Armada Funds · N14AE24 · On 5/13/96 · EX-17.C
Filed On 5/13/96 · SEC File 333-03649 · Accession Number 950152-96-2356
As Of Filer Filing On/For/As Docs:Pgs Issuer Agent
5/13/96 Armada Funds N14AE24 19:636 950152
Registration Statement of an Open-End Investment Company (Business Combination) · Form N-14
Filing Table of Contents
Document/Exhibit Description Pages Size
1: N14AE24 Armada Funds N14AE24 208 823K
2: EX-10.D Material Contract 9 36K
3: EX-11 Statement re: Computation of Earnings Per Share 3 17K
4: EX-12 Statement re: Computation of Ratios 7 29K
5: EX-13.N Annual or Quarterly Report to Security Holders 8 34K
6: EX-14.A Material Foreign Patent 1 8K
7: EX-14.B Material Foreign Patent 1 8K
8: EX-14.C Material Foreign Patent 1 7K
9: EX-17.A Letter re: Director Resignation 4 19K
10: EX-17.B Letter re: Director Resignation 2 14K
11: EX-17.C Letter re: Director Resignation 31 186K
12: EX-17.D Letter re: Director Resignation 42 167K
13: EX-17.E Letter re: Director Resignation 31 162K
14: EX-17.F Letter re: Director Resignation 27 132K
15: EX-17.G Letter re: Director Resignation 96 455K
16: EX-17.H Letter re: Director Resignation 40 188K
17: EX-17.I Letter re: Director Resignation 38 200K
18: EX-17.J Letter re: Director Resignation 43 250K
19: EX-17.K Letter re: Director Resignation 44 225K
EXHIBIT 17(c)
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PROSPECTUS
September 28, 1995
ARMADA EQUITY FUND
ARMADA EQUITY INCOME FUND
ARMADA MID CAP REGIONAL FUND
[LOGO]
ARMADA
FUNDS
EQUITY
SERIES
TABLE OF CONTENTS
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PAGE
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Expense Table............................................................................. 2
Financial Highlights...................................................................... 4
Introduction.............................................................................. 6
Risk Factors, Investment Objectives and Policies.......................................... 7
Investment Limitations.................................................................... 13
Yield and Performance Information......................................................... 14
Pricing of Shares......................................................................... 15
How to Purchase and Redeem Shares......................................................... 15
Distribution Agreement.................................................................... 20
Shareholder Services Plan................................................................. 20
Dividends and Distributions............................................................... 21
Taxes..................................................................................... 21
Management of the Trust................................................................... 23
Description of the Trust and its Shares................................................... 26
Custodian and Transfer Agent.............................................................. 27
Expenses.................................................................................. 27
Miscellaneous............................................................................. 27
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- SHARES OF THE ARMADA FUNDS ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED OR OTHERWISE SUPPORTED BY, NATIONAL CITY BANK; NATIONAL
CITY BANK, COLUMBUS; NATIONAL CITY BANK, KENTUCKY; NATIONAL ASSET MANAGEMENT
CORPORATION, THEIR PARENT COMPANY OR ANY OF THEIR AFFILIATES OR ANY BANK.
- SHARES OF THE ARMADA FUNDS ARE NOT INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT, FDIC, OR ANY GOVERNMENTAL AGENCY OR STATE.
- AN INVESTMENT IN THE ARMADA FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
National City Bank and certain of its affiliates serve as investment advisers to
Armada Funds for which they receive an investment advisory fee. Past performance
is not indicative of future performance, and the investment return will
fluctuate, so that you may have a gain or loss when you sell your shares.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST
OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE TRUST
OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
ARMADA FUNDS
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290 Donald Lynch Boulevard If you purchased your shares through National City
Marlboro, Massachusetts 01752 Investments Corporation, please call your Investment
Consultant for information.
For current performance, fund information, and to purchase
shares, please call 1-800-622-FUND (3863).
For account redemption information, please call
1-800-628-0523.
This Prospectus (formerly "NCC Funds"), describes shares in the following
three investment funds (the "Funds") of Armada Funds (the "Trust") each having
its own investment objective and policies:
EQUITY FUND'S investment objective is to seek a high level of total return
arising out of capital appreciation and income. The Fund invests in common
stocks and securities convertible into common stocks.
EQUITY INCOME FUND'S investment objective is to seek a competitive total
rate of return through investments in equity and equity equivalent securities
which carry premium current yields.
MID CAP REGIONAL FUND'S investment objective is to seek capital
appreciation by investing in a diversified fund of publicly traded equity
securities of issuers which are domiciled primarily in Ohio, Indiana and
Kentucky and contiguous states and other states in which National City
Corporation affiliates are located.
The net asset value per share of each Fund will fluctuate as the value of
its investment portfolio changes in response to changing market prices and other
factors.
National City Bank ("National City"), National City Bank, Columbus
("National City Columbus") and National City Bank, Kentucky ("National City
Kentucky") serve as investment advisers to the Equity Fund and the Equity Income
Fund; National City individually serves as investment adviser to the Mid Cap
Regional Fund (each, an "adviser" and collectively, the "advisers").
440 Financial Distributors, Inc., a wholly-owned subsidiary of First Data
Corp. (the "Distributor"), serves as the Trust's sponsor and distributor. Each
Fund pays a fee to the Distributor for distributing its shares. See
"Distribution Agreement."
This Prospectus sets forth concisely the information about the Funds that a
prospective investor should consider before investing. Investors should
carefully read this Prospectus and retain it for future reference. Additional
information about the Funds, contained in a Statement of Additional Information,
has been filed with the Securities and Exchange Commission ("SEC") and is
available upon request without charge by contacting the Trust at its telephone
number or address shown above. The Statement of Additional Information bears the
same date as this Prospectus and is incorporated by reference in its entirety
into this Prospectus.
SHARES OF THE TRUST ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED OR OTHERWISE SUPPORTED BY, NATIONAL CITY BANK, NATIONAL CITY BANK,
COLUMBUS, NATIONAL CITY BANK, KENTUCKY, THEIR PARENT COMPANY OR ANY OF THEIR
AFFILIATES, AND ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE U.S. GOVERNMENT,
FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY GOVERNMENTAL AGENCY OR STATE.
INVESTMENT IN THE TRUST INVOLVES RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
September 28, 1995
The classes or series which represent interests in the Funds are described
in this Prospectus. Class H, Class M and Class N shares constitute the
Institutional class or series of shares (herein referred to as the
"Institutional shares") of the Equity Fund, Equity Income Fund and Mid Cap
Regional Fund, respectively. Class H -- Special Series 1, Class M -- Special
Series 1 and Class N -- Special Series 1 shares constitute the Retail class or
series of shares (herein referred to as the "Retail shares") of the Equity Fund,
Equity Income Fund and Mid Cap Regional Fund, respectively.
