<PAGE>
[LOGO OF THE PARKSTONE ADVANTAGE APPEARS HERE]
[ARTWORK APPEARS HERE]
Annual Report
December 31, 1998
Not FDIC Insured
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
<TABLE>
<S> <C>
Message From Your Chairman.................................................. 2
Message From Your Investment Adviser........................................ 3
Portfolio Performance Discussion............................................ 5
Report of Independent Auditors.............................................. 9
Statements of Assets and Liabilities........................................ 10
Statements of Operations.................................................... 11
Statements of Changes in Net Assets......................................... 12
Statements of Cash Flows.................................................... 14
Schedules of Portfolio Investments.......................................... 15
Notes to Financial Statements............................................... 25
Financial Highlights........................................................ 33
</TABLE>
1
<PAGE>
Message From Your Chairman
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The Parkstone Advantage Fund December 31, 1998
Dear Shareholders:
I am pleased to be writing to you on behalf of your new Board of Trustees who
are listed on the inside back cover of this report. This report summarizes
Fund performance for the Parkstone Advantage Fund for the year ended December
31, 1998.
Volatility in the Marketplace
During this past year, the fixed income and equity markets experienced extreme
levels of volatility. After declining in July and August, the markets re-
bounded throughout the fall.
Despite the volatility of the financial markets, the Fund's long-term posi-
tions were strengthened. The key to this accomplishment has been the experi-
ence of our investment portfolio management teams. With the maturity to see
the market's dip as a short-lived buying opportunity, our portfolio managers
capitalized on the situation.
National City Investment Management Company Named Adviser
The merger of National City and First of America Bank was completed on March
31, 1998. With this merger, National City Investment Management Company (IMC)
was formed, and on August 5, 1998, was named adviser to the Parkstone Advan-
tage Fund and the Parkstone Group of Funds. IMC also serves as adviser to the
Armada Funds.
The IMC team, which includes many former First of America managers, uses a
disciplined style-specific investment approach, focusing on diversification
and risk management.
If you have any questions about the Parkstone Advantage Fund or require any
assistance, please do not hesitate to call us at 1-800-355-4555. Best wishes
to you in 1999, and thank you for your continued investment in the Parkstone
Advantage Fund.
Sincerely,
/s/ Robert D. Neary
Robert D. Neary
Chairman
[LOGO OF THE PARKSTONE ADVANTAGE APPEARS HERE]
Notice to Shareholders
Please be advised of the following facts about mutual funds:
. Your principal is at risk.
. Not an obligation of First of America or National
City.
. No FDIC coverage.
2
<PAGE>
Message From Your Investment Adviser
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
Dear Shareholders:
Very simply, the financial markets were more volatile than they have been in
decades in the year ended December 31, 1998. When the period opened, Asian
markets were in turmoil--and by mid-summer, aftershocks reached our shores. At
home, as the summer wore on, signs that our economy's growth was moderating
began to appear. After years of strong and stable growth, investors were
unnerved. Anxiety mounted. Then, in August, it was evident that the Russian
economy was in far worse shape than previously suspected.
The Air Pocket in August
While the fate of Russia has, in fact, only minimal impact on the global econo-
my, the psychological impact was far-reaching. When combined with continuing
weakness in Asia, instability in Latin America and the potential implosion of
several highly leveraged hedge funds, this was a potent combination. Investors
ran for cover. Liquidity vanished. Markets worldwide dropped significantly--and
no region was spared. Perceived to be a safe haven, U.S. Treasury securities
surged. But, in markets abroad and here at home, virtually all other fixed-in-
come and equity securities suffered to some degree.
Many of the situations that triggered the decline had eased somewhat by late
September. In Southeast Asia, governments were making progress towards struc-
tural, economic reforms. In an effort to pull its economy out of the doldrums,
the Japanese were moving toward real banking reform. In Latin America, the
Brazilians were moving toward an austerity budget with the help of the Interna-
tional Monetary Fund, to be funded by the United States. At home, a group of
investment banks, with the help of monetary authorities, provided Long Term
Capital Management, a multi-billion-dollar hedge fund, with the capital to
gradually unwind its positions. Finally, and perhaps most importantly, citing a
desire to cushion U.S. economic growth against weakness in foreign economies
and its recognition that financial conditions had become less accommodating to
growth domestically, the Federal Reserve Board made the first of three cuts in
short-term interest rates.
A Virtual Recovery?
With these indications that problems were being addressed, investor confidence
began returning and liquidity began to trickle back into the marketplace. More-
over, as the environment eased, investors noticed signs of the U.S. economy's
underlying strength and impressive resilience. The rate of real growth in the
second quarter--despite a reduction in inventories and a large decrease in net
exports--was 1.8%. The rate of growth in the third quarter was 3.9%. "Real fi-
nal sales" (Gross Domestic Product less inventories) were no longer increasing
at the phenomenal pace seen in the past, but they were still advancing. Busi-
ness investment was also increasing, just not at the torrid pace of the past
year. In short, our economy was still growing, and globally, progress was being
made.
Seeing this, market sentiment grew more positive. By October, stocks were re-
covering, and the move upward was a powerful one. This time, too, the advance
was not as narrow as it had been earlier in the year. Smaller and mid-capital-
ization issues received some long-overdue attention. By the period's end, many
of the biggest and best-known names had regained most, if not all, of the
ground lost. Many smaller and mid-cap stocks were well on their way, also.
Clearly, for the moment at least, stock investors seem willing to look beyond
whatever economic problems remain unresolved in the increasingly uncertain po-
litical environment both at home and abroad.
While the climate also improved in the fixed-income markets, investors were
more wary, and the rebound was slower. Sentiment still favored high-quality,
intermediate-term securities. Nonetheless, as the year drew to a close, liquid-
ity increased in the marketplace. Clearly, confidence once again reigned in the
stock market and it was on the comeback trail in the fixed-income arena as
well.
A Realistic Assessment
Much of the optimism the recovery indicates is justified. Historically, the
type of low interest rate, low inflation, stable growth environment we see
ahead has proved to be very favorable for the financial markets. In the short-
term, however, there is reason
3
<PAGE>
Message From Your Investment Adviser
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The Parkstone Advantage Fund December 31, 1998
for caution. Very simply, the markets hate uncertainty more than anything--and
without question, the political environment both at home and abroad is some-
what uncertain at the moment. Abroad, Iraq continues to bedevil the world com-
munity. Domestically, heated rhetoric about President Clinton's future lies
ahead of us.
Both situations are distracting attention from other problems globally and do-
mestically. The Russian, Brazilian and Japanese economies are still weak. Sin-
gapore recently reported a large decline in its GDP. At home, we see a decel-
eration in the growth of our economy. While a deceleration is very different
than a decline, corporate profits are expected to drop off in the coming year.
Against this backdrop, the sheer strength and speed of the recovery in the eq-
uities market over the course of the past several months has been very sur-
prising. While the news and the environment have improved significantly, we
are not out of the woods yet--and the markets may be volatile in the months
ahead as we work our way out. On the political front, it is unlikely the situ-
ations in Iraq or in Washington will be resolved quickly. Then, again, things
in politics can change in the wink of an eye. Regarding the global economic
situation, much will depend on the willingness of governments abroad to carry
out promised reforms. As a result, in the months ahead, we will be monitoring
the speed and depth of the follow-through very closely, as well as events in
Washington.
Sincerely,
/s/ Don Ross
Don Ross
Investment Adviser
The Parkstone Advantage Fund
4
<PAGE>
Portfolio Performance Discussion
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The Parkstone Advantage Fund December 31, 1998
Bond Fund
After a relatively quiet first half, the bond market grew extremely volatile
in the second half of the year ended December 31, 1998. Worries about turmoil
in Asia, trouble in Russia and slowing growth at home peaked in August--and
investors fled. Liquidity evaporated. By mid-August, shorter-term U.S. Trea-
sury securities were virtually the only place to be. By September, however,
many of the situations that had so troubled investors had eased, and the envi-
ronment improved significantly. Nonetheless, while far more optimistic than in
August, sentiment continued to favor high-quality securities throughout the
fall.
Given its conservative positioning and focus on high-quality issues, the Fund,
we are pleased to report, held its own in the tumultuous environment of the
year. Positioned some 5% longer on the yield curve than the market benchmark,
the Fund benefited as interest rates dropped. Also, while not overweighted in
Treasuries, the Fund did hold approximately 25% of its assets in these securi-
ties, which were among the best performers over the course of the year. As a
result, in a year that ultimately proved to be a very challenging one, we are
pleased to report that the Fund produced a total return of 6.71%. The Fund's
benchmark, the Salomon Brothers Broad Index,/1/ produced a total return of
8.7% for the same period.
Capitalizing on the Environment
Historically, major shifts in sentiment have created opportunities, and that
was the case this time as well. As all eyes focused on the Treasury sector,
other issues grew more and more attractive. In recent weeks, we have moved to
capitalize on several opportunities and have added to our positions in the
corporate and mortgage-backed sectors. Moreover, given the environment of the
past several months, there is a good deal of supply in the pipeline, particu-
larly in the corporate arena. We expect that many of these securities, when
issued, will present attractive opportunities. Nonetheless, the markets are
still somewhat nervous, and the road ahead could be rocky. Until this changes,
we expect to maintain the Fund's conservative positioning.
As of December 31, 1998, 25% of the Fund's net assets were invested in U.S.
Treasury securities, 33% in mortgage-backed securities, 26% in corporate bonds
and 11% in asset-backed securities, with the remainder invested in cash equiv-
alents. As of the same date, the average maturity of the portfolio's holdings
was 8.0 years; the average credit quality, AAA.*
- -------
*The Portfolio's composition is subject to change.
Bond Fund
Average Annual Total Return
As of December 31, 1998
- -----------------------------
Since One Five
Inception Year Year
(9/23/93)
- -----------------------------
4.94% 6.71% 5.30%
- -----------------------------
[LINE GRAPH APPEARS HERE]
- --------------------------------------------------------------------------------
Date Bond Fund Salomon Brothers Broad Index
---- --------- ----------------------------
$10,000 $10,000
Dec-93 $9,960 $10,010
Dec-94 $9,424 $9,725
Dec-95 $11,024 $11,531
Dec-96 $11,222 $11,948
Dec-97 $12,085 $12,709
Dec-98 $12,896 $13,815
/1/ The Bond Fund's performance is compared to the Salomon Brothers Broad Index,
which represents the performance of 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 predictive 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 the
original cost.
5
<PAGE>
Portfolio Performance Discussion
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The Parkstone Advantage Fund December 31, 1998
Mid Capitalization Fund
The year ended December 31, 1998, was a tumultuous one in the stock markets.
Throughout the first half, investors' attention was focused on liquidity, and
as a result, few stocks other than the largest and best-known names shone. In
August, investors ran for the exits as events unfolded in Asia, Russia and
Latin America. While all stocks suffered, small- and mid-cap stocks suffered
the steepest declines. From its peak on July 20 through the bottom on October
8, the S&P MidCap 400 Index/1/ fell 27%.
