1933 Act File No. 33-11905
1940 Act File No. 811-5010
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 19 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 21 X
THE MONITOR FUNDS
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
X on April 30, 1995 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i).
75 days after filing pursuant to paragraph (a)(ii)
on _________________ pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940, and:
X filed the Notice required by that Rule on February 15, 1995; or
intends to file the Notice required by that Rule on or about
____________; or
during the most recent fiscal year did not sell any securities
pursuant to Rule 24f-2 under the Investment Company Act of 1940, and,
pursuant to Rule 24f-2(b)(2), need not file the Notice.
Copies to:
Margaret Sheehan, Esq.
Ropes & Gray
1001 Pennsylvania Avenue
Suite 1200 South
Washington, DC 20004
CROSS-REFERENCE SHEET
This Amendment to the Registration Statement of THE MONITOR FUNDS
consists of nine portfolios: (1) The Monitor Money Market Fund; (2) The
Monitor Ohio Municipal Money Market Fund; (3) The Monitor U.S. Treasury
Money Market Fund; (4) The Monitor Growth Fund; (5) The Monitor Income
Equity Fund; (6) The Monitor Ohio Tax-Free Fund; (7) The Monitor Fixed
Income Securities Fund; (8) The Monitor Short/Intermediate Fixed Income
Securities Fund; and (9) The Monitor Mortgage Securities Fund. The
portfolios listed above are offered in either one or two separate
classes of shares known as Trust Shares and Investment Shares. All of
the Funds offer the Trust Shares class, whereas the eight portfolios
numbered 1, 2, 3, 4, 6, 7, and 9 also offer the Investment Shares class.
The Cross-Reference sheet includes information relating to all of the
classes of each Fund to facilitate the cross-reference process.
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page (1-9) Cover Page.
Item 2. Synopsis (1-9) Synopsis; Fee Table and
Example.
Item 3. Condensed Financial
Information (1-9) Financial Highlights.
Item 4. General Description of
Registrant (1-9) The Funds' Investment
Objectives and Policies; Money
Market Funds; Equity Fund(s); Income
Funds; Additional Information on
Portfolio Investments and
Strategies; Investment Restrictions.
Item 5. Management of the Fund (1-9) Management of the Trust;
Administration of the Funds;
Custodian, Recordkeeper, Transfer
Agent, and Dividend Disbursing
Agent; Independent Public
Accountants.
Item 6. Capital Stock and Other
Securities (1-9) Distributions and Taxes;
Distribution Options; Federal Income
Taxes; (2,6) Ohio Personal Income
Taxes; (1-9) Organization of the
Trust; Voting Rights; Shareholder
Inquiries; Other Classes of Shares.
Item 7. Purchase of Securities
Being Offered (1-9) How the Funds Value Their
Shares; How to Buy
(Trust/Investment) Shares; To Place
an Order (Investment Shares only);
Minimum Investment Required; What
Shares Cost(Investment Shares only);
Purchases at Net Asset Value
(Investment Shares only); Dealer
Concession (Investment Shares only);
Reducing the Sales Charge
(Investment Shares only); Quantity
Discounts and Accumulated Purchases
(Investment Shares only); Letter of
Intent (Investment Shares only);
Reinstatement Privilege (Investment
Shares only); Concurrent Purchases
(Investment Shares only); (1-9)
Systematic Investment Program; How
to Exchange (Trust/Investment)
Shares Among the Funds; By Telephone
(Investment Shares only); By Mail
(Investment Shares only);
Distribution of (Trust/Investment)
Shares; Distribution Plans
(Investment Shares only).
Item 8. Redemption or Repurchase (1-9) How to Redeem
(Trust/Investment) Shares; Redeeming
By Telephone; Redeeming by Mail;
Redeeming By Check (Investment
Shares only); Redeeming by Fax
(Investment Shares only); Systematic
Withdrawal Program (Investment
Shares only); Accounts with Low
Balances (Investment Shares only).
Item 9. Pending Legal Proceedings (1-9) Pending Legal Proceedings
Relating to Piper.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page (1-9) Cover Page.
