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THE
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PARKSTONE
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ADVANTAGE
Annual Report
December 31, 1997
Not FDIC Insured
[PARKSTONE ADVANTAGE LOGO APPEARS HERE]
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Table of Contents
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The Parkstone Advantage Fund December 31, 1997
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Message From Your Chairman.................................................. 2
Message From Your Investment Adviser........................................ 3
Portfolio Performance Discussion............................................ 5
Report of Independent Auditors.............................................. 10
Statements of Assets and Liabilities........................................ 11
Statements of Operations.................................................... 12
Statements of Changes in Net Assets......................................... 13
Schedules of Portfolio Investments.......................................... 15
Notes to Financial Statements............................................... 25
Financial Highlights........................................................ 31
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1
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Message From Your Chairman
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The Parkstone Advantage Fund December 31, 1997
Dear Shareholders:
Given the rough-and-tumble environment of the financial markets both at home
and abroad during the year ended December 31, 1997, we are pleased to report
that the portfolios of the Parkstone Advantage Fund held their ground during
the period.
Moreover, despite the volatility in the U.S. financial markets and others
around the world, investors' enthusiasm for stocks and bonds remained high.
While not at the breathtaking levels seen in 1996, money continued to stream
into mutual funds over the course of the period--and we are pleased to report
that many of these investors placed their confidence in the portfolio of The
Parkstone Advantage Fund. In 1997, net assets under management grew by $13.5
million from $78.8 million to $92.3 million, an increase of 17%.
A TIME FOR CAUTION . . . AND OPTIMISM
Very simply, the past several years have been very good ones for stock invest-
ors. Nevertheless, much as we have said and expected for quite some time, the
markets have grown more volatile in recent weeks. As it has historically, the
law of gravity has begun to prevail. This, coupled with the crises in Asia,
has created an unpredictable environment, and stocks have taken some tumbles
recently. They could take a few more in the months ahead before the Asian Flu
runs its course and we see where different economies around the world are
headed.
Nevertheless, there is one thing we can be certain of in this uncertain envi-
ronment. Those who attempt to second-guess the direction of the markets have
seldom been as successful as those who take a systematic, disciplined and
long-term approach to investing. That is why a long-term perspective is now
more important than ever, yet more difficult to maintain, as the media head-
lines events in the financial markets every night.
Nonetheless, now is a time to hold, not fold. In short, whatever happens in
Asia, the U.S. financial markets are the strongest in the world--and the best
positioned to weather a storm. Historically, investors with the fortitude to
withstand the swings in price that such storms often bring have been rewarded
handsomely. In addition, there is little reason to believe that this will not
be the case this time, as the fundamentals of our economy are solid and long-
term prospects for U.S. corporations are bright.
IN CLOSING
In the pages that follow, you will find a detailed discussion of the perfor-
mance of each of the portfolios of the Parkstone Advantage Fund during the
year ended December 31, 1997. You will also find a letter from our Investment
Adviser, which includes an economic outlook for the coming months. We urge you
to read this material closely.
Finally, we thank you for your continued confidence in us. We look forward to
providing you with superior investment management and to serving your needs
now and in the years ahead. As always, if you have any questions or require
any assistance, please do not hesitate to call us at 1-800-355-4555.
Sincerely,
/s/ John B. Rapp
John B. Rapp
Chairman
The Parkstone Advantage Fund
THE PORTFOLIOS OF THE PARKSTONE ADVANTAGE FUND ARE NOT FDIC INSURED AND ARE
NOT OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY, ANY BANK OR ITS AFFILIATES.
INVESTMENT PRODUCTS INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
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NOTICE TO SHAREHOLDERS
PLEASE BE ADVISED OF THE FOLLOWING FACTS ABOUT MUTUAL FUNDS:
. YOUR PRINCIPAL IS AT RISK.
. NOT AN OBLIGATION OF ANY BANK.
. NO FDIC COVERAGE.
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2
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Message from Your Investment Adviser
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The Parkstone Advantage Fund December 31, 1997
Dear Shareholders:
Historically, there is nothing the financial markets have hated quite as much
as uncertainty--and as we begin the New Year, there is certainly plenty to go
around. Worries about the impact of the turmoil in Asia, and about the direc-
tion of U.S. interest rates and inflation, dominate the headlines. New rumors
about corporate profits surface hourly, and experts speculate as to how long
the euphoric investor psychology that fueled the spectacular growth of the mu-
tual fund industry--and in turn, the stock market--over the past several years
can last.
The truth is, no matter how long each of these subjects is dissected or debat-
ed, no one can foresee the future. It is clear, however, that in three of the
five world economic regions, economic growth is likely to remain at last
year's levels or to expand more slowly than in 1997. Demand from these re-
gions, in particular Asia, has underpinned U.S. export growth over the past
several years. Therefore, our economy--already slowing--may slow further, but
just how much or for how long is impossible to predict precisely.
THE ASIAN FLU
Much of the uncertainty now, of course, is due to the situation in Asia. After
almost a decade of explosive growth, there is now substantially more produc-
tion capacity than worldwide demand for many products produced in Asia. Due to
the shaky state of financial institutions in the region, local consumers find
it difficult, if not impossible, to get credit--as do local businesses that
need credit to finance their operations. Galloping to the rescue, the Interna-
tional Monetary Fund has presented a series of plans designed to stabilize the
stricken economies. Within the region, however, the preferred solution seems
to be to increase exports to the United States--where benevolent American con-
sumers will save Asia with their purchases.
However, U.S. consumers are unlikely to desire anything near the quantity of
goods likely to be forthcoming. Moreover, because their Asian trading partners
have less need for industrial inputs and their foreign consumers are no longer
in the position to purchase their products, U.S. corporations are likely to
find their own exports slowing, and, in some cases, even declining. Corporate
profits, of course, will be impacted--but keep in mind that over 50% of the
U.S. economy is service oriented. Many of the services provided by individuals
are unaffected by overseas pricing.
Nonetheless, events in Asia will have an impact this year and perhaps for the
next several years. This year, we believe our economy will grow at a rate of
2.5%, with corporate profits increasing about 6% or so. Both numbers are
smaller than those we have seen in the past several years--but we believe they
will still be increasing.
WHAT ABOUT THE MARKETS?
In recent weeks, U.S. interest rates have declined more than most experts in
the marketplace anticipated, and many pundits are projecting long-term rates
may go as low as 5%. While this has sparked more enthusiasm for bonds than we
have seen in several years, rates significantly below 5.5% are unlikely to be
sustained over the course of the year. At this point, however, the interest
rate decline has been critical to the stock market, where earnings estimates
are being reduced. Why? Because the interest rate declines help maintain the
current price/earnings ratio in the stock market, or increase it slightly,
which offsets any earnings decline.
This does not make for a buoyant stock market, but on the other hand, it fore-
stalls another serious correction. Moreover, it could provide a foundation for
further gains if there is positive economic news--particularly in the first
half of the year. Much, however, will depend on market psychology, which was
extremely favorable until the Asian mania reached its current level. Sentiment
now appears to be more neutral--and could become negative, depending on the
severity of the effects the Asian Flu has on the U.S. economy.
IN ADDITION, THERE ARE A FEW WILD CARDS
Finally, based on the events of the past year, the Fed is now likely to con-
sider easing rather than increasing interest rates--which would help if the
environment grows less favorable. Also, we cannot lose sight of the fact that
1998 is a year of congressional elections. Typically, in an off-year election,
the opposition--in this case, the Republicans--will pick up additional seats
in
3
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Message From Your Investment Adviser, continued
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The Parkstone Advantage Fund December 31, 1997
Congress. We expect these elections to have little impact, on the markets but
months of heated rhetoric about spending lie ahead of us. In addition, in poli-
tics, just like in the financial markets, things can change in the wink of an
eye.
Sincerely,
/s/ Richard A. Wolf
Richard A. Wolf, CFA
President and Chief Investment Officer
First of America Investment Corporation
4
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Portfolio Performance Discussion
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The Parkstone Advantage Fund December 31, 1997
MID CAPITALIZATION FUND
Throughout the year ended December 31, 1997, events trended in favor of larger
capitalization stocks. First, as the stock market continued to rocket upwards,
investors sought the safety of the biggest and best-known names. Then, with
Asia in turmoil and interest rates declining, liquidity concerns dominated.
Therefore, the vast majority of mid-cap and small-cap stocks--no matter how
strong their fundamentals and lack of international exposure--were simply left
standing on the sidelines. In addition, what little interest there was in the
sectors, favored value stocks over growth.
Throughout the year, however, the astonishing quality of some of the Fund's
holdings overcame the market's indifference, and several posted outstanding
gains. Nonetheless, performance overall was disappointing due to the lackluster
environment for small- and mid-cap growth stocks over the course of the period.
For the year ended December 31, 1997, the Fund posted a total return of
12.58%.*
OVERLOOKED AND UNDERVALUED
Having suffered a severe case of neglect for more than a year, the small- and
mid-cap sectors offer investors a number of very, very attractive opportuni-
ties. In short, many stocks are available at bargain prices--simply because
over the course of the year, the companies involved have experienced dramatic
growth while their stock prices have been stable or have even declined.
In the short term, depending on how the situation in Asia plays out, we could
also see some activity when investors realize that few of these companies have
any international exposure. Regardless of this, however, investors will eventu-
ally and inevitably return to these stocks, drawn by the sheer strength of
their fundamentals. Therefore, we are very optimistic about the Fund's long-
term prospects.
As of December 31, 1997, the top five holdings in the Fund's portfolio were
Service Corp. International (3.3% of the Fund's assets), Peoplesoft, Inc.
(3.1%), Cardinal Health, Inc. (2.9%), Health Management Associates (2.6%) and
Paychex, Inc. (2.6%).**
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* Past performance is not indicative of future results. The total return of
the Fund does not reflect the effect of any insurance charges or the annual
maintenance fee. Such charges and expenses would reduce the performance
quoted. The investment return and net asset value of the Fund will
fluctuate, so that the value of shares purchased through a variable annuity,
when redeemed, may be worth more or less than the original cost.
** The portfolio's composition is subject to change.
Mid Capitalization Fund
Average Annual Total Return
As of December 31, 1997
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Since Inception
(9/23/93)
12.32%
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One Year
12.58%
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[LINE GRAPH APPEARS HERE]
Return on a $10,000 Investment
(9/93 to 12/97)
Date Mid Capitalization Fund S&P Mid Cap 400 Index
- ---- ----------------------- ---------------------
10,000 10,000
12/93 10,170 11,108
12/94 9,640 10,710
12/95 12,440 14,095
12/96 14,600 16,801
12/97 16,437 22,219
The Fund's performance is being compared to the Standard & Poor's Mid-Cap 400
Index to reflect the Fund's focus on the mid-cap sector of the U.S. stock
market. The index is unmanaged and does not reflect the deduction of fees
associated with a mutual fund, such as investment management and fund
accounting fees. The performance of The Parkstone Advantage Mid Capitalization
Fund reflects the deduction of fees for these value-added services. Past
performance is not indicative of future results. The investment return and NAV
will fluctuate, so that an investor's shares, when redeemed, may be worth more
or less than their original cost.
5
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Portfolio Performance Discussion, continued
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The Parkstone Advantage Fund December 31, 1997
SMALL CAPITALIZATION FUND+
Ironically, the year ended December 31, 1997, was the best of times and the
worst of times for growth-oriented small-cap companies and their investors. A
strong economy, benign inflation and declining interest rates created an envi-
ronment where many saw their earnings and revenues soar. Yet investors, con-
cerned with events overseas and the direction of interest rates, continued to
overlook and undervalue small-capitalization companies in favor of large-
caps. Therefore, stock prices in the sector remained stable or even declined
over the course of the year.