After mid-October, however, equities rebounded strongly as action by the Fed-
eral Reserve (the Fed) to ease interest rates, potential reform of the Japanese
banking system, and the promise of the International Monetary Fund aid to Latin
America calmed investors' fears. Moreover, this time, the advance was more
broad-based, and mid-cap stocks bounced back strongly. Many of the Fund's hold-
ings performed extremely well. Over the course of the fourth quarter, Sanmina
Corp. (2.2% of the Fund's net assets) gained 122%. Office Depot (2.3%),
Comverse Technologies, Inc. (1.5%) and Brightpoint (0.9%) were also standout
performers, all gaining over 62% in the same time frame.* As a result, while
the year ended December 31, 1998, was a challenging one, it was also, in the
end, a good one for our portfolio. For the 12-month period, the Fund posted a
total return of 10.33%, compared to its benchmark, the S&P MidCap 400 Index,
which returned 18.25%.
Earnings Are Key
Clearly, investors' fears have eased, and market sentiment has again grown pos-
itive, particularly with regard to smaller and mid-capitalization stocks. At
the same time, however, it is clear that our economy is slowing. Consequently,
earnings expectations have been lowered--and having been lowered, it is appar-
ent there will be no tolerance for misses or near misses. As a result, the mar-
kets could be somewhat choppy in the months ahead.
Nonetheless, we believe it may be a very good period for smaller and mid-cap
stocks. Having been out of favor throughout much of the market's rise over the
past several years and battered badly in August and September, the valuations
of these stocks are outstanding relative to larger capitalization issues. From
this viewpoint alone, we believe they are in a prime position to take over the
leadership of the market. When they will, of course, is impossible to predict.
Nevertheless, we are optimistic about the Fund's prospects in the months ahead.
As of December 31, 1998, the top five equity holdings in the Fund were Sungard
Data Systems (2.6% of the Fund's net assets), HCR Manor Care Inc. (2.5%), Wat-
son Pharmaceutical (2.4%), Century Telephone Enterprises Inc. (2.3%) and Cintas
Corp. (2.3%).*
- -------
* The Fund's composition is subject to change.
Mid Capitalization Fund
Average Annual Total Return
As of December 31, 1998
- ----------------------------
Since One Five
Inception Year Year
(9/23/93)
- ----------------------------
11.95% 10.33% 12.26%
- ----------------------------
[LINE GRAPH APPEARS HERE]
Date Mid Capitalization Fund S&P Mid Cap 400 Index
---- ----------------------- ---------------------
$10,000 $10,000
Dec-93 $10,170 $11,108
Dec-94 $9,640 $10,710
Dec-95 $12,440 $14,095
Dec-96 $14,600 $16,801
Dec-97 $16,437 $22,219
Dec-98 $18,134 $26,274
/1/ The Mid Capitalization Fund's performance is compared to the Standard &
Poor's MidCap 400 Index to better 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 predictive 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 the original cost.
6
<PAGE>
Portfolio Performance Discussion
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The Parkstone Advantage Fund December 31, 1998
Small Capitalization Fund+
The year ended December 31, 1998, was an extremely volatile one in the small-
cap markets. Throughout the first half of the period, as financial quakes
rocked Asian markets, investors sought liquidity and favored larger capital-
ization issues. In the second half of the period, the aftershocks hit our
shores. Concerns about the stability of the Russian economy and our own domes-
tic political situation added even more uncertainty to the mix. Anxiety
skyrocketed, and investors fled to quality. As a result, all but the most de-
fensive stocks saw declines in August and September--and once again, smaller
cap issues, particularly smaller cap growth issues, took the hardest hit.
By October, investors' fears--while not completely gone--had eased. Small-cap
stocks, particularly small-cap growth stocks, which were at their lowest valu-
ations on a relative basis in decades, stormed back as the market recovered.
Moreover, just as they had experienced the sharpest declines, they made some
of the most impressive gains. Despite substantial gains in the fourth quarter,
however, the year overall was a disappointing one for small-cap investors. For
the twelve months ended December 31, 1998, the industry benchmark, the Russell
2000 Stock Index,/1/ posted a total return of -2.55% compared to -2.51% for
the Fund.
Growth in a Slowing Economy
Going forward, we are optimistic about the prospects for small-cap stocks in
general, and the Fund's holdings in particular. Despite the recent rally, val-
uations in the sector are still astonishingly attractive--in fact, many NASDAQ
issues have yet to regain their 1996 highs. In addition, with their lower val-
uations and higher growth rates than the larger cap issues, these stocks are
likely to become more and more attractive to investors as our economy slows in
the coming months.
Given the rather uncertain environment, however, the market may continue to be
somewhat volatile in the months ahead. Consequently, in an effort to minimize
the impact of market swings on the Fund, we have capitalized on a number of
extremely attractive situations and increased the number of names in the port-
folio in recent weeks. At the same time, however, we will continue to subject
all stocks considered to increased scrutiny--particularly with regard to valu-
ation. As a result, while the road ahead may be bumpy, we believe the Fund is
extremely well positioned for the ride.
As of December 31, 1998, the top five holdings in the Fund were Annuity & Life
RE (2.4% of the Fund's net assets), American Bank Note Holographics (2.0%),
Serologicals Corp. (2.0%), Medquist Inc. (1.9%) and Insight Enterprises
(1.9%).*
- -------
+ Small-capitalization funds typically carry additional risks, since smaller
companies general have a higher risk of failure and historically, their
stocks have experienced a greater degree of market volatility than stocks on
average.
*The Fund's composition is subject to change.
Small Capitalization Fund
Average Annual Total Return
As of December 31, 1998
- -----------------------------
Since One Five
Inception Year Year
(9/23/93)
- -----------------------------
12.69% -2.51% 11.28%
- -----------------------------
[LINE GRAPH APPEARS HERE]
Date Small Capitalization Fund Russell 2000 Index
---- ------------------------- ------------------
$10,000 $10,000
Dec-93 $11,000 $11,092
Dec-94 $11,580 $10,890
Dec-95 $15,710 $13,987
Dec-96 $20,370 $16,299
Dec-97 $19,256 $19,943
Dec-98 $18,772 $19,434
/1/ The Small Capitalization 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 invest-
ment 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 predictive 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 the original cost.
7
<PAGE>
Portfolio Performance Discussion
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The Parkstone Advantage Fund December 31, 1998
International Discovery Fund+
The defining moment for markets worldwide during the year ended December 31,
1998, came in August when the Russian government defaulted on its outstanding
debt. While the default itself had little impact on the global economy, the
psychological impact was far-reaching. Unnerved by events in Asia earlier in
the year and by stocks hitting prices far in excess of anyone's wildest expec-
tations of future discounted profits, investors worldwide ran for the exits.
The implosion of several well-known hedge funds that had made highly leveraged
bets--which, as events played out, did not pay off--intensified anxiety. Li-
quidity evaporated, and prices plummeted. No region was spared.
The situation had improved somewhat by early fall due to events in three major
markets. In Japan, the government took several steps toward structural reform.
In Latin America, the Brazilian government agreed to austerity measures with
the United States, several developed market nations and the International Mon-
etary Fund. In the United States, the Federal Reserve lowered interest rates
to provide liquidity and restore confidence. Consequently, many markets around
the world rebounded in the final quarter and ended the year on a strong note.
Banks and property companies in Asian markets rose the most. However, due to
our concerns over the financial strength of these companies, we avoided these
issues. For the year ended December 31, 1998, the Fund generated a total re-
turn of 11.61%, versus its benchmark, the MSCI EAFE Index,/1/ which posted a
return of 20.00%.
Quality Is Key
Given the circumstances and the environment, we feel that caution was and con-
tinues to be well warranted. While we are optimistic, it is clear that many of
the problems that roiled the markets in 1998 are not going to be resolved
quickly. While reforms have been promised in Japan, what form they will take
and how soon they will be instituted is still in question. In Brazil, progress
is also somewhat slower than the markets had originally anticipated.
As we noted earlier, the markets in Southeast Asia are showing signs of life.
Certainly, in the long run, renewed economic growth will create opportunity.
In the short term, however, due to quality considerations, the Fund may remain
somewhat underweighted in this region. In Europe, the recent trend toward con-
solidation continues. The Fund remains heavily weighted in this region.
As of December 31, 1998, the top five holdings in the Fund were Takeda Chemi-
cal Industries (3.9% of the Fund's net assets), Nokia Corp. (3.4%), Glaxo
Wellcome PLC (3.1%), Altran Technologies (3.2%) and Wolters Kluwer (2.6%).*
- -------
+ International investing is subject to certain risk factors such as currency
exchange-rate volatility, possible political, social or economic instabili-
ty, foreign taxation and/or differences in accounting and other financial
standards.
* The Fund's composition is subject to change.
International Discovery Fund
Average Annual Total Return
As of December 31, 1998
- -----------------------------
Since One Five
Inception Year Year
(9/23/93)
- -----------------------------
6.49% 11.61% 6.12%
- -----------------------------
[LINE GRAPH APPEARS HERE]
Date International Discovery Fund MSCI EAFE Index
---- ---------------------------- ---------------
$10,000 $10,000
Dec-93 $10,350 $9,037
Dec-94 $9,650 $9,740
Dec-95 $10,590 $10,832
Dec-96 $12,222 $11,486
Dec-97 $12,483 $11,723
Dec-98 $13,932 $14,068
/1/ The International Discovery Fund's performance is compared to the Morgan
Stanley Capital International Europe, Australia and Far East (EAFE) Index,
which represents the performance of the major stock markets in those re-
gions. The index is unmanaged and does not reflect the deduction of fees as-
sociated with a mutual fund, such as investment management and fund account-
ing fees. The performance of the Parkstone Advantage International Discovery
Fund reflects the deduction of fees for these value-added services. Past
performance is not predictive 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 the original cost.
