HOMESTATE GROUP, 485BPOS, 1999-11-02

HOMESTATE GROUP
485BPOS, 1999-11-02

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<PAGE>

Filed with the Securities and Exchange Commission on November 1, 1999

File No. 33-48940
-----------------
File No. 811-6722
-----------------

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No. __________
Post-Effective Amendment No. 11 [X]

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 11

(Check appropriate box or boxes.)

The HomeState Group

------------------------------------
(Exact Name of Registrant as Specified in Charter)

1857 William Penn Way, Suite 203, Lancaster, PA 17605
----------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (717) 396-1116
--------------

Scott L. Rehr

1857 William Penn Way, Suite 203, Lancaster, PA
-----------------------------------------------
(Name and Address of Agent for Service)

It is proposed that this filing will become effective (check appropriate box)

[X] immediately upon filing pursuant to paragraph (b)
_ on ___________________ pursuant to paragraph (b)
_ 60 days after filing pursuant to paragraph (a)(1)
_ on ___________________ pursuant to paragraph (a)(1)
_ 75 days after filing pursuant to paragraph (a)(2)
_ on ___________________ 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.

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933:

An indefinite amount of securities is being registered under the Securities Act
of 1933 pursuant to Rule 24f-2 promulgated under the Investment Company Act of
1940.

<PAGE>

CROSS-REFERENCE SHEET
Pursuant to Rule 481(a)

The HomeState Group
The HomeState Pennsylvania Growth Fund
The HomeState Select Banking and Finance Fund
The HomeState Year 2000 (Y2K) Fund

Items Required by Form N-1A

PART A -- INFORMATION REQUIRED
IN PROSPECTUS

The HomeState Pennsylvania Growth Fund

<TABLE>
<CAPTION>
Form N-1A Location in
Item Number Description Prospectus
- ----------- ----------- ----------
<S> <C> <C>
1. Front and Back Cover Pages Front and Back Cover Pages

2. Risk/Return Summary: Investments FUND FACTS --
Risks, and Performance The HomeState Pennsylvania
Growth Fund -- Investment
Objective, Investment
Strategy, Primary Risk
Considerations and
Risk/Return Bar Chart and
Table

3. Risk/Return Summary: Fee Table FUND FACTS --The HomeState
Pennsylvania Growth
Fund -- Transaction Expenses

4. Investment Objectives, Principal FUND FACTS --
Investment Strategies, and The Pennsylvania HomeState
Related Risks Growth Fund -- Investment
Objective and Primary Risk
Considerations; ADDITIONAL
INVESTMENT
INFORMATION

5. Management's Discussion of Provided in Management's
Fund Performance Annual Report to Shareholders

6. Management, Organization GENERAL INFORMATION
and Capital Structure

7. Shareholder Information SHAREHOLDER
SERVICE INFORMATION

8. Distribution Arrangements SHAREHOLDER
SERVICE INFORMATION--
Sales Charges and Reduced
Sales Charges; GENERAL
INFORMATION --
Distribution Plans

9. Financial Highlights Information FUND FACTS --
The HomeState
Pennsylvania Growth
Fund -- Financial Highlights
</TABLE>
<PAGE>

CROSS-REFERENCE SHEET
Pursuant to Rule 481(a)

The HomeState Group
The HomeState Pennsylvania Growth Fund
The HomeState Select Banking and Finance Fund
The HomeState Year 2000 (Y2K) Fund

Items Required by Form N-1A

PART A -- INFORMATION REQUIRED
IN PROSPECTUS

The HomeState Select Banking and Finance Fund

<TABLE>
<CAPTION>
Form N-1A Location in
Item Number Description Prospectus
- ----------- ----------- ----------
<S> <C> <C>
1. Front and Back Cover Pages Front and Back Cover Pages

2. Risk/Return Summary: Investments FUND FACTS --
Risks, and Performance The HomeState Select
Banking and Finance Fund
-- Investment Objective,
Investment Strategy,
Primary Risk Considerations
and Risk/Return Bar Chart and
Table

3. Risk/Return Summary: Fee Table FUND FACTS --
The HomeState Select
Banking and Finance Fund
-- Transaction Expenses

4. Investment Objectives, Principal FUND FACTS --
Investment Strategies, and The HomeState Select Banking
Related Risks and Finance Fund -- Investment
Objective and Primary Risk
Considerations; ADDITIONAL
INVESTMENT
INFORMATION

5. Management's Discussion of Provided in Management's
Fund Performance Annual Report to Shareholders

6. Management, Organization GENERAL INFORMATION
and Capital Structure

7. Shareholder Information SHAREHOLDER
SERVICE INFORMATION

8. Distribution Arrangements SHAREHOLDER
SERVICE INFORMATION--
Sales Charges and Reduced
Sales Charges; GENERAL
INFORMATION --
Distribution Plans

9. Financial Highlights Information FUND FACTS --
The HomeState Select
Banking and
Finance Fund -- Financial
Highlights
</TABLE>
<PAGE>

CROSS-REFERENCE SHEET
Pursuant to Rule 481(a)

The HomeState Group
The HomeState Pennsylvania Growth Fund
The HomeState Select Banking and Finance Fund
The HomeState Year 2000 (Y2K) Fund

Items Required by Form N-1A

PART A -- INFORMATION REQUIRED
IN PROSPECTUS

The HomeState Year 2000 (Y2K) Fund

<TABLE>
<CAPTION>
Form N-1A Location in
Item Number Description Prospectus
- ----------- ----------- ----------
<S> <C> <C>
1. Front and Back Cover Pages Front and Back Cover Pages

2. Risk/Return Summary: Investments FUND FACTS -- Risks,
and Performance The HomeState Year 2000 (Y2K)
Fund -- Investment Objective,
Investment Strategy,
Primary Risk Considerations and
Risk/Return Bar Chart and
Table

3. Risk/Return Summary: Fee Table FUND FACTS --
The HomeState Year 2000
Y2K Fund -- Transaction
Expenses

4. Investment Objectives, Principal FUND FACTS --
Investment Strategies, and The HomeState Year 2000
Related Risks (Y2K) Fund -- Investment Objective
and Primary Risk Considerations;
ADDITIONAL INVESTMENT
INFORMATION

5. Management's Discussion of Provided in Management's
Fund Performance Annual Report to Shareholders

6. Management, Organization GENERAL INFORMATION
and Capital Structure

7. Shareholder Information SHAREHOLDER
SERVICE INFORMATION

8. Distribution Arrangements SHAREHOLDER
SERVICE INFORMATION--
Sales Charges and Reduced
Sales Charges; GENERAL
INFORMATION --
Distribution Plans

9. Financial Highlights Information FUND FACTS --
The HomeState Year 2000
(Y2K) Fund --
Financial Highlights
</TABLE>
<PAGE>

HomeState
---------

[LOGO APPEARS HERE]
_____________________
MUTUAL FUNDS

The HomeState Pennsylvania Growth Fund
The HomeState Select Banking and Finance Fund
The HomeState Year 2000 (Y2K) Fund

- --------------------------------------------------------------------------------
PROSPECTUS

Dated October 29, 1999
- --------------------------------------------------------------------------------

The Securities and Exchange Commission has not approved any Fund's
shares or determined whether this Prospectus is accurate or complete.
Anyone who tells you otherwise is committing a crime.
<PAGE>

- -------------------------------------------------------------------------------
Table of Contents
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Where To Find Information Concerning Page Number
- ------------------------------------------------------------------ -----------
<S> <C>
FUND FACTS

The HomeState Pennsylvania Growth Fund -3-
The HomeState Select Banking and Finance Fund -7-
The HomeState Year 2000 (Y2K) Fund -12-

ADDITIONAL INVESTMENT INFORMATION -17-

SHAREHOLDER SERVICE INFORMATION

How to Buy Fund Shares -18-
Retirement Plans -20-
How to Redeem Fund Shares -21-
How to Exchange Fund Shares -22-
Dividends and Distributions -22-
Taxes -22-

GENERAL INFORMATION -24-

APPENDIX

Summary of Information About the Pennsylvania Economy -26-
Summary of Information About the Banking and Financial Services Industries -27-
Additional Information Regarding the Year 2000 Problem -29-
</TABLE>
<PAGE>

The HomeState Group
-------------------

The HomeState Pennsylvania Growth Fund
The HomeState Select Banking and Finance Fund
The HomeState Year 2000 (Y2K) Fund

Prospectus Dated October 29, 1999

The HomeState Group

FUND MANAGEMENT

Mailing Address: 1857 William Penn Way
P.O. Box 10666
Lancaster, PA 17605-0666

Phone: 800 232-0224 -- Toll-Free
717 396-7864 -- Local & International

SHAREHOLDER SERVICES

Contact: Firstar Mutual Fund
Services, LLC
Mailing Address: P.O. Box 701
Milwaukee, WI 53201-0701

Phone: (800) 232-0224 -- Toll-Free

Introduction to the HomeState Group

This Prospectus introduces you to The HomeState Group, an open-end management
company offering you shares of three equity mutual funds for investment.

The three mutual funds (the Funds) currently offered and covered in this
Prospectus are:
The HomeState Pennsylvania Growth Fund
The HomeState Select Banking and Finance Fund
The HomeState Year 2000 (Y2K) Fund

This Prospectus provides you with the information you should know before
investing. Please read it carefully and keep it for future reference.

2
<PAGE>

Section 1: FUND FACTS

- -------------------------------
The HomeState Pennsylvania
Growth Fund
Symbol: HSPGX
- -------------------------------

Investment Objective

The objective of HomeState Pennsylvania Growth Fund (the PA Growth Fund) is
long-term growth through capital appreciation.

Investment Strategy

. Regional Investing

The PA Growth Fund seeks to achieve this goal by investing a minimum 65% of its
total assets in a diversified portfolio of companies that have their
headquarters in the Commonwealth of Pennsylvania, or companies that are based
elsewhere but have significant operations in the Commonwealth of Pennsylvania
(i.e. at least 50% of their revenues are derived from operating units located in
Pennsylvania). The Funds' Adviser, Emerald Advisers, Inc., believes that
Pennsylvania is positioned to provide publicly-traded companies and their
shareholders with significant opportunities for growth. Located between two of
the nation's most densely populated regions, the state's industries are poised
to take advantage of global markets. (See page 24 for "Summary of Information
About the Pennsylvania Economy.")

. Equity Securities

Under normal circumstances the PA Growth Fund invests a minimum of 65% of its
total assets in common stocks, preferred stocks, and securities convertible into
common and preferred stocks. The PA Growth Fund strives to invest in companies
with strong balance sheets and dominant or leading positions in niche markets.
(See page 15 for "Hands-On" Research Techniques.")

. Smaller Companies

The Fund can invest in companies from a wide range of industries and of various
sizes. This includes smaller companies. Smaller companies are those defined by
the Funds' adviser as having a market capitalization of less than $1 billion.
Smaller companies may offer more growth potential than larger companies because
smaller companies are generally not as widely followed by institutional
investment analysts as larger companies. The Fund's adviser believes that this
lack of available information about smaller companies presents an opportunity
for investment managers providing their own research analysis.

Primary Risk Considerations

. Market Risk

The principal risk factor associated with an investment in the PA Growth Fund,
and every stock mutual fund, is that the market value of the portfolios'
securities may decrease and result in a decrease in the value of a shareholder's
investment. Loss of money is a risk of investing in the Fund. An investment in
the Fund is not a deposit of any bank and is not insured or guaranteed by the
Federal Deposit Insurance Corporation (FDIC) or any other government agency.

. Regional Investing Risk

Due to its geographic limitation, the PA Growth Fund's assets may be subject to
greater risk of loss from developments having an unfavorable impact upon
business located in Pennsylvania. These developments could be economic,
political, or other, such as natural disasters. Because of its geographic
limitation, the PA Growth Fund may be less diversified than other funds with
similar investment objectives but more geographic representation. There can be
no assurance that the economy of Pennsylvania or the companies headquartered or
operating in Pennsylvania will grow in the future. (See page 24 for "Summary of
Information About the Pennsylvania Economy.")

. Small Company Risk

Stocks of "small cap" companies tend to be more volatile and less liquid than
stocks of larger companies. "Small cap" companies, as compared to larger
companies:

- may have a shorter history of operations;
- may not have as great an ability to raise additional capital;
- may have a less diversified product line making
them more susceptible to market pressure;
- may have a smaller public market for their shares; and
- may not be nationally recognized.

3
<PAGE>

Investment Suitability

All investments, including those in mutual funds, have risks, and no investment
is suitable for all investors. The PA Growth Fund is most suitable as part of a
diversified portfolio for long-term investors who are looking for the potential
for growth of their capital.

Risk and Return Bar Chart and Table

The following chart and table provide some indication of the risks of investing
in the PA Growth Fund by:

. showing changes in the Fund's performance from year to year;

. showing how the Fund's average annual returns for 1 and 5 years and since its
commencement of operations on October 1, 1992 compare with those of a broad
measure of market performance.

As you know, how the PA Growth Fund has performed in the past is not necessarily
an indication of how the Fund will perform in the future.

The PA Growth Fund's best-performing calendar quarter was for the 3 months ended
September 30, 1997: +22.14%.
The PA Growth Fund's worst-performing quarter was for the 3 months ended
September 30, 1998: -26.46%.
The PA Growth Fund's 1999 Year-to-date return as of September 30, 1999 was
+18.55%.

The above returns do not reflect the maximum 4.75% sales charge (load). If the
sales charge was reflected, returns would be less than those shown above.

4
<PAGE>

The following chart compares the Fund's average annual returns (including the
effects of its 4.75% maximum sales charge) to that of the Russell 2000 index.
The Russell 2000 is an unmanaged index of mostly smaller-sized companies. Note
that index are gross returns and do not reflect deduction of expenses.

Average Annual Total Return as of December 31, 1998
---------------------------------------------------
Since Inception
---------------
1 Year 5 Year 10/1/92
------ ------ -------

PA Growth Fund -16.62% +13.51% +15.32%
Russell 2000 Index - 2.55% +11.86% +14.98%

Transaction Expenses

This table describes the fees and expenses that you may pay if you buy and hold
shares of the PA Growth Fund.

Shareholder Fees (fees paid directly from your investment)

Maximum Sales Charge (Load) Imposed on Purchases

(as a percentage of offering price) 4.75%/1/
Maximum Deferred Sales Charge None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None
Redemption Fee None/2/
Exchange Fee None
Maximum Account Fee None

Annual Fund Operating Expenses/3/ (expenses that are deducted from Fund assets)

Management Fee 0.75%
Distribution (12b-1) Fees/4/ 0.35%
Other Expenses 0.46%
----
Total Annual Fund Operating Expenses 1.56%

Example

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

The Example assumes that you invest $10,000 in the PA Growth Fund 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 the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:

1 year 3 years 5 years 10 years
------ ------- ------- --------
$626 $944 $1,285 $2,243

/1/ The rules of the SEC require that the maximum sales charge be reflected
in the above table. There are several ways to reduce the sales charge.
See "How to Buy Fund Shares" for more information.
/2/ There is a $12 service fee for redemptions effected via wire transfer.
/3/ The table shows expenses based on the Fund's management fees,
distribution service (12b-1) fees and other expenses for the period
ended June 30, 1999.
/4/ Because of the 12b-1 fee, long-term shareholders may indirectly pay
more than the economic equivalent of the maximum permitted front-end
sales charge.

5
<PAGE>

Financial Highlights

The financial highlights table is intended to help you understand the PA Growth
Fund's financial performance for the past five years. Certain information
reflects financial results for a single PA Growth Fund share. The total returns
in the table represent the rate that an investor would have earned on an
investment in the PA Growth Fund (assuming the reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers LLP,
whose report, along with the PA Growth Funds financial statements, are included
in the Statement of Additional Information (SAI) which is available upon
request.

<TABLE>
<CAPTION>
Periods Ended**
---------------
6/30/99 6/30/98 6/30/97 6/30/96 6/30/95
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 13.03 $10.78 $10.63 $ 7.84 $ 6.19

Income from investment Operations
Net investment loss (0.01)/1/ (0.05)/1/ (0.03) (0.04) (0.01)

Net realized and unrealized gain on investments (1.18) 2.70 0.89 3.09 1.77
------ ---- ---- ---- ----

Total from investment operations (1.19) 2.65 0.86 3.05 1.76
------ ---- ---- ---- ----
Less Distributions
Dividends from net investment income -- -- -- -- --
Distributions from net realized gains (0.14) (0.40) (O.71) (0.26) (0.11)
------ ------ ------ ------ ------
Total distributions (0.14) (0.40) (0.71) (0.26) (0.11)
------ ------ ------ ------ ------
Net asset value at end of period $ 11.70 $13.03 $10.78 $10.63 $ 7.84
====== ====== ====== ====== =======
Total Return* (9.24%) 25.04% 9.56% 39.94% 28.96%

RATIOS/SUPPLEMENTAL DATA

Net assets, end of period (000s omitted) $98,977 $135,437 $89,577 $55,828 $20,388
Ratio of expenses to average net assets
before reimbursement by Adviser 1.56% 1.49% 1.77% 1.85% 2.00%
Ratio of expenses to average net assets
after reimbursement by Adviser na/2/ na/2/ na/2/ na/2/ 1.91%
Ratio of net investment loss to average net
assets before reimbursement by Adviser (0.11%) (0.45)% (O.39)% (0.58)% (0.20)%
Ratio of net investment loss to average net
assets after reimbursement by Adviser na/2/ na/2/ na/2/ na/2/ (0.10)%
Portfolio turnover rate 88% 51% 50% 66% 51%
</TABLE>

* Total return does not reflect 4.75% maximum sales charge
** Data reflects 2 for 1 stock split which occurred on December 29, 1997
1 Net investment income per share is calculated using ending balances prior
to consideration of adjustments for permanent book and tax differences.
2 Not applicable: no reimbursements were made by the Adviser.

6
<PAGE>

- ---------------------------------
The HomeState Select Banking and
Finance Fund
Symbol: HSSAX
- ---------------------------------

Investment Objective

The objective of the HomeState Select Banking and Finance Fund (the Banking and
Finance Fund) is long-term growth through capital appreciation. Income is a
secondary objective.

Investment Strategy

. Concentration in the Banking and Financial Services Industries

The Banking and Finance Fund will invest at least 65% of its total assets in
banking and financial services companies. For investment purposes, a company is
defined as "principally engaged" in banking or financial services industries if:

(i) at least 50% of either the revenues or earnings was derived from the
creation, purchase or sale of banking or financial services products,
or

(ii) at least 50% of the assets was devoted to such activities, based on
the company's most recent fiscal year.

Companies in the banking industry include U.S. commercial and industrial banking
and savings institutions and their parent holding companies. Companies in the
financial services industry include commercial and industrial finance companies,
diversified financial services companies, investment banking, securities
brokerage and investment advisory companies, real estate investment trusts,
insurance and insurance holding companies, and leasing companies. The Fund
normally emphasizes companies located in the Mid-Atlantic states (Pennsylvania,
New Jersey, New York, Delaware, Ohio, West Virginia, Virginia, Maryland and
Washington D.C.), but can invest in companies headquartered anywhere in the U.S.

The Banking and Finance Fund's adviser believes that this sector of the economy
will be an area of potential growth over the next several years because of:

(i) the recent wave of consolidations of commercial banks

(ii) the recent acquisitions by companies in the banking and financial
services industries resulting from changes in traditional regulatory
and operating distinctions

(iii) an increase in interest in investments and savings as the American
"baby boomers" approach retirement.

(See page 25 for "Summary of Information About the Banking and Financial
Services Industries.")

. Equity Securities

Under normal circumstances the Banking and Finance Fund invests in common
stocks, preferred stocks, and securities convertible into common and preferred
stocks. The Fund strives to invest in companies with strong balance sheets and
dominant or leading positions in niche markets. (See page 15 for "Hands-On"
Research Techniques.")

. Smaller Companies

The Banking and Finance Fund can invest in companies from a wide range of
industries and of various sizes. This includes smaller companies. Smaller
companies are those defined by the Funds' adviser as having a market
capitalization of less than $1 billion. Smaller companies may offer more growth
potential than larger companies because smaller companies are generally not as
widely followed by institutional investment analysts as larger companies. The
Fund's adviser believes that this lack of available information about smaller
companies presents an opportunity for investment managers providing their own
research analysis.

Primary Risk Considerations

. Market Risk

The principal risk factor associated with an investment in the Banking and
Finance Fund, and every stock mutual fund, is that the market value of the
portfolios' securities may decrease and result in a decrease in the value of a
shareholder's investment. Loss of money is a risk of investing in the Fund. An
investment in the Banking and Finance Fund is not a deposit of any bank and is
not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or
any other government agency.

. Small Company Risk

Stocks of "small cap" companies tend to be more volatile and less liquid than
stocks of larger companies. "Small cap" companies, as compared to larger
companies:

- may have a shorter history of operations;
- may not have as great an ability to raise additional capital;

7
<PAGE>

- may have a less diversified product line making them more susceptible to
market pressure;

- may have a smaller public market for their shares; and

- may not be nationally recognized.

. Industry Concentration Risk

The Banking and Finance Fund concentrates 65% or more of its total assets in
securities of companies principally engaged in the banking or financial services
industries. As a result, the Banking and Finance Fund may be subject to greater
risks than a portfolio without such a concentration. This is especially true
with respect to the risks associated with regulatory developments in, or related
to, the banking and financial services industries.

Investment Suitability

All investments, including those in mutual funds, have risks, and no investment
is suitable for all investors. The Banking and Finance Fund is most suitable as
part of a diversified portfolio for long-term investors who are looking for the
potential for growth of their capital.

Risk and Return Bar Chart and Table

The following chart and table provide some indication of the risks of investing
in the Banking & Finance Fund by:

. showing changes in the Fund's performance from year to year ;

. showing how the Fund's average annual returns for 1 year and since its
commencement of operations on February 18, 1997 compare with those of a broad
measure of market performance.

Prior to October 20, 1998, the Fund was named the HomeState Select Opportunities
Fund and pursued a different objective.

As you know, how the Banking & Finance Fund has performed in the past is not
necessarily an indication of how the Fund will perform in the future.

8
<PAGE>

The Banking & Finance Fund's best-performing calendar quarter was for the 3
months ended September 30, 1997: +27.49%.

The Banking & Finance Fund worst-performing quarter was for the 3 months ended
September 30, 1998: -27.35%.

The Banking & Finance Fund's 1999 Year-to-date return as of September 30, 1999
was +14.99%.

The above returns do not reflect the maximum 4.75% sales charge (load). If the
sales charge was reflected, returns would be less than those shown above.

The following chart compares the Fund's average annual returns (including the
effects of its 4.75% maximum sales charge) to that of the Russell 2000 index.
The Russell 2000 is an unmanaged index of mostly smaller-sized companies. Note
that Russell 2000 index is a gross return and does not reflect deduction of
expenses.

<TABLE>
<CAPTION>
Average Annual Total Return as of December 31, 1998
---------------------------------------------------
Since Inception
---------------
1 Year 2/18/97
------ -------
<S> <C> <C>
Banking & Finance Fund -24.31% + 0.72%
Russell 2000 Index - 2.55% + 8.73%
</TABLE>

Transaction Expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.

Shareholder Fees (fees paid directly from your investment)

Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 4.75%/1/
Maximum Deferred Sales Charge None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None
Redemption Fee None/2/
Exchange Fee None
Maximum Account Fee None

Annual Fund Operating Expenses/3/ (expenses that are deducted from Fund assets)

Management Fee 1.00%
Distribution (12b-1) Fees/4/ 0.35%
Other Expenses 1.25%
-----
Total Annual Fund Operating Expenses 2.60%
-----
Expenses Reimbursed by the Fund's Adviser (0.25%)/5/
-----
Net Operating Expenses 2.35%

9
<PAGE>

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

The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and 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 the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:

1 year/6/ 3 years/7/ 5 years/7/ 10 years/7/
------ ------- ------- --------
$702 $1,221 $1,766 $3,246

/1/ The rules of the SEC require that the maximum sales charge be reflected in
the above table. There are several ways to reduce the sales charge. See
""How to Buy Fund Shares" for more information.

/2/ There is a $12 service fee for redemptions effected via wire transfer.

/3/ The table shows expenses based on the Fund's management fees, distribution
service (12b-1) fees and other expenses for the period ended June 30, 1999.

/4/ Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the economic equivalent of the maximum permitted front-end sales
charge.

/5/ The Adviser has agreed to limit the Total Annual Fund Operating Expenses to
no more than 2.35% at least through October 30, 2000. The Adviser is
reimbursing and/or waiving fees to the Fund so that you would pay no more
than 2.35% on an annualized basis at least through October 30, 2000.

/6/ The Expense Example shown for One Year includes the effects of the
Adviser's reimbursement of Fund operating expenses in excess of 2.35% on an
annualized basis.

/7/ The Three, Five and Ten Year Expense Examples do not show the effects of
any waiver or reimbursement of operating expenses after the first year
because the Adviser is obligated to waive and/or reimburse expenses only
through the period ended October 30, 2000.

10
<PAGE>

FinanciaL Highlights

The financial highlights table is intended to help you understand the Select
Banking and Finance Fund's financial performance since it commenced operations
on February 18, 1997. Prior to October 20, 1998, the Fund was named the
HomeState Select Opportunities Fund and pursued a different objective. Certain
information reflects financial results for a single Banking and Finance Fund
share. The total returns in the table represent the rate that an investor would
have earned on an investment in the Banking and Finance Fund (assuming the
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with the Banking and
Finance Fund's financial statements, are included in the SAI which is available
upon request.

<TABLE>
<CAPTION>
Periods Ended
---------------------------------------
6/30/99 6/30/98 6/30/97+
------- ------- -------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 13.42 $ 11.70 $ 10.00
Income from Investment Operations
Net investment income (0.01)/1/ (0.20)/1/ (0.03)
Net realized and unrealized gain on investments (0.05) 2.46 1.73
------ ----- -----
Total from investment operations (0.06) 2.26 1.70
------ ----- -----
Less Distributions
Distributions from net realized gains -- (0.54) --
------ ----- -----
Total distributions -- (0.54) --
------ ----- -----
Net asset value at end of period $ 13.36 $ 13.42 $ 11.70
======= ======= =======
Total Return** (0.45)% 19.56% 17.00%***

RATIOS/SUPPLEMENTAL DATA

Net assets, end of period (000s omitted) $13,131 $17,426 $ 5,628
Ratio of expenses to average net assets
before reimbursement by Adviser 2.60% 2.59% 8.10%*
Ratio of expenses to average net assets
after reimbursement by Adviser/2/ 2.35% 2.35% 2.35%*
Ratio of dividends on short positions to
average net assets -- 0.02% --
Ratio of net investment loss to average net
assets before reimbursement by Adviser (0.31%) (1.99)% (6.85)%*
Ratio of net investment loss to average net
assets after reimbursement by Adviser (0.05%) (1.75)% (1.10)%*
Portfolio turnover rate 158% 115% 59%
</TABLE>

+ From commencement of operations: February 18, 1997
* Annualized
** Total return does not reflect 4.75% maximum sales charge
*** Not Annualized
1 Net investment income per share is calculated using ending balances
prior to consideration of adjustments for permanent book and tax
differences.
2 The operating expense ratio excludes dividends on short positions. The
ratio including dividends on short positions for the periods ended
June 30, 1999, June 30, 1998 and June 30, 1997 were 2.35%, 2.37% and
2.35%, respectively.

<PAGE>

- ---------------------------------------------
The HomeState Year 2000 (Y2K) Fund
Symbol: HSYTX
- ---------------------------------------------

Investment Objective

The investment objective of the HomeState Year 2000 (Y2K) Fund (the Y2K Fund) is
to seek capital appreciation.

Investment Strategy

. Equity Securities

Under normal conditions, the Y2K Fund will invest at a minimum 65% of its total
assets in a non-diversified portfolio of equity securities of public companies
identified by the Y2K Fund's adviser as being involved in the "Year 2000
Industry." These are companies that are actively engaged in developing, or
supporting the development or implementation of, marketable solutions to the
"Year 2000 Problem." The Y2K Fund will invest principally in common stocks, but
may also invest in preferred stocks and convertible securities of Y2K, as well
as other, companies. (See page 15 for "Hands-On" Research Techniques.") The Y2K
Fund can invest a larger percentage of its assets in a particular company than
the typical mutual fund.

. The Year 2000 Problem

The "Year 2000 Problem" stems mainly from computer system design decisions made
more than a decade ago. At that time, the requirement to save cost by storing
the year of date fields as two digits instead of four far outweighed the
consideration for what would happen in the year 2000. In these designs, the year
2000 ("00") will appear to be 1900 ("00"), 2001 will appear to be 1901, etc.
Some of the manifestations of the Year 2000 Problem may include: credit cards
with an expiration date of 01/00 will appear to have expired and will be
rejected; mortgages, interest payments, and forecasting systems where time
periods are calculated will all produce incorrect results. Left uncorrected, all
date-sensitive calculations involving the years 2000 or later can result in
massive computer malfunctions. (See page 27 for "Additional Information
Regarding the Year 2000 Problem.")

. Options, Futures, and Short-Selling Strategies

The fund may invest a portion of its assets in options, futures and foreign
currencies. It may also sell short. These practices are used primarily to hedge
the fund's portfolio but may be used to increase returns; however such practices
sometimes may reduce returns or increase volatility.