Nevertheless, the gains in the revenues and earnings of some of our holdings
were simply too astonishing to ignore--and as a result, their stock prices did
rise dramatically. In the second half of the year alone, Pacific Gateway (2.1%
of the portfolio's assets), an international telephone company, climbed 90%.
Despite bright spots like this, however, the period overall was a discouraging
one for growth-oriented small-cap investors. For the year ended December 31,
1997, the Fund produced a total return of -5.47%.*
THE SPOTLIGHT WILL SHIFT
Despite current market sentiment, we remain very optimistic about the pros-
pects of growth-oriented small-cap stocks in general, and for our holdings in
particular. Out of favor now for more than two years, many of these companies
are growing at a rate three times faster than the overall market. Regarding
our holdings specifically, we anticipate that on average the companies held
could show a 40% gain in earnings in 1998 over 1997. Very simply, market sen-
timent may change--and when it does, we believe the Fund is very well posi-
tioned to participate in the sector's comeback.
As of December 31, 1997, the top five holdings in the Fund's portfolio were
Dura Pharmaceuticals, Inc. (3.9% of the portfolio's assets), Sanmina Corp.
(3.7%), Rexall Sundown, Inc. (2.7%), Veritas Sortware Corp. (2.7%) and Visio
Corp. (2.6%).**
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* Past performance is not indicative of future results. The total return of
the Fund does not reflect the effect of any insurance charges or the annual
maintenance fee. Such charges and expenses would reduce the performance
quoted. The investment return and net asset value of the Fund will
fluctuate, so that the value of shares purchased through a variable
annuity, when redeemed, may be worth more or less than the original cost.
** The Portfolio's composition is subject to change.
+ Small-cap funds typically carry additional risks since smaller companies
generally have a higher risk of failure and, historically, their stocks have
experienced a greater degree of market volatility than stocks on average.
Small Capitalization Fund
Average Annual Total Return
As of December 31, 1997
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Since Inception
(9/23/93)
16.56%
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One Year
-5.47
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[LINE GRAPH APPEARS HERE]
Return on a $10,000 Investment
(9/93 to 12/97)
Date Small Capitalization Fund Russell 2000 Index
- ---- ------------------------- ------------------
10,000 10,000
12/93 11,000 11,092
12/94 11,580 10,890
12/95 15,710 13,987
12/96 20,370 16,299
12/97 19,256 19,943
The Fund's performance is compared to the Russell 2000 Stock Index, which
represents the performance of domestically traded common stocks of small- to
mid-sized companies. The index is unmanaged and does not reflect the deduction
of fees associated with a mutual fund, such as investment management and fund
accounting fees. The performance of the Parkstone Advantage Small
Capitalization Fund reflects the deduction of fees for these value-added
services. Past performance is not indicative of future results. The investment
return and NAV will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
6
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Portfolio Performance Discussion, continued
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The Parkstone Advantage Fund December 31, 1997
INTERNATIONAL DISCOVERY FUND+
Asian markets collapsed in 1997 as what began as a ripple in February, when a
small property company in Thailand missed a payment on its foreign debt, de-
veloped into a tidal wave of bankruptcies and currency devaluations throughout
the region by August. By late in the fourth quarter, investors in Europe and
North America were beginning to realize the severity of the economic devasta-
tion in Asia, and the potential negative impact it might have on corporate
earnings in their home markets. Old-fashioned panic was in evidence several
days over the last three months, in London and New York as well as in Tokyo
and Hong Kong, as global stock markets suffered dramatic day-to-day
volatility.
Currencies also had a major impact on investment performance over the course
of the period, as the continued strength of the U.S. dollar significantly re-
duced investment returns for U.S.-based investors. Consequently, the combina-
tion of declining Asian markets and weak currencies worked to produce a some-
what disappointing return of 2.13%* for the year ending December 31, 1997.
LOOKING BEYOND ASIA
Going forward, 1998 promises to be a year of increased uncertainty, as the
Asian financial collapse will have a detrimental influence on foreign trade,
economic growth and corporate profits around the globe. The depth and longev-
ity of the global slowdown is dependent on the ability of the Asian countries
to put their houses in order and embark on sustainable growth trends. We are
not willing to believe the bottom in the smaller Asian markets has been
reached until we see evidence of currency stabilization and movements toward
economic restructuring in each of these countries. At the present time, such
developments are lacking.
Europe and Latin America, on the other hand, continue to offer strong invest-
ment opportunities. Even though reduced exports to Asia will have a minor neg-
ative impact on GDP (Gross Domestic Product), strong consumer demand and low
interest rates continue to produce a favorable investment environment for con-
tinental Europe. The developing economies of Latin America, although not im-
mune from the troubles occurring across the Pacific, have already experienced
most of the problems afflicting the Asian Tigers and appear to be better posi-
tioned to maintain their underlying growth paths.
UNEARTHING OPPORTUNITY
The year 1998 begins with many more concerns about the global investment out-
look than in prior years, but we believe this environment of uncertainty pro-
vides the opportunity for high-quality companies to display superior operating
performance in the months ahead. Those are the types of companies we always
invest in, and we look forward to the year with a high measure of confidence.
As of December 31, 1997, the top five holdings in the Fund's portfolio were
SAP Preferred (3.3% of the portfolio's assets), Takeda Chemical Industries
(2.8%), Adidas AG (2.5%), Telecom (2.3%) and Rohm Corp. (2.2%).
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+ International investing involves increased risk and volatility.
* Past performance is not indicative of future results. The total return of
the Fund does not reflect the effect of any insurance charges or the annual
maintenance fee. Such charges and expenses would reduce the performance
quoted. The investment return and net asset value of the Fund will
fluctuate, so that the value of shares purchased through a variable
annuity, when redeemed, may be worth more or less than the original cost.
** The composition of the Fund's portfolio is subject to change.
International Discovery Fund
Average Annual Total Return
As of December 31, 1997
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Since Inception
(9/23/93)
5.32%
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One Year
2.13
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[LINE GRAPH APPEARS HERE]
Return on a $10,000 Investment
(9/93 to 12/97)
Date International Discover Fund MSCI EAFE Index
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10,000 10,000
12/93 10,350 9,037
12/94 9,650 9,740
12/95 10,590 10,832
12/96 12,222 11,486
12/97 12,483 11,723
The Fund's performance is compared to the Morgan Stanley Capital International
Europe, Australia and Far East (MSCI EAFE) Index, which represents the
performance of the major stock markets in those regions. The index is
unmanaged and does not reflect the deduction of fees associated with a mutual
fund, such as investment management and fund accounting fees. The performance
of the Parkstone Advantage International Discovery Fund reflects the deduction
of fees for these value-added services. Past performance is not indicative of
future results. The investment return and NAV will fluctuate, so that an
investor's shares, when redeemed may be worth more or less than their original
cost.
7
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Portfolio Performance Discussion, continued
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The Parkstone Advantage Fund December 31, 1997
BOND FUND
While the markets were volatile at times, all in all, 1997 was a very good year
for fixed-income investors. After spiking higher in the spring, interest rates
began trending downward on news that inflation was benign and the economy was
starting to slow. Bonds gained ground throughout the summer and into the fall.
Then, in October, with the stock market growing more volatile, and word of the
currency crises in Asia, investors sought quality and safety. Long-term inter-
est rates moved decisively lower, and fixed-income securities across the spec-
trum benefited.
A CONSERVATIVE APPROACH
Throughout the year ended December 31, 1997, the Fund was positioned
conservatively. For instance, despite the fact that mortgage-backed securities
were performing strongly, the Fund was underweighted in the sector simply be-
cause these securities did not represent good value on a fundamental basis.
Throughout much of the period, as interest rates fell, they offered investors
little or no compensation for growing prepayment risk.
At the same time, however, as news of troubles in Asia reached the fixed-income
market, spreads widened in the corporate markets--and we seized a number of
very attractive opportunities there as the year ended. Therefore, for the year
ended December 31, 1997, the Fund produced a total return of 7.69%.*
CAUTIOUS OPTIMISM
We expect the months ahead to be good ones for the bond markets. As events have
unfolded in Asia, it has become clear that the situation will take some time to
play itself out. While it is unclear just how the U.S. economy will be impact-
ed, it is apparent that we will see some slowing of growth, which would put
further downward pressure on rates--and create a very attractive environment
for bonds. Nonetheless, as interest rates fall, prepayment risks can be ex-
pected to rise.
In short, careful security selection will be critical to success in the months
ahead.
As of December 31, 1997, approximately 49% of the Fund's assets were invested
in corporate bonds, 26% in mortgage-backed and asset-backed securities, and 22%
in U.S. Treasuries, with the remainder invested in agency-backed securities. As
of the same date, the average credit quality of the portfolio was Aaa; the av-
erage maturity, 11.4 years.**
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* Past performance is not indicative of future results. The total return of
the Fund does not reflect the effect of any insurance charges or the annual
maintenance fee. Such charges and expenses would reduce the performance
quoted. The investment return and net asset value of the Fund will
fluctuate, so that the value of shares purchased through a variable annuity,
when redeemed, may be worth more or less than the original cost.
** The Portfolio's composition is subject to change.
Bond Fund
Average Annual Total Return
As of December 31, 1997
- ------------------------------
Since Inception
(9/23/93)
4.54%
- ------------------------------
One Year
7.69%
- ------------------------------
[LINE GRAPH APPEARS HERE]
Return on a $10,000 Investment
(9/93 to 12/97)
Salomon Brothers
Date Bond Fund Broad Index
- ---- --------- ----------------
10,000 10,000
12/93 9,960 10,010
12/94 9,424 9,725
12/95 11,024 11,531
12/96 11,226 11,948
12/97 12,090 12,709
The Bond Fund's performance is compared to the Salomon Brothers Broad Index,
which represents the performance of the overall bond market. The index is
unmanaged and does not reflect the deduction of fees associated with a mutual
fund, such as investment management and fund accounting fees. The performance
of the Parkstone Advantage Bond Fund reflects the deduction of fees for these
value-added services. Past performance is not indicative of future results. The
investment return and NAV will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
8
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Portfolio Performance Discussion, continued
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The Parkstone Advantage Fund December 31, 1997
PRIME OBLIGATIONS FUND
Looking at strong job growth numbers during the first half of the year ended
December 31, 1997, investors expected to see inflationary pressures rise and,
in turn, interest rates climb. However, as inflation remained benign throughout
the summer, even the toughest of inflation hawks were forced to concede that it
was not much of a problem. Rates drifted slightly lower. Then, in October, when
indications of trouble in Asian markets appeared, the money markets grew more
volatile. Despite an increasingly uncertain environment, rates ended the year
lower than they began it.
Looking ahead, it is clear that Asia's problems will not be solved overnight.
However, the impact on the U.S. economy may be minimal. What is more, once this
is apparent, investors may again focus on job growth--and realize that unem-
ployment is at the lowest levels seen in decades. While we do not expect to see
interest rates rise significantly any time soon, inflation anxiety may return
in the very near future.
As of December 31, 1997, approximately 42% of the Fund's assets were invested
in U.S. Treasury Bills, with the remainder invested in cash and cash equiva-
lents. The average maturity of the Fund's holdings was 28 days.*
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* The composition of the portfolio is subject to change.
An investment in the Prime Obligations Fund is neither insured nor guaranteed
by the U.S. Government. There can be no assurance that the Fund will be able to
maintain a stable net asset value of $1.00 per share
The Portfolios of the Parkstone Advantage Fund are distributed by BISYS Fund
Services. For more complete information on any of the Parkstone Funds,
including fees, expenses and sales charges, please call 1-800-451-8377 for a
free prospectus. Please read the prospectus carefully before investing or
sending money.