8
<PAGE>
Report of Independent Auditors
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The Parkstone Advantage Fund December 31, 1998
The Board of Trustees and Shareholders
The Parkstone Advantage Fund
We have audited the accompanying statements of assets and liabilities, includ-
ing the schedules of portfolio investments, of The Parkstone Advantage Fund
(comprised of Bond Fund, Mid Capitalization Fund, Small Capitalization Fund,
and International Discovery Fund) (collectively, the "Fund") as of December
31, 1998, and the related statements of operations for the year then ended,
statements of cash flows for Mid Capitalization Fund and Small Capitalization
Fund for the year then ended, statements of changes in net assets for each of
the two years in the period then ended, and financial highlights for each of
the periods indicated therein. These financial statements and financial high-
lights are the responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our 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, 1998, 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 our 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 the
Fund as of December 31, 1998, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, the cash flows for Mid Capitalization Fund and Small Capitaliza-
tion Fund for the year then ended and its financial highlights for each of the
periods indicated therein, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Columbus, Ohio
February 4, 1999
9
<PAGE>
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
<TABLE>
<CAPTION>
Mid Small International
Bond Capitalization Capitalization Discovery
Fund Fund Fund Fund
----------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Assets:
Investments in
securities, at value
(Cost $12,053,189;
$23,783,659;
$20,550,515 and
$13,754,069,
respectively).......... $12,215,544 $30,972,168 $24,648,495 $18,368,577
Repurchase agreements,
at cost................ -- 7,259,425 3,334,500 --
----------- ----------- ----------- -----------
Total Investments....... 12,215,544 38,231,593 27,982,995 18,368,577
Foreign currency (Cost
$0; $0; $0 and $1,463,
respectively).......... -- -- -- 1,536
Interest and dividends
receivable............. 134,149 16,617 5,409 12,071
Reclaim receivable...... -- -- -- 15,420
Receivable for
investments sold....... -- -- 871,499 --
Prepaid expenses and
other assets........... 612 2,451 2,026 2,096
----------- ----------- ----------- -----------
Total Assets............ 12,350,305 38,250,661 28,861,929 18,399,700
----------- ----------- ----------- -----------
Liabilities:
Cash overdraft.......... -- -- -- 1,648
Payable for return of
collateral received for
securities on loan..... -- 7,259,425 3,334,500 --
Payable for investments
purchased.............. -- 1,900,982 3,055,255 --
Accrued expenses and
other payables:
Investment advisory
fees................. 250 773 596 627
Administration fees... 68 155 119 100
Other................. 12,297 23,699 17,309 26,300
----------- ----------- ----------- -----------
Total Liabilities....... 12,615 9,185,034 6,407,779 28,675
----------- ----------- ----------- -----------
Net Assets:
Capital................. 11,460,769 20,673,707 17,696,832 13,326,173
Undistributed net
investment income
(loss)................. 627,425 -- -- (56,300)
Net unrealized
appreciation
(depreciation) from
investments and
translation of assets
and liabilities in
foreign currencies..... 162,355 7,188,509 4,097,980 4,614,114
Undistributed net
realized gain (loss)
from investment and
foreign currency
transactions........... 87,141 1,203,411 659,338 487,038
----------- ----------- ----------- -----------
Net Assets.............. $12,337,690 $29,065,627 $22,454,150 $18,371,025
=========== =========== =========== ===========
Outstanding units of
beneficial interest
(shares)............... 1,129,989 1,851,563 1,345,509 1,328,302
=========== =========== =========== ===========
Net asset value--
offering and redemption
price per share........ $ 10.92 $ 15.70 $ 16.69 $ 13.83
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
10
<PAGE>
Statements of Operations
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Mid Small International
Bond Capitalization Capitalization Discovery
Fund Fund Fund Fund
-------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income.......... $770,831 $ 19,580 $ 30,119 $ 1,040
Dividend income.......... 25,818 122,740 57,958 282,339
Securities lending
income.................. -- 14,729 6,531 --
Foreign tax withholding.. -- -- -- (24,100)
-------- ---------- ---------- ----------
Total Income........... 796,649 157,049 94,608 259,279
-------- ---------- ---------- ----------
Expenses:
Investment advisory fees. 91,640 295,464 241,606 233,750
Administration fees...... 24,768 59,093 48,322 37,400
Custodian and accounting
fees.................... 20,738 22,647 21,682 57,196
Legal and audit fees..... 17,856 44,228 36,853 30,099
Organization costs....... 2,085 1,426 1,410 895
Registration and filing
fees.................... 301 1,631 1,631 295
Trustees' fees and
expenses................ 2,473 6,442 5,134 4,645
Transfer agent fees...... 18,392 18,282 15,428 18,392
Printing costs........... 7,635 15,550 13,899 9,004
Other.................... 234 464 537 3,427
-------- ---------- ---------- ----------
Total Expenses......... 186,122 465,227 386,502 395,103
-------- ---------- ---------- ----------
Expenses paid by the
Administrator........... (8,355) (19,932) (16,299) (12,615)
-------- ---------- ---------- ----------
Net Expenses............. 177,767 445,295 370,203 382,488
-------- ---------- ---------- ----------
Net Investment Income
(Loss).................. 618,882 (288,246) (275,595) (123,209)
-------- ---------- ---------- ----------
Realized/Unrealized Gain
(Loss) From Investments
and Foreign Currencies:
Net realized gain (loss)
from investment and
foreign currency
transactions............ 259,379 1,267,121 1,353,803 451,159
Net change in unrealized
appreciation
(depreciation) from
investments and
translation of assets
and liabilities in
foreign currencies...... (47,262) 1,838,391 (1,787,796) 1,691,839
-------- ---------- ---------- ----------
Net realized/unrealized
gain (loss) from
investments and foreign
currencies.............. 212,117 3,105,512 (433,993) 2,142,998
-------- ---------- ---------- ----------
Change in net assets
resulting from
operations.............. $830,999 $2,817,266 $ (709,588) $2,019,789
======== ========== ========== ==========
</TABLE>
See notes to financial statements.
11
<PAGE>
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund
<TABLE>
<CAPTION>
Bond Fund Mid Capitalization Fund
------------------------ ------------------------
Year Ended December 31, Year Ended December 31,
------------------------ ------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income
(loss)................... $ 618,882 $ 569,913 $ (288,246) $ (244,850)
Net realized gain (loss)
from investment
transactions............. 259,379 63,027 1,267,121 21,346
Net change in unrealized
appreciation
(depreciation) from
investments.............. (47,262) 170,944 1,838,391 3,644,864
----------- ----------- ----------- -----------
Change in net assets
resulting from operations. 830,999 803,884 2,817,266 3,421,360
----------- ----------- ----------- -----------
Distributions To
Shareholders:
From net investment
income................... (580,827) (416,938) -- --
From net realized gains
from investment
transactions............. -- -- -- (4,029,590)
In excess of net realized
gains from investment
transactions............. -- -- -- (37,172)
----------- ----------- ----------- -----------
Change in net assets from
shareholder distributions. (580,827) (416,938) -- (4,066,762)
----------- ----------- ----------- -----------
Capital Transactions:
Proceeds from shares
issued................... 2,788,064 2,700,591 3,568,570 9,574,756
Dividends reinvested...... 579,829 416,938 -- 4,066,762
Cost of shares redeemed... (3,136,562) (1,402,718) (8,379,388) (5,977,525)
----------- ----------- ----------- -----------
Change in net assets from
shares transactions....... 231,331 1,714,811 (4,810,818) 7,663,993
----------- ----------- ----------- -----------
Change in net assets....... 481,503 2,101,757 (1,993,552) 7,018,591
Net Assets:
Beginning of period....... 11,856,187 9,754,430 31,059,179 24,040,588
----------- ----------- ----------- -----------
End of period............. $12,337,690 $11,856,187 $29,065,627 $31,059,179
=========== =========== =========== ===========
Capital Share Transactions:
Issued.................... 256,482 257,089 238,482 667,987
Reinvested................ 53,688 40,323 -- 291,943
Redeemed.................. (287,797) (133,754) (570,247) (423,731)
----------- ----------- ----------- -----------
Change in shares.......... 22,373 163,658 (331,765) 536,199
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
12
<PAGE>
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund
<TABLE>
<CAPTION>
Small Capitalization International Discovery
Fund Fund
------------------------ ------------------------
Year Ended December 31, Year Ended December 31,
------------------------ ------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income
(loss)................... $ (275,595) $ (307,909) $ (123,209) $ (87,819)
Net realized gain (loss)
from investment
transactions and foreign
currency transactions.... 1,353,803 (687,260) 451,159 377,500
Net change in unrealized
appreciation
(depreciation) from
investments and
translation of assets and
liabilities in foreign
currencies............... (1,787,796) (135,425) 1,691,839 (1,551)
----------- ----------- ----------- -----------
Change in net assets re-
sulting from operations... (709,588) (1,130,594) 2,019,789 288,130
----------- ----------- ----------- -----------
Distributions to Sharehold-
ers:
From net realized gains
from investment transac-
tions.................... -- (139,967) (80,360) --
----------- ----------- ----------- -----------
Change in net assets from
shareholder distributions. -- (139,967) (80,360) --
----------- ----------- ----------- -----------
Capital Transactions:
Proceeds from shares is-
sued..................... 3,284,718 9,004,859 1,560,022 5,616,329
Dividends reinvested...... -- 139,967 80,171 --
Cost of shares redeemed... (6,981,452) (5,509,017) (3,992,958) (4,120,845)
----------- ----------- ----------- -----------
Change in net assets from
shares transactions....... (3,696,734) 3,635,809 (2,352,765) 1,495,484
----------- ----------- ----------- -----------
Change in net assets....... (4,406,322) 2,365,248 (413,336) 1,783,614
Net Assets:
Beginning of period....... 26,860,472 24,495,224 18,784,361 17,000,747
----------- ----------- ----------- -----------
End of period............. $22,454,150 $26,860,472 $18,371,025 $18,784,361
=========== =========== =========== ===========
Capital Share Transactions:
Issued.................... 197,881 547,940 118,297 443,342
Reinvested................ -- 7,665 5,614 --
Redeemed.................. (421,252) (332,723) (306,047) (328,257)
----------- ----------- ----------- -----------
Change in shares.......... (223,371) 222,882 (182,136) 115,085
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
13
<PAGE>
Statements of Cash Flows
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Mid Small
Capitalization Capitalization
Fund Fund
-------------- --------------
<S> <C> <C>
Cash Flows from Operating Activities:
Total net investment income (loss)........... $ (288,246) $ (275,595)
Adjustments to reconcile net investment income
(loss)
to net cash provided (used) by operating
activities:
Purchases of investments..................... (110,460,452) (155,376,207)
Proceeds from disposition of investment secu-
rities...................................... 115,580,019 159,373,023
Decrease (increase) in investments purchased
with cash collateral from securities
lending..................................... (7,259,425) (3,334,500)
Decrease (increase) in dividends and interest
receivable.................................. (2,238) 2,812
Decrease (increase) in other assets.......... (809) 192
Increase (decrease) in payable for return of
collateral received from securities lending. 7,259,425 3,334,500
Increase (decrease) in accrued expenses...... (5,970) (9,709)
Net amortization/accretion from investments.. (11,516) (17,937)
------------- -------------
Net cash provided (used) by operating activ-
ities...................................... 4,810,788 3,696,579
------------- -------------
Cash Flows from Financing Activities:
Proceeds from shares issued.................. 3,568,570 3,284,718
Payment of shares redeemed................... (8,379,388) (6,981,452)
Cash distributions paid...................... -- --
------------- -------------
Net cash provided (used) by financing activ-
ities...................................... (4,810,818) (3,696,734)
Cash:
Beginning balance............................ 30 155
------------- -------------
Ending balance............................... $ -- $ --
============= =============
</TABLE>
See notes to financial statements.
