTRIBUTION ARRANGEMENTS

GENERAL INFORMATION

FINANCIAL HIGHLIGHTS

-2-
<PAGE> 108
\

RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

In this summary, we will describe certain kinds of risks that apply to one or
more of the Funds. The summary also describes specific risks that may apply to
one Fund. These risks are:

- MARKET RISK This is the risk that the value of a Fund's investments
will fluctuate as the stock or bond markets fluctuate and that prices
overall will decline over short or longer-term periods.

- INTEREST RATE RISK This is the risk that changes in interest rates will
affect the value of a Fund's investments in income-producing or
fixed-income or debt securities. Increases in interest rates may cause
the value of a Fund's investments to decline.

- CREDIT RISK This is the risk that the issuer of a security will be
unable or unwilling to make timely payments of interest or principal,
or to otherwise honor its obligations.

- FOREIGN RISK This is the risk of investments in issuers located in
foreign countries, which may have greater price volatility and less
liquidity. Investments in foreign securities also are subject to
political, regulatory, and diplomatic risks. Foreign risk includes
currency risk, which may occur due to fluctuations in the exchange
rates between the U.S. dollar and foreign currencies. This risk could
negatively affect the value of a Fund's investments.

- MANAGEMENT RISK This is the risk that investments selected by a Fund's
manager may not perform well and that the Fund will not perform as well
as a result.

Other important things for you to note:

- You may lose money by investing in a Fund.

- An investment in a Fund is not a deposit in a bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

For convenience of reference, the Funds are sometimes referred to as part of a
general grouping as described below:

- GROWTH FUNDS (International Discovery Fund, Small Capitalization Fund,
Mid Capitalization Fund and Large Capitalization Fund) The Growth Funds
offer investors seeking growth of capital a range of alternative
approaches to investing according to risk tolerance.

- GROWTH AND INCOME FUNDS (Equity Income Fund and Balanced Allocation
Fund) The Growth and Income Funds offer investors seeking current
income with preservation of capital a range of alternative approaches
to investing.

- INCOME FUNDS (Bond Fund, Intermediate Government Obligations Fund, U.S.
Government Income Fund and Limited Maturity Bond Fund) The Income Funds
offer investors seeking current income with preservation of capital a
range of alternative approaches to investing.

- TAX-FREE INCOME FUNDS (Michigan Municipal Bond Fund and National Tax
Exempt Bond Fund) The Tax-Free Income Funds offer investors seeking
income exempt from federal income tax as well as preservation of
capital a range of alternative approaches to investing.

-3-
<PAGE> 109

- MONEY MARKET FUNDS (Tax-Free Fund, Prime Obligations Fund, U.S.
Government Obligations Fund and Treasury Fund)

The Money Market Funds offer investors seeking current income as well as
preservation of capital a range of alternative approaches to investing.
An investment in one of the Money Market Funds is not a deposit of any
bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. Although each of the Money
Market Funds seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in one of the Money
Market Funds.

Each Fund's investment objective may be changed without shareholder
approval, except as otherwise stated.

-4-
<PAGE> 110
GROWTH FUNDS

RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE INTERNATIONAL DISCOVERY FUND

<TABLE>
<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide
capital appreciation by investing in a portfolio of
equity securities of foreign issuers.

PRINCIPAL INVESTMENT STRATEGIES The Fund normally invests at least 80% of its total assets
in equity securities of foreign issuers. The Funds'
assets normally will be invested in the securities of
issuers located in at least three foreign countries.
Foreign investments also may include debt obligations
issued or guaranteed by foreign governments or their
agencies, authorities, instrumentalities or political
subdivisions, including a foreign state, province or
municipality. The Fund does not presently intend to
invest in common stock of domestic companies.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are
market risk, foreign risk, and management risk.
Because the Fund invests in foreign securities the
Fund's returns will be more volatile and differ,
sometimes significantly, from U.S. stock returns
generally.

An investment in the Fund is not a bank deposit and
is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
</TABLE>

-5-
<PAGE> 111

RISK/RETURN SUMMARY AND FUND EXPENSES

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

During the period shown in the bar chart, the Fund's:
- ---------------------------------------------------------------------------
Best quarter was
- ---------------------------------------------------------------------------
Worst quarter was

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31)
Fund or Class Past Year Past 5 Years Since Inception
Inception
................ ........... .............. ..................

<S> <C> <C> <C> <C>
Institutional Shares 12/29/92
................ ........... .............. ..................

MORGAN STANLEY CAPITAL
INTERNATIONAL EAFE INDEX
................................. ................ ........... .............. ..................
</TABLE>

- -----------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-6-
<PAGE> 112

RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE SMALL CAPITALIZATION FUND

<TABLE>
<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide capital
appreciation by investing in a diversified portfolio of
publicly traded smaller cap equity securities.

PRINCIPAL INVESTMENT STRATEGIES The Fund normally invests at least 80% of its total assets
in equity securities of companies with small stock
market capitalizations. The Fund considers a "small
capitalization" company to be one that has a comparable
market capitalization to the companies in the Russell
2000 Growth Index. The Fund may invest up to 25% of its
total assets in foreign securities.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are market
risk and management risk. The Fund's risks also include
capitalization risk, which is the risk of investing in
securities of small companies. Prices of these companies'
securities tend to be more volatile than those of large
companies' securities. In addition, small-capitalization
companies may have more risk because they often have
less-seasoned management and more limited product lines,
markets, or financial resources. To the extent the Fund
invests in foreign securities, your investment may have
foreign risk.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you :
[ ] WISH TO TAKE ADVANTAGE OF THE TREMENDOUS GROWTH
POTENTIAL OF SMALL COMPANY STOCKS.
[ ] CAN REMAIN INVESTED FOR A MINIMUM OF THREE TO FIVE
YEARS
[ ] ARE WILLING TO ACCEPT HIGHER THAN AVERAGE VOLATILITY
AND RISK

</TABLE>

-7-
<PAGE> 113

<TABLE>
<S> <C>
An investment in the Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
</TABLE>

-8-
<PAGE> 114

RISK/RETURN SUMMARY AND FUND EXPENSES

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

During the period shown in the bar chart, the Fund's:
---------------------------------------------------------------------------
Best quarter was
---------------------------------------------------------------------------
Worst quarter was

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31)
Fund or Class Past Year Past 5 Years Past 10 Years Since Inception
Inception
................ ........... .............. ................ .................

RUSSELL 2000 GROWTH INDEX
................................. ................ ........... .............. ................ .................
</TABLE>

- -----------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-9-
<PAGE> 115

RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE MID CAPITALIZATION FUND

<TABLE>
<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide capital
appreciation by investing in a diversified portfolio of
publicly traded mid cap equity securities.

PRINCIPAL INVESTMENT STRATEGIES The Fund normally invests at least 80% of its total assets
in securities of companies with mid stock market
capitalization. The Fund considers a "mid capitalization"
company to be one that has a comparable market
capitalization to the companies in the Russell Mid Cap
Growth Index. The Fund may invest up to 25% of its total
assets in foreign securities.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are market
risk and management risk. The Fund's risks also include
capitalization risk, which is the risk of investing in the
securities of mid-capitalization companies. Prices of
mid-capitalization companies' securities tend to be more
volatile than those of large companies' securities. In
addition, mid-capitalization companies may have more risk
because they often have less-seasoned management and more
limited product lines, markets, or financial resources.
To the extent the Fund invests in foreign securities, your
investment may have foreign risk.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you:
[ ] WANT TO TAKE ADVANTAGE OF THE LONG-TERM GROWTH
POTENTIAL HISTORICALLY PROVIDED BY STOCK INVESTMENTS.
[ ] CAN REMAIN INVESTED FOR A MINIMUM OF THREE TO FIVE
YEARS.
[ ] ARE WILLING TO ACCEPT SHORT-TERM PRICE FLUCTUATIONS AND
HIGHER THAN AVERAGE RISK IN RETURN FOR POTENTIAL ABOVE-
AVERAGE, LONG-TERM GROWTH.

An investment in the Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
</TABLE>

-10-
<PAGE> 116

RISK/RETURN SUMMARY AND FUND EXPENSES

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

RUSSELL MID-CAP GROWTH INDEX
................................. ................ ........... .............. ................ .................
</TABLE>

- -----------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-11-
<PAGE> 117

RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE LARGE CAPITALIZATION FUND

<TABLE>
<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide capital
appreciation by investing in a diversified portfolio of
publicly traded larger cap equity securities.

PRINCIPAL INVESTMENT STRATEGIES The Fund normally invests at least 80% of its total assets
in a diversified portfolio of common stocks and securities
convertible into common stocks of companies with large
stock market capitalization. The Fund considers a "large
capitalization" company to be one that has a comparable
market capitalization to the companies in the S&P Barra
Growth Index. The Fund may also invest up to 25% of its
total assets in foreign securities.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you:
[ ] WANT TO TAKE ADVANTAGE OF THE LONG-TERM GROWTH
POTENTIAL HISTORICALLY PROVIDED BY STOCK INVESTMENTS.
[ ] WISH TO INVEST IN LARGE COMPANIES WHOSE NAMES OR
PRODUCTS/SERVICES ARE WELL KNOWN.
[ ] CAN REMAIN INVESTED FOR A MINIMUM OF THREE TO FIVE
YEARS.
[ ] ARE WILLING TO ACCEPT SHORT-TERM PRICE FLUCTUATIONS AND
HIGHER THAN AVERAGE RISK IN RETURN FOR POTENTIAL ABOVE-
AVERAGE, LONG-TERM GROWTH.

An investment in the Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
</TABLE>

-12-
<PAGE> 118

RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the Large Capitalization Fund has
performed and how its performance has varied from year to year. The bar chart
gives an indication of risk by showing changes in the Fund's yearly performance
over three years to demonstrate that the Fund has gained or lost value at
different times. The table below compares the Fund's average annual returns for
a one year period and since inception to those of the S&P Barra Growth Index
which is comprised of securities in the Standard & Poor's 500 Stock Index that
have an higher than average price-to-book ratio. Past performance does not
indicate how the Fund will perform in the future.

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31)
Fund or Class Past Year Since Inception
Inception
................ ........... ..................

<S> <C> <C> <C>
Institutional Shares 12/28/95
................ ........... ..................
................ ........... ..................

S&P BARRA GROWTH INDEX
................................. ................ ........... ..................
</TABLE>

- -----------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-13-
<PAGE> 119

Fund Expenses

FEES AND EXPENSES
- -----------------
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
INSTITUTIONAL SHARES OF THE FUNDS.

<TABLE>
<CAPTION>
FEE TABLE
---------

INTERNATIONAL SMALL MID CAPITALIZATION LARGE CAPITALIZATION
SHAREHOLDER FEES DISCOVERY FUND CAPITALIZATION FUND FUND FUND
(FEES PAID DIRECTLY FROM
YOUR INVESTMENT)

<S> <C> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases (as a
Percentage of offering
price) None None None None
............................. ...................... ..................... ..................... .....................

Maximum Deferred Sales
Charge (Load)
(as a percentage of
offering price or sale
price, whichever is less) None None None None
............................. ...................... ..................... ..................... .....................

Redemption Fee1 None None None None
............................. ...................... ..................... ..................... .....................

Exchange Fee None None None None
............................. ...................... ..................... ..................... .....................

ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)

Management Fees 1.16%(2) 1.00% 1.00% 0.80%
............................. ...................... ..................... ..................... .....................

Distribution and Service
(12b-1) Fees 0.00% 0.00% 0.00% 0.00%
............................. ...................... ..................... ..................... .....................

Other Expenses 0.40% 0.35% 0.30% 0.30%
............................. ...................... ..................... ..................... .....................

TOTAL ANNUAL FUND
OPERATING EXPENSES3 1.56% 1.35% 1.30% 1.10%

..................... ..................... ..................... .....................
</TABLE>

- ----------------------------------------
1 Although no such fee is currently in place, the Transfer Agent has reserved
the right in the future to charge a fee for wire transfers of redemption
proceeds.
2 Calculated based on 1.25% on the first $50 million, in average daily net
assets, 1.20% on the next $50 million, 1.15% on the next $300 million and
1.05% over $400 million.
3 Certain purchases of the Funds through financial institutions may be
subject to fees for additional services provided to investors.

-14-
<PAGE> 120

RISK/RETURN SUMMARY AND FUND EXPENSES

EXAMPLE

This Example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.

<TABLE>
<CAPTION>
1 3 5 10
INTERNATIONAL DISCOVERY FUND Year Years Years Years

<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES $ $ $ $

............................... ......... ......... ......... .........

SMALL CAPITALIZATION FUND

INSTITUTIONAL SHARES $ $ $ $

............................... ......... ......... ......... .........

MID CAPITALIZATION FUND

INSTITUTIONAL SHARES $ $ $ $

............................... ......... ......... ......... .........

LARGE CAPITALIZATION FUND

INSTITUTIONAL SHARES $ $ $ $

............................... ......... ......... ......... .........
</TABLE>

-15-
<PAGE> 121

RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE EQUITY INCOME FUND

<TABLE>
<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide capital
appreciation by investing in a diversified portfolio of
publicly traded larger cap equity securities which, in
the aggregate, provide a premium current yield.

PRINCIPAL INVESTMENT STRATEGIES The Fund invests at least 80% of the value of its total
assets in income producing, large cap common stocks and
securities convertible into common stocks. The Fund
considers a "large capitalization" company to be one that
has a comparable market capitalization to the companies
in the S&P Barra Value Index. The Fund expects that its
core holdings will consist of securities with a high
dividend yield, although it may balance these holdings
with lower yielding but higher-growth oriented
securities.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are market
risk, interest rate risk, credit risk and management risk.
To the extent the Fund invests in foreign securities, your
investment has foreign securities risk.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you:
[ ] WOULD LIKE TO INVEST IN THE STOCK MARKET BUT WISH TO
DO SO IN A WAY THAT HELPS REDUCE SOME OF THE RISKS
ASSOCIATED WITH OTHER TYPES OF STOCK FUNDS.
[ ] WANT A DEPENDABLE SOURCE OF MONTHLY INCOME.
[ ] CAN STAY INVESTED FOR A MINIMUM OF THREE TO FIVE
YEARS.
[ ] ARE WILLING TO ACCEPT SOME SHORT-TERM PRICE
FLUCTUATIONS IN RETURN FOR POTENTIAL ABOVE-AVERAGE,
LONG-TERM RETURNS.

An investment in the Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
</TABLE>

-16-
<PAGE> 122

RISK/RETURN SUMMARY AND FUND EXPENSES

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

<S> <C> <C> <C> <C> <C>
Institutional Shares 10/31/88
................ ........... .............. ................ .................

S&P BARRA VALUE INDEX
................................. ................ ........... .............. ................ .................
</TABLE>

- -----------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-17-
<PAGE> 123

RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE BALANCED ALLOCATION FUND

<TABLE>
<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide long-term
capital appreciation and current income.

PRINCIPAL INVESTMENT STRATEGIES The Fund invests in a broad range of securities including
common stocks, convertible securities and fixed-income
securities. Normally, the Fund expects to invest 50% to 70%
of its net assets in common stocks and convertible
securities and 25% to 55% of its net assets in fixed-income
securities. The Fund also may invest up to 30% of it net
assets in cash and cash-equivalent securities, which include
highly liquid securities with a maturity of less than three
months. The Fund may invest up to 20% of its net assets in
foreign securities.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are market
risk, interest rate risk, credit risk and management risk.
In addition, the Fund has the risk that the allocation of
its investments between equity and fixed-income securities
may have a more significant effect on the Fund's net asset
value when one of these asset classes is not performing
as well as the other. To the extent the Fund invests in
foreign securities, your investment has foreign risk.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you:
[ ] WANT EXPOSURE TO STOCKS, BONDS, AND CASH EQUIVALENTS
IN A SINGLE FUND.
[ ] WISH TO RELY ON PROFESSIONAL FUND MANAGERS TO
INCREASE OR DECREASE EXPOSURE TO DIFFERENT INVESTMENT
CATEGORIES AS MARKET CONDITIONS CHANGE.
[ ] CAN STAY INVESTED FOR A MINIMUM OF THREE TO FIVE YEARS.
[ ] ARE WILLING TO ACCEPT SOME SHORT-TERM PRICE
FLUCTUATIONS IN RETURN FOR POTENTIAL ABOVE-AVERAGE,
LONG-TERM RETURNS.

An investment in the Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
</TABLE>

-18-
<PAGE> 124

RISK/RETURN SUMMARY AND FUND EXPENSES

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

<S> <C> <C> <C> <C>
Institutional Shares 1/31/92
................ ........... .............. ..................

S&P 500 INDEX
................................. ................ ........... .............. ..................
LEHMAN AGGREGATE BOND INDEX
................................. ................ ........... .............. ..................
</TABLE>

- -----------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-19-
<PAGE> 125

FUND EXPENSES

FEES AND EXPENSES
- -----------------
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
INSTITUTIONAL SHARES OF THE FUNDS.

Annual Fund operating expenses are paid out of Fund assets, and are reflected in
the share price. The fees and expenses for each Fund and Class are based upon
the actual operating expenses of that Fund and Class for the fiscal year ended
May 31, 1999.

<TABLE>
<CAPTION>
FEE TABLE

EQUITY INCOME FUND BALANCED ALLOCATION
SHAREHOLDER FEES FUND
(FEES PAID DIRECTLY FROM
YOUR INVESTMENT)

<S> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases (as a
Percentage of offering
price) None None
.............................. ..................... ......................

Maximum Deferred Sales
Charge (Load)
(as a percentage of
offering price or sale
price, whichever is less) None None
.............................. ..................... ......................

Redemption Fee1 None None
.............................. ..................... ......................

Exchange Fee None None
.............................. ..................... ......................

ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)

Management Fees 1.00% 1.00% 2
.............................. ..................... ......................

Distribution and Service
(12b-1) Fees 0.00% 0.00%
.............................. ..................... ......................

Other Expenses 0.33% 0.37%
.............................. ..................... ......................

TOTAL ANNUAL FUND
OPERATING EXPENSES3 1.33% 1.37%

.............................. ..................... ......................

FEE WAIVERS/REIMBURSEMENTS
------ 0.25%
.............................. ..................... ......................

NET ANNUAL FUND
OPERATING EXPENSES ----- 1.12%

.............................. ..................... ......................
</TABLE>

- --------------------------------
1 Although no such fee is currently in place, the Transfer Agent has reserved
the right in the future to charge a fee for wire transfers of redemption
proceeds.

-20-
<PAGE> 126

2 The Adviser is currently limiting its advisory fees paid by the Fund for
the current fiscal year to 0.75%. The Adviser may revise or cancel these
expense limitations at any time and will notify you of any material change.
3 Certain purchases of the Funds through financial institutions may be
subject to fees for additional services provided to investors.

RISK/RETURN SUMMARY AND FUND EXPENSES

EXAMPLE

This Example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.

<TABLE>
<CAPTION>
1 3 5 10
EQUITY INCOME FUND Year Years Years Years

<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES $ $ $ $

............................... ......... ......... ......... .........

BALANCED ALLOCATION FUND

INSTITUTIONAL SHARES $ $ $ $

............................... ......... ......... ......... .........
</TABLE>

-21-
<PAGE> 127
INCOME FUNDS

RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE BOND FUND

<TABLE>
<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide
current income as well as preservation of capital by
investing in high- and medium-grade fixed-income securities.

PRINCIPAL INVESTMENT STRATEGIES The Fund invests at least 80% of it total assets in investment
grade debt securities of all types. Such securities will
be rated at the time of purchase within the four highest
rating categories assigned by a nationally recognized
statistical rating organization ("NRSRO") or, if unrated,
which the Adviser deems are of comparable quality. The
Fund expects to maintain a dollar-weighted average
portfolio maturity of 4 to 12 years.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are interest
rate risk, credit risk and management risk. Increases in
interest rates may cause the value of the Fund's investments
to decline and the decrease in value may not be offset by
higher interest rate income. Because the Fund may invest in
mortgage-related or asset-backed securities, it is subject
to the risk that mortgages or other assets may be prepaid
when interest rates decline, forcing the Fund to invest in
securities with lower interest rates. For this and other
reasons, mortgage-related and asset-backed securities may
have significantly greater price and yield volatility than
traditional fixed-income securities.

An investment in the Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
</TABLE>

-22-
<PAGE> 128

RISK/RETURN SUMMARY AND FUND EXPENSES

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

<S> <C> <C> <C> <C> <C>
Institutional Shares 10/31/88
................ ........... .............. ................ .................
LEHMAN BROTHERS AGGREGATE
BOND INDEX
................................. ................ ........... .............. ................ .................
</TABLE>

- -----------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-23-
<PAGE> 129

RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE INTERMEDIATE GOVERNMENT OBLIGATIONS FUND

<TABLE>
<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide current
income as well as preservation of capital by investing
primarily in U.S. government securities.

PRINCIPAL INVESTMENT STRATEGIES The Fund normally invests at least 80% of its total assets in
obligations issued or guaranteed by the U.S. government or
its agencies or instrumentalities. The Fund expects to
maintain a dollar-weighted average portfolio maturity of
two to ten years. The Fund normally invests in U.S.
Treasury bills, notes or bonds and other U.S. government
securities. The Fund also may invest in mortgage-related
securities issued or guaranteed by the U.S. government or
its agencies or instrumentalities.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are interest
rate risk, credit risk and management risk. Increases in
interest rates may cause the value of the Fund's investments
to decline and a decrease in value may not be offset by
higher interest rate income. Because the Fund may invest in
mortgage-related securities, it is subject to the risk that
mortgages may be prepaid when interest rates decline,
forcing the Fund to invest in securities with lower interest
rates. For this and other reasons, mortgage-related
securities may have significantly greater price and yield
volatility than traditional debt securities.

An investment in the Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
</TABLE>

-24-
<PAGE> 130

RISK/RETURN SUMMARY AND FUND EXPENSES

PERFORMANCE BAR CHART AND TABLE(1)
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES

The bar chart above does not reflect the impact of any applicable sales charges
or account fees which would reduce returns.

<S> <C> <C> <C> <C> <C>
Institutional Shares 10/31/88
................ ........... .............. ................ .................
................ ........... .............. ................ .................
LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT INDEX
................................. ................ ........... .............. ................ .................
</TABLE>

- -----------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-25-
<PAGE> 131

RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE U.S. GOVERNMENT INCOME FUND

<TABLE>
<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide current income
as well as preservation of capital by investing primarily in
U.S. government securities.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are interest
rate risk, credit risk and management risk. Increases in
interest rates may cause the value of the Fund's
investments to decline and the decrease in value may not
be offset by higher interest rate income. Because the
Fund invests primarily in mortgage-related securities, it
is subject to the risk that mortgages may be prepaid when
interest rates decline, forcing the Fund to invest in
securities with lower interest rates. For this and other
reasons, mortgage-related securities may have
significantly greater price and yield volatility than
traditional debt securities.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you:
[ ] WANT A HIGH LEVEL OF MONTHLY INCOME WITHOUT A HIGH
DEGREE OF RISK
[ ] WISH TO DIVERSIFY YOUR INVESTMENT PORTFOLIO TO
REDUCE VOLATILITY
[ ] CAN KEEP YOUR MONEY INVESTED FOR A MINIMUM OF TWO TO
THREE YEARS

An investment in the Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
</TABLE>

-26-
<PAGE> 132

RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the U.S. Government Income Fund has
performed and how its performance has varied from year to year. The bar chart
gives an indication of risk by showing changes in the Fund's yearly performance
over six years to demonstrate that the Fund has gained or lost value at
different times. The table below compares the Fund's average annual returns for
1 and 5 year periods and since inception to those of the Lehman Brothers
Mortgage-Backed Securities Index which covers all fixed-rate securities backed
by mortgage pools of the Government National Mortgage Association (GNMA),
Federal Home Loan Mortgage Corporation (FHLMC), and Federal National Mortgage
Association (FNMA). Past performance does not indicate how the Fund will perform
in the future.

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

<S> <C> <C> <C> <C>
Institutional Shares 11/12/92
................ ........... .............. ..................
................ ........... .............. ..................

LEHMAN BROTHERS MORTGAGE-BACKED
SECURITIES INDEX
................................. ................ ........... .............. ..................
</TABLE>

- -----------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-27-
<PAGE> 133

RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE LIMITED MATURITY BOND FUND

<TABLE>
<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide current
income as well as preservation of capital by investing in
a portfolio of high and medium-grade fixed income
securities.

PRINCIPAL INVESTMENT STRATEGIES The Fund normally invests at least 80% of its total assets in
investment grade debt securities of all types. The Fund
invests primarily in corporate bonds, U.S. government
obligations, and mortgage-related and asset-backed
securities. Such securities will be rated at the time of
purchase within the four highest rating categories
assigned by a nationally recognized statistical rating
organization ("NRSRO") or, if unrated, which the Adviser
deems are of comparable quality. The Fund expects to
maintain a dollar-weighted average portfolio maturity of
one to five years.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you:
[ ] WISH TO PRESERVE AND PROTECT YOUR ASSETS WHILE
POTENTIALLY STAYING AHEAD OF INFLATION.
[ ] WANT A DEPENDABLE SOURCE OF MONTHLY INCOME.
[ ] NEED ADDITIONAL DIVERSIFICATION IN YOUR PORTFOLIO TO
REDUCE VOLATILITY.
[ ] CAN KEEP YOUR MONEY INVESTED FOR A MINIMUM OF TWO TO
THREE YEARS.

An investment in the Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
</TABLE>

-28-
<PAGE> 134

RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the Limited Maturity Bond Fund has
performed and how its performance has varied from year to year. The bar chart
gives an indication of risk by showing changes in the Fund's yearly performance
over ten years to demonstrate that the Fund has gained or lost value at
different times. The table below compares the Fund's average annual returns for
1, 5 and 10 year periods and since inception to those of the Merrill Lynch 1-3
year Government/Corporate Index, which represents the total returns of
short-term government and corporate bonds. Past performance does not indicate
how the Fund will perform in the future.

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

<S> <C> <C> <C> <C> <C>
Institutional Shares 10/31/88
................ ........... .............. ................ .................
................ ........... .............. ................ .................
MERRILL LYNCH 1-3 YEAR
GOVERNMENT/CORPORATE INDEX
................................. ................ ........... .............. ................ .................
</TABLE>

- -----------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-29-
<PAGE> 135

FUND EXPENSES

FEES AND EXPENSES
- -----------------
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
INSTITUTIONAL SHARES OF THE FUNDS.

<TABLE>
<CAPTION>
FEE TABLE

BOND FUND INTERMEDIATE U.S. GOVERNMENT LIMITED MATURITY BOND
SHAREHOLDER FEES GOVERNMENT INCOME FUND FUND
(FEES PAID DIRECTLY FROM OBLIGATIONS FUND
YOUR INVESTMENT)

<S> <C> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases (as a
Percentage of offering
price) None None None None
............................. ..................... ..................... ..................... .....................

Maximum Deferred Sales
Charge (Load)
(as a percentage of
offering price or sale
price, whichever is less) None None None None
............................. ..................... ..................... ..................... .....................

Redemption Fee(1) None None None None
............................. ..................... ..................... ..................... .....................

Exchange Fee None None None None
............................. ..................... ..................... ..................... .....................

ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)

Management Fees(2) 0.74% 0.74% 0.74% 0.74%
............................. ..................... ..................... ..................... .....................

Distribution and Service
(12b-1) Fees 0.00% 0.00% 0.00% 0.00%
............................. ..................... ..................... ..................... .....................

Other Expenses 0.30% 0.32% 0.35% 0.32%
............................. ..................... ..................... ..................... .....................

TOTAL ANNUAL FUND
OPERATING EXPENSES(3) 1.04% 1.06% 1.09% 1.06%

............................. ..................... ..................... ..................... .....................

FEE WAIVERS/REIMBURSEMENTS 0.10% 0.09% 0.34% 0.24%

............................. ..................... ..................... ..................... .....................

NET ANNUAL FUND
OPERATING EXPENSES 0.94% 0.97% 0.75% 0.82%

............................. ..................... ..................... ..................... .....................
</TABLE>

-30-
<PAGE> 136

- ----------------------------
1 Although no such fee is currently in place, the Transfer Agent has reserved
the right in the future to charge a fee for wire transfers of redemption
proceeds.
2 The Adviser is currently limiting its advisory fees paid by the Fund for
the current fiscal year to 0.75%. The Adviser may revise or cancel these
expense limitations at any time and will notify you of any material change.
3 Certain purchases of the Funds through financial institutions may be
subject to fees for additional services provided to investors.

RISK/RETURN SUMMARY AND FUND EXPENSES

EXAMPLE

This Example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.

<TABLE>
<CAPTION>
1 3 5 10
BOND FUND Year Years Years Years

<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES $ $ $ $

............................... ......... ......... ......... .........

INTERMEDIATE GOVERNMENT
OBLIGATIONS FUND

INSTITUTIONAL SHARES $ $ $ $

............................... ......... ......... ......... .........

U.S. GOVERNMENT INCOME FUND

INSTITUTIONAL SHARES
$ $ $ $

............................... ......... ......... ......... .........

LIMITED MATURITY BOND FUND

INSTITUTIONAL SHARES
$ $ $ $

............................... ......... ......... ......... .........
</TABLE>

-31-
<PAGE> 137
TAX-FREE INCOME FUNDS

RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE MICHIGAN MUNICIPAL BOND FUND

<TABLE>
<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide current
income exempt from federal income taxes and, to the
extent possible, from Michigan personal income taxes, as
is consistent with conservation of capital. The Fund's
investment objective may be changed without shareholder
approval.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are interest
rate risk and credit risk. The Fund's investments in
Michigan municipal income securities may also include
exposure to special factors that may adversely affect the
value of municipal securities and have a significant effect
on the value of the Fund's investments. These factors
include political or legislative changes, uncertainties
related to the tax status of municipal securities or the
rights of investors in these securities.

Due to the level of investment in municipal obligations
issued by the State of Michigan and its political
subdivisions, the performance of the Fund will be closely
tied to the economic and political conditions in the State
of Michigan, and, therefore, an investment in the Fund may
be riskier than an investment in other types of municipal
bond funds. The State's economy is principally dependent
upon manufacturing (particularly automobiles, office
equipment and other durable goods), tourism and agriculture
and historically has been highly cyclical. When a Fund's
assets are concentrated in obligations from revenues of
similar projects issued by issuers located in the same state
or in industrial development bonds, the Fund will be subject
to the particular risks (including legal and economic
conditions) related to such securities to a greater extent
than if its assets were not so concentrated.

In addition, the Fund is not "diversified," meaning that it
can invest a greater percentage of its assets in a particular
issuer. Factors affecting these issuers could have a more
significant adverse effect on the Fund's net asset value.
</TABLE>

-32-
<PAGE> 138

<TABLE>
<S> <C>
WHO MAY WANT TO INVEST? Consider investing in the Fund if you:
[ ] WISH TO EARN INVESTMENT INCOME THAT IS EXEMPT FROM
FEDERAL INCOME TAX
[ ] LIVE IN MICHIGAN AND WISH TO EARN INVESTMENT INCOME
THAT IS ALSO EXEMPT FROM STATE INCOME TAX
[ ] WANT TO SUPPORT MICHIGAN MUNICIPALITIES BY
PURCHASING THEIR DEBT SECURITIES
[ ] SEEK TO REDUCE VOLATILITY IN YOUR PORTFOLIO THROUGH
INCREASED DIVERSIFICATION
[ ] CAN KEEP YOUR MONEY INVESTED FOR A MINIMUM OF ONE TO
TWO YEARS

An investment in the Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
</TABLE>

-33-
<PAGE> 139

RISK/RETURN SUMMARY AND FUND EXPENSES

The table measures performance in terms of total return. However, this Fund is
managed for yield and not total return.

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS(for the periods ended December 31)
Fund or Class Past Year Past 5 Years Since Inception
Inception
................ ........... .............. ..................

<S> <C> <C> <C> <C>
Institutional Shares 7/02/90
................ ........... .............. ..................
................ ........... .............. ..................

LEHMAN BROTHERS MUTUAL FUND
INTERMEDIATE INDEX
................................. ................ ........... .............. ..................
LEHMAN BROTHERS SEVEN YEAR MUNICIPAL INDEX
................................. ................ ........... .............. ..................
</TABLE>

- -----------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-34-
<PAGE> 140

RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE NATIONAL TAX EXEMPT BOND FUND

<TABLE>
<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide current
income exempt from federal income taxes as is consistent
with conservation of capital.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are interest
rate risk and credit risk. The Fund's investments in
municipal securities may also have exposure to special
factors that may adversely affect the value of these
securities, and have a significant effect on the value of
the Fund's investments. These factors include political or
legislative changes, uncertainties related to the tax status
of municipal securities or the rights of investors in these
securities.

An investment in the Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
</TABLE>

-35-
<PAGE> 141

RISK/RETURN SUMMARY AND FUND EXPENSES

This table measures performance in terms of total return. However, this Fund is
managed for yield and not total return.

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31 FOR INSTITUTIONAL SHARES

The bar chart above does not reflect the impact of any applicable sales
charges or account fees which would reduce returns.

<S> <C> <C> <C> <C> <C>
Institutional Shares 10/31/88
................ ........... .............. ................ .................
LEHMAN BROTHERS MUTUAL FUND
INTERMEDIATE INDEX
................................. ................ ........... .............. ................ .................
LEHMAN BROTHERS SEVEN YEAR MUNICIPAL INDEX
................................. ................ ........... .............. ................ .................
</TABLE>

- -----------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-36-
<PAGE> 142

FUND EXPENSES

FEES AND EXPENSES
- -----------------
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
INSTITUTIONAL SHARES OF THE FUNDS.

<TABLE>
<CAPTION>
FEE TABLE
---------

MICHIGAN MUNICIPAL NATIONAL TAX EXEMPT BOND
SHAREHOLDER FEES BOND FUND FUND
(FEES PAID DIRECTLY FROM
YOUR INVESTMENT)

<S> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases (as a
Percentage of offering
price) None None
.............................. ...................... ......................

Maximum Deferred Sales
Charge (Load)
(as a percentage of
offering price or sale
price, whichever is less) None None
.............................. ...................... ......................

Redemption Fee(1) None None
.............................. ...................... ......................

Exchange Fee None None
.............................. ...................... ......................

ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)

Management Fees(2) 0.74% 0.74%
.............................. ...................... ......................

Distribution and Service
(12b-1) Fees 0.00% 0.00%
.............................. ...................... ......................

Other Expenses 0.29% 0.33%
.............................. ...................... ......................

TOTAL ANNUAL FUND
OPERATING EXPENSES(3) 1.03% 1.07%

.............................. ...................... ......................

FEE WAIVERS/REIMBURSEMENTS 0.29% 0.29%
.............................. ...................... ......................

NET ANNUAL FUND
OPERATING EXPENSES 0.74% 0.78%

.............................. ...................... ......................
</TABLE>

-37-
<PAGE> 143

RISK/RETURN SUMMARY AND FUND EXPENSES

EXAMPLE

This Example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.

<TABLE>
<CAPTION>
1 3 5 10
MICHIGAN MUNICIPAL BOND FUND Year Years Years Years

<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES $ $ $ $

............................... ......... ......... ......... .........

NATIONAL TAX EXEMPT BOND FUND

INSTITUTIONAL SHARES $ $ $ $

............................... ......... ......... ......... .........
</TABLE>

-38-
<PAGE> 144
MONEY MARKET FUNDS

RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE TAX-FREE FUND

<TABLE>
<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide current
interest income free from federal income taxes,
consistent with the preservation of capital and relative
stability of principal.

PRINCIPAL INVESTMENT STRATEGIES The Fund is a money market fund that seeks, to maintain a
stable net asset value of $1.00 per share, although there is
no guarantee that the net asset value will not vary. The
Fund normally invests at least 80% of its total assets in
municipal obligations with interest that is exempt from
federal income tax and not subject to the federal
alternative minimum tax. These securities will have
short-term debt ratings in the two highest rating categories
of at least two nationally recognized statistical rating
organizations, or will be unrated securities of comparable
quality. The Fund's dollar-weighted average portfolio
maturity will not exceed 90 days. The Fund will not purchase
any security which matures in more than 397 days.

PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are interest
rate risk, credit risk and management risk. The Fund's
investments in municipal securities may also have exposure
to special factors that may adversely affect the value of
municipal securities, and have a significant effect on the
value of the Fund's investments. These factors include
political or legislative changes, uncertainties related to
the tax status of municipal securities or the rights of
investors in these securities. An investment in the Fund is
not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.

WHO MAY WANT TO INVEST? Consider investing in the Fund if you are:
[ ] AN INVESTOR IN A HIGH TAX BRACKET
[ ] SEEKING LIQUIDITY
[ ] SEEKING CURRENT INCOME EXEMPT FROM FEDERAL INCOME
TAXES
</TABLE>

-39-
<PAGE> 145

RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the Tax-Free Fund has performed and
how its performance has varied from year to year. The bar chart gives an
indication of risk by showing changes in the Fund's yearly performance over ten
years to demonstrate that the Fund's return has varied at different times. Past
performance does not indicate how the Fund will perform in the future

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

Year-by-Year Total Returns as of 12/31 for Institutional Shares

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31)
Past Year Past 5 Years Past 10 Years Since
Inception
............. .................. ................ ...............
<S> <C> <C> <C> <C>
Institutional Shares
............. .................. ................ ...............
</TABLE>

For current yield information on the Fund, call 1-800-451-8377. The Tax-Free
Fund's yield appears in the Wall Street Journal each Thursday.

- -----------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-40-
<PAGE> 146

RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE PRIME OBLIGATIONS FUND

<TABLE>
<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide current
income with liquidity and stability of principal.

PRINCIPAL INVESTMENT STRATEGIES The Fund is a money market fund that seeks to maintain a
stable net asset value of $1.00 per share, although there
is no guarantee that the net asset value per share will
not vary. The Fund invests in high-quality money market
instruments including municipal securities and other
instruments deemed to be of comparable high quality as
determined by the Board of Trustees. These securities will
have short-term debt ratings in the two highest rating
categories of at least two nationally recognized
statistical rating organizations, or will be unrated
securities of comparable quality. The Fund's
dollar-weighted average portfolio maturity will not exceed
90 days. The Fund will not purchase any security which
matures in more than 397 days.

</TABLE>

-41-
<PAGE> 147

RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the Prime Obligations Fund has
performed and how its performance has varied from year to year. The bar chart
gives indication of risk by showing changes in the Fund's yearly performance
over ten years Past performance does not indicate how the Fund will perform in
the future.

PERFORMANCE BAR CHART AND TABLE(1)
----------------------------------

Year-by-Year Total Returns as of 12/31 for Institutional Shares

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31)
Past Year Past 5 Years Past 10 Years
............. .................. ................
<S> <C> <C> <C>
Institutional Shares
............. .................. ................
</TABLE>

For current yield information on the Fund, call 1-800-451-8377. The Prime
Obligations Fund's yield appears in the Wall Street Journal each Thursday.

- -----------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-42-
<PAGE> 148

RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE U.S. GOVERNMENT OBLIGATIONS FUND

<TABLE>
<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide current
income with liquidity and stability of principal.

PRINCIPAL INVESTMENT STRATEGIES The Fund is a money market fund that seeks to maintain a
stable net asset value of $1.00 per share, although there
is no guarantee that the net asset value per share will
not vary. The Fund normally invests at least 65% of its
total assets in short-term U.S. Treasury bills, notes and
other obligations issued or guaranteed by the U.S.
government or its agencies or instrumentalities. Other
securities purchased by the Fund will be high quality money
market and comparable investments. These securities will have
short-term debt ratings in the two highest rating catagories
of at least two nationally recognized statistical rating
organizations or will be unrated securities of comparable
quality. The Fund's dollar-weighted average portfolio
maturity will not exceed 90 days. The Fund will not purchase
any security which matures in more than 397 days.

</TABLE>

-43-
<PAGE> 149

RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the U.S. Government Obligations Fund
has performed and how its performance has varied from year to year. The bar
chart gives an indication of risk by showing changes in the Fund's yearly
performance over ten years to demonstrate that the Fund's return has varied at
different times. Past performance does not indicate how the Fund will perform in
the future

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

Year-by-Year Total Returns as of 12/31 for Institutional Shares

For current yield information on the Fund, call 1-800-451-8377. The U.S.
Government Obligations Fund's yield appears in the Wall Street Journal each
Thursday.

- -----------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-44-
<PAGE> 150

RISK/RETURN SUMMARY AND FUND EXPENSES
- --------------------------------------------------------------------------------

RISK/RETURN SUMMARY OF THE PARKSTONE TREASURY FUND

<TABLE>
<S> <C>
INVESTMENT OBJECTIVE The Fund's investment objective is to provide current
income with liquidity and stability of principal.

-45-
<PAGE> 151

RISK/RETURN SUMMARY AND FUND EXPENSES

The chart and table on this page show how the Treasury Fund has performed and
how its performance has varied from year to year. The bar chart gives an
indication of risk by showing changes in the Fund's yearly performance over five
years to demonstrate that the Fund's return has varied at different times. Past
performance does not indicate how the Fund will perform in the future.

PERFORMANCE BAR CHART AND TABLE(1)
--------------------------------

Year-by-Year Total Returns as of 12/31 for Institutional Shares

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (for the periods ended December 31)
Past Year Past 5 Years Since Inception
............. .................. ...................

<S> <C> <C> <C>
Institutional Shares
............. .................. ...................
</TABLE>

For current yield information on the Fund, call 1-800-451-8377. The Treasury
Fund's yield appears in the Wall Street Journal each Thursday.

- -----------------------
1 Both the chart and the table assume reinvestment of dividends and
distributions.

-46-
<PAGE> 152

FUND EXPENSES

FEES AND EXPENSES
- -----------------
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
INSTITUTIONAL SHARES OF THE FUNDS.

<TABLE>
<CAPTION>
FEE TABLE
---------

TAX-FREE FUND PRIME OBLIGATIONS U.S. GOVERNMENT TREASURY FUND
SHAREHOLDER FEES FUND OBLIGATIONS FUND
(FEES PAID DIRECTLY FROM
YOUR INVESTMENT)

<S> <C> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases (as a
Percentage of offering price) None None None None
.............................. ................... ....................... ......................... .....................

Maximum Deferred Sales
Charge (Load)
(as a percentage of
offering price or sale
price, whichever is less) None None None None
.............................. ................... ....................... ......................... .....................

Redemption Fee(1) None None None None
.............................. ................... ....................... ......................... .....................

Exchange Fee None None None None
.............................. ................... ....................... ......................... .....................

ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)

Management Fees 0.40% 0.40% 0.40% 0.40%
.............................. ................... ....................... ......................... .....................

Distribution and Service
(12b-1) Fees 0.00% 0.00% 0.00% 0.00%
.............................. ................... ....................... ......................... .....................

Other Expenses 0.28% 0.28% 0.28% 0.27%
.............................. ................... ....................... ......................... .....................