The material is authorized for distribution to prospective investors only when
preceded or accompanied by a prospectus.
9
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Report of Independent Auditors
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The Contract Owners and Board of Trustees
The Parkstone Advantage Fund December 31, 1997
We have audited the accompanying statements of assets and liabilities, includ-
ing the schedules of portfolio investments, of The Parkstone Advantage Fund
(comprising, respectively, the Prime Obligations, Bond, Mid Capitalization,
Small Capitalization, and International Discovery Funds) (the "Fund") as of
December 31, 1997, and the related statements of operations for the year then
ended, the statements of changes in net assets for each of the two years in
the period then ended, and the financial highlights for each of the four years
in the period then ended, and for the period from September 23, 1993 (com-
mencement of operations) to December 31, 1993. These financial statements and
financial highlights are the responsibility of the Fund's management. Our re-
sponsibility is to express an opinion on these financial statements and finan-
cial highlights based on our audits.
We conducted out audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1997, by correspondence with the custodian
and others. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the over-
all financial statement presentation. We believe that out audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting The Parkstone Advantage Fund at De-
cember 31, 1997, and the results of their operations for the year then ended,
the changes in their net assets for each of the two years in the period then
ended, and the financial highlights for each of the four years in the period
then ended, and for the period from September 23, 1993 (commencement of opera-
tions) to December 31, 1993, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Columbus, Ohio
February 10, 1998
10
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Statements of Assets and Liabilities
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The Parkstone Advantage Fund December 31, 1997
<TABLE>
<CAPTION>
PRIME MID SMALL INTERNATIONAL
OBLIGATIONS BOND CAPITALIZATION CAPITALIZATION DISCOVERY
FUND FUND FUND FUND FUND
----------- ----------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in securi-
ties, at value (Total
cost $1,935,648;
$11,474,608;
$25,723,607;
$20,991,835; and
$15,500,503, respec-
tively)................ $1,935,648 $11,684,225 $31,073,725 $26,877,611 $18,424,336
Repurchase agreements,
at cost................ 1,841,000 -- -- -- --
---------- ----------- ----------- ----------- -----------
Total Investments....... 3,776,648 11,684,225 31,073,725 26,877,611 18,424,336
Cash.................... 794 140 30 155 249,598
Interest and dividends
receivable............. 1,709 182,079 14,379 8,221 10,708
Reclaim receivable...... -- -- -- -- 7,557
Receivable for invest-
ments sold............. -- -- -- -- 132,119
Unamortized organization
costs.................. 2,304 1,968 1,351 1,352 123
Prepaid expenses and
other assets........... -- 520 291 866 3,136
---------- ----------- ----------- ----------- -----------
Total Assets............ 3,781,455 11,868,932 31,089,776 26,888,205 18,827,577
---------- ----------- ----------- ----------- -----------
LIABILITIES:
Dividends payable....... 12,965 -- -- -- --
Payable for investments
purchased.............. -- -- -- -- 10,493
Accrued expenses and
other payables:
Investment advisory
fees................. 41 240 843 727 644
Administration fees... 624 1,985 5,234 4,533 3,262
Custodian fees........ 21 41 72 83 7,380
Accounting and trans-
fer agent fees....... 1,187 -- 1,655 1,487 2,442
Legal and audit fees.. 1,445 3,760 6,860 5,728 4,805
Trustees' fees........ 280 792 2,074 1,955 1,692
Printing fees......... 2,142 5,927 13,859 13,220 12,498
Other................. 20 -- -- -- --
---------- ----------- ----------- ----------- -----------
Total Liabilities....... 18,725 12,745 30,597 27,733 43,216
---------- ----------- ----------- ----------- -----------
NET ASSETS:
Capital................. 3,762,698 11,222,008 25,772,769 21,669,161 15,874,578
Accumulated undistrib-
uted net investment in-
come (loss)............ -- 588,095 -- -- (66,210)
Net unrealized
appreciation from
investments and
translation of assets
and liabilities in
foreign currencies..... -- 209,617 5,350,118 5,885,776 2,922,275
Accumulated
undistributed net
realized gain
(loss) from investment
and foreign currency
transactions........... 32 (163,533) (63,708) (694,465) 53,718
---------- ----------- ----------- ----------- -----------
Net Assets.............. $3,762,730 $11,856,187 $31,059,179 $26,860,472 $18,784,361
========== =========== =========== =========== ===========
Outstanding units of
beneficial interest
(shares)............... 3,762,698 1,107,616 2,183,328 1,568,880 1,510,438
========== =========== =========== =========== ===========
Net asset value--redemp-
tion price per share... $1.00 $10.70 $14.23 $17.12 $12.44
========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
11
<PAGE>
- --------------------------------------------------------------------------------
Statements of Operations
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
PRIME MID SMALL INTERNATIONAL
OBLIGATIONS BOND CAPITALIZATION CAPITALIZATION DISCOVERY
FUND FUND FUND FUND FUND
----------- -------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income......... $180,534 $698,013 $ 8,184 $ 1,150 $ --
Dividend income......... 17,694 16,488 172,527 89,757 290,065
Foreign tax withholding. -- -- (814) -- (13,856)
-------- -------- ---------- ----------- --------
Total Income.......... 198,228 714,501 179,897 90,907 276,209
-------- -------- ---------- ----------- --------
EXPENSES:
Investment advisory
fees................... 14,317 78,638 278,450 256,828 239,144
Administration fees..... 7,159 21,254 55,690 51,366 38,263
Custodian and accounting
fees................... 12,422 15,660 21,807 21,619 41,246
Legal and audit fees.... 12,317 9,756 29,710 31,387 13,993
Organization costs...... 1,687 2,023 2,639 2,639 2,892
Registration and filing
fees................... 200 954 1,671 2,159 (630)
Trustees' fees and ex-
penses................. 4,431 1,338 4,855 4,952 1,437
Transfer agent fees..... 15,909 9,867 14,224 14,227 14,223
Printing costs.......... 2,628 5,098 15,701 13,639 13,460
-------- -------- ---------- ----------- --------
Total Expenses........ 71,070 144,588 424,747 398,816 364,028
-------- -------- ---------- ----------- --------
Net Investment Income
(loss)................. 127,158 569,913 (244,850) (307,909) (87,819)
-------- -------- ---------- ----------- --------
REALIZED/UNREALIZED GAIN
(LOSS) FROM INVESTMENTS
AND FOREIGN CURRENCIES:
Net realized gain (loss)
from investment trans-
actions and foreign
currency transactions.. 32 63,027 21,346 (687,260) 377,500
Net change in unrealized
appreciation (deprecia-
tion) from investments
and translation of as-
sets and liabilites in
foreign currencies..... -- 170,944 3,644,864 (135,425) (1,551)
-------- -------- ---------- ----------- --------
Net realized/unrealized
gain (loss) from in-
vestments.............. 32 233,971 3,666,210 (822,685) 375,949
-------- -------- ---------- ----------- --------
Change in net assets re-
sulting from opera-
tions.................. $127,190 $803,884 $3,421,360 $(1,130,594) $288,130
======== ======== ========== =========== ========
</TABLE>
See notes to financial statements.
12
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund
<TABLE>
<CAPTION>
PRIME OBLIGATIONS FUND BOND FUND MID CAPITALIZATION FUND
-------------------------- -------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996 1997 1996
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVI-
TIES:
OPERATIONS:
Net investment income
(loss)................ $ 127,158 $ 183,779 $ 569,913 $ 426,491 $ (244,850) $ (145,500)
Net realized gain
(loss) from investment
transactions.......... 32 -- 63,027 (42,409) 21,346 4,807,708
Net change in
unrealized apprecia-
tion (depreciation)
from investments...... -- -- 170,944 (172,949) 3,644,864 (1,870,062)
----------- ----------- ----------- ---------- ----------- -----------
Change in net assets
resulting from
operations............. 127,190 183,779 803,884 211,133 3,421,360 2,792,146
----------- ----------- ----------- ---------- ----------- -----------
DISTRIBUTIONS TO SHARE-
HOLDERS:
From net investment in-
come.................. (127,158) (183,779) (416,938) (284,420) -- --
From net realized gains
from investment trans-
actions............... -- -- -- -- (4,029,590) --
In excess of net
realized gains from
investment
transactions.......... -- -- -- -- (37,172) --
----------- ----------- ----------- ---------- ----------- -----------
Change in net assets
from shareholder
distributions.......... (127,158) (183,779) (416,938) (284,420) (4,066,762) --
----------- ----------- ----------- ---------- ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................ 3,101,247 5,468,338 2,700,591 3,655,094 9,574,756 8,192,553
Dividends reinvested... 128,645 189,429 416,938 284,420 4,066,762 --
Cost of shares re-
deemed................ (3,046,397) (5,023,478) (1,402,718) (870,038) (5,977,525) (1,921,241)
----------- ----------- ----------- ---------- ----------- -----------
Change in net assets
from shares
transactions........... 183,495 634,289 1,714,811 3,069,476 7,663,993 6,271,312
----------- ----------- ----------- ---------- ----------- -----------
Change in net assets.... 183,527 634,289 2,101,757 2,996,189 7,018,591 9,063,458
NET ASSETS:
Beginning of period.... 3,579,203 2,944,914 9,754,430 6,758,241 24,040,588 14,977,130
----------- ----------- ----------- ---------- ----------- -----------
End of period.......... $ 3,762,730 $ 3,579,203 $11,856,187 $9,754,430 $31,059,179 $24,040,588
=========== =========== =========== ========== =========== ===========
Undistributed net in-
vestment income at end
of year................ $ -- $ -- $ 588,095 $ 142,071 $ -- $ --
=========== =========== =========== ========== =========== ===========
</TABLE>
See notes to financial statements.
13
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets, continued
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund
<TABLE>
<CAPTION>
INTERNATIONAL
SMALL CAPITALIZATION FUND DISCOVERY FUND
-------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVI-
TIES:
OPERATIONS:
Net investment income
(loss).................. $ (307,909) $ (201,060) $ (87,819) $ (48,967)
Net realized gain (loss)
from investment
transactions and foreign
currency transactions... (687,260) 2,859,204 377,500 328,532
Net change in unrealized
appreciation (deprecia-
tion) from investments
and translation of as-
sets and liabilities in
foreign currencies...... (135,425) 1,792,987 (1,551) 1,720,693
----------- ----------- ----------- -----------
Change in net assets re-
sulting from operations.. (1,130,594) 4,451,131 288,130 2,000,258
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHARE-
HOLDERS:
In excess of net invest-
ment income............. -- -- -- (52,625)
From net realized gains
from investment transac-
tions................... (139,967) (2,544,355) -- --
----------- ----------- ----------- -----------
Change in net assets from
shareholder distribu-
tions.................... (139,967) (2,544,355) -- (52,625)
----------- ----------- ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares is-
sued.................... 9,004,859 8,508,014 5,616,329 4,585,372
Dividends reinvested..... 139,967 2,544,355 -- 52,625
Cost of shares redeemed.. (5,509,017) (1,736,482) (4,120,845) (1,230,083)
----------- ----------- ----------- -----------
Change in net assets from
shares transactions...... 3,635,809 9,315,887 1,495,484 3,407,914
----------- ----------- ----------- -----------
Change in net assets...... 2,365,248 11,222,663 1,783,614 5,355,547
NET ASSETS:
Beginning of period...... 24,495,224 13,272,561 17,000,747 11,645,200
----------- ----------- ----------- -----------
End of period............ $26,860,472 $24,495,224 $18,784,361 $17,000,747
=========== =========== =========== ===========
Undistributed net invest-
ment income at end of
year..................... $ -- $ -- $ (66,210) $ --
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
14
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1997
Prime Obligations Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ------------------------------------------------------ ----------
<C> <S> <C>
U.S. TREASURY BILLS (42.1%):
$1,600,000 3/5/98................................................ $1,585,564
----------
Total U.S. Treasury Bills 1,585,564
----------
INVESTMENT COMPANIES (9.3%):
174,359 Federated Prime Money Market.......................... 174,359
175,725 Provident T-Fund...................................... 175,725
----------
Total Investment Companies 350,084
----------
REPURCHASE AGREEMENTS (49.0%):
921,000 Goldman Sachs, 6.80%, 1/2/98, dated 12/31/97
(Collateralized by $1,126,986 Federal Home Loan
Mortgage Corp., 6.45%, 3/15/24, market value--
$939,420)............................................ 921,000
920,000 Nomura Securities, 6.72%, 1/2/98, dated 12/31/97
(Collateralized by $920,000 Federal National Mortgage
Assoc., 6.45%, 3/26/01, market value--$939,059)...... 920,000
----------
Total Repurchase Agreements 1,841,000
----------
Total (Cost $3,776,648)(a) $3,776,648
==========
</TABLE>
- -------
Percentages indicated are based on net assets of $3,762,730.