14
<PAGE>
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
Bond Fund
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
---------- ----------------------------------------------------- -----------
<C> <S> <C>
Asset Backed Securities (11.4%):
$ 90,000 Comed Transitional Funding Trust, Series 1998-1,
Class A3, 5.34%, 3/25/04............................ $ 90,128
315,000 Discover Card Master Trust, 6.05%, 8/18/08........... 323,480
370,000 General Electric Capital Mortgage Services, Inc.,
6.18%, 6/25/15(c)................................... 371,388
147,158 Banc One Auto Grantor Trust, Series A, 6.27%,
11/20/03............................................ 149,015
170,000 Prudential Securities Secured Financing Corp., 6.35%,
9/15/07............................................. 172,770
100,000 Saxon Asset Securities Trust, Series 98-4, Class Af4,
6.40%, 5/25/26(c)................................... 101,085
117,888 Residential Accredit Loans, Inc., Series 1998-Qs14,
Class A2, 6.5%, 10/25/28(c)......................... 117,704
83,339 Green Tree Financial Corp., 6.90%, 4/15/19........... 84,210
-----------
Total Asset Backed Securities 1,409,780
-----------
Mortgage-backed Securities (4.1%):
300,000 Sequoia Trust, Series 3, Class A3,
6.35%, 9/25/25(c)................................... 299,437
175,000 PNC Mortgage Securities Corp., Series 1998-7, Class
1a5, 6.75%, 9/25/28(c).............................. 177,270
23,140 Structured Asset Securities Co., 7.50%, 8/25/26...... 23,221
-----------
Total Mortgage-backed Securities 499,928
-----------
Corporate Bonds (25.7%):
Consumer Goods & Services (1.2%):
150,000 American Greetings, 6.10%, 8/1/28.................... 154,125
-----------
Financial Services (4.9%):
100,000 Ford Motor Credit, 6.00%, 1/14/03.................... 101,875
40,000 Associates Corporation, 6.25%, 11/1/08............... 41,650
75,000 Simon Debartolo Property Group, Inc., 6.63%,
6/15/03............................................. 74,063
250,000 Countrywide Home, 6.84%, 10/22/04.................... 257,187
125,000 General Electric Capital Corp., 7.62%, 5/8/00........ 129,063
-----------
603,838
-----------
Food & Household Products (2.8%):
350,000 Nabisco, Inc., 6.38%, 2/1/35......................... 347,813
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
---------- ------------------------------------------------------ -----------
<C> <S> <C>
Corporate Bonds, continued:
Industrials (12.2%):
$ 95,000 Monsanto Co., 5.38%, 12/1/01.......................... $ 94,644
125,000 Raytheon Co., 5.70%, 11/1/03.......................... 124,844
120,000 Lubrizol Corp., 5.88%, 12/1/08........................ 120,000
240,000 Akzo Noble Inc., 6.00%, 11/15/03(b)................... 241,499
350,000 Computer Assoc. International, 6.25%, 4/15/03......... 348,687
200,000 Armstrong World, 6.50%, 8/15/05....................... 204,000
95,000 Monsanto Co., 6.50%, 12/1/18.......................... 95,238
250,000 Times Mirror Co., 6.61%, 9/15/27...................... 261,392
-----------
1,490,304
-----------
Oil & Gas (1.2%):
140,000 Amoco Canada, 6.75%, 2/15/05.......................... 150,850
-----------
Resorts & Entertainment (1.4%):
150,000 Time Warner Entertainment, 9.63%, 5/1/02.............. 168,188
-----------
Telecommunications (2.0%):
100,000 Sprint Capital Corp., 5.70%, 11/15/03................. 100,000
145,000 Sprint Capital Corp., 6.88%, 11/15/28................. 151,525
-----------
251,525
-----------
Total Corporate Bonds 3,166,643
-----------
Government Obligations (54.0%):
Mortgage Pass Thrus (29.0%):
Federal National Mortgage Assoc. (22.5%):
398,431 6.00%, 8/1/28......................................... 393,698
249,032 6.00%, 8/1/28......................................... 246,073
142,513 6.50%, 11/1/27........................................ 143,536
498,254 6.50%, 8/1/28......................................... 501,832
477,456 6.50%, 8/1/28......................................... 480,884
560,000 6.50%, 11/1/28........................................ 564,021
180,000 6.50%, 11/30/28....................................... 181,292
270,164 7.00%, 9/1/27......................................... 275,818
-----------
2,787,154
-----------
Government National Mortgage Assoc. (6.5%):
197,086 6.50%, 9/15/23........................................ 199,240
588,692 7.50%, 8/15/25........................................ 607,824
-----------
807,064
-----------
Total Mortgage Pass Thrus 3,594,218
-----------
</TABLE>
Continued
15
<PAGE>
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
Bond Fund
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
---------- ------------------------------------------------------ -----------
<C> <S> <C>
Government Obligations, continued:
U.S. Treasury Obligations (25.0%):
U.S. Treasury Notes (14.3%):
$ 250,000 5.63%, 5/15/08........................................ $ 266,945
405,000 5.75%, 11/15/00....................................... 413,193
205,000 5.75%, 8/15/03........................................ 214,170
35,000 6.25%, 8/31/02........................................ 36,834
745,000 6.50%, 10/15/06....................................... 828,880
-----------
1,760,022
-----------
U.S. Treasury Bonds (10.7%):
1,180,000 6.25%, 8/15/23........................................ 1,320,809
-----------
3,080,831
-----------
Total Government Obligations 6,675,049
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
---------- ------------------------------------------------------ -----------
<C> <S> <C>
Cash Equivalents (3.8%):
464,144 Goldman Sachs Financial Square Premium................ $ 464,144
-----------
Total Cash Equivalents 464,144
-----------
Total Investments (Cost $12,053,189)(a)--99.0% 12,215,544
Other assets in excess of liabilities--1.0% 122,146
-----------
Total Net Assets--100.0% $12,337,690
===========
</TABLE>
- -------
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax purposes
of $2,110. Cost for federal income tax purposes differs from value by net
unrealized appreciation of securities as follow:
<TABLE>
<S> <C>
Unrealized appreciation...................................... $189,058
Unrealized depreciation...................................... (28,813)
--------
Net unrealized appreciation.................................. $160,245
========
</TABLE>
(b) 144A security. Resale is restricted to institutional investors.
(c) Security fair valued as determined by the Board of Trustees.
See notes to financial statements.
16
<PAGE>
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
Mid Capitalization Fund
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
---------- ------------------------------------------------------ -----------
<C> <S> <C>
Common Stocks (96.5%):
Air Transportation (0.8%):
7,200 Comair Holdings, Inc. ................................ $ 243,000
-----------
Automotive (0.6%):
3,800 Harley-Davidson, Inc. ................................ 180,025
-----------
Banking (7.3%):
5,300 Amsouth Bancorporation(c)............................. 241,813
14,000 First Tennessee National Corp.(c)..................... 532,874
3,500 Marshall & Ilsley Corp. .............................. 204,531
10,700 Old Kent Financial Corp. ............................. 497,550
7,700 Southtrust Corp. ..................................... 284,419
6,000 Zions Bancorporation(c)............................... 374,250
-----------
2,135,437
-----------
Broadcasting & Publishing (3.2%):
6,900 Cablevision Systems(b)(c)............................. 346,294
10,800 Clear Channel Communications, Inc.(b)................. 588,600
-----------
934,894
-----------
Business Services (5.9%):
9,300 Cintas Corp. ......................................... 655,069
4,900 Metzler Group, Inc.(b)................................ 238,569
10,980 Paychex, Inc. ........................................ 564,784
5,900 Robert Half International, Inc.(b).................... 263,656
-----------
1,722,078
-----------
Computer Hardware (2.8%):
7,600 Apple Computer, Inc.(b)(c)............................ 311,125
4,900 Lexmark International Group, Inc.(b).................. 492,450
-----------
803,575
-----------
Computer Services (2.6%):
18,800 SunGard Data Systems, Inc.(b)......................... 746,125
-----------
Computer Software & Peripherals (4.9%):
2,800 BMC Software, Inc.(b)(c).............................. 124,775
3,600 Citrix Systems, Inc.(b)............................... 349,425
6,900 Network Appliance, Inc.(b)............................ 310,500
8,100 VERITAS Software Corp.(b)(c).......................... 485,494
3,000 Wind River System, Inc.(b)(c)......................... 141,000
-----------
1,411,194
-----------
Data Processing & Reproduction (4.2%):
12,000 Fiserv, Inc.(b)....................................... 617,250
13,300 Sterling Commerce, Inc.(b)(c)......................... 598,500
-----------
1,215,750
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
---------- ------------------------------------------------------ -----------
<C> <S> <C>
Common Stocks, continued:
Educational Services (2.0%):
7,600 Apollo Group, Inc.(b)(c).............................. $ 257,450
10,175 Sylvan Learning Systems, Inc.(b)...................... 310,338
-----------
567,788
-----------
Environmental Services (1.4%):
16,800 Allied Waste Industries, Inc.(b)...................... 396,900
-----------
Financial Services (4.1%):
13,775 Concord EFS, Inc.(b).................................. 583,716
11,100 Finova Group, Inc. ................................... 598,706
-----------
1,182,422
-----------
Food & Household Products (0.6%):
3,000 Canandaigua Wine Co., Class A(b)...................... 173,438
-----------
Food Products & Services (1.0%):
6,000 U.S. Foodservice(b)................................... 294,000
-----------
Funeral Services (2.6%):
7,000 Service Corp. International(c)........................ 266,438
22,000 Stewart Enterprises, Inc.(c).......................... 489,500
-----------
755,938
-----------
Health Care--Services (7.6%):
24,700 HCR Manor Care, Inc.(b)............................... 725,562
24,037 Health Management Associates, Inc.(b)................. 519,799
6,700 Medquist, Inc.(b)..................................... 264,650
10,700 Omnicare, Inc. ....................................... 371,825
6,500 Quintiles Transnational Corp.(b)(c)................... 346,938
-----------
2,228,774
-----------
Industrial Goods & Services (1.1%):
8,700 Ecolab, Inc. ......................................... 314,831
-----------
Industrial Supplies (1.1%):
14,000 MSC Industrial Direct Co., Inc.(b).................... 316,750
-----------
Insurance (3.6%):
7,400 Nationwide Financial Services, Inc. .................. 382,487
2,100 Progressive Corporation(c)............................ 355,688
3,900 SunAmerica, Inc. ..................................... 316,388
-----------
1,054,563
-----------
Medical Equipment & Supplies (1.2%):
7,500 Henry Schein, Inc.(b)(c).............................. 335,625
-----------
Medical--Hospital Services (1.2%):
11,500 Total Renal Care Holdings, Inc.(b)(c)................. 339,969
-----------
</TABLE>
Continued
17
<PAGE>
Schedule of Portfolio Investments
- -------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
Mid Capitalization Fund
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
---------- ------------------------------------------------------ -----------
<C> <S> <C>
Common Stocks, continued:
Pharmaceuticals (6.4%):
4,400 Biogen, Inc.(b)....................................... $ 365,200
12,200 Forest Laboratories, Inc.(b).......................... 648,887
5,300 Mylan Laboratories(c)................................. 166,950
10,900 Watson Pharmaceutical, Inc.(b)........................ 685,337
-----------
1,866,374
-----------
Retail Stores (9.1%):
8,000 Best Buy Company, Inc.(b)............................. 491,000
30,000 Family Dollar Stores(c)............................... 659,999
12,600 Linens 'N Things, Inc.(b)............................. 499,275
17,800 Office Depot, Inc.(b)................................. 657,488
9,000 Ross Stores, Inc.(c).................................. 354,375
-----------
2,662,137
-----------
Semiconductors (2.2%):
2,600 Altera Corp.(b)(c).................................... 158,275
5,600 Vitesse Semiconductor Corp.(b)(c)..................... 255,500
3,300 Xilinx, Inc.(b)....................................... 214,913
-----------
628,688
-----------
Technology (10.3%):
5,300 American Power Conversion(b).......................... 256,719
4,800 Gemstar International Group Ltd.(b)................... 274,800
4,300 Jabil Circuit, Inc.(b)(c)............................. 320,888
10,100 Sanmina Corp.(b)...................................... 631,249
5,100 Solectron Corp.(b).................................... 473,980
6,600 Symbol Technologies, Inc. ............................ 421,988
3,900 Teradyne, Inc.(b)..................................... 165,263
6,700 Uniphase Corp.(b)..................................... 464,812
-----------
3,009,699
-----------
Telecommunications--Services & Equipment (5.7%):
10,100 Century Telephone Enterprise.......................... 681,750
6,300 Comverse Technology, Inc.(b)(c)....................... 447,300
10,800 Qwest Communications International, Inc.(b)........... 540,000
-----------
1,669,050
-----------
</TABLE>
- -------
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax purposes
of $32,153. Cost for federal income tax purposes differs from value by net
unrealized appreciation of securities as follow:
<TABLE>
<S> <C>
Unrealized appreciation.................................... $7,565,604
Unrealized depreciation.................................... (409,248)
----------
Net unrealized appreciation................................ $7,156,356
==========
</TABLE>
(b) Represents non-income producing securities.