TOTAL ANNUAL FUND
OPERATING EXPENSES(2) 0.68% 0.68% 0.68% 0.67%

.............................. ................... ....................... ......................... .....................

FEE WAIVERS/REIMBURSEMENTS
0.02% 0.02% 0.02% 0.10%
.............................. ................... ....................... ......................... .....................

NET ANNUAL FUND
OPERATING EXPENSES 0.66% 0.66% 0.66% 0.57%

.............................. ................... ....................... ......................... .....................
</TABLE>

-47-
<PAGE> 153

- -----------------------
1 Although no such fee is currently in place, the Transfer Agent has reserved
the right in the future to charge a fee for wire transfers of redemption
proceeds.
2 Certain purchases of the Funds through financial institutions may be
subject to fees for additional services provided to investors.

RISK/RETURN SUMMARY AND FUND EXPENSES

EXAMPLE

This Example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.

<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES $ $ $ $
............................... ......... ......... ......... .........

PRIME OBLIGATIONS FUND

INSTITUTIONAL SHARES $ $ $ $

............................... ......... ......... ......... .........

U.S. GOVERNMENT OBLIGATIONS
FUND

INSTITUTIONAL SHARES $ $ $ $

............................... ......... ......... ......... .........

TREASURY FUND

INSTITUTIONAL SHARES $ $ $ $

............................... ......... ......... ......... .........
</TABLE>

-48-
<PAGE> 154

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

This section of the Prospectus provides a more complete description of the
Funds' principal investment objectives, strategies and risks. Of course, there
can be no assurance that the Funds will achieve their investment objectives.
Additional descriptions of the Funds' risks, strategies, and investments, as
well as other strategies and investments not described below may be found in the
Funds' Statement of Additional Information or SAI.

This section describes risks that affect the Funds' portfolios as a whole.
Certain of these risks may apply to one or more of the Funds. These risks are:

- Market Risk This is the risk that market influences will affect expected
returns of all equities and bonds in ways that were not anticipated.

- Interest Rate Risk This is the risk that returns will be better or worse
than expected because of changes in the level of interest rates.

- Credit Risk This is the risk associated with the ability of the firm or
institution that issues securities to meet its obligations on those
securities.

- Management Risk This risk is the possibility that investments selected
by the Funds' managers may not perform well and that the Funds will not
perform as well as a result.

THIS SECTION ALSO DESCRIBES SPECIFIC RISKS THAT MAY AFFECT A PARTICULAR FUND'S
PORTFOLIO.

-49-
<PAGE> 155

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE INTERNATIONAL DISCOVERY FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Institutional Shares PKIDX
-----
INVESTMENT OBJECTIVE, POLICIES AND STRATEGY
- -------------------------------------------

The Fund's investment objective is to provide capital appreciation by investing
in a portfolio of equity securities of foreign issuers. The Fund normally
invests at least 80% of its total assets in equity securities of foreign
issuers. The Fund's assets normally will be invested in the securities of
issuers located in at least three foreign countries. Foreign investments also
may include debt obligations issued or guaranteed by foreign governments or
their agencies, authorities, instrumentalities or political subdivisions,
including a foreign state, province or municipality. The Fund does not presently
intend to invest in common stock of domestic companies.

The Fund will invest primarily in equity securities, including common and
preferred stocks, rights, warrants, securities convertible into common stocks
and American Depository Receipts ("ADRs") of companies included in the Morgan
Stanley Capital International Europe, Australia, Far East ("EAFE") Index, a
broadly diversified international index consisting of more than 1,000 equity
securities of companies located in Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia, the
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland, and the
United Kingdom. The Fund, however, will not be an "index" fund, and is neither
sponsored by nor affiliated with Morgan Stanley Capital International. The Fund
will not presently make investments in markets where, in the judgement of the
adviser, property rights are not defined and supported by adequate legal
infrastructure. More than 25% of the Fund's assets may be invested in the
securities or issuers located in the same country. Criteria for determining the
appropriate distribution of investments among countries may include relative
valuation, growth prospects and fiscal, monetary and regulatory governmental
policies.

Although not currently anticipated, the Fund may invest up to 35% of its assets
in U.S. companies. The Fund may temporarily invest cash in short-term debt
instruments of U.S. and foreign issuers for cash management purposes or pending
investment.

-50-
<PAGE> 156

-51-
<PAGE> 157

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE SMALL CAPITALIZATION FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Institutional Shares PKSCX
-----

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY
- -------------------------------------------

The Fund's investment objective is to provide capital appreciation by investing
in a diversified portfolio of publicly traded smaller cap equity securities. The
Fund normally invests at least 80% of its total assets in equity securities of
companies with small stock market capitalization. The Fund considers a "small
capitalization" company as one that has a comparable market capitalization as
the companies in the Russell 2000 Growth Index.

The Fund also may invest:

up to 25% of its net assets in foreign securities either directly or through the
purchase of American Depository Receipts ("ADRs") and European Depository
Receipts ("EDRs");

up to 20% of the value of its total assets in preferred stocks, corporate bonds,
notes, units of real estate investment trusts, warrants, and short-term
obligations (with maturities of 12 months or less) consisting of commercial
paper (including variable amount master demand notes), bankers' acceptances,
certificates of deposit, repurchase agreements, obligations issued or guaranteed
by the U.S. government or its agencies or instrumentalities, and demand and time
deposits of domestic and foreign banks and savings and loan associations;

securities of other investment companies and depository or custodial receipts
representing beneficial interests in any of the foregoing securities; and

in securities issued by foreign branches of U.S. banks and foreign banks, CCP
and in U.S. dollar-denominated commercial paper of a foreign issuer.

-52-
<PAGE> 158

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE MID CAPITALIZATION FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Institutional Shares PKEQX
-----

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY
- -------------------------------------------

The Fund's investment objective is to provide capital appreciation by investing
in a diversified portfolio of publicly traded mid cap equity securities. The
Fund normally invests at least 80% of its total assets in securities of
companies with mid stock market capitalization. The Fund considers a "mid
capitalization" company as one that has a comparable market capitalization as
the companies in the Russell Mid Cap Growth Index. The Fund normally invests 80%
of its total assets in common stocks and convertible securities.

The Fund's Adviser assesses a company's growth potential by evaluating the
management team, examining products and services, analyzing financial
statements, reviewing earnings models with Wall Street analysts, and studying
company fundamentals. The Fund invests in companies that typically have
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. The Fund's core holdings are
companies that participate in long-term growth industries, although the Fund
also may invest in companies in non-growth industries that exhibit the desired
characteristics. The Fund's Adviser constantly reviews the Fund's securities
holdings and sells stocks when there is a breakdown in company or industry group
fundamentals or when a company's market capitalization exceeds that of companies
represented in the Russell MidCap Growth Index.

The Fund also may invest:

up to 25% of its net assets in foreign securities either directly or through the
purchase of ADRs or EDRs;

securities of other investment companies and depository or custodial receipts
representing beneficial interests in any of the foregoing securities; and

in securities issued by foreign branches of U.S. banks and foreign banks, CCP
and in U.S. dollar-denominated commercial paper of a foreign issuer.

-53-
<PAGE> 159

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE LARGE CAPITALIZATION FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Institutional Shares PLCIX
-----

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY
- -------------------------------------------

The Fund's investment objective is to provide capital appreciation by investing
in a diversified portfolio of publicly traded larger cap equity securities. The
Fund normally invests at least 80% of its total assets in a diversified
portfolio of common stocks and securities convertible into common stocks of
companies with large stock market capitalization. The Fund considers a "large
capitalization" company as one that has a comparable market capitalization as
the companies in the S&P Barra Growth Index.

The Fund also may invest:

up to 25% of its net assets in foreign securities either directly or through the
purchase of ADRs or EDRs; and

securities of other investment companies and depository or custodial receipts
representing beneficial interests in any of the foregoing securities; and

in securities issued by foreign branches of U.S. banks and foreign banks, CCP
and in U.S. dollar-denominated commercial paper of a foreign issuer.

-54-
<PAGE> 160

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

RISK FACTORS FOR THE GROWTH FUNDS

-55-
<PAGE> 161

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE EQUITY INCOME FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Institutional Shares PKHEX
-----

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY
- -------------------------------------------

The Fund also may invest:

up to 20% of its total assets in preferred stocks, corporate bonds or notes;

in units of real estate investment trusts, warrants, and short-term obligations
(with maturities of 12 months or less) consisting of commercial paper (including
variable amount master demand notes), bankers' acceptances, certificates of
deposit, repurchase agreements, obligations issued or guaranteed by the U.S.
government or its agencies or instrumentalities, and demand and time deposits of
domestic and foreign banks and savings and loan associations;

in securities of other investment companies and depository or custodial receipts
representing beneficial interests in any of the foregoing securities; and

up to 25% of its net assets in foreign securities either directly or through the
purchase of ADRs, securities issued by foreign branches of U.S. banks and
foreign banks, in CCP, and in Europaper.

-56-
<PAGE> 162

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE BALANCED ALLOCATION FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Institutional Shares PKBAX
-----

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY
- -------------------------------------------

The Fund's investment objective is to provide long-term capital appreciation and
current income. The Fund invests in a broad range of securities including
common stocks, convertible securities and fixed-income securities. Normally, the
Fund expects to invest 50% to 70% of its net assets in common stocks and
convertible securities and 25% to 55% of its net assets in fixed-income
securities. The Fund also may invest up to 30% of it net assets in cash and
cash-equivalent securities, which include highly liquid securities with a
maturity of less than three months.

The Fund holds common stocks held primarily for the purpose of providing
long-term growth of capital. When choosing such stocks, the potential for
long-term capital appreciation will be the primary basis for selection. The Fund
invests primarily in those companies that are growth-oriented and have exhibited
consistent, above-average growth in revenues and earnings.

The Fund also may invest in:

short-term obligations (with maturities of 12 months or less) consisting of
domestic and foreign commercial paper, variable amount master demand notes,
bankers' acceptance, certificates of deposit and

-57-
<PAGE> 163

time deposits of domestic and foreign branches of U.S. banks and foreign banks,
and repurchase agreements. The Fund may also invest in securities of other
investment companies;

obligations of the Export-Import Bank of the United States, in U.S.
dollar-denominated international bonds for which the primary trading market is
the United States ("Yankee Bonds"), or for which the primary trading market is
abroad ("Eurodollar Bonds"), and in Canadian bonds and bonds issued by
institutions, such as the World Bank and the European Economic Community,
organized for a specific purpose by two or more foreign governments
("Supranational Agency Bonds"). The Fund's investments in foreign securities may
be made either directly or through the purchase of ADRs and the Fund may also
invest in securities issued by foreign branches of U.S. banks and foreign banks,
in CCP, and in Europaper; and

short-term securities in whatever proportion deemed desirable for temporary
defensive periods during adverse market conditions as determined by the Adviser.
However, to the extent that the Fund is so invested, its investment objective
may not be achieved during that time.

-58-
<PAGE> 164

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

RISK FACTORS FOR THE GROWTH AND INCOME FUNDS
- --------------------------------------------

-59-
<PAGE> 165

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE BOND FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Institutional Shares PKBDX
-----

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY
- -------------------------------------------

The Fund's investment objective is to provide current income with preservation
of capital by investing in high- and medium-grade fixed-income securities. The
Fund invests at least 80% of its total assets in investment grade debt
securities of all types. The Fund expects to maintain a dollar-weighted average
portfolio maturity of 4 to 12 years. The Fund also expects to invest in U.S.
Treasury obligations with different interest rates and maturities, as well as
"stripped" U.S. Treasury obligations and other U.S. government obligations.

Fixed-income securities include bonds, debentures, notes, zero-coupon
securities, mortgage-related securities, state, municipal or industrial revenue
bonds, obligations issued or guaranteed by the U.S. government or its agencies
or instrumentalities, debt securities convertible into, or exchangeable for,
common stocks, first mortgage loans and participation certificates in pools of
mortgages issued or guaranteed by the U.S. government or its agencies or
instrumentalities.

The Fund will invest in state and municipal securities when, in the opinion of
the Adviser, their yields are competitive with comparable taxable debt
obligations.

The Fund also may invest:

- up to 20% of its assets in preferred stocks and notes with remaining
maturities at the time or purchase of less than one year, short-term
debt obligations consisting of domestic and foreign commercial paper
(including variable amount master demand notes), banker's acceptances,
certificates of deposit and time deposits of domestic and foreign
branches of U.S. banks and foreign banks, repurchase agreements,
securities of other investment companies, and guaranteed investment
contracts ("GICs") issued by insurance companies. Some of the securities
in which the Fund invests may have warrants or options attached;

- in Stripped Treasury Obligations, and other obligations issued or
guaranteed by the U.S. government or its agencies or instrumentalities;

-60-
<PAGE> 166

- corporate debt securities which are rated at the time of purchase within
the four highest rating categories assigned by an NRSRO or, if unrated,
which the Adviser deems present attractive opportunities and are of
comparable quality;

- obligations of the Export-Import Bank of the United States, in Yankee
Bonds, in Eurodollar Bonds, in Canadian Bonds and in Supranational
Agency Bonds; and

- During temporary defensive periods as determined by the Adviser, the
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 Fund is so invested, its investment objective may not be
achieved during that time. Uninvested cash reserves will not earn
income.

-61-
<PAGE> 167

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE INTERMEDIATE GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Institutional Shares PKIEX
-----

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY
- -------------------------------------------

The Fund's investment objective is to provide current income as well as
preservation of capital by investing primarily in U.S. government securities.
The Fund normally invests at least 80% of it total assets in U.S. government
debt securities. The Fund expects to maintain a dollar-weighted average
portfolio maturity of two to ten years.

The Fund also may:

-62-
<PAGE> 168

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE U.S. GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Institutional Shares PKGIX
-----
INVESTMENT OBJECTIVE, POLICIES AND STRATEGY
- -------------------------------------------

The Fund's investment objective is to provide current income as well as
preservation of capital by investing primarily in U.S. government securities.
The Fund normally invests at least 80% of its total assets in obligations that
are issued or guaranteed by the U.S. government or its agencies or
instrumentalities. The Fund also may invest up to 20% of its total assets in
mortgage-related securities, debt securities and preferred stock of
non-governmental entities. The Fund expects to maintain a dollar-weighted
average portfolio maturity of two to ten years. Normally, the Fund invests in a
variety of U.S. government obligations, including mortgage-related securities,
U.S. Treasury bills, notes and bonds, "stripped" U.S. Treasury obligations and
other U.S. government securities.

The Fund also may invest in:

- short-term obligations (with maturities of 12 months or less) consisting
of domestic and foreign commercial paper (including variable amount
master demand notes), rated at the time of purchase within the top two
rating categories assigned by an NRSRO or, if unrated, which the Adviser
deems present attractive opportunities and are of comparable quality,
banker's acceptances, certificates of deposit and time deposits of
domestic and foreign branches of U.S. banks and foreign banks, and
repurchase and reverse repurchase agreements. The Fund may also invest
in corporate debt securities which are rated at the time of purchase
within the top three rating categories assigned by an NRSRO or, if
unrated, which the Adviser deems present attractive opportunities and
are of comparable quality.

-63-
<PAGE> 169

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE LIMITED MATURITY BOND FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Institutional Shares PKLMX
-----

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY
- -------------------------------------------

The Fund's investment objective is to provide current income as well as
preservation of capital by investing in a portfolio of high- and medium-grade
fixed-income securities. The Fund normally invests at least 80% of the value of
its total assets in investment grade debt securities of all types. The Fund
invests primarily in corporate bonds, U.S. government obligations, and
mortgage-related securities. The Fund expects to maintain a dollar- weighted
average portfolio maturity of one to five years. The Fund also expects to invest
in U.S. Treasury obligations with different interest rates and maturities, as
well as "stripped" U.S. Treasury obligations and other U.S. government
obligations.

Fixed-income securities consist of bonds, debentures, notes with remaining
maturities at the time of purchase of one year or more, zero-coupon securities,
mortgage-related securities, state, municipal or industrial revenue bonds,
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities, debt securities convertible into, or exchangeable for, common
stocks, first mortgage loans and participation certificates in pools of
mortgages issued or guaranteed by the U.S. government or its agencies or
instrumentalities.

The Fund also may invest:

up to 25% of its net assets in foreign securities either directly or through the
purchase of ADRs and securities issued by foreign branches of U.S. banks and
foreign banks, in CCP, and in Europaper;

in Stripped Treasury Obligations, and other obligations issued or guaranteed by
the U.S. government or its agencies or instrumentalities;

-64-
<PAGE> 170

corporate debt securities which are rated at the time of purchase within the
four highest rating categories assigned by an NRSRO or, if unrated, which the
Adviser deems present attractive opportunities and are of comparable quality;
and

obligations of the Export-Import Bank of the United States, in Yankee Bonds, in
Eurodollar Bonds, in Canadian Bonds and in Supranational Agency Bonds.

Some of the securities listed above may have options or warrants attached.

-65-
<PAGE> 171

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

RISK FACTORS FOR THE INCOME FUNDS
- ---------------------------------

-66-
<PAGE> 172

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Institutional Shares PKMIX
-----

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY
- -------------------------------------------

The Fund's investment objective is to provide current income exempt from federal
income taxes and, to the extent possible, from Michigan personal income taxes,
as is consistent with conservation of capital. The Fund normally invests at
least 80% of its net assets in a portfolio of Michigan municipal securities. The
Fund's primary consideration in selecting Michigan municipal securities is
quality.

The Fund normally invests in Michigan municipal securities with dollar-weighted
average portfolio maturity of two to ten years. However, the Fund may invest in
Michigan municipal securities of any maturity and the Adviser may extend or
shorten the average weighted maturity of its portfolio depending upon
anticipated changes in interest rates or other relevant market factors. In
addition, the average weighted rating of the Fund's portfolio may vary depending
upon the availability of suitable municipal securities or other relevant market
factors.

-67-
<PAGE> 173

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE NATIONAL TAX EXEMPT BOND FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Institutional Shares PKMBX
-----

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY
- -------------------------------------------

The Fund's investment objective is to provide current income exempt from federal
income taxes as is consistent with conservation of capital. The Fund normally
invests at least 80% of its assets in a diversified portfolio of municipal
securities the interest on which is both exempt from federal income taxes and
not treated as a preference item for individuals for the purpose of the federal
alternative minimum tax.

The Fund normally invests in long-term municipal securities and expects to
maintain dollar-weighted average portfolio maturity of two to ten years. The
Fund intends, under normal market conditions, to maintain an average weighted
credit rating of Aa/AA. The average weighted rating of the Fund's portfolio may
vary depending upon the availability of suitable municipal securities or other
relevant market factors. Although it does not intend to do so an a regular
basis, the Fund may invest more than 25% of its net assets in (i) municipal
securities whose issuers are in the same state and (ii) municipal securities
the interest on which is paid solely from revenues of similar projects.

The Fund may invest up to 20% of its total assets in private activity bonds
which may be treated as a specific tax preference item under the federal
alternative minimum tax.

-68-
<PAGE> 174
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

RISK FACTORS FOR THE TAX-FREE INCOME FUNDS
- ------------------------------------------

-69-
<PAGE> 175

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

MONEY MARKET FUNDS

All of the Money Market Funds seek to maintain a stable net asset value of $1.00
per share and invest exclusively in United States dollar-denominated instruments
that the Board of Trustees and the Adviser determine present minimal credit
risks and which at the time of acquisitions are (a) U.S. government securities,
(b) money market fund shares, or (c) rated by at least two NRSROs or by the only
NRSRO providing a rating in one of the two highest rating categories for
short-term debt obligations or, if unrated, which the Adviser deems to be of
comparable quality. There is no assurance, however, that they will be able to
maintain the $1.00 net asset value per share on a continuous basis. Each Fund
pursues its strategy by maintaining a portfolio of high-quality money market
investments. As money market funds, the Funds must meet the requirements of SEC
Rule 2a-7. The Rule imposes strict requirements on the investment quality,
maturity and diversification of the Funds' investments. Under Rule 2a-7, the
Funds' investments must each have a remaining maturity of no more than 397 days
and each Money Market Fund must maintain a dollar weighted average portfolio
maturity that does not exceed 90 days.

-70-
<PAGE> 176

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE TAX-FREE FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Institutional Shares PKTXX
-----

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY
- -------------------------------------------

The Fund also may: invest in commercial paper (subject to the quality standards
for tax-exempt commercial paper).

If the Adviser deems it appropriate for temporary defensive purposes, the Fund
may increase its holdings in taxable obligations to over 20% of its total assets
and may also hold uninvested cash reserves pending investment. Taxable
obligations may include obligations issued or guaranteed by the U.S. government,
its agencies or instrumentalities (some of which may be subject to repurchase
agreements), certificates of deposit and banker's acceptances of selected banks,
and commercial paper meeting the Fund's quality standards for tax-exempt
commercial paper.

During temporary defensive periods as determined by the Adviser, the Fund may
hold up to 100% of its total assets in short-term obligations including domestic
bank certificates of deposit, bankers' acceptance and repurchase agreements
secured by bank instruments. However, to the extent that the Fund is so
invested, its investment objective may not be achieved during that time.
Uninvested cash reserves will not earn income.

The most recent information about the Fund's portfolio holdings can be found in
its annual or semi-annual report. For information about receiving this report,
see the back cover.

-71-
<PAGE> 177

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE PRIME OBLIGATIONS FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Institutional Shares PKPXX
-----

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY
- -------------------------------------------

The Fund's investment objective is to provide current income with liquidity and
stability of principal. The Fund invests in high-quality money market
instruments, including municipal securities and other instruments of comparable
high quality. The Fund also may invest in commercial paper, other short-term
promissory notes issued by corporations (including variable amount master demand
notes) rated at the time of purchase within the two highest rating categories
assigned by at least two NRSROs or by the only NRSRO providing a rating or, if
not rated, which the Adviser deems to be of comparable quality, bankers'
acceptances, CCP, Europaper, certificates of deposit and time deposits.

The most recent information about the Fund's portfolio holdings can be found in
its annual or semi-annual report. For information about receiving this report,
see the back cover.

-72-
<PAGE> 178

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE U.S. GOVERNMENT OBLIGATIONS FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Institutional Shares PKGXX
-----

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY
- -------------------------------------------

municipal securities;

bankers' acceptances;

certificates of deposit, time deposits, and other instruments deemed to be of
comparable high quality.

The most recent information about the Fund's portfolio holdings can be found in
its annual or semi-annual report. For information about receiving this report,
see the back cover.

-73-
<PAGE> 179

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS

PARKSTONE TREASURY FUND
- --------------------------------------------------------------------------------

Ticker Symbol: Institutional Shares PSCXX
-----

INVESTMENT OBJECTIVE, POLICIES AND STRATEGY
- -------------------------------------------

The Fund's investment objective is to provide current income with liquidity and
stability of principal. The Fund normally invests exclusively in U.S. government
obligations and in repurchase agreements backed by these securities.

The most recent information about the Fund's portfolio holdings can be found in
its annual or semi-annual report. For information about receiving this report,
see the back cover.

-74-
<PAGE> 180

RISK FACTORS FOR THE MONEY MARKET FUNDS
- ---------------------------------------

The Money Market Funds are subject to management risk. In addition, specific
risks of the Funds' portfolios include:

Credit Risk - This is the risk that a security's credit rating will be
downgraded or that the issuer of a security will default (fail to make scheduled
interest and principal payments).

-75-
<PAGE> 181

FUND MANAGEMENT
- ---------------

THE INVESTMENT ADVISER

National City Investment Management Company, ("IMC" or the "Adviser"),
1900 East Ninth Street, Cleveland, Ohio 44114 is the adviser for the Funds. IMC,
founded in 1998, manages more than $23.7 billion in assets including $4.3
billion in the Parkstone Group of Funds. Through its portfolio management teams,
IMC makes the day-to-day investment decisions and continuously reviews,
supervises and administers the Funds' investment programs.

For these advisory services, the Funds paid as follows during their fiscal year
ended May 31, 1999:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------- --------------------------

* Calculated based on 1.25% on the first $50 million, in average daily net
assets, 1.20% on the next $50 million, 1.15% on the next $300 million and 1.05%
over $400 million.

-76-
<PAGE> 182

PORTFOLIO MANAGEMENT TEAM

<TABLE>
<S> <C>
Portfolio Portfolio Management Team
Parkstone International Discovery Fund International Equity Team
Parkstone Small Capitalization Fund Small Cap Growth Team
Parkstone Mid Capitalization Fund Mid Cap Growth Team
Parkstone Large Capitalization Fund Large Cap Growth Team
Parkstone Equity Income Fund Equity Value Team
Parkstone Balanced Allocation Fund Large Cap Growth and Fixed Income Teams
Parkstone Bond Fund Fixed Income Team
Parkstone Intermediate Government Obligations Fixed Income Team
Fund
Parkstone U.S. Government Income Fund Fixed Income Team
Parkstone Limited Maturity Bond Fund Fixed Income Team
Parkstone Michigan Municipal Bond Fund Tax-Free Fixed Income Team
Parkstone National Tax Exempt Bond Fund Tax-Free Fixed Income Team
Parkstone Tax-Free Fund Fixed Income Team
Parkstone Prime Obligations Fund Fixed Income Team
Parkstone U.S. Government Obligations Fund Fixed Income Team
Parkstone Treasury Fund Fixed Income Team
</TABLE>

THE DISTRIBUTOR AND ADMINISTRATOR

The Trust reserves the right to reject a purchase order when the Trust
determines that it is not in the best interest of the Trust to accept such
order.

With respect to the Trust, the Distributor may, from time to time and at its own
expense, provide promotional incentives, in the form of cash or other
compensation, to financial institutions whose representatives have sold or are
expected to sell significant amounts of these Funds. BISYS Fund Services
("BISYS"), whose address is 3435 Stelzer Road, Columbus, Ohio 43219-3035, serves
as the Fund's administrator.

The Statement of Additional Information has more detailed information
about the Investment Adviser and other service providers.

YEAR 2000

-77-
<PAGE> 183

SHAREHOLDER INFORMATION
- -----------------------

PRICING OF FUND SHARES
- ----------------------

HOW NAV IS CALCULATED

Each of the Money Market Funds seeks to maintain a NAV of $1.00 per share by
valuing the obligations in accordance with SEC regulations. Amortized cost will
normally approximate market value.

The NAV is calculated by adding the total value of a Fund's investments and
other assets, subtracting its liabilities and then dividing that figure by the
number of outstanding shares of the Fund:

NAV =

TOTAL ASSETS - LIABILITIES
Number of Shares
Outstanding

You can find most Funds' NAV daily in The Wall Street Journal and other
newspapers. NAV is calculated separately for each class of shares.

MONEY MARKET FUNDS

The net asset value, or NAV, of the Treasury and Tax-Free Funds is determined
and the shares are priced as of 1:00 p.m. Eastern time and as of the close of
trading on the New York Stock Exchange ("NYSE"), normally at 4 p.m. Eastern time
each business day. The net asset value of the Prime Obligations and U.S.
Government Obligations Funds is determined and the shares are priced as of 3:00
p.m. Eastern time and as of the close of trading on the NYSE on each business
day. The Money Market Funds value their securities at their amortized cost. The
amortized cost method involves valuing a portfolio security initially at its
cost on the date of the purchase and thereafter assuming a constant amortization
to maturity of the difference between the principal amount due at maturity and
initial cost.

OTHER FUNDS

The per share net asset value (NAV) for each non-Money Market Fund is determined
and its shares are priced at the close of regular trading on the New York Stock
Exchange, normally at 4:00 p.m. Eastern time on each business day.

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.

Some of the Funds have portfolio securities that are primarily listed on foreign
exchanges that trade on weekends or other days when these Funds do not price its
shares. As a result, the net asset value of a Fund's share may change on days
when shareholders will not by able to purchase or redeem the Fund's shares.

-78-
<PAGE> 184

BUSINESS DAYS DEFINED

-79-
<PAGE> 185

SHAREHOLDER INFORMATION
- -----------------------

PURCHASING AND ADDING TO YOUR SHARES

Institutional Shares may be purchased through procedures established by the
Distributor in connection with the requirement of customer accounts maintained
by or on behalf of certain financial institutions acting as fiduciary or agent
for their customers ("Customer Accounts"). These procedures may include
instructions under which a Customer Account is "swept" automatically at least
weekly and amounts in excess of a minimum amount agreed upon by the financial
institution and the customer are invested by the Distributor in Institutional
Shares of the Money Market Funds, depending upon the type of Customer Account
and/or the instructions of the customer.

Institutional Shares sold to financial institutions acting in a fiduciary,
advisory, custodial, or other similar capacity on behalf of customers will
normally be held of record by the financial institution. It is the
responsibility of the particular financial institution 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 will be recorded
by the financial institution and reflected in the account statement provided by
the financial institution to customers. A financial institution may exercise
voting authority for those Institutional Shares for which it is granted
authority by the customer.

- - There is no sales charge imposed in connection with the purchase of
Institutional Shares.
- - Depending upon the terms of your particular Customer Account, a financial
institution may charge you fees for automatic investment and other cash
management services provided in connection with your investment.
- - Information concerning these services and any charges may be obtained from
the financial institution.

This Prospectus should be read in conjunction with any information received from
your financial institution.

FOR INFORMATION ON PURCHASING INSTITUTIONAL SHARES OF THE FUNDS CALL
1-800-451-8377.

- - All purchases must be in U.S. dollars.
- - A fee will be charged for any checks that do not clear.
- - Third-party checks are not accepted.
- - The Distributor may reject a purchase order if it considers it in the best
interest of a Fund and its shareholders.

- --------------------------------------------------------------------------------
Avoid 31% Tax Withholding

-80-
<PAGE> 186

SHAREHOLDER INFORMATION
- -----------------------

SELLING YOUR SHARES
- -------------------

You may sell your shares at any time. Your sales price will be the next NAV
after your sell order is received by a Fund, its transfer agent, or your
investment representative. Normally you will receive your proceeds within a week
after your request is received. See section on "General Policies on Selling
Shares below."

- --------------------------------------------------------------------------------
WITHDRAWING MONEY FROM YOUR
FUND INVESTMENT

As a mutual fund shareholder, you are technically selling shares when you
request a withdrawal in cash. This is also known as redeeming shares or a
redemption of shares.
- --------------------------------------------------------------------------------

INSTRUCTIONS FOR SELLING SHARES
When selling shares you should contact your trust administrator or other
financial consultant responsible for your Customer Account.

OTHER INFORMATION REGARDING REDEMPTION OF SHARES
All or part of your Institutional Shares may be redeemed in accordance with
instructions and limitations pertaining to your Customer Account with your
financial institution. For example, if you have agreed with a bank to maintain a
minimum balance in your account with the bank, and the balance in that account
falls below that minimum, your Institutional Shares may be redeemed to the
extent necessary to maintain the required minimum balance.

MONEY MARKET FUNDS
To the greatest extent possible, requests for same day payments upon redemption
of Institutional Shares of the Money Market Funds will be honored if the request
for redemption is received by the transfer agent before 1:00 p.m. Eastern time,
for the Tax-Free and Treasury Funds or 3:00 p.m. Eastern time for the Prime
Obligations and U.S. Government Obligations Funds on a Business Day or, if
received after 1:00 p.m. or 3:00 p.m. Eastern time respectively, on the next
Business Day, unless it would be disadvantageous to the Funds or the
shareholders of a Fund to sell or liquidate portfolio securities in an amount
sufficient to satisfy requests for payments in that manner. You should contact
your trust administrator or other financial consultant responsible for the
account to determine the financial institution's requirements for effectuating
redemptions.

-81-
<PAGE> 187

SHAREHOLDER INFORMATION
- -----------------------

- --------------------------------------------------------------------------------
Dividends and Distributions
- ---------------------------

All dividends and distributions will be automatically reinvested unless you
request otherwise. Capital gains are distributed at least annually.

- --------------------------------------------------------------------------------

Federal Taxes
- -------------

Any loss realized on shares held for six months or less will be treated as a
long-term capital loss to the extent of any capital gain dividends that were
received on the shares.

The one major exception to these tax principles is that distributions on, and
sales, exchanges and redemptions of, shares held in an IRA (or other
tax-qualified plan) will not be currently taxable.

Interest on indebtedness incurred by a shareholder to purchase or carry shares
of the Exempt Funds generally will not be deductible for federal income tax
purposes.

The Parkstone Michigan Municipal Bond Fund intends to distribute income that is
exempt from Michigan income taxes.

-82-
<PAGE> 188
State and Local Taxes
- ---------------------

Shareowners may also be subject to state and local taxes on distributions and
redemptions. State income taxes may not apply, however, to the portions of each
Fund's distributions, if any, that are attributable to interest on federal
securities or interest on securities of the particular state or localities
within the state. Shareowners should consult their tax advisers regarding the
tax status of distributions in their state and locality.

-83-
<PAGE> 189

FINANCIAL HIGHLIGHTS

THE FINANCIAL HIGHLIGHTS TABLE IS INTENDED TO HELP YOU UNDERSTAND THE FUNDS'
FINANCIAL PERFORMANCE FOR THE PAST 5 YEARS [OR, IF SHORTER, THE PERIOD OF THE
FUNDS' OPERATIONS]. CERTAIN INFORMATION REFLECTS FINANCIAL RESULTS FOR A SINGLE
FUND SHARE. THE TOTAL RETURNS IN THE TABLE REPRESENT THE RATE THAT AN INVESTOR
WOULD HAVE EARNED [OR LOST] ON AN INVESTMENT IN THE FUND (ASSUMING REINVESTMENT
OF ALL DIVIDENDS AND DISTRIBUTIONS). THIS INFORMATION HAS BEEN AUDITED BY
PRICEWATERHOUSECOOPERS LLP, WHOSE REPORT, ALONG WITH THE FUND'S FINANCIAL
STATEMENTS, ARE INCLUDED IN [THE SAI OR ANNUAL REPORT], WHICH IS AVAILABLE UPON
REQUEST.

INSERT PAST 5 YEARS'
FINANCIAL HIGHLIGHTS
FROM ANNUAL REPORT.

-84-
<PAGE> 190

For more information about the Funds, the following documents are available free
upon request:

ANNUAL/SEMIANNUAL REPORTS (REPORTS):
The Funds' annual and semi-annual reports to shareholders contain additional
information on the Funds' investments. In the annual report, you will find a
discussion of the market conditions and investment strategies that significantly
affected a Fund's performance during its last fiscal year.

- --------------------------------------------------------------------------------
YOU CAN GET FREE COPIES OF ANNUAL/SEMI-ANNUAL REPORTS AND THE SAI OF THE
PARKSTONE GROUP OF FUNDS, OR REQUEST OTHER INFORMATION AND DISCUSS YOUR
QUESTIONS ABOUT THE FUNDS BY CONTACTING A BROKER OR BANK THAT SELLS THE FUNDS.
OR CONTACT THE FUND AT:

THE PARKSTONE GROUP OF FUNDS
P.O. BOX 8590
BOSTON, MASSACHUSETTS 02266-8590
TELEPHONE: 1-800-451-8377

- --------------------------------------------------------------------------------

You can review information about the Fund and SAI at the Public Reference Room
of the Securities and Exchange Commission in Washington D.C. You can get copies:
- For a duplicating fee, by writing the Public Reference Section of the
Securities and Exchange Commission, Washington, D.C. 20549-6009 or
calling 1-800-SEC-0330.
- Free from the Commission's Website at http://www.sec.gov

Investment Company Act file no. 811-5105.

-85-

<PAGE> 191
THE PARKSTONE GROUP OF FUNDS

Statement of Additional Information
July 15, 1999

GROWTH FUNDS
Parkstone International Discovery Fund
Parkstone Small Capitalization Fund
Parkstone Mid Capitalization Fund
Parkstone Large Capitalization Fund

GROWTH AND INCOME FUNDS
Parkstone Equity Income Fund
Parkstone Balanced Allocation Fund

INCOME FUNDS
Parkstone Bond Fund
Parkstone Intermediate Government Obligations Fund
Parkstone U.S. Government Income Fund
Parkstone Limited Maturity Bond Fund

TAX-FREE INCOME FUNDS
Parkstone National Tax Exempt Bond Fund
Parkstone Michigan Municipal Bond Fund

MONEY MARKET FUNDS
Parkstone Tax-Free Fund
Parkstone Prime Obligations Fund
Parkstone U.S. Government Obligations Fund
Parkstone Treasury Fund

This Statement of Additional information is not a Prospectus,
but should be read in conjunction with the following Prospectuses (the
"Prospectuses") of the Funds: Each of the Investor A Shares and Investor B
Shares Prospectus and Institutional Shares Prospectus dated July 15, 1999.
This Statement of Additional Information is incorporated by reference in its
entirety into the Prospectuses. Copies of each of the Prospectuses may be
obtained by writing the Group at One Freedom Valley Drive, Oaks, Pennsylvania
19456, or by telephoning toll free (800) 451-8377.
<PAGE> 192

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENTS AND RISKS.........................................................2
Additional Information about the Funds........................................2
Additional Information on Portfolio Instruments...............................8
Investment Restrictions......................................................34
Additional Investment Limitations............................................38
Portfolio Turnover...........................................................42

NET ASSET VALUE..............................................................43
Valuation of the Money Market Funds..........................................44
Valuation of the Non-Money Market Funds......................................45

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION...............................46
ADDITIONAL INFORMATION ABOUT HOW TO BUY INSTITUTIONAL SHARES.................47
ADDITIONAL INFORMATION ABOUT REDEMPTION OF INSTITUTIONAL SHARES..............48
MANAGEMENT OF THE GROUP......................................................48
Trustees and Officers........................................................48
Trustee Deferred Compensation Plan...........................................51
Investment Adviser...........................................................51
Portfolio Transactions.......................................................54
Authority to Act as Investment Adviser.......................................56
Glass-Steagall Act...........................................................56
Administrator and Sub-Administrator..........................................57
Expenses.....................................................................60
Distributor..................................................................61
Custodian, Transfer Agent and Fund Accounting Services.......................63
Independent Auditors.........................................................65
Legal Counsel................................................................65

ADDITIONAL INFORMATION.......................................................65
Description of Shares........................................................65
Vote of a Majority of the Outstanding Shares.................................67
Shareholder and Trustee Liability............................................67
Additional Tax Information...................................................67
Additional Tax Information Concerning the Exempt Funds.......................68
Additional Tax Information Concerning the International Discovery Fund.......70
Performance Information......................................................70
Yields of the Money Market Funds.............................................71
Yields of the Non-Money Market Funds.........................................72
Calculation of Total Return..................................................74
Distribution Rates...........................................................75
Performance Comparisons......................................................77
Miscellaneous................................................................78
</TABLE>

<PAGE> 193

<TABLE>
<S> <C>
PRINCIPAL HOLDERS OF VOTING SECURITIES.......................................79

FINANCIAL STATEMENTS.........................................................80

APPENDIX A..................................................................A-1
</TABLE>

-ii-
<PAGE> 194
STATEMENT OF ADDITIONAL INFORMATION

THE PARKSTONE GROUP OF FUNDS

The Parkstone Group of Funds, which was organized in the
Commonwealth of Massachusetts on March 27, 1987 (the "Group"), is an open-end
management investment company composed of sixteen separate investment
portfolios, fifteen of which are diversified portfolios and one of which is a
non-diversified portfolio, each with different investment objectives. The
separate investment portfolios of the Group enable the Group to meet a wide
range of investment needs. This Statement of Additional Information contains
information about each of the sixteen portfolios (collectively, the "Funds" and
singly, a "Fund").

The Group includes four money market Funds: the Tax-Free Fund,
the Prime Obligations Fund, the U.S. Government Obligations Fund, the Treasury
Fund (collectively, the "Money Market Funds"), each of which, except the
Tax-Free Fund, seeks current income consistent with liquidity and stability of
principal by investing in high quality money market instruments. The Tax-Free
Fund seeks to provide current income free from federal income taxes,
preservation of capital and relative stability of principal. The U.S. Government
Obligations Fund invests primarily in short-term U.S. Treasury bills, notes and
other obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities. The Prime Obligations Fund invests in high quality money
market instruments. The Tax-Free Fund invests in high-quality tax-exempt
obligations and seeks to produce a high level of income which is exempt from
federal income taxes. The Treasury Fund invests exclusively in obligations
issued or guaranteed by the U.S. Treasury and in repurchase agreements backed by
such obligations.

In addition, the Group has twelve variable net asset value
Funds: the International Discovery Fund, the Small Capitalization Fund, the Mid
Capitalization Fund (formerly, the Parkstone Equity Fund), the Large
Capitalization Fund, the Equity Income Fund (formerly, the Parkstone High Income
Equity Fund), the Balanced Allocation Fund (formerly, the Parkstone Balanced
Fund), the Bond Fund, the Intermediate Government Obligations Fund, the U.S.
Government Income Fund, the Limited Maturity Bond Fund, the Michigan Municipal
Bond Fund and the National Tax Exempt Bond (collectively, the "Non-Money Market
Funds"). The International Discovery Fund provides capital appreciation by
investing in a portfolio of equity securities of foreign issuers. The Small
Capitalization Fund provides capital appreciation by investing in a diversified
portfolio of publicly traded smaller cap equity securities. The Mid
Capitalization Fund provides capital appreciation by investing in a diversified
portfolio of publicly traded mid cap equity securities. The Large Capitalization
Fund provides capital appreciation by investing in a diversified portfolio of
publicly traded larger cap equity securities. The Equity Income Fund provides
capital appreciation by investing in a diversified portfolio of publicly traded
larger cap equity securities which, in the aggregate, provide a premium current
yield. The Balanced Allocation Fund provides long-term capital appreciation and
current income. The Bond Fund seeks current income with preservation of capital
by investing in a portfolio of high- and medium-grade fixed-income securities.
The Intermediate Government Obligations Fund provides current income as well as
preservation of capital by investing primarily in U.S. government securities.
The U.S. Government Income Fund provides current income as well as preservation
of capital by investing primarily in U.S. government securities. The Limited
Maturity Bond Fund provides current income as well as preservation of capital by
investing in a portfolio of high- and medium grade fixed income securities. The
Michigan Municipal Bond Fund provides current income exempt from federal income
taxes and, to the extent possible, from Michigan personal income taxes, as is
consistent with conservation of capital. The National Tax Exempt Bond Fund
provides current income exempt from federal income taxes as is consistent with
conservation of capital.

-1-
<PAGE> 195
The International Discovery Fund, Small Capitalization Fund,
Mid Capitalization Fund and Large Capitalization Fund are sometimes referred to
as the Growth Funds. The Equity Income Fund and Balanced Allocation Fund are
sometimes referred to as the Growth and Income Funds. The Bond Fund,
Intermediate Government Obligations Fund, U.S. Government Income Fund and
Limited Maturity Bond Fund are sometimes referred to as the Income Funds. The
Michigan Municipal Bond Fund and National Tax Exempt Bond Fund are sometimes
referred to as the Tax-Free Income Funds.