Item 11. Table of Contents (1-9) Table of Contents.
Item 12. General Information
and History (1-9) Definitions; Additional
Information About the Trust and its
Shares.
Item 13. Investment Objectives (1-9) Investment Objectives and
Policies of the Trust; Investment
Restrictions.
Item 14. Management of the Fund (1-9) Management of the Trust.
Item 15. Control Persons and Principal
Holders of Securities (1-9) Fund Ownership.
Item 16. Investment Advisory and
Other Services (1-9) Investment Adviser;
Administrator; Distributor;
Custodian; Transfer Agent and
Dividend Disbursing Agent;
Independent Public Accountants.
Item 17. Brokerage Allocation (1-9) Portfolio Transactions;
Brokerage and Research Services.
Item 18. Capital Stock and Other
Securities (1-9) Dividends and Distributions.
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered (1-9) Distribution Plans (Investment
Shares only); Determination of Net
Asset Value; Additional Purchase
Information--Payment in Kind.
Item 20. Tax Status (1-9) Taxes.
Item 21. Underwriters Not applicable.
Item 22. Calculation of Performance
Data (1-9) Performance Information.
Item 23. Financial Statements (1-9) Incorporated into the Combined
Statement of Additional Information
by reference to the Trust's Combined
Annual Report, dated December 31,
1994.
PROSPECTUS
April 30, 1995
The Monitor Funds, a Massachusetts business trust (the "Trust"), consists of
nine series (the "Funds") which have different investment objectives and
policies. As noted below, certain Funds offer two classes of shares. Investors
may purchase Trust Shares in each of the Funds through procedures established
by Federated Securities Corp. (the "Distributor"), the Trust's distributor, in
connection with the requirements of fiduciary, advisory, agency, and other
similar accounts maintained by or on behalf of customers by The Huntington
Trust Company, N.A. or its affiliates or correspondent banks. The different
Funds for which Trust Shares are available through this Prospectus include:
MONEY MARKET FUNDS--TRUST SHARES
The Monitor Money Market Fund*
The Monitor Ohio Municipal Money Market Fund*
The Monitor U.S. Treasury Money Market Fund*
EQUITY FUNDS--TRUST SHARES
The Monitor Growth Fund*
The Monitor Income Equity Fund
INCOME FUNDS--TRUST SHARES
The Monitor Mortgage Securities Fund*
The Monitor Ohio Tax-Free Fund*
The Monitor Fixed Income Securities Fund*
The Monitor Short/Intermediate Fixed Income Securities Fund
*These Funds also offer a second class of shares, known as Investment Shares.
(A Fund's Trust and Investment Shares may be hereinafter referred to
collectively as "shares.")
This Prospectus relates only to Trust Shares of the Funds. This Prospectus
sets forth concisely what a shareholder should know before investing in Trust
Shares of any of the Funds and should be read carefully and retained for
future reference. The Combined Statement of Additional Information for Trust
Shares and Investment Shares has been filed with the Securities and Exchange
Commission and is incorporated into this Prospectus by reference. FOR A FREE
COPY OF THE COMBINED STATEMENT OF ADDITIONAL INFORMATION CALL THE MUTUAL FUND
SERVICES CENTER AT: (IN OHIO) 614-463-5580 OR (OUTSIDE THE 614 AREA CODE) 800-
253-0412.
THE HUNTINGTON TRUST COMPANY, N.A.
Investment Adviser
FEDERATED ADMINISTRATIVE SERVICES
Administrator
FEDERATED SECURITIES CORP.
Distributor
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 AC-
CURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE INVESTMENT COMPANY SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY, THE HUNTINGTON TRUST COMPANY,
N.A., NOR ARE THEY INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE COR-
PORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. AN IN-
VESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT OR
ANY AGENCY SPONSORED BY THE FEDERAL GOVERNMENT OR ANY STATE. INVESTMENT IN
THESE SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCI-
PAL. EACH MONEY MARKET FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE; THERE CAN BE NO ASSURANCE THAT A FUND WILL BE ABLE TO DO SO.