Institutional shares are sold primarily to Banks and National Asset
Management Corporation ("NAM") customers. Retail shares are sold to the public
primarily through financial institutions such as banks, brokers and dealers.
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EXPENSE TABLE
EQUITY MID CAP MID CAP
EQUITY EQUITY INCOME EQUITY INCOME REGIONAL REGIONAL
RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL
SHARES(1) SHARES SHARES(1) SHARES SHARES(1) SHARES
------ ------------- ---------- ------------- ------------ ------------
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases... 3.75% None 3.75% None 3.75% None
Sales Charge Imposed on Reinvested
Dividends................................. None None None None None None
Deferred Sales Charge....................... None None None None None None
Redemption Fee.............................. None None None None None None
Exchange Fee................................ None None None None None None
FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees............................. .75% .75% .75% .75% .75% .75%
12b-1 Fees(2)............................... .05%(2) .05%(2) .05%(2) .05%(2) .05%(2) .05%(2)
Other Expenses (after fee waivers)(3)....... .47%(3) .22%(3) .56%(3) .31%(3) .55%(3) .30%(3)
-------- ---------- ---------- ----------- ---------- ---------
TOTAL FUND OPERATING EXPENSES3........ 1.27%(3) 1.02%(3) 1.36%(3) 1.11%(3) 1.35%(3) 1.10%(3)
========= ========== ========== =========== ========== ==========
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<FN>
(1) The Trust has implemented a Shareholder Services Plan (the "Services Plan")
with respect to Retail shares in each of the Funds. Pursuant to the Services
Plan, the Trust enters into shareholder servicing agreements with certain
financial institutions under which they agree to provide shareholder
administrative services to their customers who beneficially own Retail
shares in consideration for the payment of up to .25% (on an annualized
basis) of the net asset value of such shares. For further information
concerning the Services Plan, see "Shareholder Services Plan."
(2) As a result of the payment of sales charges and 12b-1 and certain other
related fees, long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charge permitted by the National
Association of Securities Dealers, Inc. ("NASD"). The NASD has adopted rules
which generally limit the aggregate sales charges and payments under the
Trust's Service and Distribution Plan ("Distribution Plan") and Services
Plan to a certain percentage of total new gross share sales, plus interest.
The Trust would stop accruing 12b-1 and related fees if, to the extent, and
for as long as, such limit would otherwise be exceeded.
(3) The expense information in the table relating to each Fund has been restated
to reflect current fees. For the current fiscal year, the Custodian is
expected to discontinue its waiver of fees in the amount of approximately
.01% of the average daily net assets of each Fund on January 1, 1996.
Without such fee waivers, Total Fund Operating Expenses would be 1.03% and
1.28% for the Institutional and Retail shares of the Equity Fund,
respectively, 1.12% and 1.37% for the Institutional and Retail shares of the
Equity Income Fund, respectively, and 1.11% and 1.36% for the Institutional
and Retail shares of the Mid Cap Regional Fund, respectively.
2
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For example, you would pay the following expenses on a hypothetical $1,000
investment, assuming: (1) a 5% annual return (a hypothetical return required by
SEC regulations); and (2) the redemption of your investment at the end of the
following time periods (none of the Funds charges a redemption fee):
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1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------ ------------ ------------ ------------
Equity Retail Shares................................... $ 50 $ 76 $105 $185
Equity Institutional Shares............................ $ 10 $ 32 $ 56 $125
Equity Income Retail Shares............................ $ 51 $ 79 $109 $195
Equity Income Institutional Shares..................... $ 11 $ 35 $ 61 $135
Mid Cap Regional Retail Shares......................... $ 51 $ 79 $109 $194
Mid Cap Regional Institutional Shares.................. $ 11 $ 35 $ 61 $134
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATES OF RETURN. ACTUAL EXPENSES AND RATES OF RETURN MAY BE GREATER
OR LESS THAN THOSE SHOWN.
The purpose of this Expense Table is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly. For more complete descriptions of these costs and expenses, see
"Financial Highlights," "Management of the Trust" and "Distribution Agreement"
in this Prospectus and the financial statements and related notes incorporated
by reference into the Statement of Additional Information for the Funds.
3
FINANCIAL HIGHLIGHTS
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
EQUITY FUND
The following table has been audited by Ernst & Young LLP, independent
auditors, whose report is incorporated by reference in the Statement of
Additional Information. It should be read in conjunction with the financial
statements and related notes which are incorporated by reference in the
Statement of Additional Information.
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YEAR
YEAR ENDED YEAR YEAR YEAR YEAR YEAR YEAR
ENDED MAY ENDED ENDED ENDED ENDED ENDED ENDED
MAY 31, 31, MAY 31, MAY 31, MAY 31, MAY 31, MAY 31, MAY 31,
1995 1995 1994 1994 1993 1993 1992 1992
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL
------------- ------ ------------- ------- ------------- ------- ------------- -------
Net Asset Value, Beginning of
Period....................... $ 13.66 $13.68 $ 13.78 $13.80 $ 13.13 $13.13 $ 12.35 $12.35
---------- -------- --------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income........ .21 .18 .18 .15 .27 .23 .30 .25
Net Realized and Unrealized
Gain (Loss) on
Securities................. 1.21 1.21 .01 .00 .67 .68 .78 .78
---------- -------- --------- -------- -------- -------- -------- --------
Total Income from Investment
Operations................... 1.42 1.39 .19 .15 .94 .91 1.08 1.03
---------- -------- --------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from Net Investment
Income..................... (.20) (.17) (.18) (.15) (.27) (.23) (.30) (.25)
Dividends in Excess of Net
Investment Income.......... (.00) (.00) (.01) (.00) (.02) (.01) (.00) (.00)
Dividends from Net Realized
Capital Gains.............. (.00) (.00) (.11) (.11) (.00) (.00) (.00) (.00)
Dividends in excess of Net
Realized Capital Gains..... (.11) (.11) (.01) (.01) (.00) (.00) (.00) (.00)
---------- -------- --------- -------- -------- -------- -------- --------
Total Distributions.......... (.31) (.28) (.31) (.27) (.29) (.24) (.30) (.25)
---------- -------- --------- -------- -------- -------- -------- --------
Net Asset Value, End of
Period..................... $ 14.77 $14.79 $ 13.66 $13.68 $ 13.78 $13.80 $ 13.13 $13.13
========= ======== ========= ======== ======== ======== ======== ========
Total Return................. 10.62% 10.35%(5) 1.41% 1.12%(5) 7.20% 7.00%(5) 8.90% 8.48%(5)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
(000s)..................... $ 119,634 $5,974 $90,446 $7,521 $85,256 $7,707 $48,673 $2,767
Ratio of Expenses to Average
Net Assets................. 1.01%(1) 1.27%(2) 1.07% 1.32% .34%(1) .59%(2) .26%(1) .51%(2)
Ratio of Net Investment
Income to Average Net