The Trustees of the Group have divided beneficial ownership of
each of the Funds into an unlimited number of transferable units called shares.
Each Fund of the Group offers multiple classes of shares. Interested persons who
wish to obtain a copy of any of the Group's other Prospectuses or a copy of the
Group's most recent Annual Report may contact the Group at the telephone number
shown above.

Much of the information contained in this Statement of
Additional Information expands upon subjects discussed in the Prospectuses of
the sixteen Funds described above. Capitalized terms not defined herein are
defined in the Prospectuses. No investment in shares of a Fund should be made
without first reading the Fund's Prospectus.

INVESTMENTS AND RISKS

ADDITIONAL INFORMATION ABOUT THE FUNDS

The following information supplements and should be read in
conjunction with the principal strategies and risk disclosures in the
Prospectus.

The investment objective of each Fund, with the exception of
the U.S. Government Obligations Fund and the Treasury Fund, may be changed
without a vote of the holders of a majority of the outstanding shares of that
Fund although the Board of Trustees would only change a Fund's objective upon 30
days' notice to shareholders.

-2-
<PAGE> 196
The investment objectives of the U.S. Government Obligations
Fund and the Treasury Fund are fundamental and may not be changed without a vote
of the holders of a majority of the outstanding shares of that Fund.

For both the Mid Capitalization Fund and Large Capitalization
Fund, investments will be in companies that have typically exhibited consistent,
above-average growth in revenues and earnings, strong management, and sound and
improving financial fundamentals. Often, these companies are market or industry
leaders, have excellent products and/or services, and exhibit the potential for
growth. Core holdings of the Mid Capitalization Fund and Large Capitalization
Fund are in companies that participate in long-term growth industries, although
these will be supplemented by holdings in non-growth industries that exhibit the
desired characteristics.

The Small Capitalization Fund anticipates investing in dynamic
small-sized companies that exhibit outstanding potential for superior growth.
Companies that participate in sectors that are identified as having long-term
growth potential generally make up a substantial portion of such Fund's
holdings. These companies often have established a market niche or have
developed unique products or technologies that are expected to produce superior
growth in revenues and earnings. As smaller capitalization stocks are quite
volatile and subject to wide fluctuations in both the short and medium term, the
Small Capitalization Fund may be fairly characterized as more aggressive than a
general equity fund.

-3-
<PAGE> 197

The International Discovery Fund will seek to achieve its
investment objective by investing, under normal market conditions, at least 80%
of its total assets in equity securities of foreign issuers. The Fund's assets
normally will be invested in the securities of issuers located in at least three
foreign countries. Foreign investments also may include debt obligations issued
or guaranteed by foreign governments or their agencies, authorities,
instrumentalities or political subdivisions, including a foreign state, province
or municipality.

The Fund will invest primarily in equity securities, including
common and preferred stocks, rights, warrants, securities convertible into
common stocks and American Depository Receipts ("ADR's") of companies included
in the Morgan Stanley Capital International Europe, Australia, Far East ("EAFE")
Index, a broadly diversified international index consisting of more than 1,000
equity securities of companies located in Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia, the
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland, and the
United Kingdom. The Fund, however, will not be an "index" fund, and is neither
sponsored by nor affiliated with Morgan Stanley Capital International. The Fund
will not presently make investments in markets where, in the judgement of the
adviser, property rights are not defined and supported by adequate legal
infrastructure. More than 25% of the Fund's assets may be invested in the
securities of issuers located in the same country.

The Balanced Allocation Fund may vary from time to time the
amount it invests in stocks, bonds and cash reserves, depending upon the
Investment Adviser's assessment of business, economic and market conditions,
including any advantage of price shifts between the stock market and the bond
market. Like any investment program, investment in the Balanced Allocation Fund
entails certain risks. As a Fund investing in common stocks the Balanced
Allocation Fund is subject to stock market risk, i.e., the possibility that
stock prices in general will decline over short or even extended periods. Since
the Balanced Allocation Fund also invests in bonds, investors in the Balanced
Allocation Fund are also exposed to bond market risk, i.e., fluctuations in the
market value of bonds. Bond prices are influenced primarily by changes in
interest rate levels. When interest rates rise, the prices of bonds generally
fall; conversely, when interest rates fall, bond prices generally rise. While
bonds normally fluctuate less in price than stock, there have been extended
periods of cyclical increases in interest rates that have caused significant
declines in bond prices. From time to time, the stock and bond markets may
fluctuate independently of one another. In other words, a decline in the stock
market may in certain instances be offset by a rise in the bond market, or vice
versa. As a result, the Balanced Allocation Fund, with its balance of common
stock and bond investments, is expected to entail less investment risk (and a
potentially smaller investment return) than a mutual fund investing exclusively
in common stocks.

The Equity Income Fund anticipates investing in securities
that currently have a high dividend yield, with the anticipation that the
dividend will remain constant or be increased in the future. These securities
generally represent the core holdings of this Fund. However, these holdings are
balanced with lower yielding but higher growth-oriented securities to achieve
portfolio balance. All securities must provide current income. Given its bias
towards income,

-4-
<PAGE> 198

the Equity Income Fund may be considered more conservative than growth-oriented
equity funds such as the Group's Small Capitalization Fund and Mid
Capitalization Fund.

Some of the securities in which the Limited Maturity Bond Fund
invests may have warrants or options attached. Furthermore, certain debt
securities including, but not limited to, mortgage-related securities,
collateralized mortgage obligations ("CMOs") and asset-backed securities, as
well as securities subject to prepayment of principal prior to the stated
maturity date, may be repaid prior to their maturity dates. As a result,
effective maturity of these securities may be deemed to be shorter than the
stated maturity. For purposes of calculating the weighted average maturity of
the Limited Maturity Bond Fund, the effective maturity of such securities, as
determined by the Investment Adviser, will be used.

The Bond Fund and Limited Maturity Bond Fund may invest in
bonds, notes and debentures of a wide range of U.S. corporate issuers. Such
obligations, in the case of debentures will represent unsecured promises to pay,
and in the case of notes and bonds may be secured by mortgages on real property
or security interests in personal property and will in most cases differ in
their interest rates, maturities and times of issuance. An increase in interest
rates will generally reduce the value of the investments in the Bond Fund and
the Limited Maturity Bond Fund and a decline in interest rates will generally
increase the value of those investments. Depending upon the prevailing market
conditions, the Investment Adviser may purchase debt securities at a discount
from face value, which produces a yield greater than the coupon rate.
Conversely, if debt securities are purchased at a premium over face value, the
yield will be lower than the coupon rate. In making investment decisions for the
Bond Fund, the Investment Adviser will consider many factors other than current
yield, including the preservation of capital, the potential for realizing
capital appreciation, maturity, and yield to maturity. In making investment
decisions for the Limited Maturity Bond Fund, the Investment Adviser will
consider many factors other than current yield, including the preservation of
capital, maturity, and yield to maturity.

Under normal market conditions, the Intermediate Government
Obligations Fund expects to maintain a dollar-weighted average portfolio
maturity of its debt securities of two to ten years. By seeking to maintain a
dollar-weighted average portfolio maturity of two to ten years, the Intermediate
Government Obligations Fund attempts to minimize the fluctuation in its share's
net asset value relative to funds which invest in longer-term obligations.
Certain debt securities including, but not limited to, mortgage-related
securities, CMOs and asset-backed securities, as well as securities subject to
prepayment of principal prior to the stated maturity date, may be repaid prior
to their maturity dates. As a result, effective maturity of these securities may
be deemed to be shorter than the stated maturity. For purposes of calculating
the weighted average maturity of the Intermediate Government Obligations Fund,
the effective maturity of such securities, as determined by the Investment
Adviser, will be used. The types of U.S. government obligations invested in by
the Intermediate Government Obligations Fund will include obligations issued or
guaranteed as to payment of principal and interest by the full faith and credit
of the U.S. Treasury, such as Treasury bills, notes, bonds and certificates of
indebtedness, and government securities, as described below. The Fund may also
invest in

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mortgage-related securities issued or guaranteed by the U.S. government or its
agencies or instrumentalities, as more fully described below.

To the extent the National Tax Exempt Bond Fund's assets are
concentrated in Municipal Securities that are payable from the revenues of
similar projects or are issued by issuers located in the same state, or are
concentrated in private activity bonds, the Municipal Bond Fund will be subject
to the peculiar risks presented by the laws and economic conditions relating to
such states, projects and bonds to a greater extent than it would be if its
assets were not so concentrated.

The Michigan Municipal Bond Fund is classified as a
"non-diversified" investment company, which means that the amount of assets of
the Michigan Municipal Bond Fund that may be invested in the securities of a
single issuer is not limited by the Investment Company Act of 1940, as amended
(the "1940 Act"). Nevertheless, the Michigan Municipal Bond Fund intends to
conduct its operations so as to qualify as a "regulated investment company" for
purposes of the Internal Revenue Code of 1986, as amended (the "Code"). The Code
requires that, at the end of each quarter of a fund's taxable year, (i) at least
50% of the market value of its total assets be invested in cash, U.S. government
securities, securities of other regulated investment companies and other
securities, with such other securities of any one issuer limited for the
purposes of this calculation to an amount not greater than 5% of the value of
the fund's total assets and 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its total assets be invested
in the securities of any one issuer (other than U.S. government securities or
the securities of other regulated investment companies). Since a relatively high
percentage of the Michigan Municipal Bond Fund's assets may be invested in the
obligations of a limited number of issuers, some of which may be within the same
economic sector, the Michigan Municipal Bond Fund's portfolio securities may be
more susceptible to any single economic, political or regulatory occurrence than
the portfolio securities of a diversified investment company. However, the
Michigan Municipal Bond Fund attempts to diversify, to the extent the Investment
Adviser deems appropriate, among issuers and geographic areas in the State of
Michigan.

The types of U.S. government obligations, including
mortgage-related securities, invested in by the U.S. Government Income Fund will
include obligations issued or guaranteed as to payment of principal and interest
by the full faith and credit of the U.S. Treasury, such as Treasury bills, notes
and bonds, Stripped Treasury Obligations and government securities, as described
below.

The Prime Obligations Fund and, within certain limits, the
U.S. Government Obligations Fund may invest in commercial paper and other
short-term promissory notes issued by corporations (including variable amount
master demand notes) rated at the time of purchase within the two highest rating
categories assigned by at least two NRSROs or by the only NRSRO providing a
rating or, if not rated, which the Investment Adviser deems to be of comparable
quality. For a description of the rating categories of the NRSROs, see the
Appendix to the Statement of Additional Information. The Prime Obligations Fund
may also invest in Canadian Commercial Paper ("CCP"), which is commercial paper
issued by a Canadian corporation or counterpart of a U.S. corporation,
Europaper, bankers' acceptances, certificates of deposit and time deposits, as
described below.

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The U.S. Government Obligations Fund, the Prime Obligations
Fund and certain other Funds may invest in variable amount master demand notes
which are unsecured demand notes that permit the indebtedness thereunder to
vary, and that provide for periodic adjustments in the interest rate according
to the terms of the instrument. Because master demand notes are direct lending
arrangements between a Fund and the issuer, they are not normally traded.
Although there is no secondary market in the notes, a Fund may demand payment of
principal and accrued interest at any time. While the notes are not typically
rated by credit rating agencies, issuers of variable amount master demand notes
(which are normally manufacturing, retail, financial, and other business
concerns) must satisfy the same criteria as set forth above for commercial
paper. The Investment Adviser will consider the earning power, cash flow, and
other liquidity ratios of the issuers of such notes and will continuously
monitor their financial status and ability to meet payment on demand.

Each Money Market Fund invests exclusively in United States
dollar-denominated instruments which the Board of Trustees of the Group and the
Investment Adviser determine present minimal credit risks and which at the time
of acquisition are (a) U.S. government securities, (b) money market fund shares,
or (c) rated by at least two NRSROs or by obligations or, if unrated, which the
Investment Adviser deems to be of comparable quality. In addition, each of the
U.S. Government Obligations Fund, the Prime Obligations Fund and the Treasury
Fund diversifies its investments so that, except for United States government
securities and certain other exceptions, not more than 5% of its total assets is
invested in the securities of any one issuer, not more than 5% of its total
assets is invested in securities of all issuers rated by an NRSRO or NRSROs (in
accordance with SEC regulations) at the time of investment in the second highest
rating category for short-term debt obligations or deemed to be of comparable
quality to securities rated in the second highest rating category for
short-term-debt obligations (either referred to as "Second Tier Securities") and
not more than the greater of 1% of total assets or $1 million is invested in the
Second Tier Securities of one issuer.

Each of the Money Market Funds may acquire securities that are
subject to demand features (generally, a feature permitting the holder of the
security at specified intervals to sell the security at an exercise price equal
to the approximate market cost plus accrued interest). The demand feature may be
issued by the issuer of the underlying security or a dealer in the securities or
by another third party. The Money Market Funds use these arrangements to provide
liquidity and not to protect against changes in the market value of the
underlying securities. The bankruptcy, receivership, or default by the issuer of
the demand feature, or a default on the underlying security or other event that
terminates the demand feature before its exercise, will adversely affect the
liquidity of the underlying security. Demand features that are exercisable after
a payment default on the underlying security may be treated as a form of credit
enhancement.

Certain of the Money Market Funds' permitted investments may
have received credit enhancement by a guaranty, letter of credit, or insurance.
The Money Market Funds may evaluate the credit quality and ratings of
credit-enhanced securities based upon the financial condition and ratings of the
entity providing the credit enhancement, rather than the issuer. The

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bankruptcy, receivership, or default of an entity providing credit enhancement
may adversely affect the quality and marketability of the underlying security.

Consistent with the requirements of Rule 2a-7 adopted under
the 1940 Act, each of the Money Market Funds will limit its investment, with
respect to 75% of its assets, to no more than 10% of its total assets in
securities issued by or subject to demand features or guarantees of a single
issuer. With respect to the remaining 25% of a Money Market Fund's assets, the
Fund may invest in securities subject to demand features or guarantees from, or
directly issued by, one or more institutions, provided they are rated in the
highest rating category assigned by an NRSRO and are issued by a "Non-Controlled
Person," as defined in the Rule. In addition, a demand feature or guarantee may
be acquired by a Money Market Fund only if not more than 5% of the Fund's total
assets are invested in demand features, guarantees or securities issued by the
provider of the demand feature or guarantee that are rated in the second highest
short-term rating category assigned by an NRSRO or NRSROs (in accordance with
Rule 2a-7).

Each of the Money Market Funds intends to follow the
operational policies described above, as well as other non-fundamental policies
that will enable the Fund to comply with the laws and regulations applicable to
money market mutual funds, particularly Rule 2a-7 under the 1940 Act. Each of
the Money Market Funds shall determine the effective maturity of its
investments, the applicable credit rating of securities, and adequate
diversification by reference to Rule 2a-7. Each of the Money Market Funds may
change its operational policies to reflect changes in the laws and regulations
applicable to money market mutual funds without shareholder approval.

The Tax-Free Fund may acquire zero-coupon obligations, which
have greater price volatility than coupon obligations and which will not result
in the payment of interest until maturity. Additionally, the Tax-Free Fund,
within certain limitations and subject to the quality standards for tax-exempt
commercial paper described below, may invest in commercial paper.

Each of the Funds, with the exception of the Money Market
Funds and the Tax-Free Income Funds may utilize foreign currency transactions in
its portfolio. A Fund will conduct its foreign currency exchange transactions
either on a spot (i.e. cash) basis at the spot rate prevailing in the foreign
currency exchange market, or through forward contracts to purchase or sell
foreign currencies. See "ADDITIONAL INFORMATION ON PORTFOLIO INSTRUMENTS --
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS and -- FOREIGN CURRENCY FUTURES
TRANSACTIONS." These forward currency contracts are traded directly between
currency traders (usually large commercial banks). The Funds will have to
convert their holdings of foreign currencies into United States dollars from
time to time. Although foreign exchange dealers do not charge a fee or
commission, they do realize a profit based on the difference (the "spread") the
prices at which they are buying and selling various currencies.

ADDITIONAL INFORMATION ON PORTFOLIO INSTRUMENTS

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Like any investment program, an investment in a Fund entails
certain risks. The Funds will not acquire portfolio securities issued by, make
savings deposits in, or enter into repurchase, reverse repurchase or dollar roll
agreements with the Investment Adviser, BISYS, SEI or their affiliates, and will
not give preference to the correspondents of their bank affiliates with respect
to such transactions, securities, savings deposits, repurchase agreements,
reverse repurchase agreements and dollar roll agreements.

Some of the investment techniques utilized by the Investment
Adviser in the management of each of the Funds (with the exception of the
Treasury 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
Investment Adviser believes that such complex securities may, in some
circumstances, play a valuable role in successfully implementing each Fund's
investment strategy and achieving its goals. However, because complex securities
and the strategies for which they are used, are by their nature complicated,
they represent substantial opportunities for misunderstanding and misuse. To
guard against these risks, the Investment 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.

The following descriptions of portfolio instruments are
intended to supplement and should be read in conjunction with the investment
objectives, principal investment strategies and related risks of each Fund of
the Group as set forth in the Prospectus for that Fund.

Bank Obligations. Each of the U.S. Government Obligations
Fund, Prime Obligations Fund, Tax-Free Fund, Small Capitalization Fund, Mid
Capitalization Fund, Large Capitalization Fund, Balanced Allocation Fund, Equity
Income Fund, Bond Fund, Limited Maturity Bond Fund, U.S. Government Income Fund,
National Tax Exempt Fund and Michigan Municipal Bond Fund may invest in bank
obligations consisting of bankers' acceptances, certificates of deposit, and
time deposits.

Bankers' acceptances are negotiable drafts or bills of
exchange typically drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Bankers' acceptances invested in by the Funds will be those guaranteed by
domestic and foreign banks having, at the time of investment, capital, surplus,
and undivided profits in excess of $100,000,000 (as of the date of their most
recently published financial statements).

Certificates of deposit are negotiable certificates issued
against funds deposited in a commercial bank or a savings and loan association
for a definite period of time and earning a specified return. Certificates of
deposit and time deposits will be those of domestic and foreign banks and
savings and loan associations if (a) at the time of investment, the depository
or institution has capital, surplus and undivided profits in excess of
$100,000,000 (as of the date of its most recently published financial
statements), or (b) the principal amount of the instrument is insured in full by
the Federal Deposit Insurance Corporation.

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Each of the Prime Obligations Fund, U.S. Government
Obligations Fund, Tax-Free Fund, Small Capitalization Fund, Mid Capitalization
Fund, Large Capitalization Fund, International Discovery Fund, Balanced
Allocation Fund, Equity Income Fund, Bond Fund, Limited Maturity Bond Fund and
U.S. Government Income Fund may also invest in Eurodollar certificates of
deposit ("Euro CDs"), which are U.S. dollar-denominated certificates of deposit
issued by offices of foreign and domestic banks located outside the United
States; Yankee certificates of deposit ("Yankee CDs"), which are certificates of
deposit issued by a U.S. branch of a foreign bank denominated in U.S. dollars
and held in the United States; Eurodollar time deposits ("ETDs"), which are U.S.
dollar-denominated deposits in a foreign branch of a U.S. bank or a foreign
bank; and Canadian time deposits, which are basically the same as ETDs except
they are issued by Canadian-offices of major Canadian banks.

Commercial Paper. Commercial paper consists of unsecured
promissory notes issued by corporations. Except as noted below with respect to
variable amount master demand notes, issues of commercial paper normally have
maturities of less than nine months and fixed rates of return.

Subject to the limitations described in the Prospectus, the
Prime Obligations Fund, the U.S. Government Obligations Fund, the Tax-Free Fund,
the U.S. Government Income Fund and the Michigan Municipal Bond Fund will
purchase commercial paper consisting of issues rated at the time of purchase
within the two highest rating categories assigned by a nationally recognized
statistical rating organization ("NRSRO"). The Tax-Free Fund may purchase
commercial paper rated in the highest rating category assigned by an NRSRO.
These Funds may also invest in commercial paper that is not rated but that is
determined by National City Investment Management Company ("IMC" or the
"Investment Adviser"), under guidelines established by the Group's Board of
Trustees, to be of comparable quality to instruments that are so rated by an
NRSRO that is neither controlling, controlled by, or under common control with
the issuer of, or any issuer, guarantor, or provider of credit support for, the
instruments. The Small Capitalization Fund, Mid Capitalization Fund, Large
Capitalization Fund, Balanced Allocation Fund, Equity Income Fund, Bond Fund,
Limited Maturity Bond Fund and National Tax Exempt Bond Fund may invest in
commercial paper rated in any rating category or not rated by an NRSRO. In
general, investment in lower-rated instruments is more risky than investment in
instruments in higher-rated categories. For a description of the rating symbols
of each NRSRO, see the Appendix. The U.S. Government Obligations Fund, Prime
Obligations Fund, Tax-Free Fund, Small Capitalization Fund, Mid Capitalization
Fund, Large Capitalization Fund, International Discovery Fund, Balanced
Allocation Fund, Equity Income Fund, Bond Fund, Limited Maturity Bond Fund and
U.S. Government Income Fund may also invest in CCP and in Europaper, which is
U.S. dollar-denominated commercial paper of a foreign issuer.

Equity Securities. Include common and preferred stock,
securities (bonds and preferred stock) convertible into common stock, warrants
and in the case of the International Discovery Fund, securities representing
underlying international securities such as American Depository Receipts
("ADRs") and European Depository Receipts("EDRs"), as described below.

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Variable Amount Master Demand Notes. Variable amount master
demand notes, in which the Prime Obligations Fund, U.S. Government Obligations
Fund, Tax-Free Fund, Small Capitalization Fund, Mid Capitalization Fund, Large
Capitalization Fund, Balanced Allocation Fund, Equity Income Fund, Bond Fund,
Limited Maturity Bond Fund, U.S. Government Income Fund, National Tax Exempt
Bond Fund and Michigan Municipal Bond Fund may invest, are unsecured demand
notes that permit the indebtedness thereunder to vary and provide for periodic
adjustments in the interest rate according to the terms of the instrument.
Because master demand notes are direct lending arrangements between a Fund and
the issuer, they are not normally traded. Although there is no secondary market
in the notes, a Fund may demand payment of principal and accrued interest at any
time. While the notes are not typically rated by credit rating agencies, issuers
of variable amount master demand notes (which are normally manufacturing,
retail, financial, and other business concerns) must satisfy the same criteria
as set forth above for commercial paper. The Investment Adviser will consider
the earning power, cash flow, and other liquidity ratios of such notes and will
continuously monitor the financial status and ability to make payment on demand.
In determining weighted average maturity, a variable amount master demand note
will be deemed to have a maturity equal to the longer of the period of time
remaining until the next interest rate adjustment or the period of time
remaining until the principal amount can be recovered from the issuer through
demand.

Foreign Securities. The International Discovery Fund invests
primarily in the securities of foreign issuers. The Balanced Allocation Fund may
invest up to 20% of its total assets in foreign securities. The Small
Capitalization Fund, Mid Capitalization Fund, Large Capitalization Fund and
Equity Income Fund may invest in foreign securities as permitted by their
respective investment policies. Each of the Bond Fund and Limited Maturity Bond
Fund may invest up to 25% of its net assets in foreign securities either
directly or through the purchase of ADRs and may also invest in securities
issued by foreign branches of U.S. banks and foreign banks, in CCP, and in
Europaper. The U.S. Government Income Fund, the U.S. Government Obligations
Fund, the Prime Obligations Fund and the Tax-Free Fund may invest in foreign
securities by purchasing: Eurodollar certificates of deposit ("ECDs"), which are
U.S. dollar-denominated certificates of deposit issued by offices of foreign and
domestic banks outside the U.S.; Eurodollar time deposits ("ETD"), which are
U.S. dollar-denominated deposits in a foreign branch of a U.S. or foreign bank;
Canadian time deposits ("CDs"), which are essentially the same as ETDs, except
that they are issued by Canadian offices of major Canadian banks; Yankee
certificates of deposit ("Yankee CDs"), which are U.S. dollar-denominated
certificates of deposit issued by a U.S. branch of a foreign bank but held in
the U.S.; CCP, and Europaper.

Investment in foreign securities is subject to special
investment risks that differ in some respects from those related to investments
in securities of U.S. domestic issuers. Such risks include political, social or
economic instability in the country of the issuer, the difficulty of predicting
international trade patterns, the possibility of the imposition of exchange
controls, expropriation, limits on removal of currency or other assets,
nationalization of assets, foreign withholding and income taxation, and foreign
trading practices (including higher trading commissions, custodial charges and
delayed settlements). Such securities may be subject to greater fluctuations in
price than securities issued by U.S. corporations or issued or guaranteed

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by U.S. Government, its agencies or instrumentalities. The markets on which such
securities trade may have less volume and liquidity, and may be more volatile
than securities markets in the United States. In addition, there may be less
publicly available information about a foreign company than about a U.S.
domiciled company. Foreign companies generally are not subject to uniform
accounting, auditing and financial reporting standards comparable to those
applicable to U.S. domestic companies. There is generally less stringent
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 branches of U.S. banks, foreign banks and foreign issuers may be subject
to less stringent reserve requirements and to different accounting, auditing,
reporting, and record keeping standards than those applicable to domestic
branches of U.S. banks and U.S. domestic issuers.

In many instances, foreign debt securities may provide higher
yields than securities of domestic issuers which have similar maturities and
quality. Under certain market conditions these investments may be less liquid
than the securities of U.S. corporations and are certainly less liquid than
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. Finally, in the event of a default of any such foreign debt
obligations, it may be more difficult for a Fund to obtain or to enforce a
judgment against the issuers of such securities. If a security is denominated in
foreign currency, the value of the security to the Fund will be affected by
changes in currency exchange rates and in exchange control regulations, and
costs will be incurred in connection with conversions between currencies. A
change in the value of any foreign currency against the U.S. dollar will result
in a corresponding change in the U.S. dollar value of a Fund's securities
denominated in that currency. Such changes will also affect a Fund's income and
distributions to shareholders. In addition, although a Fund will receive income
on foreign securities in such currencies, such Fund will be required to compute
and distribute its income in U.S. dollars. Therefore, if the exchange rate for
any such currency declines materially after such Fund's income has been accrued
and translated into U.S. dollars, the Fund could be required to liquidate
portfolio securities to make required distributions. Similarly, if an exchange
rate declines between the time a Fund incurs expenses in U.S. dollars and the
time such expenses are paid, the amount of such currency required to be
converted into U.S. dollars in order to pay such expenses in U.S. dollars will
be greater.

The introduction of a single currency, the euro, on January 1,
1999 for participating nations in the European Economic and Monetary Union
presents unique uncertainties, including the legal treatment of certain
outstanding financial contracts after January 1, 1999 that refer to existing
currencies rather than the euro; the establishment and maintenance of exchange
rates for currencies being converted into the euro; the fluctuation of the euro
relative to non-euro currencies during the transition period from January 1,
1999 to December 31, 2001 and beyond; whether the interest rate, tax and labor
regimes of European countries participating in the euro will converge over time;
and whether the conversion of the currencies of other countries in the European
Union ("EU"), such as the United Kingdom and Denmark, into the euro and the
admission of other non-EU countries such as Poland, Latvia and Lithuania as
members of the EU may have an impact on the euro. These or other factors,
including political and economic risks, could cause market disruptions, and
could adversely affect the value of securities held by the Funds.

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U.S. dollar-denominated ADRs, which are traded in the United
States on exchanges or over-the-counter, are issued by domestic banks. ADRs
represent the right to receive securities of foreign issuers deposited in a
domestic bank or a correspondent bank. ADRs do not eliminate all of the risk
inherent in investing in the securities of foreign issuers. However, by
investing in ADRs rather than directly in foreign issuer's stock, a Fund can
avoid currency risks during the settlement period for either purchases or sales.
In general, there is a large, liquid market in the United States for many ADRs.
The information available for ADRs is subject to the accounting, auditing and
financial reporting standards of the domestic market or exchange on which they
are traded, standards which are more uniform and more exacting than those to
which many foreign issuers may be subject. The ADR is sometimes referred to as a
Global Depository Receipt, or GDR. In the United States, the GDR is, after
issuance, not unlike any other ADR. The difference is found in the purpose of
the issue. GDRs are used for global offerings, by the simultaneous issuance of a
single security in multiple world markets. The International Discovery Fund and
Balanced Allocation Fund may also invest in EDRs, which are receipts evidencing
an arrangement with a European bank similar to that for ADRs and assigned for
use in the European securities markets. EDRs are not necessarily denominated in
the currency of the underlying security.

Certain of the ADRs and EDRs, typically those categorized as
unsponsored, require their holders to bear most of the costs of such facilities
while issuers of sponsored facilities normally pay more of the costs. The
depository of an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the issuer of the deposited
securities or to pass through the voting rights to facility holders with respect
to the deposited securities, whereas the depository of a sponsored facility
typically distributes shareholder communications and passes through the voting
rights.

Subject to its applicable investment policies, each of the
Growth Funds and Growth and Income Funds may invest in debt securities
denominated in the European Currency Unit ("ECU"), which is a "basket" unit of
currency 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.

Each of the Prime Obligations Fund, U.S. Government
Obligations Fund, Tax-Free Fund, Small Capitalization Fund, Mid Capitalization
Fund, Large Capitalization Fund, Equity Income Fund, Bond Fund, International
Discovery Fund, Balanced Allocation Fund and Limited Maturity Bond Fund will
acquire foreign securities only when the Investment Adviser believes that the
risks associated with such investments are minimal.

Variable and Floating Rate Notes. The Prime Obligations Fund,
U.S. Government Obligations Fund, Tax-Free Fund, Bond Fund, Limited Maturity
Bond Fund, U.S.

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Government Income Fund, National Tax Exempt Bond Fund and Michigan Municipal
Bond Fund may acquire variable and floating rate notes subject to each such
Fund's investment objective, policies and restrictions. A variable rate note is
one whose terms provide for the adjustment of its interest rate on set dates and
which, upon such adjustment, can reasonably be expected to have a market value
that approximates its par value. A floating rate note is one whose terms provide
for the adjustment of its interest rate whenever a specified interest rate
changes and which, at any time, can reasonably be expected to have a market
value that approximates its par value. Such notes are frequently not rated by
credit rating agencies; however, unrated variable and floating rate notes
purchased by a Fund will be determined by the Investment Adviser, under
guidelines established by the Group's Board of Trustees, to be of comparable
quality at the time of purchase to rated instruments eligible for purchase under
the Fund's investment policies. In making such determinations, the Investment
Adviser will consider the earning power, cash flow and liquidity ratios of the
issuers of such notes (such issuers include financial, merchandising, bank
holding and other companies) and will continuously monitor their financial
condition. Although there may be no active secondary market with respect to a
particular variable or floating rate note purchased by a Fund, the Fund may
resell the note at any time to a third party. The absence of an active secondary
market, however, could make it difficult for the Fund to dispose of a variable
or floating rate note in the event the issuer of the note defaulted on its
payment obligations and the Fund could, as a result, or for other reasons,
suffer a loss to the extent of the default. To the extent that the Fund is not
entitled to receive the principal amount of a note within 7 days, such note will
be treated as an illiquid security for purposes of the calculation of the
limitation on the Fund's investment in illiquid securities as set forth in that
Fund's investment restrictions. Variable or floating rate notes may be secured
by bank letters of credit.

Variable or floating rate notes invested in by the Prime
Obligations Fund, U.S. Government Obligations Fund and the Tax-Free Fund may
have maturities of more than 397 days, as follows:

An instrument that is issued or guaranteed by the United
States government or any agency thereof which has a variable rate of interest
adjusted no less frequently than every 397 days will be deemed by a Fund to have
a maturity equal to the period remaining until the maturity date or the next
readjustment of the interest rate, whichever is less. A floating rate instrument
issued or guaranteed by the U.S. government or an agency thereof or a floating
rate instrument the principal amount of which must conditionally be paid in 397
days or less is deemed to mature in one day.

A variable rate note, the principal amount of which is
scheduled to be paid in 397 days or less, will be deemed by a Fund to have a
maturity equal to the period remaining until the maturity date or the next
readjustment of the interest rate, whichever is less.

A variable rate note the principal amount of which is
scheduled to be paid in more than 397 days that is subject to a demand feature
will be deemed by a Fund to have a maturity equal to the longer of the period
remaining until the next readjustment of the interest rate or the period
remaining until the principal amount can be recovered through demand.

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A floating rate note the principal amount of which is
scheduled to be paid in more than 397 days that is subject to a demand feature
will be deemed by Fund to have a maturity equal to the period remaining until
the principal amount can be recovered through demand.

As used above, a note is "subject to a demand feature" where
the Fund is entitled to receive the approximate amortized cost plus accrued
interest at any time on no more than 30 days' notice or at specified intervals
not exceeding 397 days.

Money Market Mutual Funds. Each of the Non-Money Market Funds
may invest up to 5% of the value of its total assets in the securities of any
one money market mutual fund, provided that no more than 10% of a Non-Money
Market Fund's total assets may be invested in the securities of money market
mutual funds in the aggregate. Each Non-Money Market Fund will incur additional
expenses due to the duplication of expenses as a result of investing in
securities of money market mutual funds.

Municipal Securities. The Tax-Free Fund and National Tax
Exempt Bond Fund, the assets of such Funds will be primarily invested in bonds
and notes issued by or on behalf of states (including the District of Columbia),
territories, and possessions of the United States and their respective
authorities, agencies, instrumentalities and political subdivisions, the
interest on which is both exempt from federal income tax and not treated as a
preference item for purposes of the federal alternative minimum tax ("Municipal
Securities"). With respect to the Tax-Free Fund, Municipal Securities are
expected to have remaining maturities of 397 days or less. Under normal market
conditions, at least 80% of the total assets of each such Fund will be invested
in Municipal Securities. The U.S. Government Obligations Fund may invest up to
35% of the value of its total assets in Municipal Securities. In addition, the
Bond Fund, Limited Maturity Bond Fund and Prime Obligations Fund may invest in
Municipal Securities but shall limit such investment to the extent necessary to
preclude them from paying "exempt-interest dividends" as that term is defined in
the Internal Revenue Code of 1986, as amended (the "Code").

Municipal Securities include debt obligations issued by
governmental entities to obtain funds for various public purposes, such as the
construction of a wide range of public facilities, the refunding of outstanding
obligations, the payment of general operating expenses, and the extension of
loans to other public institutions and facilities. Private activity bonds that
are issued by or on behalf of public authorities to finance various
privately-operated facilities are included within the term Municipal Securities
if the interest paid thereon is exempt from both federal income tax and not
treated as a preference item for purposes of the federal alternative minimum
tax. The Michigan Municipal Bond Fund may invest up to 100% of its total assets
in private activity bonds which may be treated as a specific tax preference
item under the federal alternative minimum tax.

Among other types of Municipal Securities, the Tax-Free Fund
and National Tax Exempt Bond Fund may purchase short-term general obligation
notes, tax anticipation notes, bond anticipation notes, revenue anticipation
notes, project notes, tax-exempt commercial paper, construction loan notes and
other forms of short-term tax-exempt loans. Such instruments are issued with a
short-term maturity in anticipation of the receipt of tax funds, the proceeds of
bond

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placements or other revenues. In addition, these Funds may invest in other types
of tax-exempt instruments, such as municipal bonds, private activity bonds, and
pollution control bonds.

Project notes are issued by a state or local housing agency
and are sold by the Department of Housing and Urban Development. While the
issuing agency has the primary obligation with respect to its project notes, the
notes are also secured by the full faith and credit of the United States through
agreements with the issuing authority which provide that, if required, the
federal government will lend the issuer an amount equal to the principal of and
interest on the project notes.

The assets of the Michigan Municipal Bond Fund will be
invested in obligations consisting of bonds, notes, commercial paper, and
certificates of indebtedness, issued by or on behalf of the State of Michigan,
its political subdivisions, municipalities and public authorities, the interest
on which is exempt from federal income tax and Michigan state income taxes (but
may be treated as a preference item for purposes of the federal alternative
minimum tax) and in debt obligations issued by the government of Puerto Rico,
the U.S. territories and possessions of Guam, the U.S. Virgin Islands or such
other governmental entities whose debt obligations, either by law or treaty,
generate interest income which is exempt from federal and Michigan state income
taxes ("Michigan Municipal Securities"). Under normal market conditions, at
least 80% of the net assets of the Michigan Municipal Bond Fund will be invested
in Michigan Municipal Securities, and at least 65% of the net assets of the
Michigan Municipal Bond Fund will be invested in Michigan Municipal Securities
issued by or on behalf of the State of Michigan, its political subdivisions,
municipalities and public authorities.

Michigan Municipal Securities include debt obligations issued
by governmental entities to obtain funds for various public purposes, such as
the construction of a wide range of public facilities, the refunding of
outstanding obligations, the payment of general operating expenses, and the
extension of loans to other public institutions and facilities. Private activity
bonds that are issued by or on behalf of public authorities to finance various
privately-operated facilities are included within the term Michigan Municipal
Securities if the interest paid thereon is exempt from both federal and Michigan
state income taxes although such interest may be treated as a preference item
for purposes of the federal alternative minimum tax.

Other types of Michigan Municipal Securities which the
Michigan Municipal Bond Fund may purchase are short-term general obligation
notes, tax anticipation notes, bond anticipation notes, revenue anticipation
notes, tax-exempt commercial paper, construction loan notes and other forms of
short-term tax-exempt loans. Such instruments are issued with a short-term
maturity in anticipation of the receipt of tax funds, the proceeds of bond
placements or other revenues.

The two principal classifications of Municipal Securities and
Michigan Municipal Securities (collectively, "Exempt Securities") consist of
"general obligation" and "revenue" issues. The Tax-Free Fund, National Tax
Exempt Bond Fund and Michigan Municipal Bond Fund (collectively the "Exempt
Funds" and singly, an "Exempt Fund") may also acquire "moral

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obligation" issues, which are normally issued by special purpose authorities.
There are, of course, variations in the quality of Exempt Securities, both
within a particular classification and between classifications, and the yields
on Exempt Securities depend upon a variety of factors, including general money
market conditions, the financial condition of the issuer, general conditions of
the municipal bond market, the size of a particular offering, the maturity of
the obligation and the rating of the issue. The ratings of an NRSRO represent
their opinions as to the quality of Exempt Securities. It should be emphasized,
however, that ratings are general and are not absolute standards of quality, and
Exempt Securities with the same maturity, interest rate and rating may have
different yields, while Exempt Securities of the same maturity and interest rate
with different ratings may have the same yield. Subsequent to purchase, an issue
of Exempt Securities may cease to be rated or its rating may be reduced below
the minimum rating required for purchase. The Investment Adviser will consider
such an event in determining whether a Fund should continue to hold the
obligation.

An issuer's obligations under Exempt Securities are subject to
the provisions of bankruptcy, insolvency, and other laws affecting the rights
and remedies of creditors, such as the federal bankruptcy code, and laws, if
any, which may be enacted by Congress or state legislatures extending the time
for payment of principal or interest, or both, or imposing other constraints
upon the enforcement of such obligations or upon the ability of municipalities
to levy taxes. The power or ability of an issuer to meet its obligations for the
payment of interest on and principal of Exempt Securities may be materially
adversely affected by litigation or other conditions.

Opinions relating to the validity of Municipal Securities and
to the exemption of interest thereon from federal income tax are rendered by
bond counsel to the respective issuers at the time of issuance. Neither the
Funds nor the Investment Adviser will review the proceedings relating to the
issuance of Municipal Securities or the basis for such opinions.

Interest income from certain municipal securities may be
subject to federal alternative minimum tax. The Tax-Free Income Funds will not
treat these bonds as Municipal Securities or Michigan Municipal Securities for
purposes of measuring compliance with the 80% tests described above. To the
extent that the Tax-Free Income Funds invest in these bonds, individual
shareholders, depending on their own tax status, may be subject to alternative
minimum tax on that part of the Tax-Free Income Funds' distributions derived
from these bonds. Investment of the Tax-Free Income Funds may be made in taxable
obligations if, for example, suitable tax-exempt obligations are unavailable or
if acquisition of U.S. government or other taxable securities is deemed
appropriate for temporary defensive purposes as determined by the Investment
Adviser to be warranted due to market conditions. Such taxable obligations
consist of government securities, certificates of deposit, time deposits and
bankers' acceptances of selected banks, commercial paper meeting the Tax-Free
Income Funds' quality standards for tax-exempt commercial paper (as described
above), and such taxable obligations as may be subject to repurchase agreements.
These obligations are described further in the Statement of Additional
Information. Under such circumstances and during the period of such investment,
the affected Tax-Free Income Fund may not achieve its stated investment
objectives.

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Special Investment Considerations Relating To Investing In The
Michigan Municipal Bond Fund. The following information is drawn from various
Michigan governmental publications, particularly the Governor's Executive Budget
for Fiscal year 1999-2000, and from official statements relating to securities
offerings of the State and its political subdivisions. While the Trust has not
independently verified such information, it has no reason to believe that it is
not correct in all material respects.

The State of Michigan's economy is principally dependent on
manufacturing (particularly automobiles, office equipment and other durable
goods), tourism and agriculture, and historically has been highly cyclical.

Total State wage and salary employment is estimated to have
grown by 1.9% in 1998. The rate of unemployment is estimated to have been 3.8%
in 1998, below the national average for the fifth consecutive year. Personal
income grew at an estimated 5.1% annual rate in 1998, up from the 4.6% growth
reported for 1997.

During the past five years, improvements in the Michigan
economy have resulted in increased revenue collections which, together with
restraints on the expenditure side of the budget, have resulted in State General
Fund budget surpluses, most of which were transferred to the State's
Counter-Cyclical Budget and Economic Stabilization Fund. The balance of that
Fund as of September 30, 1998 is estimated to have been in excess of $1.1
billion.

The Michigan Constitution limits the amount of total State
revenues that can be raised from taxes and certain other sources. State revenues
(excluding federal aid and revenues for payment of principal and interest on
general obligation bonds) in any fiscal year are limited to a fixed percentage
of State personal income in the prior calendar year or the average of the prior
three calendar years, whichever is greater, and this fixed percentage equals the
percentage of the 1978-79 fiscal year state government revenues to total
calendar 1977 State personal income (which was 9.49%).

The Michigan Constitution also provides that the proportion of
State spending paid to all units of local government to total State spending may
not be reduced below the proportion in effect in the 1978-79 fiscal year. The
State originally determined that portion to be 41.6%. If such spending does not
meet the required level in a given year, an additional appropriation for local
governmental units is required by the following fiscal year; which means the
year following the determinations of the shortfall, according to an opinion
issued by the State's Attorney General. Spending for local units met this
requirement for fiscal years 1986-87 through 1991-92. As the result of
litigation, the State agreed to reclassify certain expenditures, beginning with
fiscal year 1992-93, and has recalculated the required percentage of spending
paid to local government units to be 48.97%.

The State has issued and has outstanding general obligation
full faith and credit bonds for Water Resources, Environmental Protection
Program, Recreation Program and School Loan purposes. As of September 30, 1998,
the State had approximately $874 million of general obligation bonds
outstanding.