. Smaller Companies

The Y2K Fund can invest in companies from a wide range of industries and of
various sizes. This includes smaller companies. Smaller companies are those
defined by the Y2K Funds' adviser as having a market capitalization of less than
$1 billion. Smaller companies may offer more growth potential than larger
companies because smaller companies are generally not as widely followed by
institutional investment analysts as larger companies. The Y2K Fund's adviser
believes that this lack of available information about smaller companies
presents an opportunity for investment managers providing their own research
analysis.

. Limited Time Horizon

On October 15, 1999, the shareholders of the Y2K Fund voted to approve to
changes to the Fund. Effective in early 2000, the Fund's name will be changed to
"The HomeState Select Technology Fund" and its investment objective and policies
will be broadened to invest primarily in companies engaged in the technology
sector. (See page 27 for "Special Note Regarding the Y2K Fund's Objective.")

Primary Risk Considerations
. Market Risk

The principal risk factor associated with an investment in the Y2K Fund, and
every, stock mutual Y2K Fund is that the market value of the portfolios'
securities may decrease and result in a decrease in the value of a shareholder's
investment. Loss of money is a risk of investing in the Fund. An investment in
the Y2K Fund is not a deposit of any bank and is not insured or guaranteed by
the Federal Deposit Insurance Corporation (FDIC) or any other government agency.

. Industry Concentration Risk

Under normal market conditions, the Y2K Fund will concentrate its investments in
Year 2000 technology companies. By doing so, the Y2K Fund will be exposed to the
risk of incurring substantial losses, as well as the opportunity of earning
substantial gains, depending upon the markets' overall reception of these
companies. Factors other than a company's Y2K

12
<PAGE>

problem-solving activities will impact value. Companies in the same industry are
often faced with the same obstacles, issues or regulatory burdens, and their
securities may react similarly to these or other market conditions. Equity
securities of companies within the technology industry may have increased price
volatility due to the heightened competition and rapid pace of change that is
commonly experienced within that industry sector. As a result, a portfolio of
technology company stocks is likely to be more volatile in price than one that
includes investments in companies operating in a wider number of industry
sectors.

. Small Company Risk

Stocks of "small cap" companies tend to be more volatile and less liquid than
stocks of larger companies. "Small cap" companies, as compared to larger
companies:

- may have a shorter history of operations;

- may not have as great an ability to raise
additional capital;

- may have a less diversified product line making
them more susceptible to market pressure;

- may have a smaller public market for their
shares; and

- may not be nationally recognized.

. Non-Diversification

As a "non-diversified" mutual fund, the Y2K Fund has the ability to invest a
larger percentage of its assets in the stock of a smaller number of companies
than a "diversified" fund. Because the appreciation or depreciation of a single
portfolio security may have a greater impact on the net asset value of the Y2K
Fund, the net asset value per share of the Y2K Fund can be expected to fluctuate
more than that of a comparable "diversified" fund. (See the SAI for additional
information.)

. Options, Futures, and Short-Selling Strategies Risks

The Fund may invest a portion of its assets in options, futures and foreign
currencies. It may also sell short. These practices are used primarily to hedge
the fund's portfolio but may be used to increase returns; however such practices
sometimes may reduce returns or increase volatility. (See the SAI for additional
information.)

Investment Suitability

The Y2K Fund is an aggressive fund and may not be suitable for all investors.
This Fund is most suitable as part of a diversified portfolio for long-term
investors who are looking for the potential growth of their capital.

Risk and Return Bar Chart and Table

The following chart and table provide some indication of the risks of investing
in the Year 2000 Fund by:
. showing changes in the Fund's performance from year to year;
. showing how the Fund's average annual returns for 1 year and since its
commencement of operations on October 31, 1997 compare with those of a broad
measure of market performance.

As you know, how the Year 2000 Fund has performed in the past is not necessarily
an indication of how the Fund will perform in the future.

13
<PAGE>

The Year 2000 Fund's best-performing calendar quarter was for the 3 months ended
September 30, 1999: +25.55%. The Year 2000 Fund's worst-performing quarter was
for the 3 months ended September 30, 1998:

- -26.22%.

The Year 2000 Fund's 1999 Year-to-date return as of September 30, 1999 was
+40.57%.

The above returns do not reflect the maximum 2.90% sales charge (load). If the
sales charge was reflected, returns would be less than those shown above.

The following chart compares the Fund's average annual returns (including the
effects of its 2.90% maximum sales charge) to that of the Russell 2000 index.
The Russell 2000 is an unmanaged index of mostly smaller-sized companies. Note
that Russell 2000 index is a gross return and does not reflect deduction of
expenses.

<TABLE>
<CAPTION>
Average Annual Total Return as of December 31, 1998
---------------------------------------------------
Since Inception
---------------
1 Year 10/31/97
------ --------
<S> <C> <C>
Year 2000 Fund - 0.91% + 4.71%
Russell 2000 Index - 2.55% - 1.27%
</TABLE>

Transaction Expenses

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.

14
<PAGE>

Shareholder Fees (fees paid directly from your investment)

Maximum Sales Charge (Load) Imposed on Purchases

(as a percentage of offering price) 2.90%/1/
Maximum Deferred Sales Charge None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None
Redemption Fee None/2/
Exchange Fee None
Maximum Account Fee None

Annual Fund Operating Expenses/3/ (expenses that are deducted from Fund assets)

Management Fee 1.00%
Distribution (12b-1) Fees/4/ 0.70%
Other Expenses 1.31%
-----
Total Annual Fund Operating Expenses 3.01%
-----
Expenses Reimbursed by the Fund's Adviser (0.11%)/5/
-----
Net Operating Expenses 2.90%

Example

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

1 year/6/ 3 years/7/ 5 years/7/ 10 years/7/
------ ------- ------- --------
$575 $1,183 $1,816 $3,511

/1/ The rules of the SEC require that the maximum sales charge be reflected in
the above table. There are several ways to reduce the sales charge. See
"How to Buy Fund Shares" for more information.

/2/ There is a $12 service fee for redemptions effected via wire transfer.

/3/ The table shows expenses based on the Fund's management fees, distribution
service (12b-1) fees and other expenses for the period ended June 30, 1999.

/4/ Because of the 12b-1 fee, long-term shareholders may indirectly pay more
than the economic equivalent of the maximum permitted front-end sales
charge.

/5/ The Adviser has agreed to limit the Total Annual Fund Operating Expenses to
no more than 2.90% at least through October 30, 2000. The Adviser is
reimbursing and/or waiving fees to the Fund so that you would pay no more
than 2.90% on an annualized basis at least through October 30, 2000.

/6/ The Expense Example shown for One Year includes the effects of the
Adviser's reimbursement of Fund operating expenses to no more than 2.90% on
an annualized basis.

/7/ The Three, Five and Ten Year Expense Examples do not show the effects of
any waiver or reimbursement because the Adviser is obligated to waive
and/or reimburse expenses only through the period ended October 30, 2000.

15
<PAGE>

Financial Highlights

The financial highlights table is intended to help you understand the Y2K
Fund's financial performance since it commenced operations on October 31, 1997.
Certain information reflects financial results for a single Y2K Fund share. The
total returns in the table represent the rate that an investor would have earned
on an investment in the Y2K Fund (assuming the reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers LLP,
whose report, along with the Y2K Fund's financial statements, are included in
the SAI which is available upon request.

<TABLE>
<CAPTION>
Period Ended
-----------------
6/30/99 6/30/98+
------- -------
<S> <C> <C>
Net Asset Value, Beginning of Period $ 12.09 $ 10.00
Income From Investment Operations
Net investment loss /1/ (0.22) (0.16)
Net realized and unrealized gain on investments 0.30 2.25
------- -------
Total from investment operations 0.08 2.09
------- -------
Net asset value at end of period $ 12.17 $ 12.09
======= =======
Total Return** 0.66% 20.90%***

RATIOS/SUPPLEMENTAL DATA

Net assets, end of period (000s omitted) $ 9,056 $10,973
Ratio of expenses to average net assets
before reimbursement by Adviser 3.01% 5.29%*
Ratio of expenses to average net assets
after reimbursement by Adviser/2/ 2.90% 2.90%*
Ratio of dividends on short positions to
average net assets 0.04% 0.03%*
Ratio of net investment loss to average net
assets before reimbursement by Adviser (2.27%) (4.56)%*

Ratio of net investment loss to average net
assets after reimbursement by Adviser (2.16%) (2.17)%*
Portfolio turnover rate 200% 44%
</TABLE>

+ From commencement of operations: October 31, 1997
* Annualized
** Total return does not reflect 2.90% maximum sales charge
*** Not Annualized
1 Net investment income per share represents net investment income
divided by the average shares outstanding throughout the period.
2 The operating expense ratio excludes dividends on short positions. The
ratio including dividends on short positions for the periods ended
June 230, 1999 and June 30, 1998 were 2.94% and 2.93%, respectively.

16
<PAGE>

- --------------------------------------------------------------------------------
Section 2: ADDITIONAL INVESTMENT INFORMATION
- --------------------------------------------------------------------------------

"Hands-On" Research Techniques

"Hands-On" research is the driving force behind the Funds' stock selection
process. Stocks are chosen based primarily on fundamental analysis and, although
technical factors are not ignored, the main investment criteria focuses on an
evaluation of revenues, earnings, debt, capitalization, quality of management,
level of insider ownership, changing market conditions, past performance, and
future expectations. The Funds tend to choose companies with well-defined
business plans and long-term operating strategies designed to increase
shareholder value. When evaluating a company for possible inclusion in one of
the Funds' portfolios, a member of the Adviser's portfolio management or
research staff requests an in-person visit to the company whenever such a visit
is judged appropriate. Meeting with the company's management and surveying its
operations can provide important insights into a company.

The Adviser also tries to interview a cross section of the company's employees,
customers, suppliers, and competitors. The Adviser believes that this "hands-on"
approach to investing may give it an opportunity to spot developing trends in
these companies. The Adviser estimates that approximately 80 percent of the PA
Growth Fund's equity holdings have historically been a result of this intensive,
in-house research effort and that this percentage is similar in the Banking and
Finance Fund and the Y2K Fund.

Primary research is particularly important in the analysis of smaller companies.
Smaller companies are generally not as widely followed by institutional
investment analysts as larger companies such as those listed on the New York
Stock Exchange. According to surveys by brokerage firms, more than 60 percent of
all companies listed on the NASDAQ Stock Exchange and American Stock Exchange
have two or fewer analysts following the company. The Funds' Adviser believes
that this lack of generally available information about smaller companies
presents an opportunity for investment managers who are dedicated to providing
their own research analysis. "Hands-On" research analysis may help the Adviser
spot developing trends early, so the Adviser can work to take advantage of them
before they are seen by the larger investment community.

Fixed-Income/Debt Securities

Each Fund may also invest up to 35 percent of the value of its total assets in
preferred stocks, investment-grade corporate bonds and notes, and high-quality
short-term debt securities such as commercial paper, bankers' acceptances,
certificates of deposit, repurchase agreements, obligations insured or
guaranteed by the United States Government or its agencies, and demand and time
deposits of domestic banks and United States branches and subsidiaries of
foreign banks.

The prices of debt securities in which the Funds invest are likely to decrease
in times of rising interest rates. Conversely, when rates fall, the value of the
Funds' debt securities may rise. Price changes of these debt securities held by
the Funds have a direct impact on the net asset value per share of the Funds.
(See SAI for additional information.)

Mortgage-Related Securities

The Funds do not invest directly in real estate or real estate mortgage loans,
except those instruments issued or guaranteed by the United States Government.
The mortgage-related instruments in which the Funds may invest include those
issued by Government National Mortgage Association ("GNMA"), Federal National
Mortgage Association ("FNMA"), and Federal Home Loan Mortgage Corporation
("FHLMC") (collectively, the "Mortgage-Related Instruments"). The underlying
mortgages which collateralize Mortgage-Related Instruments issued by GNMA are
fully guaranteed by the Federal Housing Administration or Veteran's
Administration, while those collateralizing Mortgage-Related Instruments issued
by FHLMC or FNMA are typically conventional residential mortgages conforming to
strict underwriting size and maturity constraints.
(See SAI for additional information.)

Short-Term Obligations

When, in the opinion of the Funds' investment adviser, market conditions warrant
a temporary defensive approach, the Funds may invest more than 35 percent of
their total assets in short-term obligations. Short-term obligations include the
following: securities issued or guaranteed by the U.S. government, commercial
paper, and bankers acceptances. During intervals when the Funds adopt a
temporary defensive position they will not be achieving their stated investment
objective.

17
<PAGE>

- --------------------------------------------------------------------------------
Section 3: SHAREHOLDER SERVICE INFORMATION
- --------------------------------------------------------------------------------

How to Buy Fund Shares

You may buy shares of the Funds through selected financial service firms (such
as broker-dealer firms) that have signed a selling agreement with Rafferty
Capital Markets, Inc. (the "Distributor"), the Funds' principal distributor. If
you would like help finding a dealer, you should contact the Funds by calling
(800) 232-0224. Shares can be purchased by mail or by wire, as described in this
Prospectus.

. The minimum initial investment is $500.
. The minimum subsequent investment is $50.

Investors may be charged a fee if they effect transactions through a broker or
dealer.

Purchase Price/Share Valuation

Purchase orders for shares of the Funds placed with a registered broker-dealer
must be received by the broker-dealer before the close of the New York Stock
Exchange (NYSE) to receive the Funds' valuation calculated that day. The
broker-dealer is responsible for the timely transmission of orders to the
Distributor. Orders placed with the registered broker-dealer after the close of
the NYSE will be executed based on the Funds' valuation calculated on the next
business day.

The net asset value and offering price of the shares of the Funds are determined
once on each Business Day as of the close of the NYSE, which on a normal
Business Day is usually 4:00 p.m. Eastern Time. A "Business Day" is defined as a
day in which the NYSE is open for trading.

Each Fund's value is determined by adding the value of the portfolio securities
and other assets, subtracting its liabilities, and dividing the result by the
number of its shares outstanding. Net asset value includes interest on
fixed-income securities, which is accrued daily. Securities of the Funds listed
or traded on a securities exchange will be valued at the last quoted sales price
on the security's principal exchange. Listed securities not traded on an
exchange that day, and other securities which are not traded in the
over-the-counter market on any given day, will be valued at the mean between the
last bid and ask price on the market on that day. Debt securities that mature in
sixty days or less are valued at amortized cost, which approximates market
value. Fair market value for other securities without available market
quotations will be valued by the Board of Trustees. (See the SAI for additional
information.)

The net asset value of the Funds fluctuates with market conditions as the value
of the investment portfolio changes. With approval of the Board of Trustees, the
Funds may use a pricing service, bank or broker-dealer experienced in such
matters to value the Funds' securities.

Right to Refuse an Order

The Funds may refuse any order for the purchase of shares which the Board of
Trustees deems as not in the best interests of the Funds.

Stock Certificates

Stock certificates representing shares of the Funds are not issued except upon
written request. In order to facilitate redemptions and transfers, most
shareholders elect not to receive certificates. If you lose your certificate,
you may incur an expense to replace it.

Sales Charges

The maximum sales load on the purchase of shares is 4.75% for the PA Growth Fund
and the Banking and Finance Fund. The Offering Price is the net asset value per
share plus the front-end sales load, and is calculated as follows:

<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF: DEALER'S CONCESSION
-------------------------------- -------------------
DOLLAR AMOUNT INVESTED OFFERING PRICE N.A.V. (AS A % OF OFFERING PRICE)
- ---------------------- -------------- ------ ---------------------------
<S> <C> <C> <C>
Less Than $50,000 4.75% 4.99% 4.25%
$50,000 to $250,000 3.75 3.90 3.25
$250,000 to $500,000 2.75 2.83 2.50
$500,000 to $1,000,000 2.25 2.30 2.00
$1,000,000 & Above 0.00 0.00 0.50
</TABLE>

18
<PAGE>

The maximum sales load on the purchase of shares of the Y2K Fund is 2.90%. The
Offering Price is calculated as follows:

<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF: DEALER'S CONCESSION
-------------------------------- -------------------
DOLLAR AMOUNT INVESTED OFFERING PRICE N.A.V. (AS A % OF OFFERING PRICE)
- ---------------------- -------------- ------ --------------------------
<S> <C> <C> <C>
Less Than $100,000 2.90% 2.99% 2.40%
$100,000 to $250,000 1.90 1.94 1.40
$250,000 to $500,000 1.00 1.01 0.90
$500,000 & Above 0.00 0.00 0.50
</TABLE>

Reduced Sales Charge

There are several ways for you the shareholder to reach a higher discount level
and qualify to pay a lower sales charge. Shareholders may qualify by combining
current or past purchases in any of the Funds.

1. Reach "Break Points" - Increase the initial investment amount.
2. Right of Accumulation - Add to an existing shareholder account.
3. Sign a Letter of Intent - Inform the Funds that you wish to sign a non-
binding Letter of Intent to purchase an additional number of shares over a
13-month period.
4. Combined Purchase Privilege - Combine investor accounts into one "purchase"
or "holding." (See the SAI for additional information.)

Purchases at Net Asset Value

The Board of Trustees has determined that under certain conditions shareholders
shall be permitted to purchase shares of the Funds without paying a sales
charge. On purchases of $1,000,000 or more in the PA Growth Fund and the Banking
and Finance Fund and on purchases of $500,000 or more in the Y2K Fund, shares
are acquired at net asset value with no sales charge or dealer concession
charged to the investor. The Distributor, however, may pay the broker-dealer up
to 0.50% of the Offering Price, from its own assets. (See the SAI for additional
information.)

Distribution Plans

Rafferty Capital Markets, Inc. (the Distributor) will incur certain expenses
while providing selling and sales distribution services for the Funds, including
such costs as compensation to broker-dealers for (i) selling shares of the
Funds, and (ii) providing information and advice to their shareholder clients
regarding ongoing investment in the Funds, as well as advertising, promotional
and printing expenses.

To promote shares of the Funds to the general public, each Fund has adopted a
distribution services plan (the "Plans") under Rule 12b-1 of the Investment
Company Act of 1940 (the "Act"). The Plans allow the Funds to reimburse the
Distributor for costs specifically described in this Section. The Distributor
receives no other compensation from the Funds, except that (i) any sales charge
collected will be paid to the Distributor, and (ii) the minimum total dollar
amount paid to the Distributor on an annual basis (net of the amount paid to
broker-dealers and/or service organizations) will be $21,000. The Distributor
may pay these sales charges to broker-dealers who have entered into a Selling
Agreement with the Distributor as a commission paid for selling the Funds'
shares. (See page 16 for "Sales Charges.")

The Funds pay the Distributor on a monthly basis at an annual rate not to exceed
0.35% of the series' average net assets for the PA Growth Fund and Banking and
Finance Fund, and 0.70% for the Y2K Fund. Expenses acceptable for reimbursement
under the Plan include compensation of broker-dealers or other persons for
providing assistance in distribution and for promotion of the sale of the shares
of the Funds. The Funds' Adviser is responsible for paying the Distributor for
any unreimbursed distribution expenses. Because these fees are paid out of the
Funds' assets on an ongoing basis, over time these fees will increase the cost
of your investment and may cost you more than paying other types of sales
charges.

According to the Plans, a broker-dealer may receive a maintenance commission in
the amount of 0.25%

19
<PAGE>

(annualized) of the average net assets maintained by their clients in the PA
Growth Fund and Banking and Finance Fund and 0.50% in the Y2K Fund. The Funds
may also compensate a bank under the Plans only to the extent that a bank may
serve as a "service organization," providing administrative and accounting
services for the Funds' shareholders.

Buying Shares by Mail

Please complete and sign the Purchase Application form included with this
Prospectus and send it, together with your check or money order, made payable to
The HomeState Group. Mail to:

The HomeState Group
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701

Please note that a different procedure is used for opening Individual Retirement
Accounts (IRA's). Please call Firstar Mutual Fund Services, LLC (Firstar) at
(800) 232-0224 for details. Firstar will charge $25 against a shareholder's
account for any check returned for insufficient funds.

Buying Shares by Overnight or

Express Mail
Mail to:
Firstar Mutual Fund Services, LLC
3rd Floor
615 E. Michigan Street
Milwaukee, WI 53202
(800) 232-0224

Buying Shares by Wire

1. Call Firstar at (800) 232-0224 to advise of the investment and dollar
amount.
2. Immediately after your investment is made send a completed Purchase
Application Form to Firstar.
3. Your purchase request should be wired through the Federal Reserve Bank as
follows:

Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, WI 53202
ABA Number 075000022

For credit to Firstar Mutual Fund Services LLC Account Number 112-952-137
For further credit to (Fund Name, Shareholder Account Number, Shareholder
Name) Include taxpayer identification number for new accounts.

Additional Purchases

You may add to your account at any time by purchasing shares by mail (minimum
$50) or by wire (minimum $1,000). You must call to notify Firstar at (800)
232-0224 before sending your wire. A remittance form which is attached to your
individual account statement should accompany any investments made through the
mail. All purchase requests must include your shareholder account number.

Buying Shares by Telephone

After your initial purchase, you may make additional purchases by telephone.
Simply call (800) 232-0224 and money can be transferred directly from your bank
account (domestic financial institutions only) through the Automated Clearing
House (ACH) to purchase Fund shares. The minimum amount you may transfer is
$100. To receive the daily net offering price both your purchase order and
Electronic Funds Transfer must be received before the close of regular trading
on the purchase day.

AutoInvest Plan

To invest a set amount on a regular monthly, bi-monthly, semi-annual, or annual
basis, you can sign up for the AutoInvest Plan. With a minimum investment of $50
per month, you can have money regularly transferred directly from your bank
account (domestic financial institutions that are ACH members only) through the
ACH to purchase fund shares. You choose the schedule. You may sign up for this
service on your Purchase Application Form. The minimum initial investment in the
Funds is $50 when using the AutoInvest Plan. Please note that the Funds may
change or terminate this service at any time.

Retirement Plans

Tax-deferred retirement plans provide qualified investors with the benefit of
tax-free compounding of income dividends and capital gains distributions. For
more information, applications, and brochures please contact us at (800)
232-0024. HomeState Group Funds may be used in tax-deferred retirement plans
such as:

. Individual Retirement Accounts (IRA's), including the "Traditional" IRA,
Roth IRA, and Education IRA
. employer-sponsored defined contribution plans (including 401(k) plans)
. tax-sheltered custodial accounts as described in Section 403(b)(7) of the
Internal Revenue Code
(See the SAI for additional information.)

20
<PAGE>

How to Redeem Fund Shares
Redeeming Shares by Mail

You may mail your redemption request to:

The HomeState Group
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701

It is important to mail your redemption request to the correct address and in
"Good Order." If it is sent in error to the Fund, it will be forwarded to
Firstar, but the effective date of the redemption will be delayed. Redemption
instructions with special conditions, or which specify an effective date, can
not be honored.

"Good Order" means that your request includes:

. the name of the Fund
. the number of shares or dollar amount to be redeemed
. signature of all registered shareholders as registered
. account registration number

In addition:

. If the account is registered to a corporation or association, the
redemption request and a corporate resolution must be signed by whomever is
required to sign for the account, with a signature guarantee.
. If the account is registered to a Trust, the redemption request must be
signed by the Trustee(s) with a signature guarantee. If the Trustee's name
is not registered on the account, a copy of the trust document certified
within the last 60 days is also required.

Redemption Order Amounts Above $10,000/Mailing to a Different Address

A redemption request for amounts above $10,000, or redemption requests for which
payment is to be mailed somewhere other than the address of record, must be
accompanied by signature guarantees.
(See the SAI for additional information.)

IRA Redemptions

If you are an IRA shareholder, you must indicate on your redemption request
whether or not to withhold federal income tax. Requests that do not indicate a
preference will be subject to withholding.

Redemption Valuation

The redemption price is the next determined net asset value after Firstar
receives a redemption request in "Good Order." The net asset value may be more
or less than the initial cost of the shares redeemed.

Payment for Shares

Payment for the redeemed shares will be mailed to you, typically within one or
two days, but no later than seven days, or earlier if required by law. If the
shares were purchased by check, payment for redeemed shares will be delayed
until the purchase check has cleared, which may take up to 12 days. Your payment
can be made to you by mail, wire, or ACH transfer. There are no fees for ACH
transfers, however there is a $100 minimum.

Wire Redemption

Wire transfers may be arranged to redeem shares, however a $12 fee per wire
transfer will be assessed against your account if you decide to redeem shares
through wire transfer. The minimum wire redemption is $1,000.

Redeeming Shares by Telephone

You may arrange for telephone redemption privileges on the Purchase Application
form, or by writing or calling the transfer agent at (800) 232-0224. However,
any redemption of more than $10,000 must be requested in writing. A written
request and signature guarantee is required of all shareholders to change
telephone redemption privileges. Neither the Funds nor any or its service
contractors will be liable for any loss or expense in acting upon any telephone
instructions that are reasonably believed to be genuine.
(See the SAI for additional information.)

Systematic Withdrawal Plan

If the value of your shares is $10,000 or more you may arrange to systematically
withdraw money from your Fund account on a scheduled basis and have it
automatically deposited into your bank account. Please note that if you plan to
purchase additional Fund shares, it may not be to your advantage to choose this
option due to the tax implications of buying and selling shares at the same
time. To sign up for the Systematic Withdrawal Plan, check the appropriate box
on your Purchase Application Form or call (800) 232-0224.

Funds' Right to Redeem an Account

The Funds reserve the right to redeem the shares of any shareholder whose
account has a value of less than $500, other than as a result of a decline in
the

21
<PAGE>

value per share of the Funds or if the shareholder is an active participant in
the AutoInvest Plan. The Funds will provide a 30-day written notice to a
shareholder prior to redeeming the account.

How to Exchange Fund Shares

Fund shares may be exchanged between the PA Growth Fund and the Banking and
Finance Fund at the current net asset value by calling the Funds' transfer agent
by 4:00 p.m. Eastern Time on a Normal Business Day (a day in which the New York
Stock Exchange is open for business). Note that any exchange of shares involves
the redemption of shares from one Fund and the purchase of shares of another
Fund. This may cause the realization of gains or losses for income tax purposes.

. Firstar Funds

In addition, you may exchange shares of the Funds for Firstar Money Market
Fund and Firstar U.S. Government Money Market Fund (the Firstar Funds)
which are managed by Firstar Investment Research and Management Company,
LLC, and distributed by B.C. Ziegler and Company. Shares of the Firstar
Funds acquired through direct purchase, or shares gained from dividends
earned on these shares, may be exchanged for shares of any HomeState Group
Fund at the net asset value plus the normal fund sales charge. The minimum
initial investment is $1,000. You may establish an account in the Firstar
Funds by telephone exchange or written request. This exchange privilege may
be changed by the Firstar Funds and the transfer agent with 60 days notice
to shareholders.

. Exchange Restriction You may not exchange shares between the Y2K Fund and
---
the other HomeState Group Funds.

Dividends and Distributions

Dividends and capital gains, if any, realized by the Funds will be declared and
paid semi-annually, in the months of July and December.

Keep in mind the following dates and note that any that fall on the weekend or a
recognized holiday will be the next business day:

. Record Date and Declaration Date for payments to shareholders will normally
be the 15th of the month
. Ex-Dividend dates will normally be the 16th of the month
. Reinvest Dates and Payable Dates will normally be the 20th of the month.

The net asset value price of the Funds will be reduced by the corresponding
amount of the per-share payment declared on the Ex-Dividend Date. Since dividend
income is not a primary objective of the Funds, the Funds do not anticipate
paying substantial income dividends to shareholders.

A shareholder will automatically receive all dividends and capital gains
distributions in additional full and fractional shares of the Funds at net asset
value as of the date of payment, unless the shareholder chooses to receive these
distributions in cash. To change the distribution option chosen, the shareholder
should write to the Funds' transfer agent, Firstar Mutual Fund Services, LLC,
P.O. Box 701, Milwaukee, WI 53201-0701. The request will become effective with
respect to distributions having record dates after its receipt by the transfer
agent.

If a shareholder elects to receive distributions in cash, and the check is
returned by the United States Postal Service, the Funds reserve the right to
invest the amount of the returned check in additional shares of the Funds at the
then existing net asset value and to convert the shareholder's election to
automatic reinvestment of all distributions.

Taxes

Reinvested dividends and capital gains distributions will receive the same tax
treatment as dividends and distributions paid in cash. Because the Funds are
each a series of a Pennsylvania common law trust, shares of the Funds are exempt
from Pennsylvania personal property taxes.

The Taxpayer Relief Act of 1997 created a new category of long-term capital
gains for individuals that are now taxed at new lower rates. For investors who
are in the 28% or higher federal income tax brackets, these gains are taxed at a
maximum of 20%. For investors who are in the 15% federal income tax bracket,
these gains are taxed at a maximum of 10%. Capital gain distributions will
qualify for these maximum tax rates, depending on when the Funds' securities
were sold and how long they were held by the Fund before they were sold.

22
<PAGE>

Distributions out of the "net capital gain" (the excess of net long-term capital
gain over net short-term capital loss), if any, of the Funds will be taxed to
shareholders as long-term capital gain in the year in which they are received.
This is regardless of the length of time a shareholder has owned the shares and
whether or not such gain was reflected in the price paid for the shares. All
other distributions, to the extent they are taxable, are taxed to shareholders
as ordinary income.