Assets..................... 1.53%(1) 1.23%(2) 1.33% 1.08% 2.13%(1) 1.88%(2) 2.36%(1) 2.15%(2)
Portfolio Turnover Rate...... 17% 17% 15% 15% 15% 15% 9% 9%
FOR THE PERIOD
YEAR YEAR DECEMBER 20,
ENDED ENDED 1989
MAY 31, MAY 31, (COMMENCEMENT OF
1991 1991 OPERATIONS) TO
INSTITUTIONAL RETAIL(3) MAY 31, 1990
------------- ------- ----------------
Net Asset Value, Beginning of
Period....................... $ 10.77 $12.04 $ 10.00
-------- -------- ---------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income........ .31 .04 .13
Net Realized and Unrealized
Gain (Loss) on
Securities................. 1.58 .27 .71
-------- -------- ---------
Total Income from Investment
Operations................... 1.89 .31 .84
-------- -------- ---------
LESS DISTRIBUTIONS
Dividends from Net Investment
Income..................... (.31) (.00) (.07)
Dividends in Excess of Net
Investment Income.......... (.00) (.00) (.00)
Dividends from Net Realized
Capital Gains.............. (.00) (.00) (.00)
Dividends in excess of Net
Realized Capital Gains..... (.00) (.00) (.00)
-------- -------- ---------
Total Distributions.......... (.31) (.00) (.07)
-------- -------- ---------
Net Asset Value, End of
Period..................... $ 12.35 $12.35 $ 10.77
======== ======== =========
Total Return................. 18.10% 21.82%(4,5) 20.09%(4)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
(000s)..................... $42,112 $1,389 $ 34,034
Ratio of Expenses to Average
Net Assets................. .31%(1) .53%(2,4) .36%(1,4)
Ratio of Net Investment
Income to Average Net
Assets..................... 2.90%(1) 2.94%(2,4) 3.30%(1,4)
Portfolio Turnover Rate...... 11% 11% 5%
<FN>
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(1) The operating expense ratio and the net investment income ratio before fee
waiver by the Custodian for the Institutional class for the year ended
May 31, 1995 would have been 1.02% and 1.51%. The operating expense ratio
and the net investment income ratio before fee waivers by the Investment
Advisers for the Institutional class for the years ended May 31, 1993, 1992
and 1991 would have been 1.01% and 1.46%, 1.01% and 1.61%, and 1.06% and
2.15%, respectively.
(2) The operating expense ratio and the net investment income ratio before fee
waiver by the Custodian for the Retail class for the year ended May 31,
1995 would have been 1.28% and 1.22%. The operating expense ratio and the
net investment income ratio before fee waivers by the Investment Advisers
for the Retail class for the years ended May 31, 1993 and 1992 and for the
period ended May 31, 1991 would have been 1.26% and 1.21%, 1.27% and 1.40%,
and 1.28% and 2.19%, respectively.
(3) Retail class commenced operations on April 15, 1991.
(4) Annualized.
(5) Total Return excludes sales load.
4
FINANCIAL HIGHLIGHTS
(FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD)
EQUITY INCOME FUND
The following table has been audited by Ernst & Young LLP, independent
auditors, whose report is incorporated by reference in the Statement of
Additional Information. It should be read in conjunction with the financial
statements and related notes which are incorporated by reference in the
Statement of Additional Information.
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FOR THE PERIOD
ENDED MAY 31, 1995
----------------------------
INSTITUTIONAL(3) RETAIL(3)
-------------- ---------
Net asset value beginning of period.................................. $ 10.00 $ 10.26
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INCOME FROM INVESTMENT OPERATIONS
Net investment income.............................................. .34 .26
Net gain on securities (realized and unrealized)................... .94 .75
-------------- ---------
Total from investment operations........................... 1.28 1.01
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LESS DISTRIBUTIONS
Dividends from net investment income............................ (.27) (.26)
-------------- ---------
Total distributions........................................ (.27) (.26)
-------------- ---------
Net asset value, end of period....................................... $ 11.01 $ 11.01
============ ========
TOTAL RETURN......................................................... 14.34%(4) 13.18%(4,5)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)................................. $ 36,194 $ 125
Ratio of expenses to average net assets.............................. .99%(1,4) 1.41%(2,4)
Ratio of net investment income to average net assets................. 3.87%(1,4) 3.45%(2,4)
Portfolio Turnover Rate.............................................. 12% 12%
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<FN>
(1) The operating expense ratio and the net investment income ratio before fee
waivers by the Investment Advisers, Administrator, and Custodian for the
Institutional class for the period ended May 31, 1995 would have been 1.21%
and 3.66%, respectively.
(2) The operating expense ratio and the net investment income ratio before fee
waivers by the Investment Advisers, Administrator, and Custodian for the
Retail class for the period ended May 31, 1995 would have been 1.45% and
3.40%, respectively.
(3) Institutional and Retail classes commenced operations on July 1, 1994 and
August 22, 1994, respectively.
(4) Annualized.
(5) Total Return excludes sales load.
5
FINANCIAL HIGHLIGHTS
(FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD)
MID CAP REGIONAL FUND
The following table has been audited by Ernst & Young LLP, independent
auditors, whose report is incorporated by reference in the Statement of
Additional Information. It should be read in conjunction with the financial
statements and related notes which are incorporated by reference in the
Statement of Additional Information.
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FOR THE PERIOD
ENDED MAY 31, 1995
----------------------------
INSTITUTIONAL(3) RETAIL(3)
-------------- ---------
Net asset value, beginning of period................................. $ 10.00 $ 10.16
-------------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income........................................... .10 .07
Net gains on securities (realized and unrealized)............... 1.36 1.11
-------------- ---------
Total from investment operations........................... 1.46 1.18
-------------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income............................ (.04) (.04)
Dividends from net realized capital gains....................... (.04) (.04)
-------------- ---------
Total distributions........................................ (.08) (.08)
-------------- ---------
Net asset value, end of period....................................... $ 11.38 $ 11.26
============ ========
TOTAL RETURN......................................................... 17.42%(4) 14.80%(4,5)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)................................. $ 50,993 $ 3,567
Ratio of expenses to average net assets.............................. 1.01%(1,4) 1.34%(2,4)
Ratio of net investment income to average net assets................. 1.31%(1,4) 1.09%(2,4)
Portfolio Turnover Rate.............................................. 69% 69%
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<FN>
(1) The operating expense ratio and the net investment income ratio before fee
waivers by the Investment Adviser, Administrator, and Custodian for the
Institutional class for the period ended May 31, 1995 would have been 1.15%
and 1.17%, respectively.