TABLE OF CONTENTS
PAGE
SYNOPSIS.......................................................................1
FEE TABLE AND EXAMPLE..........................................................3
SUPPLEMENTARY INFORMATION --
FINANCIAL HIGHLIGHTS..........................................................4
THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES.................................10
MONEY MARKET FUNDS............................................................10
Money Market Fund............................................................10
Ohio Municipal Money Market Fund.............................................11
U.S. Treasury Money Market Fund..............................................13
EQUITY FUNDS..................................................................13
Growth Fund..................................................................13
Income Equity Fund...........................................................14
INCOME FUNDS..................................................................14
Mortgage Securities Fund.....................................................14
Ohio Tax-Free Fund...........................................................19
Fixed Income Securities Fund............................................ 20
Short/Intermediate Fixed Income Securities Fund..............................20
ADDITIONAL INFORMATION ON PORTFOLIO INVESTMENTS AND STRATEGIES................20
Ohio Tax-Exempt Securities...................................................20
Non-Diversification..........................................................21
Defensive Investment Strategies..............................................21
Options and Futures Contracts........................................... 21
Foreign Investments..................................................... 23
Repurchase Agreements........................................................23
When-Issued and Delayed Delivery Transactions........................... 24
Lending of Portfolio Securities..............................................24
INVESTMENT RESTRICTIONS.................................................. 25
HOW THE FUNDS VALUE THEIR SHARES..............................................25
PAGE
HOW TO BUY TRUST SHARES.......................................................26
Minimum Investment Required............................................ .27
Systematic Investment Program.......................................... .27
HOW TO EXCHANGE TRUST SHARES AMONG THE FUNDS............................ .27
HOW TO REDEEM TRUST SHARES............................................... 28
Redeeming By Telephone.......................................................28
Redeeming By Mail...................................................... .29
MANAGEMENT OF THE TRUST................................................. .30
Adviser's Background........................................................30
Sub-Adviser.................................................................30
Sub-Adviser's Background.............................................. .30
Distribution of Trust Shares.................................................32
Administration of the Funds..................................................32
Custodian, Recordkeeper, Transfer Agent, and Dividend Disbursing Agent.. 33
Independent Public Accountants........................................ ..33
DISTRIBUTIONS AND TAXES.......................................................33
Money Market Funds...........................................................33
Other Funds..................................................................33
Distribution Options.................................................... 33
Federal Income Taxes................................................... .34
Ohio Personal Income Taxes............................................. .35
ORGANIZATION OF THE TRUST.....................................................35
Voting Rights.......................................................... .36
PERFORMANCE DATA AND COMPARISONS........................................ .37
SHAREHOLDER INQUIRIES........................................................ 37
OTHER CLASSES OF SHARES................................................. .37
PENDING LEGAL PROCEEDINGS RELATING TO PIPER............................ ..38
APPENDIX I.............................................................. .39
SYNOPSIS
The Trust, a management investment company, was established as a
Massachusetts business trust under a Declaration of Trust dated February 10,
1987. The Declaration of Trust permits the Trust to offer separate series of
shares of beneficial interest representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate
classes. As of the date of this Prospectus, the Board of Trustees has
established two classes of shares, known as Trust Shares and Investment
Shares, in the Money Market Fund, the Ohio Municipal Money Market Fund, the
U.S. Treasury Money Market Fund, the Growth Fund, the Mortgage Securities
Fund, the Ohio Tax-Free Fund, and the Fixed Income Securities Fund. All of the
portfolios of the Trust, with the exception of the Ohio Municipal Money Market
Fund and the Ohio Tax-Free Fund, are diversified.