Redemptions and exchanges from the Funds are each taxable events. A statement
- ----------------------------------------------------------------
detailing the federal income tax status of all distributions made during a
taxable year will be sent to shareholders of record no later than January 31 of
the following year.

Shareholders must furnish to the Funds a certified taxpayer identification
number ("TIN"). The Funds are required to withhold 31% from reportable payments
including ordinary income dividends, capital gains distributions, and
redemptions occurring in accounts where the shareholder has failed to furnish a
certified TIN and has not certified that a withholding does not apply. Any
shareholders who are non-resident alien individuals, or foreign corporations,
partnerships, trusts or estates, may be subject to different federal income tax
treatment.

The tax information presented here is based on federal and state tax laws and
regulations effective as of the date of this Prospectus, and are subject to
change. Because the information presented here is only a very brief summary of
some of the important tax considerations for shareholders, shareholders are
urged to consult their tax advisers for more specific professional advice,
especially as it relates to local and state tax regulations. (See the SAI for
additional information.)

23
<PAGE>

- --------------------------------------------------------------------------------
Section 4:
GENERAL INFORMATION
- --------------------------------------------------------------------------------

Fund Portfolio Management

Kenneth G. Mertz II, CFA, President of Emerald Advisers, Inc., and Vice
President and Chief Investment Officer of the Funds, is primarily responsible
for the day-to-day management of the Funds' portfolios. Steven E. Russell, Esq.
serves as co-manager of the Banking and Finance Fund, a post he has held since
October, 1998. Mr. Mertz has managed the PA Growth Fund since it began operating
on October 1, 1992. He has also managed the Banking and Finance Fund and the Y2K
Fund since their inception dates. Before managing the HomeState Group Funds, Mr.
Mertz was the Chief Investment Officer to the $12 billion Pennsylvania State
Employees' Retirement System. Mr. Russell joined the Fund's Adviser in March,
1998. He previously served as a portfolio manager for the $40 billion
Pennsylvania Public School Employees' Retirement System.

Investment Adviser

Emerald Advisers, Inc. serves as investment adviser to the Funds. The Adviser
was organized as a Pennsylvania corporation on November 14, 1991, and is
registered with the SEC under the Investment Advisers Act of 1940 and with the
Pennsylvania Securities Commission under the Pennsylvania Securities Act of
1972.

Total assets managed by the Adviser exceeded $500 million at June 30, 1999. The
four principal officers of the Adviser combine over 50 years of experience in
the mutual fund, investment advisory, pension funds management, and securities
brokerage industries.

Under the investment advisory agreements (the "Advisory Agreements"), the
Adviser furnishes each Fund with investment advisory and administrative services
which are necessary to conduct the Fund's business. Specifically, the Adviser
manages the Funds' investment operations and furnishes advice with respect to
the purchase and sale of securities on a daily basis. The PA Growth Fund
agreement is dated September 1, 1992, the Banking and Finance Fund agreement is
dated February 1, 1997, and the Y2K Fund agreement is dated September 12, 1997.

Under the terms of the Advisory Agreements, the Funds pay the Adviser an annual
fee based on a percentage of the net assets under management.

The fees are computed daily and paid monthly as follows:

. PA Growth Fund: for assets up to and including $250 million: 0.75%; for assets
in excess of $250 million and up to and including $500 million: 0.65%; for
assets in excess of $500 million and up to and including $750 million: 0.55%;
for assets in excess of $750 million: 0.45%. The PA Growth Fund paid the Adviser
$784,190, $869,718 and $528,528 in advisory fees for the fiscal years ended June
30 1999, 1998 and 1997, respectively.

. Banking and Finance Fund: for assets up to and including $100 million: 1.0%;
for assets in excess of $100 million: 0.90%. The Banking and Finance Fund paid
the Adviser $119,952 and $146,960 in advisory fees for the fiscal years ended
June 30, 1999 and 1998, respectively. The Adviser waived $30,430 and $36,124 of
these amounts in 1999 and 1998, respectively. The Banking and Finance Fund paid
the Adviser $11,200 in advisory fees for the fiscal year ended June 30, 1997.
The Adviser waived this entire amount and also reimbursed the Banking and
Finance Fund an additional $47,862 in fees and expenses.

. Y2K Fund: for assets up to and including $100 million: 1.0%; for assets in
excess of $100 million: 0.90%. The Y2K Fund paid the Adviser $92,173 in advisory
fees for the Fiscal Year ended June 30, 1999. The Adviser waived $9,851 of this
amount. The Y2K Fund paid the Adviser $37,072 in advisory fees for the fiscal
year ended June 30, 1998. The Adviser waived this entire amount and also
reimbursed the Y2K Fund an additional $51,405 in fees and expenses.

These fees are higher than most other registered investment companies but
comparable to fees paid by equity funds of a similar investment objective and
size.

The Funds pay all of its expenses other than those expressly assumed by the
Adviser. Specifically, the Funds pay the fees and expenses of their transfer
agent, custodian, independent auditors, and legal counsel. These fees are
generally for the costs of necessary professional services, regulatory
compliance, and those pertaining to maintaining the Funds' organizational
standing. The fees may include,

24
<PAGE>

but are not limited to: brokerage commissions, taxes and organizational fees,
bonding and insurance, custody, auditing and accounting services, shareholder
communications and shareholder servicing, and the cost of financial reports and
prospectuses sent to shareholders.

The Adviser reserves the right to voluntarily waive any portion of its advisory
fee at any time. The Adviser has agreed to waive its advisory fee and/or
reimburse other expenses for the Banking and Finance Fund for the period at
least through and including October 30, 2000 so that total Fund operating
expenses are capped at 2.35% or less. The Adviser has agreed to waive its
advisory fee and/or reimburse other expenses for the Y2K Fund for the period at
least through and including October 30, 2000 so that total Fund operating
expenses are capped at 2.90% or less.

Distributor

Rafferty Capital Markets, Inc. (the Distributor), 1311 Mamaroneck Avenue, White
Plains, NY 10605, is the sole distributor of shares of the Funds. The
Distributor is a New York Corporation, a broker-dealer registered with the SEC,
and a member of the National Association of Securities Dealers. Officers and
employees of the Adviser may also serve as registered representatives of the
Distributor to sell shares of the Funds.

Reporting

Shareholders will receive an annual report containing financial statements which
have been audited by the Funds' independent accountants, and a semi-annual
report containing unaudited financial statements. Each report will include a
list of investment securities held by the Funds. Shareholders may contact the
Funds for additional information.

Contacts

Legal Counsel:
Duane, Morris & Heckscher LLP,
305 North Front Street, Harrisburg, PA 17108

Independent Accountants:
PricewaterhouseCoopers LLP,
100 East Wisconsin Avenue, Milwaukee, WI 53202

Trustees:

Bruce E. Bowen
Kenneth G. Mertz II, C.F.A.
Scott C. Penwell, Esq.
Scott L. Rehr
H.J. Zoffer, Ph.D.

Officers:

Scott L. Rehr, President
Kenneth G. Mertz II, C.F.A., Vice President and Chief Investment Officer
Daniel W. Moyer IV, Vice President and Secretary
Steven E. Russell, Esq., Vice President and Portfolio Manager
Joseph C. Neuberger, Assistant Secretary
Jeffrey T. Rauman, Assistant Secretary

25
<PAGE>

- --------------------------------------------------------------------------------
APPENDIX: Additional Fund Information
- --------------------------------------------------------------------------------
For PA Growth Fund Investors:
Summary of Information About the Pennsylvania Economy
- --------------------------------------------------------------------------------

The following is a brief summary of certain factors affecting the Pennsylvania
economy. The summary is based upon information derived from publicly available
documents and is not intended to provide complete coverage of the subject.

Pennsylvania is the nation's fifth-ranked state in terms of population, behind
California, New York, Texas, and Florida. Pennsylvania's population notched up
to 11.9 million in 1990 from 11.8 million in 1980. Pennsylvania's population is
evenly split between the metropolitan areas of Philadelphia and Pittsburgh and
the rest of the State.

Pennsylvania boasts the nation's highest personal savings rate and the least
transitory population of any state in the nation (81% of the current population
was born in the State). The State's workforce totals more than 5.9 million,
ranking it as the sixth largest labor pool in the nation. The State's seasonally
adjusted unemployment rate stood at 5.1% in July 1996, versus 5.4% for the U.S.
economy as a whole. By comparison, neighboring New Jersey's rate was 6.1%.
Pennsylvania has a lower per capita state tax burden than the surrounding states
of New York, New Jersey, Maryland and Ohio.

Pennsylvania has ports accessing the Great Lakes system, the Mississippi and
Ohio rivers to the Gulf of Mexico, and the Atlantic Ocean. At the heart of the
State is an expansive railroad system and a major network of inter-connecting
interstate highways.

Pennsylvania has historically been a leading state in manufacturing and mining.
The coal and steel industries have declined in national importance in recent
years, but remain a major component of the Pennsylvania economy. Due to the
cyclical nature of these businesses, Pennsylvania may be more vulnerable to the
industries' economic fluctuations and downturns.

In part because of the decline in the heavy manufacturing sector, Pennsylvania's
economy has diversified beyond the traditional "smoke stack" industries. Major
new sources for growth are in the service sector, including medical and health
services, trade, education, and financial institutions. The State's workforce
has diversified so that it is almost evenly divided between the services
(24.4%), wholesale and retail trade (23.9%) and manufacturing (23.3%) employment
sectors. The State is home to the nation's third largest number of technology
companies, and the greater Philadelphia area is ranked as the nation's
number-two region for biotechnology companies.

Pennsylvania's agriculture industries have also historically played a prominent
role in the State's economy. Crop and livestock products add an annual $3.5
billion to the State's economy, while agribusiness and food-related industries
as a whole support $38 billion in annual economic activity. Agribusiness
activities can be detrimentally affected by consistently poor weather
conditions.

Pennsylvania's economy is home to 33 Fortune 500 corporations and more than
237,000 public and private businesses. Pennsylvania is the only state in the
nation with two cities (Philadelphia and Pittsburgh) listed in Fortune's top ten
cities with the largest number of Fortune 500 companies. Since the PA Growth
Fund began operations in 1992, the number of Pennsylvania-based, publicly-traded
companies it has identified has grown from 440 to over 500 companies. (See SAI
for a complete listing of these companies.)

Pennsylvania's corporate profile is diverse: from high-tech biopharmaceutical
firms headquartered in the State's southeast corner, to rich farmlands in
central Pennsylvania, to the growing financial and commercial center of the
west. From Erie to Philadelphia and from Pittsburgh to the Poconos, the four
corners of Pennsylvania frame a $244 billion economy. If Pennsylvania were a
freestanding country, its Gross Domestic Product would rank it similar in size
to such countries as Mexico or the Republic of Korea. The Adviser believes that
the Fund will provide a positive influence on the Pennsylvania economy by
stimulating investor interest and awareness in Pennsylvania companies.

26
<PAGE>

- --------------------------------------------------------------------------------
For Banking and Finance Fund Investors:
Summary of Information About the Banking and Financial Services Industries
- --------------------------------------------------------------------------------

(i) Wave of Consolidations

At the end of 1997, there were 9,943 commercial banks chartered in the United
States. By comparison, there were 121 banks in all of Canada. The FDIC has
reported that the total number of U.S. banks and savings and loans has declined
from over 17,300 in 1987 to 10,500 in 1997. Emerald Advisers, Inc., the Fund's
investment adviser, expects this consolidation trend to continue as banks seek
economies of scale and rely more heavily on expensive technologies as they
expand their market share and geographic reach.

(ii) Changes in Traditional Banking and Financial Service Industries' Regulatory
and Operating Distinctions

There are currently regulatory proposals which would make significant changes in
the federal laws which govern the range of business and services in which
federally regulated banks can engage. Some of these proposals would eliminate
most of the distinctions between commercial and investment banks and would allow
certain banks and their holding companies the ability to offer financial
products and services such as insurance, mutual fund underwriting, and
securities underwriting. These new opportunities may make some companies more
attractive acquisition candidates.

(iii) Changing Demographics

As the large demographic segment of the American population known as "Baby
Boomers" (traditionally defined as the 76.1 million Americans born between the
years of 1946 and 1964) move nearer to their retirement years, much more
attention has been focused on investments and savings. For example, according to
the Investment Company Institute, the amount of money invested in U.S. mutual
funds has grown from $51 billion in 1976 to $716 billion in 1986 to over $3.5
trillion in 1996.

(iv) Securities of Companies in the Financial Services Industry

Federal regulations limit investments in the securities of companies that derive
more than 15% of their gross revenues from securities-related activities
(including activities as a broker, dealer, underwriter, or investment adviser).
The Competitive Equality Banking Act of 1987 requires that with respect to at
least 75% of the total assets of a fund, investments in bank securities are
limited to no more than 5% of the fund's total assets. The Fund intends to
comply with these restrictions.

(v) Special Factors Affecting Investments in Banking and Financial Services
Companies

The Fund's investments and performance returns will be affected by general
market and economic conditions as well as other risks specific to the banking
and financial services industries. Banking and financial services companies are
subject to extensive government regulation. This regulation may limit both the
amount and types of loans and other financial commitments a banking or financial
services company (such as an insurance company) can make as well as the interest
rates and fees it can charge.

These limitations may have a significant impact on the profitability of a
banking or financial services company since that company's profitability is
attributable, at least in part, to its ability to make financial commitments
such as loans. Profitability is to a significant degree dependent upon the
availability and cost of capital funds. The financial difficulties of borrowers
can negatively impact the industry to the extent that borrowers may not be able
to repay loans made by banking or financial services companies. Economic
conditions in the real-estate market may have a particularly strong impact on
certain banks and savings associations.

Insurance companies may be subject to severe price competition, claims activity,
marketing competition, and general economic conditions. Particular insurance
lines will also be influenced by specific circumstances. For example, property
and casualty insurer profits may be affected by weather catastrophes or other
disasters, while life and health insurer profits may be affected by mortality
risks and morbidity rates. Also, individual insurance companies may be subject
to material risks including reserve funds which are inadequate to pay claims and
failures by reinsurance carriers. Investment banking, securities brokerage and
investment advisory companies are particularly subject to government regulation
and the risk inherent in securities trading and underwriting activities.

There are current legislative proposals to reduce the separation between
commercial and investment banking businesses. If enacted, the legislation could

27
<PAGE>

significantly impact the industry. While banks may be able to expand the
services they offer (which are currently typically limited to certain non-
securities activities such as making loans and accepting deposits), expanded
powers related to securities activities could expose banks to well-established
competitors, particularly as the distinctions between banks and other financial
services companies erode. The broadening of bank powers to include multi-state
operations and diversification of operations can also expose certain banks to
well-established competitors in new areas of operations. The financial services
industry itself continues to undergo significant change, resulting from
industry-wide consolidation as well as continuing new product development and
further regulatory initiatives.

28
<PAGE>

For Y2K Fund Investors:
Additional Information Regarding the Year 2000 Problem
- --------------------------------------------------------------------------------

The investment objective of the Y2K Fund is to seek capital appreciation by
investing primarily in equity securities of public companies which have stated,
or been reported as possessing, an intention of developing or supporting
marketable solutions to problems stemming from the susceptibility of various
business and other computer application programs or systems to fail, or to
produce inappropriate results, regarding data, calculations or other processing
involving dates subsequent to December 31, 1999.

The costs of correcting the problem have been estimated at anywhere from $200
billion to $1 trillion or more worldwide. The estimate given greatest
credibility by The Y2K Fund's adviser is the range of $300 billion to $600
billion, generated by the Gartner Group, a computer/technology consulting firm
of which representatives testified before a U.S. House of Representatives
subcommittee exploring the Y2K issue. Total costs include hardware and software
conversion, replacement systems, lost productivity and litigation.

The Y2K Fund primarily targets small systems integrators, tool vendors and
conversion factories. Companies targeted as possible investment opportunities
include computer/technology firms and others which support the Y2K solutions
offered.

Computer/technology companies may increase revenues through the following
Y2K-related activities:

1. Assessment of a company's potential Y2K impact on systems;
2. Planning to correct/prioritize Y2K problems;
3. Actual correction of Y2K problems;
4. Testing of Y2K solutions.

Many different firms may be involved in each of these tasks for any one
company's Y2K problems. Companies which may increase revenues based on Y2K work
also include staffing companies to provide information technology workers to
assist in the correction process and disaster recovery companies which can sell
excess system time to customers at premium prices.

The Y2K Fund's Adviser has identified over 100 publicly-traded companies that
have stated, or been reported as possessing, an intention of developing or
supporting marketable solutions to Year 2000 computer-related problems. A full
listing of these companies appears in the SAI.

Special Note Regarding the Y2K Fund's Objective

Since its inception, the Fund's prospectus has stated that before or during the
last six months of calendar year 2000, the Board of Directors of the Y2K Fund
planned to consider:
(1) implementation of an offer of exchange whereby investors would be afforded
the opportunity to exchange shares of the Y2K Fund for shares of one or more
other registered investment companies, and/or
(2) solicitation of Y2K Fund shareholders for proxies regarding a vote upon one
or more of the following options, as the Board may then determine to be in the
best interests of all Y2K Fund shareholders, as a group:
(a) a change in the Y2K Fund's investment objective and/or fundamental
investment policies;
(b) a merger into or consolidation with another registered investment company;
or
(c) dissolution and liquidation of the Y2K Fund's assets.

The Board unanimously recommended, and a majority of the Fund's shareholders of
record as of August 11, 1999 approved on October 15, 1999, option #(2)(a) above.
Therefore, effective at a date in early calendar year 2000, the Fund will be
renamed The HomeState Select Technology Fund, and its investment objectives and
policies will be broadened to invest primarily in companies engaged in the
technology sector. A prospectus detailing these changes will be mailed to all
shareholders when they become effective.

29
<PAGE>

(This page left intentionally blank)
<PAGE>

HomeState
--------------
[LOGO OF HOMESTATE APPEARS HERE]
--------------

FOR MORE
--------------
INFORMATION
--------------
The HomeState Group
SEC file number: 811-6722

Additional information about The HomeState Group mutual funds is available free
upon request.
. Annual Report and Semi-Annual Report: Describes the fund's performance,
lists portfolio holdings and contains a letter from the Funds' portfolio
manager discussing recent market conditions, economic trends and fund
strategies.
. Statement of Additional Information (SAI): The SAI includes a description
of the Funds' trustees and officers, a list of investment policies and
restrictions, as well as more detail about the management and operations of
each Fund. A current SAI is on file with the Securities and Exchange
Commission (SEC) and is incorporated by reference (is legally considered
part of this prospectus).

To receive any of these documents:

By Telephone
------------
Toll-Free in the U.S.
(800) 232-0224
Overseas and Local (Lancaster, PA)
(717) 396-1116

By Mail
-------
Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701

On the Internet
- ---------------
Text-only versions of fund documents can be viewed online or downloaded from the
SEC's website at: http://www.sec.gov
------------------
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, DC (phone 1-800-SEC-0330) or by sending your request and a
duplicating fee to the SEC's Public Reference Section, Washington, DC20549-6009.
<PAGE>

Items Required by Form N-1A

PART B -- STATEMENT OF ADDITIONAL
INFORMATION

<TABLE>
<CAPTION>
Form N-1A Location in
Item Number Description Prospectus
- ----------- ----------- ------------
<S> <C> <C>

10.a Cover Page Cover Page
b. Table of Contents Table of Contents

11. Fund History ADDITIONAL
INFORMATION
CONCERNING
INVESTMENT
OBJECTIVES AND
POLICIES -- General;
ADDITIONAL
GENERAL FUND
INFORMATION --
Description of Shares and
Voting Rights

12. Description of Funds and ADDITIONAL
their Investments and Risks INFORMATION
CONCERNING
INVESTMENT
OBJECTIVES AND
POLICIES; ADDITIONAL
INFORMATION ABOUT
OTHER INVESTMENT
TECHNIQUES

13. Management of the Funds MANAGEMENT OF THE
FUNDS -- Board of Trustees
and Other Officers of the Trust

14. Control Persons and Principal MANAGEMENT OF THE Holders of
Securities FUNDS -- Persons Controlling
the Funds

15. Investment Advisory and MANAGEMENT OF THE
Other Services FUNDS -- Investment Adviser
and Other Service Providers

16. Brokerage Allocation and ADDITIONAL BROKERAGE
Other Practices
ALLOCATION
INFORMATION

17. Capital Stock and Other ADDITIONAL GENERAL
Securities FUND INFORMATION --
Description of Shares and
Voting Rights; ADDITIONAL
PURCHASE AND REDEMPTION
INFORMATION --
Additional Redemption
Information
</TABLE>
<PAGE>

<TABLE>
<S> <C> <C>
18. Purchase, Redemption, and ADDITIONAL PURCHASE
Pricing of Shares AND REDEMPTION
INFORMATION

19. Taxation of the Funds ADDITIONAL DIVIDEND,
DISTRIBUTIONS & TAXES
INFORMATION -- Taxes,
Other Tax Information

20. Underwriters MANAGEMENT OF THE
FUNDS -- Investment Adviser
and Other Service Providers
--Investment Adviser and
Principal Underwriter

21. Calculation of Performance MEASURING
Data PERFORMANCE

22. Financial Statements FINANCIAL STATEMENTS
</TABLE>

THE HOMESTATE GROUP
HomeState Pennsylvania Growth Fund
HomeState Select Banking and Finance Fund
HomeState Year 2000 ("Y2K") Fund

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

1857 William Penn Way
P.O. Box 10666
Lancaster, PA 17605-0666

INVESTMENT ADVISER
GENERAL FUND INFORMATION
EMERALD ADVISERS, INC.
P.O. Box 10666
Lancaster, PA 17605-0666

DISTRIBUTOR
RAFFERTY CAPITAL MARKETS, INC.
550 Mamaroneck Avenue
Harrison, NY 10528

ADMINISTRATOR,
TRANSFER AGENT AND
ACCOUNTING AGENT
FIRSTAR TRUST COMPANY
P.O. Box 701
615 E. Michigan Street
Milwaukee, WI 53201-0701

CUSTODIAN
FIRSTAR TRUST COMPANY
777 E. Wisconsin Avenue
Milwaukee, WI 53202
<PAGE>

LEGAL COUNSEL
DUANE, MORRIS & HECKSCHER LLP
305 North Front Street
Harrisburg, PA 17108

INDEPENDENT ACCOUNTANT
PRICE WATERHOUSE LLP
30 South Seventeenth Street
Philadelphia, PA 19103

<PAGE>

THE HOMESTATE GROUP
HomeState Pennsylvania Growth Fund
HomeState Select Banking and Finance Fund
HomeState Year 2000 ("Y2K") Fund

1857 William Penn Way
P.O. Box 10666
Lancaster, PA 17605-0666

Investment Adviser
General Fund Information
Emerald Advisers, Inc. STATEMENT OF
P.O. Box 10666 ADDITIONAL INFORMATION
Lancaster, PA 17605-0666

THE HOMESTATE GROUP
-------------------
Distributor THE HOMESTATE PENNSYLVANIA
Rafferty Capital Markets, Inc. GROWTH FUND
1311 Mamaroneck Avenue THE HOMESTATE SELECT
White Plains, NY 10605 BANKING AND FINANCE FUND
THE HOMESTATE YEAR 2000 ("Y2K") FUND

Administrator
Transfer Agent and
Accounting Agent
Firstar Mutual Fund Services, LLC DATED OCTOBER 29, 1999
P.O. Box 701
615 E. Michigan Street
Milwaukee, WI 53201-0701

Custodian
Firstar Bank Milwaukee, N.A.
777 E. Wisconsin Avenue
Milwaukee, WI 53202

Legal Counsel
Duane, Morris & Heckscher LLP
305 North Front Street
Harrisburg, PA 17108

Independent Accountant
PricewaterhouseCoopers LLP
100 E. Wisconsin Avenue
Milwaukee, WI 53202
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
DATED OCTOBER 29, 1999

THE HOMESTATE GROUP

This Statement of Additional Information contains information which may be
useful to investors but which is not included in the Prospectus of The HomeState
Group (the "Trust"), and its three operating series funds: The HomeState
Pennsylvania Growth Fund, The HomeState Select Banking and Finance Fund and The
HomeState Year 2000 ("Y2K") Fund (the "Funds"). This Statement is not a
Prospectus and should be read in conjunction with the Funds' Prospectus. This
Statement is only authorized for distribution when accompanied or preceded by a
copy of the Funds' Prospectus dated October 29, 1999. You may obtain a free copy
of the Prospectus by writing the Funds, c/o Firstar Mutual Fund Services, LLC,
P.O. Box 701, Milwaukee, WI 53201-0701, or by calling (800)232-0224.

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TABLE OF CONTENTS
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Additional Information Concerning Investment Objectives and Policies................. 2
General..................................................................... 2
Fundamental Investment Restrictions......................................... 2
Other Investment Policies................................................... 4

Additional Information About Other Investment Techniques............................. 7
Additional Fund Valuation Information................................................ 8
Additional General Fund Information.................................................. 8

Description of Shares and Voting Rights..................................... 8
Additional Purchase and Redemption Information....................................... 10

Reduced Sales Charge Plans ................................................. 10
Other Purchase Information ................................................. 13
Additional Redemption Information .......................................... 16

Additional Dividend, Distributions & Taxes Information............................... 18
Dividends & Distributions................................................... 18
Taxes....................................................................... 19
Other Tax Information ...................................................... 19

Management of the Funds.............................................................. 20
Board of Trustees and Officers of the Trust................................. 20
Persons Controlling the Funds............................................... 22
Investment Adviser and Other Services Providers ............................ 23
The Distribution Plans...................................................... 25

Additional Brokerage Allocation Information.......................................... 27
Measuring Performance................................................................ 28
Financial Statements................................................................. 29
Appendix A - Description of Ratings.................................................. A-i
Appendix B - Options and Short Selling Strategies.................................... B-i
Appendix C - Pennsylvania-Based Companies............................................ C-i

Appendix D - Year 2000 Technology and Support Companies.................................. D-i
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ADDITIONAL INFORMATION CONCERNING INVESTMENT OBJECTIVES AND POLICIES

General

The HomeState Group, an open-end management company, is registered as a
"series" fund, whereby each individual series of the Trust, in effect,
represents a separate mutual fund with its own objectives and policies.
Currently, there are three series: The HomeState Pennsylvania Growth Fund (the
"PA Growth Fund"), The HomeState Select Banking and Finance Fund (the "Banking
and Finance Fund") and The HomeState Year 2000 ("Y2K") Fund (the "Y2K Fund").
Information about all three series is contained herein. In the likely event that
further series' of the Trust are introduced, these new series would have their
own separate objectives and policies and would be disclosed here as such. The
Funds' investment adviser is Emerald Advisers, Inc. ("Emerald" or the
"Adviser").

The PA Growth Fund's objective is long-term growth through capital
appreciation. The Fund seeks to achieve this goal mainly by investing in a
diversified portfolio of companies that have their headquarters or principal
operations in the Commonwealth of Pennsylvania, or companies that are based
elsewhere but whose business in the Commonwealth of Pennsylvania contributes
significantly to their overall performance. To pursue its objective, the Fund
will invest at least 65% of the value of its total assets in common stocks,
preferred stocks and securities convertible into common and preferred stocks
issued by firms whose headquarters are located in Pennsylvania or companies that
are based elsewhere but have significant operations in Pennsylvania (i.e. at
least 50% of their revenues are derived from operating units headquartered in
the state). The Fund's annual portfolio turnover rate is not anticipated to
exceed eighty percent, but was 88% for the fiscal year ended June 30, 1999.

The Banking and Finance Fund's objective is long-term growth through
capital appreciation. Income is a secondary objective. To pursue its objective,
the Fund will, under normal circumstances, invest at least 65% of its total
assets in the equity securities of companies principally engaged in the banking
and financial services industries. While the Fund can invest in companies
headquartered anywhere in the United States and of varying size, it will usually
emphasize companies located in the Mid-Atlantic states (defined by the Adviser
as Pennsylvania, Maryland, New Jersey, Delaware, Virginia, Ohio, West Virginia
and New York) and smaller companies: those with a market capitalization of less
than $1 billion. The Fund's annual portfolio turnover rate is not anticipated to
exceed eighty percent. Prior to October 20, 1998, the Banking and Finance Fund
was named the HomeState Select Opportunities Fund, and was a non-diversified
fund which did not focus on the banking and financial services industries. The
Banking and Finance Fund had a higher portfolio rate of 158% in the fiscal year
ended June 30, 1999 during a substantial portion of which it was pursuing its
prior objective.

The Y2K Fund's objective is capital appreciation by investing primarily in
equity securities of public companies involved in "The Year 2000 Industry" - a
grouping of companies which the Fund's Adviser shall identify as having stated
an intention, or been reported as intending, to develop or support marketable
solutions to problems stemming from the susceptibility of certain business and
other computer application programs or systems to fail, or to produce
inappropriate results with respect to, data, calculations and other processing
involving dates subsequent to December 31, 1999 (collectively, the "Year 2000 --
or Y2K -- Problem"). The Fund can invest a larger percentage of its assets in a
particular company, and will focus on those companies identified by the Fund's
Adviser as having what it believes are superior prospects for price
appreciation. The Fund's annual portfolio turnover rate is expected to not
exceed two hundred percent.