(a) Cost for federal income tax and financial reporting purposes are the
same.
See notes to financial statements.
15
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1997
Bond Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
ASSET BACKED SECURITIES (10.2%):
$246,857 Banc One Auto Grantor Trust, 6.27%, 11/20/03........... $ 248,236
231,926 Daimler-Benz Auto Grantor Trust, 6.05%, 3/20/05........ 231,455
315,000 Discover Card Master Trust, 6.05%, 8/18/08............. 310,562
100,000 Green Tree Financial Corp., 6.90%, 4/15/19............. 101,869
87,676 Lehman FHA--Title 1 Loan Trust, 6.78%, 3/25/08......... 88,128
150,000 Sears Credit Account Master Trust, 6.50%, 10/15/03..... 150,755
78,947 Structured Asset Securities Co., 7.50%, 8/25/26........ 80,032
-----------
Total Asset Backed Securities 1,211,037
-----------
CORPORATE BONDS (48.8%):
Automotive Finance (4.6%):
250,000 Ford Motor Credit, 8.20%, 2/15/02...................... 267,188
275,000 GMAC, 6.38%, 12/1/01................................... 275,687
-----------
542,875
-----------
Banking (3.1%):
325,000 Swiss Bank, 7.75%, 9/1/26.............................. 362,375
-----------
Consumer Goods & Services (2.5%):
300,000 Nike, Inc., 6.38%, 12/1/03............................. 301,875
-----------
Financial Services (16.2%):
250,000 Associates Corp., NA, 6.50%, 7/15/02................... 252,188
285,000 Chase Capital II, 6.36%, 2/1/27........................ 277,148
325,000 Fleet Capital Trust II, 7.92%, 12/11/26................ 344,499
125,000 General Electric Capital Corp., 7.62%, 5/8/00.......... 129,375
300,000 Sears Roebuck Acceptance, 6.38%, 11/25/02.............. 301,125
275,000 Travelers Property Casualty, 6.75%, 11/15/06........... 279,813
300,000 USF & G Capital II, 8.47%, 1/10/27..................... 329,625
-----------
1,913,773
-----------
Foreign Governments (2.3%):
250,000 Quebec Province, 13.00%, 10/1/13....................... 274,063
-----------
Government Agency (2.8%):
325,000 Fannie Mae, 7.55%, 3/27/07............................. 334,545
-----------
Industrial Goods & Services (10.2%):
250,000 Honeywell, Inc., 6.75%, 3/15/02........................ 254,375
250,000 ICI Wilmington, 6.95%, 9/15/04......................... 257,188
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Industrial Goods & Services, continued:
$ 300,000 Northrop-Grumman, 7.88%, 3/1/26........................ $ 334,499
105,000 Sears Roebuck Co., 7.50%, 10/15/27..................... 109,331
250,000 Times Mirror Co, 6.61%, 9/15/27........................ 255,938
-----------
1,211,331
-----------
Oil & Gas (5.8%):
240,000 Amoco Canada, 6.75%, 2/15/05........................... 248,700
350,000 Atlantic Richfield, 10.88%, 7/15/05.................... 444,063
-----------
692,763
-----------
Transportation & Shipping (1.3%):
150,000 Norfolk Southern Corp., 6.95%, 5/1/02.................. 154,125
-----------
Total Corporate Bonds 5,787,725
-----------
GOVERNMENT OBLIGATIONS (37.6%):
Mortgage Pass Thrus (15.6%):
Federal National Mortgage Assoc. (7.1%):
300,000 8.00%, 2/25/21, Series G92-35.......................... 310,587
380,221 7.00%, 9/1/27.......................................... 382,358
154,867 6.50%, 11/1/27......................................... 152,640
-----------
845,585
-----------
Government National Mortgage Assoc. (8.5%):
763,261 7.50%, 8/15/25, Pool #780213........................... 784,549
219,774 6.50%, 9/15/23, Pool #345871........................... 217,765
-----------
1,002,314
-----------
Total Mortgage Pass Thrus 1,847,899
-----------
U.S. Treasury Obligations (22.0%):
U.S. Treasury Notes (22.0%):
100,000 6.25%, 6/30/02......................................... 101,972
300,000 7.88%, 11/15/04........................................ 335,361
150,000 5.63%, 11/30/00........................................ 149,652
1,690,000 6.50%, 8/31/01......................................... 1,731,708
90,000 6.25%, 3/31/99......................................... 90,652
200,000 6.38%, 4/30/99......................................... 201,832
-----------
Total U.S. Treasury Obligations 2,611,177
-----------
Total Government Obligations 4,459,076
-----------
INVESTMENT COMPANIES (1.9%):
182,387 Federated Prime Money Market........................... 182,387
44,000 Provident T-Fund....................................... 44,000
-----------
Total Investment Companies 226,387
-----------
Total (98.5%) (Cost $11,476,655)(a) $11,684,225
===========
</TABLE>
- -------
Percentages indicated are based on net assets of $11,856,187.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation..................................... $223,273
Unrealized depreciation..................................... (15,703)
--------
Net unrealized appreciation................................. $207,570
========
See notes to financial statements.
16
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1997
Mid Capitalization Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (99.1%):
Apparel/Shoes (1.3%):
7,900 Brylane, Inc.(b)....................................... $ 389,075
-----------
Broadcasting & Publishing (5.7%):
27,400 CanWest Global Communications Corp. ................... 493,200
10,100 Chancellor Media Corp.(b)(c)........................... 753,713
6,650 Clear Channel Communications, Inc.(b)(c)............... 528,259
-----------
1,775,172
-----------
Building Products (1.0%):
13,400 Royal Group Technologies Ltd. ......................... 310,713
-----------
Business Services (11.8%):
13,800 BA Merchant Services, Inc. ............................ 244,950
13,300 Cambridge Technology Partners, Inc. ................... 553,613
12,000 Cintas Corp. .......................................... 468,000
12,050 Concord EFS, Inc.(b)................................... 299,744
15,987 Paychex, Inc. ......................................... 809,341
21,100 SunGard Data Systems, Inc.(c).......................... 654,099
20,150 U.S. Office Products Co.(b)(c)......................... 395,444
10,200 U.S. Rentals, Inc.(b).................................. 239,700
-----------
3,664,891
-----------
Computer Software & Peripherals (11.9%):
9,800 Baan Co. N.V.(b)....................................... 323,400
10,900 BMC Software, Inc.(b)(c)............................... 715,312
18,900 Cadence Design Systems, Inc.(b)(c)..................... 463,050
5,000 HNC Software(b)........................................ 215,000
9,200 Parametric Technology Corp.(b)......................... 435,850
24,900 PeopleSoft, Inc.(b).................................... 971,099
5,000 VERITAS Software Corp.(b).............................. 255,000
9,300 Visio Corp.(b)(c)...................................... 356,888
-----------
3,735,599
-----------
Correctional Facilities (0.8%):
6,700 Corrections Corp. of America(b)........................ 248,319
-----------
Data Processing & Reproduction (2.1%):
13,500 Fiserv, Inc.(b)........................................ 663,188
-----------
Educational Services (3.9%):
5,600 Apollo Group, Inc.(b)(c)............................... 264,600
6,000 CBT Group PLC(b)....................................... 492,750
11,450 Sylvan Learning Systems, Inc.(b)(c).................... 446,550
-----------
1,203,900
-----------
Electrical & Electronic (1.5%):
15,737 Molex, Inc. ........................................... 452,439
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Environmental Services (1.5%):
11,975 USA Waste Services, Inc.(b)(c)......................... $ 470,019
-----------
Financial Services (8.1%):
12,900 Finova Group, Inc. .................................... 640,969
5,600 FIRSTPLUS Financial Group, Inc.(b)..................... 214,900
11,600 Nationwide Financial Services.......................... 419,050
18,400 Ocwen Financial Services Corp.(b)...................... 468,050
18,000 SunAmerica, Inc.(c).................................... 769,499
-----------
2,512,468
-----------
Food & Household Products (1.0%):
7,700 Sunbeam Corp.(c)....................................... 324,363
-----------
Funeral Services (4.7%):
27,300 Service Corp. International(c)......................... 1,008,394
9,650 Stewart Enterprises.................................... 449,931
-----------
1,458,325
-----------
Health & Personal Care (0.9%):
10,100 Alberto-Culver Co.(c).................................. 272,700
-----------
Health Care--Services (7.3%):
9,800 Health Care & Retirement Corp.(b)...................... 394,450
32,125 Health Management Associates, Inc.(b).................. 811,155
22,900 Omnicare, Inc.(c)...................................... 709,900
9,500 Quintiles Transnational Corp.(b)(c).................... 363,375
-----------
2,278,880
-----------
Hotels & Lodging (1.5%):
13,200 Capstar Hotel(b)....................................... 452,925
-----------
Manufacturing--Consumer Goods (2.1%):
15,000 Newell Co. ............................................ 637,500
-----------
Medical Equipment & Supplies (1.5%):
7,300 Guidant Corp. ......................................... 454,425
-----------
Office Equipment & Services (0.3%):
6,100 Electronics for Imaging, Inc.(b)....................... 101,413
-----------
Oilfield Services & Equipment (3.8%):
4,800 Camco International, Inc. ............................. 305,700
7,100 Cooper Cameron Corp.(b)................................ 433,100
24,700 Newpark Resources, Inc.(b)............................. 432,250
-----------
1,171,050
-----------
Pharmaceuticals (1.9%):
13,200 Dura Pharmaceuticals, Inc.(b).......................... 605,550
-----------
</TABLE>
Continued
17
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1997
Mid Capitalization Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Resorts & Entertainment (2.1%):
6,800 Royal Caribbean Cruises Ltd. .......................... $ 362,525
13,150 Signature Resorts, Inc.(b)(c).......................... 287,656
-----------
650,181
-----------
Retail Stores (4.6%):
14,231 Consolidated Stores Corp.(b)(c)........................ 625,274
9,125 Dollar General Corp. .................................. 330,781
11,500 MSC Industrial Direct Co., Inc.(c)..................... 487,313
-----------
1,443,368
-----------
Semiconductors (1.9%):
13,233 Analog Devices, Inc.(c)................................ 366,389
5,700 Vitesse Semiconductor Corp.(b)......................... 215,175
-----------
581,564
-----------
Technology (3.4%):
10,000 MRV Communications(b).................................. 238,750
5,300 Qwest Communications International, Inc.(b)............ 315,350
3,100 Sanmina Corp.(b)....................................... 210,025
7,100 Uniphase Corp.(b)(c)................................... 293,763
-----------
1,057,888
-----------
Technology--Software (2.1%):
7,800 Computer Sciences Corp.(b)(c).......................... 651,300
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Telecommunications--Services & Equipment (4.9%):
13,400 ADC Telecommunications, Inc.(b)(c)..................... $ 559,450
9,200 Electric Lightwave(b).................................. 136,850
10,700 McLeod USA, Inc.(b).................................... 342,400
10,400 PairGain Technologies, Inc.(b)......................... 201,500
23,500 West TeleServices Corp.(b)............................. 282,000
-----------
1,522,200
-----------
Wholesale Distribution (2.6%):
16,700 Brightpoint, Inc.(b)................................... 231,713
3,200 CDW Computer Center, Inc.(b)(c)........................ 166,800
15,000 Richfood Holdings, Inc. ............................... 423,750
-----------
822,263
-----------
Wholesale Distribution--Pharmaceuticals (2.9%):
11,850 Cardinal Health, Inc.(c)............................... 890,231
-----------
Total Common Stocks 30,801,909
-----------
INVESTMENT COMPANIES (0.9%):
133,816 Federated Prime Money Market........................... 133,816
138,000 Provident T-Fund....................................... 138,000
-----------
Total Investment Companies 271,816
-----------
Total (100.0%) (Cost $25,725,297)(a) $31,073,725
===========
</TABLE>
- -------
Percentages indicated are based on net assets of $31,059,179.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation.................................. $ 6,482,452
Unrealized depreciation.................................. (1,134,024)
-----------
Net unrealized appreciation.............................. $ 5,348,428
===========
(b) Represents non-income producing securities.