(2) The operating expense ratio and the net investment income ratio before fee
waivers by the Investment Adviser, Administrator, and Custodian for the
Retail class for the period May 31, 1995 would have been 1.38% and 1.05%,
respectively.
(3) Institutional and Retail classes commenced operations on July 26, 1994 and
August 15, 1994, respectively.
(4) Annualized.
(5) Total Return excludes sales load.
INTRODUCTION
The Trust is an open-end management investment company registered under the
Investment Company Act of 1940, as amended ("1940 Act"). Each Fund consists of a
separate pool of assets with separate investment objectives and policies, as
described below under "Investment Objectives and Policies." Each Fund is
classified as a diversified investment fund under the 1940 Act.
6
Shares of each Fund have been classified into two separate classes --
Retail shares and Institutional shares. Retail shares and Institutional shares
represent equal pro rata interests in a Fund except that, as described more
fully below under "Shareholder Services Plan," the Trust has implemented the
Services Plan with respect to Retail shares in the Funds. Under the Services
Plan, only the beneficial owners of Retail shares bear the expenses of
shareholder administrative services which are provided by financial institutions
for their benefit (estimated not to exceed .25% annually). See "Shareholder
Services Plan," "Dividends and Distributions" and "Description of the Trust and
Its Shares" for a description of the impact that the Services Plan may have on
holders of Retail shares.
RISK FACTORS, INVESTMENT OBJECTIVES AND POLICIES
The Trust uses a range of different investments and investment techniques
in seeking to achieve a Fund's investment objective. The investments and
investment techniques utilized by the Funds are described below. Prior to making
an investment decision, an investor should consider which Fund or Funds best
meet an investor's investment objectives and review carefully the risks involved
in Fund investments as described below.
The investment objective of a Fund may not be changed without the vote of
the holders of a majority of its outstanding shares (as defined in
"Miscellaneous"). Except as noted below under "Investment Limitations," a Fund's
investment policies, however, may be changed without a vote of shareholders. In
addition, each Fund may sell portfolio securities shortly after they are
purchased, which may result in higher transaction costs and taxable gains for
the Fund. There can be no assurance that a Fund will achieve its objective.
EQUITY FUND
The investment objective of the Equity Fund is to seek a high level of
total return arising out of capital appreciation and income. The Fund seeks to
achieve its objective by investing substantially all of its assets in a
diversified portfolio of common stocks and securities convertible into common
stocks. Under normal conditions, at least 80% of the Fund's total assets will be
invested in common stocks and securities convertible into common stocks. The
Fund's advisers select common stocks based on a number of factors, including
historical and projected earnings growth, earnings quality and liquidity, each
in relation to the market price of the stock. Stocks purchased for the Fund
generally will be listed on a national securities exchange or will be unlisted
securities with an established over-the-counter market. The Fund may also invest
up to 20% of its total assets at the time of purchase in American Depository
Receipts ("ADRs") and securities issued by foreign issuers.
During temporary defensive periods the Fund may invest in various short
term obligations described below under "Common Investment Policies of the
Funds."
EQUITY INCOME FUND
The investment objective of the Equity Income Fund is to seek a competitive
total rate of return through investments in equity and equity equivalent
securities which carry premium current yields. Under normal conditions, at least
65% of the value of the Fund's total assets will be invested in common stocks
and securities convertible into common stocks.
The Fund's advisers will generally try to select securities that provide a
higher yield than the general market and will generally dispose of those
securities as their yield approaches a market yield or they no longer meet
purchase criteria in other respects.
Exchange Rate-Related Securities. The Equity Income Fund may invest in
securities for which the principal repayment at maturity, while paid in U.S.
dollars, is determined by reference to the exchange rate between the U.S. dollar
and the currency of one or more foreign countries ("Exchange Rate-Related
Securities"). The interest payable on these securities is denominated in U.S.
7
dollars and is not subject to foreign currency risk and, in most cases, is paid
at rates higher than most other similarly rated securities in recognition of the
foreign currency risk component of Exchange Rate-Related Securities.
Investments in Exchange Rate-Related Securities entail certain risks. There
is the possibility of significant changes in rates of exchange between the U.S.
dollar and any foreign currency to which an Exchange Rate-Related Security is
linked. In addition, there is no assurance that sufficient trading interest to
create a liquid secondary market will exist for a particular Exchange
Rate-Related Security due to conditions in the debt and foreign currency
markets. Illiquidity in the forward foreign exchange market and the high
volatility of the foreign exchange market may from time to time combine to make
it difficult to sell an Exchange Rate-Related Security prior to maturity without
incurring a significant price loss.
Forward Currency Exchange Contracts. The Equity Income Fund may enter into
forward currency exchange contracts in an effort to reduce the level of
volatility caused by changes in foreign currency exchange rates or where such
transactions are economically appropriate for the reduction of risks inherent in
the ongoing management of the Fund. The Fund may not enter into such contracts
for speculative purposes. A forward currency exchange contract is an obligation
to purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of contract. Although such contracts tend to minimize the
risk of loss due to a decline in the value of the hedged currency, at the same
time they tend to limit any potential gain that might be realized should the
value of such currency increase. Consequently, the Fund may choose to refrain
from entering into such contracts. In connection with forward currency exchange
contracts, the Fund will create a segregated account of liquid assets, such as
cash, U.S. Government securities or other liquid high grade debt obligations, or
will otherwise cover its position in accordance with applicable requirements of
the SEC.
During temporary defensive periods the Fund may invest in various short
term obligations described below under "Common Investment Policies of the
Funds."
MID CAP REGIONAL FUND
The investment objective of the Mid Cap Regional Fund is to seek capital
appreciation by investing in a diversified portfolio of publicly traded equity
securities of issuers which are domiciled primarily in Ohio, Indiana and
Kentucky and contiguous states and other states in which National City
Corporation affiliates are located. Under normal conditions, at least 65% of the
value of the Fund's total assets will be invested in equity securities. In
addition, under normal conditions, the Fund will invest at least 60% of the
value of its total assets in equity securities of companies with market
capitalization ranging from $100 million to $2 billion.
Options. The Mid Cap Regional Fund may write covered call options, buy put
options, buy call options and sell or "write" secured put options on a national
securities exchange and issued by the Options Clearing Corporation for hedging
purposes. Such transactions may be effected on a principal basis with primary
reporting dealers in U.S. Government securities in an amount not exceeding 5% of
a Fund's net assets, as described further in the Statement of Additional
Information. Such options may relate to particular securities or to various
stock indices or bond indices. Purchasing options is a specialized investment
technique which entails a substantial risk of a complete loss of the amounts
paid as premiums to the writer of the option.