Fundamental Investment Restrictions

The following investment policies and restrictions may not be changed
without the approval of a majority of each Fund's outstanding shares. For these
purposes, a majority of shares of each Fund is

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defined as the vote, at a special meeting of the shareholders of the Fund duly
called, of more than fifty percent (50%) of the Fund's outstanding voting
securities.

The PA Growth Fund may not:

1. Invest more than 5% of the value of its assets in the equity or debt
of one issuer (other than obligations issued or guaranteed by the United States
Government).

2. Invest more than 15% of total assets in one industry.

3. Invest in, write, or sell put or call options, straddles, spreads or
combinations thereof.

4. Make short sales.

5. Borrow money, except from a bank. Such borrowing shall be permitted
for temporary or emergency purposes only (to facilitate the meeting of
redemption requests), and not for investment purposes. Such borrowing cannot
exceed fifteen percent (15%) of the Fund's current total assets, and will be
repaid before any additional investments are purchased. The Fund will not
purchase securities when borrowing exceeds 5% of total assets;

6. Pledge, mortgage or hypothecate assets, except to secure borrowings
permitted by Item (5) above, and then only pledge securities not exceeding ten
percent (10%) of the Fund's total assets (at current value);

7. Purchase securities on margin, except such short-term credits as may
be necessary for the clearance of purchases and sales of securities; and

8. Purchase or sell commodities, commodity contracts or futures
contracts.

The Banking and Finance Fund may not:

1. Invest more than 5% of the value of its assets in the equity or debt
of one issuer (other than obligations issued or guaranteed by the U.S.
Government.

2. Invest more than 25% of total assets in one industry, except that the
Fund shall, under normal conditions, invest not less than 25% of its total
assets in securities of companies principally engaged in the banking industry
and not less than 25% of its total assets in securities of companies principally
engaged in the financial services industry.

3. Borrow money, except from a bank or for purposes of purchasing
securities on margin (provided that such purchases may not exceed 120% of total
assets taken at current value); such borrowing will be limited to no more than
5% of net assets.

The Y2K Fund may not:

1. Invest more than 25% of the value of its assets in the equity or debt
of one issuer (other than obligations issued or guaranteed by the United States
Government), nor, with respect to at least 50% of its total assets, invest more
than 5% of the value of such assets in the equity or debt of one issuer (other
than obligations issued or guaranteed by the U.S. Government).

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3. Issue or sell senior securities, except that the Fund may engage in
options, futures and/or short-selling strategies provided the Fund either (i)
sets aside liquid, unencumbered, daily marked-to-market assets in a segregated
account with its custodian in amounts as prescribed by pertinent SEC guidelines,
or (ii) holds securities or other options or futures contracts whose values are
expected to offset ("cover") its obligations thereunder. Securities or other
options or futures contracts used for cover will not be sold or closed out while
such strategies are outstanding, unless they are replaced with similar assets.

4. Borrow money, except from a bank or for purposes of purchasing securities
on margin (provided that such purchases may not exceed 120% of total assets
taken at current value). Such borrowing will be limited to no more than 5% of
total net assets.

The Funds may not:

1. Issue or sell senior securities;

2. Underwrite securities issued by other persons except to the extent
that, in connection with the disposition of its portfolio investments, it may be
deemed to be an underwriter under certain federal securities laws;

3. Purchase or sell real estate, although it may purchase securities
which are secured by or represent interests in real estate that are issued or
backed by the United States Government, its agencies or instrumentalities;

4. Purchase or hold the securities of any issuer if the officers or
directors of the Fund or its investment Adviser (i) individually own more than
one-half of one percent (0.5%) of the outstanding securities of the issuer, or
(ii) collectively own more than five percent (5%) of the outstanding securities;

5. Acquire more than ten percent (10%) of the voting securities of any
issuer; or make investments for the purpose of gaining control of a company's
management;

6. Invest in the securities of other investment companies (except in
no-load, open-end money market mutual funds, and except in the case of acquiring
such companies through merger, consolidation or acquisition of assets). The Fund
will not invest more than ten percent (10%) of its total current assets in
shares of other investment companies nor invest more than five percent (5%) of
its total current assets in a single investment company. When investing in a
money market mutual fund, the Fund will incur duplicate fees and expenses; or

7. Make loans, except by purchase of debt obligations in which the Fund
may invest in accordance with its investment policies, or except by entering
into qualified repurchase agreements with respect to not more than twenty-five
percent (25%) of its total assets (taken at current value).

The aforementioned investment limitations are considered at the time the
investment securities are purchased.

Other Investment Policies

In addition to the fundamental investment restrictions listed above, the
Funds have also adopted the following non-fundamental investment policies. These
policies may be changed by the Funds' Board of Trustees without shareholder
approval.

The PA Growth Fund:

1. Will not buy or sell oil, gas or other mineral leases, rights or
royalty contracts;

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2. Will not invest in illiquid securities (including illiquid equity
securities, repurchase agreements and time deposits with maturities or notice
periods of more than 7 days, and other securities which are not readily
marketable, including securities subject to legal or contractual restrictions on
resale);

3. Will not invest in warrants (a warrant is an option issued by a
corporation that gives the holder the right to buy a stated number of shares of
common stock of the corporation at a specified price within a designated time
period); and

4. Will not invest more than five percent (5%) of its total assets (at
current value) in securities of companies, including predecessor companies or
controlling persons, having a record of less than three years of continuous
operation.

The Banking and Finance Fund:

1. Will not invest more than 15% in illiquid securities (including
illiquid equity securities, repurchase agreements and time deposits with
maturities or notice periods of more than 7 days, and other securities which are
not readily marketable, including securities subject to legal or contractual
restrictions on resale);

2. May engage in options strategies with respect to less than 5% of the
Fund's net assets, in which the Fund will either: (i) set aside liquid,
unencumbered, daily marked-to-market assets in a segregated account with the
Fund's custodian in the prescribed amount; or (ii) hold securities or other
options or futures contracts whose values are expected to offset ("cover") its
obligations thereunder. Securities, currencies or other options or futures
contracts used for cover cannot be sold or closed out while the strategy is
outstanding, unless they are replaced with similar assets;

3. May not write put or call options having aggregate exercise prices
equal to or greater than 5% of the Fund's net assets, except with respect to
options attached to or acquired with or traded together with their underlying
securities and securities that incorporate features similar to options;

4. May make short sales in total amounts that equal less than 5% of the
Fund's net assets.

The Y2K Fund:

1. Will not invest more than 15% of net assets in illiquid securities
(including illiquid equity securities, repurchase agreements and time deposits
with maturities or notice periods of more than 7 days, and other securities
which are not readily marketable, including securities subject to legal or
contractual restrictions on resale);

2. May not write options (whether on securities or securities indexes) or
initiate further short-sale positions if aggregate exercise prices of previously
written outstanding options, together with the value of assets used to cover
outstanding short-sale positions, would exceed 25% of the Fund's total net
assets.

3. Will not purchase or sell non-hedging futures contracts or related
options if aggregate initial margin and premiums required to establish such
positions would exceed 5% of the Fund's total assets. For purposes of this
limitation, unrealized profits and unrealized losses on any open contracts are
taken into account, while the in-the-money amount of an option that is, or was,
in-the-money at the time of purchase is excluded.

The Funds:

1. Will not invest in foreign currencies or foreign options;

2. Will not issue long-term debt securities;

3. Will not invest more than ten percent (10%) of its total assets (at
current value) in repurchase agreements, and will not invest in repurchase
agreements maturing in more than seven

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days. A repurchase agreement is a contract under which the Fund acquires a
security for a relatively short time period (usually not more than one week)
subject to the obligation of the seller to repurchase and the Fund to resell
such security at a fixed time and price which represents the Fund's cost plus
interest. The arrangement results in a fixed rate of return that is not subject
to market fluctuations during the period that the underlying security is held by
the Funds. Repurchase agreements involve certain risks, including seller's
default on its obligation to repurchase or seller's bankruptcy. The Fund will
enter into such agreements only with commercial banks and registered broker-
dealers. In these transactions, the securities issued by the Fund will have a
total value in excess of the value of the repurchase agreement during the term
of the agreement. If the seller defaults, the Fund could realize a loss on the
sale of the underlying security to the extent that the proceeds of the sale,
including accrued interest, are less than the resale price provided in the
agreement including interest, and it may incur expenses in selling the security.
In addition, if the other party to the agreement becomes insolvent and subject
to liquidation or reorganization under the United States Bankruptcy Code of 1983
or other laws, a court may determine that the underlying security is collateral
for a loan by the Fund not within the control of the Fund and therefore the Fund
may not be able to substantiate its interest in the underlying security and may
be deemed an unsecured creditor of the other party to the agreement. While the
Funds' management acknowledges these risks, it is expected that they can be
controlled through careful monitoring procedures.

4. May invest their cash for temporary purposes in commercial paper,
certificates of deposit, money market mutual funds, repurchase agreements (as
set forth in Item 7 above) or other appropriate short-term investments.
Commercial paper must be rated A-1 or A-2 by Standard & Poor's Corporation ("S &
P") or Prime-1 or Prime-2 by Moody's Investor Services ("Moody's"), or issued by
a company with an unsecured debt issue currently outstanding rated AA by S & P
or Aa by Moody's, or higher. For more information on ratings, see "Appendix A:
Description of Ratings" in this Statement. Certificates of Deposit ("CD's") must
be issued by banks or thrifts which have total assets of at least $1 billion. In
the case of a bank or thrift with assets of less than $1 billion, the Funds will
only purchase CD's from such institutions covered by FDIC insurance, and only to
the dollar amount insured by the FDIC.

5. May invest in securities convertible into common stock, but only when
the Funds' Adviser believes the expected total return of such a security exceeds
the expected total return of common stocks eligible for investment; (In carrying
out this policy, the Funds may purchase convertible bonds and convertible
preferred stock which may be exchanged for a stated number of shares of the
issuer's common stock at a price known as the conversion price. The conversion
price is usually greater than the price of the common stock at the time of
purchase of the convertible security. The interest rate of convertible bonds and
the yield of convertible preferred stock will generally be lower than that of
the non-convertible securities. While the value of the convertible securities
will usually vary with the value of the underlying common stock and will
normally fluctuate inversely with interest rates, it may show less volatility in
value than the non-convertible securities. A risk associated with the purchase
of convertible bonds and convertible preferred stock is that the conversion
price of the common stock will not be attained. The Funds will purchase only
those convertible securities which have underlying common stock with potential
for long-term growth in the Adviser's opinion. The Funds will only invest in
investment-grade convertible securities (Those rated in the top four categories
by either Standard & Poor's Corporation ("S & P") or Moody's Investor Services,
Inc. ("Moody's") - See "Appendix: Description of Ratings" in this statement).

Will maintain their portfolio turnover rate at a percentage consistent with
their investment objective, in the case of the PA Growth Fund and Banking and
Finance Fund: long-term growth, in the case of the Y2K Fund: appreciation of
capital. The Funds will not engage primarily in trading for short-term profits,
but they may from time to time make investments for short-term purposes when
such trading is believed by the Funds' Adviser to be desirable and consistent
with a sound investment policy. The Funds may dispose of securities whenever the
Adviser deems advisable without regard to the length of time held. The

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PA Growth Fund and Banking and Finance Fund are not expected to exceed portfolio
turnover rates of 80% on an annual basis; The Y2K Fund is not expected to exceed
a portfolio turnover rate of 200% on an annual basis.

ADDITIONAL INFORMATION ABOUT OTHER INVESTMENT TECHNIQUES

Both the Banking and Finance Fund and the Y2K Fund can utilize certain
options and short-selling strategies. See "Appendix B: Options and Short-Selling
Strategies" for a complete discussion of these strategies and the risks
involved.

The Funds may also invest up to 35 percent of the value of their total
assets in preferred stocks, investment-grade corporate bonds and notes, and
high-quality short-term debt securities such as commercial paper, bankers'
acceptances, certificates of deposit, repurchase agreements, obligations insured
or guaranteed by the United States Government or its agencies, and demand and
time deposits of domestic banks and United States branches and subsidiaries of
foreign banks. (The price of debt securities in which the Funds invest are
likely to decrease in times of rising interest rates. Conversely, when rates
fall, the value of the Funds' debt securities may rise. Price changes of these
debt securities held by the Funds have a direct impact on the net asset value
per share of the Funds. Investment grade corporate bonds are generally defined
by the four highest rating categories by Standard & Poor's Corporation ("S & P")
and Moody's Investors Services ("Moody's"): AAA, AA, A or BBB by S & P and Aaa,
Aa, A and Baa by Moody's. Corporate bonds rated BBB by S & P or Baa by Moody's
are regarded as having an adequate capacity to pay principal and interest but
with greater vulnerability to adverse economic conditions and speculative
characteristics (See "Appendix A" of the Funds' Statement of Additional
Information for further information). The Funds will make use of these
short-term instruments primarily under those circumstances where it has cash to
manage for a brief time period (i.e. after receiving dividend distributions,
proceeds from the sale of portfolio securities or money from the sale of Fund
shares to investors).

The Funds will not engage in direct investment in real estate or real
estate mortgage loans, except those instruments issued or guaranteed by the
United States Government. The mortgage-related instruments in which the Funds
may invest include those issued by Government National Mortgage Association
("GNMA"), Federal National Mortgage Association ("FNMA") and Federal Home Loan
Mortgage Corporation ("FHLMC") (collectively, the "Mortgage-Related
Instruments"). The underlying mortgages which collateralize Mortgage-Related
Instruments issued by GNMA are fully guaranteed by the Federal Housing
Administration or Veteran's Administration, while those collateralizing
Mortgage-Related Instruments issued by FHLMC or FNMA are typically conventional
residential mortgages conforming to strict underwriting size and maturity
constraints. Mortgage-Related Instruments provide for a periodic payment
consisting of both interest and principal. The interest portion of these
payments will be distributed by the Fund as income and the capital portion will
be reinvested. Unlike conventional bonds, Mortgage-Related Instruments pay back
principal over the life of the Mortgage-Related Instrument rather than at
maturity. At the time that a holder of a Mortgage-Related Instrument reinvests
the payments and any unscheduled prepayment of principal that it receives, the
holder may receive a rate of interest which is actually lower than the rate of
interest paid on the existing Mortgage-Related Instruments. As a consequence,
Mortgage-Related Instruments may be a less effective means of "locking-in"
long-term interest rates than other types of U.S. government securities. While
Mortgage-Related Instruments generally entail less risk of a decline during
periods of rapidly rising interest rates, they may also have less potential for
capital appreciation than other investments with comparable maturities because
as interest rates decline, the likelihood increases that mortgages will be
prepaid. Furthermore, if Mortgage-Related Instruments are purchased at a
premium, mortgage foreclosures and unscheduled principal payments may result in
some loss of a holder's principal investment to the extent of premium paid.
Conversely, if Mortgage-Related Instruments are purchased at a discount, both a
scheduled payment of principal and an

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unscheduled payment of principal would increase current and total returns and
would be taxed as ordinary income when distributed to shareholders.

ADDITIONAL FUND VALUATION INFORMATION

Each Fund determines its net asset value per share daily by subtracting its
liabilities (including accrued expenses and dividends payable) from its total
assets (the market value of the securities the Fund holds plus cash or other
assets, including interest accrued but not yet received) and dividing the result
by the total number of shares outstanding. Each Fund's net asset value per share
is calculated as of the close of trading on the New York Stock Exchange (the
"Exchange") every day the Exchange is open for trading. The Exchange closes at
4:00 p.m. Eastern Time on a normal business day. Presently, the Exchange is
closed on the following holidays: New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.

Securities of the Funds listed or traded on a securities exchange for which
representative market quotations are available will be valued at the last quoted
sales price on the security's principal exchange on that day. Listed securities
not traded on an exchange that day, and other securities which are not traded in
the over-the-counter market on any given day will be valued at the mean between
the last bid and ask price in the market on that day, if any. Securities for
which market quotations are not readily available or not deemed representative
of actual market values and all other assets will be valued at their respective
fair market value as determined in good faith by, or under procedures
established by, the Board of Trustees. In determining fair market value, the
Trustees may employ an independent pricing service.

Short-term investments with less than sixty days remaining to maturity when
acquired by the Funds will be valued on an amortized cost basis by the Funds,
excluding unrealized gains or losses thereon from the valuation. This is
accomplished by valuing the security at cost and then assuming a constant
amortization to maturity of any premium or discount. If the Funds acquire a
short-term security with more than sixty days to maturity, it will be valued at
current market value until the 60/th/ day prior to maturity, and will then be
valued on an amortized cost basis based upon the value on such date unless the
Trustees determine during such sixty day period that this amortized cost value
does not represent fair market value.

ADDITIONAL GENERAL FUND INFORMATION

Description of Shares and Voting Rights

The HomeState Group was organized as a Pennsylvania common law trust on August
26, 1992. Shares of the Trust do not have preemptive or conversion rights, and
are fully-paid and non-assessable when issued.

Since The HomeState Group is organized as a Pennsylvania common law trust, it is
not required to hold annual meetings, and does not intend to do so, except as
required by the Act or other applicable Federal or state law. The Trust will
assist in shareholder communications as required by Section 16(c) of the Act.
The Act does require initial shareholder approval of each investment advisory
agreement and election of Trustees. Under certain circumstances, the law
provides shareholders with the right to call for a special shareholders meeting
for the purpose of removing Trustees or for other proper purposes. Shares are
entitled to one vote per share, and do not have cumulative voting rights.

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The Declaration of Trust permits the Board of Trustees to issue an unlimited
number of shares of beneficial interest without par value from separate classes
("Series") of shares. Currently the Trust is offering shares of three Series.
Additional series may be added in the future by the Board of Trustees. Each
share of each Fund has pro rata distribution rights, and shares equally in
dividends and distributions of the respective Fund series.

The shares of the Trust are fully paid and nonassessable except as set forth
under "Shareholder and Trustee Liability" and have no preference as to
conversion, exchange, dividends, retirement or other features. The shares of the
Trust have no preemptive rights. The shares of the Trust have non-cumulative
voting rights which means that the holders of more than 50% of the shares voting
for the election of Trustees can elect 100% of the Trustees if they choose to do
so. A shareholder is entitled to one vote for each full share held (and a
fractional vote for each fractional share held), then standing in his name on
the books of the Trust. On any matter submitted to a vote of shareholders, all
shares of the Trust then issued and outstanding and entitled to vote,
irrespective of the class, shall be voted in the aggregate and not by class
except that shares shall be voted as a separate class with respect to matters
affecting that class or as otherwise required by applicable law.

The Trust will continue without limitation of time, provided however that:

1) Subject to the majority vote of the holders of shares of any Series of
the Trust outstanding, the Trustees may sell or convert the assets of such
Series to another investment company in exchange for shares of such investment
company and distribute such shares ratably among the shareholders of such
Series;

2) Subject to the majority vote of shares of any Series of the Trust
outstanding, the Trustees may sell and convert into money the assets of such
Series and distribute such assets ratably among the shareholders of such Series;
and

3) Without the approval of the shareholders of any Series, unless
otherwise required by law, the Trustees may combine the assets of any two or
more Series into a single Series so long as such combination will not have a
material adverse effect upon the shareholders of such Series.

Upon completion of the distribution of the remaining proceeds or the
remaining assets of any Series as provided in paragraphs 1), 2), and 3) above,
the Trust shall terminate as to that Series and the Trustees shall be discharged
of any and all further liabilities and duties hereunder and the right, title and
interest of all parties shall be canceled and discharged.

Shareholder and Trustee Liability - Under Pennsylvania law, shareholders of such
- ---------------------------------
a Trust may, under certain circumstances, be held personally liable as partners
for the obligations of the Trust. Therefore, the Declaration of Trust contains
an express disclaimer of shareholder liability for acts or obligations of the
Trust and requires that notice of such disclaimer be given in each agreement,
obligation, or instrument entered into or executed by the Trust or the Trustees.
The Declaration of Trust provides for indemnification out of the Trust property
of any shareholder held personally liable for the obligations of the Trust. The
Declaration of Trust also provides that the Trust shall, upon request, assume
the defense of any claim against any shareholder for any act or obligation of
the Trust and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Trust itself would be unable to meet its obligations.

The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.

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ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

The Funds' shares are sold at net asset value with a sales charge payable
at the time of purchase. The Prospectus contains a general description of how
investors may buy shares of the Funds, as well as a table of applicable sales
charges for the Funds. The following is additional information which may be of
interest to investors.

The Funds are currently making a continuous offering of their shares. The
Funds receive the entire net asset value of shares sold. The Funds will accept
unconditional orders for shares to be executed at the public offering price
based on the net asset value per share next determined after the order is
placed. The public offering price is the net asset value plus the applicable
sales charge, if any.

For orders placed through the Funds' established broker-dealer network, the
public offering price will be based on the net asset value determined on the day
the order is placed, but only if (i) the dealer has received the order before
the close of the Exchange, and (ii) the dealer transmits it to the Funds'
Distributor prior to the close of the Exchange that same day (normally 4:00 p.m.
Eastern time). The dealer is responsible for transmitting this order by 4:00
p.m. Eastern time, and if the dealer fails to do so, the customer's entitlement
to that day's closing price must be settled between the customer and the dealer.
If the dealer receives the order after the close of the Exchange, the price will
be based on the net asset value determined as of the close of the Exchange on
the next day it is open.

Reduced Sales Charge Plans

Shares of series of the Trust may be purchased at a reduced sales charge to
certain investors listed below. The shareholders' purchases in the series of the
Trust may be aggregated in order to qualify for reduced sales charges.

1. Reach "Break Points" - Increase the initial investment amount to reach
a higher discount level, as listed in the Funds' prospectus.

2. Right of Accumulation - Add to an existing shareholder account so that
the current offering price value of the total combined holdings reach a
higher discount level (see more information below).

3. Sign a Letter of Intent - Inform the Funds or their Agent that you
wish to sign a non-binding "Letter of Intent" (the "Letter") to purchase an
additional number of shares so that the total equals at least $50,000 over
the following 13-month period ($100,000 in the case of the Y2K Fund). Upon
the Funds' receipt of the signed Letter, the shareholder will receive a
discount equal to the dollar level specified in the Letter. If, however,
the purchase level specified by the shareholder's Letter has not been
reached at the conclusion of the 13-month period, each purchase will be
deemed made at the sales charge appropriate for the actual purchase amount
(see more information below).

4. Combined Purchase Privilege - Combine the following investor accounts
into one "purchase" or "holding" to qualify for a reduced sales charge:

i. An individual or "company," as defined in Section 2(a)(8) of the Act;

ii. An individual, his spouse and children under age 21;

iii. A trustee or other fiduciary for certain trusts, estates, and certain
fiduciary accounts; or

iv. The employee benefit plans of a single employer. The Funds' Transfer Agent,
Firstar Mutual Fund Services, LLC ("Firstar"), must be advised of the
related accounts at the time the purchase is made.

(See more information below.)

5. Purchases at Net Asset Value - Additionally, the Board of Trustees has
determined that the following shareholders shall be permitted to purchase
shares of the Funds without paying a sales charge:

10
<PAGE>

(i) Existing shareholders, upon reinvestment of their dividend income or
capital gains distributions as dividends and capital gains
distributions are reinvested in shares of the Funds at the net asset
value without sales charge;

(ii) Shareholders who have redeemed any or all of their shares of the
Funds within the past 120 days may purchase shares at the net asset
value without sales charge. The amount which may be reinvested is
limited to the amount up to but not exceeding the redemption
proceeds (or to the nearest full share if fractional shares are not
purchased) and is limited to shareholders who have not previously
exercised this right. The Transfer Agent must be notified of the
exercise of this privilege when shares are being purchased (see more
information below);

(iii) Shareholders of the HomeState Pennsylvania Growth Fund or the
HomeState Select Banking and Finance Fund may exchange their Fund
shares into shares of the other Fund at net asset value without
sales charge;

(iv) Certain "Institutional Investors" -- PA Growth Fund Only:
Corporations with headquarters or significant operations in the
Commonwealth of Pennsylvania having a minimum of $5 million in
annual sales and fifteen full-time employees, and the retirement
plans of each of the above may purchase at net asset value without
sales charge. For these purposes, "significant operations" is
defined as having a material impact on the corporation's financial
condition or profitability in the discretion of the Adviser; For all
Funds: State and local government-affiliated agencies, non-profit
and charitable organizations, and the retirement plans of each of
the above may purchase at net asset value without sales charge.

(v) Investor's shares purchased by advisory accounts managed by
SEC-registered investment advisers or bank trust departments;

(vi) Trustees, Officers, Employees (and those retired) of the Funds,
their services providers and their affiliates, for their own
accounts and for their spouse and children, and employees of such
broker-dealer firms that have executed a Selling Agreement with the
Funds may purchase shares at net asset value without a sales charge.

6. On purchases of $1,000,000 or more, shares are acquired at net asset value
with no sales charge or dealer concession charged to the investor. The
Distributor, however, may pay the broker-dealer up to 0.50% of the Offering
Price, from its own assets.

Combined Purchase Privilege - Certain investors may qualify for a reduced sales
- ---------------------------
charge by combining purchases into a single "purchase" if the resulting
"purchase" totals at least $50,000. The applicable sales charge for such a
"purchase" is based on the combined purchases of the following: (i) an
individual, or a "company," as defined in section 2(a)(8) of the Investment
Company Act of 1940 (which includes corporations which are corporate affiliates
of each other, but does not include those companies in existence less than six
months or which have no purpose other than the purchase of shares of the Funds
or other registered investment companies at a discount); (ii) an individual,
their spouse and their children under age twenty-one, purchasing for his, her or
their own account; (iii) a single purchase by a trustee or other fiduciary
purchasing shares for a single trust, estate or single fiduciary account
although more than one beneficiary is involved; or (iv) a single purchase for
the employee benefit plans of a single employer. Firstar, the Funds' Transfer
Agent, must be advised of the related accounts at the time the purchase is made.

Right of Accumulation - An investor's purchase of additional shares may qualify
- ---------------------
for a cumulative quantity discount by combining a current purchase with certain
other shares already owned ("Right of Accumulation"). The applicable shares
charge is based on the total of: (i) the investor's current purchase; (ii) the
net asset value (valued at the close of business on the previous day of (a.) all
shares of the series held by the investor, and (b.) all shares of any other
series fund of the HomeState Group which may be introduced and held by the
investor); and (iii) the net asset value of all shares described in section (ii)

11
<PAGE>

above owned by another shareholder eligible to combine their purchase with that
of the investor into a single "purchase" (See "Combined Purchase Privilege"
above).

To qualify for the Combined Purchase Privilege or obtain the Right of
Accumulation on a purchase through a broker-dealer, when each such purchase is
made the investor or dealer must provide the Distributor with sufficient
information to verify that the purchase qualifies for the privilege or discount.

Letter of Intent - Investors may purchase shares at a reduced sales charge by
- ----------------
means of a written Letter of Intent (a "Letter"), which expresses the investor's
intention to invest a minimum of $50,000 within a period of 13 months in shares
of the PA Growth and Banking and Finance Fund, or a minimum of $100,000 in the
Y2K Fund.

Each purchase of shares under a Letter will be made at the public offering
price applicable at the time of such purchase to a single transaction of the
dollar amount indicated in such Letter. At the investor's option, a Letter may
include purchases of shares made not more than ninety days prior to the date the
investor signed the Letter; however, the 13-month period during which the Letter
is in effect will then begin on the date of the earliest purchase to be
included. Investors do not receive credit for shares purchased by the
reinvestment of distributions. Investors qualifying for the Combined Purchase
Privilege (see above) may purchase shares under a single Letter. The Letter is
not a binding obligation upon the investor to purchase the full amount
indicated. The minimum initial investment under a Letter is 20% of such stated
amount. Shares purchased with the first 5% of such amount will be held in escrow
(while remaining registered in the name of the investor) to secure payment of
the higher sales charge applicable to the shares actually purchased if the full
amount indicated is not purchased, and such escrow accounts will be
involuntarily redeemed to pay the additional sales charge, if necessary.

To the extent that an investor purchases more than the dollar amount
indicated in the Letter and qualifies for a further reduction in the sales
charge, the sales charge will be adjusted for the entire amount purchased at the
end of the 13-month period, upon recovery from the investor's dealer of its
portion of the sales charge adjustment. Once received from the dealer, the sales
charge adjustment will be used to purchase additional shares of the Trust's
series at the then-current offering price applicable to the actual amount of the
aggregate purchases. No sales charge adjustment will be made until the
investor's dealer returns any excess commissions previously received. Dividends
and distributions on shares held in escrow, whether paid in cash or reinvested
in additional Fund shares, are not subject to escrow. The escrow will be
released when the full amount indicated has been purchased. Investors making
initial purchases who wish to enter into a Letter may complete the appropriate
section of the Subscription Application Form. Current shareholders may call the
Fund at (800) 232-0224 to receive the appropriate form.

Reinstatement Privilege - An investor who has sold shares of the Funds may
- -----------------------
reinvest the proceeds of such sale in shares of the series within 120 days of
the sale, and any such reinvestment will be made at the Funds' then-current net
asset value, so that no sales charge will be levied. Investors should call the
Funds for additional information.