(c) All or a portion of this security has been loaned at December 31, 1997.
See notes to financial statements.
18
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1997
Small Capitalization Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
COMMON STOCKS (96.2%):
Advertising (1.5%):
15,987 HA-LO Industries, Inc.(b)............................. $ 415,662
-----------
Business Services (14.8%):
6,900 Applied Graphics Technologies, Inc.(b)................ 367,425
14,350 Cambridge Technology Partners, Inc.(b)................ 597,318
10,800 Envoy Corp.(b)........................................ 314,550
8,300 International Telecommunications Data Systems,
Inc.(b).............................................. 265,600
10,000 Medquist, Inc.(b)..................................... 347,500
10,050 NCO Group, Inc.(b).................................... 258,788
7,400 NOVA Corp (Georgia)(b)................................ 185,000
13,600 Novacare Employee Services(b)......................... 108,800
10,650 Registry, Inc.(b)..................................... 488,568
6,800 RWD Technologies, Inc.(b)............................. 122,400
7,900 SOS Staffing Services, Inc.(b)........................ 149,113
16,400 Staff Leasing, Inc.(b)................................ 309,550
16,750 Technology Solutions Co.(b)........................... 441,781
-----------
3,956,393
-----------
Computer Hardware (2.0%):
11,650 Apex PC Solutions, Inc.(b)............................ 257,757
9,100 Box Hill Systems Corp.(b)............................. 94,981
7,200 ONTRACK Data International(b)......................... 179,550
-----------
532,288
-----------
Computer Software & Peripherals (11.4%):
12,800 Aspen Technologies, Inc.(b)........................... 438,400
7,100 Axnet Technologies, Inc.(b)........................... 122,475
9,600 CyberMedia, Inc.(b)................................... 144,600
11,600 JDA Software Group, Inc.(b)........................... 406,000
8,700 Logility, Inc.(b)..................................... 84,825
6,700 MEMCO Software, Inc.(b)............................... 135,675
15,600 Pegasystems, Inc...................................... 314,925
14,050 VERITAS Software Corp.(b)............................. 716,549
18,300 Visio Corp.(b)........................................ 702,263
-----------
3,065,712
-----------
Correctional Facilities (1.8%):
17,500 Wackenhut Corrections Corp.(b)........................ 470,313
-----------
Cosmetics/Personal Care (2.7%):
24,100 Rexall Sundown, Inc.(b)............................... 727,519
-----------
Data Processing & Reproduction (0.7%):
11,750 Deltek Systems, Inc.(b)............................... 185,797
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Financial Services (9.1%):
25,275 Concord EFS, Inc.(b)................................... $ 628,715
10,000 First Alliance Corp.(b)................................ 183,750
14,200 Franchise Mortgage Acceptance Co.(b)................... 260,925
31,414 Imperial Credit Industries, Inc.(b).................... 643,986
10,000 Metris Cos., Inc. ..................................... 342,500
7,300 Sirrom Capital Corp. .................................. 380,513
-----------
2,440,389
-----------
Food Products & Services (0.2%):
6,500 Fine Host Corp.(b)..................................... 65,813
-----------
Funeral Services (1.0%):
11,900 Equity Corp. International(b).......................... 275,188
-----------
Health Care--Services (13.4%):
8,800 Advanced Health Corp.(b)............................... 139,700
22,600 American Oncology Resources, Inc.(b)................... 361,600
6,900 Boron, Lepore & Assoc., Inc.(b)........................ 189,750
11,100 Capital Senior Living Corp.(b)......................... 115,856
9,300 Carematrix Corp.(b).................................... 267,375
8,500 Concentra Managed Care, Inc.(b)........................ 286,875
15,200 NCS HealthCare, Inc., Class A(b)....................... 400,900
36,600 Orthodontic Centers of America, Inc.(b)................ 608,474
15,200 Parexel International Corp.(b)......................... 562,400
13,150 Serologicals Corp.(b).................................. 341,900
11,133 Total Renal Care Holdings, Inc.(b)..................... 306,158
-----------
3,580,988
-----------
Manufactured Housing (0.5%):
6,600 Modtech, Inc.(b)....................................... 128,700
-----------
Medical Equipment & Supplies (3.1%):
10,550 ESC Medical Systems Ltd.(b)............................ 408,812
7,000 Molecular Devices Corp.(b)............................. 148,750
5,600 Sabratek Corp.(b)...................................... 161,000
6,100 Schick Technologies, Inc.(b)........................... 118,569
-----------
837,131
-----------
Oilfield Services & Equipment (1.8%):
11,600 IRI International Corp.(b)............................. 162,400
8,600 Key Energy Group, Inc.(b).............................. 186,513
11,900 Omni Energy Services(b)................................ 139,825
-----------
488,738
-----------
Pharmaceuticals (5.8%):
22,800 Dura Pharmaceuticals, Inc.(b).......................... 1,045,949
13,675 Jones Medical Industries, Inc. ........................ 523,069
-----------
1,569,018
-----------
</TABLE>
Continued
19
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1997
Small Capitalization Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Printing & Publishing (1.3%):
7,350 Consolidated Graphics, Inc.(b)......................... $ 342,694
-----------
Records Management (1.4%):
10,100 Iron Mountain, Inc.(b)................................. 363,600
-----------
Rental Equipment/Furniture (2.2%):
12,600 Rental Service Corp.(b)................................ 309,488
13,800 Renter's Choice, Inc.(b)............................... 282,900
-----------
592,388
-----------
Resorts & Entertainment (4.1%):
12,862 Regal Cinemas, Inc.(b)................................. 358,528
19,400 Signature Resorts, Inc.(b)............................. 424,375
14,200 Vistana, Inc.(b)....................................... 326,600
-----------
1,109,503
-----------
Restaurants (2.6%):
17,150 Landry's Seafood Restaurants(b)........................ 411,600
9,400 The Cheesecake Factory(b).............................. 286,700
-----------
698,300
-----------
Retail--Speciality Stores (2.0%):
5,700 Insight Enterprises(b)................................. 209,475
13,575 Petco Animal Supplies, Inc.(b)......................... 325,800
-----------
535,275
-----------
Retail Stores (1.5%):
11,950 The Men's Wearhouse, Inc.(b)........................... 415,263
-----------
Technology (4.7%):
7,400 ENCAD, Inc.(b)......................................... 203,500
9,800 International Manufacturing Services(b)................ 71,050
14,700 Sanmina Corp.(b)....................................... 995,924
-----------
1,270,474
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Telecommunications--Services & Equipment (3.1%):
10,300 Pacific Gateway Exchange, Inc.(b)...................... $ 554,269
11,700 SmarTalk Teleservices, Inc.(b)......................... 266,175
-----------
820,444
-----------
Wholesale Distribution (3.5%):
39,600 Brightpoint, Inc.(b)................................... 549,450
7,750 CDW Computer Center, Inc.(b)........................... 403,969
-----------
953,419
-----------
Total Common Stocks 25,841,009
-----------
FOREIGN COMMON STOCKS (1.9%):
Canada (0.7%):
Computer Software (0.7%):
8,500 Discreet Logic, Inc.(b)................................ 186,469
-----------
Israel (1.2%):
Computer Hardware (1.2%):
7,600 Nice Systems Ltd.(b)................................... 319,200
-----------
Total Foreign Common Stocks 505,669
-----------
INVESTMENT COMPANIES (2.0%):
213,933 Federated Prime Money Market........................... 213,933
317,000 Provident T-Fund....................................... 317,000
-----------
Total Investment Companies 530,933
-----------
Total (100.1%) (Cost $20,995,219)(a) $26,877,611
===========
</TABLE>
- -------
Percentages indicated are based on net assets of $26,860,472.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation.................................. $ 7,143,880
Unrealized depreciation.................................. (1,261,488)
-----------
Net unrealized appreciation.............................. $ 5,882,392
===========
(b) Represents non-income producing securities.
See notes to financial statements.