A call option for a particular security gives the purchaser of the option
the right to buy, and a writer the obligation to sell, the underlying security
at the stated exercise price at any time prior to the expiration of the option,
regardless of the market price of the security. The premium paid to the writer
is the consideration for undertaking the obligations under the option contract.
A put option for a particular security gives the purchaser the right to sell the
underlying security at the stated exercise price at any time prior to the
expiration date of the option, regardless of the market price of the security.
In
8
contrast to an option on a particular security, an option on a securities index
provides the holder with the right to make or receive a cash settlement upon
exercise of the option.
The Mid Cap Regional Fund may purchase and sell put options on portfolio
securities at or about the same time that it purchases the underlying security
or at a later time. By buying a put, the Fund limits its risk of loss from a
decline in the market value of the security until the put expires. Any
appreciation in the value of and yield otherwise available from the underlying
security, however, will be partially offset by the amount of the premium paid
for the put option and any related transaction costs. Call options may be
purchased by the Fund in order to acquire the underlying security at a later
date at a price that avoids any additional cost that would result from an
increase in the market value of the security. The Fund may also purchase call
options to increase its return to investors at a time when the call is expected
to increase in value due to anticipated appreciation of the underlying security.
Prior to its expiration, a purchased put or call option may be sold in a closing
sale transaction (a sale by the Fund, prior to the exercise of an option that it
has purchased, of an option of the same series), and profit or loss from the
sale will depend on whether the amount received is more or less than the premium
paid for the option plus the related transaction costs.
In addition, the Mid Cap Regional Fund may write covered call and secured
put options. A covered call option means that the Fund owns or has the right to
acquire the underlying security subject to call at all times during the option
period. A secured put option means that the Fund maintains in a segregated
account with its custodian cash or U.S. Government securities in an amount not
less than the exercise price of the option at all times during the option
period. Such options will be listed on a national securities exchange and issued
by the Options Clearing Corporation and may be effected on a principal basis
with primary reporting dealers in U.S.
Government securities. The aggregate value of the securities subject to
options written by the Fund will not exceed 25% of the value of its net assets.
In order to close out an option position prior to maturity, the Fund may enter
into a "closing purchase transaction" by purchasing a call or put option
(depending upon the position being closed out) on the same security with the
same exercise price and expiration date as the option which it previously wrote.
Options trading is a highly specialized activity and carries greater than
ordinary investment risk. Purchasing options may result in the complete loss of
the amounts paid as premiums to the writer of the option. In writing a covered
call option, the Fund gives up the opportunity to profit from an increase in the
market price of the underlying security above the exercise price (except to the
extent the premium represents such a profit). Moreover, it will not be able to
sell the underlying security until the covered call option expires or is
exercised or the Fund closes out the option. In writing a secured put option,
the Fund assumes the risk that the market value of the security will decline
below the exercise price of the option. The use of covered call and secured put
options will not be a primary investment technique of the Fund.
Futures Contracts and Related Options. The Mid Cap Regional Fund may
invest in futures contracts and options on futures contracts for hedging
purposes or to maintain liquidity.
Futures contracts obligate the Fund, at maturity, to take or make delivery
of certain securities or the cash value of a securities index. The Fund may sell
a futures contract in order to offset a decrease in the market value of its
portfolio securities that might otherwise result from a market decline. The Fund
may do so either to hedge the value of its portfolio of securities as a whole or
to protect against declines occurring prior to sales of securities in the value
of the securities to be sold. Conversely, the Fund may purchase a futures
contract in anticipation of purchases of securities. In addition, the Fund may
utilize futures contracts in anticipation of changes in the composition of its
holdings.
The Fund may purchase and sell call and put options on futures contracts
traded on an exchange
9
or board of trade. When the Fund purchases an option on a futures contract, it
has the right to assume a position as a purchaser or seller of a futures
contract at a specified exercise price at any time during the option period.
When the Fund sells an option on a futures contract, it becomes obligated to
purchase or sell a futures contract if the option is exercised. In anticipation
of a market advance, the Fund may purchase call options on futures contracts as
a substitute for the purchase of futures contracts to hedge against a possible
increase in the price of securities which the Fund intends to purchase.
Similarly, if the value of the Fund's securities is expected to decline, the
Fund might purchase put options or sell call options on futures contracts rather
than sell futures contracts.
The Fund intends to comply with the regulations of the Commodity Futures
Trading Commission ("CFTC") exempting it from registration as a "commodity pool
operator." The Fund's commodities transactions must constitute bona fide hedging
or other permissible transactions pursuant to such regulations. In addition, the
Fund may not engage in such transactions if the sum of the amount of initial
margin deposits and premiums paid for unexpired commodity options, other than
for bona fide hedging transactions, would exceed 5% of the liquidation value of
its assets, after taking into account unrealized profits and unrealized losses
on such contracts it has entered into; provided, however, that in the case of an
option that is in-the-money at the time of purchase, the in-the-money amount may
be excluded in calculating the percentage limitation. In connection with the
Fund's position in a futures contract or option thereon, it will create a
segregated account of liquid assets, such as cash, U.S. Government securities or
other liquid high grade debt obligations, or will otherwise cover its position
in accordance with applicable requirements of the SEC.
The primary risks associated with the use of futures contracts and options
are: (i) an imperfect correlation between the change in market value of the
securities held by the Fund and the price of the futures contracts and options;
(ii) possible lack of a liquid secondary market for a futures contract and the
resulting inability to close a futures contract when desired; (iii) losses due
to unanticipated market movements which are potentially unlimited; and (iv) the
adviser's ability to predict correctly the direction of securities prices,
interest rates and other economic factors. For further information, see "Risk
Factors, Investment Objectives and Policies -- Futures Contracts and Options"
and Appendix B in the Statement of Additional Information.
During temporary defensive periods the Fund may invest in various short
term obligations described below under "Common Investment Policies of the
Funds."
COMMON INVESTMENT POLICIES OF THE FUNDS
Foreign Securities and American Depository Receipts
Each Fund may invest in securities issued by foreign issuers either
directly or indirectly through investments in ADRs. ADRs are receipts issued by
an American bank or trust company evidencing ownership of underlying securities
issued by foreign issuers. ADRs may be listed on a national securities exchange
or may be traded in the over-the-counter market. ADR prices are denominated in
U.S. dollars; the underlying security may be denominated in a foreign currency.
Investments in foreign securities involve certain inherent risks, such as
political or economic instability of the issuer or the country of issue, the
difficulty of predicting international trade patterns, changes in exchange rates
of foreign currencies and the possibility of adverse changes in investment or
exchange control regulations. There may be less publicly available information
about a foreign company than about a domestic company. Foreign companies
generally are not subject to uniform accounting, auditing and financial
reporting standards comparable to those applicable to domestic companies.