By exercising this reinstatement privilege, the investor does not alter the
federal income tax treatment of any capital gains realized on the previous sale
of shares of the series, but to the extent that any shares are sold at a loss
and proceeds are reinvested in shares of the series, some or all of the loss may
be disallowed as a deduction. Please contact your tax adviser for more
information concerning tax treatment of such transactions.

12
<PAGE>

Other Purchase Information

The underwriter's commission (paid to the Distributor) is the sales charge
shown in the Prospectus, less any applicable dealer concession. The dealer
concession is paid to those firms selling shares as a member of the Funds'
broker-dealer network. The dealer concession is the same for all dealers, except
that the Distributor retains the entire sales charge on any retail sales made by
it. For the fiscal years ended June 30, 1999 and 1998 Rafferty Capital Markets,
Inc., the Fund's distributor, received $78,896 and $11,035, respectively. For
the fiscal years ended June 30, 1998 and 1997 Rodney Square Distributors, Inc.,
the Fund's previous distributor, received $648,549 and $166,908, respectively.

The Distributor may from time to time allow broker-dealers selling shares
of the Funds to retain 100% of the sales charge. In such cases, the
broker-dealer may be deemed an "underwriter" under the Securities Act of 1933,
as amended.

In addition to the commission paid to broker-dealers selling Funds shares
by way of a selling agreement, the Distributor may also from time to time pay
additional cash bonuses or other incentives to selected broker-dealers in
connection with their registered representatives selling Funds shares. Such
compensation will be paid solely by the Distributor, and may be conditioned upon
the sale by the broker-dealer's representatives of a specified minimum dollar
amount of shares. Compensation may include payment for travel expenses,
including lodging, incurred in connection with trips taken by registered
representatives and members of their families to locations within or outside the
United States for meetings of a business nature.

Shares of the Funds may be purchased for your account directly by your financial
services firm representative, and may be purchased by mail or wire.

Investing by Mail - Please complete and sign the Subscription Application Form
included with the Prospectus and send it, together with your check or money
order ($500 minimum; any lesser amount must be approved by the Fund), made
payable to The HomeState Group, TO: The HomeStateGroup, c/o Firstar Mutual Fund
Services, LLC, P.O. Box 701, Milwaukee, WI 53210-0701. Note: A different
procedure is used for establishing Individual Retirement Accounts. Please call
Firstar at (800) 232-0224 for details. All purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks. No cash will be accepted.
Firstar will charge a $25 fee against a shareholder's account for any check
returned to it for insufficient funds. The shareholder will also be responsible
for any losses suffered by the Fund as a result.

Investing by Overnight or Express Mail - Please use the following address to
insure proper delivery: Firstar Mutual Fund Services, LLC, 3/rd/ Floor, 615 E.
Michigan Street, Milwaukee, WI 53202.

Investing by Wire - To establish a new account by wire please first call Firstar
at (800) 232-0224 to advise it of the investment and dollar amount. This will
ensure prompt and accurate handling of your investment. A completed Subscription
Application Form must also be sent to the Fund at the address above immediately
after your investment is made so the necessary remaining information can be
recorded to your account. Your purchase request should be wired through the
Federal Reserve Bank as follows:

13
<PAGE>

Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, WI 53202
ABA Number 075000022
For credit to Firstar Mutual Fund Services, LLC
Account Number 112-952-137
For further credit to (Fund Name, Shareholder Account Number, Shareholder
Name)
((For new accounts, include taxpayer identification number))

Additional Purchases - You may add to your account at any time by purchasing
shares by mail (minimum $50) or by wire (minimum $1,000) according to the
aforementioned wiring instructions. You must notify Firstar at (800) 232-0224
prior to sending your wire. A remittance form which is attached to your
individual account statement should accompany any investments made through the
mail, when possible. All purchase requests must include your shareholder account
number in order to assure that your funds are credited properly.

Purchases by Telephone - By using the Funds' telephone purchase option you may
move money from your bank account to your Fund account at your request. Only
bank accounts held at domestic financial institutions that are Automated
Clearing House (ACH) members may be used for telephone transactions. To have
your Fund shares purchased at the offering price determined at the close of
regular trading on a given date, Firstar must receive both your purchase order
and payment by Electronic Funds Transfer through the ACH System before the close
of regular trading on such a date. Most transfers are completed within one
business day. You may not use telephone purchase transactions for initial
purchases of Fund shares. The minimum amount that can be transferred by
telephone is $100.

AutoInvest Plan

Shares of the Funds may be purchased through the AutoInvest Plan. The Plan
provides a convenient method by which investors may have monies deducted
directly from their checking, savings or bank money market accounts for an
investment in the Funds on a monthly, bi-monthly, quarterly, semi-annual or
annual basis. The minimum investment pursuant to this Plan is $50 per month. The
account designated will be debited in the specified amount, on the schedule you
select, and Fund shares will be purchased. Only an account maintained at a
domestic financial institution which is an ACH member may be so designated. The
Funds may alter, modify or terminate this Plan at any time. You may establish
this option by completing the appropriate section of the Subscription
Application Form. For more information about participating in the AutoInvest
Plan, call the Fund at (800) 232-0224.

Retirement Plans

Shares of the Funds are also available for use in all types of tax-deferred
retirement plans such as IRA's, employer-sponsored defined contribution plans
(including 401(k) plans) and tax-sheltered custodial accounts described in
Section 403(b)(7) of the Internal Revenue Code. Qualified investors benefit from
the tax-free compounding of income dividends and capital gains distributions.
Application forms and brochures describing investments in the Funds for
retirement plans can be obtained from the Funds by calling (800) 232-0224. The
following is a description of the types of retirement plans for which the Funds'
shares may be used for investment:

Individual Retirement Accounts ("IRAs") - Individuals, who are not active
participants (and, when a joint return is filed, who do not have a spouse who is
an active participant) in an employer maintained retirement plan are eligible to
contribute on a deductible basis to an IRA account. The IRA deduction is also
retained for individual taxpayers and married couples with adjusted gross
incomes not in excess of

14
<PAGE>

certain specified limits. All individuals who have earned income may make
nondeductible IRA contributions to the extent that they are not eligible for a
deductible contribution. Income earned by an IRA account will continue to be tax
deferred. A special IRA program is available for employers under which the
employers may establish IRA accounts for their employees in lieu of establishing
tax qualified retirement plans. Known as SEP-IRA's (Simplified Employee Pension-
IRA), they free the employer of many of the recordkeeping requirements of
establishing and maintaining a tax qualified retirement plan trust.

If you are entitled to receive a distribution from a qualified retirement plan,
you may rollover all or part of that distribution into the Funds' IRA. Your
rollover contribution is not subject to the limits on annual IRA contributions.
You can continue to defer Federal income taxes on your contribution and on any
income that is earned on that contribution.

Firstar makes available its services as an IRA Custodian for each shareholder
account that is established as an IRA. For these services, Firstar receives an
annual fee of $12.50 per account with a cap of $25.00 per social security
number, which fee is paid directly to Firstar by the IRA shareholder. If the fee
is not paid by the due date, shares of the Fund owned by the shareholder in the
IRA account will be redeemed automatically for purposes of making the payment.

The Taxpayer Relief Act of 1997 (The "1997 Act") also created several new or
expanded IRAs which were available to Fund shareholders beginning on March 16,
1998.

The 1997 Act created a new "Roth IRA" which will permit tax-free distributions
of account balances if the assets have been invested for five years or more, and
the distributions meet certain qualifying restrictions. Investors filing as
single taxpayers who have adjusted gross incomes ("AGI") of $95,000 or more, and
investors filing as joint taxpayers with adjusted gross incomes of $150,000 or
more may find their participation in this IRA to be restricted.

The 1997 Act also created a new education IRA to help parents fund their
children's post secondary school education. Parents or others may contribute up
to $500 annually to an education IRA on behalf of any child under age 18. This
IRA is subject to the same AGI limits as the Roth IRA above, and there are other
contribution restrictions that may apply. The education IRA earnings accumulate
tax free, and assets that have accumulated in the IRA may be distributed tax
free when used to pay qualified higher education expenses.

Both new IRAs are subject to special rules and conditions that must be reviewed
by the investor when opening a new account.

401(k) Plans and Other Defined Contribution Plans - The Funds' shares may also
be used for investment in defined contribution plans by both self-employed
individuals (sole proprietorships and partnerships) and corporations who wish to
use shares of the Funds as a funding medium for a retirement plan qualified
under the Internal Revenue Code. Such plans typically allow investors to make
annual deductible contributions, which may be matched by their employers up to
certain percentages based on the investor's pre-contribution earned income.

403(b)(7) Retirement Plans - The Funds' shares are also available for use by
schools, hospitals, and certain other tax-exempt organizations or associations
who wish to use shares of the Funds as a funding medium for a retirement plan
for their employees. Contributions are made to the 403(b)(7) Plan as a reduction
to the employee's regular compensation. Such contributions, to the extent they
do not exceed

15
<PAGE>

applicable limitations (including a generally applicable limitation of $9,500
per year), are excludable from the gross income of the employee for Federal
Income tax purposes.

Additional Redemption Information

Shareholders may redeem their shares of the Fund on any business day that the
Fund calculates its net asset value. See "Valuing the Funds' Shares."
Redemptions will be effected at the net asset value per share next determined
after the receipt by the transfer agent of a redemption request meeting the
requirements described below. The Funds normally send redemption proceeds on the
next business day, but in any event redemption proceeds are sent within seven
calendar days of receipt of a redemption request in proper form, or sooner if
required under applicable law. Payment may also be made by wire directly to any
bank previously designated by the shareholder in a shareholder account
application. The Fund's custodian or the shareholder's bank may impose a fee for
wire service. The Fund will honor redemption requests of shareholders who
recently purchased shares by check, but will not mail the proceeds attributable
to such purchase until it is reasonably satisfied that the purchase check has
cleared, which may take up to twelve days from the purchase date, at which time
the redemption proceeds will be sent to the shareholder. Purchases made with a
check that does not clear will be canceled and the investor will be responsible
for any losses or fees incurred in the transaction.

Redemption by Mail - At any time during normal business hours you may request
that the Funds redeem your shares in whole or part. Written redemption requests
must be directed to The HomeState Group, c/o Firstar Mutual Fund Services, LLC,
P.O. Box 701, Milwaukee, WI 53201-0701. If a redemption request is inadvertently
sent to the Fund at its corporate address, it will be forwarded to Firstar, but
the effective date of the redemption will be delayed until the request is
received by Firstar. Requests for redemption which are subject to any special
conditions or which specify an effective date other than provided herein cannot
be honored.

A redemption request must be received in "Good Order" by Firstar for the request
to be processed. "Good Order" means the request for redemption must include:

Your letter of instruction specifying the name of the Fund and either the number
of shares or the dollar amount of shares to be redeemed. The letter of
instruction must be signed by all registered shareholders exactly as the shares
are registered and must include your account registration number and the
additional requirements listed below that apply to the particular account.

<TABLE>
<CAPTION>
Type of Registration Requirements
-------------------- ------------
<S> <C>
Individual, Joint Tenants, Sole Proprietorship, Redemption requests must be signed by all person(s)
Custodial (Uniform Gift To Minors Act), required to sign for the account, exactly as
General Partners it is registered

Corporations, Associations Redemption request and a corporate resolution,
signed by the person(s) required to sign for the
account, accompanied by signature guarantee(s)

Trusts Redemption request signed by the trustee(s), with a
signature guarantee. (If the Trustee's name is not
registered on the account, a copy of the trust document
certified within the last 60 days is also required.)
</TABLE>

16
<PAGE>

A redemption request for amounts above $10,000, or redemption requests for which
proceeds are to be mailed somewhere other than the address of record, must be
accompanied by signature guarantees. Signatures must be guaranteed by an
"eligible guarantor institution" as defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934. Eligible guarantor institutions include banks, brokers,
credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations. Broker-dealers
guaranteeing signatures must be a member of a clearing corporation or maintain
net capital of at least $100,000. Credit unions must be authorized to issue
signature guarantees. Signature guarantees will be accepted from any eligible
guarantor institution which participates in a signature guarantee program. The
transfer agent may require additional supporting documents for redemptions made
by corporations, executors, administrators, trustees and guardians.

If you have an IRA, you must indicate on your redemption request whether or not
to withhold federal income tax. Redemption requests not indicating an election
to have federal tax withheld will be subject to withholding. If you are
uncertain of the redemption requirements, please contact, in advance, Firstar.

The redemption price is the next determined net asset value after Firstar
receives a redemption request in "Good Order." The amount paid will depend on
the market value of the investments in the Funds' portfolio at the time of
determination of net asset value, and may be more or less than the initial cost
of the shares redeemed. Payment for shares redeemed will be mailed to you
typically within one or two days, but no later than the seventh day (or earlier
if required under applicable law) after receipt by Firstar of the redemption
request in "Good Order" unless the Fund is requested to redeem shares purchased
by check. In such an event the Funds may delay the mailing of a redemption check
until the purchase check has cleared which may take up to 12 days. Wire
transfers may be arranged through Firstar, which will assess a $12.00 wire fee
against your account.

Redemption by Telephone - Shareholders who have so indicated on the Subscription
Application Form, or have subsequently arranged in writing to do so, may redeem
shares in any amount up to $10,000 by instructing the transfer agent by
telephone at (800) 232-0224. If proceeds are sent by wire, a $12.00 wire fee
will apply, and there is a $1,000 minimum per telephone redemption required. In
order to arrange for redemption by wire or telephone after an account has been
opened, or to change the bank or account designated to receive redemption
proceeds, a written request must be sent to the transfer agent at the address
listed above. A signature guarantee is required of all shareholders in order to
change telephone redemption privileges.

Neither the Fund(s) nor any of its service contractors will be liable for any
loss or expense in acting upon any telephone instructions that are reasonably
believed to be genuine. In attempting to confirm that telephone requests are
genuine, the Fund will use such procedures as are considered reasonable,
including requesting a shareholder to correctly state his or her Fund account
number, the name in which his or her account is registered, his or her banking
institution, bank account number and the name in which his or her bank account
is registered. To the extent that the Funds fail to use reasonable procedures to
verify the genuineness of telephone instructions, it and/or its service
contractors may be liable for any such instructions that prove to be fraudulent
or unauthorized.

Redemption proceeds can be sent to your bank account by ACH transfer. You can
elect this option by completing the appropriate section of the Subscription
Application Form. If money is moved by ACH transfer, you will not be charged by
the Fund for these services. There is a $100 minimum per ACH transfer.

17
<PAGE>

During times of drastic economic or market changes, the telephone redemption
privilege may be difficult to implement. In the event that you are unable to
reach Firstar by telephone, you may make a redemption request by mail. The Fund
and Firstar each reserve the right to refuse a wire or telephone redemption if
it is believed advisable to do so. Procedures for redeeming Funds shares by wire
or telephone may be modified or terminated at any time by the Funds.

Checks will be made payable to you and will be sent to your address of record.
If the proceeds of the redemption are requested to be sent to other than the
address of record or if the address of record has been changed within 15 days of
the redemption request, the request must be in writing with your signature(s)
guaranteed.

The Funds also reserve the right to involuntarily redeem an investor's account
where the account is worth less than the minimum initial account investment
required when the account is established, presently $500 for all accounts except
AutoInvest Plan accounts, where the minimum is presently $50. The shares will
not be redeemed solely due to market fluctuations and the effect such
fluctuations may have on an investor's account balance. (Any redemption of
shares from an inactive account established with a minimum investment may reduce
the account below the minimum initial investment, and could subject the account
to redemption initiated by the Fund). The Funds will advise the shareholder of
such intention in writing at least sixty (60) days prior to effecting such
redemption, during which time the shareholder may purchase additional shares in
any amount necessary to bring the account back to the minimum.

Systematic Withdrawal Plan

Shareholders who own shares with a value of $10,000 or more may participate in
the Systematic Withdrawal Plan. If you select the Funds' systematic withdrawal
option, you may move money automatically from your Fund account to your bank
account according to the schedule you select. The systematic withdrawal option
may be in any amount subject to a $50 minimum. To select the option you must
check the appropriate box on the Subscription Application Form. If you expect to
purchase additional Fund shares, it may not be to your advantage to participate
in the Systematic Withdrawal Plan because contemporary purchases and redemption
may result in adverse tax consequences. For further details, see the application
form or call the Fund at (800) 232-0224.

ADDITIONAL DIVIDEND, DISTRIBUTIONS & TAXES INFORMATION

Dividends and Distributions

Dividends, if any, will be declared and paid in July and December. Capital
gains, if any, will be declared and paid in July and December. All such payments
will be declared on the 15/th/ of the month, go ex-dividend on the 16/th/ of the
month and be paid on the 20/th/ of the month. If any of these dates falls on a
weekend, the declaration, ex-dividend and payment dates will be moved
accordingly to the next business day.

If you elect to receive cash dividends and/or capital gains distributions
and a check is returned as undelivered by the United States Postal Service, the
Funds reserve the right to invest the check in additional shares of the Funds at
the then-current net asset value and to convert your account's election to
automatic reinvestment of all distributions, until the Funds' Transfer Agent
receives a corrected address in writing from the number of account owners
authorized on your application to change the registration. If the Transfer Agent
receives no written communication from the account owner(s) and there are no
purchases, sales or exchanges in your account for a period of time mandated by
state law, then that state may require the Transfer Agent to turn over to state
government the value of the account as well as any dividends or distributions
paid.

18
<PAGE>

After a dividend or capital gains distribution is paid, the Funds' share
price will drop by the amount of the dividend or distribution. If you have
chosen to have your dividends or distributions paid to your account in
additional shares, the total value of your account will not change after the
dividend or distribution is paid. In such cases, while the value of each share
will be lower, each reinvesting shareholder will own more shares. Reinvested
shares will be purchased at the price in effect at the close of business on the
day after the record date.

Taxes

Each series of the Trust is treated as a separate Fund for federal income
tax purposes. Each Fund intends to qualify each year as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). In order to qualify, and, therefore to qualify for the special tax
treatment accorded regulated investment companies and their shareholders, each
Fund must, among other things:

(1) Derive at least 90% of its gross income from dividends, interest,
payments with respect to certain securities, loans, and gains from the sale of
stock and securities, or other income derived with respect to its business of
investing in such stock or securities;

(2) Distribute with respect to each taxable year at least 90% of its
taxable and tax-exempt income for such year; and

(3) Diversify its holdings so that, at the end of each fiscal quarter, (i)
at least 50% of the market value of the Fund's assets is represented by cash and
cash items, United States Government securities, securities of other investment
companies, and other securities limited in respect of any one issuer to a value
not greater than 5% of the value of the Fund's total assets and 10% of the
voting securities of such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities (other than those of the United States
Government or other regulated investment companies) of any one issuer or of two
or more issuers which the Fund controls and which are engaged in the same,
similar, or related types of businesses.

If each Fund qualifies to be taxed as a regulated investment company it is
accorded special tax treatment and will not be subject to federal income tax on
income distributed to its shareholders in the form of dividends (including both
capital gain and ordinary income dividends). If, however, a Fund does not
qualify for such special tax treatment, that Fund will be subject to tax on its
taxable income at corporate rates, and could be required to recognize unrealized
gains, pay substantial taxes and interest and make substantial distributions
before requalifying as a regulated investment company that is accorded special
tax treatment. In addition, if a Fund fails to distribute in a calendar year
substantially all of its ordinary income for such year and substantially all of
its net capital gain for the year ending October 31 (or later if the Fund is
permitted so to elect and so elects), plus any retained amount from the prior
year, that Fund will be subject to a 4% excise tax on the undistributed amounts.
Each Fund intends generally to make distributions sufficient to avoid imposition
of the 4% excise tax. In calculating its income, each Fund must include
dividends in income not when received, but on the date when the stock in
question is acquired or becomes ex-dividend, whichever is later.

Other Tax Information

Return of Capital Distributions - If a Fund makes a distribution to you in
- -------------------------------
excess of its accumulated earnings and profits in any taxable year, the excess
distribution will be treated as a return of capital to the extent of your tax
basis in your shares, and thereafter as capital gain. A return of capital is not
taxable, but it reduces your tax basis in your shares.

Capital Gains - When you purchase shares of a Fund, the Fund's then-current net
- -------------
asset value may reflect undistributed capital gains or net unrealized
appreciation of securities held by the Fund. If the Fund

19
<PAGE>

subsequently distributed such amounts to you, the distribution would be taxable,
although it constituted a return of your investment. For federal income tax
purposes, each Fund is permitted to carry forward net realized capital losses,
if any, and realize net capital gains up to the amount of such losses without
being required to pay taxes on or distribute such gains which, if distributed,
might be taxable to you.

Dividends - The Code provides a 70% deduction for dividends received by
- ---------
corporate shareholders, with certain exceptions. It is expected that only part
of each Fund's investment income will be derived from dividends qualifying as
such and, therefore, not all dividends received will be subject to the
deduction.

Shares Purchased through Retirement Plans - Special tax rules and fiduciary
- -----------------------------------------
responsibility requirements apply to investments made through retirement plans
which satisfy the requirements of Section 401(a) of the Code. Shareholders of
the Funds should consult with their tax adviser to determine the suitability of
shares of the Funds as an investment through such plans, and the precise effect
of such an investment on their particular tax situation.

MANAGEMENT OF THE FUNDS

Board of Trustees and Officers of the Trust

The HomeState Group is organized as a Pennsylvania common law trust. The
operations and management of the Trust are the responsibility of the Board of
Trustees. Pursuant to that responsibility, the Board of Trustees has approved
contracts with organizations to provide, among other things, day-to-day
investment advisory and administrative management services.

The following individuals hold positions as Trustees and/or Officers of the
Trust. Their position with the Trust is listed along with their business
occupations for the previous five years:

Name, Position and Occupation for previous Five Years:

Scott L. Rehr*, 1857 William Penn Way, Lancaster, PA 17601, President and
Trustee, age 36, has been Senior Vice President and Treasurer of Emerald
Advisers, Inc. since 1991. He was Vice President of Weik Investment Services,
Inc. from 1990 to 1991. He was Vice President of Penn Square Mutual Fund and the
William Penn Interest Income Fund from 1989 to 1990 and Director of Investor
Services, Penn Square Management Corp. from 1986 to 1989.

Bruce E. Bowen, 1536 Buttonbush Circle, Palm City, Fl 34990, Trustee, age 60, is
currently a private investor. He retired as Vice Chairman and Secretary of Penn
Square Mutual Fund, positions he held from 1968 to 1988 and Vice Chairman and
Secretary of William Penn Interest Income Fund positions he held from 1987 to
1988. He also served as Vice President and Secretary of Penn Square Management
Corp. from 1964 to 1988. He also was a Director of Berk-Tek, Inc. from 1987 to
1991 and Director of Morgan Corporation, from 1989 to 1991.

Kenneth G. Mertz II, C.F.A.*, 1857 William Penn Way, Lancaster, PA 17601,
Trustee, Vice President and Chief Financial Officer, age 47, has been President
and Chief Investment Officer of Emerald Advisers, Inc. since 1992. He was Chief
Investment Officer for the Pennsylvania State Employes Retirement System from
1985 to 1992. He was a Member of the National Advisory Board, Northwest Center
for Professional Education/Real Estate Investment for Pension Funds from 1991 to
1992 and a Member of the Advisory Board, APA/Fostin Pennsylvania Venture Capital
Fund from 1987 to 1992.

20
<PAGE>

Daniel W. Moyer IV*, 1857 William Penn Way, Lancaster, PA 17601, Vice President
and Secretary, age 44, has been Vice President of Emerald Advisers, Inc. since
1992 as well as a Registered Representative for First Montauk Securities Corp.
since 1992. He was the Branch Office Manager for Keogler Morgan & Co. and a
Registered Representative and Director for Financial Management Group from 1988
to 1992.

Scott C. Penwell, Esq.**, 305 North Front Street, Harrisburg, PA 17108, Trustee,
age 45, has been a partner at Duane, Morris & Heckscher since 1981. He has also
been Chairman of the Securities Regulation Committee of the Corporation, Banking
and Business Law Section of the Pennsylvania Bar Association since 1994.

Steven E. Russell, Esq.*, 1857 William Penn Way, Lancaster, PA 17601, Vice
President and Portfolio Manager, age 31, has been a Vice President of Emerald
Advisers, Inc. since March, 1998. He was a senior equity analyst with the
Pennsylvania Public School Employes Retirement System from 1996 to 1998, a
financial manager for Harrah's Entertainment Inc. from 1995 to 1996, an account
executive with United Way of Southeastern Pennsylvania and an ensign in the U.S.
Navy in 1995. He attended Temple University from 1992 to 1995, receiving an MBA
in Business Administration and a JD in Law in 1995.

Dr. H. J. Zoffer, Joseph M. Katz School of Business, 366 Mervis Hall,
Pittsburgh, PA 15260, Trustee, age 68, has been Professor of Business
Administration at Joseph M. Katz School of Business since 1966. He was Dean of
Joseph M. Katz School of Business, University of Pittsburgh from 1966 to 1996.
He is also a Director of Penwood Savings Association.

* Employee of Emerald Advisers, Inc. and "Interested Person" within the meaning
of the Investment Company Act of 1940.
** Employee of the Trust's Legal Counsel and therefore an "Interested Person"
within the meaning of the Investment Company Act of 1940.

The Trustees of the Funds who are not employed by the Adviser, the
Distributor, or their affiliates (the "Disinterested Trustees") receive an
annual retainer of $2,500 for the PA Growth Fund and $ 1,000 each for the
Banking and Finance Fund and the Y2K Fund, $350 for each Trustees meeting
attended, and $100 for each Audit Committee meeting attended. For the year ended
June 30, 1999, the Funds incurred Trustees fees and expenses totaling $18,000.
The Funds will also reimburse the Independent Trustees' travel expenses incurred
attending Board meetings.

21
<PAGE>

Compensation Table

<TABLE>
<CAPTION>
Name and Title Aggregate Pay Aggregate Pay From Aggregate Pay From Total Pay From Fund
From PA Growth Banking and Finance The Year 2000 Fund Complex (1)
Fund Fund
<S> <C> <C> <C> <C>
Scott L. Rehr, $ 0 $ 0 $ 0 $ 0
Trustee and President
Bruce E. Bowen, 3,000 1,500 1,500 6,000
Trustee

Kenneth G. Mertz, II, 0 0 0 0
Trustee, Vice-President
and Chief Investment
Officer
Scott C. Penwell, 3,000 1,500 1,500 6,000
Trustee
Dr. H. J. Zoffer 3,000 1,500 1,500 6,000
Trustee
</TABLE>

(1) No pension or retirement benefits are provided for trustees or officers of
the Funds.

The Officers of the Funds receive no compensation for their services as
such.

As of September 30, 1999 the Trustees and Officers of the Funds owned, as a
group, less than one percent of the outstanding shares of the Funds.

The Declaration of Trust provides that the Trust will indemnify the
Trustees and may indemnify its officers and employees against liabilities and
expenses incurred in connection with litigation in which they may be involved
because of their offices with the Trust, except if it is determined in the
manner specified in the Trust that they have acted in bad faith, with reckless
disregard of his/her duties, willful misconduct or gross negligence. The Trust,
at its expense, may provide liability insurance for the benefit of its Trustees,
officers and employees.

Persons Controlling the Funds

To the knowledge of the Funds, no person owned of record or beneficially
25% or more of each Fund's outstanding shares as of September 30, 1999.

To the knowledge of the Funds, no person owned of record or beneficially 5%
or more of the Banking and Finance Fund's or the Y2K Fund's outstanding shares
as of September 30, 1999.

The following persons owned of record or beneficially 5% or more of the PA
Growth Fund's outstanding shares as of September 30, 1999:

<TABLE>
<CAPTION>
Name Address % of Ownership
- ----- ------- --------------
<S> <C> <C>
Smith Barney Inc. 333 W. 34/th/ St., 3/rd/ Floor, NY, NY 10001 13.9%

FMB Trust Company P.O. Box 1596, Baltimore, MD 21203 10.9%
</TABLE>

22
<PAGE>

Investment Adviser and Other Service Providers

Investment Adviser and Principal Underwriter

Emerald Advisers, Inc., 1857 William Penn Way, Lancaster, PA 17601, and
Rafferty Capital Markets, Inc., 1311 Mamaroneck Avenue, White Plains, NY 10605,
are the Funds' investment adviser and distributor, respectively. The Distributor
is not obligated to sell any specific amount of shares of the Funds and will
purchase shares for resale only against orders for shares. The Distributor is a
New York corporation, a broker-dealer registered with the Securities and
Exchange Commission, and a member of the National Association of Securities
Dealers, Inc., (the "NASD"). Some officers of the Funds are employed by the
Adviser and may also distribute shares of the Funds as registered
representatives of the Distributor.

Emerald Advisers, Inc. is a wholly-owned subsidiary of Emerald Asset
Management, Inc. ("EAM"), 1857 William Penn Way, Lancaster, PA 17601. The
shareholders of EAM are: Joseph E. Besecker, James Brubaker, Stanley Corker,
Joseph W. Garner, Kenneth G. Mertz II, Daniel W. Moyer IV, Scott L. Rehr, Stacey
L. Stichter, Paul W. Ware and Judy S. Ware.