20
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1997
International Discovery Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (89.2%):
Argentina (1.3%):
Oil & Gas Exploration, Production & Services (1.3%):
7,000 YPF Sociedad Anonima, ADR.............................. $ 239,313
-----------
Australia (2.0%):
Construction (0.4%):
20,000 Leighton Holdings...................................... 69,848
-----------
Diversified Operations (0.7%):
16,933 Smith (Howard) Ltd. ................................... 140,560
-----------
Pharmaceuticals (0.9%):
25,000 CSL Ltd. .............................................. 156,378
-----------
366,786
-----------
Austria (0.4%):
Engineering (0.4%):
550 VA Technologies AG..................................... 83,386
-----------
Belgium (2.1%):
Electronic Components/Instruments (0.5%):
500 Barco N.V. ............................................ 91,768
-----------
Retail Stores/Catalog (1.6%):
600 Colrayt N.V. .......................................... 306,479
-----------
398,247
-----------
Brazil (1.9%):
Beverages & Tobacco (0.5%):
6,500 Compania Cervejaria Brahma, Sponsored ADR.............. 92,219
-----------
Telecommunications (1.4%):
2,200 Telecommunicacoes Brasileiras SA....................... 256,163
-----------
348,382
-----------
Canada (1.5%):
Aerospace/Defense (1.1%):
5,000 Bombardier, Inc., Class B.............................. 102,724
12,000 Cae, Inc. ............................................. 93,919
-----------
196,643
-----------
Telecommunications--Services & Equipment (0.4%):
2,200 Newbridge Networks Corp., ADR(b)....................... 76,725
-----------
273,368
-----------
Chile (1.5%):
Telecommunications (1.5%):
9,350 Cia de Telecomunicaciones de Chile SA, ADR............. 279,331
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Finland (1.9%):
Computer Software (0.3%):
500 TT Tieto Oy--B Shares.................................. $ 56,285
-----------
Food Products & Services (0.4%):
1,700 Huhtamaki Group........................................ 70,242
-----------
Telecommunications--Services & Equipment (1.2%):
3,200 Nokia AB, Class A, ADR................................. 224,000
-----------
350,527
-----------
France (5.0%):
Engineering (1.1%):
670 Altran Technologies.................................... 204,925
-----------
Machinery & Equipment (1.2%):
3,500 Sidel SA............................................... 232,136
-----------
Office Equipment/Supplies (1.4%):
3,640 BIC SA................................................. 265,806
-----------
Retail Stores/Catalog (1.3%):
450 Pinault-Printemps-Redoute SA........................... 240,190
-----------
943,057
-----------
Germany (5.9%):
Machinery & Equipment (2.2%):
805 Mannesmann Ag(b)....................................... 404,281
-----------
Manufacturing--Consumer Goods (2.4%):
3,520 Adidas AG.............................................. 465,929
-----------
Pharmaceuticals (1.3%):
2,500 Schering AG............................................ 241,235
-----------
1,111,445
-----------
Greece (0.3%):
Beverages & Tobacco (0.3%):
2,800 Hellenic Bottling Co. SA............................... 65,040
-----------
Hong Kong (2.6%):
Automobiles (0.1%):
50,000 Qingling Motors Co. ................................... 24,522
-----------
Electrical & Electronic (0.3%):
18,000 Johnson Electric Holdings Ltd.(b)...................... 51,805
-----------
Food Products & Services (0.7%):
50,000 Guangnan Holdings...................................... 40,977
90,000 NG Fung Hong Ltd. ..................................... 94,666
-----------
135,643
-----------
Real Estate (0.4%):
10,500 Sun Hung Kai Properties Ltd.(b)........................ 73,178
-----------
</TABLE>
Continued
21
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1997
International Discovery Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Utilities--Electrical & Gas (1.1%):
100,700 Hong Kong & China Gas Co. Ltd. ........................ $ 194,946
-----------
480,094
-----------
Indonesia (0.0%):
Banking (0.0%):
697 PT Bank International Indonesia........................ 41
-----------
Israel (0.9%):
Pharmaceuticals (0.9%):
3,600 Teva Pharmaceutical Industries, Ltd. .................. 170,325
-----------
Italy (2.5%):
Electronic Components/Instruments (0.4%):
4,400 Gewiss SpA............................................. 83,371
-----------
Jewelry (1.0%):
32,000 Bulgari SpA............................................ 162,896
-----------
Medical Equipment & Supplies (0.4%):
3,200 Safilo SpA(b).......................................... 83,258
-----------
Telecommunications--Services & Equipment (0.7%):
30,000 Telecom Italia Mobile SpA.............................. 138,547
-----------
468,072
-----------
Japan (21.5%):
Computer Software (2.0%):
5,000 TDK Corp. ............................................. 378,400
-----------
Electrical & Electronic (4.8%):
2,600 Keyence Corp. ......................................... 385,937
14,000 Matsushita Electric Works.............................. 121,673
4,000 Rohm Corp. ............................................ 409,165
-----------
916,775
-----------
Electronic Components/Instruments (3.5%):
5,000 Hirose Electric........................................ 256,497
15,000 NEC Corp. ............................................. 160,359
15,000 Omron Corp. ........................................... 235,346
-----------
652,202
-----------
Food Products & Services (1.0%):
4,900 Matsumotokiyoshi....................................... 188,431
-----------
Health & Personal Care (0.7%):
4,000 Hoya Corp. ............................................ 126,133
-----------
Manufacturing--Consumer Goods (3.0%):
14,000 Canon, Inc. ........................................... 327,331
6,000 Fuji Photo Film Ltd. .................................. 230,732
-----------
558,063
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Office Equipment & Services (1.6%):
24,000 Ricoh Co. Ltd. ........................................ $ 299,028
-----------
Pharmaceuticals (3.9%):
10,000 Sankyo Co. Ltd. ....................................... 226,886
18,000 Takeda Chemical Industries............................. 514,994
-----------
741,880
-----------
Telecommunications (0.3%):
20,000 Denki Kogyo Co. Ltd.................................... 65,374
-----------
Toys (0.7%):
1,300 Nintendo............................................... 127,979
-----------
4,054,265
-----------
Malaysia (0.1%):
Engineering (0.1%):
26,000 United Engineers Ltd................................... 21,642
-----------
Mexico (3.1%):
Beverages & Tobacco (1.5%):
36,000 Fomento Economico Mexicano, Sa de CV................... 287,578
-----------
Diversified Operations (1.0%):
29,000 Grupo Carso Sa de CV................................... 193,170
-----------
Food Products & Services (0.6%):
110,000 Grupo Industrial Maseca Sa de CV....................... 110,248
-----------
590,996
-----------
Netherlands (6.0%):
Broadcasting & Publishing (2.6%):
13,000 Elsevier N.V........................................... 210,337
2,176 Wolters Kluwer N.V. ................................... 281,120
-----------
491,457
-----------
Commercial Services (0.5%):
2,800 Getronics N.V. ........................................ 89,225
-----------
Office Equipment & Services (2.9%):
5,980 Ahrend................................................. 187,905
3,400 Oce-Van Der Grinten N.V. .............................. 370,654
-----------
558,559
-----------
1,139,241
-----------
New Zealand (0.8%):
Agriculture (0.3%):
25,000 Fernz Corp. Ltd........................................ 64,598
-----------
Consumer Goods & Services (0.5%):
28,387 Fisher & Paykel Industries Ltd. ....................... 90,657
-----------
155,255
-----------
</TABLE>
See notes to financial statements.
22
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1997
International Discovery Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Portugal (2.3%):
Telecommunications (2.3%):
9,000 Portugal Telecom SA.................................... $ 423,000
-----------
Russia (0.5%):
Oil & Gas Exploration, Production & Services (0.5%):
1,000 Lukoil Holdings, ADR................................... 91,825
-----------
Singapore (0.4%):
Diversified Operations (0.3%):
50,000 Singapore Technologies Industrial Corp................. 47,776
-----------
Electrical & Electronic (0.1%):
38,000 Thakral Corp. ......................................... 19,760
-----------
67,536
-----------
South Africa (0.8%):
Beverages & Tobacco (0.4%):
3,000 South African Breweries................................ 73,977
-----------
Investment Company (0.4%):
18,108 Dimension Data Holdings Ltd.(b)........................ 78,143
-----------
152,120
-----------
Spain (2.8%):
Apparel/Shoes (0.6%):
6,000 Cortefiel SA........................................... 120,460
-----------
Beverages & Tobacco (0.8%):
1,800 Talbacalera SA......................................... 145,851
-----------
Commercial Services (1.4%):
25,000 Prosegur Cia de Seguridad SA........................... 250,960
-----------
517,271
-----------
Sweden (2.4%):
Engineering (1.1%):
7,000 Sandvik B.............................................. 200,268
-----------
Industrial Goods & Services (1.0%):
6,500 Atlas Copco AB......................................... 194,156
-----------
Metals (0.3%):
2,300 Assa Abloy AB-B........................................ 60,874
-----------
455,298
-----------
Switzerland (5.1%):
Banking (1.2%):
140 Novartis AG............................................ 227,486
-----------
Food Products & Services (2.0%):
250 Nestle SA Registered................................... 375,201
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Pharmaceuticals (1.9%):
35 Roche Holdings AG...................................... $ 348,068
-----------
950,755
-----------
United Kingdom (13.6%):
Aerospace/Defense (1.4%):
7,700 British Aerospace PLC.................................. 220,578
3,500 Cobham PLC............................................. 48,173
-----------
268,751
-----------
Air Transportation/Related (1.1%):
10,400 Airtours PLC........................................... 211,336
-----------
Appliances & Household Products (0.4%):
8,000 D.F.S. Furniture Co. PLC............................... 67,922
-----------
Building Products (1.3%):
85,000 Polypipe PLC........................................... 245,453
-----------
Capital Goods (2.0%):
36,800 Powerscreen International PLC.......................... 367,846
-----------
Computer Software (1.8%):
18,114 Logica PLC............................................. 344,991
-----------
Engineering (1.6%):
16,000 Siebe PLC.............................................. 300,121
-----------
Food Products & Services (1.4%):
22,000 Compass Group PLC...................................... 269,319
-----------
Machinery & Equipment (0.8%):
33,000 TT Group PLC........................................... 150,135
-----------
Manufacturing--Consumer Goods (1.0%):
98,933 Halma PLC.............................................. 189,645
-----------
Metals (0.8%):
17,000 Johnson Matthey PLC.................................... 151,468
-----------
2,566,987
-----------
Total Common Stocks 16,763,605
-----------
PREFERRED STOCKS (5.0%):
Brazil (0.5%):
Banking (0.5%):
180,000 Banco Itau............................................. 96,772
-----------
Germany (4.5%):
Business Services (3.3%):
1,900 SAP AG................................................. 617,327
-----------
Medical Equipment & Supplies (1.2%):
1,200 Fresenius AG........................................... 218,237
-----------
835,564
-----------
Total Preferred Stocks 932,336
-----------
</TABLE>
Continued
23
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments, continued
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1997
International Discovery Fund
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
INVESTMENT COMPANIES (3.9%):
178,395 Highmark Diversified Money Market Fund................. $ 178,395
300,000 Highmark US Government Money Market Fund .............. 300,000
250,000 Highmark 100% US Treasury Money Market Fund............ 250,000
-----------
Total Investment Companies 728,395
-----------
Total (Cost $15,500,503)(a)--98.1% $18,424,336
===========
</TABLE>
At December 31, 1997, International Discovery Fund's investment concentration
by industry was as follows:
<TABLE>
<S> <C>
Basic Industries 10.6%
Conglomerates 2.3%
Consumer Goods & Services 21.3%
Electrical & Electronics 10.8%
Energy 3.1%
Engineering 4.8%
Financial & Business Services 4.4%
Health Care 11.1%
Retailing 3.2%
Telecommunications 8.7%
Other 19.7%
------------
Total 100.0%
============
</TABLE>
- -------
Percentages indicated are based on net assets of $18,784,361.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation................................... $3,918,003
Unrealized depreciation................................... (994,170)
----------
Net unrealized appreciation............................... $2,923,833
==========
(b) Represents non-income producing securities.
ADR (American Depository Receipt)
At December 31, 1997, the Fund's open forward currency contracts were as
follows:
<TABLE>
<CAPTION>
CONTRACT CONTRACT VALUE APPRECIATION DELIVERY
CURRENCY PRICE U.S. DOLLARS (DEPRECIATION) DATE
- -------- -------- -------------- -------------- --------
<S> <C> <C> <C> <C>
Long Contracts:
Hong Kong Dollar............. $ 10,492 $ 10,492 $ 0 1/2/98
Short Contracts:
U. S. Dollar................. $(10,492) $(10,492) $ 0 1/2/98
</TABLE>
See notes to financial statements.
24
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1997
1. ORGANIZATION:
The Parkstone Advantage Fund (the "Company") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
investment company.
The Company is authorized to issue an unlimited number of shares which are
shares of beneficial interest without par value. The Company presently offers
series of shares of the Prime Obligations Fund, Bond Fund, Mid Capitalization
Fund (formerly known as the Equity Fund), Small Capitalization Fund and
International Discovery Fund (collectively, "the Funds" and individually, a
"Fund"). Sales of shares of the Funds may only be made to separate accounts
of various life insurance companies ("Participating Insurance Companies"). As
of December 31, 1997, the only Participating Insurance Company is Security
Benefit Life Insurance Company. First of America Investment Corp. ("FIC"), a
wholly-owned subsidiary of First of America Bank, serves as investment
adviser to the Company.