Further, foreign stock markets are generally not as developed or efficient as
those in the U.S., and in most foreign markets volume and liquidity are less
than in the U.S. Fixed commissions on foreign stock exchanges are generally
higher than the negotiated commissions on U.S. exchanges, and there is generally
less government supervision and regulation of foreign stock ex-
10
changes, brokers and companies than in the U.S. With respect to certain foreign
countries, there is a possibility of expropriation or confiscatory taxation,
limitations on the removal of funds or other assets, or diplomatic developments
that could affect investment within those countries. Because of these and other
factors, securities of foreign companies acquired by the Funds may be subject to
greater fluctuation in price than securities of domestic companies. For further
information, see "Risk Factors, Investment Objectives and Policies" in the
Statement of Additional Information.
When-Issued Securities
Each Fund may purchase securities on a "when-issued" or delayed delivery
basis. These transactions are arrangements in which a Fund purchases securities
with payment and delivery scheduled for a future time. These transactions
involve the risk that the price or yield obtained may be less favorable than the
price or yield available when delivery takes place. Each Fund expects that
commitments to purchase when-issued securities will not exceed 25% of the value
of its total assets under normal market conditions. The Funds do not intend to
purchase when-issued securities for speculative purposes but only for the
purpose of acquiring portfolio securities. In when-issued and delayed delivery
transactions, a Fund relies on the seller to complete the transaction; its
failure to do so may cause the Fund to miss a price or yield considered to be
attractive. For further information, see "Risk Factors, Investment Objectives
and Policies" in the Statement of Additional Information.
Short Term Obligations
During temporary defensive periods each Fund may hold some short term
obligations (with maturities of 18 months or less) such as domestic and foreign
commercial paper, bankers' acceptances, certificates of deposit and demand and
time deposits of domestic and foreign branches of U.S. banks and foreign banks,
U.S. Government securities, repurchase agreements, reverse repurchase agreements
and guaranteed investment contracts ("GICs"). In the case of repurchase
agreements, default or bankruptcy of the seller may expose a Fund to possible
loss because of adverse market action or delays connected with the disposition
of the underlying obligations. Further, it is uncertain whether the Fund would
be entitled, as against a claim by such seller or its receiver or trustee in
bankruptcy, to retain the underlying securities. Reverse repurchase agreements
involve the risk that the market value of the securities held by a Fund may
decline below the price of the securities it is obligated to repurchase. For
further information, see "Risk Factors, Investment Objectives and Policies" in
the Statement of Additional Information.
Lending Portfolio Securities
In order to generate additional income, each Fund may, from time to time,
lend its portfolio securities to broker-dealers, banks or other institutional
borrowers. A Fund must receive 100% collateral in the form of cash or U.S.
Government securities. This collateral must be valued daily by the Fund's
adviser or advisers and the borrower will be required to provide additional
collateral should the market value of the loaned securities increase. During the
time portfolio securities are on loan, the borrower pays the Fund involved any
dividends or interest paid on such securities. Loans are subject to termination
by the Fund or the borrower at any time. While a Fund does not have the right to
vote securities on loan, it intends to terminate the loan and regain the right
to vote if this is considered important with respect to the investment. A Fund
will only enter into loan arrangements with broker-dealers, banks or other
institutions which its adviser or advisers have determined are creditworthy
under guidelines established by the Trust's Board of Trustees.
Securities of Other Investment Companies
Subject to 1940 Act limitations and pursuant to applicable SEC
requirements, each Fund may invest in securities issued by other investment
companies (including other investment companies advised by the advisers) which
invest in high quality, short-term debt securities and which determine their net
asset value per share based on the amortized cost or penny-rounding method. As a
shareholder of another investment company, a Fund would bear, along with other
shareholders, its pro rata portion of that company's expenses, including
11
advisory fees. These expenses would be in addition to the advisory and other
expenses that the Fund bears directly in connection with its own operations.
Investment companies in which a Fund may invest may also impose a sales or
distribution charge in connection with the purchase or redemption of their
shares and other types of commissions or charges. Such charges will be payable
by the Fund and, therefore, will be borne indirectly by its shareholders. For
further information, see "Risk Factors, Investment Objectives and Policies" in
the Statement of Additional Information.
Illiquid Securities
The Equity Fund will not knowingly invest more than 10% of its net assets
and the Equity Income and Mid Cap Regional Funds will not knowingly invest more
than 15% of their respective net assets in securities that are illiquid.
Illiquid securities would generally include repurchase agreements and GICs with
notice/termination dates in excess of seven days and certain securities which
are subject to trading restrictions because they are not registered under the
Securities Act of 1933, as amended (the "1933 Act").
Each Fund may purchase securities which are not registered under the 1933
Act but which can be sold to "qualified institutional buyers" in accordance with
Rule 144A under the 1933 Act. Any such security will not be considered illiquid
so long as it is determined by the Board of Trustees or the Fund's adviser or
advisers, acting under guidelines approved and monitored by the Board, that an
adequate trading market exists for that security. This investment practice could
have the effect of increasing the level of illiquidity in a Fund during any
period that qualified institutional buyers become uninterested in purchasing
these restricted securities. The ability to sell to qualified institutional
buyers under Rule 144A is a recent development, and it is not possible to
predict how this market will develop. The Board will carefully monitor any
investment by a Fund in these securities.
Risk Factors Associated with Derivative Instruments
The Mid Cap Regional Fund may purchase certain "derivative" instruments.
Derivative instruments are instruments that derive value from the performance of
underlying securities, interest or currency exchange rates, or indices, and
include (but are not limited to) futures contracts.
Like all investments, derivative instruments involve several basic types of
risks which must be managed in order to meet investment objectives. The specific
risks presented by derivatives include, to varying degrees, market risk in the
form of underperformance of the underlying securities, exchange rates or
indices; credit risk that the dealer or other counterparty to the transaction
will fail to pay its obligations; volatility and leveraging risk that, if
interest or exchange rates change adversely, the value of the derivative
instrument will decline more than the securities, rates or indices on which it
is based; liquidity risk that the Fund will be unable to sell a derivative
instrument when it wants because of lack of market depth or market disruption;
pricing risk that the value of a derivative instrument (such as an option) will
not correlate exactly to the value of the underlying securities, rates or
indices on which it is based; and operations risk that loss will occur as a
result of inadequate systems and controls, human error or otherwise. Some
derivative instruments are more complex than others, and for those instruments
that have been developed recently, data are lacking regarding their actual
performance over complete market cycles.
The adviser will evaluate the risks presented by the derivative instruments
purchased by the Fund, and will determine, in connection with its day-to-day
management of the Fund, how they will be used in furtherance of the Fund's
investment objective.
Portfolio Turnover
Portfolio turnover will tend to rise during periods of economic turbulence
and decline during periods of stable growth. Each Fund's annual port-
12
folio turnover is not expected to exceed 100% under normal market conditions.