(c) All or part of this security has been loaned at December 31, 1998.
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
---------- ----------------------------------------------------- -----------
<C> <S> <C>
Common Stocks, continued:
Wholesale Distribution (0.9%):
19,500 Brightpoint, Inc.(b)................................. $ 268,125
-----------
Wholesale Distribution--Pharmaceuticals (2.1%):
4,100 Allegience Corp. .................................... 191,163
5,525 Cardinal Health, Inc.(c)............................. 419,209
-----------
610,372
-----------
Total Common Stocks 28,067,521
-----------
Government Agency Obligations (6.1%):
Federal National Mortgage Association (6.1%):
$1,776,000 3.88%, 1/4/99........................................ 1,776,000
-----------
Total Government Agency Obligations 1,776,000
-----------
Cash Equivalents (3.9%):
1,128,647 Goldman Sachs Financial Square Premium............... 1,128,647
-----------
Total Cash Equivalents 1,128,647
-----------
Short Term Securities Held as Collateral (25.0%):
Repurchase Agreements (25.0%):
$7,259,425 Lehman Brothers Triparty Agreement, 5.70%, 1/4/99,
(Collateralized by $176,359,318, Student Loan
Marketing Association, 5.21%-5.26%, 1/25/07-
10/25/11, market value-- $175,190,619 and by
$34,715,000, Salomon Brothers Mortgage Securities
VII, 5.64%, 1/25/29, market value-- $34,721,969).... 7,259,425
-----------
Total Short Term Securities Held as Collateral 7,259,425
-----------
Total Investments (Cost $31,043,084)(a)--131.5% 38,231,593
Liabilities in excess of other assets--(31.5)% (9,165,966)
-----------
Total Net Assets--100.0% $29,065,627
===========
</TABLE>
See notes to financial statements.
18
<PAGE>
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
Small Capitalization Fund
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
--------- ------------------------------------------------------ -----------
<C> <S> <C>
Common Stocks (97.9%):
Advertising (1.4%):
8,400 HA-LO Industries, Inc.(b)............................. $ 316,050
-----------
Automotive (0.9%):
9,500 Wabash National Corp. ................................ 192,969
-----------
Banking (1.6%):
15,800 Republic Security Financial Corp. .................... 191,575
8,650 Susquehanna Bancshares, Inc. ......................... 177,055
-----------
368,630
-----------
Business Services (10.5%):
10,900 FYI, Inc.(b).......................................... 348,800
9,500 Hagler Bailly, Inc.(b)................................ 190,000
1,750 International Telecommunications Data Systems,
Inc.(b).............................................. 25,813
10,450 Iron Mountain, Inc.(b)................................ 376,853
8,600 Metzler Group, Inc.(b)(c)............................. 418,712
7,900 NCO Group, Inc.(b).................................... 355,500
10,050 NOVA Corp.(b)(c)...................................... 348,609
6,000 QRS Corp.(b).......................................... 288,000
-----------
2,352,287
-----------
Chemicals (1.2%):
6,939 MacDermid, Inc. ...................................... 271,488
-----------
Communications--Networking (0.6%):
8,600 Fvc.com, Inc.(b)...................................... 135,450
-----------
Computer Hardware (2.9%):
8,300 Insight Enterprises, Inc.(b).......................... 422,262
7,850 Smart Modular Technologies(b)(c)...................... 217,838
-----------
640,100
-----------
Computer Services (3.0%):
6,400 Checkfree Holdings Corp.(b)........................... 149,600
4,500 National Data Corp. .................................. 219,094
8,700 Pegasus Systems, Inc.(b).............................. 313,200
-----------
681,894
-----------
Computer Software & Peripherals (12.3%):
8,650 Apex PC Solutions, Inc.(b)............................ 249,769
8,100 Axnet Technologies, Inc.(b)........................... 247,556
13,250 Deltek Systems, Inc.(b)............................... 223,594
3,300 HNC Software(b)....................................... 133,444
7,900 Macrovision Corp.(b).................................. 333,774
11,450 Mercury Computer Systems, Inc.(b)..................... 322,031
5,650 New Dimension Software Ltd.(b)........................ 271,906
16,900 Software AG Systems, Inc.(b)(c)....................... 306,313
6,300 Symix Systems, Inc.(b)................................ 132,300
9,800 Unigraphics Solutions, Inc.(b)........................ 142,100
11,100 Visio Corp.(b)........................................ 405,843
-----------
2,768,630
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
--------- ------------------------------------------- -----------
<C> <S> <C>
Common Stocks, continued:
Correctional Facilities (1.4%):
11,250 Wackenhut Corrections Corp.(b)............. $ 322,031
-----------
Data Processing & Reproduction (1.0%):
11,850 INSpire Insurance Solutions, Inc.(b)....... 217,744
-----------
Educational Services (1.0%):
10,500 School Specialty, Inc.(b)(c)............... 224,438
-----------
Electrical & Electronic (1.9%):
4,400 CTS Corp. ................................. 191,400
6,046 Maxwell Technologies, Inc.(b).............. 243,352
-----------
434,752
-----------
Environmental Services (1.5%):
9,300 Casella Waste Systems, Inc.(b)............. 345,263
-----------
Financial Services (4.4%):
4,700 Affiliated Managers Group(b)............... 140,413
11,500 Amresco, Inc.(b)........................... 100,625
8,150 DVI, Inc.(b)............................... 147,719
22,600 Franchise Mortgage Acceptance
Co.(b).................................... 175,150
5,400 Healthcare Financial Partners, Inc.(b)(c).. 214,312
8,500 Knight/Trimark Group, Inc., Class A(b)..... 203,469
-----------
981,688
-----------
Food Products & Services (0.6%):
17,650 NBTY, Inc.(b).............................. 125,756
-----------
Funeral Services (0.5%):
4,800 Stewart Enterprises........................ 106,800
-----------
Health Care--Services (16.1%):
13,850 ABR Information Services, Inc.(b)(c)....... 271,806
21,400 American Oncology Resources, Inc.(b)(c).... 311,638
9,150 Boron, Lepore & Assoc., Inc.(b)............ 315,675
12,600 Carematrix Corp.(b)........................ 385,875
7,000 Hooper Holmes, Inc. ....................... 203,000
11,000 Medquist, Inc.(b).......................... 434,499
10,042 NCS HealthCare, Inc., Class A(b)........... 238,498
15,550 Orthodontic Centers of America, Inc.(b).... 302,253
9,750 Parexel International Corp.(b)............. 243,750
3,800 Priority Healthcare Corp., Class B(b)(c)... 197,125
8,200 Quadramed Corp.(b)(c)...................... 168,100
14,800 Serologicals Corp.(b)...................... 443,999
2,200 Sunrise Assisted Living, Inc.(b)........... 114,125
-----------
3,630,343
-----------
</TABLE>
Continued
19
<PAGE>
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
Small Capitalization Fund
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
--------- ------------------------------------------- -----------
<C> <S> <C>
Common Stocks, continued:
Insurance (2.4%):
20,200 Annuity & Life Re.......................... $ 545,400
-----------
Machinery & Equipment (0.7%):
4,600 Motivepower Industries, Inc.(b)............ 148,063
-----------
Manufactured Housing (0.2%):
3,600 Modtech, Inc.(b)........................... 54,900
-----------
Manufacturing-Capital Goods (1.6%):
9,400 Applied Power, Inc., Class A............... 354,850
-----------
Medical Equipment & Supplies (2.3%):
4,150 Biomatrix, Inc.(b)......................... 241,738
8,500 Molecular Devices Corp.(b)................. 184,875
5,400 Sabratek Corp.(b)(c)....................... 88,425
-----------
515,038
-----------
Oilfield Services & Equipment (0.2%):
13,200 Omni Energy Services(b).................... 56,100
-----------
Pharmaceuticals (3.9%):
5,700 Gliatech, Inc.(b)(c)....................... 171,000
7,150 Jones Pharma, Inc.(c)...................... 260,975
10,600 King Pharmaceuticals, Inc.(b)(c)........... 276,925
15,800 Scios, Inc.(b)............................. 163,925
-----------
872,825
-----------
Printing & Publishing (3.3%):
25,300 American Bank Note Holographics(b)......... 442,750
4,250 Consolidated Graphics, Inc.(b)............. 287,141
-----------
729,891
-----------
Radio (1.2%):
10,250 Citadel Communications Corp.(b)............ 265,219
-----------
Real Estate Investment Trust (0.7%):
10,600 Standard Pacific Corp. .................... 149,725
-----------
Rental Equipment Furniture (1.6%):
3,800 Rental Service Corp.(b).................... 59,613
9,300 Renter's Choice, Inc.(b)................... 295,275
-----------
354,888
-----------
Resorts & Entertainment (1.0%):
16,800 Vistana, Inc.(b)........................... 235,200
-----------
Retail Stores (2.0%):
11,800 Fred's, Inc. .............................. 177,000
8,525 The Men's Wearhouse, Inc.(b)............... 270,669
-----------
447,669
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
---------- ------------------------------------------ -----------
<C> <S> <C>
Common Stocks, continued:
Semiconductors (2.6%):
5,344 ATMI, Inc.(b)............................. $ 134,936
7,850 Burr-Brown Corp.(b)....................... 183,984
10,400 Cymer, Inc.(b)............................ 152,100
5,001 Photronics, Inc.(b)....................... 119,868
-----------
590,888
-----------
Technology (5.4%):
8,100 Aeroflex, Inc.(b)......................... 122,513
11,100 Ardent Software, Inc.(b).................. 255,299
3,750 Engineering Animation, Inc.(b)(c)......... 202,500
9,950 Gentex Corporation(b)(c).................. 199,000
3,600 Sanmina Corp.(b).......................... 224,999
5,500 SDL, Inc.(b).............................. 217,938
-----------
1,222,249
-----------
Telecommunications--Services & Equipment (5.0%):
7,300 ANTEC Corp.(b)............................ 146,913
6,400 Dycom Industries, Inc.(b)................. 365,599
7,297 Genesys Telecomm Labs, Inc.(b)............ 162,358
6,600 Pacific Gateway Exchange, Inc.(b)(c)...... 317,212
5,800 World Access, Inc.(b)..................... 123,975
-----------
1,116,057
-----------
Wholesale Distribution (1.0%):
16,450 Brightpoint, Inc.(b)...................... 226,188
-----------
Total Common Stocks 22,001,463
-----------
Government Agency Obligations (8.5%):
Federal National Mortgage Assoc. (8.5%):
$1,900,000 5.17%, 1/4/99............................. 1,898,909
-----------
Total Government Agency Obligations 1,898,909
-----------
Cash Equivalents (3.3%):
748,123 Goldman Sachs Financial Square Premium.... 748,123
-----------
Total Cash Equivalents 748,123
-----------
</TABLE>
Continued
20
<PAGE>
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
Small Capitalization Fund
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
---------- --------------------------------------------------- -----------
<C> <S> <C>
Short Term Securities held as Collateral (14.9%):
Repurchase Agreements (14.9%):
$3,334,500 Lehman Brothers Triparty Agreement, 5.70%, 1/4/99,
(Collateralized by $176,359,318, Student Loan
Marketing Association, 5.21%-5.26%, 1/25/07-
10/25/11, market value-- $175,190,619 and by
$34,715,000, Salomon Brothers Mortgage Securities
VII, 5.64%, 1/25/29, market value--$34,721,969)... $ 3,334,500
-----------
Total Short Term Securities held as Collateral 3,334,500
-----------
Total Investments (Cost $23,885,015)(a)--124.6% 27,982,995
Liabilities in excess of other assets--(24.6)% (5,528,845)
-----------
Total Net Assets--100.0% $22,454,150
===========
</TABLE>
- -------
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax purposes
of $52,434. Cost for federal income tax purposes differs from value by net
unrealized appreciation of securities as follow:
<TABLE>
<S> <C>
Unrealized appreciation.................................... $4,941,365
Unrealized depreciation.................................... (895,819)
----------
Net unrealized appreciation................................ $4,045,546
==========
</TABLE>
(b) Represents non-income producing securities.