As of the date of this Prospectus, the Trust is comprised of the following
nine Funds:
MONEY MARKET FUNDS--TRUST SHARES
MONEY MARKET FUND--seeks to maximize current income while preserving
capital and maintaining liquidity by investing in a portfolio of high
quality money market instruments;
OHIO MUNICIPAL MONEY MARKET FUND--seeks to provide income exempt from
both federal regular income tax and Ohio personal income taxes while
preserving capital and maintaining liquidity by investing in Ohio tax-
exempt securities;
U.S. TREASURY MONEY MARKET FUND--seeks to maximize current income while
preserving capital and maintaining liquidity by investing exclusively
in obligations issued by the U.S. Government and backed by its full
faith and credit and in repurchase agreements with respect to such
obligations;
EQUITY FUNDS--TRUST SHARES
GROWTH FUND--seeks to achieve long-term capital appreciation by
investing primarily in equity securities;
INCOME EQUITY FUND--seeks to achieve high current income and moderate
appreciation of capital by investing in income-producing equity
securities;
INCOME FUNDS--TRUST SHARES
MORTGAGE SECURITIES FUND--seeks to achieve current income by investing
in mortgage securities and in U.S. Government securities;
OHIO TAX-FREE FUND--seeks to provide current income exempt from federal
income tax and Ohio personal income taxes by investing in Ohio tax-
exempt securities;
FIXED INCOME SECURITIES FUND--seeks to achieve high current income by
investing in fixed income securities where the average maturity of the
Fund will not exceed 10 years; and
SHORT/INTERMEDIATE FIXED INCOME SECURITIES FUND--seeks to achieve
current income by investing in fixed income securities with a maximum
maturity for individual issues of 5 years or less at the time of
purchase and a dollar-weighted average portfolio maturity of more than
2 but less than 5 years.
For information on how to purchase Trust Shares of any of the Funds, please
refer to "How to Buy Trust Shares." A minimum initial investment of $1,000 is
required for each Fund. Subsequent investments in a Fund must be in amounts of
at least $500. Trust Shares of each Fund are sold and
redeemed at net asset value. Information on redeeming shares may be found
under "How to Redeem Trust Shares." The Funds are advised by The Huntington
Trust Company, N.A. In addition, Piper Capital Management, Inc. ("Piper")
serves as sub-adviser to the Mortgage Securities Fund.
RISK FACTORS. Investors should be aware of the following general observations.
There can be no assurance that a Fund will achieve its investment objective.
The market value of fixed-income securities, which constitute a major part of
the investments of several Funds, may vary inversely in response to changes in
prevailing interest rates ("interest rate risk"). Shareholders of the Ohio
Municipal Money Market Fund and the Ohio Tax-Free Fund may be subject to the
federal alternative minimum tax on that part of the Funds' dividends derived
from interest on certain municipal securities. One or more Funds may make
certain investments and employ certain investment techniques that involve
special risks, including the use of repurchase agreements, lending portfolio
securities, entering into futures contracts and related options as hedges,
investing in foreign securities, and purchasing securities on a when-issued or
delayed delivery basis, including the use of dollar rolls. These investments
and investment techniques may increase the volatility of a Fund's net asset
value. Their risks are described under "Additional Information on Portfolio
Investments and Strategies." The Mortgage Securities Fund may engage in short-
term trading in attempting to achieve its investment objective, which will
increase transaction costs. The Mortgage Securities Fund may purchase
mortgage-related securities including derivative mortgage securities. In
addition to interest rate risk, mortgage-related securities are subject to
prepayment risk. The market experience of 1994 has shown that certain
derivative mortgage securities may be extremely sensitive to changes in
interest rates and in prepayment rates on the underlying assets and, as a
result, the prices of such securities may be highly volatile.
FEE TABLE AND EXAMPLE
The following Fee Table and Example summarize the various costs and expenses
that a shareholder of Trust Shares will bear, either directly or indirectly.