The following individuals have the following positions and offices with the
Trust and the Adviser:

<TABLE>
<CAPTION>
Name Position(s) With Adviser Position(s) With Trust
<S> <C> <C>
Scott L. Rehr Senior Vice President; Treasurer; Trustee; President
Director

Kenneth G. Mertz II, C.F.A. President; Director Trustee; Vice President; Chief
Investment Officer

Daniel W. Moyer, IV Vice President; Director Vice President; Secretary

Steven E. Russell, Esq. Vice President Vice President, Portfolio Manager
</TABLE>

In carrying out its responsibilities under the investment advisory contract
with the Funds, the Adviser furnishes or pays for all facilities and services
furnished or performed for, or on behalf of, the Funds. Such items may include,
but are not limited to: office facilities, office support materials and
equipment, records and personnel necessary to manage the Funds' daily affairs.
In return for these services, the Funds have agreed to pay the Adviser an
annualized fee, based on the average market value of the net assets of the
Funds, computed each business day and paid to the Adviser monthly. The fee is
paid as follows:

HOMESTATE PENNSYLVANIA GROWTH FUND:

Assets $0 to $250 Million.............................. 0.75%
Over $250 MM to $500 MM................................ 0.65%
Over $500 MM to $750 MM................................ 0.55%
Over $750 Million...................................... 0.45%

HOMESTATE SELECT BANKING AND FINANCE FUND and
HOMESTATE YEAR 2000 ("Y2K") FUND:

Assets $0 to $100 Million.............................. 1.00%
Over $100 Million...................................... 0.90%

23
<PAGE>

These fees are higher than most other registered mutual funds but
comparable to fees paid by equity funds of a similar investment objective and
size. For the fiscal years ended June 30, 1999, 1998 and 1997, the Adviser
received management fees from the PA Growth Fund totaling $784,190, $869,718 and
$528,528, respectively. For the period ended June 30, 1999, the Adviser received
management fees from the Banking and Finance Fund, before reimbursement of
expenses, totaling $119,952, of which the Adviser waived $30,430. For the period
ended June 30, 1998, the Adviser received management fees from the Banking and
Finance Fund, before reimbursement of expenses, totaling $146,960, of which the
Adviser waived $36,124. For the period ended June 30, 1997, the Adviser received
management fees from the Banking and Finance Fund, before reimbursement of
expenses, totaling $11,200 of which the Adviser waived the entire fee, or
$11,200 and reimbursed the Banking and Finance Fund for additional expenses
totaling $47,862. For the period ended June 30, 1999, the Adviser received
management fees from the Year 2000 Fund, before reimbursement of expenses,
totaling $92,173, of which the Adviser waived $9,851. For the period ended June
30, 1998, the Adviser received management fees from the Year 2000 Fund, before
reimbursement of expenses, totaling $37,072 of which the Adviser waived the
entire fee, or $37,072 and reimbursed the Y2K Fund for additional expenses
totaling $51,405.

The Funds pay all of their expenses other than those expressly assumed by
the Adviser. Specifically, the Funds pay the fees and expenses of their transfer
agent, custodian, independent accountants and legal counsel. These fees are
generally for the costs of necessary professional services, regulatory
compliance, and those pertaining to maintaining the Funds' organizational
standing. The resulting fees may include, but are not limited to: brokerage
commissions, taxes and organizational fees, bonding and insurance, custody,
auditing and accounting services, shareholder communications and shareholder
servicing, and the cost of financial reports and prospectuses sent to
Shareholders. The Adviser reserves the right to voluntarily waive any portion of
its advisory fee at any time.

Administrator, Accounting Agent and Transfer Agent

The Fund has entered into an administration agreement (the "Administration
Agreement") with Firstar Mutual Fund Services, LLC (the "Administrator"), 615 E.
Michigan Street, Milwaukee, WI 53202. Under the Administrative Agreement, the
administrator: (1) coordinates with the Custodian and monitors the custodial,
transfer agency and accounting services provided to the Funds; (2) coordinates
with and monitors any other third parties furnishing services to the Funds; (3)
provides the Funds with necessary office space, telephones and other
communications facilities and personnel competent to perform administrative and
clerical functions; (4) maintains such books and records of the Funds as may be
required by applicable federal or state law and supervises the maintenance of
such books and records if maintained by third parties; (5) prepares or
supervises the preparation by third parties of all federal, state and local tax
returns and reports of the Funds required by applicable law; (6) prepares and,
after approval by the Funds, files and arranges for the distribution of proxy
materials and periodic reports to shareholders of the Funds as required by
applicable law; (7) prepares and, after approval by the Funds, arranges for the
filing of such registration statements and other documents with the U.S.
Securities and Exchange Commission (the "SEC") and other federal and state
regulatory authorities as may be required by applicable law; (8) reviews and
submits to the officers of the Trust for their approval invoices or other
requests for payment of the Funds' expenses and instructs the Custodian to issue
checks in payment thereof; (9) assists the Funds in the preparation of documents
and information needed for meetings of the Board of Trustees and prepares the
minutes of Board meetings; (10) monitors the Funds' compliance with applicable
state securities laws; (11) assists the Distributor with the preparation of
quarterly reports to the Board of Trustees relating to the distribution plan
adopted by the Funds pursuant to Rule 12b-1; and (12) takes other such action
with respect to the Funds as may be necessary in the opinion of the
Administrator to perform its duties under the agreement.

24
<PAGE>

The Administrator, at its own expense and without reimbursement from the Funds,
furnishes office space and all necessary office facilities, equipment and
executive personnel for performing the services required to be performed by it
under the Administration Agreement. For the foregoing, the Administrator
receives from the Fund a fee, paid monthly, at an annual rate of .07% of the
first $200,000,000 of each Fund's average net assets, .06% of the next
$500,000,000 of each Fund's average net assets, and .04% of each Fund's average
net assets in excess of $700,000,000. Notwithstanding the foregoing, the
Administrator's minimum annual fee is $30,000.

Custodian, Transfer Agent and Fund Accountant

Firstar Bank Milwaukee serves as custodian of the Trust's assets pursuant to a
Custody Agreement. Under the Custody Agreement, Firstar Bank Milwaukee has
agreed to (i) maintain a separate account in the name of each of the Funds, (ii)
make receipts and disbursements of money on behalf of the Funds, (iii) collect
and receive all income and other payments and distributions on account of the
Funds' portfolio investments, (iv) respond to correspondence from shareholders,
security brokers and others relating to its duties and (v) make periodic reports
to the Funds concerning the Funds' operations. Firstar Bank Milwaukee does not
exercise any supervisory function over the purchase and sale of securities.

Firstar Mutual Fund Services, LLC serves as transfer agent and dividend
disbursing agent for the Funds under a Shareholder Services Agreement. As
transfer agent and dividend disbursing agent, Firstar has agreed to (i) issue
and redeem shares of the Funds, (ii) make dividend and other distributions to
shareholders of the Funds, (iii) respond to correspondence by Fund shareholders
and others relating to its duties, (iv) maintain shareholder accounts and (v)
make periodic reports to the Funds.

In addition, the Trust has entered into a Fund Accounting Servicing Agreement
with Firstar Mutual Fund Services, LLC pursuant to which Firstar has agreed to
maintain the financial accounts and records of the Funds and provide other
accounting services to the Funds. For its accounting services, Firstar is
entitled to receive fees, payable monthly, based on the total annual rate of
$24,000 for the first $40 million in average net assets of the Funds, 0.01% on
the next $200 million of average net assets and 0.005% on average net assets
exceeding $240 million (subject to an annual minimum of $24,000). Firstar is
also entitled to certain out of pocket expenses, including pricing expenses.

For the fiscal year ended June 30, 1999, Firstar received fees totalling
$505,929 from the Funds for performing administrative, accounting and transfer
agency services. For the fiscal year ended June 30, 1998, Firstar received fees
totalling $218,011 from the Funds for performing these services. Prior to March
of 1998, Rodney Square Management Corp. ("Rodney Square") performed
administrative, accounting and transfer agency services for the Funds. For the
fiscal year ended June 30, 1998 and before March, 1998, Rodney Square received
fees totaling $256,690. For the fiscal years ended June 30, 1997 Rodney Square
received fees totaling $302,133 and for the period from November 20, 1995
through June 30, 1996, Rodney Square received fees totaling $106,524.

Independent Accountants

PricewaterhouseCoopers LLP, 100 E. Wisconsin Avenue, Milwaukee, WI 53202,
are the independent accountants which audit the annual financial statements of
the Funds.

The Distribution Plans

General Information. In order to compensate investment dealers (including for
- ------- -----------
this purpose certain financial institutions) for services provided in connection
with sales of shares of certain series of the Trust and maintenance of
shareholder accounts within these series, the Distributor makes quarterly
payments to qualifying dealers based on the average net asset value of shares of
the Funds' specified series which are attributable to shareholders for whom the
dealers are designated as the dealer of record. The

25
<PAGE>

Distributor makes such payments at the annual rate of 0.25% of the average net
asset value of the PA Growth Fund and Banking and Finance Fund and an annual
rate of 0.50% of the Y2K Fund, with "average net asset value" attributable to a
shareholder account meaning the product of (i) the average daily share balance
of the account multiplied by (ii) the series' average daily net asset value per
share.

For administrative reasons, the Distributor may enter into agreements with
certain dealers providing for the calculation of "average net asset value" on
the basis of assets of the accounts of the dealer's customers on an established
day in each quarter. The Distributor may suspend or modify these payments at any
time. Payments are subject to the continuation of the Series' Plan described
below and the terms of service agreements between dealers and the Distributor.

The PA Growth Fund, the Banking and Finance Fund and the Y2K Fund are all
currently operating with Distribution Plans (the "Plans"). Each Fund has adopted
a Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940. The
purpose of the Plans are to permit the Funds to compensate the Distributor for
services provided and expenses incurred by it in promoting the sale of shares of
the Series, reducing redemptions, or maintaining or improving services provided
to shareholders by the Distributor or dealers. By promoting the sale of shares
and/or reducing redemptions, the Plan should help provide a continuous cash
flow, affording the Adviser the ability to purchase and redeem securities
without forcing the Adviser to make unwanted redemptions of existing portfolio
securities.

The Plans provide for quarterly payments by each Fund to the Distributor at
the annual rate of up to 0.35% of the Series' average net assets for the PA
Growth Fund and Banking and Finance Fund and the annual rate of up to 0.70% for
the Y2K Fund, subject to the authority of the Trust's Board of Trustees to
reduce the amount of payments or to suspend the Plans for such periods as they
may determine. Subject to these limitations, the amount of such payments and the
specific purposes for which they are made shall be determined by the Board of
Trustees. At present, the Trustees have approved payments under the Plans for
the purpose of reimbursing the Distributor for payments made by it to dealers
under the service agreements referred to above as well as for certain additional
expenses related to shareholder services and the distribution of shares, subject
to the maximum annual rate of 0.35% of each Fund's average net assets.
Continuance of the Plans is subject to annual approval by a vote of 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 interest in the Plan or related
arrangements (these Trustees are known as "Disinterested Trustees"), cast in
person at a meeting called for that purpose. All material amendments to the
Plans must be likewise approved by separate votes of the Trustees and the
Disinterested Trustees of the Trust. The Plans may not be amended in order to
increase materially the costs which the Funds bear for distribution pursuant to
the Plans without also being approved by a majority of the outstanding voting
securities of a Fund. The Plans terminate automatically in the event of their
assignment and may be terminated without penalty, at any time, by a vote of the
majority of (i) the outstanding voting securities of a Fund, or (ii) the
Disinterested Trustees.

The Glass-Steagall Act and other applicable laws and regulations prohibit a
bank from acting as underwriter or distributor of securities. If a bank were
prohibited from providing certain administrative services, shareholders would be
permitted to remain as the Funds' shareholders and alternate means for
continuing the servicing of such shareholders would be sought. It is not
expected that shareholders would suffer any financial consequences as a result
of any of those occurrences.

Future regulatory review and revision of Rule 12b-1 by the SEC, of Rule
2830 of the Rules of Fair Practice by the NASD, or any similar review and
revision of other applicable regulations by other regulatory agencies could
affect the Funds' Plans. The Board of Trustees will promptly modify the Plans if
such action is warranted.

26
<PAGE>

For the fiscal year ended June 30, 1999, the PA Growth Fund incurred
expenses totaling $365,956 pursuant to the Distribution Plan, the Banking and
Finance Fund incurred expenses totaling $41,984, and the Y2K Fund incurred
expenses totaling $64,521.

ADDITIONAL BROKERAGE ALLOCATION INFORMATION

The Adviser is responsible for selecting brokers and dealers to effect portfolio
securities transactions and for negotiating brokerage commissions and dealers'
charges. The Adviser places orders for the purchase or sale of portfolio
securities of the Funds. In choosing a particular broker to execute a given
transaction, the Adviser uses the following criteria: (1) the past capabilities
of that broker in executing such types of trades; (2) the quality and speed of
executing trades; (3) competitive commission rates; and (4) all other factors
being equal, useful research services provided by the brokerage firm. The
research services provided to the Adviser are used to advise all of its clients,
including the Funds, but not all such services furnished are used to advise the
Funds. Research services can include written reports and interviews by analysts
on a particular industry or company or on economic factors, and other such
services which can enhance the Adviser's ability to gauge the potential
investment worthiness of companies and/or industries, such as evaluation of
investments, recommendations as to the purchase or sale of investments,
newspapers, magazines, quotation services and news services. If these services
are not used exclusively by the Adviser for Funds' research purposes, then the
Adviser, based upon allocations of expected use, bears that portion of the
service's cost that directly relates to non-Funds research use. The management
fee paid by the Funds to the Adviser is not reduced because the Adviser receives
these services even though the Adviser might otherwise be required to purchase
some of these services for cash. The Adviser does not pay excess commissions to
any broker for research services provided or for any other reason. Consistent
with the Rules of Fair Practice of the National Association of Securities
Dealers, Inc. (the "NASD") and subject to seeking the most favorable price and
execution available and such other policies as the Board of Trustees may
determine, the Adviser may consider sales of shares of front-end load series of
the Funds as a factor in the selection of broker-dealers to execute portfolio
transactions for the Funds.

To the extent consistent with applicable provisions of the Investment Company
Act of 1940, Rule 17e-1, and other rules and exemptions adopted by the SEC under
that Act, the Board of Trustees has determined that transactions for the Funds
may be executed by affiliated brokers if, in the judgment of the Adviser, the
use of an affiliated broker is likely to result in price and execution at least
as favorable as those qualified brokers. The Adviser will not execute principal
transactions by use of an affiliated broker.

For the fiscal years ended June 30, 1999, 1998 and 1997, the PA Growth Fund
incurred brokerage commissions aggregating $358,774, $224,379 and $208,752,
respectively. For the fiscal years ended June 30, 1999 and 1998 and the period
ended June 30, 1997, the Select Banking and Finance Fund incurred brokerage
commissions aggregating $80,701, $80,299 and $21,558, respectively. For the
fiscal year ended June 30, 1999 and the period ended June 30, 1998, the Y2K Fund
incurred brokerage commissions aggregating $65,475 and $20,756, respectively.

Portfolio Turnover Rate. The portfolio turnover rate is calculated by
-----------------------
dividing the lesser of each Fund's annual purchases and sales of portfolio
securities for the particular fiscal year by the monthly average value of the
portfolio securities owned by each Fund during the year. All securities,
including options, whose maturity or expiration date at the time of acquisition
was one year or less are to be excluded from both the numerator and the
denominator. The portfolio turnover rate of the PA Growth Fund for the fiscal
years ended June 30, 1999 and 1998 was 88% and 51%, respectively. The portfolio
turnover rate for the Banking and Finance Fund for the fiscal years ended June
30, 1999 and 1998 was

27
<PAGE>

158% and 115%, respectively. Prior to October 20, 1998, the Banking and Finance
Fund was pursuing a different investment objective. The portfolio turnover rate
for the Y2K Fund for the fiscal year ended June 30, 1999 and the period ended
June 30, 1998 was 200% and 44%, respectively. All three funds experienced higher
portfolio turnover rates as s result of generally more volatile market
conditions in 1998 and 1999, and the Banking and Finance Fund's turnover rate
was higher in part due to its transition from its prior objective.

MEASURING PERFORMANCE

Average annual total return data ("Standardized Return") for the Funds may
from time to time be presented in the Prospectus, this Statement and in
advertisements. Each Fund's "average annual total return" is an average annual
compounded rate of return. It is the rate of return based on factors that
include a hypothetical investment of $1,000 held for a number of years with an
Ending Redeemable Value of that investment, according to the following formula:

(ERV/P)/1/n/ - 1 = T

where: P = hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at end of the
period of a hypothetical $1,000 payment
made at the beginning of that period.

HomeState Pennsylvania Growth Fund
----------------------------------

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN SINCE INCEPTION
1 YEAR OCTOBER 1, 1992
ENDED THROUGH
SALES LOAD JUNE 30, 1999 JUNE 30, 1999
---------- ------------- -------------
<S> <C> <C>
4.75% - 13.55% 15.66%

NONE - 9.24% 16.49%
</TABLE>

HomeState Select Banking and Finance Fund
-----------------------------------------

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN SINCE INCEPTION
1 YEAR FEBRUARY 18, 1997
ENDED THROUGH
SALES LOAD JUNE 30, 1999 JUNE 30, 1999
---------- ------------- -------------
<S> <C> <C>
4.75% - 5.18% 12.68%

NONE - 0.45% 15.03%
</TABLE>

28
<PAGE>

HomeState Year 2000 ("Y2K") Fund
--------------------------------

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN SINCE INCEPTION
1 YEAR OCTOBER 31, 1997
ENDED THROUGH
SALES LOAD JUNE 30, 1999 JUNE 30, 1999
---------- ------------- -------------
<S> <C> <C>
2.90% - 2.25% 10.53%

NONE 0.66% 12.51%
</TABLE>

Total return data ("Non-Standardized Return") may also be presented from
time to time. The calculation of each Fund's "total return" uses some of the
same factors as the calculation of the average annual total return, but does not
average the rate of return on an annual basis. Total return measures the
cumulative (rather than average) change in value of a hypothetical investment in
a Fund over a stated period. Total return is stated as follows:

P(1 + T)/(n)/ = ERV

Both methods of total return calculation assume: (i) deduction of the
Fund's maximum sales charge, if applicable, and (ii) reinvestment of all Fund
distributions at net asset value on the respective date. Average annual total
return and total return calculation is a measurement of past performance, and is
not indicative of future results. Share prices will fluctuate so that an
investor's shares in the Fund may be worth more or less than their original
purchase cost when redeemed.

Each Fund may periodically compare its performance to that of other mutual
funds tracked by mutual fund ratings services (such as Lipper Analytical
Services, Inc.), financial and business publications and periodicals, of broad
groups of comparable mutual funds or of unmanaged indices (such as the Standard
& Poor's 500, Dow Jones Industrial Average, NASDAQ Composite, Russell 2000,
Wilshire 5000 or Wilshire 4500 indices), which may assume investment of
dividends but generally do not reflect deductions for administrative and
management costs. A Fund may quote Morningstar, Inc., a service that ranks
mutual funds on the basis of risk-adjusted performance. A Fund may also quote
financial and business publications and periodicals as they relate to fund
management, investment philosophy, and investment techniques.

FINANCIAL STATEMENTS

The Schedule of Investments as of June 30, 1999; the Statements of Assets
and Liabilities as of June 30, 1999; the Statements of Operations for the fiscal
year ended June 30, 1999; the Statement of Changes in Net Assets for the fiscal
years ended June 30, 1999 and 1998 for the PA Growth Fund, the Banking and
Finance Fund (formerly the HomeState Select Opportunities Fund) and the Year
2000 Fund; the Financial Highlights for the fiscal years ended June 30, 1999,
1998, 1997, 1996 and 1995, for the PA Growth Fund, for the fiscal years ended
June 30, 1999, 1998 and 1997 for the Banking and Finance Fund and for the fiscal
years ended June 30, 1999 and 1998 for the Year 2000 Fund; and the Notes to the
Financial Statements and the Report of Independent Accountants, each of which is
included in the Annual Report to the shareholders of the Funds as of and for the
fiscal year ended June 30, 1999, are incorporated herein by reference from the
Form N-30D filed with the Securities and Exchange Commission on September 10,
1999.

29
<PAGE>

APPENDIX A:
DESCRIPTION OF RATINGS

Following are descriptions of investment securities ratings from Moody's
Investor Services ("Moody's") and Standard & Poor's Corporation ("S & P"). See
pages 4 and 5 of this Statement for how these ratings relate to investments in
the Funds' portfolio.

I. Commercial Paper Ratings:

A. Moody's: Issuers rated Prime-1 have a superior capacity, issuers rated
Prime-2 have a strong capacity, and issuers rated Prime-3 have an acceptable
capacity for the repayment of short-term promissory obligations.

B. S & P: Issues rated A are the highest quality obligations. Issues in
this category are regarded as having the greatest capacity for timely payment.
For issues designated A-1 the degree of safety regarding timely payment is very
strong. For issues designated A-2 the capacity for timely payment is also
strong, but not as high as for A-1 issues. Issues designated A-3 have a
satisfactory capacity for timely payment.

II. Corporate Bond Ratings:

A. Moody's:
Aaa - Bonds which are rated Aaa are judged to be of the best quality and
carry the smallest degree of investment risk. 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 which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there maybe other elements present which
make the long term risks appear somewhat larger than in Aaa securities.

A - Bonds which are rated A 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 which are rated Baa 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
period of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

These categories are considered to be of "Investment Grade" by Moody's. Moody's
applies numerical modifiers "1," "2," and "3" in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking, and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

A-i
<PAGE>

B. S & P:
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal &
interest.

AA - Bonds rated AA also qualify as high-quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.

A - Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.

BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
principal and conditions or changing circumstances are more likely to lead to a
weakened capacity to pay principal and interest for bonds in this category than
for bonds in the A category.

S & P classifies corporate bonds of these ratings to be of "Investment Grade."
Plus (+) or Minus (-): The ratings from AA to B may be modified by the addition
of a plus or minus sign to show relative standing within the major rating
categories.

III. Preferred Stock Ratings:

Both Moody's and S & P use the same designations for corporate bonds as
they do for preferred stock except in the case of Moody's preferred stock
ratings, the initial letter rating is not capitalized. While the descriptions
are tailored for preferred stocks, the relative quality descriptions are
comparable to those described above for corporate bonds.

Ratings by Moody's and S & P represent their respective opinions as to the
investment quality of the rated obligations. These ratings do not constitute a
guarantee that the principal and interest payable under these obligations will
be paid when due, but rather serve as a general guide in comparing prospective
investments.

A-ii
<PAGE>

APPENDIX B

OPTIONS AND SHORT SELLING STRATEGIES FOR
THE HOMESTATE SELECT BANKING AND FINANCE FUND AND
THE HOMESTATE YEAR 2000 ("Y2K") FUND

Regulation of the Use of Options Strategies. As discussed in the
Prospectus, in managing the Banking and Finance Fund and the Y2K Fund, the
Adviser may engage in certain options and short selling strategies to hedge
various market risks or to enhance potential gain. Certain special
characteristics of and risks associated with using these instruments are
discussed below. Use of options and short selling is subject to applicable
regulations of the SEC, the several options exchanges upon which these
instruments may be traded, and the various state regulatory authorities. The
Board of Trustees has adopted investment guidelines (described below) reflecting
those option trading regulations. The discussion below relates to each of the
two Funds unless otherwise noted.

Cover for Options Strategies. The Fund will not use leverage in their
options strategies. Accordingly, the Fund will comply with guidelines
established by the SEC with respect to coverage of these strategies and will
either (1) set aside liquid, unencumbered, daily marked-to-market assets in a
segregated account with the Fund's custodian in the prescribed amount; or (2)
hold securities or other options or futures contracts whose values are expected
to offset ("cover") its obligations thereunder. Securities or other options used
for cover cannot be sold or closed out while the strategy is outstanding, unless
they are replaced with similar assets. As a result, there is a possibility that
the use of cover involving a large percentage of the Fund's assets could impede
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.

Options Strategies. The Fund may purchase and write (sell) options on
securities and securities indices that are traded on U.S. exchanges and in the
over-the-counter ("OTC") market. Currently, options on debt securities are
primarily traded on the OTC market. Exchange-traded options in the U.S. are
issued by a clearing organization affiliated with the exchange on which the
option is listed, which, in effect, guarantees completion of every
exchange-traded option transaction. In contrast, OTC options are contracts
between the Fund and its contra-party with no clearing organization guarantee
unless the parties provide for it. Thus, when the Fund purchases an OTC option,
it relies on the dealer from which it has purchased the OTC option to make or
take delivery of the securities underlying the option. Failure by the dealer to
do so would result in the loss of any premium paid by the Fund as well as the
loss of the expected benefit of the transaction. Accordingly, before the Fund
purchases or sells an OTC option, the Adviser assesses the creditworthiness of
each counterparty and any guarantor or credit enhancement of the counterparty's
credit to determine whether the terms of the option are likely to be satisfied.

The Fund may purchase call options on securities in which it is authorized
to invest in order to fix the cost of a future purchase. Call options also may
be used as a means of enhancing returns by, for example, participating in an
anticipated price increase of a security. In the event of a decline in the price
of the underlying security, use of this strategy would serve to limit the
potential loss to the Fund to the option premium paid; conversely, if the market
price of the underlying security increases above the exercise price and the Fund
either sells or exercises the option, any profit eventually realized would be
reduced by the premium paid.

The Fund may purchase put options on securities that it holds in order to
hedge against a decline in the market value of the securities held or to enhance
return. The put option enables the Fund to sell the underlying security at the
predetermined exercise price; thus, the potential for loss

B-i
<PAGE>

to the Fund below the exercise price is limited to the option premium paid. If
the market price of the underlying security is higher than the exercise price of
the put option, any profit the Fund realizes on the sale of the security is
reduced by the premium paid for the put option less any amount for which the put
option may be sold.

The Fund may on certain occasions wish to hedge against a decline in the
market value of securities that it holds at a time when put options on those
particular securities are not available for purchase. At those times, the Fund
may purchase a put option on other carefully selected securities in which it is
authorized to invest, the values of which historically have a high degree of
positive correlation to the value of the securities actually held. If the
Adviser's judgment is correct, changes in the value of the put options should
generally offset changes in the value of the securities being hedged. However,
the correlation between the two values may not be as close in these transactions
as in transactions in which the Fund purchases a put option on a security that
it holds. If the value of the securities underlying the put option falls below
the value of the portfolio securities, the put option may not provide complete
protection against a decline in the value of the portfolio securities.

The Fund may write covered call options on securities in which it is
authorized to invest for hedging purposes or to increase return in the form of
premiums received from the purchasers of the options. A call option gives the
purchaser of the option the right to buy, and the writer (seller) the obligation
to sell, the underlying security at the exercise price during the option period.
The strategy may be used to provide limited protection against a decrease in the
market price of the security, in an amount equal to the premium received for
writing the call option less any transaction costs. Thus, if the market price of
the underlying security held by the Fund declines, the amount of the decline
will be offset wholly or in part by the amount of the premium received by the
Fund. If, however, there is an increase in the market price of the underlying
security and the option is exercised, the Fund will be obligated to sell the
security at less than its market value.

Securities used to cover OTC call options written by the Fund are
considered illiquid and therefore subject to the Fund's limitations on investing
in illiquid securities, unless the OTC options are sold to qualified dealers who
agree that the Fund may repurchase any OTC options it writes for a maximum price
to be calculated by a formula set forth in the option agreement. The cover for
an OTC call option written subject to this procedure is considered illiquid only
to the extent that the maximum repurchase price under the formula exceeds the
intrinsic value of the option. The Fund could lose the ability to participate in
an increase in the value of the underlying securities above the exercise price
because the increase would likely be offset by an increase in the cost of
closing out the call option (or could be negated if the buyer chose to exercise
the call option at an exercise price below the current market value).

The Fund may also write covered put options on securities in which it is
authorized to invest. A put option gives the purchaser of the option the right
to sell, and the writer (seller) the obligation to buy, the underlying security
at the exercise price during the option period. So long as the obligation of the
writer continues, the writer may be assigned an exercise notice by the
broker-dealer through whom such option was sold, requiring it to make payment of
the exercise price against delivery of the underlying security. The operation of
put options in other respects, including their related risks and rewards, is
substantially identical to that of call options. If the put option is not
exercised, the Fund will realize income in the amount of the premium received.
This technique could be used to enhance current return during periods of market
uncertainty. The risk in such a transaction would be that the market price of
the underlying securities would decline below the exercise price less the
premiums received, in which case the Fund would expect to suffer a loss.

B-ii
<PAGE>

The Fund may purchase put and call options and write covered put and call
options on indexes in much the same manner as the more traditional options
discussed above, except that index options may serve as a hedge against overall
fluctuations in the securities markets (or a market sector) rather than
anticipated increases or decreases in the value of a particular security. An
index assigns values to the securities included in the index and fluctuates with
changes in such values. Settlements of index options are effected with cash
payments and do not involve delivery of securities. Thus, upon settlement of an
index option, the purchaser will realize, and the writer will pay, an amount
based on the difference between the exercise price and the closing price of the
index. The effectiveness of hedging techniques using index options will depend
on the extent to which price movements in the index selected correlate with
price movements of the securities in which the Fund invests. Perfect correlation
is not possible because the securities held or to be acquired by the Fund will
not exactly match the composition of indexes on which options are purchased or
written.