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The State may issue notes or bonds without voter approval for
the purposes of making loans to school districts. The proceeds of such notes or
bonds are deposited in the School Bond Loan Fund maintained by the State
Treasurer and used to make loans to school districts for payment of debt on
qualified general obligations bonds issued by local school districts.

The State is a party to various legal proceedings seeking
damages or injunctive or other relief. In addition to routine litigation,
certain of these proceedings could, if unfavorably resolved from the point of
view of the State, substantially affect State programs or finances. As of early
1999, these lawsuits involved programs generally in the areas of corrections,
tax collection, commerce, and proceedings involving budgetary reductions to
school districts and governmental units, and court funding. Notable among these
legal proceedings are lawsuits brought by a number of school districts
challenging the constitutionality of certain state-mandated special education
services without corresponding State Funding.

The State Constitution limits the extent to which
municipalities or political subdivisions may levy taxes upon real and personal
property through a process that regulates assessments.

On March 15, 1994, Michigan voters approved a property tax and
school finance reform measure commonly known as Proposal A. Under Proposal A, as
approved, effective May 1, 1994, the State sales and use tax increased from 4%
to 6%, the State income tax decreased from 4.6% to 4.4%, the cigarette tax
increased from $.25 to $.75 per pack and an additional tax of 16% of the
wholesale price began to be imposed on certain other tobacco products. A .75%
real estate transfer tax became effective January 1, 1995. Beginning in 1994, a
state property tax of 6 mills began to be imposed on all real and personal
property currently subject to the general property tax. All local school boards
are authorized, with voter approval, to levy up to the lesser of 18 mills or the
number of mills levied in 1993 for school operating purposes on nonhomestead
property and nonqualified agricultural property. Proposal A contains additional
provisions regarding the ability of local school districts to levy taxes, as
well as a limit on assessment increases for each parcel of property, beginning
in 1995. Such increases for each parcel of property are limited to the lesser of
5% or the rate of inflation. When property is subsequently sold, its assessed
value will revert to the current assessment level of 50% of true cash value.
Under Proposal A, much of the additional revenue generated by the new taxes will
be dedicated to the State School Aid Fund.

Proposal A and its implementing legislation shifted
significant portions of the cost of local school operations from local school
districts to the State and raised additional State revenues to fund these
additional State expenses. These additional revenues will be included within the
State's constitutional revenue limitations and may impact the State's ability to
raise additional revenues in the future.

A state economy during a recessionary cycle would also, as a separate
matter, adversely affect the capacity of users of facilities constructed or
acquired through the proceeds of private activity bonds or other "revenue"
securities to make periodic payments for the use of those facilities.

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Government Obligations. The U.S. Government Obligations Fund
will invest primarily in obligations issued or guaranteed by the U.S. government
or its agencies or instrumentalities. Subject to the investment parameters
described above, each of the remaining Funds may also invest in such
obligations. The Treasury Fund, however, will invest exclusively in obligations
issued or guaranteed by the U.S. Treasury and in repurchase agreements backed by
such securities. Each of the Funds may invest in obligations issued or
guaranteed by the U.S. government or its agencies or instrumentalities,
including bills, notes and bonds issued by the U.S. Treasury, as well as
"stripped" U.S. Treasury obligations ("Stripped Treasury Obligations") such as
Treasury receipts issued by the U.S. Treasury representing either future
interest or principal payments. Stripped securities are issued at a discount to
their "face value," and may exhibit greater price volatility than ordinary debt
securities because of the manner in which their principal and interest are
returned to investors. The Stripped Treasury Obligations in which the Money
Market Funds may invest do not include certificates of accrual on Treasury
securities ("CATS") or Treasury income growth receipts ("TIGRs").

Obligations of certain agencies and instrumentalities of the
U.S. government, such as the Government National Mortgage Association ("GNMA"),
are supported by the full faith and credit of the U.S. Treasury; others, such as
those of the Federal National Mortgage Association ("FNMA"), are supported by
the right of the issuer to borrow from the Treasury; others, such as those of
the Student Loan Marketing Association ("SLMA"), are supported by the
discretionary authority of the U.S. government to purchase the agency's
obligations; still others, such as those of the Federal Farm Credit Banks or the
Federal Home Loan Mortgage Corporation ("FHLMC"), are supported only by the
credit of the instrumentality. No assurance can be given that the U.S.
Government would provide financial support to U.S. Government-sponsored agencies
or instrumentalities, such as FNMA, SLMA or FHLMC, since it is not obligated to
do so by law. The Funds which may invest in these government obligations will
invest in the obligations of such agencies or instrumentalities only when the
Investment Adviser believes that the credit risk with respect thereto is
minimal.

Guaranteed Investment Contracts ("GIC"). The Bond Fund, the
Limited Maturity Bond Fund and the Prime Obligations Fund may invest in GICs.
When investing in GICs, the Bond Fund, the Limited Maturity Bond Fund and the
Prime Obligations Fund make cash contributions to a deposit fund of an insurance
company's general account. The insurance company then credits guaranteed
interest to the deposit fund on a monthly basis. The GICs provide that this
guaranteed interest will not be less than a certain minimum rate. The insurance
company may assess periodic charges against a GIC for expenses and service costs
allocable to it, and the charges will be deducted from the value of the deposit
fund. The Bond Fund and the Limited Maturity Bond Fund may invest in GICs of
insurance companies without regard to the ratings, if any, assigned to such
insurance companies' outstanding debt securities. The Prime Obligations Fund may
only invest in GICs that have received the requisite ratings by one or more
NRSROs. Because a Fund may not receive the principal amount of a GIC from the
insurance company on seven days' notice or less, the GIC is considered an
illiquid investment. For each of the Bond Fund and Limited Maturity Bond Fund,
no more than 15% of its total assets will be invested in instruments which are
considered to be illiquid. For the Prime Obligations Fund, no more than 10% of
its total assets may be invested in instruments which are considered to be

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illiquid. In determining average portfolio maturity, GICs will be deemed to have
a maturity equal to the period of time remaining until the next readjustment of
the guaranteed interest rate.

Taxable obligations. under normal market conditions, each of
the Exempt Funds may invest up to 20% of its total assets in Taxable
Obligations. Taxable Obligations may include: (1) obligations of the United
States Treasury; (2) obligations of agencies and instrumentalities of the United
States government; (3) money market instruments, such as certificates of deposit
issued by domestic banks, corporate commercial paper, and bankers' acceptances;
and (4) taxable instruments subject to repurchase agreements (agreements under
which the seller agrees at the time of sale to repurchase the securities it is
selling at an agreed time and price). Certificates of deposit will be those of
domestic branches of U.S. banks which are members of the Federal Reserve System
or the Federal Deposit Insurance Corporation and which have total assets at the
time of purchase in excess of $100,000,000, or of savings and loan associations
which are members of the Federal Deposit Insurance Corporation and which have
total assets at the time of purchase in excess of $100,000,000. Bankers'
acceptances will be guaranteed by U.S. commercial banks having total assets at
the time of purchase in excess of $100,000,000. Obligations of the U.S. Treasury
and U.S. government agencies and instrumentalities, bankers' acceptances, and
certificates of deposit are described in this Statement of Additional
Information.

Put and Call Options. Each of the Growth Funds, the Growth and
Income Funds, the Income Funds and the Tax-Free Income Funds may purchase put
and call options on securities and on foreign currencies, subject to its
applicable investment policies, for the purposes of hedging against market risks
related to its portfolio securities and adverse movements in exchange rates
between currencies, respectively. Purchasing options is a specialized investment
technique that entails a substantial risk of a complete loss of the amounts paid
as premiums to writers of options. Each Fund may so engage in writing call
options from time to time as the Investment Adviser be with respect to the
Balanced Allocation Fund or International Fund, deems appropriate. The Funds
will write only covered call options (options on securities or currencies owned
by the particular Fund). In order to close out a call option it has written, the
Fund will enter into a "closing purchase transaction" (the purchase of a call
option on the same security or currency with the same exercise price and
expiration date as the call option which such Fund previously has rewritten).
When a portfolio security or currency subject to a call option is sold, the Fund
will effect a closing purchase transaction to close out any existing call option
on that security or currency. If such Fund is unable to affect a closing
purchase transaction, it will not be able to sell the underlying security or
currency until the option expires or that Fund delivers the underlying security
or currency upon exercise. In addition, upon the exercise of a call option by
the optionholder, the Fund will forego the potential benefit represented by
market appreciation over the exercise price. Under normal conditions, it is not
expected that a Fund will cause the underlying value of portfolio securities and
currencies subject to such options to exceed 50% of its net assets, and with
respect to each of the Balanced Allocation Fund and International Discovery
Fund, 20% of its net assets.

Each of the Growth Funds, the Growth and Income Funds and the
U.S. Government Income Fund, as part of its options transactions, also may
purchase index put and call options

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and write index options. As with options on individual securities, a Fund will
write only covered index call options. Through the writing or purchase of index
options a Fund can achieve many of the same objectives as through the use of
options on individual securities. options on securities indices are similar to
options on a security except that, rather than the right to take or make
delivery of a security at 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 a Fund owns or intends to
purchase probably will not correlate perfectly with movements in the level of an
index and, therefore, a Fund bears the risk of a loss on an index option that is
not completely offset by improvements in the price of such securities. Because
index options are settled in cash, a call writer cannot determine the amount of
its settlement obligations in advance and, unlike call writing on specific
securities, cannot provide in advance for, or cover, its potential settlement
obligations by acquiring and holding the underlying securities. A Fund may be
required to segregate assets or provide an initial margin to cover index options
that would require it to pay cash upon exercise.

In addition, each of the Tax-Free Fund and the Tax-Free Income
Funds may acquire "puts" with respect to Municipal Securities (or Michigan
Municipal Securities, as the case may be), held in its portfolio. Under a put,
such Fund would have the right to sell a specified Municipal Security (or
Michigan Municipal Security, as the case may be) within a specified period of
time at a specified price. A put would be sold, transferred, or assigned only
with the underlying security. Each of the Tax-Free Fund and the Tax-Free Income
Funds will acquire puts solely either to facilitate portfolio liquidity, shorten
the maturity of the underlying securities, or permit the investment of its funds
at a more favorable rate of return. Each of the Tax-Free Fund and the Tax-Free
Income Funds expects that it will generally acquire puts only where the puts are
available without the payment of any direct or indirect consideration. However,
if necessary or advisable, such Fund may pay for a put either separately in cash
or by paying a higher price for portfolio securities which are acquired subject
to the puts (thus reducing the yield to maturity otherwise available for the
same securities).

The amount payable to an Exempt Fund upon its exercise of a
put is normally: (i) the Exempt Fund's acquisition cost of the Exempt Securities
(excluding any accrued interest which the Exempt Fund paid on the acquisition),
less any amortized market premium or plus any amortized market or original issue
discount during the period the Exempt Fund owned the securities, plus (ii) all
interest accrued on the Exempt Securities since the last interest payment date
during that period.

The Exempt Funds intend to enter into puts only with dealers,
banks, and broker-dealers which, in the Investment Adviser's opinion, present
minimal credit risks.

When-Issued and Delayed-Delivery Securities. Each Fund may
purchase securities on a "when-issued" or "delayed-delivery" basis (i.e., for
delivery beyond the normal settlement date at a stated price and yield). The
Funds will engage in when-issued and delayed-

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delivery transactions only for the purpose of acquiring portfolio securities
consistent with its investment objectives and policies, not for investment
leverage although such transactions represent a form of leveraging. When-issued
securities are securities purchased for delivery beyond the normal settlement
date at a stated price and yield and thereby involve a risk that the yield
obtained in the transaction will be less than those available in the market when
delivery takes place. A Fund will not pay for such securities or start earning
interest on them until they are received. When the Fund agrees to purchase
securities on a "when-issued" or "delayed-delivery" basis, the Fund's Custodian
will set aside cash or liquid securities equal to the amount of the commitment
in a separate account. Normally, the Custodian will set aside portfolio
securities to satisfy the purchase commitment, and in such a case, the Fund may
be required subsequently to place additional assets in the separate account in
order to assure that the value of the account remains equal to the amount of the
Fund's commitment. It may be expected that the Fund's net assets will fluctuate
to a greater degree when it sets aside portfolio securities to cover such
purchase commitments than when it sets aside cash. In addition, because the Fund
will set aside cash or liquid securities to satisfy its purchase commitments in
the manner described above, the Fund's liquidity and the ability of the
Investment Adviser, as the case may be, to manage it might be affected in the
event its commitments to purchase "when issued" or "delayed-delivery" securities
ever exceeded 25% of the value of its assets. Under normal market conditions,
however, a Fund's commitments to purchase "when-issued" or "delayed-delivery"
securities will not exceed 25% of the value of its assets.

If the Fund sells a "when-issued" or "delayed-delivery"
security before a delivery, any gain would not be tax-exempt. When the Fund
engages in "when-issued" or "delayed-delivery" transactions, it relies on the
seller to consummate the trade. Failure of the seller to do so may result in the
Fund incurring a loss or missing the opportunity to obtain a price considered to
be advantageous. The Funds will engage in "when-issued" or "delayed-delivery"
transactions only for the purpose of acquiring securities consistent with the
Funds' investment objectives and policies and not for investment leverage,
although such transactions represent a form of leveraging.

Mortgage-Related Securities. The U.S. Government Income Fund
normally invests at least 80% of its total assets in obligations issued or
guaranteed by the U.S. government or its agencies or instrumentalities. However,
the U.S. Government Income Fund may invest greater amounts as conditions
warrant. Each of the remaining Funds, except the International Discovery Fund,
may also invest in mortgage-related securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities. Such agencies or
instrumentalities include GNMA, FNMA and FHLMC. Each of the Balanced Allocation
Fund, Bond Fund, Limited Maturity Bond Fund, Intermediate Government Obligations
Fund, U.S. Government Income Fund, Prime Obligations Fund and U.S. Government
Obligations Fund may also invest in mortgage-related securities issued by
non-governmental entities which are rated, at the time of purchase, within the
three highest bond rating categories assigned by an NRSRO or, if unrated, which
the Investment Adviser deems present attractive opportunities and are of
comparable quality.

The mortgage-related securities in which these Funds may
invest have mortgage obligations backing such securities, consisting of
conventional thirty-year fixed-rate mortgage

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obligations, graduated payment mortgage obligations, fifteen-year mortgage
obligations and adjusted-rate mortgage obligations. All of these mortgage
obligations can be used to create pass-through securities. A pass-through
security is created when mortgage obligations are pooled together and undivided
interests in the pool or pools are sold. The cash flow from the mortgage
obligations is passed through to the holders of the securities in the form of
periodic payments of interest, principal and prepayments (net of a service fee).
Prepayments occur when the holder of an individual mortgage obligation prepays
the remaining principal before the mortgage obligation's scheduled maturity
date. As a result of the pass-through of prepayments of principal on the
underlying securities, mortgage-backed securities are often subject to more
rapid prepayment of principal than their stated maturity would indicate. Because
the prepayment characteristics of the underlying mortgage obligations vary, it
is not possible to predict accurately the realized yield or average life of a
particular issue of pass-through certificates.

Prepayment rates are important because of their effect on the
yield and price of the securities. Accelerated prepayments have an adverse
impact on yields for pass-throughs purchased at a premium (i.e., a price in
excess of principal amount) and may involve additional risk of loss of principal
because the premium may not have been fully amortized at the time the litigation
is repaid. The opposite is true for pass-throughs purchased at a discount. The
Funds may purchase mortgage-related securities at a premium or at a discount.

If a Fund purchases a mortgage-related security at a premium,
that portion may be lost if there is a decline in the market value of the
security, whether resulting from changes in interest rates or prepayments in the
underlying mortgage collateral. As with other interest-bearing securities, the
prices of such securities are inversely affected by changes in interest rates.
However, though the value of a mortgage-related security may decline when
interest rates rise, the converse is not necessarily true, since in periods of
declining interest rates the mortgages underlying the securities are prone to
prepayment, thereby shortening the average life of the security and shortening
the period of time over which income at the higher rate is received. When
interest rates are rising, though, the rate of prepayment tends to decrease,
thereby lengthening the period of time over which income at the lower rate is
received. For these and other reasons, a mortgage-related security's average
maturity may be shortened or lengthened as a result of interest rate
fluctuations and, therefore, it is not possible to predict accurately the
security's return to the Fund. In addition, regular payments received with
respect to mortgage-related securities include both interest and principal. No
assurance can be given as to the return a Fund will receive when these amounts
are reinvested.

The principal governmental (i.e., backed by the full faith and
credit of the United States government) guarantor of mortgage-related securities
is GNMA. GNMA is a wholly-owned United States government corporation within the
Department of Housing and Urban Development. GNMA is authorized to guarantee,
with the full faith and credit of the United States government, the timely
payment of principal and interest on securities issued by institutions approved
by GNMA (such as savings and loan institutions, commercial banks and mortgage
bankers) and backed by pools of mortgages insured by the Federal Housing
Administration or guaranteed by the Veterans Administration.

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Government-related (i.e., not backed by the full faith and
credit of the United States government) guarantors include FNMA and FHLMC. FNMA
is a government-sponsored corporation owned entirely by private stockholders.
Pass-through securities issued by FNMA are guaranteed as to timely payment of
principal and interest by FNMA but are not backed by the full faith and credit
of the United States government. FHLMC is a corporate instrumentality of the
United States government whose stock is owned by the twelve Federal Home Loan
Banks. Participation certificates issued by FHLMC are guaranteed as to the
timely payment of interest and ultimate collection of principal but are not
backed by the full faith and credit of the United States government.

There are a number of important differences among the agencies
and instrumentalities of the U.S. government that issue mortgage-related
securities and among the securities that they issue. Mortgage-related securities
issued by GNMA include GNMA Mortgage Pass-Through Certificates (also known as
"Ginnie Maes") which are guaranteed as to the timely payment of principal and
interest by GNMA and such guarantee is backed by the full faith and credit of
the United States. GNMA is a wholly-owned U.S. government corporation within the
Department of Housing and Urban Development. GNMA certificates are also
supported by the authority of GNMA to borrow funds from the U.S. Treasury to
make payments under its guarantee. Mortgage-related securities issued by FNMA
include FNMA Guaranteed Mortgage Pass-Through Certificates (also known as
"Fannie Maes") which are solely the obligations of FNMA and are not backed by or
entitled to the full faith and credit of the United States. FNMA is a
government-sponsored organization owned entirely by private stockholders. Fannie
Maes are guaranteed as to the timely payment of the principal and interest by
FNMA. Mortgage-related securities issued by FHLMC include FHLMC Mortgage
Participation Certificates (also known as "Freddie Macs" or "PCs"). FHLMC is a
corporate instrumentality of the United States, created pursuant to an Act of
Congress and owned entirely by the Federal Home Loan Banks. Freddie Macs are not
guaranteed by the United States or by any Federal Home Loan Banks and do not
constitute a debt or obligation of the United States or of any Federal Home Loan
Bank. Freddie Macs entitle the holder to the timely payment of interest, which
is guaranteed by FHLMC. FHLMC guarantees either ultimate collection or the
timely payment of all principal payments on the underlying mortgage loans. When
FHLMC does not guarantee timely payment of principal, FHLMC may remit the amount
due on account of its guarantee of ultimate payment of principal at any time
after default on an underlying mortgage, but in no event later than one year
after it becomes payable.

The U.S. Government Income Fund also may invest up to 20% of
its total assets in mortgage-related securities issued by non-governmental
entities and in other securities described below. Commercial banks, savings and
loan institutions, private mortgage insurance companies, mortgage bankers and
other secondary market issues also create pass-through pools of conventional
residential mortgage loans. Such issuers may also be the originators of the
underlying mortgage loans as well as the guarantors of the mortgage-related
securities. Pools created by such non-governmental issuers generally offer a
higher rate of interest than government and government-related pools because
there are not direct or indirect government guarantees of payments in the former
pools. However, timely payment of interest and principal of these pools is
supported by various forms of insurance or guarantees, including individual

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loan, title, pool and hazard insurance. The insurance and guarantees are issued
by government entities, private insurers and the mortgage poolers. such
insurance and guarantees and the creditworthiness of the issuers will be
considered in determining whether a mortgage-related security meets a Fund's
investment quality standards. There can be no assurance that the private
insurers can meet their obligations under the policies. The U.S. Government
Income Fund may buy mortgage-related securities without insurance or guarantees
if, through an examination of the loan experience and practices of the poolers,
the Investment Adviser determines that the securities meet the U.S. Government
Income Fund's quality standards. Although the market for such securities is
becoming increasingly liquid, securities issued by certain private organizations
may not be readily marketable. The U.S. Government Income Fund will not purchase
mortgage-related securities or any other assets which in the Investment
Adviser's opinion are illiquid if, as a result, more than 15% of the value of
the U.S. Government Income Fund's total assets will be illiquid.

Mortgage-related securities in which the above-named Funds may
invest may also include CMOs. CMOs are debt obligations issued generally by
finance subsidiaries or trusts that are secured by mortgage-backed certificates,
including, in many cases, certificates issued by government-related guarantors,
including GNMA, FNMA and FHLMC, together with certain funds and other
collateral. Although payment of the principal of and interest on the
mortgage-backed certificates pledged to secure the CMOs may be guaranteed by
GNMA, FNMA or FHLMC, the CMOs represent obligations solely of the issuer and are
not insured or guaranteed by GNMA, FHLMC, FNMA or any other governmental agency,
or by any other person or entity. The issuers of the CMOs typically have no
significant assets other than those pledged as collateral for the obligations.

CMOs are issued in multiple classes. Each class of CMOs, often
referred to as a "tranche," is issued at a specific adjustable or fixed interest
rate and must be fully retired no later than its final distribution date.
Principal prepayments on the mortgage loans or the mortgage assets underlying
the CMOs may cause some or all of the classes of CMOs to be retired
substantially earlier than their final distribution dates. Generally, interest
is paid or accrues on all classes of CMOs on a monthly basis.

The principal of and interest on the mortgage assets may be
allocated among the several classes of CMOs in various ways. In certain
structures (known as sequential pay" CMOs), payments of principal, including any
principal prepayments, on the mortgage assets generally are applied to the
classes of CMOs in the order of their respective final distribution dates. Thus,
no payment of principal will be made on any class of sequential pay CMOs until
all other classes having an earlier final distribution date have been paid in
full.

Additional structures of CMOs include, among others, "parallel
pay" CMOs. Parallel pay CMOs are those which are structured to apply principal
payments and prepayments of the mortgage assets to two or more classes
concurrently on a proportionate or disproportionate basis. These simultaneous
payments are taken into account in calculating the final distribution date of
each class.

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The U.S. Government Income Fund expects that governmental,
government-related or private entities may create mortgage loan pools offering
pass-through investments in addition to those described above. The mortgages
underlying these securities may be alternative mortgage instruments; that is
mortgage instruments whose principal or interest payments may vary or whose
terms to maturity may differ from customary long-term fixed-rate mortgages. As
new types of mortgage-related securities are developed and offered to investors,
the Investment Adviser will, consistent with the U.S. Government Income Fund's
investment objective, policies and quality standards, consider making
investments in such new types of securities.

Medium-Grade Securities. The Balanced Allocation Fund, Bond
Fund, Limited Maturity Bond Fund, National Tax Exempt Bond Fund and Michigan
Municipal Bond Fund may each invest in securities which are rated within the
four highest rating categories assigned by an NRSRO (including, for example,
securities rated BBB by S&P or Baa by Moody's, respectively) or, if not rated,
are of comparable quality as determined by the Investment Adviser.
("Medium-Grade Securities"). These types of fixed-income securities are
considered by the NRSROs to have some speculative characteristics, and are more
vulnerable to changes in economic conditions, higher interest rates or adverse
issuer-specific developments which are more likely to lead to a weaker capacity
to make principal and interest payments than comparable higher rated debt
securities.

Should subsequent events cause the rating of a fixed-income
security purchased by any of the Funds listed above to fall below the fourth
highest rating, the Investment Adviser will consider such an event in
determining whether the Fund should continue to hold that security. In no event,
however, would the Fund be required to liquidate any such portfolio security
where the Fund would suffer a loss on the sale of such security.

As with other fixed-income securities, Medium-Grade Securities
are subject to credit risk and market risk. Market risk relates to changes in a
security's value as a result of changes in interest rates. Credit risk relates
to the ability of an issuer to make payments of principal and interest.
Medium-Grade Securities are considered by Moody's to have speculative
characteristics.

Medium-Grade Securities are generally subject to greater
credit risk than comparable higher-rated securities because issuers are more
vulnerable to economic downturns, higher interest rates or adverse
issuer-specific developments. In addition, the prices of Medium-Grade Securities
are generally subject to greater market risk and therefore react more sharply to
changes in interest rates. The value and liquidity of Medium-Grade Securities
may be diminished by adverse publicity and investor perceptions.

Because certain Medium-Grade Securities are traded only in
markets where the number of potential purchasers and sellers, if any, is
limited, the ability of a Fund to sell such securities at their fair market
value either to meet redemption requests or to respond to changes in the
financial markets may be limited.

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Particular types of Medium-Grade Securities may present
special concerns. The prices of payment-in-kind or zero-coupon securities may
react more strongly to changes in interest rates than the prices of other
Medium-Grade Securities. Some Medium-Grade Securities in which a Fund may invest
may be subject to redemption or call provisions that may limit increases in
market value that might otherwise result from lower interest rates while
increasing the risk that a Fund may be required to reinvest redemption or call
proceeds during a period of relatively low interest rates.

The credit ratings issued by Moody's and S&P are subject to
various limitations. For example, while such ratings evaluate credit risk, they
ordinarily do not evaluate the market risk of Medium-Grade Securities. In
certain circumstances, the ratings may not reflect in a timely fashion adverse
developments affecting an issuer. For these reasons, the Investment Adviser
conducts its own independent credit analysis of Medium-Grade Securities.

Restricted Securities. Securities in which each of the Funds,
with the exception of the Treasury 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 Funds who agree that they are
purchasing the securities for investment and not with a view to public
distribution. Any resale must also generally be made in an exempt transaction.
Section 4(2) securities are normally resold to other institutional investors
through or with the assistance of the issuer or investment dealers who make a
market in such Section 4(2) securities, thus providing liquidity. Pursuant to
procedures adopted by the Board of Trustees of the Group, the Investment 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.

Subject to the limitations described above, the Funds may
acquire investments that are illiquid or of limited liquidity, such as private
placements or investments that are not registered under the 1933 Act. An
illiquid investment is any investment that cannot be disposed of within seven
days in the normal course of business at approximately the amount at which it is
valued by a Fund. The price a Fund pays for illiquid securities or receives upon
resale may be lower than the price paid or received for similar securities with
a more liquid market. Accordingly, the valuation of these securities will
reflect any limitations on their liquidity. For each of the Non-Money Market
Funds, a Fund may not invest in additional illiquid securities if, as a result,
more than 15% of the market value of its net assets would be invested in
illiquid securities. For each of the Money Market Funds, a Fund may not invest
in additional illiquid securities if, as a result, more than 10% of the market
value of its net assets would be invested in illiquid securities. The Group's
Board of Trustees has delegated to the Investment Adviser the day-to-day
authority to determine whether a particular issue of Section 4(2) Securities
that are eligible for resale under Rule 144A under the 1933 Act should be
treated as liquid. Rule 144A provides a safe-harbor exemption from the
registration requirements of the 1933 Act for resales to "qualified
institutional buyers" as defined in the Rule. With the exception of registered

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broker-dealers, a qualified institutional buyer must generally own and invest on
a discretionary basis at least $100 million in securities.

The Investment Adviser may deem Section 4(2) Securities liquid
if it believes that, based on the trading markets for such security, such
security can be disposed of within seven days in the ordinary course of business
at approximately the amount at which the Fund has valued the security. In making
such determination, the Investment Adviser generally considers any and all
factors that it deems relevant, which may include: (i) the credit quality of the
issuer; (ii) the frequency of trades and quotes for the security; (iii) the
number of dealers willing to purchase or sell the security and the number of
other potential purchasers; (iv) dealer undertakings to make a market in the
security; and (v) the nature of the security and the nature of market-place
trades.

Treatment of Section 4(2) Securities as liquid could have the
effect of decreasing the level of a Fund's liquidity to the extent that
qualified institutional buyers become, for a time, uninterested in purchasing
these securities.

Repurchase Agreements. Securities held by each of the Group's
Funds may be subject to repurchase agreements. Under the terms of a repurchase
agreement, a Fund would acquire securities from member banks of the Federal
Deposit Insurance Corporation and registered broker-dealers which the Investment
Adviser deems creditworthy under the guidelines approved by the Group's Board of
Trustees, subject to the seller's agreement to repurchase such securities at a
mutually agreed upon date and price. The repurchase price would generally equal
the price paid by the Fund plus interest negotiated on the basis of current
short-term rates, which may be more or less than the rate on the underlying
portfolio securities. The seller under a repurchase agreement will be required
to maintain at all times the value of collateral held pursuant to the agreement
at not less than the repurchase price (including accrued resale premium). If the
seller were to default on its repurchase obligation or become insolvent, the
Fund holding such obligation would suffer a loss to the extent that the proceeds
from the sale of the underlying portfolio securities were less than the
repurchase price under the agreement, or to the extent that the disposition of
such securities by the Fund were delayed pending court action. Additionally,
there is no controlling legal precedent confirming that a Fund would be
entitled, as against a claim by such seller or its receiver or trustee in
bankruptcy, to retain the underlying securities, although management of the
Group believes that, under the regular procedures normally in effect for custody
of a Fund's securities subject to repurchase agreements, and under federal laws,
a court of competent jurisdiction would rule in favor of the Group if presented
with the question. Securities subject to repurchase agreements will be held by
the Group's Custodian or another qualified custodian or in the Federal
Reserve/Treasury book-entry system. Repurchase agreements are considered to be
loans by a Fund under the 1940 Act.

Reverse Repurchase Agreements and Dollar Roll Agreements. Each
of the Funds may borrow money by entering into reverse repurchase agreements
and, in the case of the Income Funds and the Tax-Free Income Funds, dollar roll
agreements in accordance with the investment restrictions described below.
Pursuant to reverse repurchase agreements, a Fund would sell certain of its
securities to financial institutions such as banks and broker-dealers, and

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agree to repurchase the securities at a mutually agreed upon date and price.
Dollar roll agreements utilized by the Income Funds and Tax-Free Income Funds
are identical to reverse repurchase agreements except for the fact that
substantially similar securities may be repurchased. At the time a Fund enters
into a reverse repurchase agreement or a dollar roll 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
and dollar roll agreements involve the risk that the market value of securities
sold by a Fund may decline below the price at which it is obligated to
repurchase the securities. Reverse repurchase agreements and dollar roll
agreements are considered to be borrowings by an investment company under the
1940 Act and therefore a form of leverage. A Fund may experience a negative
impact on its net asset value if interest rates rise during the term of a
reverse repurchase agreement or dollar roll agreement. A Fund generally will
invest the proceeds of such borrowings only when such borrowings will enhance a
Fund's liquidity or when the Fund reasonably expects that the interest income to
be earned from the investment of the proceeds is greater than the interest
expense of the transaction.

Futures Contracts. The Growth Funds, the Growth and Income
Funds, the Income Funds and the National Tax Exempt Bond 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. A Fund may engage in such futures contracts in an
effort to hedge against market risks. For example, when interest rates are
expected to rise or market values of portfolio securities are expected to fall,
a Fund can seek through the sale of futures contracts to offset a decline in the
value of its portfolio securities. When interest rates are expected to fall or
market values are expected to rise, a Fund, through the purchase of such
contracts, can attempt to secure better rates or prices for the Fund than might
later be available in the market when it effects anticipated purchases.

The acquisition of put and call options on futures contracts
will, respectively, give a Fund the right (but not the obligation), for a
specified price, to sell or to purchase the underlying futures contract, upon
exercising the option at any time during the option period.

Aggregate initial margin deposits for futures contracts, and
premiums paid for related options, may not exceed 5% of a Fund's total assets,
and the value of securities that are the subject of such futures and options
(both for receipt and delivery) may not exceed one-third of the market value of
a Fund's total assets. Futures transactions will be limited to the extent
necessary to maintain each Fund's qualification as a regulated investment
company.

Futures transactions involve brokerage costs and require a
Fund to segregate liquid assets, such as cash, U.S. government securities or
other liquid high-grade debt obligations, to cover its performance under such
contracts. A Fund may lose the expected

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benefit of futures transactions if interest rates, securities prices or foreign
exchange rates move in an unanticipated manner. Such unanticipated changes may
also result in poorer overall performance than if the Fund had not entered into
any futures transactions. In addition, the value of a Fund's futures positions
may not prove to be perfectly or even highly correlated with its portfolio
securities and foreign currencies, limiting the Fund's ability to hedge
effectively against interest rate, foreign 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.

Foreign Currency Transactions. Each of the Funds, with the
exception of the Money Market Funds and the Tax-Free Income Funds, may utilize
foreign currency transactions in its portfolio. The value of the assets of a
Fund as measured in United States dollars may be affected favorably or
unfavorably by changes in foreign currency exchange rates and exchange control
regulations, and a Fund may incur costs in connection with conversions between
various currencies. A Fund will conduct its foreign currency exchange
transactions either on a spot (i.e., cash) basis at the spot rate prevailing in
the foreign currency exchange market, or through forward contracts to purchase
or sell foreign currencies. A forward foreign currency exchange contract
("forward currency contracts") involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at a price set at the time
of the contract. These forward currency contracts are traded directly between
currency traders (usually large commercial banks) and their customers. The Funds
may enter into forward currency contracts in order to hedge against adverse
movements in exchange rates between currencies.

For example, when a Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, it may want to
establish the United States dollar cost or proceeds, as the case may be. By
entering into a forward currency contract in United States dollars for the
purchase or sale of the amount of foreign currency involved in an underlying
security transaction, such Fund is able to protect itself against a possible
loss between trade and settlement dates resulting from an adverse change in the
relationship between the United States dollar and such foreign currency.
Additionally, for example, when a Fund believes that a foreign currency may
suffer a substantial decline against the U.S. dollar, it may enter into a
forward currency sale contract to sell an amount of that foreign currency
approximating the value of some or all of that Fund's portfolio securities or
other assets denominated in such foreign currency. Alternatively, when a Fund
believes it will increase, it may enter into a forward currency purchase
contract to buy that foreign currency for a fixed U.S. dollar amount; however,
this tends to limit potential gains which might result from a positive change in
such currency relationships. A Fund may also hedge its foreign currency exchange
rate risk by engaging in currency financial futures and options transactions.

The forecasting of short-term currency market movement is
extremely difficult and whether such a short-term hedging strategy will be
successful is highly uncertain. It is impossible to forecast with precision the
market value of portfolio securities at the expiration of a forward currency
contract. Accordingly, it may be necessary for a Fund to purchase additional
currency on the spot market (and bear the expense of such purchase) if the
market value of the security is less than the amount of foreign currency such
Fund is obligated to deliver when a

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decision is made to buy the security and make delivery of the foreign currency
in settlement of a forward contract. Conversely, it may be necessary to sell on
the spot market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of foreign currency
such Fund is obligated to deliver.

If a Fund retains the portfolio security and engages in an
offsetting transaction, such Fund will incur a gain or a loss (as described
below) to the extent that there has been movement in forward currency contract
prices. If the Fund engages in an offsetting transaction, it may subsequently
enter into a new forward currency contract to sell the foreign currency. If
forward prices decline during the period between which a Fund enters into a
forward currency contract for the sale of foreign currency and the date it
enters into an offsetting contract for the purchase of the foreign currency,
such Fund would realize a gain to the extent the price of the currency it has
agreed to sell exceeds the price of the currency it has agreed to purchase. If
forward prices increase, such Fund would suffer a loss to the extent the price
of the currency it has agreed to purchase exceeds the price of the currency it
has agreed to sell. Although such contracts tend to minimize the risk of loss
due to a decline in the value of the hedged currency, they also tend to limit
any potential gain which might result if the value of such currency increases.
The Funds will have to convert their holdings of foreign currencies into United
States dollars from time to time. Although foreign exchange dealers do not
charge a fee for conversion, they do realize a profit based on the difference
(the "spread") between the prices at which they are buying and selling various
currencies.

No Fund intends to enter into forward currency contracts if
more than 15% of the value of its total assets would be committed to such
contracts on a regular or continuous basis. A Fund also will not enter into
forward currency contracts or maintain a net exposure on such contracts where
such Fund would be obligated to deliver an amount of foreign currency in excess
of the value of the Fund's portfolio securities or other assets denominated in
that currency.

Foreign Currency Options. Each of the Funds, except the Money
Market Funds and the Tax-Free Income Funds, may invest in foreign currency
options. A foreign currency option provides the option buyer with the right to
buy or sell a stated amount of foreign currency at the exercise price at a
specified date or during the option period. A call option gives its owner the
right, but not the obligation, to buy the currency, while a put option gives its
owner the right, but not the obligation, to sell the currency. The option seller
(writer) is obligated to fulfill the terms of the option sold if it is
exercised. However, either seller or buyer may close its position during the
option period in the secondary market for such options any time prior to
expiration.

A call rises in value if the underlying currency appreciates.
Conversely, a put rises in value if the underlying currency depreciates. While
purchasing a foreign currency option can protect a Fund against an adverse
movement in the value of a foreign currency, it does not limit the gain which
might result from a favorable movement in the value of such currency. For
example, if a Fund were holding securities denominated in an appreciating
foreign currency and had purchased a foreign currency put to hedge against a
decline in the value of the currency, it would not have to exercise its put.
Similarly, if a Fund has entered into a contract to purchase a security
denominated in a foreign currency and had purchased a foreign currency call to
hedge

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against a rise in the value of the currency but instead the currency had
depreciated in value between the date of purchase and the settlement date, such
Fund would not have to exercise its call, but could acquire in the spot market
the amount of foreign currency needed for settlement.

Foreign Currency Futures Transactions. Each of the Funds,
except the Money Market Funds and the Tax-Free Income Funds, may invest in
foreign currency futures transactions. As part of its financial futures
transactions, the Funds may use foreign currency futures contracts and options
on such futures contracts. Through the purchase or sale of such contracts, a
Fund may be able to achieve many of the same objectives as through forward
foreign currency exchange contracts more effectively and possibly at a lower
cost.

Unlike forward foreign currency exchange contracts, foreign
currency futures contracts and options on foreign currency futures contracts are
standardized as to amount and delivery period and may be traded on boards of
trade and commodities exchanges or directly with a dealer which makes a market
in such contracts and options. It is anticipated that such contracts may provide
greater liquidity and lower cost than forward foreign currency exchange
contracts.

Regulatory Restrictions. To the extent required to comply with
Securities and Exchange Commission (the "SEC") Release No. IC-10666, when
purchasing a futures contract or writing a put option or entering into a forward
foreign currency exchange purchase, a Fund will maintain in a segregated account
cash or liquid high-grade debt securities equal to the value of such contracts.

To the extent required to comply with Commodity Futures
Trading Commission Regulation 4.5 and thereby avoid being classified as a
"commodity pool operator," a Fund will not enter into a futures contract or
purchase an option thereon if immediately thereafter the initial margin deposits
for futures contracts held by such Fund plus premiums paid by it for open
options on futures would exceed 5% of such Fund's total assets. Such Fund will
not engage in transactions in financial futures contracts or options thereon for
speculation, but only to attempt to hedge against changes in market conditions
affecting the values of securities which such Fund holds or intends to purchase.
When futures contracts or options thereon are purchased to protect against a
price increase on securities intended to be purchased later, it is anticipated
that at least 25% of such intended purchases will be completed. When other
futures contracts or options thereon are purchased, the underlying value of such
contracts will at all times not exceed the sum of: (1) accrued profit on such
contracts held by the broker; (2) cash or high quality money market instruments
set aside in an identifiable manner; and (3) cash proceeds from investments due
in 30 days.

Lending of Portfolio Securities. In order to generate
additional income, each of the Funds may, from time to time, lend its portfolio
securities to broker-dealers, banks or institutional borrowers of securities. A
Fund must receive 100% collateral in the form of cash or U.S. government
securities. This collateral must be valued daily by the Custodian and, should
the market value of the loaned securities increase, the borrower must furnish
additional collateral to the Fund. During the time portfolio securities are on
loan,

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the borrower pays the Fund any dividends or interest paid on such securities.
Loans are subject to termination on by the Fund or the borrower at any time.
While the Fund does not have the right to vote securities on loan, it intends to
terminate the loan and regain the right to vote if that is considered important
with respect to the investment. In the event the borrower defaults in its
obligation to a Fund, the Fund bears the risk of delay in the recover of its
portfolio securities and the risk of loss of rights in the collateral. A Fund
will only enter into loan arrangements with broker-dealers, banks or other
institutions which the Investment Adviser has determined are creditworthy under
guidelines established by the Group's Board of Trustees.

Private Activity Bonds. The Tax-Free Income Funds and the
Tax-Free Fund may invest in private activity bonds. It should be noted that the
Tax Reform Act of 1986 substantially revised provisions of prior federal law
affecting the issuance and use of proceeds of certain tax-exempt obligations. A
new definition of private activity bonds applies to many types of bonds,
including those which were industrial development bonds under prior law. Any
reference herein to private activity bonds includes industrial development
bonds. Interest on private activity bonds is tax-exempt (and such bonds will be
considered Municipal Securities for purposes of this Statement of Additional
Information) only if the bonds fall within certain defined categories of
qualified private activity bonds and meet the requirements specified in those
respective categories. If a Fund invests in private activity bonds which fall
outside these categories, shareholders may become subject to the federal
alternative minimum tax on that part of the Fund's distributions derived from
interest on such bonds. The Tax Reform Act generally did not change the federal
tax treatment of bonds issued to finance government operations. For further
information relating to the types of private activity bonds which will be
included in income subject to the federal alternative minimum tax, see
"ADDITIONAL INFORMATION -- Additional Tax Information Concerning the Tax-Free
Fund, the National Tax Exempt Bond Fund and the Michigan Bond Fund" in the
Statement of Additional Information.

INVESTMENT RESTRICTIONS

Each 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
that Fund (as defined in this Statement of Additional Information).

THE FOLLOWING INVESTMENT RESTRICTIONS APPLY TO ALL FUNDS EXCEPT THE U.S.
GOVERNMENT OBLIGATIONS FUND AND THE TREASURY FUND:

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No Non-Money Market Fund, with the exception of the Michigan
Municipal Bond Fund, may:

Purchase securities of any one issuer, other than securities
issued or guaranteed by the U.S. government or its agencies or
instrumentalities, if, immediately after such purchase, more than 5% of the
value of the Fund's total assets would be invested in such issuer or the Fund
would hold more than 10% of any class of securities of the issuer or more than
10% of the outstanding voting securities of the issuer, except that up to 25% of
the value of the Fund's total assets may be invested without regard to such
limitations.