ANNUAL TRUST SHARES OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
TOTAL TRUST SHARES
NET OPERATING EXPENSES
MANAGEMENT 12B-1 OTHER NET OF ANY WAIVERS
FEES (1) FEES EXPENSES (2) OR REIMBURSEMENTS
---------- ------ ------------ ------------------
<S> <C> <C> <C> <C>
Money Market Fund............ 0.30% None 0.21% 0.51%
Ohio Municipal Money Market
Fund (3)*.................... 0.15% None 0.30% 0.45%
U.S. Treasury Money Market
Fund ........................ 0.20% None 0.22% 0.42%
Growth Fund.................. 0.60% None 0.28% 0.88%
Income Equity Fund........... 0.60% None 0.24% 0.84%
Mortgage Securities Fund
(4)*......................... 0.00% None 0.52% 0.52%
Ohio Tax-Free Fund........... 0.50% None 0.27% 0.77%
Fixed Income Securities Fund. 0.50% None 0.25% 0.75%
Short/Intermediate Fixed
Income Securities Fund....... 0.50% None 0.22% 0.72%
</TABLE>
- --------
(1)Fees paid by each Fund for investment advisory services. See "Management of
the Trust."
(2)Includes administration fees. See "Management of the Trust--Administration
of the Funds."
(3) The Total Trust Shares Operating Expenses for the Ohio Municipal Money
Market Fund would have been 0.60%, absent the voluntary waiver of
management fees. The maximum management fee for Ohio Municipal Money
Market Fund is 0.30%.
(4) The Total Trust Shares Operating Expenses for the Mortgage Securities Fund
in the table above are based on net expenses expected during the fiscal
year ending December 31, 1995. Absent the voluntary waiver of management,
administrative and custody fees, the anticipated gross expenses are 1.10%.
The maximum management, administrative and custody fees are 0.50%, 0.06%
and 0.026%, respectively. The Total Trust Shares Operating Expenses were
0.88% for the fiscal year ended December 31, 1994 and were 0.96% absent
the voluntary waivers of the management and administrative fees and the
voluntary reimbursement of certain other operating expenses.
* The adviser, administrator and/or custodian can terminate these voluntary
waivers at any time at their sole discretion.
EXAMPLE:
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Fund.............................. $5 $16 $29 $ 64
Ohio Municipal Money Market Fund............... $5 $14 $25 $ 57
U.S. Treasury Money Market Fund................ $ 4 $13 $24 $ 53
Growth Fund.................................... $ 9 $28 $49 $108
Income Equity Fund............................. $ 9 $27 $47 $104
Mortgage Securities Fund....................... $ 5 $17 $29 $ 65
Ohio Tax-Free Fund............................. $ 8 $25 $43 $ 95
Fixed Income Securities Fund................... $ 8 $24 $42 $ 93
Short/Intermediate Fixed Income Securities
Fund.......................................... $ 7 $23 $40 $ 89
</TABLE>
The purpose of the foregoing Example is to assist an investor in
understanding the various costs and expenses that a shareholder of Trust
Shares will bear directly or indirectly. The Example should not be considered
a representation of past or future expenses. Actual expenses may be greater or
less than those shown.
FINANCIAL HIGHLIGHTS--MONEY MARKET FUNDS (FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD)
The following information has been audited by the Trust's independent
accountants, Price Waterhouse LLP. Their report on the Trust's financial
statements and financial highlights for the year ended December 31, 1994 is
included in the Annual Report to Shareholders which is incorporated by
reference into the Statement of Additional Information.