On April 30, 1997, the Board resolved that the name of the Trust's Equity
Fund portfolio be, and thereby was, changed to the Mid Capitalization Fund.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Company in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITIES VALUATION:
Investments of the Prime Obligations Fund are valued at either amortized
cost, which approximates market value, or at original cost, which combined
with accrued interest approximates market value. Under the amortized cost
method, discount or premium is amortized on a constant basis to the
maturity of the security. In addition, the Prime Obligations Fund may not
(a) purchase any investment with a remaining maturity greater than thirteen
months unless such instrument is subject to a demand feature, or (b)
maintain a dollar-weighted average portfolio maturity which exceeds 90
days.
Investments in common and preferred stocks, corporate bonds, commercial
paper and foreign government bonds and U.S. Government securities of the
Bond Fund, Mid Capitalization Fund, Small Capitalization Fund and
International Discovery Fund (collectively, "the variable net asset value
funds"), are valued at their market values determined on the basis of the
mean between the latest available bid and asked prices in the principal
market (closing sales prices if the principal market is an exchange) in
which such securities are normally traded. Amortization of premium or
discount is recognized on the sale or maturity of the security for the Bond
Fund. Investments in foreign securities in the International Discovery Fund
are valued based on quotations from the primary market in which they are
traded. Investments in investment companies are valued at their net asset
values as reported by such investment companies. The differences between
the cost and market values of investments held by the variable net asset
value funds are reflected as either unrealized appreciation or
depreciation.
Continued
25
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1997
SECURITIES TRANSACTIONS AND RELATED INCOME:
Securities transactions are accounted for on the date the security is
purchased or sold (trade date). Interest income is recognized on the
accrual basis. Dividend income is recorded on the ex-dividend date. Gains
or losses realized from sales of securities are determined by comparing the
identified cost of the security lot sold with the net sales proceeds.
FOREIGN CURRENCY TRANSLATION:
The market value of investment securities, other assets and liabilities of
the International Discovery Fund denominated in a foreign currency are
translated into U.S. dollars at the current exchange rate. Purchases and
sales of securities, income receipts and expense payments are translated
into U.S. dollars at the exchange rate on the date of each transaction.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of portfolio securities, sales of foreign currencies, currency
exchange fluctuations between the trade and settlement dates of securities
transactions, and the difference between the amounts of assets and
liabilities recorded and the U.S. dollars equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains and losses
arise from changes in the value of assets and liabilities, including
investments in securities, resulting from changes in currency exchanges
rates.
REPURCHASE AGREEMENTS:
The Funds may acquire repurchase agreements from member banks of the
Federal Deposit Insurance Corporation with capital, surplus and undivided
profits in excess of $100,000,000 (as of the date of their most recently
published financial statements) and from registered broker/dealers which
FIC deems creditworthy under guidelines approved by the Board of Trustees,
subject to the seller's agreement to repurchase the underlying securities
at a mutually agreed-upon date and price. The repurchase price generally
equals the price paid by the Fund plus interest negotiated on the basis of
current short-term rates, which may be more or less than the rate on the
underlying collateral. The seller, under a repurchase agreement, is
required to maintain the value of collateral held pursuant to the agreement
at not less than the repurchase price (including accrued interest).
Securities subject to repurchase agreements are held by the Funds'
custodian or another qualified custodian or in the Federal Reserve/Treasury
book-entry system. Repurchase agreements are considered to be loans by a
Fund under the 1940 Act.
LENDING PORTFOLIO SECURITIES:
In order to generate additional income, the Funds may lend their portfolio
securities to broker-dealers, banks, or institutional borrowers of
securities which have been determined creditworthy under guidelines
established by the Company's Board of Trustees in exchange for 100%
collateral consisting of cash or securities.
During the time portfolio securities are on loan, the borrower pays the
Fund any dividends or interest received on such securities. Loans are
subject to termination by the Fund or the borrower at any time. While a
Fund does not have the right to vote securities on loan, each Fund intends
to terminate the loan
Continued
26
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1997
and regain the right to vote if that is considered important with respect
to the investment. In the event the borrower defaults in its obligation to
a Fund, such Fund bears the risk of delay in the recovery of its portfolio
securities and the risk of loss of rights in the collateral.
At December 31, 1997, the Mid Capitalization Fund had loaned securities
with a market value of $9,651,883. The loaned securities were fully
collateralized with cash or securities on deposit with the Company's
custodian.
During the year ended December 31, 1997, the Mid Capitalization Fund and
the Small Capitalization Fund earned income of $6,897 and $1,327,
respectively on securities lending.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
The Fund intends to pay, at least annually, substantially all of its net
investment income. Net capital gains, if any, are distributed at least
annually.
The amounts of dividends from net investment income and of distributions
from net realized gains are determined in accordance with federal income
tax regulations which may differ from generally accepted accounting
principles. These "book/tax" differences are either considered temporary or
permanent in nature. To the extent these differences are permanent in
nature, such amounts are reclassified within the composition of net assets
based on their federal tax-basis treatment; temporary differences do not
require reclassification. Dividends and distributions to shareholders which
exceed net investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as dividends in
excess of net investment income or distributions in excess of net realized
gains. To the extent they exceed net investment income and net realized
gains for tax purposes, they are reported as distributions of capital.
As of December 31, 1997, the following reclassification have been made to
increase (decrease) such accounts with offsetting adjustments made to
additional paid-in-capital:
<TABLE>
<CAPTION>
ACCUMULATED ACCUMULATED UNDISTRIBUTED NET
UNDISTRIBUTED NET REALIZED GAIN (LOSS) ON INVESTMENTS
FUND INVESTMENT INCOME AND FOREIGN CURRENCY TRANSACTIONS
---- ----------------- -----------------------------------
<S> <C> <C>
Bond $ 10,752 $(10,752)
Mid Capitalization $244,850 $(26,536)
Small Capitalization $307,909 $(13,405)
International Discovery $ 29,643 $ 35,111
</TABLE>
FEDERAL INCOME TAXES:
It is the policy of each of the Funds to continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies, as defined in applicable sections of the Internal
Revenue Code, and to make distributions of net investment income and net
realized capital gains sufficient to relieve it from all, or substantially
all, federal income taxes.
Continued
27
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1997
OTHER:
Expenses that are directly related to one of the Funds are charged directly
to that Fund. Other operating expenses for the Company are prorated to the
Funds on the basis of relative net assets.
3. INVESTMENT RISKS:
The International Discovery Fund's investment in foreign securities may
involve risks not present in domestic investments. Since foreign securities
are denominated in foreign currencies and pay interest or dividends in
foreign currencies, changes in the relationship of these currencies to the
U.S. dollar can significantly affect the value of the investment and
operations of the Fund. Foreign investments may also subject the Fund to
foreign government exchange restrictions, expropriation, taxation or other
political, social or economic developments, all of which could affect the
market and/or credit risk of the investments.
4. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the
year ended December 31, 1997 are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Bond Fund............................................ $16,448,938 $14,604,296
Mid Capitalization Fund.............................. 19,824,347 14,117,113
Small Capitalization Fund............................ 16,336,480 12,228,135
International Discovery Fund......................... 7,737,104 5,791,304
</TABLE>
5. CAPITAL SHARE TRANSACTIONS:
<TABLE>
<CAPTION>
PRIME
OBLIGATIONS FUND BOND FUND
----------------------- ---------------------
AMOUNT SHARES AMOUNT SHARES
----------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Year ended December 31,
1997:
Shares sold.............. $ 3,101,247 3,101,247 $ 2,700,591 257,089
Dividends reinvested..... 128,645 128,645 416,938 40,323
Shares redeemed.......... (3,046,397) (3,046,397) (1,402,718) (133,754)
----------- ---------- ----------- --------
Net Increase (decrease).. $ 183,495 183,495 $ 1,714,811 163,658
=========== ========== =========== ========
Year ended December 31,
1996:
Shares sold.............. $ 5,468,338 5,468,338 $ 3,655,094 356,077
Dividends reinvested..... 189,429 189,429 284,420 28,528
Shares redeemed.......... (5,023,478) (5,023,478) (870,038) (84,465)
----------- ---------- ----------- --------
Net Increase (decrease).. $ 634,289 634,289 $ 3,069,476 300,140
=========== ========== =========== ========
</TABLE>
Continued
28
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1997
<TABLE>
<CAPTION>
MID CAPITALIZATION SMALL CAPITALIZATION INTERNATIONAL DISCOVERY
FUND FUND FUND
--------------------- --------------------- --------------------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
----------- -------- ----------- -------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31,
1997:
Shares sold........... $ 9,574,756 667,987 $ 9,004,859 547,940 $ 5,616,329 443,342
Dividends reinvested.. 4,066,762 291,943 139,967 7,665 -- --
Shares redeemed....... (5,977,525) (423,731) (5,509,017) (332,723) (4,120,845) (328,257)
----------- -------- ----------- -------- ------------- ----------
Net Increase (de-
crease).............. $ 7,663,993 536,199 $ 3,635,809 222,882 $ 1,495,484 115,085
=========== ======== =========== ======== ============= ==========
Year ended December 31,
1996:
Shares sold........... $ 8,192,553 579,034 $ 8,508,014 452,500 $ 4,585,372 398,934
Dividends reinvested.. -- -- 2,544,355 140,962 52,625 4,568
Shares redeemed....... (1,921,241) (136,089) (1,736,482) (92,463) (1,230,083) (107,563)
----------- -------- ----------- -------- ------------- ----------
Net Increase (de-
crease).............. $ 6,271,312 442,945 $ 9,315,887 500,999 $ 3,407,914 295,939
=========== ======== =========== ======== ============= ==========
</TABLE>
6. RELATED PARTY TRANSACTIONS:
Investment advisory services are provided to the Funds by FIC. Gulfstream
Global Investors, Ltd. ("Gulfstream") serves as the sub-adviser for the
International Discovery Fund. Under the terms of the investment advisory
agreement, FIC is entitled to receive fees based on a percentage of the
average daily net assets of the Funds. Under the terms of the sub-investment
advisory agreement, Gulfstream is entitled to receive fees from FIC based on
a percentage of the average daily net assets of the International Discovery
Fund.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS")
is an Ohio limited partnership. BISYS Fund Services Ohio, Inc. ("BISYS
Ohio"), and BISYS are subsidiaries of The BISYS Group, Inc.
BISYS, with whom certain officers of the Company are affiliated, serves the
Company as Administrator. Such officers are paid no fees directly by the
Company for serving as officers of the Company. Under the terms of the
Administration Agreement between BISYS and the Company, BISYS's fees are
computed daily as a percentage of the average net assets of each of the
Funds. BISYS also serves as Distributor, Mutual Fund Accountant and Transfer
Agent.
Continued
29
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements, continued
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund
<TABLE>
<CAPTION>
PRIME MID SMALL INTERNATIONAL
OBLIGATIONS BOND CAPITALIZATION CAPITALIZATION DISCOVERY
FUND FUND FUND FUND FUND
----------- ------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ADVISORY
FEES:
Annual fee (percentage
of average net assets). 0.40% 0.74% 1.00% 1.00% Varies(a)
ADMINISTRATION FEES:
Annual fee (percentage
of average net assets). 0.20% 0.20% 0.20% 0.20% 0.20%
ACCOUNTING & TRANSFER
AGENT FEES(B).......... $26,889 $24,620 $33,632 $33,645 $43,285
</TABLE>
-------
(a) For International Discovery Fund, FIC receives 1.25% of the first $50
million of the International Discovery Fund's average daily net assets,
1.20% of the average daily net assets between $50 million and $100
million, 1.15% of average daily net assets between $100 million and $400
million; and 1.05% of all average daily net assets above $400 million.
(b) The Transfer Agent receives an annual fee for its transfer agency
services equal to $15,000 per Fund. The Fund Accountant receives an
annual fee for its fund accounting services equal to $10,000 per Fund.