No Fund may:

1. Purchase any securities which would cause 25% or more of
the value of its total assets at the time of purchase to be invested in the
securities of one or more issuers conducting their principal business activities
in the same industry, provided that:

(a) there is no limitation with respect to
obligations issued or guaranteed by the U.S. government, any state, territory or
possession of the United States, the District of Columbia or any of their
authorities, agencies, instrumentalities or political subdivisions, and
repurchase agreements secured by such instruments, or in the case of the Prime
Obligations or Tax-Free Funds, domestic bank obligations and repurchase
agreements secured by such obligations;

(b) wholly-owned finance companies will be considered
to be in the industries of the their parents if their activities are primarily
related to financing the activities of the parents;

(c) utilities will be divided according to their
services, for example, gas, gas transmission, electric and gas, electric, and
telephone will each be considered a separate industry; and

(d) personal credit and business credit businesses
will be considered separate industries.

2. make loans, except that the Fund may purchase and hold debt
instruments and enter into repurchase agreements in accordance with its
investment objective and policies and may lend portfolio securities in an amount
not exceeding one-third of its total assets.

3. Borrow money, issue senior securities or mortgage, pledge
or hypothecate its assets except to the extent permitted under the 1940 Act.

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The following investment restrictions apply to the U.S. Government Obligations
Fund and the Treasury Fund:

Neither of the Funds may:

Purchase securities of any one issuer, other than obligations
issued or guaranteed by the U.S. government or its agencies or
instrumentalities, if, immediately after such purchase, more than 5% of the
value of the Fund's total assets would be invested in such issuer, or the Fund
would hold more than 10% of the outstanding voting securities of the issuer,
except that 25% or less of the value of such Fund's total assets may be invested
without regard to such limitations. There is no limit to the percentage of
assets that may be invested in U.S. Treasury bills, notes, or other obligations
issued or guaranteed by the U.S. government or its agencies or
instrumentalities.

Irrespective of the investment restriction above, and pursuant
to Rule 2a-7 under the 1940 Act, the U.S. Government Obligations Fund and the
Treasury Fund each will, with respect to 100% of its total assets, limit its
investment in the securities of any one issuer in the manner provided by such
Rule.

For purposes of the investment limitations above, a security
is considered to be issued by the governmental entity (or entities) whose assets
and revenues back the security and, with respect to a private activity bond that
is backed only by the assets and revenues of a non-governmental user, a security
is considered to be issued by such non-governmental user.

Neither of the Funds will:

1. Purchase any securities which would cause more than 25% of
the value of the Fund's total assets at the time of purchase to be invested in
securities of one or more issuers conducting their principal business activities
in the same industry, provided that:

(a) there is no limitation with respect to
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities and repurchase agreements secured by obligations of the U.S.
government or its agencies or instrumentalities;

(b) wholly-owned finance companies will be considered
to be in the industries of their parents if their activities are primarily
related to financing the activities of their parents;

(c) and 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 each Fund may borrow from
banks for temporary or emergency purposes and then only in amounts up to 10% of
its total assets at the time of borrowing (and provided that such bank
borrowings, reverse repurchase agreements and dollar roll agreements do not
exceed in the aggregate one-third of the Fund's total assets less liabilities

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<PAGE> 230

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 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 Fund's total assets less liabilities other than the obligations
represented by such reverse repurchase and dollar roll agreements; and

3. Make loans, except that a Fund may Purchase or hold debt
instruments and lend portfolio securities in accordance with its investment
objective and policies, make time deposits with financial institutions and enter
into repurchase agreements.

For purposes of investment limitation number 1 above only,
such limitation shall not apply to Municipal Securities or governmental
guarantees of Municipal Securities, and industrial development bonds or private
activity bonds that are backed only by the assets and revenues of a
non-governmental user shall not be deemed to be Municipal Securities.

For purposes of the above investment limitations, the Funds
treat all supranational organizations as a single industry and each foreign
government (and all of its agencies) as a separate industry. In addition, a
security is considered to be issued by the government entity (or entities) whose
assets and revenues back the security.

Generally, if a percentage limitation is satisfied at the time
of investment, a later increase or decrease in such percentage resulting from a
change in the value of a Fund's portfolio securities will not constitute a
violation of such limitation for purposes of the 1940 Act.

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<PAGE> 231

ADDITIONAL INVESTMENT LIMITATIONS

Each Fund's investment objective may be changed without a vote
of the holders of a majority of the Fund's outstanding shares, with the
exception of the U.S. Government Obligations and Treasury Funds. The investment
objectives of the U.S. Government Obligations and Treasury Funds are fundamental
and may not be changed without a vote of the holders of a majority of
outstanding shares of that Fund. In addition to the investment restrictions
disclosed above, the Funds are subject to the following investment limitations
which may be changed with respect to a particular Fund only by a vote of the
holders of a majority of such Fund's outstanding shares (as defined under
"ADDITIONAL INFORMATION - Vote of a Majority of the Outstanding Shares" in this
Statement of Additional Information).

The following investment restrictions apply to all Funds
except the U.S. Government Obligations Fund and the Treasury Fund:

No Fund may:

1. Purchase or sell real estate, except that the Fund may
purchase securities of issuers which deal in real estate and may purchase
securities which are secured by interests in real estate.

2. Invest in commodities, except that as is consistent with
its investment objective and policies a Fund may: (a) purchase and sell options,
forward contracts, futures contracts, including without limitation those
relating to indices; (b) purchase and sell options on futures contracts or
indices; and (c) purchase publicly traded securities of companies engaging in
whole or in part in such activities. For purposes of this investment limitation,
"commodities" includes commodity contracts.

3. Act as an underwriter of securities within the meaning of
the Securities Act of 1933, except insofar as the Fund might be deemed to be an
underwriter upon the disposition of portfolio securities acquired within the
limitation on purchases of illiquid securities and except to the extent that the
purchase of obligations directly from the issuer thereof in accordance with its
investment objective, policies and limitations may be deemed to be underwriting.

In addition, the Funds are subject to the following
non-fundamental limitations, which may be changed without the vote of
shareholders.

No Fund may:

1. Acquire any other investment company or investment company
security except in connection with a merger, consolidation, reorganization or
acquisition of assets or where otherwise permitted under the 1940 Act.

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<PAGE> 232

2. Write or sell put options, call options, straddles,
spreads, or any combination thereof, except, as consistent with the Fund's
investment objective and policies for transactions in options on securities or
indices of securities, future contracts and options on futures contracts and in
similar investments.

3. Purchase securities on margin, make short sales of
securities or maintain a short position, except that, as consistent with a
Fund's investment objective and policies, (a) this investment limitation shall
not apply to the Fund's transactions in futures contracts and related options,
options on securities or indices of securities and similar instruments, and (b)
it may obtain short-term credit as may be necessary for the clearance of
purchases and sales of portfolio securities.

4. Purchase securities of companies for the purpose of
exercising control.

5. Invest more than 15% (10% in the case of a Money Market
Fund) of its net assets in illiquid securities.

The following investment restriction applies to the U.S.
Government Obligations Fund and the Treasury Fund:

No Fund may:

Purchase securities on margin, except for use of
short-term credit necessary for clearance of purchases of portfolio securities.

None of the Funds will:

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<PAGE> 233

1. Underwrite the securities issued by other persons, except
to the extent that a Fund may be deemed to be an underwriter under certain
securities laws in the disposition of "restricted securities";

2. Purchase or sell commodities or commodities contracts,
except to the extent disclosed in the current Prospectus of the Fund;

3. Purchase or sell real estate (although investments in
marketable securities of companies engaged in such activities and securities
secured by real estate or interests therein are not prohibited by this
restriction);

4. Purchase any securities which would cause more than 25% of
the value of the Fund's total assets at the time of purchase to be invested in
securities of one or more issuers conducting their principal business activities
in the same industry, provided that: (a) there is no limitation with respect to
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities and repurchase agreements secured by obligations of the U.S.
government or its agencies or instrumentalities; (b) wholly-owned finance
companies will be considered to be in the industries of their parents if their
activities are primarily related to financing the activities of their parents,
and (c) utilities will provide according to their services. For example, gas,
gas transmission, electric and gas, electric, and telephone will each be
considered a separate industry;

5. Borrow money (not including reverse repurchase agreements
or dollar roll agreements), except that each Fund may borrow from banks for
temporary or emergency purposes and then only in amounts up to 30% of its total
assets at the time of borrowing (and provided that such bank borrowings and
reverse repurchase agreements and dollar roll agreements do not exceed in the
aggregate one-third of the Fund's total assets (10% in the case of the Money
Market Funds) less liabilities other than the obligations represented by the
bank borrowings, reverse repurchase agreements and dollar roll agreements), or
mortgages, pledge or hypothecate any assets except in connection with a bank
borrowing in amounts not to exceed 30% of the Fund's net assets at the time of
borrowing;

6. Enter into reverse repurchase agreements, dollar roll
agreements and other permitted borrowings in amounts exceeding in the aggregate
one-third of the Fund's total assets (10% in the case of the Money Market Funds)
less liabilities other than the obligations represented by such reverse
repurchase and dollar roll agreements;

7. Issue senior securities except as permitted by 1940 Act or
any rule, order or interpretation thereunder;

8. Make loans, except that a Fund may purchase or hold debt
instruments and lend portfolio securities in accordance with its investment
objective and policies , make time deposits with financial institutions and
enter into repurchase agreements; or

9. Write any call options on securities unless the securities
are held by the Fund or unless the Fund is entitled to such securities in
deliverable form in exchange for cash in

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<PAGE> 234

an amount which has been segregated for payment or without further payment. In
no event will a Fund write call options in excess of 5% of its total assets.

For purposes of investment limitation number 4 above only, such
limitation shall not apply to Municipal Securities or governmental guarantees of
Municipal Securities, and industrial development bonds or private activity bonds
that are backed only by the assets and revenues of a non-governmental user shall
not be deemed to be Municipal Securities.

The following additional investment restrictions may be
changed without the vote of a majority of the outstanding shares of a Fund. No
Fund may:

1. Engage in any short sales;

2. Invest more than 10% of the Fund's total assets in the
securities of issuers which, together with any predecessors, have a record of
less than three years of continuous operation;

3. Purchase securities of other investment companies, except
(a) in connection with a merger, consolidation, acquisition or reorganization,
and (b) to the extent permitted by the 1940 Act or pursuant to any exemptions
therefrom;

4. Purchase or retain securities of any issuer if the
officers or Trustees of the Group and the officers or directors of its
Investment Adviser and of its Administrator, who each owns beneficially more
than one-half of 1% of the outstanding securities of such issuer, together own
beneficially more than 5% of such securities;

5. Purchase participations or direct interests in oil, gas or
other mineral exploration or development programs (although investments by the
Fund in marketable securities of companies engaged in such activities are not
prohibited by this restriction); or

6. Purchase or otherwise acquire any securities if, as a
result, more than 15% (10% in the case of the Money Market Funds) of the Fund's
net assets would be invested in securities that are illiquid.

PORTFOLIO TURNOVER

The portfolio turnover rate for each of the Group's Funds is
calculated by dividing the lesser of a Fund's purchases or sales of portfolio
securities for the year by the monthly average value of the securities. The SEC
requires that the calculation exclude all securities whose remaining maturities
at the time of acquisition are one year or less.

Because each Money Market Fund intends to invest entirely in
securities with maturities of less than one year and because the SEC requires
such securities to be excluded from the calculation of portfolio turnover rate,
the portfolio turnover rate with respect to each of the Money Market Funds is
expected to be zero for regulatory purposes. The Balanced Allocation

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<PAGE> 235

Fund does not expect that its turnover rate with respect to that portion of its
portfolio invested in (i) common stocks and securities convertible into common
stocks and (ii) other investments will exceed 200%.

The portfolio turnover rates for the Funds of the Group may
vary greatly from year to year as well as within a particular year, and may also
be affected by cash requirements for redemptions of shares and, in the case of
the National Tax Exempt Bond Fund and the Michigan Municipal Bond Fund, by
requirements which enable those Funds to receive certain favorable tax
treatments. High portfolio turnover rates will generally result in higher
transaction costs to a Fund, including brokerage commissions, and may result in
additional tax consequences to a Fund's shareholders. Portfolio turnover will
not be a limiting factor in making investment decisions.

Significant changes in the portfolio turnover rates for the
Small Capitalization Fund, the Mid Capitalization Fund and the Large
Capitalization Fund were primarily the result of fundamental changes in the
prospects of the companies held and/or the availability of better opportunities.
In addition, with respect to the Small Capitalization Fund and the Mid
Capitalization Fund, portfolio turnover was affected by equity market
capitalization exceeding $2.5 billion and $10 billion, respectively. For the
Equity Income Fund, reduced portfolio turnover resulted from sustained
suitability of securities held in the portfolio. The decrease in portfolio
turnover for the International Discovery Fund was principally due to the fact
that there were fewer changes in country allocation during the latest 12-month
period ended June 30, 1997 as heavier weighting in continental Europe and lesser
weighting in the Far East were maintained.

For the Group's Income Funds, changes in portfolio turnover
rates occurred in connection with changes in opportunities perceived by the
Investment Adviser to be profitable to the Funds and their shareholders.

PARKSTONE INTERMEDIATE GOVERNMENT OBLIGATIONS FUND

During the fiscal year ended May 31, 1999, portfolio turnover was _______% as
compared to 774.28% for the previous fiscal year. The style of investment
management employed by the investment advisor sought to enhance shareholders'
total return through the active trading of portfolio holdings. The advisor's
style involves the monitoring of market values of securities held by the fund
relative to securities available in the marketplace. When the advisor believes
the relationships to be out of line with historically normal relationships, they
would trade the securities held for those in the marketplace. The advisor
believes that these "swaps" produce profits which benefit shareholders.

The advisor believes that opportunities for profits from the above described
activity are related to market conditions such as volatility. As market
volatility varies from period to period, so too may the opportunities to profit
from those market conditions. In the advisor's estimation, the fiscal year ended
May 31, 1998 presented less opportunity for such profitable trades than did the
previous fiscal year and therefore trade activity was less than during the
previous period.

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<PAGE> 236

An additional factor which reduced turnover is the result of the change in
fiscal year. The fiscal year ended May 31, 1998 covers eleven months as compared
to twelve for the previous fiscal year.

PARKSTONE GOVERNMENT INCOME FUND

During the fiscal year ended May 31, 1999, portfolio turnover was _______% as
compared to 278.94% for the previous fiscal year. The style of investment
management employed by the investment adviser sought to enhance shareholders'
total return through the active trading of portfolio holdings. The advisor's
style involves the monitoring of market values of securities held by the fund
relative to securities available in the marketplace. When the advisor believes
the relationships to be out of line with historically normal relationships, they
would trade the securities held for those in the marketplace. The adviser
believes that these "swaps" produce profits which benefit shareholders.

The adviser believes that opportunities for profits from the above described
activity are related to market conditions such as volatility. As market
volatility varies from period to period, so too may the opportunities to profit
from those market conditions. In the advisor's estimation, the fiscal year ended
May 31, 1998 presented less opportunity for such profitable trades than did the
previous fiscal year and therefore trade activity was less than during the
previous period.

An additional factor which reduced turnover is the result of the change in
fiscal year. The fiscal year ended May 31, 1998 covers eleven months as compared
to twelve for the previous fiscal year.

NET ASSET VALUE

As indicated in the Prospectuses, the net asset value of each
Fund is determined and the shares of each Fund are priced as of the Valuation
Times defined in the Prospectuses on each Business Day of the Group. A business
day for the Funds is generally a day that the New York Stock Exchange is open
for business. The Funds will not be open in observance of the following
holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Columbus Day (Money Market
Funds only), Veterans Day (Money Market Funds only), Thanksgiving and Christmas
Day.

The offering prices for Investor A Shares of the Non-Money
Market Funds as of May 31, 1999 were calculated as illustrated in this example
using the Small Capitalization Fund:

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<PAGE> 237

Net Assets $
Outstanding Shares
Net Asset Value Per Share $
Sales Charge, 4.50% of the
offering price (4.71 of NAV) per share $

Offering Price $

The offering prices for Investor B Shares of the Funds as of
May 31, 1999 were calculated as illustrated in this example using the Small
Capitalization Fund:

Net Assets $
Outstanding Shares
Net Asset Value Per Share $
Sales Charge

Offering Price $

The offering prices for Institutional Shares of the Non-Money
Market Funds as of May 31, 1999 were calculated as illustrated in this example
using the Small Capitalization Fund:

Net Assets $
Outstanding Shares
Net Asset Value Per Share $
Sales Charge

Offering Price $

The net asset value per share will fluctuate as the value of the investment
portfolio of a Fund changes. However, the assets in each Money Market Fund are
valued based upon the amortized cost method.

VALUATION OF THE MONEY MARKET FUNDS

The Money Market Funds have elected to use the amortized cost
method of valuation pursuant to Rule 2a-7 under the 1940 Act. This involves
valuing an instrument at its cost initially and thereafter assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. This method
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price a Fund would receive if it sold the instrument.
The value of securities in the Money Market Funds can be expected to vary
inversely with changes in prevailing interest rates.

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Pursuant to Rule 2a-7, the Money Market Funds will maintain a
dollar-weighted average maturity appropriate to each Fund's objective of
maintaining a stable net asset value per share, provided that no Fund will
purchase any security with a remaining maturity (calculated under the Rule) of
more than 397 days (thirteen months) (securities subject to repurchase
agreements may bear longer maturities) nor will it maintain a dollar-weighted
average maturity which exceeds 90 days. The Group's Board of Trustees has also
undertaken to establish procedures reasonably designed, taking into account
current market conditions and the investment objective of each of these Funds,
to stabilize the net asset value per share of each Fund for purposes of sales
and redemptions at $1.00. These procedures include review by the Trustees, at
such intervals as they deem appropriate, to determine the extent, if any, to
which the net asset value per share of each Fund calculated by using available
market quotations deviates from $1.00 per share. In the event such deviation
exceeds 0.5%, Rule 2a-7 requires that the Board of Trustees promptly consider
what action, if any, should be initiated. If the Trustees believe that the
extent of any deviation from a Fund's $1.00 amortized cost price per share may
result in material dilution or other unfair results to new or existing
investors, they will take such steps as they consider appropriate to eliminate
or reduce, to the extent reasonably practicable, any such dilution or unfair
results. These steps may include selling portfolio instruments prior to
maturity, shortening the dollar-weighted average maturity, withholding or
reducing dividends, reducing the number of the Fund's outstanding shares without
monetary consideration, or utilizing a net asset value per share determined by
using available market quotations. As permitted by Rule 2a-7 and the procedures
adopted by the Board, certain of the Board's responsibilities under the Rule may
be delegated to the Investment Adviser.

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.

VALUATION OF THE NON-MONEY MARKET FUNDS

Portfolio securities, the principal market for which is a
securities exchange, will be valued at the closing sales price on that exchange
on the day of computation. With respect to the Fixed Income Funds, Tax-Free
Income Fund and the fixed income securities of the Balanced Allocation Fund, if
there have been no sales during such day, portfolio securities will be valued at
the mean between the most recent quoted bid and asked prices. Portfolio
securities, the principal market for which is not a securities exchange, will be
valued at the mean between the most recent quoted bid and asked prices in such
principal market. With respect to the Growth Funds, Equity Income Fund, and the
equity securities of the Balanced Allocation Fund, if there have been no sales
during such day, portfolio securities will be valued at the latest bid
quotation. In either case, if no such price is available, then such securities
will be valued in good faith at their respective fair market values using
methods determined by or under the supervision of the Board of Trustees of the
Group. Portfolio securities with a remaining maturity of 60 days or less will be
valued either at amortized cost or original cost plus accrued interest, which
approximates current value.

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<PAGE> 239

All other assets and securities including securities for which
market quotations are not readily available will be valued at their fair market
value as determined in good faith under the general supervision of the Board of
Trustees of the Group.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Each of the classes of shares of the Group's Funds is sold on
a continuous basis by the Group's distributor, SEI Investments Distribution Co.
("SEI" or the "Distributor"), and SEI has agreed to use appropriate efforts to
solicit all purchase orders. The Group's Funds offer two or more of the
following classes of shares: Investor A Shares, Investor B Shares and
Institutional Shares. In addition to purchasing shares directly from SEI,
Institutional Shares may be purchased at net asset value through procedures
established by SEI in connection with the requirements of financial
institutions, including the Trust Department of National City Bank, an affiliate
of the Funds' Investment Adviser, other affiliated entities acting on behalf of
customers for investment of funds that are held by such Trust Department in a
fiduciary, agency, custodial or similar capacity, although currently
Institutional Shares are only being offered to the trust departments of National
City Bank and its affiliates.

As stated in the relevant Prospectuses , the public offering
price of Investor A Shares of the Money Market Funds is their net asset value
per share which they will seek to maintain at $1.00. The public offering price
of Investor A Shares of each of the other Funds is its net asset value per share
next computed after the sale plus a sales charge which varies based upon the
quantity purchased. The public offering price of such Investor A Shares of a
Fund is calculated by dividing net asset value by the difference (expressed as a
decimal) between 100% and the sales charge percentage of offering price
applicable to the purchase. The offering price is rounded to two decimal places
each time a computation is made.

The public offering price of Investor B Shares of each Fund is
its net asset value per share. Investor B Shares redeemed prior to five years
from the date of purchase may be subject to a contingent deferred sales charge
of 2.00% to 5.00%. Investor B Shares purchased prior to January 1, 1997 may be
subject to a contingent deferred sales charge of 2.00% to 4.00%, if redeemed
prior to four years from the date of purchase.

The Group may suspend the right of redemption or postpone the
date of payment for shares during any period when: (a) trading on the NYSE is
restricted by applicable rules and regulations of the SEC; (b) the NYSE is
closed for other than customary weekend and holiday closings; (c) the SEC has by
order permitted such suspension; or (d) an emergency exists as a result of
which: (i) disposal by the Group of securities owned by it is not reasonably
practicable, or (ii) it is not reasonably practicable for the Group to determine
the fair market value of its net assets. When redeeming shares, 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, and
(3) the amount of the redemption check is less than $10,000.

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<PAGE> 240

When purchases are made by check, redemption proceeds will not
be released until the investment being redeemed has been in the account 15 days.

The Money Market Funds may redeem shares involuntarily if
redemption appears appropriate in light of the Group's responsibilities under
the 1940 Act. See "NET ASSET VALUE - Valuation of the Money Market Funds" in
this Statement of Additional Information.

ADDITIONAL INFORMATION ABOUT HOW TO BUY INSTITUTIONAL SHARES

Institutional Shares of the Michigan Municipal Bond Fund may
only be sold in those states where the Fund has filed the required notification
documents, currently only Colorado, District of Columbia, Florida, Georgia,
Hawaii, Illinois, Indiana, Michigan, Mississippi, New Jersey, Ohio and Virginia.

Purchases of Institutional Shares of any of the Funds will be
effected only on a Business Day (as defined in "PRICING OF FUND SHARES" in the
prospectus) of the applicable Fund. An order received prior to a Valuation Time
on any Business Day will be executed at the net asset value determined as of the
next Valuation Time on the date of receipt. An order received after the last
Valuation Time on any Business Day will be executed at the net asset value
determined as of the next Valuation Time on the next Business Day of that Fund.
Institutional Shares of all Funds, except the Money Market Funds, are eligible
to earn dividends on the first Business Day following the execution of the
purchase. Institutional Shares of the Treasury and Tax-Free Funds purchased
before 1 p.m., Eastern Time, will begin earning dividends on the same Business
Day. Institutional Shares of the Prime Obligations Fund and the U.S. Government
Obligations Fund purchased before 3:00 p.m. Eastern Standard Time begin earning
dividends on the same Business Day. Institutional Shares of the Funds continue
to be eligible to earn dividends through the day before their redemption.

An order to purchase Institutional Shares will be deemed to
have been received by the Distributor only when federal funds are available to
the Group's Custodian for investment. Federal funds are monies credited to a
bank's account within a Federal Reserve Bank. Payment for an order to purchase
Institutional Shares which is transmitted by federal funds wire will be
available the same day for investment by the Group's Custodian if received prior
to the last Valuation Time. Purchases made by check or other means are made at
the price next determined upon receipt of the purchase instrument. However,
proceeds from redeemed shares purchased by check will not be sent until the
method of payment has cleared. The Group strongly recommends that investors of
substantial amounts use federal funds to purchase Institutional Shares.

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 Group by financial institutions on behalf of their customers may
be obtained from the financial

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<PAGE> 241
institutions. Shareholders may rely on these statements in lieu of certificates.
Certificates representing Institutional Shares of the Funds will not be issued.

ADDITIONAL INFORMATION ABOUT REDEMPTION OF INSTITUTIONAL SHARES

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. The proceeds paid upon redemption of such
Institutional Shares of the Funds may be more or less than the amount invested.
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, receipts from financial institutions
for next day payments upon redemption of Institutional Shares except the Money
Market Funds will be honored if the request for redemption is received by the
Transfer Agent before 4:00 p.m., (Eastern Time), on a Business Day or, if
received after 4:00 p.m., (Eastern Time), within two Business Days, unless it
would be disadvantageous to the Group or the shareholders of a Fund to sell or
liquidate portfolio securities in an amount sufficient to satisfy requests for
payments in that manner.

MANAGEMENT OF THE GROUP

TRUSTEES AND OFFICERS

Overall responsibility for management of the Group rests with
its Board of Trustees, who are elected by the shareholders of the Group's Funds.
The Trustees elect the officers of the Group to supervise actively its
day-to-day operations. One officer of the Trust, Herbert R. Martens, Jr., also
serves as a Trustee.

The Trustees of the Group, their addresses, ages and principal
occupations during the past five years are as follows:

<TABLE>
<CAPTION>
Names, Addresses Position(s) Held Principal Occupation
and Ages With the Group During Past 5 Years
-------- -------------- -------------------
<S> <C> <C>
Robert D. Neary Chairman of the Board and Retired Co-Chairman of Ernst & Young, April 1984
32980 Creekside Drive Trustee to September 1993; Director, Cold Metal Products,
Pepper Pike, OH 44124 Inc., since March 1994; Director, Strategic Distribution,
Inc., since January 1999.

Herbert R. Martens, Jr.* President and Trustee Executive Vice President, National City Corporation
c/o NatCity Investments, Inc. (bank holding company), since July 1997; Chairman,
1965 East Sixth Street President and Chief Executive Officer, NatCity
Cleveland, OH 44114 Investments, Inc. (investment banking), since July
Age 47 1995; President and Chief Executive Officer, Raffensberger,
Hughes & Co., (broker-dealer) from 1993 until 1995; President,
Reserve Capital Group, from 1990 until 1998; Trustee of Armada
Funds and Parkstone Advantage Funds since November 1997.
</TABLE>

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<PAGE> 242
<TABLE>
<CAPTION>
Names, Addresses Position(s) Held Principal Occupation
and Ages With the Group During Past 5 Years
-------- -------------- -------------------
<S> <C> <C>
Leigh Carter* Trustee Retired President and Chief Operating Officer, B.F.
13901 Shaker Blvd., #6B Goodrich Company, August 1986 to September 1990;
Cleveland, OH 44120 Director, Adams Express Company (closed-end
Age 73 investment company), April 1982 to December 1997;
Director; Acromed Corporation; (producer of spinal
implants), June 1992 to March 1998; Director,
Petroleum & Resources Corp., April 1987 to December 1997;
Director, Morrison Products (manufacturer of blowers
fans and air moving equipment), since April 1983; Director,
Kirtland Capital Corp. (privately funded investment
group), since January 1992; Director, Truseal Technologies
(manufacturer of insulated glass sealants), since April 1997.

John F. Durkott Trustee President and Chief Operating Officer, Kittle's Home
8600 Allisonville Road Furnishings Center, Inc., since January 1982;
Indianapolis, IN 46250 partner, Kittles Bloomington Properties LLC, since
Age 54 January 1989; partner, KK&D LLC, since January 1989; partner,
KK&D II LLC, since February 1998 (affiliated real estate
companies of Kittles Home Furnishings Center.

Robert J. Farling Trustee Retired Chairman, President and Chief Executive
1608 Balmoral Way Officer, Centerior Energy (electric utility), March
Westlake, OH 44145 1992 to October 1997; Director, National City Bank
Age 62 until October 1997; Director, Republic Engineered
Steels, October 1997 to September 1998.

Richard W. Furst, Dean Trustee Garvice D. Kincaid Professor of Finance and Dean, Carol
2133 Rothbury Road Martin Gatton College of Business and Economics; University
Lexington, KY 40515 of Kentucky, since 1981; Director, The Seed Corporation
Age 60 (restaurant group), since 1990; Director, Foam
Design, Inc., (manufacturer of industrial and
commercial foam products), since 1993.

Gerald L. Gherlein Trustee Executive Vice-President and General Counsel, Eaton
3679 Greenwood Drive Corporation, since 1991 (global manufacturing);
Pepper Pike, OH 44124 Trustee, WVIZ Educational Television (public television).
Age 61

J. William Pullen Trustee President and Chief Executive Officer, Whayne Supply
Whayne Supply Company Co. (engine and heavy equipment distribution), since
1400 Cecil Avenue 1986; President and Chief Executive Officer,
P.O. Box 25900 American Contractors Rentals & Sales (rental
Louisville, KY 40232-5900 subsidiary of Whayne Supply Co.), since 1988.
Age 60
</TABLE>

*Mr. Carter and Mr. Martens are each an "interested person" of
the Trust, as defined in the 1940 Act.

Mr. Martens is an "interested person" because (1) he is an
Executive Vice President of National City Corporation, (2) he owns shares of
common stock and options to purchase common stock of National City Corporation,
and (3) he is the Chief Executive Officer of NatCity Investments, Inc., a
broker-dealer affiliated with National City Investment Management Company.

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<PAGE> 243
Mr. Carter is an "interested person" of the Trust, as defined
in the 1940 Act, due to his ownership of 7,200 shares of stock of National City
Corporation, an affiliate of National City Investment Management Company, the
Fund's investment adviser.

The Group paid an aggregate of $_____ in Trustees' fees and
expenses for the fiscal year ended May 31, 1999, to all Trustees of the Group.
All of the Trustees also serve as Trustees of The Parkstone Advantage Fund, an
open-end investment company managed by the Group's Investment Adviser as an
investment vehicle for insurance company separate accounts, and as Trustees for
Armada Funds. The following table depicts, for the fiscal period ended May 31,
1999, the compensation received by each of the Trustees from the Group and in
total from all investment companies managed by the Investment Adviser to the
Group.

COMPENSATION TABLE

<TABLE>
<CAPTION>
TOTAL COMPENSATION
FROM GROUP THE
PENSION OR PARKSTONE ADVANTAGE
RETIREMENT FUND AND THE FUND
AGGREGATE BENEFITS ACCRUED ESTIMATED ANNUAL COMPLEX (ARMADA
COMPENSATION AS PART OF FUND BENEFITS UPON FUNDS) PAID TO
NAME OF TRUSTEE FROM THE GROUP EXPENSES RETIREMENT TRUSTEES*
--------------- -------------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Robert D. Neary -0- -0-
Leigh Carter -0- -0-
John F. Durkott -0- -0-
Robert J. Farling -0- -0-
Richard W. Furst -0- -0-
Gerald L. Gherlein -0- -0-
Herbert R. Martens, Jr. -0- -0-
J. William Pullen -0- -0-
John B. Rapp -0- -0-
George R. Landreth -0- -0-
Robert M. Beam -0- -0-
Lawrence D. Bryan -0- -0-
Adrian Charles Edwards -0- -0-
James F. Jones, Jr. -0- -0-
</TABLE>

Each Trustee who is not an affiliated person of BISYS or
National City Corporation, the ultimate parent of IMC, receives an annual fee of
$15,000 plus $3,000 for each Board meeting attended and reimbursement of
expenses incurred in attending meetings for services as a Trustee to the Fund
Complex. The Chairman of the Board is entitled to receive an additional $5,000
per annum for services in such capacity. Mr. Martens is an employee of National
City Corporation. He receives no compensation from the Group for acting as
Trustee. Mr. Landreth served as Chairman of the Board until his resignation as
Chairman on February 12,

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<PAGE> 244
1997, at which time Mr. Rapp became a Trustee and assumed that position. Mr.
Landreth resigned as Trustee and the Group's President on October 23, 1997. Dr.
Jones began serving as a Trustee on August 21, 1997. Mr. Landreth is an employee
of BISYS. He received no compensation from the Group for acting as Trustee.
Messrs. Rapp, Beam, Bryan, Edwards and Jones served as Trustees until their
resignations on August 14, 1998.

* Reflects total compensation paid to Trustees for the fiscal year June 1,
1998 through May 31, 1999.

The officers of the Group, their addresses, and principal
occupations during the past five years are as follows:

<TABLE>
<CAPTION>
Position(s) Held Principal Occupation
Name With the Group During Past 5 Years
<S> <C> <C>
Herbert R. Martens, Jr. President Executive Vice President, National City Corporation (bank
holding company), since July 1997; Chairman, President and
Chief Executive Officer, NatCity Investments, Inc. (investment
banking), since July 1995; President and Chief Executive
Officer, Raffensperger, Hughes & Co., (broker-dealer), from
1993 until 1995; President, Reserve Capital Group, from 1990
until 1993; President, since July 1997 and Trustee, since
November 1997 of Armada Funds.

W. Bruce McConnel, III Secretary Partner of the law firm Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania.

Gary Tenkman Treasurer Director of Financial Services, BISYS Fund Services since
April 1998; formerly, Audit Manager, Ernst & Young LLP.

R. Jeffrey Young Assistant Treasurer Vice President, Client Services; BISYS Fund Services
</TABLE>

The officers of the Group receive no compensation directly
from the Group for performing the duties of their offices. As Administrator,
BISYS receives fees from the Group. As Distributor, SEI may retain all or a
portion of any sales charge on the shares sold and may receive fees under the
Distribution and Shareholder Service Plans described below. BISYS Fund Services
Ohio, Inc. ("BISYS Ohio," or the "Fund Accountant") receives fees from the Group
for providing certain fund accounting services. Mr. Tenkman, the Treasurer of
the Group, and Mr. Young, the Assistant Treasurer of the Group, are employees of
BISYS.

TRUSTEE DEFERRED COMPENSATION PLAN

The Trustees may elect to defer payment of 25% to 100% of the
fees the Trustee receives in accordance with a Trustee Deferred Compensation
Plan (the "Plan"). Under the Plan, a Trustee may elect to have his or her
deferred fees treated as if they had been invested by the Trust in the shares of
one or more portfolios of the Trust or Armada Funds, and the amount paid to the
Trustee under the Plan will be determined based on the performance of such
investments. Distributions are generally of equal installments over a period of
two to 15 years. The Plan will remain unfunded for federal income tax purposes
under the Internal Revenue Code of 1986, as amended (the "Code"). Deferral of
Trustee fees in accordance with the Plan will have a negligible impact on
Portfolio assets and liabilities and will not obligate the Trust to retain any
Trustee or pay any particular level of compensation to a Trustee. The Trust may
invest in underlying securities without shareholder approval.

INVESTMENT ADVISER

Subject to the general supervision of the Group's Board of
Trustees and in accordance with the Funds' investment objectives and
restrictions, investment advisory services are provided to the Funds of the
Group by IMC (formerly "First of America"), 1900 East Ninth Street, Cleveland,
Ohio 44114, pursuant to the Investment Advisory Agreement dated July 9, 1987, as
amended (with respect to the Money Market Funds) and the Investment Advisory
Agreement dated September 8, 1988, as amended (with respect to the Small
Capitalization Fund,

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<PAGE> 245

Mid Capitalization Fund, Large Capitalization Fund, Equity Income Fund, Bond
Fund, Limited Maturity Bond Fund, Intermediate Government Obligations Fund,
National Tax Exempt Bond Fund, Michigan Municipal Bond Fund, Balanced Allocation
Fund and Government Income Fund) (the "First Investment Advisory Agreements")
and the Investment Advisory Agreement dated as of December 22, 1992 (with
respect to the International Discovery Fund (the "Second Investment Advisory
Agreement") (together called the "Investment Advisory Agreements").

IMC is a registered investment adviser and an indirect
wholly-owned subsidiary of National City Corporation ("NCC"). As of August 5,
1998 NCC consolidated the asset management responsibilities of its various bank
affiliates including FOA. Prior to such time, the investment adviser of the
Funds was First of America Investment Corporation ("First of America"), a
wholly-owned subsidiary of FOA.

Under the Investment Advisory Agreements, the Investment
Adviser has agreed to provide, either directly or through one or more
subadvisers, investment advisory services for each of the Group's Funds as
described in their Prospectuses. For the services provided and expenses assumed
pursuant to the Investment Advisory Agreements, each of the Group's Funds pays
IMC a fee, computed daily and paid monthly, at an annual rate calculated as a
percentage of the average daily net assets of that Fund. The annual rates for
the Funds are as follows: 0.40% for the Money Market Funds; 0.74% for the Bond
Fund, Limited Maturity Bond Fund, Intermediate Government Obligations Fund,
Municipal Bond Fund, Michigan Municipal Bond Fund and U.S. Government Income
Fund, 1.00% for the Small Capitalization Fund, Mid Capitalization Fund, Equity
Income Fund and Balanced Allocation Fund; 0.80% for the Large Capitalization
Fund; for the International Discovery Fund; 1.25% of the first $50 million of
the International Discovery Fund's average daily net assets, 1.20% of average
daily net assets between $50 million and $100 million, 1.15% of average daily
net assets between $100 million and $400 million, and 1.05% of average daily net
assets above $400 million. The Board of Trustees of the Group believes the fees
for the last seven Funds mentioned in the previous sentence to be comparable to
advisory fees paid by many funds having objectives and policies similar to those
Funds. The Investment Adviser may periodically voluntarily reduce all or a
portion of its advisory fee with respect to any Fund to increase the net income
of one or more of the Funds available for distribution as dividends.

Pursuant to each of the Investment Advisory Agreements, the
Investment Adviser will pay all expenses, including, as applicable, the
compensation of any subadvisers directly appointed by it, incurred by it in
connection with its activities under the Investment Advisory Agreements other
than the cost of securities (including brokerage commissions, if any) purchased
for the Group.

For the fiscal year ended May 31, 1999, the fiscal period
ended May 31, 1998 and the fiscal year ended June 30, 1997, IMC collected and
voluntarily reduced the amounts indicated below which were payable to it with
respect to its investment advisory services to the indicated Funds under the
Investment Advisory Agreements:

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<PAGE> 246

<TABLE>
<CAPTION>
Fiscal Year Ended Fiscal Period Ended Fiscal Year Ended
May 31 May 31 June 30
FUND 1999 1998 1997
-------------------------- ----------------------- -------------------------

Gross Fees Gross Fees Gross Fees
Fees Voluntarily Fees Voluntarily Fees Voluntarily
Collected Reduced Collected Reduced Collected Reduced
--------- ------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Prime Obligations Fund 3,212,525 -- 3,441,611 --

U.S. Government Obligations Fund 1,390,243 -- 1,712,370 --

Tax-Free Fund 631,554 -- 651,531 --

Treasury Fund 1,905,446 -- 1,618,910 --

Small Capitalization Fund 7,988,486 -- 7,049,924 --

Mid Capitalization Fund 6,103,574 -- 6,531,413 --

Large Capitalization Fund(1) 2,681,620 -- 2,725,217 --

International Discovery Fund 4,978,744 -- 4,981,112 --

Equity Income Fund 3,930,234 -- 4,335,969 --

Balanced Allocation Fund 2,599,865 649,964 1,946,812 484,709

Bond Fund 3,554,009 192,110 4,027,206 207,298

Limited Maturity Bond Fund 1,263,800 324,490 1,134,805 289,664

Intermediate Government
Obligations Fund 1,334,336 72,116 1,692,438 86,957

U.S. Government Income Fund 1,649,105 646,269 1,587,392 620,579

National Tax Exempt Bond Fund 954,911 245,181 1,058,852 270,292

Michigan Municipal Bond Fund 1,705,361 437,864 1,715,085 437,841
</TABLE>

(1) Commenced operations December 27, 1995.

Unless sooner terminated, each of the Investment Advisory
Agreements continues in effect as to a particular Fund for successive one-year
periods ending December 31 of each year if such continuance is approved at least
annually by the Group's Board of Trustees or by vote of a majority of the
outstanding shares of such Fund, and a majority of the Trustees who are not
parties to the Investment Advisory Agreements or interested persons (as defined
in the 1940 Act) of any party to the Investment Advisory Agreements by votes
cast in person at a meeting called for such purpose.

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<PAGE> 247

The Investment Advisory Agreements is terminable as to a particular Fund at any
time on 60 days' written notice without penalty by the Trustees, by vote of a
majority of the outstanding shares of that Fund, or by the Investment Adviser.
Such Agreements also terminate automatically in the event of any assignment, as
defined in the 1940 Act.

The Investment Advisory Agreements provide that the Investment
Adviser shall be liable for any error of judgment or mistake of law or for any
loss suffered by the Group in connection with the performance of their duties,
except a loss suffered by a Fund resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services or a loss resulting from
willful misfeasance, bad faith, or gross negligence on the part of the
respective investment adviser or subadviser in the performance of their duties,
or from reckless disregard of their duties and obligations thereunder.

From time to time, advertisements, supplemental sales
literature and information furnished to present or prospective shareholders of
the Funds may include descriptions of the Investment Adviser including, but not
limited to, (i) descriptions of the Investment Adviser's operations; (ii)
descriptions of certain personnel and their functions; and (iii) statistics and
rankings related to the Investment Adviser's operations.

PORTFOLIO TRANSACTIONS

With respect to all Funds of the Group pursuant to the
Investment Advisory Agreements, the Investment Adviser determines, subject to
the general supervision of the Board of Trustees of the Group and in accordance
with each Fund's investment objective and restrictions, which securities are to
be purchased and sold by a Fund, and which brokers are to be eligible to execute
such Fund's portfolio transactions.

Purchases and sales of portfolio securities which are debt
securities usually are principal transactions in which portfolio securities are
normally purchased directly from the issuer or from an underwriter or market
maker for the securities. Purchases from underwriters of portfolio securities
generally include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers serving as market makers may include the
spread between the bid and asked prices. Transactions on stock exchanges involve
the payment of negotiated brokerage commissions. Transactions in the
over-the-counter market are generally principal transactions with dealers. With
respect to the over-the-counter market, the Group, where possible, will deal
directly with dealers who make a market in the securities involved except in
those circumstances where better price and execution are available elsewhere.

Allocation of transactions, including their frequency, to
various brokers and dealers is determined by the Investment Adviser in their
best judgment and in a manner deemed fair and reasonable to shareholders. The
primary consideration is prompt execution of orders in an effective manner at
the most favorable price. Subject to this consideration, brokers and dealers who
provide supplemental investment research to the Investment Adviser may receive
orders for transactions on behalf of the Group. Information so received is in
addition to and not

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<PAGE> 248

in lieu of services required to be performed by the Investment Adviser and does
not reduce the fees payable to such advisers by the Group or the Investment
Adviser, as the case may be. Such information may be useful to the Investment
Adviser in serving both the Group and other clients and, conversely,
supplemental information obtained by the placement of business of other clients
may be useful to such advisers in carrying out their obligations to the Group.