<TABLE>
<CAPTION>
NET ASSET DIVIDENDS TO NET ASSET
VALUE, NET SHAREHOLDERS VALUE,
YEAR ENDED BEGINNING INVESTMENT FROM NET END OF TOTAL
DECEMBER 31, OF PERIOD INCOME INVESTMENT INCOME PERIOD RETURN+ EXPENSES
- ---------------------------------------------------------------------------------
TRUST SHARES
MONEY MARKET
<S> <C> <C> <C> <C> <C> <C>
1987* $1.00 0.04 (0.04) $1.00 3.38% 0.49%(a)
1988 $1.00 0.07 (0.07) $1.00 7.45% 0.45%
1989 $1.00 0.09 (0.09) $1.00 9.13% 0.50%
1990 $1.00 0.08 (0.08) $1.00 8.10% 0.47%
1991 $1.00 0.06 (0.06) $1.00 5.85% 0.50%
1992 $1.00 0.03 (0.03) $1.00 3.44% 0.50%
1993 $1.00 0.03 (0.03) $1.00 2.74% 0.51%
1994 $1.00 0.04 (0.04) $1.00 3.86% 0.51%
<CAPTION>
OHIO MUNICIPAL MONEY MARKET
<S> <C> <C> <C> <C> <C> <C>
1987** $1.00 0.02 (0.02) $1.00 2.14% 0.50%(a)
1988 $1.00 0.05 (0.05) $1.00 4.89% 0.52%
1989 $1.00 0.06 (0.06) $1.00 6.01% 0.52%
1990 $1.00 0.05 (0.05) $1.00 5.43% 0.60%
1991 $1.00 0.04 (0.04) $1.00 4.07% 0.58%
1992 $1.00 0.03 (0.03) $1.00 2.61% 0.49%
1993 $1.00 0.02 (0.02) $1.00 2.08% 0.45%
1994 $1.00 0.02 (0.02) $1.00 2.41% 0.45%
<CAPTION>
U.S. TREASURY MONEY MARKET
<S> <C> <C> <C> <C> <C> <C>
1989*** $1.00 0.02 (0.02) $1.00 1.37% 0.38%(a)
1990 $1.00 0.07 (0.07) $1.00 7.97% 0.44%
1991 $1.00 0.05 (0.05) $1.00 5.66% 0.44%
1992 $1.00 0.03 (0.03) $1.00 3.43% 0.41%
1993 $1.00 0.03 (0.03) $1.00 2.77% 0.40%
1994 $1.00 0.04 (0.04) $1.00 3.79% 0.42%
</TABLE>
- -------------------------------------------------------------------------------
*Commenced operations on June 11, 1987.
**Reflects operations for the period from June 10, 1987 (date of initial
public investment) to December 31, 1987.
***Commenced operations on October 2, 1989.
+ Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a)Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
<TABLE>
<CAPTION>
NET NET ASSETS,
INVESTMENT EXPENSE WAIVER/ END OF PERIOD
INCOME REIMBURSEMENT(B) (000 OMITTED)
- --------------------------------------------------------------------------
<S> <C> <C>
6.76%(a) -- $303,798
7.24% -- $295,414
8.75% -- $327,419
7.79% -- $313,436
5.74% -- $335,751
3.38% -- $291,818
2.70% 0.02% $337,276
3.75% 0.02% $287,805
4.33%(a) -- $72,001
4.76% -- $70,370
5.85% -- $71,527
5.33% -- $72,105
4.00% 0.02% $54,873
2.60% 0.14% $48,893
2.07% 0.20% $40,141
2.40% 0.19% $39,624
7.58%(a) 0.05%(a) $62,499
7.68% -- $149,066
5.52% -- $130,302
3.34% -- $146,453
2.74% 0.01% $231,123
3.76% 0.02% $256,538
</TABLE>
- ---------------------------------------------
FINANCIAL HIGHLIGHTS--EQUITY FUNDS (FOR A SHARE OUTSTANDING THROUGHOUT EACH
PERIOD)
The following information has been audited by the Trust's independent
accountants, Price Waterhouse LLP. Their report on the Trust's financial
statements and financial highlights for the year ended December 31, 1994 is
included in the Annual Report to Shareholders which is incorporated by
reference into the Statement of Additional Information.