For further information, see "Risk Factors, Investment Objective and Policies"
in the Statement of Additional Information.
INVESTMENT LIMITATIONS
Each Fund is subject to a number of investment limitations. The following
investment limitations are matters of fundamental policy and may not be changed
with respect to a particular Fund without the affirmative vote of the Fund's
outstanding shares (as defined under "Miscellaneous"). (Other investment
limitations that also cannot be changed without a vote of shareholders are
contained in the Statement of Additional Information under "Risk Factors,
Investment Objectives and Policies.")
No Fund may:
1. Make loans, except that each Fund may purchase or hold debt instruments,
lend portfolio securities and enter into repurchase agreements in accordance
with its investment objective and policies.
2. Borrow money or issue senior securities, except that each Fund may
borrow from banks and enter into reverse repurchase agreements for temporary
purposes in amounts not in excess of 10% of the value of its total assets at the
time of such borrowing; or mortgage, pledge, or hypothecate any assets except in
connection with any such borrowing and in amounts not in excess of the lesser of
the dollar amounts borrowed or 10% of the value of the Fund's total assets at
the time of such borrowing. A Fund will not purchase securities while borrowings
(including reverse repurchase agreements) in excess of 5% of its total assets
are outstanding.
3. Purchase any securities which would cause 25% or more of the value of
its total assets at the time of such purchase to be invested in securities of
one or more issuers conducting their principal business activities in the same
industry, provided that (a) there is no limitation with respect to obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
and repurchase agreements secured by such obligations, (b) wholly owned finance
companies will be considered to be in the industries of their parents if their
activities are primarily related to financing the activities of their parents,
and (c) utilities will be classified according to their services, for example,
gas, gas transmission, electric and gas, electric, and telephone will each be
considered a separate industry.
4. Purchase securities of any one issuer, other than obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities, if,
immediately after such purchase, more than 5% of the value of the Fund's total
assets would be invested in such issuer or the Fund would hold more than 10% of
any class of securities of the issuer or more than 10% of the outstanding voting
securities of the issuer, except that up to 25% of the value of the Fund's total
assets may be invested without regard to such limitations.
Additional investment limitations which are matters of fundamental policy
are as follows:
5. The Equity Fund may invest no more than 10% of the value of its net
assets in illiquid securities, including repurchase agreements with remaining
maturities in excess of seven days, non-negotiable time deposits, certificates
of participation without corresponding remarketing agreements, and other
securities which are not readily marketable.
6. Neither the Equity Income Fund nor the Mid Cap Regional Fund may invest
more than 15% of the value of its net assets in illiquid securities. See
"Illiquid Securities" under "Investment Objectives and Policies -- Common
Investment Policies of the Funds."
For purposes of investment limitation No. 4, a security is considered to be
issued by the government entity (or entities) whose assets and revenues back the
security.
If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in value of a
Fund's securities will not constitute a violation of such limitation for
purposes of the 1940 Act.
13
In order to permit the sale of the Funds' shares in certain states, the
Trust may make commitments more restrictive than the investment policies and
limitations described above. Should the Trust determine that any such commitment
is no longer in a Fund's best interests, it will revoke the commitment by
terminating sales of the Fund's shares to investors residing in the state
involved.
YIELD AND PERFORMANCE INFORMATION
From time to time, the Trust may quote in advertisements or in reports to
shareholders each Fund's total return data for its Institutional shares and
Retail shares. The Funds calculate their total returns for each class of shares
on an "average annual total return" basis for various periods from the date they
commenced investment operations and for other periods as permitted under the
rules of the SEC. Average annual total return reflects the average annual
percentage change in value of an investment in the class over the measuring
period. Total returns for each class of shares may also be calculated on an
"aggregate total return" basis for various periods. Aggregate total return
reflects the total percentage change in value over the measuring period. Both
methods of calculating total return reflect changes in the price of the shares
and assume that any dividends and capital gain distributions made by a Fund with
respect to a class during the period are reinvested in shares of that class.
When considering average total return figures for periods longer than one year,
it is important to note that the annual total return of a class for any one year
in the period might have been greater or less than the average for the entire
period. The Funds may also advertise, from time to time, the total returns of
one or more classes of shares on a year-by-year or other basis for various
specified periods by means of quotations, charts, graphs or schedules.
The "yield" quoted in advertisements of the Equity Income Fund refers to
the income generated by an investment in a class of shares of over a 30-day
period identified in the advertisement. This income is then "annualized." The
amount of income so generated by the investment during the 30-day period is
assumed to be earned and reinvested at a constant rate and compounded
semi-annually; the annualized income is then shown as a percentage of the
investment.
Shareholders should note that the total return and yield of Retail shares
will be reduced by the amount of shareholder servicing fees that are payable
under the Services Plan. See "Shareholder Services Plan."
Investors may compare the performance of each class of shares of a Fund to
the performance of other mutual funds with comparable investment objectives, to
various mutual fund or market indices and to data or rankings prepared by
independent services such as Lipper Analytical Services, Inc. or other financial
or industry publications that monitor the performance of mutual funds.
Comparisons may also be made to indices or data published in Money Magazine,
Forbes, Barron's, The Wall Street Journal, The New York Times, Business Week,
U.S.A. Today, CDA/Weisenberger, The American Banker, Morningstar, Incorporated
and other publications of a local, regional or financial industry nature.
The performance of each class of shares of the Funds is based on historical
earnings and will fluctuate and is not intended to indicate future performance.
The investment return and principal value of an investment in a class will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost. Performance data may not provide a basis for
comparison with bank deposits and other investments which provide a fixed yield
for a stated period of time. Changes in net asset value of a class should be
considered in ascertaining the total return to shareholders for a given period.
Total return data should also be considered in light of the risks associated
with a Fund's composition, quality, maturity, operating expenses and market
conditions. Any fees charged by financial institutions (as described in "How to
Purchase and Redeem Shares") are not included in the computation of performance
data but will reduce a shareholder's net return on an investment in a Fund.
14
Further information about the performance of the Funds is available in the
annual and semi-annual reports to shareholders. Shareholders may obtain these
materials from the Trust free of charge by calling 1-800-622-FUND(3863).
PRICING OF SHARES
For purposes of pricing purchase and redemption orders, the net asset value
per share of each Fund is calculated as of the close of trading on the New York
Stock Exchange (the "Exchange") (generally, 4:00 p.m., Eastern Time) on each
Business Day as described below. Net asset value per share is determined on each
Business Day, except those holidays which the Exchange, or banks and trust
companies which are affiliated with National City Corporation (the "Banks"),
observe (currently New Year's Day, Dr. Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans' Day, Thanksgiving Day, and Christmas Day) ("Business Day"). Net asset
value per share of a particular class in a Fund is calculated by dividing the
value of all securities and other assets belonging to the Fund allocable to such
class, less the liabilities charged to that class, by the number of the
outstanding shares of that class.