(c) All or part of this security has been loaned at December 31, 1998.
See notes to financial statements.
21
<PAGE>
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
International Discovery Fund
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
--------- ------------------------------------------------------- -----------
<C> <S> <C>
Common Stocks (95.5%):
Australia (2.4%):
Banking (1.2%):
14,042 National Australia Bank Ltd. .......................... $ 211,875
-----------
Real Estate (1.2%):
16,642 Lend Lease Corp. Ltd................................... 224,566
-----------
436,441
-----------
Belgium (2.4%):
Retail Stores/Catalog (2.4%):
520 Colruyt NV............................................. 435,948
-----------
Denmark (0.8%):
Telecommunications--Services & Equipment (0.8%):
1,040 Tele Danmark A/S, Class B.............................. 140,369
-----------
Finland (4.9%):
Commercial Services (1.5%):
6,241 TT Tieto Oy-B Shares................................... 279,800
-----------
Telecommunications--Services & Equipment (3.4%):
5,201 Nokia AB, Class A, ADR................................. 626,395
-----------
906,195
-----------
France (12.1%):
Business Services (3.2%):
2,372 Altran Technologies.................................... 572,405
-----------
Energy (0.7%):
1,248 Total SA, Class B...................................... 126,453
-----------
Health & Personal Care (1.8%):
468 L'Oreal................................................ 338,474
-----------
Insurance (2.0%):
2,496 AXA--UAP SA............................................ 361,933
-----------
Machinery & Equipment (2.0%):
4,369 Sidel SA............................................... 370,731
-----------
Retail Stores/Catalog (2.4%):
2,340 Pinault-Printemps-Redoute SA........................... 447,389
-----------
2,217,385
-----------
Germany (7.6%):
Banking (1.6%):
1,872 Bayerische Vereins AG.................................. 148,139
3,745 BHF Bank AG............................................ 150,653
-----------
298,792
-----------
Diversified Operations (2.0%):
5,565 Siemens AG............................................. 359,189
-----------
Insurance (1.5%):
728 Allianz AG............................................. 267,068
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
--------- --------------------------------------------------- -----------
<C> <S> <C>
Common Stocks, continued:
Germany, continued:
Telecommunications (2.5%):
4,057 Mannesmann AG...................................... $ 465,250
-----------
1,390,299
-----------
Greece (0.0%):
Telecommunications--Services & Equipment (0.0%):
0* Hellenic Telecommunication......................... 12
-----------
Hong Kong (1.3%):
Electrical & Electronic (0.8%):
56,168 Johnson Electric Holdings Ltd. .................... 144,281
-----------
Utilities--Eletrical & Gas (0.5%):
68,649 Hong Kong & China Gas Co. Ltd. .................... 87,284
-----------
231,565
-----------
Ireland (0.9%):
Banking (0.9%):
7,801 Bank of Ireland(b)................................. 170,937
-----------
Italy (2.3%):
Jewelry (1.1%):
33,285 Bulgari SpA........................................ 198,835
-----------
Telecommunications--Services & Equipment (1.2%):
31,204 Telecom Italia Mobile SpA.......................... 230,875
-----------
429,710
-----------
Japan (14.6%):
Computer Hardware (1.6%):
3,120 TDK Corp........................................... 285,732
-----------
Consumer Electronics (0.7%):
1,664 Sony Corp.......................................... 121,411
-----------
Electronic Components/Instruments (1.1%):
5,721 Fanuc Co. Ltd...................................... 196,285
-----------
Industrial Goods & Services (1.0%):
8,321 Bridgestone Corporation............................ 189,220
-----------
Insurance (0.8%):
12,482 Tokio Marine & Fire Insurance Co. Ltd. ............ 149,390
-----------
Manufacturing--Consumer Goods (3.0%):
14,562 Canon, Inc. ....................................... 311,775
6,241 Fuji Photo Film Ltd................................ 232,385
-----------
544,160
-----------
Pharmaceuticals (5.1%):
10,401 Sankyo Co. Ltd..................................... 227,759
18,723 Takeda Chemical Industries......................... 722,052
-----------
949,811
-----------
</TABLE>
Continued
22
<PAGE>
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
International Discovery Fund
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
--------- ------------------------------------------------------- -----------
<C> <S> <C>
Common Stocks, continued:
Retail Food (1.3%):
6,241 Matsumotokiyoshi....................................... $ 241,791
-----------
2,677,800
-----------
Netherlands (8.7%):
Broadcasting & Publishing (2.6%):
2,295 Wolters Kluwer NV...................................... 491,366
-----------
Consumer Goods & Services (1.7%):
3,641 Unilever NV............................................ 311,393
-----------
Energy (1.1%):
3,953 Royal Dutch Petroleum.................................. 196,948
-----------
Insurance (1.9%):
1,768 Aegon NV............................................... 217,247
2,028 ING Groep NV........................................... 123,733
-----------
340,980
-----------
Retail Food (1.4%):
6,969 Kon Ahold NV........................................... 257,717
-----------
1,598,404
-----------
Portugal (2.3%):
Telecommunications (2.3%):
9,361 Portugal Telecom SA.................................... 417,735
-----------
Spain (3.9%):
Beverages & Tobacco (1.5%):
10,401 Tabacalera SA(b)....................................... 262,793
-----------
Gas & Electric Utility (1.3%):
8,945 Endesa SA.............................................. 237,370
-----------
Telecommunications (1.1%):
4,681 Telefonica SA(b)....................................... 208,461
-----------
708,624
-----------
Sweden (0.5%):
Metals (0.5%):
2,392 Assa Abloy AB, Class B................................. 91,483
-----------
Switzerland (7.2%):
Food Products & Services (1.1%):
90 Nestle SA.............................................. 195,925
-----------
Insurance (2.2%):
156 Swiss Reinsurance Co................................... 406,730
-----------
Pharmaceuticals (3.9%):
146 Novartis AG............................................ 287,008
36 Roche Holdings AG...................................... 439,292
-----------
726,300
-----------
1,328,955
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
--------- --------------------------------------------------- -----------
<C> <S> <C>
Common Stocks, continued:
United Kingdom (20.3%):
Aerospace/Defense (1.8%):
39,301 British Aerospace PLC.............................. $ 333,811
-----------
Banking (1.5%):
13,002 Abbey National PLC................................. 278,413
-----------
Beverages & Tobacco (1.0%):
16,642 Diageo PLC......................................... 189,392
-----------
Chemicals (0.6%):
7,593 BOC Group PLC...................................... 108,583
-----------
Commercial Services (2.5%):
53,120 Logica PLC(b)...................................... 461,791
-----------
Electric Utility (1.4%):
31,204 National Grid Group PLC............................ 248,164
-----------
Energy (1.4%):
17,682 British Petroleum Co. PLC.......................... 264,038
-----------
Engineering (0.7%):
33,285 Siebe PLC.......................................... 130,696
-----------
Food Products & Services (1.7%):
27,044 Compass Group PLC.................................. 309,571
-----------
Insurance (1.0%):
11,962 Allied Zurich PLC(b)............................... 178,425
-----------
Media and Entertainment (1.8%):
16,538 Pearson PLC........................................ 328,265
-----------
Pharmaceuticals (3.0%):
16,746 Glaxo Wellcome PLC................................. 576,186
-----------
Telecommunications (1.9%):
10,609 Cable & Wireless PLC............................... 130,443
13,002 Vodafone........................................... 211,135
-----------
341,578
-----------
3,748,913
-----------
United States (3.3%):
Diversified Operations (1.4%):
3,328 Tyco International Ltd. ........................... 251,056
-----------
Pharmaceuticals (1.9%):
6,241 Pharmacia & Upjohn, Inc............................ 353,397
-----------
604,453
-----------
Total Common Stocks 17,535,228
-----------
</TABLE>
Continued
23
<PAGE>
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
International Discovery Fund
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
--------- ------------------------------------------------------- -----------
<C> <S> <C>
Preferred Stocks (0.9%):
Germany (0.9%):
Business Services (0.9%):
343 SAP AG................................................. $ 163,764
-----------
Total Preferred Stocks 163,764
-----------
Rights--Foreign Securities (0.0%):
Spain (0.0%):
Telecommunications (0.0%):
4,681 Telefonica SA.......................................... 4,163
-----------
Total Rights--Foreign Securities 4,163
-----------
</TABLE>
- -------
* Amount is less than 1 share.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax purposes
of $35,485. Cost for federal income tax purposes differs from value by net
unrealized appreciation of securities as follow:
<TABLE>
<S> <C>
Unrealized appreciation.................................... $4,782,770
Unrealized depreciation.................................... (203,747)
----------
Net unrealized appreciation................................ $4,579,023
==========
</TABLE>
(b) Represents non-income producing securities.
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
--------- ------------------------------------------------------- -----------
<C> <S> <C>
Cash Equivalents (3.6%):
665,422 Goldman Sachs Financial Square Premium................. $ 665,422
-----------
Total Cash Equivalents 665,422
-----------
Total Investments (Cost $13,754,069)(a)--100.0% 18,368,577
Other assets in excess of liabilities--0.0% 2,448
-----------
Total Net Assets--100.0% $18,371,025
===========
</TABLE>
See notes to financial statements.