While the Investment Adviser generally seek competitive
commissions, the Group may not necessarily pay the lowest commission available
on each brokerage transaction for reasons discussed above. For the fiscal year
ended May 31, 1999, the fiscal period ended May 31, 1998 and the fiscal year
ended June 30, 1997, the Group paid an aggregate of approximately $ __________ ,
$2,930,315 and $3,118,633, respectively, as brokerage commissions on behalf of
the Funds.

The Group will not acquire portfolio securities issued by,
make savings deposits in, or enter into repurchase or reverse repurchase
agreements with National City Corporation (the parent corporation of IMC), SEI,
BISYS, or their affiliates, and will not give preference to National City
Corporation's correspondents with respect to such transactions, securities,
savings deposits, repurchase agreements, and reverse repurchase agreements.

Investment decisions for each Fund of the Group are made
independently from those for the other Funds or any other portfolio, investment
company or account managed by the Investment Adviser. Any such other portfolio,
investment company or account may also invest in the same securities as the
Group. When a purchase or sale of the same security is made at substantially the
same time on behalf of a Fund and another Fund, portfolio, investment company or
account, the transaction will be averaged as to price and available investments
will be allocated as to amount in a manner which the Investment Adviser believes
to be equitable to the Fund(s) and such other portfolio, investment company or
account. In some instances, this investment procedure may adversely affect the
price paid or received by a Fund or the size of the position obtained by a Fund.
To the extent permitted by law, the Investment Adviser may aggregate the
securities to be sold or purchased for a Fund with those to be sold or purchased
for other Funds or for other portfolios, investment companies or accounts in
order to obtain best execution. As provided by the Investment Advisory
Agreements, in taking investment recommendations for the Group, the Investment
Adviser will not inquire or take into consideration whether an issuer of
securities proposed for purchase or sale by the Group is a customer of the
Investment Adviser, its parent or its subsidiaries or affiliates, and, in
dealing with its customers, the Investment Adviser, its parent, subsidiaries,
and affiliates will not inquire or take into consideration whether securities of
such customers are held by the Group.

Each of the Prime Obligations Fund, U.S. Government
Obligations Fund, Treasury Fund, Small Capitalization Fund, Mid Capitalization
Fund, Large Capitalization Fund, Balanced Allocation Fund, Equity Income Fund,
Bond Fund, Limited Maturity Bond Fund, Intermediate Government Obligations Fund,
and U.S. Government Income Fund held, from time to time during the fiscal period
ended May 31, 1998, securities of its regular brokers or dealers, as defined in
Rule 10b-1 under the 1940 Act, or their parent companies, including: with
respect to the Prime Obligations Fund, those of Bank of America, Bear Stearns,
Hong Kong Shanghai

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<PAGE> 249

Bank, Goldman Sachs, Morgan Stanley and Nomura Securities; with respect to the
U.S. Government Obligations Fund, those of Aubrey Lanston, Goldman Sachs and
Morgan Stanley; with respect to the Treasury Fund, those of Aubrey Lanston, Bank
of America, J.P. Morgan, Goldman Sachs, Hong Kong Shanghai Bank Corp., Lehman
Brothers and Nomura Securities; with respect to the Small Capitalization Fund,
the Mid Capitalization Fund and the Large Capitalization Fund, those of Goldman
Sachs; with respect to the Balanced Allocation Fund, those of Goldman Sachs and
Lehman Brothers; with respect to the Equity Income Fund, those of Goldman Sachs
and Morgan Stanley; with respect to the Bond Fund, those of Goldman Sachs,
Lehman Brothers and Salomon Smith Barney; with respect to the Limited Maturity
Bond Fund, those of Goldman Sachs and Lehman Brothers; with respect to the
Intermediate Government Obligations Fund, those of Goldman Sachs; and with
respect to the Government Income Fund, those of Goldman Sachs and Prudential.

As of May 31, 1999, the Prime Obligations Fund held the
following amounts of the securities of Goldman Sachs and Morgan Stanley,
respectively: $__________ and $____________. The Treasury Fund held the
following amounts of securities of Bank of America, Goldman Sachs, J.P. Morgan,
and Nomura Securities, respectively: $___________, $____________, $___________
and $___________. The Balanced Allocation Fund held the following amounts of the
securities of Lehman Brothers: $___________. The Equity Income Fund held the
following amounts of securities of Morgan Stanley: $___________. The Bond Fund
held the following amounts of securities of Lehman Brothers: $___________. The
Limited Maturity Bond Fund held the following amounts of securities of Lehman
Brothers: $___________. The U.S. Government Income Fund held the following
amounts of securities of Prudential: $__________.

AUTHORITY TO ACT AS INVESTMENT ADVISER

Banking laws and regulations currently prohibit a bank holding
company registered under the Bank Holding Company Act of 1956, as amended, or
any bank or non-bank affiliate thereof from sponsoring, organizing, controlling
or distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibits banks
generally from issuing, underwriting, selling, or distributing securities such
as shares of the Funds, but do not prohibit such a bank holding company or its
affiliates or banks generally from acting as investment adviser, transfer agent,
or custodian to such an investment company or from purchasing shares of such a
company as agent for and upon the order of customers. The investment adviser and
custodians are subject to such banking laws and regulations. Should legislative,
judicial, or administrative action prohibit or restrict the activities of such
companies in connection with their services to the Funds, the Group might be
required to alter materially or discontinue its arrangements with such companies
and change its method of operation. It is anticipated, however, that any
resulting change in the Group's method of operation would not affect a Fund's
net asset value per share or result in financial losses to any shareholder.
State securities laws on this issue may differ from federal law and banks and
financial institutions may be required to register as dealers pursuant to state
law.

GLASS-STEAGALL ACT

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<PAGE> 250

In 1971, the United States Supreme Court held in Investment
Company Institute v. Camp that the Federal statute commonly referred to as the
Glass-Steagall Act prohibits a national bank from operating a mutual fund for
the collective investment of managing agency accounts. Subsequently, the Board
of Governors of the Federal Reserve System (the "Board") issued a regulation and
interpretation to the effect that the Glass-Steagall Act and such decision: (a)
forbid a bank holding company registered under the Federal Bank Holding Company
Act of 1956 (the "Holding Company Act") or any non-bank affiliate thereof from
sponsoring, organizing, or controlling a registered, open-end investment company
continuously engaged in the issuance of its shares, but (b) do not prohibit such
a holding company or affiliate from acting as investment adviser, transfer
agent, and custodian to such an investment company. In 1981, the United States
Supreme Court held in Board of Governors of The Federal Reserve System v.
Investment Company Institute that the Board did not exceed its authority under
the Holding Company Act when it adopted its regulation and interpretation
authorizing bank-companies and their non-bank affiliates to act as investment
advisers to registered closed-end investment companies. In the Board of
Governors case, the Supreme Court also stated that if a national bank complied
with the restrictions imposed by the Board in its regulation and interpretation
authorizing bank holding companies and their non-bank affiliates to act as
investment advisers to investment companies, a national bank performing
investment advisory services for an investment company would not violate the
Glass-Steagall Act. The Office of the Comptroller of the Currency, which has
jurisdiction over national banks and their subsidiaries, has specifically
permitted national banks and their subsidiaries to act as investment advisers to
investment companies.

The Investment Adviser believes that it possesses the legal
authority to perform the services for the Funds contemplated by the
Prospectuses, this Statement of Additional Information and the Investment
Advisory Agreements without violation of applicable statutes and regulations.
Future changes in either federal or state statutes and regulations relating to
the permissible activities of banks or bank holding companies and the
subsidiaries or affiliates of those entities, as well as further judicial or
administrative decisions or interpretations of present and future statutes and
regulations, could prevent or restrict the Investment Adviser from continuing to
perform such services for the Group. Depending upon the nature of any changes in
the services which could be provided by the Investment Adviser, the Board of
Trustees of the Group would review the Group's relationship with the Investment
Adviser and consider taking all action necessary in the circumstances.

Should future legislative, judicial, or administrative action
prohibit or restrict the proposed activities of the Investment Adviser and/or
National City Corporation's affiliated and correspondent banks in connection
with customer purchases of shares of the Group, those banks might be required to
alter materially or discontinue the services offered by them to customers. It is
not anticipated, however, that any change in the Group's method of operations
would affect its daily net asset value per share or result in financial losses
to any shareholder.

ADMINISTRATOR AND SUB-ADMINISTRATOR

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<PAGE> 251

BISYS, 3435 Stelzer Road, Columbus, Ohio 43219, formerly the
Winsbury Company Limited Partnership, serves as administrator (the
"Administrator") to the Group pursuant to the Administration Agreement dated
January 1, 1995, as amended (the "Administration Agreement"). BISYS and its
affiliated companies, including BISYS Ohio, are wholly-owned by The BISYS Group,
Inc., a publicly-held company which is a provider of information processing,
loan servicing and 401(k) administrative and recordkeeping securities to and
through banking and other financial organizations. The Administrator assists in
supervising all operations of each Fund (other than those performed by the
Investment Adviser under the Investment Advisory Agreements, by National City
Bank and Union Bank (the "Custodians") under the Custody Agreement and by BISYS
Ohio under the Fund Accounting Agreement). The Administrator is a broker-dealer
registered with the SEC, and is a member of the National Association of
Securities Dealers, Inc.

Under the Administration Agreement, the Administrator has
agreed to maintain office facilities for the Group; furnish statistical and
research data, clerical and certain bookkeeping services and stationery and
office supplies; prepare the periodic reports to the SEC on Form N-SAR or any
replacement forms therefor; compile data for, prepare for execution by the Funds
and file certain federal and state tax returns and required tax filings prepare
compliance filings pursuant to state securities laws with the advice or the
Group's counsel; keep and maintain the financial accounts and records of the
Funds, including calculation of daily expense accruals; in the case of the Money
Market Funds, determine the actual variance from $1.00 of the Fund's net asset
value per share; and generally assist in all aspects of the Group's operations
other than those performed by the Investment Adviser under the Investment
Advisory Agreements, by State Street Bank and Trust Company under the Custody
Agreements and by BISYS Ohio under the Fund Accounting Agreement. Under the
Administration Agreement, the Administrator may delegate all or any part of its
responsibilities thereunder.

Pursuant to its authority to delegate its responsibilities
under the Administration Agreement, the Administrator has engaged IMC to provide
certain services as Sub- Administrator to the Funds of the Group. IMC serves as
Sub-Administrator to the Group pursuant to a Sub-Administration Agreement dated
as of January 1, 1995, and receives a fee from the Administrator for its
services. Under the Sub-Administration Agreement, IMC will assist the
Administrator by providing, upon the request of the Administrator, services
which are incidental to, but not included among, its duties as Investment
Adviser to the Group. These services include preparation of reports and
documents necessary to calculate daily expense accruals, to update the financial
accounts and records of the Funds and to prepare certain federal and state tax
returns.

The Administrator receives a fee from each Fund for its
services as Administrator and expenses assumed pursuant to the Administration
Agreement, calculated daily and paid periodically, equal to the lesser of (a)
the fee calculated at the annual rate of 0.20% of that Fund's average daily net
assets, or (b) such other fee as may from time to time be agreed upon in writing
by the Group and the Administrator. As Sub-Administrator, IMC is entitled to
receive a fee from the Administrator of not more than 0.05% of each Fund's
average daily net assets. The

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<PAGE> 252

Administrator may voluntarily reduce all or a portion of its fee with respect to
any Fund in order to increase the net income of one or more of the Funds
available for distribution as dividends.

For the fiscal year ended May 31, 1999, the fiscal period
ended May 31, 1998 and the fiscal year ended June 30, 1997, the Administrator
collected and voluntarily reduced the amounts indicated below which were payable
to it with respect to its administrative services to the indicated Funds:

<TABLE>
<CAPTION>
Fiscal Year Ended Fiscal Period Ended Fiscal Year Ended
May 31 May 31 June 30
FUND 1999 1998 1997
--------------------------- ----------------------- ------------------------

U.S. Government Obligations Fund 695,128 69,506 854,229 83,726

Tax-Free Fund 315,780 31,575 325,122 31,933

Treasury Fund 952,742 476,362 808,404 403, 676

Small Capitalization Fund 1,597,709 -- 1,410,121 --

Mid Capitalization Fund 1,220,724 -- 1,306,285 --

Large Capitalization Fund 670,411 -- 681,310 --

International Discovery Fund 865,301 -- 858,253 --

Equity Income Fund 76,053 -- 867,179 --

Balanced Allocation Fund 519,977 -- 389,895 --

Bond Fund 960,550 240,142 1,089,049 270,497

Limited Maturity Bond Fund 341,570 85,394 306,698 76,205

Intermediate Government
Obligations Fund 360,580 90,147 457,683 113,651

U.S. Government Income Fund 445,707 111,428 428,868 106,625

National Tax Exempt Bond Fund 258,086 129,041 286,364 142,990

Michigan Municipal Bond Fund 460,912 230,452 463,836 231,610
</TABLE>

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Unless sooner terminated as provided therein, the
Administration Agreement and the Sub-Administration Agreement will continue in
effect until December 31, 1999. The Administration Agreement and the
Sub-Administration Agreement thereafter shall be renewed automatically for
successive five-year terms, unless written notice not to renew is given by the
non-renewing party to the other Party at least 60 days prior to the examination
of the then-current term. The Administration Agreement and the
Sub-Administration Agreement are each terminable with respect to a particular
Fund only upon mutual agreement of the parties to the Administration Agreement
(or Sub-Administration Agreement, as the case may be) and for cause (as defined
in the Administration Agreement) by the party alleging cause, on no less than 60
days' written notice by the Group's Board of Trustees or by the Administrator
(or Sub-Administrator, in the case of the Sub-Administration Agreement).

The Administration Agreement and the Sub-Administration
Agreement provide that the Administrator and the Sub-Administrator shall not be
liable for any error of judgment or mistake of law or any loss suffered by the
Group in connection with the matters to which the Administration Agreement or
the Sub-Administration Agreement relate, except a loss resulting from willful
misfeasance, bad faith, or gross negligence in the performance of its duties, or
from the reckless disregard by the Administrator or the Sub-Administrator of its
obligations and duties thereunder.

EXPENSES

The Investment Adviser and BISYS each bear all expenses in
connection with the performance of their services as Investment Adviser and
Administrator, respectively, other than the cost of securities (including
brokerage commissions) purchased for the Group. Each 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, SEC
fees, state securities qualification fees, costs of preparing and printing
prospectuses for regulatory purposes and for distribution to current
shareholders, outside auditing and legal administration fees, legal expenses,
advisory 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 each Fund's operation. As a general matter, expenses are
allocated to the Institutional Shares and the other classes of shares of the
Funds on the basis of the relative net asset value of each class. The various
classes may bear certain additional retail transfer agency expenses and may also
bear certain additional shareholder service and distribution costs incurred
pursuant to a Distribution and Shareholder Service Plan.

The Trustees reserve the right, subject to the receipt of
relevant regulatory approvals or rulings, if needed, to allocate certain other
expenses to the shareholders of a particular class, including the Institutional
Shares 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
distribution of materials such as shareholder reports, prospectuses and proxies
to current shareholders, Blue Sky registration fees

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incurred by a class of shares; SEC registration fees incurred by a class of
shares; expenses related to administrative personnel and services as required to
support the shareholders of a specific class; litigation or other legal expenses
relating solely to one class of shares; and Trustees' fees incurred as a result
of issues relating solely to one class of shares.

DISTRIBUTOR

SEI Investments Distribution Co. ("SEI"), a registered
broker/dealer, serves as Distributor to the Group pursuant to the Distribution
Agreement dated September 14, 1998 (the "Distribution Agreement"). SEI is
located at One Freedom Valley Drive, Oaks, Pennsylvania 19456. BISYS served as
the principal underwriter and distributor for the Group prior to September 14,
1998. Unless otherwise terminated, the Distribution Agreement remains in effect
for successive one-year periods ending September 14 of each year if approved at
least annually (i) by the Group's Board of Trustees or by the vote of a majority
of the outstanding shares of the Group, and (ii) by the vote of a majority of
the Trustees of the Group who are not parties to the Distribution Agreement or
interested persons (as defined in the 1940 Act) of any party to the Distribution
Agreement, cast in person at a meeting called for the purpose of voting on such
approval. The Distribution Agreement may be terminated in the event of any
assignment, as defined in the 1940 Act. Under the Distribution Agreement, SEI
acts as agent for the Funds in the distribution of their shares and, in such
capacity, solicits orders for the sale of shares, advertisers, 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, but may retain some or all of any sales change imposed upon Investor A or
Investor B Shares and may receive compensation under the Distribution and
Shareholder Service Plans described below.

For the Group's fiscal year ended May 31, 1999, total
commissions paid in connection with sales of the Group's shares were $
__________. Of that amount SEI retained $ __________ . For the period from June
1, 1998 to September 14, 1998, the fiscal period ended May 31, 1998 and the
fiscal year ended June 30, 1997 , total commissions paid in connection with
sales of the Group's shares were $ __________, $1,259,061 and $3,523,450 ,
respectively. Of that amount BISYS retained $ __________, $77,510 and $3,241,396
respectively.

As described in the Prospectuses, the Group has adopted an
Investor A Distribution and Shareholder Service Plan with respect to Investor A
Shares (the "Investor A Plan") and an Investor B Distribution and Shareholder
Service Plan with respect to Investor B Shares (the "Investor B Plan") (the
Investor A Plan and Investor B Plan together are hereinafter referred to as the
"Plans") pursuant to Rule 12b-1 of the 1940 Act. Pursuant to these Plans, the
Funds are authorized to pay or reimburse SEI, as Distributor, for certain
expenses that are incurred in connection with the provision of shareholder and
distribution services. Pursuant to the Investor A Plan, a Fund is authorized to
pay SEI, as Distributor of Investor A Shares, a distribution and shareholder
service fee in an amount not to exceed on an annual basis 0.25% of the average
daily net assets of Investor A Shares of a Fund. Such amount may be used by SEI
to pay banks and their affiliates (including National City Corporation and its
affiliates), and other institutions, including broker-dealers (collectively,
"Participating Organizations") for distribution

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or shareholder services provided or expenses incurred in provided such services
pursuant to an agreement between SEI and the Participating Organization.

Pursuant to the Investor B Plan, each Fund is authorized to
pay SEI, as Distributor of Investor B Shares, a distribution fee in an amount
not to exceed on an annual basis 0.75% of the average daily net asset value of
Investor B Shares of a Fund. Such amounts may be used by SEI to pay
Participating Organizations for distribution assistance or to reimburse them for
expenses incurred in providing distribution assistance pursuant to an agreement
between SEI and the Participating Organization. Also pursuant to the Investor B
Plan, a Fund is authorized to pay SEI a service fee in an amount not to exceed
on an annual basis 0.25% of the average daily net asset value of the Investor B
Shares of a Fund. Such amounts may be used to pay Participating Organizations
for shareholder services provided or expenses incurred in providing such
services.

As required by Rule 12b-1, the Investor A Plan was approved by
the holders of the Investor A Shares and by the Board of Trustees, including a
majority of the Trustees who are not interested persons of the Fund and who have
no direct or indirect financial interest in the operation of that Plan (the
"Independent Trustees"). The Investor B Plan has been approved by the Board of
Trustees, including a majority of the Independent Trustees, and by the initial
Investor B Shareholders of each Fund.

For the fiscal period from September 14, 1998 to May 31, 1999,
SEI received $ __________ pursuant to the Investor A Plan to compensate dealers
for their distribution and shareholder service assistance. For the fiscal period
from June 1, 1998 to September 14, 1998, BISYS received $ __________ pursuant to
the Investor A Plan to compensate dealers for their distribution and shareholder
service assistance.

For the fiscal period from September 14, 1998 to May 31, 1999,
SEI received $ ____________ pursuant to the Investor B Plan to compensate
dealers for their distribution and shareholder service assistance. For the
fiscal period from June 1, 1998 to September 14, 1998, BISYS received
$__________ pursuant to the Investor B Plan to compensate dealers for their
distribution and shareholder service assistance.

The Plans may be terminated as to a Fund by vote of a majority
of the Independent Trustees, or by vote of a majority of the outstanding shares
of the applicable class of the Fund. Any change in a Plan that would materially
increase the distribution cost to the Fund requires shareholder approval. The
Trustees review quarterly a written report of such costs and the purposes for
which such costs have been incurred. The Plan may be amended by vote of the
Trustees including a majority of the Independent Trustees, cast in person at a
meeting called for that purpose. For so long as the Plans are in effect,
selection and nomination of those Trustees who are not interested persons of the
Group shall be committed to the discretion of such Independent Trustees. All
agreements with any person relating to the implementation of a Plan may be
terminated at any time on 60 days' written notice without payment of any
penalty, by vote of a majority of the Independent Trustees or by a vote of the
majority of the outstanding shares of the applicable class of the Fund. The
Plans will continue in effect for successive one-year periods, provided that
each such continuance is specifically approved (i) by the vote of a

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majority of the Independent Trustees, and (ii) by a vote of a majority of the
entire Board of Trustees cast in person at a meeting called for that purpose.
The Board of Trustees has a duty to request and evaluate such information as may
be reasonably necessary for them to make an informed determination of whether
the Plans should be implemented or continued. In addition the Trustees in
approving the Plans must determine that there is a reasonable likelihood that
the Plans will benefit the Funds and their shareholders.

The Board of Trustees of the Group believes that the Plans are
in the best interests of the Funds since they encourage Fund growth. As the
Funds grow in size, certain expenses, and therefore total expenses per share,
may be reduced and overall performance per share may be improved.

As authorized by the Investor B Plan, SEI has entered into a
Service and Commission Agreement with Security Distributors, Inc. ("SDI"),
Security Benefit Group, Inc. ("SBG") and First of America Brokerage Service,
Inc. ("FOA Brokerage") which relates to purchases of Investor B Shares made
prior to January 1, 1995. Pursuant to the Service and Commission Agreement, FOA
Brokerage performs certain brokerage and related services in connection with the
purchase of Investor B Shares by its customers and maintains shareholder
accounts for such customers. Also pursuant to the Service and Commission
Agreement, SBG provides financing assistance, consistent with the Investor B
Plan, in connection with the services performed by FOA-Brokerage. Services
provided by FOA-Brokerage include placing orders to purchase Investor B Shares,
as agent for its customers, pursuant to the terms of its Dealer Agreement;
providing shareholder liaison services; responding to inquiries; providing such
information as FOA-Brokerage and SDI mutually determine to be appropriate in
order to properly (maintain shareholder accounts; and providing at its own
expense such office space equipment, facilities and personnel as may be
reasonably necessary or beneficial in order to provide such services to
customers. In consideration for such services, FOA-Brokerage receives from SBG a
commission rate of 4.00% of the net asset value of Investor B Shares purchased
by FOA-Brokerage as agent for its customers. SDI, either directly or through an
affiliate, receives amounts specified in the Shareholder Services and Financing
Agreement dated February 1, 1994 between SEI and SDI. Under that Agreement, SDI
receives compensation for financing assistance at the annual rate of up to 0.75%
of the average daily net assets of Investor B Shares of each Fund and
compensation for shareholder support services at an annual rate of up to 0.25%
of the average daily net assets of the Investor B Shares of each Fund.

CUSTODIAN, TRANSFER AGENT AND FUND ACCOUNTING SERVICES

National City Bank, 1900 East Ninth Street, Cleveland, Ohio
44114, an affiliate of IMC serves as Custodian to the Group pursuant to the
Custodian Services Agreement dated as of July 24, 1998. Union Bank of California
serves as Custodian for the International Discovery Fund pursuant to an
Agreement dated July 31, 1995. The Custodians' responsibilities include
safeguarding and controlling the Funds, cash and securities, handling the
receipt and delivery of securities, and collecting interest and dividends on the
Funds' investments.

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State Street Bank and Trust Company, P.O. Box 8590, Boston, MA
02266, serves as transfer agent and dividend disbursing agent (the "Transfer
Agent") for all Funds of the Group pursuant to the Transfer Agency Agreement
dated as of September 14, 1998, as amended. Pursuant to such Agreement, the
Transfer Agent, among other things, performs the following services: maintenance
of shareholder records for each of the Group's shareholders of record;
processing shareholder purchase and redemption orders; processing transfers and
exchanges of shares of the Group on the shareholder files and records;
processing dividend payments and reinvestments; and assistance in the mailing of
shareholder reports and proxy solicitation materials. For such services, the
Transfer Agent receives a fee based on the number of shareholders of record.
Prior to September 14, 1998, BISYS served as the Fund's transfer agent and
disbursing agent. For the fiscal period from September 14, 1998 to May 31, 1999,
State Street received $ __________ from the Group for services as Transfer Agent
for all portfolios of the Group. For the fiscal period from June 1, 1998 to
September 14, 1998, the fiscal period ended May 31, 1998 and the fiscal year
ended June 30, 1997 , BISYS received $ __________, $2,576,000, and $2,091,000,
respectively, from the Group for services as transfer agent for all portfolios
of the Group.

In addition, BISYS Ohio, 3435 Stelzer Road, Columbus, Ohio
43219 provides certain fund accounting services to the Group pursuant to a Fund
Accounting Agreement dated January 26, 1993, as amended. BISYS Ohio receives a
fee for such services, computed daily and paid periodically at an annual rate of
0.016% of the average daily net assets of each Money Market Fund and 0.022% of
the average daily net assets of each of the other Funds. Under such Agreement,
BISYS Ohio maintains the accounting books and records for the Funds, including
journals containing an itemized daily record of all purchases and sales of
portfolio securities, all receipts and disbursements of cash and all other
debits and credits, general and auxiliary ledgers reflecting all asset,
liability, reserve, capital, income and expense accounts, including interest
accrued and interest received, and other required separate ledger accounts;
maintains a monthly trial, balance of all ledger accounts; performs certain
accounting services for the Funds, including calculation of the daily net asset
value per share, calculation of the dividend and capital gain distributions, if
any, and of yield, reconciliation of cash movements with the Funds' Custodian,
affirmation to the Funds' Custodian of all portfolio trades and cash
settlements, verification and reconciliation with the Funds, Custodian of all
daily trade activity; provides certain reports; obtains dealer quotations,
prices from a pricing service or matrix prices on all portfolio securities in
order to mark the portfolio to the market; and prepares an interim balance
sheet, statement of income and expense, and statement of changes in net assets
for the Funds. The Funds reimburse National City Bank for its direct and
indirect costs and expenses incurred in rendering custodial services, except
that the costs and expenses borne by each Fund in any year may not exceed .020%
of each portfolio's first $100 million of average daily net assets, .010% of
each portfolio's next $650 million of average daily net assets and .008% of the
average daily net assets of each portfolio which exceed $750 million.

For such services, for fiscal year ended May 31, 1999, the
fiscal period ended May 31, 1998 and the fiscal year ended June 30, 1997, BISYS
Ohio received $ __________, $1,746,000 and $1,722,000, respectively, from the
Group.

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INDEPENDENT AUDITORS

The Financial Statements of the Group as of May 31, 1999,
which appear in the Group's Annual Report dated May 31, 1999, have been audited
by PricewaterhouseCoopers LLP, 100 East Broad Street, Columbus, Ohio 43215,
independent auditors. The Financial Statements are incorporated herein by
reference to the Annual Report in reliance upon such report and on the authority
of PricewaterhouseCoopers LLP as experts in auditing and accounting.

LEGAL COUNSEL

Drinker Biddle & Reath LLP, One Logan Square, 18th and Cherry Streets,
Philadelphia, PA 19103-6996 is counsel to the Group and will pass upon certain
legal matters pertaining to the shares offered hereby.

ADDITIONAL INFORMATION

DESCRIPTION OF SHARES

The Parkstone Group of Funds is a Massachusetts business trust. The
Group was organized on March 25, 1987, and the Group's Declaration of Trust was
filed with the Secretary of State of the Commonwealth of Massachusetts on March
27, 1987. The Declaration of Trust authorizes the Board of Trustees to issue an
unlimited number of shares, which are units of beneficial interest, without par
value. The Group presently has sixteen series of shares, representing interests
in each series of the Group. The shares of each of the Funds of the Group, other
than the Money Market Funds are offered in three separate classes: Investor A
Shares, Investor B Shares and Institutional Shares. Shares of the Money Market
Funds are offered in two separate classes: Investor A Shares and Institutional
Shares, except for the Prime Obligations Fund which offers Investor A Shares,
Investor B Shares and Institutional Shares. The Group's Declaration of Trust
authorizes the Board of Trustees to classify or re-classify any unissued shares
of the Group into one or more additional series by setting or changing in any
one or more respects their respective preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption.

Shares of each of the Group's Funds have no subscription or pre-emptive
rights and only such conversion or exchange rights as the Board of Trustees may
grant in its discretion. When issued for payment as described in the
Prospectuses and this Statement of Additional Information, shares of the Group's
Funds will be fully paid and non-assessable. In the event of a liquidation or
dissolution of the Group or an individual Fund, shareholders of a Fund are
entitled to receive the assets available for distribution belonging to that Fund
at a proportionate distribution, based upon the relative asset values of the
respective Funds, of any general assets not belonging to any particular Fund
which are available for distribution.

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Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the shareholders of the outstanding voting securities of an
investment company such as the Group shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each Fund affected by the matter. For purposes of
determining whether the approval of a majority of the outstanding shares of a
Fund will be required in connection with a matter, a Fund will be deemed to be
affected by a matter unless it is clear that the interests of each Fund in the
matter are identical or that the matter does not affect any interest of the
Fund. Under Rule 18f-2, the approval of an investment advisory agreement or any
change in fundamental investment policy submitted to shareholders would be
effectively acted upon with respect to a Fund only if approved by majority of
the outstanding shares of such Fund. However, Rule 18f-2 also provides that the
ratification of independent accountants, the approval of principal underwriting
contracts, and the election of Trustees may be effectively acted upon by
shareholders of the Group voting without regard to a Fund.

Shareholders are entitled to one vote for each dollar value invested
and fractional votes for any fraction of a dollar invested and will vote in the
aggregate, and not by class except as otherwise required by the 1940 Act or
other applicable law, or when the matter to be voted upon affects only interests
of the shareholders of a particular class. Voting rights are not cumulative,
and, accordingly, the holders of more than 50% of the Group's outstanding shares
may elect all of the Trustees, irrespective of the votes of other shareholders.

The Group does not intend to hold annual shareholder meetings except as
may be required by the 1940 Act. The Group's Declaration of Trust provides that
a meeting of shareholders shall be called by the Board of Trustees upon written
request of shareholders owning at least 10% of the outstanding shares of the
Group entitled to vote.

The Group's Declaration of Trust authorizes the Board of Trustees,
without shareholder approval (unless otherwise required by applicable law) to
(a) sell and convey the assets of a class of shares to another management
investment company for consideration which may include securities issued by the
purchaser and, in connection therewith, to cause all outstanding shares of such
class to be redeemed at a price which is equal to their net asset value and
which may be cash or by distribution of the securities or other consideration
received from the sale and conveyance; (b) sell and convert the assets belonging
to a class of shares into money and, in connection therewith, to cause all
outstanding shares of such class to be redeemed at their net asset value; or (c)
combine the assets belonging to a class of shares with the assets belonging to
one or more other classes of shares of the Group if the Board of Trustees
reasonably determines that such combination will not have a material adverse
effect on the shareholders of a class participating in such combination and, in
connection therewith, to cause all outstanding shares of any class to be
redeemed at their net asset value or converted into shares of another class of
the Group's shares at their net asset value. However, the exercise of such
authority by the Board of Trustees may be subject to certain restrictions under
the 1940 Act. The Board of Trustees may authorize the termination of any class
of shares after the assets belonging to such class have been distributed to its
shareholders.

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VOTE OF A MAJORITY OF THE OUTSTANDING SHARES

As used in the Prospectuses and the Statement of Additional
Information, a "vote of a majority of the outstanding shares" of the Group or
the Fund, means the affirmative vote, at an annual or special meeting of
shareholders duly called, of the lesser of: (a) 67% or more of the votes of
shareholders of the Group or the Fund present at such meeting at which the
holders of more than 50% of the votes attributable to the shareholders of record
of the Group or the Fund are represented in person or by proxy, or (b) the
holders of more than 50% of the outstanding votes of shareholders of the Group
or the Fund.

SHAREHOLDER AND TRUSTEE LIABILITY

Under Massachusetts law, holders of units of interest in a business
trust may, under certain circumstances, be held personally liable as partners
for the obligations of the trust. However, the Group's Declaration of Trust
provides that shareholders shall not be subject to any personal liability for
the obligations of the Group, and that every written agreement, obligation,
instrument, or undertaking made by the Group shall contain a provision to the
effect that the shareholders are not personally liable thereunder. The
Declaration of Trust provides for indemnification out of the trust property of
any shareholder held personally liable solely by reason of his or her being or
having been a shareholder. The Declaration of Trust also provides that the Group
shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Group, and shall satisfy any
judgment thereon. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which the Group
itself would be unable to meet its obligations.

The Declaration of Trust states further that no Trustee, officer, or
agent of the Group shall be personally liable in connection with the
administration or preservation of the assets of the trust or the conduct of the
Group's business; nor shall any Trustee, officer, or agent be personally liable
to any person for any action or failure to act except on his own bad faith,
willful-misfeasance, gross negligence, or reckless disregard of his duties. The
Declaration of Trust also provides that all persons having any claim against the
Trustees or the Group shall look solely to the assets of the trust for payment.

ADDITIONAL TAX INFORMATION

Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code, and to distribute out its income to
shareholders each year, so that the Fund itself generally will be relieved of
federal income and excise taxes. If a Fund were to fail to so qualify: (1) the
Fund would be taxed at regular corporate rates without any deduction for
distributions to shareholders; and (2) shareholders would be taxed as if they
received ordinary dividends, although corporate shareholders could be eligible
for the dividends received deduction.

A non-deductible excise tax is also imposed on regulated investment
companies that do not distribute in each calendar year (regardless of whether
they otherwise have a non-calendar

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taxable year) an amount equal to 98% of their ordinary income for the calendar
year plus 98% of their capital gain net income for the one-year period ending on
October 31 of such calendar year. The balance of such income must be distributed
during the next calendar year. For the foregoing purposes, a Fund is treated as
having distributed any amount on which it is subject to income tax for any
taxable year ending in such calendar year. If distributions during a calendar
year were less than the required amount, a particular Fund would be subject to a
non-deductible excise tax equal to 4% of the deficiency.

Each of the Funds will be required in certain cases to withhold and
remit to the United States Treasury 31% of taxable dividends paid to a
shareholder who has provided either an incorrect tax identification number or no
number at all, or who is subject to withholding by the Internal Revenue Service
for failure to report properly payments of interest or dividends.

The tax principles applicable to transactions in financial instruments
and futures contacts and options that may be engaged in by a Fund, and
investments in passive foreign investment companies ("PFICs"), are complex and,
in some cases, uncertain. Such transactions and investments may cause a Fund to
recognize taxable income prior to the receipt of cash, thereby requiring the
Fund to liquidate other positions, or to borrow money, so as to make sufficient
distributions to shareholders to avoid corporate-level tax. Moreover, some or
all of the taxable income recognized may be ordinary income or short-term
capital gain, so that the distributions may be taxable to shareholders as
ordinary income.

In addition, in the case of any shares of a PFIC in which a Fund
invests, the Fund may be liable for corporate-level tax on any ultimate gain or
distributions on the shares if the Fund fails to make an election to recognize
income annually during the period of its ownership of the shares.

Information set forth in the Prospectuses and this Statement of
Additional Information which relates to federal taxation is only a summary of
some of the important federal tax considerations generally affecting purchasers
of shares of the Funds. No attempt has been made to present a detailed
explanation of the federal income tax treatment of a Fund or its shareholders
and this discussion is not intended as a substitute for careful tax planning.
Accordingly, potential purchasers of shares of a Fund are urged to consult their
tax advisers with specific reference to their own tax situation. In addition,
the tax discussion in the Prospectuses and this Statement of Additional
Information is based on tax laws and regulations which are in effect on the date
of the Prospectuses and this Statement of Additional Information; such laws and
regulations may be changed by legislative or administrative action.

ADDITIONAL TAX INFORMATION CONCERNING THE EXEMPT FUNDS

As indicated in the Prospectuses, the Exempt Funds are designed to
provide shareholders with current tax-exempt interest income. The Exempt Funds
are not intended to constitute balanced investment programs and are not designed
for investors seeking capital appreciation or maximum tax-exempt income
irrespective of fluctuations in principal. Shares of the Exempt Funds would not
be suitable for tax-exempt institutions and may not be suitable for retirement

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plans qualified under Section 401 of the Code, H.R. 10 plans and individual
retirement accounts, since such plans and accounts are generally tax-exempt and,
therefore, would not gain any additional benefit from the Exempt Funds,
dividends being tax-exempt; furthermore, such dividends would be ultimately
taxable to the beneficiaries when distributed to them. In addition, the Exempt
Funds may not be appropriate investments for entities which are "substantial
users," or "related persons" thereof, of facilities financed by private activity
bonds held by an Exempt Fund. "Substantial user" is defined under U.S. Treasury
Relations to include a non-exempt person who regularly uses a part of such
facilities in his or her trade or business and whose gross revenues derived with
respect to the facilities financed by the issuance of bonds represent more than
50% of the total revenues derived by any users of such facilities, or who
occupies more than 5% of the usable area of such facilities or for whom such
facilities or a part thereof were specifically constructed, reconstructed or
acquired. "Related persons" include certain related natural persons, affiliated
corporations, a partnership and its partners and an S Corporation and its
shareholders.

The percentage of total dividends paid by an Exempt Fund with respect
to any taxable year which qualifies as federal exempt interest dividends will be
the same for all shareholders receiving dividends during such year. In order for
an Exempt Fund to pay exempt-interest dividends during any taxable year, at the
close of each fiscal quarter, at least 50% of the aggregate value of the Exempt
Fund must consist of exempt-interest obligations. In addition, the Exempt Fund
must distribute 90% of the aggregate exempt-interest income and 90% of the
investment company taxable income earned by it during the taxable year. After
the close of an Exempt Fund's taxable year, the Exempt Fund will notify each
shareholder of the portion of the dividends paid by the Exempt Fund to the
shareholder with respect to such taxable year which constitutes an
exempt-interest dividend. However, the aggregate amount of dividends as
designated cannot exceed the excess of the amount of interest exempt from tax
under Section 103 of the Code received by the Exempt Fund during the taxable
year over any amounts disallowed as deductions under Section 265 and 171(a)(2)
of the Code.

As indicated in the Prospectuses, each Exempt Fund may acquire rights
regarding specified portfolio securities under puts. See "INVESTMENTS AND RISKS
Additional Information on Portfolio Instruments-Puts" in this Statement of
Additional Information. The policy of each Exempt Fund is to limit its
acquisition of puts to those under which it will be treated for federal income
tax purposes as the owner of the Exempt Securities acquired subject to the put
and the interest on the Exempt Securities will be tax-exempt to it. Although the
Internal Revenue Service has issued a published ruling that provides some
guidance regarding the tax consequences of the purchase of puts that each Exempt
Fund could acquire under the 1940 Act. Therefore, although each Exempt Fund will
only acquire a put after concluding that it will have the tax consequences
described above, the Internal Revenue Service could reach a different
conclusion.

The foregoing is only a summary of some of the important federal tax
considerations generally affecting purchasers of shares of the Exempt Funds. No
attempt has been made to present a detailed explanation of the federal income
tax treatment of each Exempt Fund or its shareholders or of Michigan state
income tax treatment of the Michigan

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Municipal Bond Fund or its shareholders, and this discussion is not intended as
a substitute for careful tax planning. Accordingly potential purchasers of
shares of these Funds are urged to consult their own tax advisers with specific
reference to their own tax situation. In addition, the foregoing discussion is
based on tax laws and regulations which are in effect on the date of this
Statement of Additional Information; such laws and regulations may be changed by
legislative or administrative action.

ADDITIONAL TAX INFORMATION CONCERNING THE INTERNATIONAL DISCOVERY FUND

If, for any reason, the International Discovery Fund were treated as a
United Kingdom ("UK") resident, the worldwide income and capital gains of the
International Discovery Fund would be subject to UK tax. If, for any reason, the
International Discovery Fund were treated as having a permanent establishment in
the UK, the Fund's UK source income (although not its capital gains), if any,
would become subject to UK tax and certain other advantages otherwise available
to the International Discovery Fund under the double tax treaty between the UK
and the U.S. would not be available. Provided that the International Discovery
Fund is not treated as being resident or having a permanent establishment in the
UK, such Funds will not incur any UK tax liability with respect to the types of
income or gains that they are likely to receive, except with respect to income
on UK securities held in the portfolios of the International Discovery Fund. The
Group believes, based on the advice of special counsel, that it would be highly
unlikely for the Fund to be deemed or treated as being UK residents for UK tax
purposes or having a permanent establishment in the UK pursuant to the double
tax treaty between the U.S. and the UK as a result of the activities of both
Funds' Investment Adviser.

PERFORMANCE INFORMATION

From time to time, performance information for the Funds
showing their average annual total return, aggregate total return and/or yield
may be presented in advertisements, sales literature and shareholder reports.
Such performance figures are based on historical earnings and are not intended
to indicate future performance. Average annual total return of a class of shares
in a Fund will be calculated for the period since the establishment of the Funds
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 a Fund at the beginning by the relevant period to the
redemption value of the investment at the end of the period (assuming immediate
reinvestment of any dividends or capital gain distributions) and annualizing the
result. Aggregate total return is calculated similarly to average annual total
return except that the return figure is aggregated over the relevant period
instead of annualized. Yield of a class of shares will be computed by dividing a
class of shares, net investment income per share earned during a recent
one-month period by that class of shares' per share maximum offering price
(reduced by any undeclared earned income expected to be paid shortly as a
dividend) on the last day of the period and annualizing the result. Each 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 Funds may present their
respective distribution rates for a class of shares in shareholder reports and
in supplemental sales literature which is

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<PAGE> 264

accompanied or preceded by a prospectus. Distribution rates will be computed by
dividing the distribution per share of a class made by a Fund over a
twelve-month period by the maximum offering price per share. The calculation of
income in the distribution rate includes both income and capital gain dividends
and does not reflect unrealized gains or losses, although a Fund may also
present a distribution rate excluding the effect of capital gains. The
distribution rate differs from the yield, because it includes capital gains
which are often non-recurring in nature, whereas yield does not include such
items. Distribution rates may also be presented excluding the effect of a sales
charge, if any.

Standardized yield and total return quotations will be
computed separately for Investor A Shares and the other classes of the Funds.
Because of differences in the fees and/or expenses borne by different classes of
shares of the Funds, the net yield and total return on Investor A Shares may be
different from that for another class of the same Fund. For example, net yield
and total return on Investor A Shares is expected, at any given time, to be
lower than the net yield and total return on Institutional Shares of the same
period.