The Fund may purchase and write covered straddles on securities or indexes.
A long straddle is a combination of a call and a put purchased on the same
security where the exercise price of the put is less than or equal to the
exercise price on the call. The Fund would enter into a long straddle when the
Adviser believes that it is likely that prices will be more volatile during the
term of the options than is implied by the option pricing. A short straddle is a
combination of a call and a put written on the same security where the exercise
price on the put is less than or equal to the exercise price of the call where
the same issue of the security is considered "cover" for both the put and the
call. The Fund would enter into a short straddle when the Adviser believes that
it is unlikely that prices will be as volatile during the term of the options as
is implied by the option pricing. In such case, the Fund will set aside cash
and/or liquid, high-grade debt securities in a segregated account with its
custodian equivalent in value to the amount, if any, by which the put is
"in-the-money," that is, that amount by which the exercise price of the put
exceeds the current market value of the underlying security. Because straddles
involve multiple trades, they result in higher transaction costs and may be more
difficult to open and close out.

The Fund may purchase put and call warrants with values that vary depending
on the change in the value of one or more specified indexes ("index warrants").
An index warrant is usually issued by a bank or other financial institution and
gives the Fund the right, at any time during the term of the warrant, to receive
upon exercise of the warrant a cash payment from the issuer of the warrant based
on the value of the underlying index at the time of exercise. In general, if the
Fund holds a call warrant and the value of the underlying index rises above the
exercise price of the warrant, the Fund will be entitled to receive a cash
payment from the issuer upon exercise based on the difference between the value
of the index and the exercise price of the warrant; if the Fund holds a put
warrant and the value of the underlying index falls, the Fund will be entitled
to receive a cash payment from the issuer upon exercise based on the difference
between the exercise price of the warrant and the value of the index. The Fund
holding a call warrant would not be entitled to any payments from the issuer at
any time when the exercise price is greater than the value of the underlying
index; the Fund holding a put warrant would not be entitled to any payments when
the exercise price is less than the value of the underlying index. If the Fund
does not exercise an index warrant prior to its expiration, then the Fund loses
the amount of the purchase price that it paid for the warrant.

The Fund will normally use index warrants as it may use index options. The
risks of the Fund's use of index warrants are generally similar to those
relating to its use of index options. Unlike most index options, however, index
warrants are issued in limited amounts and are not obligations of a regulated
clearing agency, but are backed only by the credit of the bank or other
institution which issues the warrant. Also, index warrants generally have longer
terms than index options. Index warrants are not likely to be as liquid as index
options backed by a recognized clearing agency. In

B-iii
<PAGE>

addition, the terms of index warrants may limit the Fund's ability to exercise
the warrants at any time or in any quantity.

Options Guidelines. In view of the risks involved in using the options
strategies described above, the Fund has adopted the following investment
guidelines to govern its use of such strategies; these guidelines may be
modified by the Board of Trustees without shareholder approval:

(1) the Fund will write only covered options, and each such option
will remain covered so long as the Fund is obligated under the option; and

(2) the Y2K Fund will not write put or call options having
aggregate exercise prices greater than 25% of its net assets and the
Banking and Finance Fund will not write put or call options having
aggregate exercise prices of 5% or greater of its net assets.

These guidelines do not apply to options attached to or acquired with or
traded together with their underlying securities and do not apply to securities
that incorporate features similar to options.

Special Characteristics and Risks of Options Trading. The Fund may
effectively terminate its right or obligation under an option by entering into a
closing transaction. If the Fund wishes to terminate its obligation to purchase
or sell securities under a put or a call option it has written, the Fund may
purchase a put or a call option of the same series (that is, an option identical
in its terms to the option previously written); this is known as a closing
purchase transaction. Conversely, in order to terminate its right to purchase or
sell specified securities under a call or put option it has purchased, the Fund
may sell an option of the same series as the option held; this is known as a
closing sale transaction. Closing transactions essentially permit the Fund to
realize profits or limit losses on its options positions prior to the exercise
or expiration of the option. If the Fund is unable to effect a closing purchase
transaction with respect to options it has acquired, the Fund will have to allow
the options to expire without recovering all or a portion of the option premiums
paid. If the Fund is unable to effect a closing purchase transaction with
respect to covered options it has written, the Fund will not be able to sell the
underlying securities or dispose of assets used as cover until the options
expire or are exercised, and the Fund may experience material losses due to
losses on the option transaction itself and in the covering securities.

In considering the use of options to enhance returns or for hedging
purposes, particular note should be taken of the following:

(1) The value of an option position will reflect, among other
things, the current market price of the underlying security or index, the
time remaining until expiration, the relationship of the exercise price to
the market price, the historical price volatility of the underlying
security or index and general market conditions. For this reason, the
successful use of options depends upon Adviser's ability to forecast the
direction of price fluctuations in the underlying securities markets or, in
the case of index options, fluctuations in the market sector represented by
the selected index.

(2) Options normally have expiration dates of up to three years.
An American style put or call option may be exercised at any time during
the option period while a European style put or call option may be
exercised only upon expiration or during a fixed period prior to
expiration. The exercise price of the options may be below, equal to or
above the current market value of the underlying security or index.
Purchased options that expire unexercised have no value. Unless an option
purchased by the Fund

B-iv
<PAGE>

is exercised or unless a closing transaction is effected with respect to
that position, the Fund will realize a loss in the amount of the premium
paid and any transaction costs.

(3) A position in an exchange-listed option may be closed out only on
an exchange that provides a secondary market for identical options.
Although the Fund intends to purchase or write only those exchange-traded
options for which there appears to be a liquid secondary market, there is
no assurance that a liquid secondary market will exist for any particular
option at any particular time. A liquid market may be absent if: (i) there
is insufficient trading interest in the option; (ii) the exchange has
imposed restrictions on trading, such as trading halts, trading suspensions
or daily price limits; (iii) normal exchange operations have been
disrupted; or (iv) the exchange has inadequate facilities to handle current
trading volume.

Closing transactions may be effected with respect to options traded in
the OTC markets only by negotiating directly with the other party to the
option contract or in a secondary market for the option if such market
exists. Although the Fund will enter into OTC options with dealers that
agree to enter into, and that are expected to be capable of entering into,
closing transactions with the Fund, there can be no assurance that the Fund
will be able to liquidate an OTC option at a favorable price at any time
prior to expiration. In the event of insolvency of the contra-party, the
Fund may be unable to liquidate an OTC option. Accordingly, it may not be
possible to effect closing transactions with respect to certain options,
which would result in the Fund having to exercise those options that it has
purchased in order to realize any profit. With respect to options written
by the Fund, the inability to enter into a closing transaction may result
in material losses to the Fund.

(4) With certain exceptions, exchange listed options generally settle
by physical delivery of the underlying security. Index options are settled
exclusively in cash for the net amount, if any, by which the option is "in-
the-money" (where the value of the underlying instrument exceeds, in the
case of a call option, or is less than, in the case of a put option, the
exercise price of the option) at the time the option is exercised. If the
Fund writes a call option on an index, the Fund will not know in advance
the difference, if any, between the closing value of the index on the
exercise date and the exercise price of the call option itself and thus
will not know the amount of cash payable upon settlement. If the Fund holds
an index option and exercises it before the closing index value for that
day is available, the Fund runs the risk that the level of the underlying
index may subsequently change.

The Fund's activities in the options markets may result in a higher
portfolio turnover rate and additional brokerage costs; however, the Fund
also may save on commissions by using options as a hedge rather than buying
or selling individual securities in anticipation of, or as a result of,
market movements.

SHORT-SELLING

If the Fund anticipates that the price of a security will decline, it may
sell the security short and borrow the same security from a broker or other
institution to complete the sale. The Fund may realize a profit or loss
depending upon whether the market price of a security decreases or increases
between the date of the short sale and the date on which the Fund must replace
the borrowed security. As a hedging technique, the Fund may purchase options to
buy securities sold short by the Fund. Such options would lock in a future
purchase price and protect the Fund in case of an unanticipated increase in the
price of a security sold short

B-v
<PAGE>

by the Fund. Short-selling is a technique that may be considered speculative and
involves risk beyond the initial capital necessary to secure each transaction.
In addition, the technique could result in higher operating costs for the Fund
and have adverse tax effects for the investor. Investors should consider the
risks of such investments before investing in the Fund.

Whenever the Fund effects a short sale, it will set aside in segregated accounts
cash, U.S. Government Securities or other liquid assets equal to the difference
between (i) the market value of the securities sold short; and (ii) any cash or
U.S. Government Securities required to be deposited with the broker in
connection with the short sale (but not including the proceeds of the short
sale.) Until the Fund replaces the security it borrowed to make the short sale
it must maintain daily the segregated account at such a level that the amount
deposited in it plus the amount deposited with the broker as collateral will
equal the current market value of the securities sold short. No more than 25% of
the value of the Y2K Fund's, or 5% or more of the value of the Banking and
Finance Fund's total net assets will be, when added together, (i) deposited as
collateral for the obligation to replace securities borrowed to effect short
sales; and (ii) allocated to segregated accounts in connection with short sales.

B-vi
<PAGE>

APPENDIX C
PENNSYLVANIA-BASED CORPORATIONS

In order to present a prospective investor in the PA Growth Fund with a general
idea of the size and composition of the universe of Pennsylvania-based publicly-
traded companies, this Appendix provides a listing of such companies identified
by the Adviser as: 1. Being available for purchase by the general public, either
as listed on major exchanges (New York Stock Exchange, American Stock Exchange,
or NASDAQ Stock Market), or available over the counter; 2. Having their
principal headquarters located in Pennsylvania. This listing does not purport to
be complete and is based on information derived from publicly available
documents. The listing is a general guide of Pennsylvania-based companies and is
not meant to serve as a listing of companies whose stocks are currently held or
may be held in the future by the Fund. See "Investment Objectives and Policies"
in the Prospectus and "Additional Information Concerning Investment Objectives
and Policies" in this Statement for an explanation how portfolio investments are
chosen, and certain limitations on what investments this Fund can purchase.

Appendix C information is presented as follows:

<TABLE>
<CAPTION>
COMPANY NAME SYMBOL
------------ ------
<S> <C>
202 Data Systems..................................................................... TOOT
Acap Corp............................................................................ ACAP
ACNB Corp............................................................................ ACNB
Acrodyne............................................................................. ACRO
Action Industries.................................................................... ACX
ADAGE................................................................................ ADGE
Adelphia Communication............................................................... ADLA.C
Adience.............................................................................. NONE
Advanta.............................................................................. ADVN.A
10 AEL Industries................................................................... AELN.A
11 Aero Services International...................................................... AERO
12 Air Products..................................................................... APD
13 Airgas........................................................................... ARG
14 Alco Standard.................................................................... ASN
15 Alcoa............................................................................ AA
16 Allegheny Ludlum................................................................. ALS
17 Allegheny Valley Bancorp......................................................... NONE
18 Allen Organ...................................................................... AORG.B
19 Aloette Cosmetics................................................................ ALET
20 AM Communications................................................................ AMCI
21 Amalgamated Automotive........................................................... AAI
22 Ambassador Bank of the Commonwealth.............................................. NONE
23 American Eagle Outfitters........................................................ AEOS
24 American Travellers.............................................................. ATVC
25 AmeriSource...................................................................... ASHC
26 Ametek........................................................................... AME
27 AMP Incorporated................................................................. AMP
28 Ampco-Pittsburgh................................................................. AP
29 Amsco International.............................................................. ASZ
30 Apogee Inc....................................................................... APGG
31 Apollo Bancorp, Inc.............................................................. NONE
</TABLE>

C-i
<PAGE>

<TABLE>
<S> <C>
32 Arco Chemical..................................................................... RCM
33 Armco............................................................................. AS
34 Armstrong County Trust Company.................................................... NONE
35 Armstrong World................................................................... ACK
36 Arnold Industries................................................................. AIND
37 Arrow International............................................................... ARRO
38 Associated Communication.......................................................... ACCM.A
39 Astea International, Inc.......................................................... ATEA
40 Astrotech International........................................................... AIX
41 Atlantic Central Bankers Bank..................................................... NONE
42 Autoclave Engineers............................................................... ACLV
43 Aydin Corp........................................................................ AYD
44 Baker, Michael Corp............................................................... BKR
45 Bank of Landisburg................................................................ NONE
46 Bankers'' Financial Services Corporation.......................................... BKSV*
47 Bankvest Inc...................................................................... NONE
48 BCB Financial Services Corp....................................................... NONE
49 Bell Atlantic..................................................................... BEL
50 Berger Holdings Ltd............................................................... BGRH
51 Bethlehem Corp.................................................................... BET
52 Bethlehem Steel................................................................... BS
53 Betz Labs......................................................................... BTL
54 BHC Financial..................................................................... BHCF
55 Biocontrol Tech................................................................... BICO
56 Black Box Corp.................................................................... BBOX
57 Blair............................................................................. BL
58 Blue Ridge Real Estate Co......................................................... BLRGZ
59 Bon Ton........................................................................... BONT
60 Bowline Corp...................................................................... BOLN*
61 Brandywine Realty Trust........................................................... BDN
62 Bridgeville Savings............................................................... BRFC
63 Bryn Mawr Bank Corp............................................................... BMTC
64 BT Financial...................................................................... BTFC
65 Buck Hill Falls Co................................................................ NONE
66 Buckeye Partners, L.P............................................................. BPL
67 Buffalo Valley Telephone.......................................................... BUFF*
68 Burnham........................................................................... BURCA*
69 C Cor Electronics................................................................. CCBL
70 C-Tec............................................................................. CTEX
71 Cable Design Technologies......................................................... CDTC
72 Cabot Medical..................................................................... CBOT
73 Calgon Carbon..................................................................... CCC
74 Canondale Corp.................................................................... BIKE
75 Carbide/Graphite Group............................................................ CGGI
76 Cardinal Bancorp Inc. PA.......................................................... NONE
77 Carpenter Technology.............................................................. CRS
78 Castle Energy Corp................................................................ CECX
79 CCFNB Bancorp Inc................................................................. NONE
80 CDI Corp.......................................................................... CDI
81 Ceco Filters Inc.................................................................. CEC
</TABLE>

C-ii
<PAGE>

<TABLE>
<S> <C>
82 Cedar Group Inc.................................................................. CGMV
83 Centercore....................................................................... CCOR
84 Centocor......................................................................... CNTO
85 Central Sprinkler................................................................ CNSP
86 Century Financial Corp........................................................... CYFN*
87 Cephalon......................................................................... CEPH
88 CGS Scientific Corp.............................................................. CGSC
89 Chambers Development............................................................. CDV/A
90 Charming Shoppes................................................................. CHRS
91 Charter Power System 1........................................................... CHP
92 Chemcial Leaman.................................................................. CLEA
93 Chester Valley Bancorp........................................................... CVAL
94 Cigna............................................................................ CI
95 Citizen and Northern Corp........................................................ CZNC
96 Citizens Bankcorp................................................................ NONE
97 Citizens Bank and Trust Company.................................................. CZNP*
98 Citizens Financial Services Inc.................................................. NONE
99 Citizens, Inc.................................................................... NONE
100 Citizens National Bank of Ashland................................................ CIZP*
101 Citizens National Bank of Meyersdale............................................. CZNS*
102 Clearfield Bank & Trust Company.................................................. CLFD*
103 CMAC Investment Corp............................................................. CMT
104 CNB Financial Corp............................................................... CNBB
105 Codorus Valley Bancorp Inc....................................................... CVLY*
106 Columbia Financial Corporation................................................... CLBF*
107 Comcast.......................................................................... CMCSK
108 Comm Bancorp..................................................................... NONE
109 Commerce Bank/Harrisburg......................................................... COBH
110 Commercial National Financial Corp............................................... CNAF*
111 Commonwealth Federal Savings Bank................................................ CMSB
112 Communciations Group............................................................. CMGI
113 Community Bankers Corp........................................................... NONE
114 Community Banks.................................................................. CBKI
115 Community Bank, National Association............................................. CMYN*
116 Community Independent Bank....................................................... CMYI*
117 Community Ntl. Bank of Northwestern PA........................................... NONE
118 Computer Research Inc............................................................ CORE
119 Concord Health................................................................... CHGR
120 Conestoga Enterprises Inc........................................................ NONE
121 Conrail.......................................................................... CRR
122 Consolidated Natural Gas......................................................... CNG
123 Constitution Bancorp, Inc........................................................ NONE
124 Consumers Financial Corp......................................................... CFIN
125 CoreStates....................................................................... CFL
126 Craftmatic Contour Industries Inc................................................ CRCC
127 Crown American Realty Trust...................................................... CWN
128 Crown Cork & Seal................................................................ CCK
129 CSS Industries................................................................... CSS
130 Dauphin Deposit.................................................................. DAPN
131 Deb Shops........................................................................ DEBS
</TABLE>

C-iii
<PAGE>

<TABLE>
<S> <C>
132 Dentsply.......................................................................... XRAY
133 Derma Sciences.................................................................... DSCI
134 Digimetrics Inc................................................................... DIGMC
135 Digital Descriptor Systems........................................................ DDSI
136 DiMark............................................................................ DMK
137 Dimeco............................................................................ NONE
138 DNB Financial Corp................................................................ NONE
139 Donegal Group..................................................................... DGIC
140 DQE............................................................................... DQE
141 Dravo............................................................................. DRV
142 Drovers Bancshares Corp........................................................... DROV*
143 Eagle National Bank............................................................... NONE
144 East Penn Bank.................................................................... NONE
145 East Prospect State Bank.......................................................... NONE
146 Eastern Environmental............................................................. EESI
147 ECC International................................................................. ECC
148 Ecogen............................................................................ EECN
149 Elderton State Bank............................................................... NONE
150 Electro Kinetic Systems........................................................... EKSIA
151 Emcee Broadcast Products.......................................................... ECIN
152 Elverson National Bank............................................................ ELVN*
153 Emclaire Financial Corp........................................................... NONE
154 Emons Transportation Group........................................................ EMHO
155 Environmental Tectonics........................................................... ETC
156 Ephrata National Bank............................................................. EPNB*
157 Equitable Resources............................................................... EQT
158 Erie Family Life Insurance........................................................ ERIF*
159 ExecuFirst........................................................................ FXBC
160 Exide............................................................................. EX
161 Extended Product Life............................................................. EXED
162 Farmers National Bank of Kittanning............................................... NONE
163 Farmers National Bank of Newville................................................. NONE
164 Farmers & Merchants Bank.......................................................... FMMB*
165 FedOne Savings Bank, F.A.......................................................... NONE
166 Fidelity Bancorp.................................................................. FSBI
167 Fidelity Deposit and Discount Bank................................................ FDDB*
168 Financial Trust................................................................... FITC
169 First Bank of Philadelphia........................................................ FBKP
170 First Bell Bancorp Inc............................................................ FBBC
171 First Capitol..................................................................... FCYP*
172 First Colonial Group Inc.......................................................... FTCG
173 First Commercial Bank of Philadelphia............................................. NONE
174 First Commonwealth Financial...................................................... FCF
175 First Harrisburg Bancorp.......................................................... FFHP
176 First Jermyn...................................................................... FJMY*
177 First Keystone Corp............................................................... FKYS*
178 First Leesport Bancorp, Inc....................................................... FLPB*
179 First Lehigh Corporation.......................................................... FLHI*
180 First National Bancorp............................................................ NONE
181 First National Bank of Gallitzin.................................................. FIGA*
</TABLE>

C-iv
<PAGE>

<TABLE>
<S> <C>
182 First National Bank of Canton..................................................... FINC*
183 First National Bank of Fredicksburg............................................... NONE
184 First National Bank of Lilly...................................................... NONE
185 First National Bank of Liverpool.................................................. NONE
186 First National Bank of Marysville................................................. FNBM*
187 First National Bank of Newport.................................................... FNBT*
188 First National Bank of Port Allegheny............................................. FIPG*
189 First National Bank of Reynoldsville.............................................. NONE
190 First National Bank of Slippery Rock.............................................. FNSL*
191 First National Bank of Spangler................................................... FNBG*
192 First National Bank of Spring Mills............................................... NONE
193 First National Community Bank..................................................... NONE
194 First Philson Financial Corp...................................................... FPHN*
195 First Shenango Bancorp, Inc....................................................... SHEN
196 First Star Savings Bank........................................................... FSRS
197 First Sterling Bancorp............................................................ NONE
198 First United National Bank........................................................ NONE
199 First West Chester Corp........................................................... FWCC
200 First Western..................................................................... FWBI
201 FJF Financial Mutual Holding Company.............................................. NONE
202 Fleetwood Bank Corporation........................................................ NONE
203 FNB Bancorp, Inc.................................................................. NONE
204 FNB Financial Corporation......................................................... FBAN
205 FNBM Financial Corporation........................................................ NONE
206 FNH Corporation................................................................... NONE
207 Foamex International.............................................................. FMXI
208 Fore Systems...................................................................... FORE
209 Foster, L.B....................................................................... FSTRA
210 Founders Bank..................................................................... NONE
211 FPA Bank.......................................................................... FPO
212 Franklin First Financial Services................................................. FRAF
213 Freda Corp........................................................................ FRDA
214 Fulton Bancshares................................................................. NONE
215 Fulton Financial.................................................................. FULT
216 General Devices................................................................... GDIC
217 General Nutrition Corp............................................................ GNCI
218 Genesis Health Ventures........................................................... GHV
219 Geriatric & Medical............................................................... GEMC
220 Giant Cement...................................................................... GCHI
221 Gilbert Associates................................................................ GILB.A
222 Glatfelter, P.H................................................................... GLT
223 Glen Rock State Bank.............................................................. GLRO*
224 Global Environmental Corp......................................................... GLEN
225 Global Spill Management........................................................... GSMI
226 GMIS.............................................................................. GMIS
227 Gracecare Health Systems Inc...................................................... GCHS*
228 Grant Street National Bank........................................................ GSNB
229 Greater Pottsville Federal S&LA................................................... NONE
230 Guaranty Bancshares............................................................... GBNC
231 Halifax National Bank............................................................. NONE
</TABLE>

C-v
<PAGE>

<TABLE>
<S> <C>
232 Hamlin Bank and Trust Company..................................................... NONE
233 Hanover Bancorp................................................................... HOVB*
234 Hanover Foods Corp................................................................ NONE
235 Harleysville Group................................................................ HGIC
236 Harleysville Nat'l Corp........................................................... HNBC
237 Harleysville Savings.............................................................. HARL
238 Harris Savings Bank............................................................... HARS
239 Harsco Corporation................................................................ HSC
240 Healthcare Services Group......................................................... HCSG
241 Health Rite....................................................................... HLRT
242 Heinz............................................................................. HNZ
243 Herley Industries................................................................. HRLY
244 Herndon National Bank............................................................. NONE
245 Hershey Foods..................................................................... HSY
246 Hoblitzell National Bank of Hyndman............................................... NONE
247 Honat Bancorp..................................................................... HONT*
248 Hope Technologies................................................................. HOPK*
249 Horsehead Resources Development................................................... HHRD
250 Hunt Manufacturing................................................................ HUN
251 IBAH, Inc......................................................................... BAH
252 IBT Bancorp, Inc.................................................................. IBTB
253 ICC Technology.................................................................... ICGN
254 II VI............................................................................. IIVI
255 Independent American Financial Corp............................................... NONE
256 Industrial Scientific............................................................. ISCX
257 Inertial Motors Corp.............................................................. IMTS*
258 Information Systems Acquisitions Corp............................................. ISAC
259 Innovative Tech Systems........................................................... ITSY
260 Integra Financial................................................................. ITG
261 Integrated Circuit Systems........................................................ ICST
262 Intelligent Electronics........................................................... INEL
263 InterDigital Communications....................................................... IDC
264 International Canine Genetics..................................................... ICGI
265 Irex Corp......................................................................... IREX
266 Iron & Glass Bancorp, Inc......................................................... IRGB*
267 J & L Specialty Steels............................................................ JL
268 Jetronic Industries............................................................... JET
269 JLG Industries.................................................................... JLGI
270 Johnstown America................................................................. JAII
271 Jones Apparel Group............................................................... JNY
272 Jonestown Bank & Trust Company.................................................... NONE
273 JTNB Bancorp...................................................................... NONE
274 Judicate Inc...................................................................... JUDG
275 Juniata Valley Financial Corp..................................................... JUVF*
276 Kennametal Inc.................................................................... KMT
277 Keystone Financial Inc............................................................ KSTN
278 Keystone Heritage Group Inc....................................................... KHGI
279 Kish Bancorp, Inc................................................................. KISB*
280 Kleinerts......................................................................... KLRT
281 Kranzco Realty Trust.............................................................. KRT
</TABLE>

C-vi
<PAGE>

<TABLE>
<S> <C>
282 Kulicke Soffa..................................................................... KLIC
283 Lake Ariel Bancorp, Inc........................................................... LABN*
284 Lannett Co. Inc................................................................... LANN*
285 Laurel Capital Group.............................................................. LARL
286 Laurentian Capital................................................................ LQ
287 Lewistown Trust Company........................................................... LEWI*
288 Liberty Property Trust............................................................ LRY
289 Liberty Technology................................................................ LIBT
290 Lock Haven Savings Bank........................................................... NONE
291 Lukens............................................................................ LUC
292 Luzerne National Bank Corporation................................................. NONE
293 Madison Bancshares Group LTD...................................................... NONE
294 Magainin Pharmaceuticals.......................................................... MAGN
295 Mainline Bancorp.................................................................. NONE
296 Manor National Bank............................................................... MANR*
297 Mark Centers Trust................................................................ MCT
298 Marlton Technology................................................................ MTY
299 Mars National Bank................................................................ MNBP*
300 Masland........................................................................... MSLD
301 Matthews International Corporation................................................ MATW
302 Mauch Chunk Trust Company......................................................... NONE
303 Medco Group Inc................................................................... NONE
304 Med-Design........................................................................ MEDD
305 Mellon Bank....................................................................... MEL
306 Menley & James.................................................................... MENJ
307 Mercer County State Bancorp....................................................... MCSB*
308 Mercersburg Financial Corporation................................................. NONE
309 Merchants National Bank of Bangor................................................. MCHT*
310 Merchants National Bank of Kittanning............................................. NONE
311 Merchants of Shenandoah Ban-Corp.................................................. MSHN*
312 Meridian Bancorp.................................................................. MRDN
313 Met-Pro........................................................................... MPR
314 Metrobank of Philadelphia, N.A.................................................... NONE
315 Mid Penn Bancorp.................................................................. MPEN*
316 Mifflinburg Bancorp, Inc.......................................................... NONE
317 Mine Safety Appliances............................................................ MNES
318 Miners Bank of Lykens............................................................. MNRB*
319 Miners Nat'l Bancorp.............................................................. MNBC
320 MK Rail........................................................................... MKRL
321 Montour Bank...................................................................... NONE
322 Moore Products.................................................................... MORP
323 Mother's Work..................................................................... MWRK
324 Mountbatten, Inc.................................................................. MTBN
325 Moxham Bank Corporation........................................................... MOXM*
326 Moyco Industries.................................................................. MOYC*
327 Muncy Bank Financial.............................................................. MNCY*
328 Musicom........................................................................... MUSO
329 Mylan Labs........................................................................ MYL
330 National American Bancorp......................................................... NABN*
331 National Bank of Malvern.......................................................... NONE
</TABLE>

C-vii
<PAGE>

<TABLE>
<S> <C>
332 National Bank of Olyphant......................................................... NONE
333 National Media.................................................................... NM
334 National Penn Bancshares.......................................................... NPBC
335 National Record Mart.............................................................. NRMI
336 Neffs Bancorp, Inc................................................................ NEFF*
337 New Bethelem Bank................................................................. NBET*
338 New Tripoli Bancorp............................................................... NETN*
339 Nobel Education Dynamics.......................................................... NEDI
340 Nocopi............................................................................ NOOP*
341 North East Bancshares, Inc........................................................ NONE
342 North Pittsburgh System........................................................... NORY*
343 Northern Lehigh Bancorp, Inc...................................................... NOLE*
344 NorthStar Health Services......................................................... NSTR
345 Northumberland National Bank...................................................... NONE
346 Novacare.......................................................................... NOV
347 Noxso............................................................................. NOXO
348 NSD Bancorp....................................................................... NONE
349 Nuclear Research Corp............................................................. NONE
350 Nuclear Support................................................................... NSSI
351 Numar............................................................................. NUMR
352 Numerex........................................................................... NMRX
353 Nutrition Management.............................................................. NMSCA
354 Oakhurst Company.................................................................. OAK
355 O'Brien Energy System............................................................. OBS
356 Old Forge Bank.................................................................... OLDF*
357 OMEGA............................................................................. OMEF
358 Orbisonia Community Bancorp, Inc.................................................. NONE
359 Orrstown Financial Services....................................................... ORRB*
360 Owosso Corp....................................................................... OWOS
361 Palm Bancorp...................................................................... NONE
362 Parkvale Financial................................................................ PVSA
363 PCI Services...................................................................... PCIS
364 PDG Environmental................................................................. PDGE
365 Penn American Group............................................................... PAGI
366 Penn Engineering & Mfg............................................................ PNN
367 Penn First Bancorp................................................................ PWBC
368 Penn Laurel Financial Corporation................................................. NONE
369 Penn National Gaming.............................................................. PENN
370 Penn Security Bank and Trust Company.............................................. PSBT*
371 Penn Virginia..................................................................... PVIR
372 Penncore Financial Services Corporation........................................... NONE
373 Pennrock Finanical Services Corp.................................................. PRFS*
374 Penns Woods Bancorp Inc........................................................... PWOD*
375 Pennsylvania Capital Bank......................................................... NONE
376 Pennsylvania Enterprises.......................................................... PNT
377 Pennsylvania Power & Light........................................................ PPL
378 Pennsylvania Real Estate Inv. Trust............................................... PEI
379 Pennsylvania State Bank........................................................... NONE
380 PennTreaty American Corp.......................................................... PTAC
381 Peoples Bank of Oxford............................................................ PPBK*
</TABLE>