The Prime Obligations Fund pays an additional annual fee of 0.016% of its
average daily net assets. Each of the Small Capitalization Fund, Mid
Capitalization Fund and Bond Fund pays an additional annual fee of 0.022%
of its average daily net assets and the International Discovery Fund pays
an additional annual fee of 0.035% of its average daily net assets.
Fees may be voluntarily reduced or reimbursed to assist the Funds in
maintaining competitive expense ratios.
7. FEDERAL INCOME TAX INFORMATION (UNAUDITED):
At December 31, 1997, the Bond Fund had available $161,486 of capital loss
carryforwards which, if not utilized, $120,727 and $40,759 will expire in the
year 2002 and 2004, respectively.
At December 31, 1997, the Mid Capitalization Fund had available $62,018 of
capital loss carryforwards which, if not utilized, will expire in the year
2005.
At December 31, 1997, the Small Capitalization Fund had available $691,082 of
capital loss carryforwards which, if not utilized, will expire in the year
2005.
See notes to financial statements.
30
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund
<TABLE>
<CAPTION>
PRIME OBLIGATIONS FUND
----------------------------------------------------------------
FOR A SHARE OUTSTANDING SEPTEMBER 23
THROUGHOUT YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 1993 TO
THE PERIOD DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995 1994 1993(A)
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
INVESTMENT ACTIVITIES
Net investment income.. 0.035 0.044 0.041 0.023 0.009
---------- ---------- ---------- ---------- ----------
Total from Investment
Activities............ 0.035 0.044 0.041 0.023 0.009
---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS
From net investment in-
come.................. (0.035) (0.044) (0.041) (0.023) (0.009)
---------- ---------- ---------- ---------- ----------
Total Distributions.... (0.035) (0.044) (0.041) (0.023) (0.009)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ==========
Total Return............ 3.61% 4.46% 4.19% 2.29% 0.88% (b)
RATIOS/SUPPLEMENTARY DA-
TA:
Net Assets at end of pe-
riod................... $3,762,730 $3,579,203 $2,944,914 $2,231,991 $2,028,251
Ratio of expenses to av-
erage net assets....... 1.99% 1.01% 1.64% 1.90% 1.79% (c)
Ratio of net investment
income to average net
assets................. 3.55% 4.34% 4.15% 2.29% 1.53% (c)
</TABLE>
- -------
(a) Period from commencement of operations.
(b) Not Annualized
(c) Annualized
See notes to financial statements.
31
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund
<TABLE>
<CAPTION>
BOND FUND
------------------------------------------------------------------
FOR A SHARE OUTSTANDING SEPTEMBER 23,
THROUGHOUT YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 1993 TO
THE PERIOD DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995 1994 1993 (A)
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD......... $ 10.33 $ 10.50 $ 9.35 $ 9.96 $ 10.00
----------- ---------- ---------- ---------- ----------
INVESTMENT ACTIVITIES
Net investment income.. 0.48 0.36 0.40 0.42 0.10
Net realized and
unrealized gains
(losses) from
investments........... 0.30 (0.18) 1.17 (0.96) (0.14)
----------- ---------- ---------- ---------- ----------
Total from Investment
Activities............ 0.78 0.18 1.57 (0.54) (0.04)
----------- ---------- ---------- ---------- ----------
DISTRIBUTIONS
From net investment in-
come.................. (0.41) (0.35) (0.42) (0.07) --
----------- ---------- ---------- ---------- ----------
Total Distributions.... (0.41) (0.35) (0.42) (0.07) --
----------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD................. $ 10.70 $ 10.33 $ 10.50 $ 9.35 $ 9.96
=========== ========== ========== ========== ==========
Total Return............ 7.69% 1.83% 16.98% (5.38%) (0.40%)(b)
RATIOS/SUPPLEMENTARY DA-
TA:
Net Assets at end of pe-
riod................... $11,856,187 $9,754,430 $6,758,241 $4,651,157 $3,216,233
Ratio of expenses to av-
erage net assets....... 1.36% 1.29% 1.57% 1.80% 2.03% (c)
Ratio of net investment
income to average net
assets................. 5.36% 5.32% 5.31% 5.27% 5.23% (c)
Portfolio turnover rate. 144% 492% 178% 159% 101%
</TABLE>
- -------
(a) Period from commencement of operations.
(b) Not Annualized
(c) Annualized
See notes to financial statements.
32
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund
<TABLE>
<CAPTION>
MID CAPITALIZATION FUND
-----------------------------------------------------------------------
FOR A SHARE OUTSTANDING SEPTEMBER 23,
THROUGHOUT YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 1993 TO
THE PERIOD DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995 1994 1993 (A)
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD......... $ 14.60 $ 12.44 $ 9.64 $ 10.17 $ 10.00
----------- ----------- ----------- ---------- ----------
INVESTMENT ACTIVITIES
Net investment income
(loss)................ (0.11) (0.09) (0.08) (0.07) (0.02)
Net realized and
unrealized gains
(losses) from
investments........... 1.90 2.25 2.88 (0.46) 0.19
----------- ----------- ----------- ---------- ----------
Total from Investment
Activities............ 1.79 2.16 2.80 (0.53) 0.17
----------- ----------- ----------- ---------- ----------
DISTRIBUTIONS
From net realized
gains................. (2.16) -- -- -- --
----------- ----------- ----------- ---------- ----------
Total Distributions.... (2.16) -- -- -- --
----------- ----------- ----------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD................. $ 14.23 $ 14.60 $ 12.44 $ 9.64 $ 10.17
=========== =========== =========== ========== ==========
Total Return............ 12.58% 17.36% 29.05% (5.21%) 1.70% (b)
RATIOS/SUPPLEMENTARY DA-
TA:
Net Assets at end of pe-
riod................... $31,059,179 $24,040,588 $14,977,130 $9,095,015 $3,893,346
Ratio of expenses to av-
erage net assets....... 1.53% 1.42% 1.62% 1.86% 2.11% (c)
Ratio of net investment
income to average net
assets................. (0.88%) (0.73%) (0.84%) (0.92%) (1.09%) (c)
Portfolio turnover rate. 55% 127% 44% 51% 45%
Average commission rate
paid(d)................ $ 0.0798 $ 0.0800 (e) -- -- --
</TABLE>
- -------
(a) Period from commencement of operations.
(b) Not Annualized
(c) Annualized
(d) Represents the total dollar amount of commissions paid on portfolio
security transactions divided by total number of shares purchased and sold
by the Fund for which commissions were charged.
(e) For the period 6/30/96 through 12/31/96.
See notes to financial statements.
33
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund
<TABLE>
<CAPTION>
SMALL CAPITALIZATION FUND
-----------------------------------------------------------------------------
FOR A SHARE OUTSTANDING SEPTEMBER 23,
THROUGHOUT YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 1993 TO
THE PERIOD DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995 1994 1993 (A)
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD.......... $ 18.20 $ 15.71 $ 11.58 $ 11.00 $ 10.00
----------- ----------- ----------- ---------- ----------
INVESTMENT ACTIVITIES
Net investment income
(loss)................. (0.20) (0.15) (0.15) (0.13) (0.03)
Net realized and
unrealized gains
(losses) from
investments............ (0.79) 4.79 4.28 0.71 1.03
----------- ----------- ----------- ---------- ----------
Total from Investment
Activities............. (0.99) 4.64 4.13 0.58 1.00
----------- ----------- ----------- ---------- ----------
DISTRIBUTIONS
From net realized gains. (0.09) (2.15) -- -- --
----------- ----------- ----------- ---------- ----------
Total Distributions..... (0.09) (2.15) -- -- --
----------- ----------- ----------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD.................. $ 17.12 $ 18.20 $ 15.71 $ 11.58 $ 11.00
=========== =========== =========== ========== ==========
Total Return............. (5.47%) 29.66% 35.66% 5.27% 10.00% (b)
RATIOS/SUPPLEMENTARY DA-
TA:
Net Assets at end of pe-
riod.................... $26,860,472 $24,495,224 $13,272,561 $7,476,444 $3,064,765
Ratio of expenses to av-
erage net assets........ 1.55% 1.40% 1.64% 1.98% 1.87% (c)
Ratio of net investment
income(loss) to average
net assets.............. (1.20%) (1.06%) (1.29%) (1.66%) (1.40%)(c)
Ratio of expenses to av-
erage net assets*....... 1.55% 1.40% 1.64% 1.98% 2.23% (c)
Ratio of net investment
income to average net
assets*................. (1.20%) (1.06%) (1.29%) (1.66%) (1.76%)(c)
Portfolio turnover rate.. 51% 60% 64% 39% 23%
Average commission rate
paid(d)................. $ 0.0800 $ 0.0799 (e) -- -- --
</TABLE>
- -------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not Annualized
(c) Annualized
(d) Represents the total dollar amount of commissions paid on portfolio
security transactions divided by total number of shares purchased and sold
by the Fund for which commissions were charged.
(e) For the period 6/30/96 through 12/31/96.
See notes to financial statements.
34
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund
<TABLE>
<CAPTION>
INTERNATIONAL DISCOVERY FUND
----------------------------------------------------------------------------
FOR A SHARE OUTSTANDING SEPTEMBER 23,
THROUGHOUT THE PERIOD YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 1993 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995 1994 1993 (A)
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD......... $ 12.18 $ 10.59 $ 9.65 $ 10.35 $ 10.00
----------- ----------- ----------- ---------- ----------
INVESTMENT ACTIVITIES
Net investment income
(loss)................ (0.06) (0.04) (0.03) (0.07) (0.03)
Net realized and
unrealized gains
(losses) from
investments........... 0.32 1.67 0.97 (0.63) 0.38
----------- ----------- ----------- ---------- ----------
Total from Investment
Activities............ 0.26 1.63 0.94 (0.70) 0.35
----------- ----------- ----------- ---------- ----------
DISTRIBUTIONS
In excess of net in-
vestment income....... -- (0.04) -- -- --
----------- ----------- ----------- ---------- ----------
Total Distributions.... -- (0.04) -- -- --
----------- ----------- ----------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD................. $ 12.44 $ 12.18 $ 10.59 $ 9.65 $ 10.35
=========== =========== =========== ========== ==========
Total Return............ 2.13% 15.41% 9.74% (6.76%) 3.50% (b)
RATIOS/SUPPLEMENTARY DA-
TA:
Net Assets at end of pe-
riod................... $18,784,361 $17,000,747 $11,645,200 $9,537,019 $6,334,523
Ratio of expenses to av-
erage net assets....... 1.90% 2.00% 2.38% 2.34% 2.51% (c)
Ratio of net investment
income(loss) to average
net assets............. (0.46%) (0.35%) (0.39%) (1.13%) (1.38%)(c)
Portfolio turnover rate. 34% 65% 86% 87% 13%
Average commission rate
paid(d)................ $ 0.0264 $ 0.0316 (e) -- -- --
</TABLE>
- -------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not Annualized
(c) Annualized
(d) Represents the total dollar amount of commissions paid on portfolio
security transactions divided by total number of shares purchased and sold
by the Fund for which commissions were charged.
(e) For the period 6/30/96 through 12/31/96.
See notes to financial statements.
35
<PAGE>
The Parkstone Advantage Fund
. Mid Capitalization Fund
. Small Capitalization Fund
. International Discovery Fund
. Bond Fund
. Prime Obligations Fund
Not FDIC Insured
This report is submitted for the general information of the shareholders of the
Funds. The report is not authorized for distribution to prospective investors in
the Funds unless preceded or accompanied by an effective prospectus, which
contains details concerning the sales charges and other pertinent information.
2/98