24
<PAGE>
Notes to Financial Statements
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
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 Bond Fund, the Mid Capitalization Fund, the Small
Capitalization Fund and the 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") and certain qualified benefit plans. As of December 31,
1998, the only Participating Insurance Company is Security Benefit Life
Insurance Company. On March 31, 1998, First of America Bank Corporation
completed its merger with National City Corporation ("NCC"), the parent
corporation of National City Bank ("NCB"). National City Investment
Management Company ("IMC"), formerly First of America Investment Corporation,
serves as the investment adviser to the Company.
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 (GAAP). 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 in common and preferred stocks, corporate bonds, commercial
paper and foreign government bonds and U.S. government securities of the
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 Funds are reflected
as either unrealized appreciation or depreciation.
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.
Continued
25
<PAGE>
Notes to Financial Statements
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
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.
The International Discovery Fund does not isolate that portion of the
results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gains or losses from investments.
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 exchange
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
IMC 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).
Lending Portfolio Securities:
To generate additional income, the Funds may lend up to 33% of securities
in which they are invested pursuant to agreements requiring that the loan
be continuously secured by cash, U.S. government or U.S. government agency
securities, shares of an investment trust or mutual fund, or any
combination of cash and such securities as collateral equal at all times to
at least 100% of the market value plus accrued interest on the securities
lent. The Funds continue to earn interest and dividends on securities lent
while simultaneously seeking to earn interest on the investment of
collateral.
When cash is received as collateral for securities loaned, the Funds may
invest such cash in short-term U.S. government securities, repurchase
agreements, or other short-term corporate securities. The cash or
subsequent short-term investments are recorded as assets of the Funds,
offset by a corresponding liability to repay the cash at the termination of
the loan. In addition, the short-term securities purchased with the cash
collateral are included in the accompanying schedules of portfolio
investments. Fixed
Continued
26
<PAGE>
Notes to Financial Statements
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
income securities received as collateral are not recorded as an asset or
liability of the Funds because the Funds do not have effective control of
such securities.
There may be risks of delay in recovery of the securities or even loss of
rights in the collateral should the borrower of the securities fail
financially. However, loans will be made only to borrowers deemed by the
Advisor to be of good standing and creditworthy under guidelines
established by the Board of Trustees and when, in the judgment of the
Advisor, the consideration which can be earned currently from such
securities loans justifies the attendant risks. Loans are subject to
termination by the Funds or the borrower at any time, and are, therefore,
not considered to be illiquid investments. According to GAAP, a statement
of cash flows is presented if a Fund lent out, on average, more than 10% of
net assets during the year. Under this guideline, a statement of cash flows
is presented for each of the Funds listed below. As of December 31, 1998,
the following Funds had securities with the following market values on
loan:
<TABLE>
<CAPTION>
Market Market Value
Value of of Loaned
Collateral Securities
---------- ------------
<S> <C> <C>
Mid Capitalization Fund.............................. $7,259,425 $7,238,753
Small Capitalization Fund............................ 3,334,500 3,322,831
</TABLE>
The loaned securities were fully collateralized by cash, U.S. government
securities, short-term corporate notes and repurchase agreements as of
December 31, 1998.
Dividends and Distributions to Shareholders:
The Funds intend to pay, at least annually, substantially all of their net
investment income. Net capital gains, if any, are distributed at least
annually. The International Discovery Fund distributed long-term capital
gains in the amount of $80,360.
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 GAAP. These "book/tax" differences
are either considered temporary or permanent in nature and are primarily
due to differing treatments for mortgage-backed securities and deferrals of
certain losses.
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 and 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.
Continued
27
<PAGE>
Notes to Financial Statements
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
As of December 31, 1998, the following reclassifications have been made to
increase (decrease) such accounts with offsetting adjustments made to
additional paid-in-capital:
<TABLE>
<CAPTION>
Undistributed Net
Undistributed Net Realized Gain (Loss) on Investments
Investment Income and Foreign Currency Transactions
----------------- -----------------------------------
<S> <C> <C>
Bond Fund............... $ 1,275 $(8,705)
Mid Capitalization Fund. 288,246 (2)
Small Capitalization
Fund................... 275,595 --
International Discovery
Fund................... 133,119 62,521
</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.
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, 1998, are as follows:
<TABLE>
<CAPTION>
Purchases Sales
----------- -----------
<S> <C> <C>
Bond Fund............................................ $22,392,530 $22,525,182
Mid Capitalization Fund.............................. 20,135,048 25,974,183
Small Capitalization Fund............................ 19,053,412 22,950,514
International Discovery Fund......................... 13,120,526 15,195,433
</TABLE>
Continued
28
<PAGE>
Notes to Financial Statements
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
5. Related Party Transactions:
Investment advisory services are provided to the Funds by IMC. Gulfstream
Global Investors, Ltd. ("Gulfstream") served as the sub-adviser for the
International Discovery Fund until November 30, 1998 when the agreement was
terminated and IMC assumed the day-to-day management. Under the terms of the
investment advisory agreement, IMC 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 was entitled to receive
fees from IMC based on a percentage of the average daily net assets of the
International Discovery Fund. NCB, an affiliate of IMC, serves as custodian
of the Company's assets pursuant to a Custodian Service Agreement dated July
24, 1998, and receives a fee based on the daily average net assets of each
Fund. Union Bank of California served the Company as the custodian until July
23, 1998.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS")
is an Ohio limited partnership. BISYS Fund Services, Inc. ("BISYS Inc."), 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 serves as Distributor to the Trust, and BISYS Inc. serves the
Trust as Mutual Fund Accountant and Transfer Agent.
<TABLE>
<CAPTION>
Mid Small International
Bond Capitalization Capitalization Discovery
Fund Fund Fund Fund
------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Investment Advisory Fees:
Annual fee (percentage of
average net assets)..... 0.74% 1.00% 1.00% 1.25%(a)
Administration Fees:
Annual fee (percentage of
average net assets)..... 0.20% 0.20% 0.20% 0.20%
Fund Accounting Fees..... $20,231 $21,213 $20,454 $29,034
Transfer Agent Fees...... 18,392 18,282 15,428 18,392
</TABLE>
-------
(a) For International Discovery Fund, IMC 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 and $400; and
1.05% of all average daily net assets above $400 million.
Fees may be voluntarily reduced or reimbursed to assist the Funds in
maintaining competitive expense ratios. Such amounts are reflected in the
Statements of Operations.
6. Proxy:
On August 13, 1998, a special meeting of the shareholders of The Parkstone
Advantage Fund was held to consider various proposals. The vote tabulations
for the various issues are as follows:
29
<PAGE>
Notes to Financial Statements
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
Issue 1. Election of Trustees
<TABLE>
<CAPTION>
Affirmative Against Abstain
------------- ------------- ----------
<S> <C> <C> <C>
Robert D. Neary........................ 70,570,339.17 17,057,305.68 648,613.94
Leigh Carter........................... 70,373,233.90 17,057,305.68 845,719.21
John F. Durkott........................ 70,570,339.17 17,057,305.68 648,613.94
Robert J. Farling...................... 70,570,339.17 17,057,305.68 648,613.94
Richard W. Furst....................... 70,570,339.17 17,057,305.68 648,613.94
Gerald L. Gherlein..................... 70,570,339.17 17,057,305.68 648,613.94
Herbert R. Martens, Jr. ............... 70,570,339.17 17,057,305.68 648,613.94
J. William Pullens..................... 70,570,339.17 17,057,305.68 648,613.94
</TABLE>
Issue 2. Change each Fund's investment objective to non-fundamental
<TABLE>
<CAPTION>
Affirmative Against Abstain
------------- ------------ ------------
<S> <C> <C> <C>
Bond Fund............................. 8,121,231.43 1,040,144.89 808,024.12
Mid Capitalization Fund............... 22,859,783.68 2,470,310.24 1,947,254.54
Small Capitalization Fund............. 18,234,126.20 1,827,584.20 1,227,032.48
International Discovery Fund.......... 10,578,642.61 1,460,502.76 644,315.96
</TABLE>
Issue 3(a). Change to the fundamental investment limitation on underwriting
activities
<TABLE>
<CAPTION>
Affirmative Against Abstain
------------- ---------- ------------
<S> <C> <C> <C>
Bond Fund............................... 9,006,217.20 209,464.75 753,718.48
Mid Capitalization Fund................. 24,241,928.68 882,139.24 2,153,280.54
Small Capitalization Fund............... 19,149,373.16 776,897.42 1,362,472.30
International Discovery Fund............ 11,489,529.19 453,825.74 740,106.40
</TABLE>
Issue 3(b) Change to the fundamental investment limitation on real estate
transactions
<TABLE>
<CAPTION>
Affirmative Against Abstain
------------- ---------- ------------
<S> <C> <C> <C>
Bond Fund............................... 9,006,217.20 209,464.75 753,718.48
Mid Capitalization Fund................. 24,241,928.68 882,139.24 2,153,280.54
Small Capitalization Fund............... 19,149,373.16 776,897.42 1,362,472.30
International Discovery Fund............ 11,489,529.19 453,825.74 740,106.04
</TABLE>
Issue 3(c) Change to the fundamental investment limitation on investment in
commodities
<TABLE>
<CAPTION>
Affirmative Against Abstain
------------- ---------- ------------
<S> <C> <C> <C>
Bond Fund............................... 9,006,217.20 209,464.75 753,718.48
Mid Capitalization Fund................. 24,241,928.68 882,139.24 2,153,280.54
Small Capitalization Fund............... 19,149,373.16 776,897.42 1,362,472.30
International Discovery Fund............ 11,489,529.19 453,825.74 740,106.04
</TABLE>
Continued
30
<PAGE>
Notes to Financial Statements
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
Issue 3(d) Change to the fundamental investment limitation regarding industry
concentration
<TABLE>
<CAPTION>
Affirmative Against Abstain
------------- ---------- ------------
<S> <C> <C> <C>
Bond Fund............................... 9,006,217.20 209,464.75 753,718.48
Mid Capitalization Fund................. 24,241,928.68 882,139.24 2,153,280.54
Small Capitalization Fund............... 19,149,373.16 776,897.42 1,362,472.30
International Discovery Fund............ 11,489,529.19 453,825.74 740,106.04
</TABLE>
Issue 3(e) Change to the fundamental investment limitation on loans