YIELDS OF THE MONEY MARKET FUNDS

For the seven-day period ended May 31, 1999, the yield and compounded
effective yield for the Investor A Shares of the Prime Obligations Fund, U.S.
Government Obligations Fund, the Treasury Fund and the Tax-Free Fund were,
respectively: _____% and _____%; _____% and _____ %; _____% and _____%; and
_____% and _____%. For the thirty-day period ended May 31, 1999, the yield and
compounded effective yield for the Investor A Shares of the Prime Obligations
Fund, U.S. Government Obligations Fund, the Treasury Fund and the Tax-Free Fund
were, respectively: ____% and ____%; ____% and ____%; ____% and ____%; and
____% and ____%.

For the seven-day period ended May 31, 1999, the yield and compounded
effective yield for the Institutional Shares of the Prime Obligations Funds,
U.S. Government Obligations Fund, the Treasury Fund and the Tax-Free Fund were,
respectively: _____% and _____%; _____% and _____%; _____% and _____%; and
_____% and _____%. For the thirty-day period ended May 31, 1999, the yield and
compounded effective yield for the Institutional Shares of the Prime Obligations
Fund, the U.S. Government Obligations Fund, the Treasury Fund and the Tax-Free
Fund were, respectively: _____% and _____%; _____% and _____%; _____% and
_____%; and _____% and _____%.

The standardized seven-day yield for each of the Money Market Funds is
computed: (1) by determining the net change, exclusive of capital changes and
income other than investment income, in the value of a hypothetical pre-existing
account in that Fund having a balance of one share at the beginning of the
seven-day base period, subtracting a hypothetical charge reflecting deductions
from shareholder accounts; (2) dividing the difference by the value of the
account at the beginning of the base period to obtain the base period return;
and (3) annualizing the results (i.e., multiplying the base period return by
(365/7)). The net change in the account value of each of the Money Market Funds
includes the value of additional shares purchased with dividends from the
original share, dividends declared on both the original share and any additional
shares,

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<PAGE> 265

and all fees, other than non-recurring account or sales charges charged to all
shareholder accounts in proportion to the length of the base period and assuming
that Fund's average account size. The capital changes to be excluded from the
calculation of the net change in account value are net realized gains and losses
from the sale of securities and unrealized appreciation and depreciation.

The effective yield for each of the Money Market Funds is computed by
compounding the base period return, as calculated above by adding one to the
base period return, raising the sum to a power equal to 365 divided by seven and
subtracting one from the result. Each of the thirty-day yields and effective
yields is calculated as described above except that the base period is 30 days
rather than 7 days.

For the seven-day period ended May 31, 1999, the tax-equivalent yield
(using a federal income tax rate of 39.6%) of the Investor A Shares of the
Tax-Free Fund was _____% and its tax-equivalent effective yield (using a federal
income tax rate of 39.6%) for the same period was _____%. For the thirty-day
period ended May 31, 1999, the tax-equivalent yield of the Investor A Shares of
the Tax-Free Fund (using a federal income tax rate of 39.6%) was _____% and its
tax-equivalent effective yield (using a federal income tax rate of 39.6%) for
the same period was _____%.

For the seven-day period ended May 31, 1999, the tax-equivalent yield
(using a federal income tax rate of 39.6%) of the Institutional Shares of the
Tax-Free Fund was _____% and its tax-equivalent effective yield (using a federal
income tax rate of 39.6%) for the same period was _____%. For the thirty-day
period ended May 31, 1999, the tax-equivalent yield of the Institutional Shares
of the Tax-Free Fund (using a federal income tax rate of 39.6%) was _____% and
its tax-equivalent effective yield (using a federal income tax rate of 39.6%)
for the same period was _____%.

The Tax-Free Fund's tax-equivalent yields were computed by dividing
that portion of the Tax-Free Fund's yield which is tax-exempt by one minus the
stated income tax rate and adding the result to that portion, if any, of the
Tax-Free Fund's yield that is not tax-exempt. The Tax-Free Fund's tax-equivalent
effective yields were computed by dividing that portion of the effective yield
which is tax-exempt by one minus the stated income tax rate and adding to that
result the portion, if any, of the Tax-Free Fund's effective yield that is not
tax-exempt.

At any time in the future, yields may be higher or lower than past
yields and there can be no assurance that any historical results will continue.

YIELDS OF THE NON-MONEY MARKET FUNDS

As summarized in the Prospectuses under the heading "PERFORMANCE
INFORMATION," yields of each of the Non-Money Market Funds will be computed by
analyzing net investment income per share for a recent thirty-day period and
dividing that amount by a Fund share's maximum offering price (reduced by any
undeclared earned income expected to be paid shortly as a dividend) on the last
trading day of that period. Net investment

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<PAGE> 266

income will reflect amortization of any market value premium or discount of
fixed income securities (except for obligations backed mortgages or other
assets) and may include recognition of a pro rata portion of the stated dividend
rate of dividend paying portfolio securities. The yield of each of the Non-Money
Market Funds will vary from time depending upon market conditions, the
composition of a Fund's portfolio and operating expenses of the Group allocated
to each Fund. These factors and possible differences in the methods used in
calculating yield should be considered when comparing a Fund's yield to yields
published for other investment companies and other investment vehicles. Yield
should also be considered relative to changes in the value of the Fund's shares
and to the relative risks associated with the investment objectives and policies
of each of the Funds.

In addition, for the Municipal Bond Fund and the Michigan Municipal
Bond Fund, tax-equivalent yields will be computed by dividing that portion of a
Fund's yield (as computed above) which is tax-exempt by one minus a stated
income tax rate and adding that result to that portion, if any, of the yield of
that Fund which is not tax exempt.

For the 30-day period ended May 31, 1999, the yields, calculated as set
forth above, for the Funds were as follows:

<TABLE>
<CAPTION>
Investor A Shares Investor Investor I
With Sales Load B Shares Shares
<S> <C> <C> <C>
Parkstone Small Capitalization Fund % % %
Parkstone Mid Capitalization Fund % % %
Parkstone Large Capitalization Fund % % %
Parkstone International Discovery Fund % % %
Parkstone Equity Income Fund % % %
Parkstone Balanced Allocation Fund % % %
Parkstone Bond Fund % % %
Parkstone Limited Maturity Fund % % %
Parkstone Intermediate Government Obligations Fund % % %
Parkstone U.S. Government Income Fund % % %
</TABLE>

The tax-equivalent yields for the Municipal Bond Funds for the 30-day
period ended May 31, 1999 (assuming a 39.6% federal tax rate for the Municipal
Bond Fund and a 4.4% Michigan income tax rate for the Michigan Municipal Bond
Fund) were as follows:

<TABLE>
<CAPTION>
Investor A Shares Investor Institutional
With Sales Load B Shares Shares
<S> <C> <C> <C>
Parkstone National Tax Exempt Bond Fund % % %
Parkstone Michigan Municipal Bond Fund % % %
</TABLE>

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<PAGE> 267

CALCULATION OF TOTAL RETURN

As summarized in the Prospectuses under the heading "PERFORMANCE
INFORMATION," average annual total return is a measure of the change in value of
an investment in a Fund over the period covered, which assumes any dividends or
capital gains distributions are reinvested in the Fund immediately rather than
paid to the investor in cash. Average annual total return will be calculated by:
(1) adding to the total number of shares purchased by a hypothetical $1,000
investment in the Fund and (less the maximum sales charge, if any) all
additional shares which would have been purchased if all dividends and
distributions paid or distributed during the period had been immediately
reinvested; (2) calculating the value of the hypothetical initial investment of
$1,000 as of the end of the period by multiplying the total number of shares
owned at the end of the period by the net asset value per share on the last
trading day of the period; (3) assuming redemption at the end of the period; and
(4) dividing this account value for the hypothetical investor by the initial
$1,000 investment and annualizing the result for periods of less than one year.

For the one-year period ended May 31, 1999, the five-year period ended
June 30, 1999, and the period from commencement of operations to May 31, 1999,
the average annual total returns for the Investor A Shares of the following
Funds, assuming the imposition of the maximum sales load, were: Small
Capitalization Fund, _____%, _____% and _____%; Mid Capitalization Fund, _____%,
_____% and _____%; Equity Income Fund, _____%, _____% and _____%; Balanced
Allocation Fund, _____%, _____% and _____%; Bond Fund, _____%, _____% and
_____%; Limited Maturity Bond Fund, _____%, _____% and _____%; Intermediate
Government Obligations Fund, _____%, _____% and _____%; National Tax Exempt Bond
Fund, _____%, _____% and _____% and Michigan Municipal Bond Fund, _____%, _____%
and _____%. For the one-year period ended May 31, 1999, and the period from
commencement of operations to May 31, 1999, the average annual total returns for
the Investor A Shares of the following Funds, assuming the imposition of the
maximum sales load, were: Large Capitalization Fund, _____% and _____%;
Government Income Fund, _____% and _____%; and International Discovery Fund,
_____% and _____%.

For the one-year period ended May 31, 1999, the five-year period ended
June 30, 1999 and the period from the commencement of operations to May 31,
1999, the average annual total returns for the Investor A Shares of the
following Funds, excluding the effect of any sales charges, were: Small
Capitalization Fund, _____%, _____% and _____%; Mid Capitalization Fund, _____%,
_____% and _____%; Equity Income Fund, _____%, _____% and _____%; Balanced
Allocation Fund, _____%, _____% and _____%; Bond Fund, _____%, _____% and
_____%; Limited Maturity Bond Fund, _____%, _____% and _____%; Intermediate
Government Obligations Fund, _____%, _____% and _____%; National Tax Exempt
Bond Fund, _____%, _____% and _____%; and Michigan Municipal Bond Fund, _____%,
_____% and _____%. For the one-year period ended May 31, 1999, and the period
from commencement of operations to May 31, 1999, the average annual total
returns for the Investor A Shares of the following Funds, excluding the effect
of any sales charges, were: Large Capitalization Fund, _____% and ______%;
Government Income Fund, _____% and _____%; and International Discovery Fund,
_____% and _____%.

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<PAGE> 268

For the one-year period ended May 31, 1999 and the period from the
commencement of operations to May 31, 1999, the average annual total returns for
the Investor B Shares of the following Funds, assuming the imposition of the
maximum contingent deferred sales charges, were: Small Capitalization Fund,
_____% and _____%; Mid Capitalization Fund, _____% and _____%; Large
Capitalization Fund, _____% and _____%; Equity Income Fund, _____% and _____%;
Balanced Allocation Fund, _____% and _____%; Bond Fund _____% and _____%;
Limited Maturity Bond Fund _____% and _____%; Intermediate Government
Obligations Fund _____% and _____%; Government Income Fund, _____% and _____%;
National Tax Exempt Bond Fund _____% and _____%; Balanced Allocation Fund,
_____% and _____%; and Michigan Municipal Bond Fund _____% and _____%.

For the one-year period ended May 31, 1999, and the period from
commencement of operations to May 31, 1999, the average annual total returns for
the Investor B Shares of the following Funds, excluding the effect of any
contingent deferred sales charges, were: Small Capitalization Fund, _____% and
_____%; Mid Capitalization Fund, _____% and _____%; Large Capitalization Fund,
_____% and _____%; International Discovery Fund, _____% and _____%; Equity
Income Fund, _____% and _____%; Balanced Allocation Fund, _____% and _____%;
Government Income Fund, _____% and _____%; Bond Fund, _____% and _____%; Limited
Maturity Bond Fund, _____% and _____%; Intermediate Government Obligations Fund,
_____% and _____%; Municipal Bond Fund ______% and _____%; and Michigan
National Tax Exempt Bond Fund, _____% and _____%.

For the one-year period ended May 31, 1999, the five-year period ended
May 31, 1999, and the period from commencement of operations to May 31, 1999,
the average annual total returns for the Institutional Shares of the following
Funds were: Small Capitalization Fund, _____%, _____% and _____%; Mid
Capitalization Fund, _____%, _____% and _____%; Equity Income Fund, _____%,
_____% and _____%; Balanced Allocation Fund, _____%, _____% and _____%; Bond
Fund, _____%, _____% and _____%; Limited Maturity Bond Fund, _____%, _____% and
_____%; Intermediate Government Obligations Fund, _____%, _____% and _____%;
National Tax Exempt Bond Fund, _____%, _____% and _____%; and Michigan Municipal
Bond Fund, _____%, _____% and _____%. For the one-year period ended May 31,
1999, the average annual total returns of the Institutional Shares of the
following Funds were: Government Income Fund, _____%; and International
Discovery Fund, _____%.

DISTRIBUTION RATES

Each of the Funds may from time to time advertise current distribution
rates which are calculated in accordance with the method disclosed in the
Prospectuses. For the fiscal period ended May 31, 1999, the distribution rates
for the Investor A Shares of the Funds, including the effect of sales loads and
capital gains, were as follows: Small Capitalization Fund, _____%; Mid
Capitalization Fund, _____%; Large Capitalization Fund, _____%; International
Discovery Fund, _____%; Equity Income Fund, _____%; Balanced Allocation Fund,
_____%; Bond Fund, _____%; Limited Maturity Bond Fund, _____%; Intermediate
Government Obligations Fund, _____%; Government Income Fund, _____%; National
Tax Exempt Bond Fund, _____%; and Michigan

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<PAGE> 269

Municipal Bond Fund, _____%. For the fiscal period ended May 31, 1999, the
distribution rates, including the effect of sales loads but excluding the effect
of capital gains, for the Investor A Shares of the Funds were as follows: Small
Capitalization Fund, _____%; Mid Capitalization Fund, _____%; Large
Capitalization Fund, _____%; International Discovery Fund, _____%; Equity Income
Fund, _____%; Balanced Allocation Fund, _____%; Bond Fund, _____%; Limited
Maturity Bond Fund, _____%; Intermediate Government Obligations Fund, _____%;
Government Income Fund, _____%; National Tax Exempt Bond Fund, _____%; and
Michigan Municipal Bond Fund, _____%.

Excluding the effect of sales loads but including the effect of capital
gains, for the fiscal period ended May 31, 1999, the distribution rates for the
Investor A Shares of the Funds were as follows: Small Capitalization Fund,
_____%; Mid Capitalization Fund, _____%; Large Capitalization Fund, _____%;
International Discovery Fund, _____%; Equity Income Fund, _____%; Balanced
Allocation Fund, _____%; Bond Fund, _____%; Limited Maturity Bond Fund, _____%;
Intermediate Government Obligations Fund, _____%; Government Income Fund,
_____%; Municipal Bond Fund, _____%; and Michigan Municipal Bond Fund, _____%.
For the fiscal period ended May 31, 1999, the distribution rates, excluding the
effect of capital gains and sales loads for the Investor A Shares of the Funds
were as follows: Small Capitalization Fund, _____%; Mid Capitalization Fund,
_____%; Large Capitalization Fund, _____%; International Discovery Fund, _____%;
Equity Income Fund, _____%; Balanced Allocation Fund, _____%; Bond Fund, _____%;
Limited Maturity Bond Fund, _____%; Intermediate Government Obligations Fund,
_____%; Government Income Fund, _____%; National Tax Exempt Bond Fund, _____%;
and Michigan Municipal Bond Fund, _____%.

Distribution rates for the Investor B Shares of the Funds, including
the effect of sales loads are not calculated by the Group, nor are they
advertised. Distribution rates for the Investor B Shares of the Funds, excluding
the effect of sales loads but including the effect of capital gains, for the
fiscal period ended May 31, 1999, were as follows: Small Capitalization Fund,
_____%; Mid Capitalization Fund, _____%; Large Capitalization Fund, _____%;
International Discovery Fund, _____%; Equity Income Fund, _____%; Balanced
Allocation Fund, _____%; Bond Fund, _____%; Limited Maturity Bond Fund, _____%;
Intermediate Government Obligations Fund, _____%; Government Income Fund,
_____%; Municipal Bond Fund, _____%; and Michigan Municipal Bond Fund, _____%.
For the fiscal period ended May 31, 1999, the distribution rates, excluding the
effect of capital gains and sales loads for the Investor B Shares of the Funds
were as follows: Small Capitalization Fund, _____%; Mid Capitalization Fund,
_____%; Large Capitalization Fund, _____%; International Discovery Fund, _____%;
Equity Income Fund, _____%; Balanced Allocation Fund, _____%; Bond Fund, _____%;
Limited Maturity Bond Fund, _____%; Intermediate Government Obligations Fund,
_____%; Government Income Fund, _____%; National Tax Exempt Bond Fund, _____%;
and Michigan Municipal Bond Fund, _____%.

For the fiscal period ended May 31, 1999, the distribution rates,
including the effect of capital gains, for the Institutional Shares of the Funds
were as follows: Prime Obligations Fund, _____%; Small Capitalization Fund,
_____%; Mid Capitalization Fund, _____%; Large Capitalization Fund, _____%;
International Discovery Fund, _____%; Equity Income Fund,

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<PAGE> 270

_____%; Balanced Allocation Fund, _____%; Bond Fund, _____%; Limited Maturity
Bond Fund, _____%; Intermediate Government Obligations Fund, _____%; Government
Income Fund, _____%; Municipal Bond Fund, _____%; and Michigan Municipal Bond
Fund, _____%. For the fiscal period ended May 31, 1999, the distribution rates,
excluding the effect of capital gains, for the Institutional Shares of the Funds
were as follows: Prime Obligations Fund, _____%; Small Capitalization Fund,
_____%; Mid Capitalization Fund, _____%; Large Capitalization Fund, _____%;
International Discovery Fund, _____%; Equity Income Fund, _____%; Balanced
Allocation Fund, _____%; Bond Fund, _____%; Limited Maturity Bond Fund, _____%;
Intermediate Government Obligations Fund, _____%; Government Income Fund,
_____%; National Tax Exempt Bond Fund, _____% and Michigan Municipal Bond Fund,
_____%.

PERFORMANCE COMPARISONS

Investors may judge the performance of the Funds by comparing their
performance to the performance of other mutual funds or mutual fund portfolios
with comparable investment objectives and policies through various mutual fund
or market indices such as the Morgan Stanley Capital International EAFE Index
and those prepared by Dow Jones & Co., Inc., Standard & Poor's Corporation,
Shearson Lehman Brothers, Inc. and The Russell 2000 Index and to data prepared
by Lipper, Inc., a widely recognized independent service which monitors the
performance of mutual funds, Morningstar, Inc. and the Consumer Price Index.
Comparisons may also be made to indices or data published in Donoghue's MONEY
FUND REPORT of Holliston, Massachusetts 01746, a nationally recognized money
market fund reporting service, Money Magazine, Forbes, Barron's, The Wall Street
Journal, The Bond Buyer's Weekly 20-Bond Index, The Bond Buyer's Index, The Bond
Buyer, The New York Times, Business Week, Pensions and Investments and U.S.A.
Today. In addition to performance information, general information about these
Funds that appears in a publication such as those mentioned above may be
included in advertisements and in reports to shareholders.

From time to time, the Funds may include the following types of
information in advertisements, supplemental sales literature and reports to
shareholders: (1) discussions of general economic or financial principles (such
as the effects of compounding and the benefits of dollar-cost averaging); (2)
discussions of general economic trends; (3) presentations of statistical data to
supplement such discussions; (4) descriptions past or anticipated portfolio
holdings for one or more of the funds within the Group; (5) descriptions of
investment strategies for one or more of the Funds; (6) descriptions or
comparisons of various savings and investment products (including, but not
limited to, insured bank products, annuities, qualified retirement plans and
individual stocks and bonds), which may or may not include the Funds; (7)
comparisons of investment products (including the Funds) with relevant market or
industry indices or other appropriate benchmarks; and (8) discussions of fund
rankings or ratings by recognized rating organizations. The Funds may also
include calculations, such as hypothetical compounding examples, which describe
hypothetical investment results in such communications. Such performance
examples will be based on an express set of assumptions and are not indicative
of the performance of any of the Funds.

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<PAGE> 271

Morningstar, Inc., Chicago, Illinois, rates mutual funds on a one- to
five-star rating scale with five stars representing the highest rating. Such
ratings are based upon a fund's historical risk/reward ratio as determined by
Morningstar relative to other funds in that fund's class. Funds are divided into
classes based upon their respective investment objectives. The one- to five-star
ratings represent the following ratings by Morningstar, respectively: Lowest,
Below Average, Neutral, Above Average and Highest.

Current yields or performance will fluctuate from time to time and are
not necessarily representative of future results. Accordingly, a Fund's yield or
performance may not provide for comparison with bank deposits or other
investments which provide fixed returns for a stated period of time. Yield and
performance are functions of a Fund's quality, composition, and maturity, as
well as expenses allocated to the Fund. Fees imposed upon customer accounts by
the Investment Adviser or its affiliated or correspondent banks for cash
management services will reduce a Fund's effective yield to customers.

MISCELLANEOUS

Individual Trustees are elected by the shareholders and, subject to
removal by the vote of two-thirds of the Board of Trustees, serve for a term
lasting until the next meeting of shareholders at which Trustees are elected.
Such meetings are not required to be held at any specific intervals. Individual
Trustees may be removed by vote of the shareholders voting not less than a
majority of the shares then outstanding, cast in person or by proxy at any
meeting called for that purpose, or by a written declaration signed by
shareholders voting not less than two thirds of the shares then outstanding.

The Group is registered with the SEC as a management investment
company. Such registration does not involve supervision by the SEC of the
management or policies of the Group. The 1999 Annual Report and, when available,
the November 30, 1999 Semi-Annual Report to shareholders of the Group are
incorporated herein by reference. These reports include the financial statements
for the fiscal period ended May 31, 1999. In addition, the Annual Report
includes management's discussion of Fund performance for each of the Non-Money
Market Funds, as well as line graph comparisons to appropriate broad-based
securities indices.

The Prospectuses and this Statement of Additional Information omit
certain of the information contained in the Registration Statement filed with
the SEC. Copies of such information may be obtained from the SEC upon payment of
the prescribed fee.

The Prospectuses and this Statement of Additional Information are not
an offering of the securities herein described in any state in which such
offering may not lawfully be made. No salesman, dealer, or other person is
authorized to give any information or make any representation other than those
contained in the Prospectuses and this Statement of Additional Information.

As of May 31, 1999, the Trustees and officers of the Group, as a group,
owned less than one percent of the shares of any Fund of the Group.

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<PAGE> 272

PRINCIPAL HOLDERS OF VOTING SECURITIES

As of _________________, 1999, the following persons were the record
owners of more than 5% of the Investor A Shares, Investor B Shares and
Institutional Shares of each of the Group's Funds:

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<PAGE> 273

<TABLE>
<CAPTION>
SHARES PERCENT
FUND OWNER OWNED OWNED
<S> <C> <C> <C>
Fund Prime Obligations A Shares National Financial Services Corp. 79,169,316.160 75.622
For The Benefit of Our Customers
Church Street Station
PO BOX 3908
New York, NY 10008-3908

Corelink Financial Inc. 6.153,460.765 5.877
PO Box 4054
Concord, CA 94524

U.S. Gov't Obligations A National Financial Services Corp. 21,710,398.170 13.384
Shares For The Benefit of our Customers
Church Street Station
PO Box 3908
New York, MY 10008-3908

First of America 140,258,967.530 86.471
Trust Operations
PO Box 4042
Kalamazoo, MI 49003-4042

Tax Free Obligations A National Financial Services Corp. 28,356,994.580 56.832
Shares For The Benefit of Our
Customers
Church Street Station
PO Box 3908
New York, NY 10008-3908

First of America 18,322,403.120 36.721
Trust Operations
PO Box 4042
Kalamazoo, MI 49003-4042

Corelink Financial Inc. 2,881,332.790 5.774
PO Box 4054
Concord, CA 94524

Mid Capitalization A Corelink Financial Inc. 1,036,626.040 18.654
Shares PO Box 4054
Concord, CA 94524

J C Bradford Co. Cust FBO 518,039.510 9.322
Cust RCIP Limited Partners I
330 Commerce St.
Nashville, TN 37201-1899
</TABLE>

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<PAGE> 274

<TABLE>
<CAPTION>
SHARES PERCENT
FUND OWNER OWNED OWNED
<S> <C> <C> <C>
Small Capitalization A Charles Schwab & Co. Inc. 273,242.656 5.047
Shares Special Custodian Account
FBO Our Customers
ATTN: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104

Corelink Financial Inc. 337,350.737 6.231
PO Box 4054
Concord, CA 94524

Donaldson Lufkin Jenrette 598,748.014 11.059
Securities Corporation Inc.
Jersey City, NJ 07303-9998

Limited Maturity Bond A Corelink Financial Inc. 2,267,840.436 54.273
Shares PO Box 4054
Concord, CA 94524

NFSC FEBO OL4-639028 485,752.169 11.624
NSF International
PO Box 130140
Ann Arbor, MI 48113

Wheat First Securities Inc. 385,023.284 9.214
A C 5634-2536
Midwest Foundation Corporation
PO Box 1207
Tremont, IL 61568-1207

Municipal Bond A Shares Corelink Financial Inc. 317,568.563 42.622
PO Box 4054
Concord, CA 94524

Michigan Municipal Bond Corelink Financial Inc. 498,963.465 16.086
A Shares PO Box 4054
Concord, CA 94524

U.S. Government Income A Corelink Financial Inc. 1,842,237.918 34.757
Shares PO Box 4054
Concord, CA 94524

International Discovery A Corelink Financial Inc. 411,419.037 17.217
Shares PO Box 4054
Concord, CA 94524

Treasury Fund A Shares First Of America 235,279,318.940 96.190
Trust Operations
PO Box 4042
Kalamazoo, MI 49003-4042
</TABLE>

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<PAGE> 275

<TABLE>
<CAPTION>
SHARES PERCENT
FUND OWNER OWNED OWNED
<S> <C> <C> <C>
Large Capitalization Fund Corelink Financial Inc. 496,783.214 38.583
A Shares PO Box 4054
Concord, CA 94524

Prime Obligations B Shares Richard C. Sloan 61,493.380 9.694
287 Twin Lakes Drive
Moultrie, GA 31768

Donald L. Edwards 122,169.900 19.260
PO Box 1766
Moultrie, GA 31776

Wheat First Securities Inc. 32,355.830 5.100
A C 1027-5263
Florence M. Adams
Thomas L. Adams
880 E. Remus Rd.
Mt. Pleasant, MI 48858-9072

NFSC FEBO W69-006394 96,746.780 15.252
NFSC FMTC IRA
FBO Paul A. Spinelli
5143 SW 9th Lane
Gainesville, FL 32607

Union Bank of California, 38,563.990 6.079
Custodian
Michael D. Laughhunn
SEP IRA
6884 3 Mile
White Cloud, MI 49349

Union Bank of California, 32,336.930 5.097
Custodian
Michael D. Laughhunn
SEP IRA
6884 3 Mile
White Cloud, MI 49349

Limited Maturity Raymond James Assoc. Inc. 8,797.945 5.717
Bond B Shares CSDN
David E. Reese Jr. IRA
519 Brandwynne Ct.
Dayton, OH 45459

Wheat First Securities Inc. 10,351.967 6.727
A C 4422-0525
Isaac Walker Company
PO Box 3500
Peoria, IL 61612-3500
</TABLE>

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<PAGE> 276
<TABLE>
<CAPTION>
SHARES PERCENT
FUND OWNER OWNED OWNED
<S> <C> <C> <C>
Intermediate NFSC FEBO OL4-634433 23,197.783 13.567
Government B Shares Horace Burton Gemmill
Joyce Louise Gemmill
2360 Mccomb Drive
Clio, MI 48420

Municipal Bond B Shares NFSC FEBO OL4-640557 5,252.929 8.586
Edward L. Najim
Cheri S. Najim
1300 Pine Valley Court
Springfield, IL 62704

NFSC FEBO OL4-655562 6,187.391 10.113
William G. Bruns
2604 W. Purdie Ave.
Muncie, IN 47304

Wheat First Securities Inc. 11,985.951 19.591
A C 1684-5440
Berry J. Bowen
2400 Country Club Drive
Springfield, IL 62704-3262

Wheat First Securities Inc. 5,706.210 9.326
A C 3706-4972
Frank A. Gregory
Thelma M. Gregory
3149 Shadow Brook Dr.
Indianapolis, IN 46214-1904

Wheat First Securities 3,432.051 5.609
A C 899-5047
2309 Vassar
Lansing, MI 4B912

Wayne Hummer Investments LLC 12,738.296 20.821
910-33413-10
Attn: Mutual Funds
PO Box 750
Chicago, IL 60690

Prime Obligations First Of America 577,715,241.770 87.553
Institutional Shares Trust Operations
Trust I
PO Box 4042
Kalamazoo, MI 49003-4042
</TABLE>

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<PAGE> 277

<TABLE>
<CAPTION>
SHARES PERCENT
FUND OWNER OWNED OWNED
<S> <C> <C> <C>
First Of America 60,655,333.190 9.192
Trust Operations
Trust 2
PO Box 4042
Kalamazoo, MI 49003-4042

U.S. Gov't Obligations First Of America 135,122,037.050 69.604
Institutional Shares Trust Operations
Trust 1
PO Box 4042
Kalamazoo, MI 49003-4042

First Of America 48,249,492.860 24.854
Trust Operations
Trust 2
PO Box 4042
Kalamazoo, MI 49003-4042

National City Indiana 10,756,510.780 5.540
Trust Operations
Money Market 5312
PO Box 94777
Cleveland, OH 44101-4777

Tax Free Obligations First of America 86,294,471.260 94.486
Institutional Shares Trust Operations
Trust I
PO Box 4042
Kalamazoo, MI 49003-4042

Mid Capitalization First of America 22,552,056.887 68.444
Institutional Shares Trust Operations
Reinvest
PO Box 4042
Kalamazoo, MI 49003-4042

First of America 9,585,841.409 29.092
Trust Operations
Cash
PO Box 4042
Kalamazoo, MI 49003-4042

Small Capitalization First Of America 11,126,048.565 66.482
Institutional Shares Trust Operations
Reinvest
PO Box 4042
Kalamazoo, MI 49003-4042
</TABLE>

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<PAGE> 278

<TABLE>
<CAPTION>
SHARES PERCENT
FUND OWNER OWNED OWNED
<S> <C> <C> <C>
First Of America 4,772,077.175 28.515
Trust Operations
Cash
PO Box 4042
Kalamazoo, MI 49003-4042

Equity Income First Of America 3,150,996.316 21.768
Institutional Shares Trust Operations
Reinvest
PO Box 4042
Kalamazoo, MI 49003-4042

First Of America 10,555,403.660 72.920
Trust Operations
Cash
PO Box 4042
Kalamazoo, MI 49003-4042

Bond Institutional Shares First Of America 30,728,727.234 64.719
Trust Operations
Reinvest
PO Box 4042
Kalamazoo, MI 49003-4042

First Of America 15,099,647.690 31.802
Trust Operations
Cash
PO Box 4042
Kalamazoo, MI 49003-4042

Limited Maturity Bond First Of America 5,420,250.683 33.818
Institutional Shares Trust Operations
Reinvest
PO Box 4042
Kalamazoo, MI 49003-4042

First Of America 9,966,426.410 62.307
Trust Operations
Cash
PO Box 4042
Kalamazoo, Ml 49003-4042

Intermediate Government First of America 4,636,539.591 27.678
Institutional Shares Trust Operations
Reinvest
PO Box 4042
Kalamazoo, MI 49003-4042
</TABLE>

-85-
<PAGE> 279

<TABLE>
<CAPTION>
SHARES PERCENT
FUND OWNER OWNED OWNED
<S> <C> <C> <C>
First of America 11,424,553.558 68.220
Trust Operations
Cash
PO Box 4042
Kalamazoo, MI 49003-4042

Municipal Bond First Of America 9,620,841.587 84.465
Institutional Shares Trust Operations
Cash
PO Box 4042
Kalamazoo, MI 49003-4042

Sheldon & Co. 813,547.001 7.142
Attn: Mutual Funds
PO Box 94984
Cleveland, OH 44101-4984

Michigan Municipal Bond First Of America 2,591,197.240 13.961
Institutional Shares Trust Operations
Reinvest
PO Box 4042
Kalamazoo, MI 49003-4042

First Of America 15,840,243.403 85.350
Trust Operations
Cash
PO Box 4042
Kalamazoo, Ml 49003-4042

Balanced Allocation First Of America 16,598,465.338 90.841
Institutional Shares Trust Operations
Reinvest
PO Box 4042
Kalamazoo, MI 49003-4042

First Of America 1,623,261.565 8.883
Trust Operations
Cash
PO Box 4042
Kalamazoo, MI 49003-4042

U.S. Government Income First Of America 1,501,504.025 8.850
Institutional Shares Trust Operations
Reinvest
PO Box 4042
Kalamazoo, MI 49003-4042
</TABLE>

-86-
<PAGE> 280

<TABLE>
<CAPTION>
SHARES PERCENT
FUND OWNER OWNED OWNED
<S> <C> <C> <C>
First Of America 14,437,558.151 85.099
Trust Operations
Cash
PO Box 4042
Kalamazoo, MI 49003-4042

International Discovery First Of America 14,326,201.801 56.994
Institutional Shares Trust Operations
Reinvest
PO Box 4042
Kalamazoo, MI 49003-4042

First Of America 10,112,666.425 40.231
Trust Operations
Cash
PO Box 4042
Kalamazoo, MI 49003-4042

Treasury Fund First Of America 299,234,794.650 99.208
Institutional Shares Trust Operations
Trust 1
PO Box 4042
Kalamazoo, MI 49003-4042

Large Capitalization Fund First Of America 13,585,677.460 62.982
Institutional Fund Shares Trust Operations
Cash
PO Box 4042
Kalamazoo, MI 49003-4042

First Of America 7,337,053.664 34.014
Trust Operations
Reinvest
PO Box 4042
Kalamazoo, MI 49003-4042
</TABLE>

As of August 31, 1999, as a result of its possession of voting or
investment power with respect to such shares, through accounts for which
National City Bank and other affiliates of NCC act in a fiduciary capacity,
National City Bank and other affiliates were deemed to be the record and
beneficiary owners of approximately _____% of the Institutional Shares of the
Group as follows:

Institutional Shares Beneficially Owned By National City Bank And Its
Affiliates:

<TABLE>
<CAPTION>
Amount of Beneficial Percent of Percent of
Title of Institutional Share Fund Ownership Fund Class Fund

<S> <C> <C> <C>
Prime Obligations Fund $ % %
</TABLE>

-87-
<PAGE> 281

<TABLE>
<CAPTION>
Amount of Beneficial Percent of Percent of
Title of Institutional Share Fund Ownership Fund Class Fund

<S> <C> <C> <C>
U.S. Government Obligations Fund $ % %
Treasury Fund $ % %
Tax-Free Fund $ % %
Small Capitalization Fund $ % %
Mid Capitalization Fund $ % %
Large Capitalization Fund $ % %
International Discovery Fund $ % %
Balanced Allocation Fund $ % %
Equity Income Fund $ % %
Bond Fund $ % %
Limited Maturity Bond Fund $ % %
Intermediate Government Obligations Fund $ % %
Government Income Fund $ % %
Municipal Bond Fund $ % %
Michigan Municipal Bond Fund $ % %
</TABLE>

Therefore, NCC owned beneficially as of such date _____% of the total
outstanding shares of the Group. NCC may be presumed to control both the Group
and each of the Funds because it possesses or shares investment or voting power
with respect to more than 25% of the total outstanding shares of the Group and
of each of the Funds. As a result, NCC may have the ability to elect the
Trustees of the Group, approve the Investment Advisory Agreements and
Distribution Agreement for each of the Funds and to control any other matters
submitted to the shareholders of the Funds for their approval or ratification.

With respect to all of the Funds, the Group's officers and directors
collectively owned less than 1% of the Funds' outstanding securities.

FINANCIAL STATEMENTS

Financial Statements describing audited financial information for each
Fund's operations since inception appear in the Group's Annual Report dated May
31, 1999, and on file with the SEC (File Nos. 33-13283 and 811-5105) are
incorporated herein by reference. The report of PricewaterhouseCoopers LLP,
independent auditors of the Group, appears therein.

-88-
<PAGE> 282

APPENDIX A

COMMERCIAL PAPER RATINGS

A Standard & Poor's commercial paper rating is a current
assessment of the likelihood of timely payment of debt having an original
maturity of no more than 365 days. The following summarizes the rating
categories used by Standard and Poor's for commercial paper:

"A-1" - Obligations are rated in the highest category
indicating that the obligor's capacity to meet its financial commitment on the
obligation is strong. Within this category, certain obligations are designated
with a plus sign (+). This indicates that the obligor's capacity to meet its
financial commitment on these obligations is extremely strong.

"A-2" - Obligations are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.

"A-3" - Obligations exhibit adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.

"B" - Obligations are regarded as having significant
speculative characteristics. The obligor currently has the capacity to meet its
financial commitment on the obligation; however, it faces major ongoing
uncertainties which could lead to the obligor's inadequate capacity to meet its
financial commitment on the obligation.

"C" - Obligations are currently vulnerable to nonpayment and
are dependent upon favorable business, financial, and economic conditions for
the obligor to meet its financial commitment on the obligation.

"D" - Obligations are in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The "D"
rating will be used upon the filing of a bankruptcy petition or the taking of a
similar action if payments on an obligation are jeopardized.

Moody's commercial paper ratings are opinions of the ability
of issuers to repay punctually senior debt obligations not having an original
maturity in excess of one year, unless explicitly noted. The following
summarizes the rating categories used by Moody's for commercial paper:

A-1
<PAGE> 283

"Prime-1" - Issuers (or supporting institutions) have a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity.

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

"Prime-3" - Issuers (or supporting institutions) have an
acceptable ability for repayment of senior short-term debt obligations. The
effect of industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and may require relatively high
financial leverage. Adequate alternate liquidity is maintained.

"Not Prime" - Issuers do not fall within any of the Prime
rating categories.

The three rating categories of Duff & Phelps for investment
grade commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff &
Phelps employs three designations, "D-1+," "D-1" and "D-1-," within the highest
rating category. The following summarizes the rating categories used by Duff &
Phelps for commercial paper:

"D-1+" - Debt possesses the highest certainty of timely
payment. Short-term liquidity, including internal operating factors and/or
access to alternative sources of funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.

"D-1" - Debt possesses very high certainty of timely payment.
Liquidity factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.

"D-1-" - Debt possesses high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.

"D-2" - Debt possesses good certainty of timely payment.
Liquidity factors and company fundamentals are sound. Although ongoing funding
needs may enlarge total financing requirements, access to capital markets is
good. Risk factors are small.

"D-3" - Debt possesses satisfactory liquidity and other
protection factors qualify issues as to investment grade. Risk factors are
larger and subject to more variation. Nevertheless, timely payment is expected.

A-2
<PAGE> 284

"D-4" - Debt possesses speculative investment characteristics.
Liquidity is not sufficient to insure against disruption in debt service.
Operating factors and market access may be subject to a high degree of
variation.

"D-5" - Issuer failed to meet scheduled principal and/or
interest payments.

Fitch IBCA short-term ratings apply to debt obligations that
have time horizons of less than 12 months for most obligations, or up to three
years for U.S. public finance securities. The following summarizes the rating
categories used by Fitch IBCA for short-term obligations:

"F1" - Securities possess the highest credit quality. This
designation indicates the strongest capacity for timely payment of financial
commitments and may have an added "+" to denote any exceptionally strong credit
feature.

"F2" - Securities possess good credit quality. This
designation indicates a satisfactory capacity for timely payment of financial
commitments, but the margin of safety is not as great as in the case of the
higher ratings.

"F3" - Securities possess fair credit quality. This
designation indicates that the capacity for timely payment of financial
commitments is adequate; however, near-term adverse changes could result in a
reduction to non-investment grade.

"B" - Securities possess speculative credit quality. This
designation indicates minimal capacity for timely payment of financial
commitments, plus vulnerability to near-term adverse changes in financial and
economic conditions.

"C" - Securities possess high default risk. This designation
indicates that default is a real possibility and that the capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.

"D" - Securities are in actual or imminent payment default.

Thomson Financial BankWatch short-term ratings assess the
likelihood of an untimely payment of principal and interest of debt instruments
with original maturities of one year or less. The following summarizes the
ratings used by Thomson Financial BankWatch:

"TBW-1" - This designation represents Thomson Financial
BankWatch's highest category and indicates a very high likelihood that principal
and interest will be paid on a timely basis.

"TBW-2" - This designation represents Thomson Financial
BankWatch's second-highest category and indicates that while the degree of
safety regarding timely repayment of

A-3
<PAGE> 285

principal and interest is strong, the relative degree of safety is not as high
as for issues rated "TBW-1."

"TBW-3" - This designation represents Thomson Financial
BankWatch's lowest investment-grade category and indicates that while the
obligation is more susceptible to adverse developments (both internal and
external) than those with higher ratings, the capacity to service principal and
interest in a timely fashion is considered adequate.

"TBW-4" - This designation represents Thomson Financial
BankWatch's lowest rating category and indicates that the obligation is regarded
as non-investment grade and therefore speculative.

CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS

The following summarizes the ratings used by Standard & Poor's
for corporate and municipal debt:

"AAA" - An obligation rated "AAA" has the highest rating
assigned by Standard & Poor's. The obligor's capacity to meet its financial
commitment on the obligation is extremely strong.

"AA" - An obligation rated "AA" differs from the highest rated
obligations only in small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong.

"A" - An obligation rated "A" is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions than
obligations in higher-rated categories. However, the obligor's capacity to meet
its financial commitment on the obligation is still strong.

"BBB" - An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.

Obligations rated "BB," "B," "CCC," "CC" and "C" are regarded
as having significant speculative characteristics. "BB" indicates the least
degree of speculation and "C" the highest. While such obligations will likely
have some quality and protective characteristics, these may be outweighed by
large uncertainties or major exposures to adverse conditions.

"BB" - An obligation rated "BB" is less vulnerable to
nonpayment than other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial or economic conditions
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.

A-4
<PAGE> 286

"B" - An obligation rated "B" is more vulnerable to nonpayment
than obligations rated "BB", but the obligor currently has the capacity to meet
its financial commitment on the obligation. Adverse business, financial or
economic conditions will likely impair the obligor's capacity or willingness to
meet its financial commitment on the obligation.

"CCC" - An obligation rated "CCC" is currently vulnerable to
nonpayment, and is dependent upon favorable business, financial and economic
conditions for the obligor to meet its financial commitment on the obligation.
In the event of adverse business, financial, or economic conditions, the obligor
is not likely to have the capacity to meet its financial commitment on the
obligation.

"CC" - An obligation rated "CC" is currently highly vulnerable
to nonpayment.

"C" - The "C" rating may be used to cover a situation where a
bankruptcy petition has been filed or similar action taken, but payments on this
obligation are being continued.

"D" - An obligation rated "D" is in payment default. The "D"
rating category is used when payments on an obligation are not made on the date
due even if the applicable grace period has not expired, unless Standard &
Poor's believes that such payments will be made during such grace period. The
"D" rating also will be used upon the filing of a bankruptcy petition or the
taking of a similar action if payments on an obligation are jeopardized.

PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC"
may be modified by the addition of a plus or minus sign to show relative
standing within the major rating categories.

"r" - This symbol is attached to the ratings of instruments
with significant noncredit risks. It highlights risks to principal or volatility
of expected returns which are not addressed in the credit rating. Examples
include: obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk - such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.

The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:

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

"Aa" - Bonds are judged to be of high quality by all
standards. Together with the "Aaa" group they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in "Aaa" securities or

A-5
<PAGE> 287

fluctuation of protective elements may be of greater amplitude or there may be
other elements present which make the long-term risk appear somewhat larger than
the "Aaa" securities.

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

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

"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of
these ratings provide questionable protection of interest and principal ("Ba"
indicates speculative elements; "B" indicates a general lack of characteristics
of desirable investment; "Caa" are of poor standing; "Ca" represents obligations
which are speculative in a high degree; and "C" represents the lowest rated
class of bonds). "Caa," "Ca" and "C" bonds may be in default.

Con. (---) - Bonds for which the security depends upon the
completion of some act or the fulfillment of some condition are rated
conditionally. These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operating experience, (c)
rentals which begin when facilities are completed, or (d) payments to which some
other limiting condition attaches. Parenthetical rating denotes probable credit
stature upon completion of construction or elimination of basis of condition.

Note: Moody's applies numerical modifiers 1, 2, and 3 in each
generic rating classification from "Aa" through "Caa". The modifier 1 indicates
that the obligation ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking
in the lower end of its generic rating category.

The following summarizes the long-term debt ratings used by
Duff & Phelps for corporate and municipal long-term debt:

"AAA" - Debt is considered to be of the highest credit
quality. The risk factors are negligible, being only slightly more than for
risk-free U.S. Treasury debt.

"AA" - Debt is considered to be of high credit quality.
Protection factors are strong. Risk is modest but may vary slightly from time to
time because of economic conditions.

"A" - Debt possesses protection factors which are average but
adequate. However, risk factors are more variable in periods of greater economic
stress.

A-6
<PAGE> 288

"BBB" - Debt possesses below-average protection factors but
such protection factors are still considered sufficient for prudent investment.
Considerable variability in risk is present during economic cycles.

"BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of
these ratings is considered to be below investment grade. Although below
investment grade, debt rated "BB" is deemed likely to meet obligations when due.
Debt rated "B" possesses the risk that obligations will not be met when due.
Debt rated "CCC" is well below investment grade and has considerable uncertainty
as to timely payment of principal, interest or preferred dividends. Debt rated
"DD" is a defaulted debt obligation, and the rating "DP" represents preferred
stock with dividend arrearages.

To provide more detailed indications of credit quality, the
"AA," "A," "BBB," "BB" and "B" ratings may be modified by the addition of a plus
(+) or minus (-) sign to show relative standing within these major categories.

The following summarizes the ratings used by Fitch IBCA for
corporate and municipal bonds:

"AAA" - Bonds considered to be investment grade and of the
highest credit quality. These ratings denote the lowest expectation of credit
risk and are assigned only in case of exceptionally strong capacity for timely
payment of financial commitments. This capacity is highly unlikely to be
adversely affected by foreseeable events.

"AA" - Bonds considered to be investment grade and of very
high credit quality. These ratings denote a very low expectation of credit risk
and indicate very strong capacity for timely payment of financial commitments.
This capacity is not significantly vulnerable to foreseeable events.

"A" - Bonds considered to be investment grade and of high
credit quality. These ratings denote a low expectation of credit risk and
indicate strong capacity for timely payment of financial commitments. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.

"BBB" - Bonds considered to be investment grade and of good
credit quality. These ratings denote that there is currently a low expectation
of credit risk. The capacity for timely payment of financial commitments is
considered adequate, but adverse changes in circumstances and in economic
conditions are more likely to impair this capacity.

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

A-7
<PAGE> 289
"B" - Bonds are considered highly speculative. These ratings
indicate that significant credit risk is present, but a limited margin of safety
remains. Financial commitments are currently being met; however, capacity for
continued payment is contingent upon a sustained, favorable business and
economic environment.

"CCC," "CC" and "C" - Bonds have high default risk. Default is
a real possibility, and capacity for meeting financial commitments is solely
reliant upon sustained, favorable business or economic developments. "CC"
ratings indicate that default of some kind appears probable, and "C" ratings
signal imminent default.

"DDD," "DD" and "D" - Bonds are in default. The ratings of
obligations in this category are based on their prospects for achieving partial
or full recovery in a reorganization or liquidation of the obligor. While
expected recovery values are highly speculative and cannot be estimated with any
precision, the following serve as general guidelines. "DDD" obligations have the
highest potential for recovery, around 90%-100% of outstanding amounts and
accrued interest. "DD" indicates potential recoveries in the range of 50%-90%,
and "D" the lowest recovery potential, i.e., below 50%.

Entities rated in this category have defaulted on some or all
of their obligations. Entities rated "DDD" have the highest prospect for
resumption of performance or continued operation with or without a formal
reorganization process. Entities rated "DD" and "D" are generally undergoing a
formal reorganization or liquidation process; those rated "DD" are likely to
satisfy a higher portion of their outstanding obligations, while entities rated
"D" have a poor prospect for repaying all obligations.

To provide more detailed indications of credit quality, the
Fitch IBCA ratings from and including "AA" to "CCC" may be modified by the
addition of a plus (+) or minus (-) sign to show relative standing within these
major rating categories.

Thomson Financial BankWatch assesses the likelihood of an
untimely repayment of principal or interest over the term to maturity of long
term debt and preferred stock which are issued by United States commercial
banks, thrifts and non-bank banks; non-United States banks; and broker-dealers.
The following summarizes the rating categories used by Thomson BankWatch for
long-term debt ratings:

"AAA" - This designation indicates that the ability to repay
principal and interest on a timely basis is extremely high.

"AA" - This designation indicates a very strong ability to
repay principal and interest on a timely basis, with limited incremental risk
compared to issues rated in the highest category.

"A" - This designation indicates that the ability to repay
principal and interest is strong. Issues rated "A" could be more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.

A-8
<PAGE> 290

"BBB" - This designation represents the lowest
investment-grade category and indicates an acceptable capacity to repay
principal and interest. Issues rated "BBB" are more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.

"BB," "B," "CCC," and "CC," - These designations are assigned
by Thomson Financial BankWatch to non-investment grade long-term debt. Such
issues are regarded as having speculative characteristics regarding the
likelihood of timely payment of principal and interest. "BB" indicates the
lowest degree of speculation and "CC" the highest degree of speculation.

"D" - This designation indicates that the long-term debt is in
default.

PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC"
may include a plus or minus sign designation which indicates where within the
respective category the issue is placed.

MUNICIPAL NOTE RATINGS

A Standard and Poor's rating reflects the liquidity factors
and market access risks unique to notes due in three years or less. The
following summarizes the ratings used by Standard & Poor's for municipal notes:

"SP-1" - The issuers of these municipal notes exhibit a strong
capacity to pay principal and interest. Those issues determined to possess a
very strong capacity to pay debt service are given a plus (+) designation.

"SP-2" - The issuers of these municipal notes exhibit
satisfactory capacity to pay principal and interest, with some vulnerability to
adverse financial and economic changes over the term of the notes.

"SP-3" - The issuers of these municipal notes exhibit
speculative capacity to pay principal and interest.

Moody's ratings for state and municipal notes and other
short-term loans are designated Moody's Investment Grade ("MIG") and variable
rate demand obligations are designated Variable Moody's Investment Grade
("VMIG"). Such ratings recognize the differences between short-term credit risk
and long-term risk. The following summarizes the ratings by Moody's Investors
Service, Inc. for short-term notes:

A-9
<PAGE> 291

"MIG-1"/"VMIG-1" - This designation denotes best quality.
There is present strong protection by established cash flows, superior liquidity
support or demonstrated broad-based access to the market for refinancing.

"MIG-2"/"VMIG-2" - This designation denotes high quality, with
margins of protection that are ample although not so large as in the preceding
group.

"MIG-3"/"VMIG-3" - This designation denotes favorable quality,
with all security elements accounted for but lacking the undeniable strength of
the preceding grades. Liquidity and cash flow protection may be narrow and
market access for refinancing is likely to be less well established.

"MIG-4"/"VMIG-4" - This designation denotes adequate quality.
Protection commonly regarded as required of an investment security is present
and although not distinctly or predominantly speculative, there is specific
risk.

"SG" - This designation denotes speculative quality. Debt
instruments in this category lack of margins of protection.

Fitch IBCA and Duff & Phelps use the short-term ratings
described under Commercial Paper Ratings for municipal notes.

A-10
<PAGE> 292

THE PARKSTONE GROUP OF FUNDS
FORM N-1A

PART C. OTHER INFORMATION

ITEM NO.
- -------------------------------------------------------------------------------
ITEM 23. EXHIBITS

Exhibits*:

(a) 1. Declaration of Trust dated March 25, 1987 (incorporated by
reference to Registrant's Post-Effective Amendment No. 31,
filed October 9, 1996).

(i) Amendment dated April 7, 1987 to Declaration
of Trust (incorporated by reference to
Registrant's Post-Effective Amendment No.
31, filed October 9, 1996).

(ii) Amendment dated July 1, 1987 to Declaration
of Trust (incorporated by reference to
Registrant's Post-Effective Amendment No.
31, filed October 9, 1996).

(b) 1. Code of Regulations as approved and adopted by Registrant's
Board of Trustees (incorporated by reference to
Registrant's Post-Effective Amendment No. 31, filed
October 9, 1996).

(i) Amendment dated May 11, 1989 to Code of
Regulations (incorporated by reference to
Registrant's Post-Effective Amendment No.
31, filed October 9, 1996).

(ii) Amendment dated August 26, 1993 to Code of
Regulations (incorporated by reference to
Registrant's Post-Effective Amendment No.
31, filed October 9, 1996).

(d) 1. Investment Advisory Agreement between Registrant and
Securities Counsel, Inc., dated July 9, 1987, relating
to the U.S. Government Obligations Fund, the Prime
Obligations Fund and the Tax-Free Fund (incorporated by
reference to Registrant's Post-Effective Amendment No.
31, filed October 9, l996).

* The file number for all exhibits incorporated by reference is
33-13283.

<PAGE> 293

(i) Amendment dated August 26, 1993 to Schedule
A adding the Treasury Fund and Municipal
Investor Fund (incorporated by reference to
Registrant's Post-Effective Amendment No.
31, filed October 9, 1996).

2. Investment Advisory Agreement between Registrant and
Securities Counsel, Inc. dated September 8, 1988, relating
to the Bond Fund, the Limited Maturity Bond Fund, the
Intermediate Government Obligations Fund, the Municipal
Bond Fund, the Equity Fund, the Small Capitalization Fund
and the High Income Equity Fund (incorporated by reference
to Registrant's Post-Effective Amendment No. 31, filed
October 9, 1996).

(i) First Amendment dated March 1, 1995
authorizing the use of subadvisers with
respect to the Balanced Fund (incorporated
by reference to Registrant's Post-Effective
Amendment No. 31, filed October 9, 1996).

(ii) Amendment to Schedule A dated December 16,
1996 adding the Conservative Allocation Fund
and the Aggressive Allocation Fund and
incorporating previous amendments adding the
Large Capitalization Fund, the Michigan
Municipal Bond Fund, the Balanced Allocation
Fund and the U.S. Government Income Fund
(incorporated by reference to Registrant's
Post-Effective Amendment No. 35, filed July
30 1997).

(iii) Second Amendment dated December 16, 1996
authorizing the use of subadvisers with
respect to the Conservative Allocation Fund
and the Aggressive Allocation Fund
(incorporated by reference to Registrant's
Post-Effective Amendment No. 35, filed July
30, 1997).

3. Investment Advisory Agreement between the Registrant and
First of America Investment Corporation dated December 22,
1992, relating to the International Discovery Fund
(incorporated by reference to Registrant's Post-Effective
Amendment No. 31, filed October 9, 1996).

(i) Amendment dated February 10, 1995 to
Schedule A adding the Emerging Markets Fund
(incorporated by reference to Registrant's
Post-Effective Amendment No. 31, filed
October 9, 1996).

4. Sub-Investment Advisory Agreement between First of America
Investment Corporation and Gulfstream Global Investors,
Ltd. dated March 1, 1995, relating to the International
Discovery Fund, the Balanced Fund and the Emerging Markets
Fund (incorporated by reference to Registrant's
Post-Effective Amendment No. 31, filed October 9, 1996).

-2-
<PAGE> 294

(i) Amendment to Schedule A dated December 16,
1996 adding the Conservative Allocation Fund
and the Aggressive Allocation Fund
(incorporated by reference to Registrant's
Post-Effective Amendment No. 35, filed July
30, 1997).

(e) 1. Form of Distribution Agreement between Registrant and SEI
Investments Distribution Co. dated September 14, 1998
(incorporated by reference to Registrant's Post-Effective
Amendment No. 40, filed September 16, 1998).

2. Specimen Dealer Agreement between SEI Investments
Distribution Co. and dealers (incorporated by reference to
Registrant's Post-Effective Amendment No. 40, filed
September 16, 1998).

(f) Not applicable.

(g) 1. Custody Services Agreement between Registrant and National
City Bank dated July 24, 1998 (incorporated by reference to
Registrant's Post-Effective Amendment No. 40, filed
September 16, 1998).

2. Custody Agreement between Registrant and the Bank of
California, N.A., dated October 18, 1991, relating to the
U.S. Government Obligations Fund, the Prime Obligations
Fund, the Tax-Free Fund, the Bond Fund, the Limited
Maturity Bond Fund, the Intermediate Government Obligations
Fund, the Municipal Bond Fund, the Equity Fund, the Small
Capitalization Fund, the High Income Equity Fund and the
Michigan Municipal Bond Fund (incorporated by reference to
Registrant's Post-Effective Amendment No. 31, filed October
9, 1996).

(i) Amendment to Schedule A dated December 16,
1996 adding the Conservative Allocation Fund
and the Aggressive Allocation Fund and
incorporating previous amendments adding the
Large Capitalization Fund, the Balanced
Allocation Fund, the U.S. Government Income
Fund, the International Discovery Fund, the
Treasury Fund and the Municipal Investor
Fund (incorporated by reference to
Registrant's Post-Effective Amendment No.
35, filed July 30, 1997).

(ii) Amendment dated November 20, 1992, to
Schedule B of the Custody Agreement
(incorporated by reference to Registrant's
Post-Effective Amendment No. 31 filed
October 9, 1996).

(iii) Securities Lending and Reverse Repurchase
Agreement Addendum dated June 8, 1995,
relating to the Bond Fund, the Balanced Fund
and the Limited Maturity Bond Fund
(incorporated by reference to Registrant's
Post-Effective Amendment No. 31, filed
October 9, 1996).

-3-

<PAGE> 295

3. Exhibit D dated March 18, 1996, adding the Intermediate
Government Obligations Fund's reinvestment policy
(incorporated by reference to Registrant's Post-Effective
Amendment No. 35, filed July 30, 1997).

4. Exhibit D dated March 18, 1996 adding the U.S. Government
Income Fund's reinvestment policy (incorporated by
reference to Registrant's Post-Effective Amendment No. 35,
filed July 30, 1997).

5. Amendment to Exhibit D dated May 22, 1997 adding the Small
Capitalization Fund, the Mid Capitalization Fund, the Large
Capitalization Fund and the Equity Income Fund and
incorporating previous Exhibits D relating to the Bond
Fund, the Limited Maturity Bond Fund, the Balanced
Allocation Fund, the Conservative Allocation Fund and the
Aggressive Allocation Fund (incorporated by reference to
Registrant's Post-Effective Amendment No. 40, filed
September 16, 1998).

6. Amendment to Exhibit E dated May 22, 1997 revising the fee
schedule (incorporated by reference to Registrant's
Post-Effective Amendment No. 40, filed September 16, 1998).

7. Amendment to Schedule I dated May 22, 1997 adding the Small
Capitalization Fund, the Mid Capitalization Fund, the Large
Capitalization Fund and the Equity Income Fund and
incorporating previous amendments adding the Conservative
Allocation Fund, the Aggressive Allocation Fund, the
Intermediate Government Obligations Fund and the Government
Income Fund (incorporated by reference to Registrant's
Post-Effective Amendment No. 40, filed September 16, 1998).

(i) International Custodian Agreement between
Registrar and the Bank of California, N.A.,
dated July 30, 1995 (incorporated by
reference to Registrant's Post-Effective
Amendment No. 31, filed October 9, 1996).

(h)1. Administration Agreement between Registrant and The
Winsbury Company Limited Partnership dated January 1, 1995,
relating to the U.S. Government Obligations Fund, the Prime
Obligations Fund, the Tax-Free Fund, the Treasury Fund, the
Municipal Investor Fund, the Equity Fund, the Small
Capitalization Fund, the International Discovery Fund, the
Balanced Fund, the High Income Equity Fund, the Bond Fund,
the Limited Maturity Bond Fund, the Intermediate Government
Obligations Fund, the U.S. Government Income Fund, the
Municipal Bond Fund and the Michigan Municipal Bond Fund
(incorporated by reference to Registrant's Post-Effective
Amendment No. 31, filed October 9, 1996).

(i) Amendment to Exhibit A dated December 16,
1996 adding the Conservative Allocation Fund
and the Aggressive Allocation Fund and
incorporating a previous amendment adding
the Large

-4-
<PAGE> 296

Capitalization Fund (incorporated by
reference to Registrant's Post-Effective
Amendment No. 35, filed July 30. 1997).

2. Fund Accounting Agreement between Registrant and The
WinsburyService Corporation dated as of February 1, 1993,
relating to the U.S. Government Obligations Funds, the
Prime Obligations Fund, the Tax-Free Fund, the Equity Fund,
the Small Capitalization Fund, the International Discovery
Fund, the Balanced Fund, the High Income Equity Fund, the
Bond Fund, the Limited Maturity Bond Fund, the Intermediate
Government Obligations Fund, the U.S. Government Income
Fund, the Municipal Bond Fund and the Michigan Municipal
Bond Fund (incorporated by reference to Registrant's
Post-Effective Amendment No. 31, filed October 9, 1996.)

(i) Amendment to Schedule A dated December 16,
1996 adding the Conservative Allocation Fund
and the Aggressive Allocation Fund and
Incorporating previous amendments adding the
Large Capitalization Fund, the Treasure Fund
and the Municipal Investor Fund
(incorporated by reference to Registrant's
Post-Effective Amendment No. 35, filed July
30, 1997).

(ii) Amendment dated Apri1 1, 1993 to Schedule B
revising the fee schedule (incorporated by
reference to Registrant's Post-Effective
Amendment No. 31, filed on October 9, 1996).

3. Transfer Agency Agreement (incorporated by reference to
Registrant's Post-Effective Amendment No. 40, filed
September 16, 1998).

4. Sub-Administration Agreement between First of America
Investment Corporation and The Winsbury Company Limited
Partnership dated January 1, 1995, relating to the U.S.
Government Obligations Fund, the Prime Obligations Fund,
the Tax-Free Fund, the Treasury Fund, the Municipal
Investor Fund, the Equity Fund, the Small Capitalization
Fund, the International Discovery Fund, the Balanced Fund,
the High Income Equity Fund, the Bond Fund, the Limited
Maturity Bond Fund, the Intermediate Government Obligations
Fund, the U.S. Government Income Fund, the Municipal Bond
Fund and the Michigan Municipal Bond Fund (incorporated by
reference Registrant's Post-Effective Amendment No. 31,
filed October 9, 1996).

(i) Amendment to Schedule A dated December 16,
1996 adding the Conservative Allocation Fund
and the Aggressive Allocation Fund and
incorporating a previous amendment adding
the Large Capitalization Fund (incorporated
by reference to Registrant's Post-Effective
Amendment No. 5, filed July 30, 1997).

-5-
<PAGE> 297

5. Amended and Restated Securities Lending Record
Administration Agreement between Union Bank of California,
N.A. and BISYS Fund Services Limited Partnership dated May,
22 1997.

6. Amended and Restated Securities Lending Record
Administration Agreement between Union Bank of California,
N.A. and BISYS Fund Services Limited Partnership
(incorporated by reference to Registrant's Post-Effective
Amendment No. 40, filed September 16, 1998).

(i) None.

(j) Consent of Drinker Biddle & Reath LLP.**

(k) Not applicable.

(l) 1. Purchase agreement dated July 2, 1987, between Registrant
and The Winsbury Corporation (incorporated by reference to
Registrant's Post-Effective Amendment No. 31 filed
October 9, 1996).

2. Specimen Agreement for the Parkstone Individual Retirement
Account (incorporated by reference to Registrant's
Post-Effective Amendment No. 31 filed October 9, 1996).

3. Specimen Agreement for the National Financial Services
Corporation Individual Retirement Account offered through
First of America Securities, Inc. for investment in the
Parkstone Group of Funds (incorporated by reference to
Registrant's Post-Effective Amendment No. 31 filed October
9, 1996).

(m) 1. Investor A Distribution and Shareholder Service Plan
(incorporated by reference to Registrant's Post-Effective
Amendment No. 40, filed September 16, 1998).

2. Investor B Distribution and Shareholder Service Plan
(incorporated by reference to Registrant's Post-Effective
Amendment No. 40, filed September 16, 1998).

(n) None.

(o) Specimen Amended and Restated Rule 18f-3 Multiple Class Plan
(incorporated by reference to Registrant's Post-Effective
Amendment No. 40, filed September 16, 1998).

** Filed herewith.

-6-
<PAGE> 298

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

Registrant is controlled by its Board of Trustees.

ITEM 25. INDEMNIFICATION

Article IX Section 9.2 of the Registrant's Declaration of Trust, as
amended, provides for the indemnification of Registrant's Trustees and
officers. Indemnification of the Group's principal underwriter,
custodian, investment adviser, manager and administrator, transfer
agent and fund accountant is provided for, respectively, in Section
1.13 of the Distribution Agreement incorporated by reference as Exhibit
(e)1. hereto, Sections 12 and 10.1 of the Custody Agreements
incorporated by reference as Exhibits (g)1. and 2., respectively,
hereto and in Section 16 of the Custodian Agreement incorporated by
reference as Exhibit (g)2. hereto, Section 8 of the Investment Advisory
and Sub-Investment Advisory Agreements incorporated by reference as
Exhibits (d)1., 2., 3. and 4. hereto, Section 6 of the Administration
Agreement incorporated by reference as Exhibit (h)1. hereto, Section 9
of the Transfer Agency Agreement, incorporated by reference as Exhibit
(h)3. hereto, and Section 6 of the Fund Accounting Agreement
incorporated by reference as Exhibit (h)2. hereto. As of the date of
this Registration Statement, the Group has obtained from a major
insurance carrier a Trustees' and officers' liability policy covering
certain types of errors and omissions. In no event will Registrant
indemnify any of its Trustees, officers, employees or agents against
any liability to which such person otherwise be subject by reason of
his willful misfeasance, bad faith, or gross negligence in the
performance of its duties, or by reason of his reckless disregard of
the duties involved in the conduct of his office or under his agreement
with Registrant Registration will comply with Rule 484 under the
Securities Act of 1933 and Release 11330 under the Investment Company
Act of 1940 in connection with any indemnification.

Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "Act"), may be permitted to trustees,
officers, and controlling persons of Registrant pursuant to the
foregoing provisions, or otherwise, Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of
expenses incurred or paid by a trustee, officer, or controlling person
of Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such trustee, officer, or controlling person
in connection with the securities being registered, Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against policy as
expressed in the Act and will be governed by the final adjudication of
such issues.

-7-
<PAGE> 299

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

(a) National City Investment Management Company ("IMC") Cleveland, Ohio
is an investment adviser registered under the Investment Advisers' Act
of 1940, as amended (the "Advisers Act"). IMC is an indirect,
wholly-owned subsidiary of National City Corporation. IMC currently
manages over $12 billion on behalf of both taxable and tax-exempt
clients, including pensions, endowments, corporations, individual
portfolios, The Parkstone Advantage Fund and Armada Funds.

To the knowledge of Registrant, none of the directors or officers of
IMC is or has been at any time during the past two fiscal years engaged
in any other business, profession, vocation or employment of a
substantial nature, except that certain directors and officers of IMC
may also hold positions with National City's parent, or National City
Corporation or other subsidiaries. Information relating to any
business, profession, or employment of a substantial nature engaged in
by officers and directors of First of America during the past two years
is presented below as derived from Schedules A and D of Form ADV filed
by National City pursuant to the Advisers Act (SEC file No. 801-446.)

To the knowledge of Registrant, none of the directors or officers of
IMC, except those set forth below, is or has been, at any time during
the past two calendar years, engaged in any other business, profession,
vocation or employment of a substantial nature, except that certain
directors and officers also hold various positions with, and engage in
business for, the Corporation, which owns all the outstanding stock of
First America Bank, N.A., which in turn owns all the outstanding stock
of IMC, or other subsidiaries of the Corporation. Set forth below are
the names and principal businesses of the directors and certain of the
senior executive officers of IMC who are engaged in any other business,
profession, vocation or employment of a substantial nature.

NATIONAL CITY INVESTMENT MANAGEMENT COMPANY

<TABLE>
<CAPTION>
Position with National
City Investment Other Business Type of
Name Management Company Connections Business
----- ----------------------- ----------- --------
<S> <C> <C> <C>
Kathleen T. Barr Managing Director, National City Bank Bank
Sales and Marketing

Susan E. Kentosh Vice President and National City Bank Bank
Chief Compliance
Officer
</TABLE>

-8-
<PAGE> 300
<TABLE>
<CAPTION>
Position with National
City Investment Other Business Type of
Name Management Company Connections Business
---- ----------------------- ----------- --------
<S> <C> <C> <C>
Robert M. Leggett Vice Chairman of the National City Bank Bank
Board, President and
Managing Director

Michael Minnaugh Chairman of the Board National City Bank Bank
and Managing Director

Joseph C. Penko Vice President and National City Bank Bank
Director, Legal Affairs

Donald L. Ross Chief Investment National City Bank Bank
Officer and Managing
Director
</TABLE>

ITEM 27. PRINCIPAL UNDERWRITER

(a) SEI Investments Distribution Co. ("SEI") acts as distributor and
administrator for Registrant. SEI also distributes the securities
of SEI Daily Income Trust, SEI Liquid Asset Trust, SEI Tax Exempt
Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI
Institutional International Trust, The Pillar Funds, The Advisors'
Inner Circle Fund, CUFUND, STI Classic Funds, STI Classic Variable
Trust, PBHG Insurance Series Fund, Inc., Alpha Select Funds, Oak
Associates Funds, The Nevis Funds, Inc., The Parkstone Group of
Funds, First American Funds, Inc., First American Investment
Funds, Inc., The Arbor Fund, Boston 1784 Funds(R), The PBHG Funds,
Inc., Morgan Grenfell Investment Trust, The Achievement Funds
Trust, Bishop Street Funds, CrestFunds, Inc., STI Classic Variable
Trust, ARK Funds, Huntington Funds, SEI Asset Allocation Trust,
TIP Funds, SEI Institutional Investments Trust, First American
Strategy Funds, Inc., HighMark Funds, Armada Funds, Expedition
Funds, CNI Charter Funds, each of which is an investment
management company.

-9-
<PAGE> 301

(b) Directors, officers and partners of SEI, as of April 15, 1999,
were as follows:

<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman of the Board of --
Directors

Henry H. Greer Director --

Carmen V. Romeo Director --

Mark J. Held President & Chief Operating Officer --

Gilbert L. Beebower Executive Vice President --

Richard B. Lieb Executive Vice President --

Dennis J. McGonigle Executive Vice President --

Robert M. Silvestri Chief Financial Officer & Treasurer --

Carl A. Guarino Senior Vice President --

Larry Hutchison Senior Vice President --

Jack May Senior Vice President --

Hartland J. McKeown Senior Vice President --

Barbara J. Moore Senior Vice President --

Kevin P. Robins Senior Vice President & General Counsel --
& Secretary

Patrick K. Walsh Senior Vice President --

Robert Aller Vice President --

Gordon W. Carpenter Vice President --

Todd Cipperman Vice President & Assistant Secretary --

S. Courtney E. Collier Vice President & Assistant Secretary --

Robert Crudup Vice President & Managing Director --

Barbara Doyne Vice President --

Jeff Drennen Vice President --

Vic Galef Vice President & Managing Director --

Lydia A. Gavalis Vice President & Assistant Secretary --

Greg Gettinger Vice President & Assistant Secretary --

Kathy Heilig Vice President & Treasurer --

Jeff Jacobs Vice President --

Samuel King Vice President --

Kim Kirk Vice President & Managing Director --
</TABLE>

-10-
<PAGE> 302

<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
John Krzeminski Vice President & Managing Director --

Carolyn McLaurin Vice President & Managing Director --

W. Kelso Morrill Vice President & Managing Director --

Mark Nagle Vice President --

Joanne Nelson Vice President --

Joseph M. O'Donnell Vice President --

Cynthia M. Parrish Vice President & Assistant Secretary

Kim Rainey Vice President --

Rob Redican Vice President --

Maria Rinehart Vice President --

Mark Samuels Vice President & Managing Director --

Steve Smith Vice President --

Daniel Spaventa Vice President --

Kathryn L. Stanton Vice President & Assistant Secretary Assistant Treasurer

Lynda J. Striegel Vice President & Assistant Secretary --

Lori L. White Vice President & Assistant Secretary --

Wayne M. Withrow Vice President & Managing Director --
</TABLE>

Compensation to BISYS, the Trust's former distributor, during the fiscal year
ended May 31, 1999 was as follows:

<TABLE>
<CAPTION>
Net Underwriting Compensation on
Discounts and Redemption and Brokerage Other
Commissions Repurchase Commissions Compensation
- ----------- ---------- ----------- ------------

-11-
<PAGE> 303

Compensation to SEI, the Trust's distributor, during the fiscal [period] ended
______, 1999 was as follows:

<TABLE>
<CAPTION>
Net Underwriting Compensation on
Discounts and Redemption and Brokerage Other
Commissions Repurchase Commissions Compensation
- ----------- ---------- ----------- ------------

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

(a) National City Investment Management Company, 1900 East Ninth
Street, Cleveland, Ohio 44114-3484 (records relating to its
functions as investment adviser);

(b) Gulfstream Global Investors, Ltd., 100 Crescent Court, Suite
550, Dallas, Texas 75201 (records relating to certain functions as
the former subadviser for the International Discovery Fund,
Conservative Allocation Fund, Balanced Allocation Fund and
Aggressive Allocation Fund);

(c) SEI Investments Distribution Co., One Freedom Valley Drive,
Oaks, Pennsylvania, 19456 (records relating to its functions as
distributor);

(d) BISYS Fund Services, L.P., 3435 Stelzer Road, Columbus, Ohio
43219 (records relating to its functions as administrator and fund
accountant);

(e) Drinker Biddle & Reath LLP, One Logan Square, 18th and Cherry
Street, Philadelphia, Pennsylvania 19103-6996. (Declaration of
Trust, Code of Regulations, and Minute Books);

(f) National City Bank, 4100 West 150th Street, Cleveland, Ohio
44135 (records relating to its function as custodian);

(g) State Street Bank and Trust Company, P.O. Box 8590, Boston,
Massachusetts 02266 (records relating to its function as transfer
agent and dividend disbursing agent).

ITEM 29. MANAGEMENT SERVICES

Not applicable.

-12-
<PAGE> 304

ITEM 30. UNDERTAKINGS

Registrant hereby undertakes to furnish to each person to whom a
prospectus is delivered a copy of Registrant's latest Semi-Annual
Report to Shareholders upon request and without charge.

-13-
<PAGE> 305

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, Registrant has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Philadelphia and the State of
Pennsylvania on the 15th day of July, 1999.

THE PARKSTONE GROUP OF FUNDS

By /s/ Herbert R. Martens, Jr.*
----------------------------------
Herbert R. Martens, Jr., President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>

Herbert R. Martens, Jr.* President and Trustee July 15, 1999

Robert D. Neary* Trustee July 15, 1999

Leigh Carter* Trustee July 15, 1999

John F. Durkott* Trustee July 15, 1999

Robert J. Farling* Trustee July 15, 1999

Richard W. Furst* Trustee July 15, 1999

Gerald L. Gherlein* Trustee July 15, 1999

J. William Pullen* Trustee July 15, 1999

Gary Tenkman* Treasurer July 15, 1999

*By:/s/ W. Bruce McConnel, III July 15, 1999
----------------------------
Name: W. Bruce McConnel, III
Attorney-in-Fact
</TABLE>

-14-

<PAGE> 306

THE PARKSTONE GROUP OF FUNDS

CERTIFICATE OF SECRETARY

The following resolution was duly adopted by the Board of Directors of
The Parkstone Group of Funds on May 11, 1999 and remains in effect on the date
hereof:

FURTHER RESOLVED, that the officers of Armada and the Group
required to execute amendments to Armada's and the Group's Registration
Statements be, and hereby are, authorized to execute a Power of Attorney
appointing Herbert R. Martens, Jr. and W. Bruce McConnel, III, and either of
them, their true and lawful attorney or attorneys, to execute in their name,
place and stead, any and all amendments to the Registration Statements, and all
instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission; and either of said attorneys
shall have full power of substitution and resubstitution; and to do in the name
and on behalf of said officers, in any and all capacities, every act whatsoever
requisite or necessary to be done in the premises, as fully and to all intents
and purposes as each or any of said officers might or could do in person.

THE PARKSTONE GROUP OF FUNDS

By: /s/ W. Bruce McConnel, III
--------------------------
W. Bruce McConnel, III
Secretary

Dated: July 15, 1999

<PAGE> 307
THE PARKSTONE GROUP OF FUNDS

POWER OF ATTORNEY
-----------------

Know All Men by These Presents, that the undersigned, Robert D.
Neary, hereby constitutes and appoints Herbert R. Martens, Jr. and W. Bruce
McConnel, III, his true and lawful attorneys, to execute in his name, place, and
stead, in his capacity as Trustee or officer, or both, of The Parkstone Group of
Funds, the Registration Statement and any amendments thereto and all instruments
necessary or incidental in connection therewith, and to file the same with the
Securities and Exchange Commission; and said attorneys shall have full power and
authority to do and perform in his name and on his behalf, in any and all
capacities, every act whatsoever requisite or necessary to be done in the
premises, as fully and to all intents and purposes as he might or could do in
person, said acts of said attorneys being hereby ratified and approved.

DATED: September 15, 1998

/s/ Robert D. Neary
- -----------------------------
Robert D. Neary
<PAGE> 308
THE PARKSTONE GROUP OF FUNDS

POWER OF ATTORNEY
-----------------

Know All Men by These Presents, that the undersigned, Leigh
Carter, hereby constitutes and appoints Herbert R. Martens, Jr. and W. Bruce
McConnel, III, his true and lawful attorneys, to execute in his name, place, and
stead, in his capacity as Trustee or officer, or both, of The Parkstone Group of
Funds, the Registration Statement and any amendments thereto and all instruments
necessary or incidental in connection therewith, and to file the same with the
Securities and Exchange Commission; and said attorneys shall have full power and
authority to do and perform in his name and on his behalf, in any and all
capacities, every act whatsoever requisite or necessary to be done in the
premises, as fully and to all intents and purposes as he might or could do in
person, said acts of said attorneys being hereby ratified and approved.

DATED: September 15, 1998

/s/ Leigh Carter
- -----------------------------
Leigh Carter
<PAGE> 309
THE PARKSTONE GROUP OF FUNDS

POWER OF ATTORNEY
-----------------

Know All Men by These Presents, that the undersigned, John F.
Durkott, hereby constitutes and appoints Herbert R. Martens, Jr. and W. Bruce
McConnel, III, his true and lawful attorneys, to execute in his name, place, and
stead, in his capacity as Trustee or officer, or both, of The Parkstone Group of
Funds, the Registration Statement and any amendments thereto and all instruments
necessary or incidental in connection therewith, and to file the same with the
Securities and Exchange Commission; and said attorneys shall have full power and
authority to do and perform in his name and on his behalf, in any and all
capacities, every act whatsoever requisite or necessary to be done in the
premises, as fully and to all intents and purposes as he might or could do in
person, said acts of said attorneys being hereby ratified and approved.

DATED: September 15, 1998

/s/ John F. Durkott
- -----------------------------
John F. Durkott
<PAGE> 310
THE PARKSTONE GROUP OF FUNDS

POWER OF ATTORNEY
-----------------

Know All Men by These Presents, that the undersigned, Robert J.
Farling, hereby constitutes and appoints Herbert R. Martens, Jr. and W. Bruce
McConnel, III, his true and lawful attorneys, to execute in his name, place, and
stead, in his capacity as Trustee or officer, or both, of The Parkstone Group of
Funds, the Registration Statement and any amendments thereto and all instruments
necessary or incidental in connection therewith, and to file the same with the
Securities and Exchange Commission; and said attorneys shall have full power and
authority to do and perform in his name and on his behalf, in any and all
capacities, every act whatsoever requisite or necessary to be done in the
premises, as fully and to all intents and purposes as he might or could do in
person, said acts of said attorneys being hereby ratified and approved.

DATED: September 15, 1998

/s/ Robert J. Farling
- -----------------------------
Robert J. Farling
<PAGE> 311
THE PARKSTONE GROUP OF FUNDS

POWER OF ATTORNEY
-----------------

Know All Men by These Presents, that the undersigned, Richard W.
Furst, Dean, hereby constitutes and appoints Herbert R. Martens, Jr. and W.
Bruce McConnel, III, is true and lawful attorneys, to execute in his name,
place, and stead, in his capacity as Trustee or officer, or both, of The
Parkstone Group of Funds, the Registration Statement and any amendments thereto
and all instruments necessary or incidental in connection therewith, and to file
the same with the Securities and Exchange Commission; and said attorneys shall
have full power and authority to do and perform in his name and on his behalf,
in any and all capacities, every act whatsoever requisite or necessary to be
done in the premises, as fully and to all intents and purposes as he might or
could do in person, said acts of said attorneys being hereby ratified and
approved.

DATED: September 15, 1998

/s/ Richard W. Furst, Dean
- -----------------------------
Richard W. Furst, Dean
<PAGE> 312
THE PARKSTONE GROUP OF FUNDS

POWER OF ATTORNEY
-----------------

Know All Men by These Presents, that the undersigned, Herbert R.
Martens, Jr., hereby constitutes and appoints W. Bruce McConnel, III, his true
and lawful attorney, to execute in his name, place, and stead, in his capacity
as Trustee or officer, or both, of The Parkstone Group of Funds, the
Registration Statement and any amendments thereto and all instruments necessary
or incidental in connection therewith, and to file the same with the Securities
and Exchange Commission; and said attorney shall have full power and authority
to do and perform in his name and on his behalf, in any and all capacities,
every act whatsoever requisite or necessary to be done in the premises, as fully
and to all intents and purposes as he might or could do in person, said acts of
said attorney being hereby ratified and approved.

DATED: September 15, 1998

/s/ Herbert R. Martens, Jr.
- -----------------------------
Herbert R. Martens, Jr.
<PAGE> 313
THE PARKSTONE GROUP OF FUNDS

POWER OF ATTORNEY
-----------------

Know All Men by These Presents, that the undersigned, Gerald L.
Gherlein, hereby constitutes and appoints Herbert R. Martens, Jr. and W. Bruce
McConnel, III, his true and lawful attorneys, to execute in his name, place, and
stead, in his capacity as Trustee or officer, or both, of The Parkstone Group of
Funds, the Registration Statement and any amendments thereto and all instruments
necessary or incidental in connection therewith, and to file the same with the
Securities and Exchange Commission; and said attorneys shall have full power and
authority to do and perform in his name and on his behalf, in any and all
capacities, every act whatsoever requisite or necessary to be done in the
premises, as fully and to all intents and purposes as he might or could do in
person, said acts of said attorneys being hereby ratified and approved.

DATED: September 15, 1998

/s/ Gerald L. Gherlein
- -----------------------------
Gerald L. Gherlein
<PAGE> 314
THE PARKSTONE GROUP OF FUNDS

POWER OF ATTORNEY
-----------------

Know All Men by These Presents, that the undersigned, J. William
Pullen, hereby constitutes and appoints Herbert R. Martens, Jr. and W. Bruce
McConnel, III, his true and lawful attorneys, to execute in his name, place, and
stead, in his capacity as Trustee or officer, or both, of The Parkstone Group of
Funds, the Registration Statement and any amendments thereto and all instruments
necessary or incidental in connection therewith, and to file the same with the
Securities and Exchange Commission; and said attorneys shall have full power and
authority to do and perform in his name and on his behalf, in any and all
capacities, every act whatsoever requisite or necessary to be done in the
premises, as fully and to all intents and purposes as he might or could do in
person, said acts of said attorneys being hereby ratified and approved.

DATED: September 15, 1998

/s/ J. William Pullen
- -----------------------------
J. William Pullen
<PAGE> 315
THE PARKSTONE GROUP OF FUNDS

POWER OF ATTORNEY

Know All Men by These Presents, that the undersigned, Gary
Tenkman, hereby constitutes and appoints Herbert R. Martens, Jr. and W. Bruce
McConnel, III, his true and lawful attorneys, to execute in his name, place, and
stead, in his capacity as Trustee or officer, or both, of The Parkstone Group of
Funds, the Registration Statement and any amendments thereto and all instruments
necessary or incidental in connection therewith, and to file the same with the
Securities and Exchange Commission; and said attorneys shall have full power and
authority to do and perform in his name and on his behalf, in any and all
capacities, every act whatsoever requisite or necessary to be done in the
premises, as fully and to all intents and purposes as he might or could do in
person, said acts of said attorneys being hereby ratified and approved.

DATED: September 15, 1998

/s/ Gary Tenkman
- -----------------------------
Gary Tenkman
<PAGE> 316

EXHIBIT INDEX - THE PARKSTONE GROUP OF FUNDS
- --------------------------------------------

EXHIBIT NO. EXHIBIT
- ----------- -------

(j) (1) Consent of Drinker Biddle & Reath LLP

<PAGE> 1

CONSENT OF COUNSEL

We hereby consent to the use of our name and to the reference
to our Firm under the caption "Counsel" in the Statement of Additional
Information that is included in Post-Effective Amendment No. 41 to the
Registration Statement (Nos. 33-13283; 811-5105) on Form N-1A of The Parkstone
Group of Funds under the Securities Act of 1933 and the Investment Company Act
of 1940, respectively. This consent does not constitute a consent under Section
7 of the Securities Act of 1933, and in consenting to the use of our name and
the references to our Firm under such caption we have not certified any part of
the Registration Statement and do not otherwise come within the categories of
persons whose consent is required under Section 7 or the rules and regulations
of the Securities and Exchange Commission thereunder.

/s/ Drinker Biddle & Reath LLP
------------------------------
DRINKER BIDDLE & REATH LLP

Philadelphia, Pennsylvania
July 15, 1999