With respect to each Fund, investments in securities traded on an exchange
are valued at the last quoted sale price for a given day, or if a sale is not
reported for that day, at the mean between the most recent quoted bid and asked
prices. Unlisted securities for which market quotations are readily available
are valued at the mean between the most recent bid and asked prices. Securities
for which no quotations are readily available are valued at fair value as
determined in good faith by the Fund's administrator pursuant to Board of
Trustees guidelines. The net asset value per share of each class of shares of
each Fund will fluctuate as the value of its investment fund changes.
HOW TO PURCHASE AND REDEEM SHARES
DISTRIBUTOR
Shares in the Funds are sold on a continuous basis by the Trust's sponsor
and distributor. The Distributor is a registered broker/dealer with principal
offices located at 290 Donald Lynch Boulevard, Marlboro, Massachusetts 01752.
From time to time, the Distributor, at its expense, may offer promotional
incentives to dealers. As of the date of this Prospectus, the Distributor
intends to offer certain promotional incentives, including trips and monetary
awards, to National City Investments Corporation.
PURCHASE OF RETAIL SHARES
Retail shares are sold to the public ("Investors") primarily through
financial institutions such as banks, brokers and dealers. Investors may
purchase Retail shares directly in accordance with the procedures set forth
below or through procedures established by their financial institutions in
connection with the requirements of their accounts.
Financial institutions may charge certain account fees depending on the
type of account the Investor has established with the institution. (For
information on such fees, the Investor should review his agreement with the
institution or contact it directly.) In addition, certain financial institutions
may enter into shareholder servicing agreements with the Trust whereby a
financial institution would perform various administrative support services for
its customers who are the beneficial owners of Retail shares and would receive
fees from the Funds for such services of up to .25% (on an annualized basis) of
the average daily net asset value of such shares. See "Shareholder Services
Plan." To purchase shares, Investors should call 1-800-622-FUND (3863) or visit
their local National City Investments Corporation office: Cleveland (1-800-
15
624-6450), Columbus (1-800-345-0278), Dayton (1-800-755-8723), Akron
(1-800-229-0295), Louisville (1-800-727-5656), Indianapolis (1-800-826-2868),
Toledo (1-800-331-8275), or Youngstown (1-800-742-4098).
Shares may be purchased in conjunction with an individual retirement
account ("IRA") and roll-over IRAs where a designated custodian acts as
custodian. Investors should contact National City Investments Corporation, the
Distributor or their financial institutions for information as to applications
and annual fees. Investors should also consult their tax advisers to determine
whether the benefits of an IRA are available or appropriate.
The minimum investment is $2,500 for the initial purchase of Retail shares
in a Fund, except for purchases for an IRA or other retirement plan in which
event the minimum initial investment is $500. All subsequent investments for
Retail shares and IRAs are subject to a minimum investment of $250. Investments
made in Retail shares through a monthly savings program described below are not
subject to the minimum initial and subsequent investment requirements or any
minimum account balance requirements described in "Other Redemption Information"
below. Purchases for an IRA through the monthly savings program will be
considered as contributions for the year in which the purchases are made.
Under a monthly savings program, Investors may add to their investment in
the Retail shares of a Fund, in a consistent manner each month, with a minimum
amount of $50. Monies may be automatically withdrawn from a shareholder's
checking or savings account available through an investor's financial
institution and invested in additional Retail shares at the Public Offering
Price next determined after an order is received by the Trust. An Investor may
apply for participation in a monthly program through a financial institution,
such as banks, brokers, or dealers selling Retail shares of the Funds, by
completing an application. The program may be modified or terminated by an
Investor on 30 days written notice or by the Trust at any time.
All shareholders of record will receive confirmations of share purchases
and redemptions. Financial institutions will be responsible for transmitting
purchase and redemption orders to the Trust's transfer agent, The Shareholder
Services Group, Inc., d/b/a 440 Financial (the "Transfer Agent"), on a timely
basis.
The Trust reserves the right to reject any purchase order.
SALES CHARGES APPLICABLE TO PURCHASES OF RETAIL SHARES
The Public Offering Price for Retail shares of each Fund is the sum of the
net asset value of the shares being purchased plus any applicable sales charge
per account, per Fund, which is assessed as follows:
· Download Table
AS A % AS A % DEALERS'
OF OFFERING OF NET REALLOWANCE
PRICE PER ASSET VALUE AS A % OF
AMOUNT OF TRANSACTION SHARE PER SHARE OFFERING PRICE
--------------------- ----------- ----------- --------------
Less than $100,000... 3.75 3.90 3.75
$100,000 but less
than $250,000...... 2.75 2.83 2.75
$250,000 but less
than $500,000...... 2.00 2.04 2.00
$500,000 but less
than $1,000,000.... 1.25 1.27 1.25
$1,000,000 or more... 0.00 0.00 0.00
Under the 1933 Act, the term "underwriter" includes persons who offer or sell
for an issuer in connection with the distribution of a security or have a direct
or indirect participation in such undertaking, but excludes persons whose
interest is limited to a commission from an underwriter or dealer not in excess
of the usual and customary distributors' or sellers' commission. The Staff of
the SEC has expressed the view that persons who receive 90% or more of a sales
load may be deemed to be underwriters within the meaning of this definition. The
Dealers' Reallowance may be changed from time to time.
No sales charge will be assessed on purchases of Retail shares made by: (a)
trustees and officers of the Trust; (b) directors, employees and participants in
employee benefit/retirement plans (annuitants) of National City Corporation or
any of its
16
affiliates; (c) the spouses, children, grandchildren, and parents of individuals
referred to in clauses (a) and (b) above; (d) qualified retirement plans
purchasing shares through National City Investments Corporation or NatCity
Investments, Inc.; (e) individuals investing in a Fund by way of a direct
transfer or a rollover from a qualified plan distribution and subsequent
transactions into the same account where affiliates of National City Corporation
are serving as a trustee or agent; and (f) investors purchasing Fund shares
through a payroll deduction plan.
REDUCED SALES CHARGES APPLICABLE TO PURCHASES OF RETAIL SHARES
The applicable sales charge may be reduced on purchases of Retail shares of
each Fund made under the Right of Accumulation or Letter of Intent, as described
below. To qualify for a reduced sales charge, Investors must so notify their
financial institutions at the time of purchase. Reduced sales charges may be
modified or terminated at any time and are subject to confirmation of an
Investor's holdings.
Right of Accumulation. Investors may use their aggregate investments in
Retail shares in determining the applicable sales charge. An Investor's
aggregate investment in Retail shares is the total value (based on the higher of
current net asset value or any Public Offering Price original