<TABLE>
<CAPTION>
Affirmative Against Abstain
------------- ---------- ------------
<S> <C> <C> <C>
Bond Fund............................... 9,006,217.20 209,464.75 753,718.48
Mid Capitalization Fund................. 24,241,928.68 882,139.24 2,153,280.54
Small Capitalization Fund............... 19,149,373.16 776,897.42 1,362,472.30
International Discovery Fund............ 11,489,529.19 453,825.74 740,106.04
</TABLE>
Issue 3(f) Change to the fundamental investment limitation on borrowing and the
issuance of senior securities
<TABLE>
<CAPTION>
Affirmative Against Abstain
------------- ---------- ------------
<S> <C> <C> <C>
Bond Fund............................... 9,006,217.20 209,464.75 753,718.48
Mid Capitalization Fund................. 24,241,928.68 882,139.24 2,153,280.54
Small Capitalization Fund............... 19,149,373.16 776,897.42 1,362,472.30
International Discovery Fund............ 11,489,529.19 453,825.74 740,106.04
</TABLE>
Issue 3(g) Change to the fundamental investment limitation on issuer
diversification
<TABLE>
<CAPTION>
Affirmative Against Abstain
------------- ---------- ------------
<S> <C> <C> <C>
Bond Fund............................... 9,006,217.20 209,464.75 753,718.48
Mid Capitalization Fund................. 24,241,928.68 882,139.24 2,153,280.54
Small Capitalization Fund............... 1,905,984.93 798,783.03 1,413,974.92
International Discovery Fund............ 11,489,529.19 453,825.74 740,106.40
</TABLE>
Issue 4(a) To approve a change in the fundamental investment limitation on
purchasing securities on margin restriction non-fundamental
<TABLE>
<CAPTION>
Affirmative Against Abstain
------------- ------------ ------------
<S> <C> <C> <C>
Bond Fund............................. 8,944,458.40 154,827.49 870,114.55
Mid Capitalization Fund............... 23,877,988.38 1,268,722.91 2,130,637.18
Small Capitalization Fund............. 19,075,984.93 798,783.03 1,413,974.92
International Discovery Fund.......... 11,429,238.59 458,055.60 796,167.15
</TABLE>
Continued
31
<PAGE>
Notes to Financial Statements
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund December 31, 1998
Issue 4(b) To approve a change in the fundamental investment limitation on
writing and selling call options restriction non-fundamental
<TABLE>
<CAPTION>
Affirmative Against Abstain
------------- ------------ ------------
<S> <C> <C> <C>
Bond Fund............................. 8,927,955.25 171,330.64 870,114.55
Mid Capitalization Fund............... 24,044,601.79 1,102,109.49 2,130,637.18
Small Capitalization Fund............. 19,169,077.03 762,627.54 1,357,038.31
International Discovery Fund.......... 11,402,183.31 487,547.77 793,730.26
</TABLE>
7. Federal Income Tax Information (unaudited):
Under current tax law, capital losses and foreign currency losses realized
after October 31 may be deferred and treated as occurring on the first day of
the next fiscal year. As of December 31, 1998, the following Funds had de-
ferred losses of:
<TABLE>
<S> <C>
Bond Fund............................................................ $ 21,768
International Discovery Fund......................................... 303,485
</TABLE>
Continued
32
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund
<TABLE>
<CAPTION>
Bond Fund
------------------------------------------------------------
For the Share Outstanding
Throughout Year Ended December 31,
the Period ------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 10.70 $ 10.33 $ 10.50 $ 9.35 $ 9.96
----------- ----------- ---------- ---------- ----------
Investment Activities
Net investment income
(loss)................ 0.51 0.48 0.36 0.40 0.42
Net realized and
unrealized gains
(losses) from
investments........... 0.20 0.30 (0.18) 1.17 (0.96)
----------- ----------- ---------- ---------- ----------
Total from Investment
Activities............ 0.71 0.78 0.18 1.57 (0.54)
----------- ----------- ---------- ---------- ----------
Distributions
From net investment in-
come.................. (0.49) (0.41) (0.35) (0.42) (0.07)
----------- ----------- ---------- ---------- ----------
Total Distributions.... (0.49) (0.41) (0.35) (0.42) (0.07)
----------- ----------- ---------- ---------- ----------
Net Asset Value, End of
Period................. $ 10.92 $ 10.70 $ 10.33 $ 10.50 $ 9.35
=========== =========== ========== ========== ==========
Total Return............ 6.71% 7.69% 1.83% 16.98% (5.38%)
Ratios/Supplementary
Data:
Net Assets at end of pe-
riod................... $12,337,690 $11,856,187 $9,754,430 $6,758,241 $4,651,157
Ratio of expenses to av-
erage net assets....... 1.44% 1.36% 1.29% 1.57% 1.80%
Ratio of net investment
income to average net
assets................. 5.00% 5.36% 5.32% 5.31% 5.27%
Ratio of expenses to av-
erage net assets*...... 1.50% (a) (a) (a) (a)
Portfolio turnover rate. 190% 144% 492% 178% 159%
</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) There were no waivers or reimbursements during this period.
See notes to financial statements.
33
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund
<TABLE>
<CAPTION>
Mid Capitalization Fund
--------------------------------------------------------------
For a Share Outstanding
Throughout Year Ended December 31,
the Period --------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 14.23 $ 14.60 $ 12.44 $ 9.64 $ 10.17
----------- ----------- ----------- ----------- ----------
Investment Activities
Net investment income
(loss)................ (0.16) (0.11) (0.09) (0.08) (0.07)
Net realized and
unrealized gains
(losses) from
investments........... 1.63 1.90 2.25 2.88 (0.46)
----------- ----------- ----------- ----------- ----------
Total from Investment
Activities............ 1.47 1.79 2.16 2.80 (0.53)
----------- ----------- ----------- ----------- ----------
Distributions
From net realized
gains................. -- (2.16) -- -- --
----------- ----------- ----------- ----------- ----------
Total Distributions.... -- (2.16) -- -- --
----------- ----------- ----------- ----------- ----------
Net Asset Value, End of
Period................. $ 15.70 $ 14.23 $ 14.60 $ 12.44 $ 9.64
=========== =========== =========== =========== ==========
Total Return............ 10.33% 12.58% 17.36% 29.05% (5.21%)
Ratios/Supplementary
Data:
Net Assets at end of
period................. $29,065,627 $31,059,179 $24,040,588 $14,977,130 $9,095,015
Ratio of expenses to
average net assets..... 1.51% 1.53% 1.42% 1.62% 1.86%
Ratio of net investment
income to average net
assets................. (0.98%) (0.88%) (0.73%) (0.84%) (0.92%)
Ratio of expenses to
average net assets*.... 1.57% (a) (a) (a) (a)
Portfolio turnover rate. 71% 55% 127% 44% 51%
</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) There were no waivers or reimbursements during this period.
See notes to financial statements.
34
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund
<TABLE>
<CAPTION>
Small Capitalization Fund
--------------------------------------------------------------
For a Share Outstanding Throughout Year Ended December 31,
the Period --------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $ 17.12 $ 18.20 $ 15.71 $ 11.58 $ 11.00
----------- ----------- ----------- ----------- ----------
Investment Activities
Net investment income
(loss)................. (0.20) (0.20) (0.15) (0.15) (0.13)
Net realized and
unrealized gains
(losses) from
investments............ (0.23) (0.79) 4.79 4.28 0.71
----------- ----------- ----------- ----------- ----------
Total from Investment
Activities............. (0.43) (0.99) 4.64 4.13 0.58
----------- ----------- ----------- ----------- ----------
Distributions
From net realized gains. -- (0.09) (2.15) -- --
----------- ----------- ----------- ----------- ----------
Total Distributions..... -- (0.09) (2.15) -- --
----------- ----------- ----------- ----------- ----------
Net Asset Value, End of
Period.................. $ 16.69 $ 17.12 $ 18.20 $ 15.71 $ 11.58
=========== =========== =========== =========== ==========
Total Return............. (2.51%) (5.47%) 29.66% 35.66% 5.27%
Ratios/Supplementary
Data:
Net Assets at end of
period.................. $22,454,150 $26,860,472 $24,495,224 $13,272,561 $7,476,444
Ratio of expenses to
average net assets...... 1.53% 1.55% 1.40% 1.64% 1.98%
Ratio of net investment
income (loss) to average
net assets.............. (1.14%) (1.20%) (1.06%) (1.29%) (1.66%)
Ratio of expenses to
average net assets*..... 1.60% (a) (a) (a) (a)
Portfolio turnover rate.. 83% 51% 60% 64% 39%
</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) There were no waivers or reimbursements during this period.
See notes to financial statements.
35
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
The Parkstone Advantage Fund
<TABLE>
<CAPTION>
International Discovery Fund
--------------------------------------------------------------
For a Share Outstanding
Throughout Year Ended December 31,
the Period --------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 12.44 $ 12.18 $ 10.59 $ 9.65 $ 10.35
----------- ----------- ----------- ----------- ----------
Investment Activities
Net investment income
(loss)................ (0.10) (0.06) (0.04) (0.03) (0.07)
Net realized and
unrealized gains
(losses) from
investments........... 1.55 0.32 1.67 0.97 (0.63)
----------- ----------- ----------- ----------- ----------
Total from Investment
Activities............ 1.45 0.26 1.63 0.94 (0.70)
----------- ----------- ----------- ----------- ----------
Distributions
In excess of net
investment income..... -- -- (0.04) -- --
From net realized
gains................. (0.06) -- -- -- --
----------- ----------- ----------- ----------- ----------
Total Distributions.... (0.06) -- (0.04) -- --
----------- ----------- ----------- ----------- ----------
Net Asset Value, End of
Period................. $ 13.83 $ 12.44 $ 12.18 $ 10.59 $ 9.65
=========== =========== =========== =========== ==========
Total Return............ 11.61% 2.13% 15.41% 9.74% (6.76%)
Ratios/Supplementary
Data:
Net Assets at end of
period................. $18,371,025 $18,784,361 $17,000,747 $11,645,200 $9,537,019
Ratio of expenses to
average net assets..... 2.05% 1.90% 2.00% 2.38% 2.34%
Ratio of net investment
income (loss) to
average net assets..... (0.66%) (0.46%) (0.35%) (0.39%) (1.13%)
Ratio of expenses to
average net assets*.... 2.11% (a) (a) (a) (a)
Portfolio turnover rate. 73% 34% 65% 86% 87%
</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) There were no waivers or reimbursements during this period.
See notes to financial statements.
36
<PAGE>
Parkstone Advantage Fund
Board of Trustees
Robert D. Neary
Chairman
Retired Co-Chairman, Ernst & Young
Director:
Cold Metal Products, Inc.
Strategic Distribution, Inc.
Herbert R. Martens, Jr.
President
Executive Vice President,
National City Corporation
Chairman, President and Chief Executive
Officer, NatCity Investments, Inc.
Leigh Carter
Retired President and Chief Operating
Officer, B.F. Goodrich Company
Director:
Kirtland Capital Corporation
Morrison Products
TruSeal Technologies
John F. Durkott
President and Chief Operating Officer,
Kittle's Home Furnishings Center, Inc.
Robert J. Farling
Retired Chairman, President and Chief
Executive Officer, Centerior Energy
Richard W. Furst, Dean
Professor of Finance and Dean
Carol Martin Gatton College of Business
and Economics, University of Kentucky
Director:
Foam Design, Inc.
The Seed Corporation
Gerald L. Gherlein
Executive Vice President and General
Counsel, Eaton Corporation
Trustee:
WVIZ Educational Television
J. William Pullen
President and Chief Executive Officer,
Whayne Supply Company
The Parkstone Advantage Fund Trustees also serve as the Trustees of the Armada
Funds and Parkstone Group of Funds.
[LOGO OF THE PARKSTONE ADVANTAGE APPEARS HERE]
<PAGE>
The Parkstone Advantage Fund
. Bond Fund
. Mid Capitalization Fund
. Small Capitalization Fund
. International Discovery Fund
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
Not FDIC Insured contains details concerning the sales charges and other
pertinent information.
----------------
Bulk Rate
U.S. Postage
PAID
Cleveland, Ohio
Permit No. 1535
----------------
PAR-F-003-01000
(2/99)