C-viii
<PAGE>

<TABLE>
<S> <C>
382 Peoples Bank of Unity............................................................. NONE
383 Peoples Financial Corporation, Inc................................................ NONE
384 Peoples Financial Services Corporation, Inc....................................... NONE
385 Peoples Ltd....................................................................... NONE
386 Peoples National Bank of Rural Valley............................................. NONE
387 Peoples State Bank................................................................ PSEB
388 Pep Boys.......................................................................... PBY
389 Phoenix Bancorp, Inc.............................................................. NONE
390 Philadelphia Consolidated Holding Corp............................................ PHLY
391 PECO.............................................................................. PE
392 Philadelphia Suburban............................................................. PSC
393 Piercing Pagoda................................................................... PGDA
394 Pioneer American Holding Company Corp............................................. NONE
395 Pitt-Desmoines.................................................................... PDM
396 PNC Financial..................................................................... PNC
397 PPG Industries.................................................................... PPG
398 Premier Bank...................................................................... NONE
399 Prime Bancorp..................................................................... PSAB
400 Progress Financial................................................................ PFNC
401 Prophet 21........................................................................ PXXI
402 Provident American................................................................ PAMC
403 QNB Corp.......................................................................... QNBC*
404 Quad Systems...................................................................... QSYS
405 Quaker Chemical................................................................... QCHM
406 Quigley Corp...................................................................... QGYC
407 QVC Network....................................................................... QVCN
408 Reading Co........................................................................ RDGCA
409 Regent Bancshares................................................................. RBNK
410 Renal Treatment Centers........................................................... RXTC
411 Rent Way.......................................................................... RWAY
412 Resource America.................................................................. REXI
413 Respironics....................................................................... RESP
414 Rhone Poulac-Rorer................................................................ RPR
415 Right Management Consultants...................................................... RMCI
416 Rite Aid.......................................................................... RAD
417 Robec............................................................................. ROBC
418 Robroy Industries................................................................. RROYA*
419 Rochester & Pittsburgh Coal Company............................................... REPT
420 Rohm & Haas....................................................................... ROH
421 Royal Bank........................................................................ RBPA.A
422 R&B Inc........................................................................... RBIN
423 Safeguard Scientifics............................................................. SFE
424 Salem............................................................................. SBS
425 Scan Graphics..................................................................... SCNG
426 Scanforms Inc..................................................................... CFM
427 Scott Paper....................................................................... PP
428 Second National Bank of Masontown................................................. NONE
429 Security First Bank............................................................... SFMP
430 SEI Corp.......................................................................... SEIC
431 Selas............................................................................. SLS
</TABLE>

C-ix
<PAGE>

<TABLE>
<S> <C>
432 Shared Medical Systems............................................................ SMED
433 Shawnee Financial Services Corporation............................................ NONE
434 SI Handling....................................................................... SIHS
435 Sigma Alpha Entertainment Group LTD............................................... SAEG
436 Sinter Metals..................................................................... SNM
437 Smithfield State Bank of Smithfield............................................... NONE
438 SMT Health Services............................................................... SHED
439 Somerset Trust Company............................................................ SOMT*
440 Southwest National................................................................ SWPA
441 Sovereign Bancorp................................................................. SVRN
442 Spectrum Control.................................................................. SPEC
443 SPS Technologies.................................................................. ST
444 State Bancshares.................................................................. SBNP
445 Steel City Products............................................................... SCPI
446 Sterling Financial Corp........................................................... SLFI*
447 Strawbridge & Clother............................................................. STRW.A
448 STV Group......................................................................... STVI
449 SubMicron......................................................................... SUBM
450 Suburban Federal Savings Bank..................................................... SUBF*
451 Sulcus Computer................................................................... SUL
452 Summit Bancorp.................................................................... NONE
453 Sun Bancorp....................................................................... SUBI
454 Sun Company....................................................................... SUN
455 Sungard Data Systems.............................................................. SNDT
456 Super Rite........................................................................ SUPR
457 Supra Medical..................................................................... SUM
458 Surgical Laser Technologies....................................................... SLTI
459 Susquehanna Bancshares............................................................ SUSQ
460 Sylvan Foods...................................................................... SYLN
461 Systems & Computer Tehcnology..................................................... SCTC
462 S&T Bancorp....................................................................... STBA
463 Tasty Baking...................................................................... TBC
464 Technitrol........................................................................ TNL
465 Teleflex.......................................................................... TFX
466 Tel-Save Holdings................................................................. TALK
467 TF Financial Corp................................................................. NONE
468 Thermal Industries................................................................ THMP
469 Toll Brothers..................................................................... TOL
470 Total Containment, Inc............................................................ TCIX
471 Tower Bancorp..................................................................... TOBC*
472 Transducer Systems................................................................ TSIC
473 Troy Hill Bancorp................................................................. THBC
474 Tseng Labs........................................................................ TSNG
475 Turbotville National Bank......................................................... TVNB*
476 Tuscarora Plastics................................................................ TUSC
477 UGI Corp.......................................................................... UGI
478 UNB Corporation................................................................... NONE
479 Uni-Marts......................................................................... UNI
480 Union Bancorp..................................................................... UBTP*
481 Union National Financial Corp..................................................... NONE
</TABLE>

C-x
<PAGE>

<TABLE>
<S> <C>
482 Union Pacific..................................................................... UNP
483 Unisys............................................................................ UIS
484 United Bank of Philadelphia....................................................... NONE
485 United Valley Bank................................................................ NONE
486 Universal Health Services......................................................... UHS
487 Univest Corporation of Pennsylvania............................................... UVSP
488 Urban Outfitters.................................................................. URBN
489 USA BancShares.................................................................... USAB
490 USA Technologies.................................................................. USAN
491 US Wats Inc....................................................................... USWI
492 USBANCorp......................................................................... UBAN
493 USX - Marathon.................................................................... MRO
494 USX Delhi......................................................................... DGP
495 USX - U.S. Steel.................................................................. X
496 UTI Energy Corporation............................................................ UTI
497 U.S. Bioscience................................................................... UBS
498 U.S. Healthcare................................................................... USHC
499 Valley Forge Scientific........................................................... VLFG
500 Vineyard Oil and Gas.............................................................. NONE
501 Vishay Intertechnology............................................................ VSH
502 VWR............................................................................... VWRX
503 V. F. Corp........................................................................ VFC
504 Walshire Inc...................................................................... WALS
505 Wayne County Bank & Trust Company................................................. WYBP*
506 Weis Markets...................................................................... WMK
507 West.............................................................................. WST
508 West Milton State Bank............................................................ NONE
509 Westinghouse...................................................................... WX
510 Westinghouse Airbrake............................................................. WAB
511 Westmoreland Coal................................................................. WCX
512 Weston Roy F...................................................................... WSTN.A
513 Woodlands Bank.................................................................... NONE
514 WVS Financial Corp................................................................ WVFC
515 York Financial.................................................................... YFED
516 York International................................................................ YRK
517 York Water........................................................................ YWTR
518 Zurn Ind.......................................................................... ZRN
519 Zynaxis........................................................................... ZNXS
</TABLE>

C-xi
<PAGE>

APPENDIX D: YEAR 2000 INDUSTRY COMPANIES

The Following is a listing of companies (1) common stock of which is (a)
available for purchase and sale upon either the New York Stock Exchange ("NYSE")
or the American Stock Exchange ("AMEX"), (b) regularly quoted on either the
National Market ("NNM") or Small-Cap ("NSC") level of the NASDAQ Automated Quote
System ("NASDAQ") of the National Association of Securities Dealers,
Inc.("NASD"), or (c) otherwise traded in the over-the-counter dealer market
("OTC") by NASD member firms; and (2) which the Fund's Adviser has identified as
having stated, or been reported as possessing, an intention of developing or
supporting marketable solutions to Year 2000 computer-related problems.

The listing is based on information derived from publicly available
sources, is furnished only as a present illustrative guide to the Y2K industry,
and does not purport to be a complete listing of either the Y2K industry as a
whole or of the companies which are currently (or which may, at any time in the
future) be represented within the portfolio of The Y2K Fund. The Fund's Adviser
reserves the right to engage in short, as well as long options and short-selling
strategies when investing, on behalf of the Fund, in securities issued by these,
and other, Y2K companies. For a complete description of the Fund's investment
objective and policies, see the Prospectus and accompanying Statement of
Additional Information.

Company Trading Symbol Primary Trading Market
- ------- -------------- ----------------------
Accelr8 Technology Corp. ACLY NNM
AccuStaff, Inc. ASI NYSE
AGISS Corporation AGCR OTC
ALLTEL Corp. AT NYSE
Alternative Resources Corp. ALRC NNM
Alydaar Software Corp. ALYD OTC
Amdahl Corp. AMH AMEX
American Management Systems AMSY NNM
American Software AMSWA NNM
SABRE Group Holdings "A" TSG NYSE
Analysts International Corp. ANLY NNM
Automatic Data Processing AUD NYSE
Baan Company BAANF NNM
BDM International Inc. BDMI NNM
BRC Holdings Inc. BRCP NNM
BTG Incorporated BTGI NNM
CACI International Inc. CACI NNM
Cambridge Technology Partners CATP NNM
Cayenne Software Inc. CAYN NNM
CIBER Inc. CBR NYSE
Claremont Technology Group CLMT NNM
Cognizant Corporation CZT NYSE
Cognos COGNF NNM
Comdisco Inc. CDO NYSE
Comforce Corporation CFS AMEX
Complete Business Solutions Inc. CBSL NNM
Computer Associates International CA NYSE
Computer Concepts Corp. CCEE NSC
Computer Horizons Corp. CHRZ NNM
Computer Management Sciences Inc. CMSX NNM

D-i
<PAGE>

Computer Sciences CSC NYSE
Computer Task Group Inc. TSK NYSE
Compuware Corp. CPWR NNM
ConSyGen, Inc. CSGI OTC
COREStaff Inc. CSTF NNM
Crystal Systems Solutions CRYSF NNM
Data Dimensions DDIM NNM
Data Systems Network Corp. DSYS NSM
Dell Computer Corp. DELL NMS
DelSoft Consulting Inc. DSFT OTC
Digital Equipment Corp. DEC NYSE
Egan Systems Inc. EGNS OTC
Electronic Data Systems Corp. EDS NYSE
Forrester Research, Inc. FORR NNM
Gartner Group "A" GART NNM
GTE Corp. GTE NYSE
Hitachi, Ltd. ADR HIT NYSE
Intl. Business Machines IBM NYSE
Infinium Software INFM NNM
Information Analysis Inc. IAIC NNM
Information Management Resources IMRS NNM
Informix Corp. IFMX NNM
International Veronex Resources Ltd. IVXR OTC
Intersolv ISLI NSM
Keane Inc. KEA AMEX
Logicon Inc. LGN NYSE
MAPICS Inc. MAPX NNM
Mastech Corporation MAST NNM
Mercury Interactive MERQ NNM
MCI Communications MCIC NNM
Micro Focus Group ADS MIFGY NNM
NeoMedia Technologies Inc. NEOM NSM
Neoware Systems Inc. NWRE NNM
The NetPlex Group Inc. NTPL NSM
New Dimension Software DDDDF NNM
Norrell Corp. NRL NYSE
Olsten Corp. OLS NYSE
Oracle Corp. ORCL NNM
PeopleSoft Inc. PSFT NNM
Peritus Software Services PTUS NNM
PLATINUM technology Inc. PLAT NNM
Policy Management Systems PMS NYSE
Reliance Group Holdings REL NYSE
Robert Half International RHI NYSE
Romac International Inc. ROMC NNM
Safeguard Scientifics Inc. SFE NYSE
SAP AG - Sponsored ADR SAPHY OTC
Sapiens International Corp. N.V. SPNSF NNM
SCB Computer Technology Inc. SCBI NNM
SEEC Inc. SEEC NNM

D-ii
<PAGE>

Sterling Software SSW NYSE
Strategia Corp. STGI OTC
SunGard Data Systems SDS NYSE
Sun Microsystems SUNW NNM
Sybase Inc. SYBS NNM
Systems & Computer Technology Corp. SCTC NNM
Systems Software Associates Inc. SSAX NNM
Tandem Computers TDM NYSE
Tangram Enterprise Solutions, Inc. TESI NSM
Techforce Corp. TFRC NNM
Thinking Tools Inc. TSIM NSM
Titan Corporation TTN NYSE
Topro Inc. TPRO NSM
Transformation Processing Inc. TPII OTC
TSR Inc. TSRI NNM
Unicomp Inc. UCMP NNM
Unisys Corp. UIS NYSE
VIASOFT Inc. VIAS NNM
Walker Interactive Systems WALK NNM
Wang Laboratories Inc. WANG NNM
Whittman-Hart Inc. WHIT NNM
Zitel Corp. ZITL NNM
ZMAX Corp. ZMAX OTC

D-iii
<PAGE>

PART C: OTHER INFORMATION

Item 23. Exhibits

(a)(2) Addendum 2 to the Declaration of Trust, dated August 1, 1997
(Incorporated by reference to Exhibit 23(a)(2) to the Post-Effective
No. 10 to this Registration Statement filed with the Commission on
August 20, 1998)

(a)(3) Amendment to the Declaration of Trust dated August 31, 1998 restating
Addendum 1 thereto (Incorporated by reference to Exhibit 23(a)(1) to
the Post-Effective No. 10 to this Registration Statement filed with
the Commission on August 20, 1998)

(b) None.

(c) Form of Certificate of Common Stock. (Incorporated by reference to
Exhibit 4 to Pre-Effective Amendment No. 3 to this Registration
Statement filed with the Commission on September 22, 1992.)

(d)(1) Investment Advisory Agreement between the Registrant, on behalf of The
HomeState Pennsylvania Growth Fund, and Emerald Advisers, Inc., dated
September 1, 1992 (Incorporated by reference to Exhibit 5(a) to
Post-Effective Amendment No. 5 to this Registration Statement filed
with the Commission on November 27, 1996.)

(d)(2) Investment Advisory Agreement between the Registrant, on behalf of The
HomeState Select Banking and Finance Fund, and Emerald Advisers, Inc.,
dated September 1, 1992 (Incorporated by reference to Exhibit 5(b) to
Post-Effective Amendment No. 5 to this Registration Statement filed
with the Commission on November 27, 1996.)

(d)(3) Investment Advisory Agreement between the Registrant, on behalf of The
HomeState Year 2000 ("Y2K") Fund, and Emerald Advisers, Inc., dated
September 11, 1997 (Incorporated by reference to Exhibit 5(c) to
Post-Effective Amendment No. 8 to this Registration Statement filed
with the Commission on September 15, 1997.)

(e) Distribution Agreement between the Registrant and Rafferty Capital
Markets, Inc., dated May 19, 1998 (Incorporated by reference to
Exhibit 23(e) to the Post- Effective No. 10 to this Registration
Statement filed with the Commission on August 20, 1998)

(f) None.

(g)(1) Custodian Servicing Agreement between the Registrant and Firstar Trust
Company dated March 1, 1998 (Incorporated by reference to Exhibit
23(g)(1) to the Post-
<PAGE>

Effective No. 10 to this Registration Statement filed with the
Commission on August 20, 1998)

(g)(2) Firstar Trust Company Mutual Fund Services Fee Schedules for
Registrant (Incorporated by reference to Exhibit 23(g)(2) to the
Post-Effective No. 10 to this Registration Statement filed with the
Commission on August 20, 1998)

(h)(1) Transfer Agent Servicing Agreement between the Registrant and Firstar
Trust Company dated March 1, 1998 (Incorporated by reference to
Exhibit 23(h)(1) to the Post-Effective No. 10 to this Registration
Statement filed with the Commission on August 20, 1998)

(h)(2) Fund Administration Servicing Agreement between the Registrant and
Firstar Trust Company dated March 1, 1998 (Incorporated by reference
to Exhibit 23(h)(2) to the Post-Effective No. 10 to this Registration
Statement filed with the Commission on August 20, 1998)

(h)(3) Fund Account Servicing Agreement between the Registrant and Firstar
Trust Company dated March 1, 1998 (Incorporated by reference to
Exhibit 23(h)(3) to the Post-Effective No. 10 to this Registration
Statement filed with the Commission on August 20, 1998)

(h)(4) Fulfillment Servicing Agreement between the Registrant and Firstar
Trust Company dated March 1, 1998 (Incorporated by reference to
Exhibit 23(h)(4) to the Post-Effective No. 10 to this Registration
Statement filed with the Commission on August 20, 1998)

(i) Not Applicable

(j) Consent of Independent Accountants....................................

(k) Financial Statements for The HomeState Pennsylvania Growth Fund, The
HomeState Select Banking and Finance Fund, and The HomeState Year 2000
(Y2K) Fund are Incorporated by Reference to the Form N-30D filed on
September 10, 1999.

(l) Initial Capital Agreement (Incorporated by Reference to Exhibit 13 to
Post-Effective Amendment No. 9 to this Registration Statement filed on
October 30, 1997.)

(m)(1) Rule 12b-1 Plan for The HomeState Pennsylvania Growth Fund
(Incorporated by Reference to Exhibit 15(a) to Post-Effective
Amendment No. 5 to this Registration Statement filed on November 27,
1996.)

(2) Rule 12b-1 Plan for The HomeState Banking and Finance Fund
(Incorporated by Reference to Exhibit 15(b) to Post-Effective
Amendment No. 5 to this Registration Statement filed on November 27,
1996.)

(3) Rule 12b-1 Plan for The Year 2000 ("Y2K") Fund (Incorporated by
Reference to Exhibit 15(c) to Post-Effective Amendment No. 8 to this
Registration Statement filed on September 15, 1997.)
<PAGE>

(n) Financial Data Schedule (Incorporated by Reference to Exhibit 17 to
Post Effective Amendment No. 7 filed on August 18, 1997.)

(o) None.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUNDS

None.

ITEM 25. INDEMNIFICATION

The Declaration of Trust incorporated by reference to Exhibit 23(a)(1) to
the Post-Effective No. 10 to this Registration Statement filed with the
Commission on August 20, 1998 provides for indemnification of Trustees, as set
forth in Section 13 thereof.

The Distribution Agreement incorporated by reference to Exhibit 23(e) to
the Post-Effective No. 10 to this Registration Statement filed with the
Commission on August 20, 1998 provides for indemnification of Rafferty Capital
Markets, Inc., its officers and directors and any person who controls Rafferty
Capital Markets, Inc.

The Registrant has in effect a directors' and officers' liability policy
covering specific types of errors and omissions.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to such provisions of the Declaration of
Trust, Distribution Agreement, or statutes or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in said Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in the
successful defense of any such action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the shares of the
Registrant, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER

Emerald Advisers, Inc. also serves as General Partner to Emerald Partners,
L.P., a Pennsylvania-chartered investment limited partnership. As Emerald
Advisers, Inc. is a wholly-owned corporation (incorporated on November 14,
1991), each director and officer of the corporation has held various positions
with other companies prior to the founding of Emerald Advisers, Inc. Information
as to the directors and officers of Emerald Advisors, Inc. is included in its
Form ADV filed on November 14, 1991, and most recently supplemented on September
20, 1999, with the Securities and Exchange Commission (File No. 801-40263) and
is incorporated herein by reference.
<PAGE>

ITEM 27. PRINCIPAL UNDERWRITERS

(a) Investment Companies for which Rafferty Capital
Markets, Inc. also acts a principal underwriter: Potomac Funds,
Badgley Funds (as of August 17, 1998).

(b) The following table sets forth certain information for
each director, officer or partner of Rafferty Capital Markets,
Inc., the principal underwriter of the Funds.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
(1) (2) (3)
- ------------------------------------------------------------------------------------------------------
Name and Principal Positions and Offices Positions and Officers
Business Address with Rafferty Capital with Funds
Markets, Inc.
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Lawrence Rafferty Owner Partner of Potomac Funds,
550 Mamaroneck Avenue Not Involved with other Fund
Harrison, NY 10528 Duties
- ------------------------------------------------------------------------------------------------------
Thomas Mulrooney President General Securities Principal
550 Mamaroneck Avenue
Harrison, NY 10528
- ------------------------------------------------------------------------------------------------------
Derek Park Senior Vice President General Securities Principal
550 Mamaroneck Avenue
Harrison, NY 10528
- ------------------------------------------------------------------------------------------------------
Brendan Moyna Vice President Series 7 Representative
550 Mamaroneck Avenue
Harrison, NY 10528
- ------------------------------------------------------------------------------------------------------
Richard Buhr Head Trader None
550 Mamaroneck Avenue
Harrison, NY 10528
- ------------------------------------------------------------------------------------------------------
Philip Harding Vice President Series 7 Representative
550 Mamaroneck Avenue
Harrison, NY 10528
- ------------------------------------------------------------------------------------------------------
</TABLE>

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.

Certain accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder and the records relating to the duties of the Registrant's transfer
agent are maintained by Firstar Trust Company, P.O. Box 701, 615 E. Michigan
Street, Milwaukee, WI 53201-0701. Records relating to the duties of the
Registrant's custodian are maintained by Firstar Trust Company, P.O. Box 701,
615 E. Michigan Street, Milwaukee, WI 53201-0701.
<PAGE>

ITEM 29. MANAGEMENT SERVICES

None.

ITEM 30. UNDERTAKINGS

Not Applicable.
<PAGE>

SIGNATURES

Pursuant to the requirements of the Investment Company Act, the Registrant
certifies that it has duly caused this Post-Effective Amendment No. 11 to its
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Lancaster, and the Commonwealth of Pennsylvania
on the 29th day of October, 1999.

The HomeState Group

By: /s/ Scott L. Rehr

---------------------------------
Scott L. Rehr

President and Trustee

Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 11 to the Registration Statement has been signed below
by the following persons in the capacities and on the dates indicated.

Bruce E. Bowen Trustee October 29, 1999

Kenneth G. Mertz II, C.F.A. Trustee, Vice October 29, 1999
President and

Chief Investment
Officer

Daniel W. Moyer IV Trustee, Vice October 29, 1999
President and
Secretary

Scott C. Penwell Trustee October 29, 1999

Scott L. Rehr Trustee and October 29, 1999
President

Dr. H.J. Zoffer Trustee October 29, 1999

Dated: October 29, 1999

By: /s/ Scott L. Rehr

--------------------------------------
Scott L. Rehr
President and Trustee
(Power of Attorney*)

* (Incorporated by Reference to the Signature Page of Post-Effective
Amendment No. 9 to this Registration Statement filed with the
Commission on October 30, 1997.)
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
No. Page
No.
<S> <C>
Description of Exhibit

(a)(1) The HomeState Group's (the "Registrant")
Declaration of Trust, dated August 26, 1992 and
Joinder of Additional Trustees (Incorporated by
reference to Exhibit 23(a)(1) to the Post-Effective
No. 10 to this Registration Statement filed with
the Commission on August 20, 1998)
(a)(2) Addendum 2 to the Declaration of Trust, dated August 1,
1997 (Incorporated by reference to Exhibit 23(a)(2) to
the Post-Effective No. 10 to this Registration
Statement filed with the Commission on August
20, 1998)
(a)(3) Amendment to the Declaration of Trust dated August 31,
1998 restating Addendum 1 thereto (Incorporated by
reference to Exhibit 23(a)(1) to the Post-Effective
No. 10 to this Registration Statement filed with the
Commission on August 20, 1998)
(b) None.

(c) Form of Certificate of Common Stock. (Incorporated by
reference to Exhibit 4 to Pre-Effective Amendment No.
3 to this Registration Statement filed with the
Commission on September 22, 1992.)
(d)(1) Investment Advisory Agreement between the Registrant,
on behalf of The HomeState Pennsylvania Growth Fund,
and Emerald Advisers, Inc., dated September 1, 1992
(Incorporated by reference to Exhibit 5(a) to
Post-Effective Amendment No. 5 to this Registration
Statement filed with the Commission on November 27, 1996.)
(d)(2) Investment Advisory Agreement between the Registrant,
on behalf of The HomeState Select Banking and Finance
Fund, and Emerald Advisers, Inc., dated September 1,
1992 (Incorporated by reference to Exhibit 5(b) to
Post-Effective Amendment No. 5 to this Registration
Statement filed with the Commission on November 27, 1996.)
(d)(3) Investment Advisory Agreement between the Registrant,
on behalf of The HomeState Year 2000 ("Y2K") Fund, and
Emerald Advisers, Inc., dated September 11, 1997
(Incorporated by reference to Exhibit 5(c) to
Post-Effective Amendment No. 8 to this Registration
Statement filed with the Commission on September 15, 1997.)
(e) Distribution Agreement between the Registrant and Rafferty
Capital Markets, Inc., dated May 19, 1998 (Incorporated
by reference to Exhibit 23(e) to the Post-Effective No.
10
</TABLE>

<PAGE>

to this Registration Statement filed with the Commission
on August 20, 1998)
(f) None.
(g) (1)Custodian Servicing Agreement between the Registrant
and Firstar Trust Company dated March 1, 1998
(Incorporated by reference to Exhibit 23(g)(1) to the
Post-Effective No.10 to this Registration Statement filed
with the Commission on August 20, 1998)
(g)(2) Firstar Trust Company Mutual Fund Services Fee Schedules
for Registrant (Incorporated by reference to Exhibit
23(g)(2) to the Post-Effective No.10 to this Registration
Statement filed with the Commission on August 20, 1998)
(h)(1) Transfer Agent Servicing Agreement between the Registrant
and Firstar Trust Company dated March 1, 1998
(Incorporated by reference to Exhibit 23(h)(1) to the
Post-Effective No. 10 to this Registration Statement
filed with the Commission on August 20, 1998)
(h)(2) Fund Administration Servicing Agreement between the
Registrant and Firstar Trust Company dated March 1,
1998 (Incorporated by reference to Exhibit 23(h)(2) to
the Post-Effective No. 10 to this Registration Statement
filed with the Commission on August 20, 1998)
(h)(3) Fund Account Servicing Agreement between the Registrant
and Firstar Trust Company dated March 1, 1998
(Incorporated by reference to Exhibit 23(h)(3) to the
Post-Effective No. 10 to this Registration Statement
filed with the Commission on August 20, 1998)
(h)(4) Fulfillment Servicing Agreement between the Registrant
and Firstar Trust Company dated March 1, 1998
(Incorporated by reference to Exhibit 23(h)(4) to the
Post-Effective No. 10 to this Registration Statement
filed with the Commission on August 20, 1998)
(i) Not Applicable
(j) Consent of Independent Accountants.
(k) Financial Statements for The HomeState Pennsylvania
Growth Fund, The HomeState Select Banking and Finance
Fund, and The HomeState Year 2000 (Y2K) Fund are
Incorporated by Reference to the Form N-30D filed on
September 10, 1999.
(l) Initial Capital Agreement (Incorporated by Reference to
Exhibit 13 to Post-Effective Amendment No. 9 to this
Registration Statement filed on October 30, 1997.)
(m)(1) Rule 12b-1 Plan for The HomeState Pennsylvania Growth
Fund (Incorporated by Reference to Exhibit 15(a) to
Post-Effective Amendment No. 5 to this Registration
Statement filed on November 27, 1996.)
(2) Rule 12b-1 Plan for The HomeState Banking and Finance
<PAGE>

Fund (Incorporated by Reference to Exhibit 15(b) to
Post-Effective Amendment No. 5 to this Registration
Statement filed on November 27, 1996.)
(3) Rule 12b-1 Plan for The Year 2000 ("Y2K") Fund
(Incorporated by Reference to Exhibit 15(c) to
Post-Effective Amendment No. 8 to this Registration
Statement filed on September 15, 1997.)

(n) Financial Data Schedule (Incorporated by Reference to
Exhibit 17 to Post Effective Amendment No. 7 filed on
August 18, 1997.)

(o) None.

<PAGE>

CONSENT OF INDEPENDENT ACCOUNTANTS

To the Board of Trustees of
The HomeState Group

We consent to the incorporation by reference in Post-Effective Amendment No.11
to the Registration Statement of The HomeState Group on Form N-1A of our report
dated July 30, 1999, on our audit of the financial statements and financial
highlights of The HomeState Pennsylvania Growth Fund, The HomeState Select
Banking and Finance Fund, and The HomeState Year 2000 (Y2K) Fund, which report
is included in the Annual Report to Shareholders for the year ended June 30,
1999, which is incorporated by reference in the Post-Effective Amendment to the
Registration Statement. We also consent to the references to our Firm under the
captions "Independent Accountant" in the Statement of Additional Information and
"Financial Highlights" in the Prospectus.

PricewaterhouseCoopers LLP

Milwaukee, Wisconsin
October 29, 1999