<TABLE>
<CAPTION>
DISTRIBUTIONS TO
DIVIDENDS TO SHAREHOLDERS DISTRIBUTIONS
NET ASSET NET REALIZED SHAREHOLDERS FROM NET IN EXCESS
VALUE, NET AND UNREALIZED TOTAL FROM FROM NET REALIZED GAIN OF NET
YEAR ENDED BEGINNING INVESTMENT GAIN/(LOSS) ON INVESTMENT INVESTMENT ON INVESTMENT INVESTMENT
DECEMBER 31, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS INCOME+
- --------------------------------------------------------------------------------------------------------
TRUST SHARES
GROWTH
<S> <C> <C> <C> <C> <C> <C> <C>
1989* $20.00 0.33 0.59 0.92 (0.31) -- --
1990 $20.61 0.50 (0.47) 0.03 (0.51) -- --
1991 $20.13 0.53 4.74 5.27 (0.54) (0.06) (0.02)
1992 $24.78 0.56 1.36 1.92 (0.55) (0.39) --
1993 $25.76 0.46 0.44 0.90 (0.47) (0.02) --
1994 $26.17 0.39 0.21 0.60 (0.40) (0.07) --
<CAPTION>
INCOME EQUITY
<S> <C> <C> <C> <C> <C> <C> <C>
1989* $20.00 0.50 0.17 0.67 (0.42) -- --
1990 $20.25 0.80 (2.57) (1.77) (0.88) -- --
1991 $17.60 0.71 3.31 4.02 (0.72) -- --
1992 $20.90 0.75 0.79 1.54 (0.74) -- --
1993 $21.70 0.74 1.57 2.31 (0.74) (0.06) --
1994 $23.21 0.88 (1.29) (0.41) (0.87) -- --
</TABLE>
- -------------------------------------------------------------------------------
* Commenced operations on July 3, 1989.
+ Distributions in excess of net investment income were the result of
certain book and timing differences. These distributions do not represent
a return of capital for federal income tax purposes.
++ Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a)Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
Further information about the Funds' performance is contained in the Funds'
Annual Report dated February 28, 1995, which can be obtained free of charge.
<TABLE>
<CAPTION>
NET ASSET NET ASSETS,
VALUE, NET END OF PORTFOLIO
TOTAL END OF TOTAL INVESTMENT EXPENSE WAIVER/ PERIOD (000 TURNOVER
DISTRIBUTIONS PERIOD RETURN++ EXPENSES INCOME REIMBURSEMENT(B) OMITTED) RATE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
(0.31) $20.61 4.63% 0.95%(a) 3.24%(a) -- $24,457 14%
(0.51) $20.13 0.16% 1.00% 2.58% -- $36,253 18%
(0.62) $24.78 26.47% 0.93% 2.33% 0.02% $71,451 13%
(0.94) $25.76 7.88% 0.91% 2.25% 0.01% $90,096 36%
(0.49) $26.17 3.53% 0.84% 1.79% 0.04% $109,576 29%
(0.47) $26.30 2.28% 0.88% 1.52% 0.04% $103,463 42%
(0.42) $20.25 3.39% 0.92%(a) 5.13%(a) -- $35,215 29%
(0.88) $17.60 (8.86%) 0.94% 4.43% -- $45,468 66%
(0.72) $20.90 23.20% 0.93% 3.67% -- $79,908 25%
(0.74) $21.70 7.49% 0.85% 3.53% 0.01% $95,182 22%
(0.80) $23.21 10.85% 0.82% 3.29% -- $135,618 10%
(0.87) $21.93 (1.82%) 0.84% 3.91% -- $115,399 50%
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--INCOME FUNDS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following information has been audited by the Trust's independent
accountants, Price Waterhouse LLP. Their report on the Trust's financial
statements and financial highlights for the year ended December 31, 1994 is
included in the Annual Report to Shareholders which is incorporated by
reference into the Statement of Additional Information.
<TABLE>
<CAPTION>
DISTRIBUTIONS TO
DIVIDENDS TO SHAREHOLDERS DISTRIBUTIONS
NET ASSET NET REALIZED SHAREHOLDERS FROM NET IN EXCESS
VALUE, NET AND UNREALIZED TOTAL FROM FROM NET REALIZED GAIN OF NET
YEAR ENDED BEGINNING INVESTMENT GAIN/(LOSS) ON INVESTMENT INVESTMENT ON INVESTMENT INVESTMENT
DECEMBER 31, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS INCOME+
- --------------------------------------------------------------------------------------------------------
TRUST SHARES
OHIO TAX-FREE
<S> <C> <C> <C> <C> <C> <C> <C>
1988* $20.00 0.22 (0.05) 0.17 (0.22) -- --
1989 $19.95 1.20 0.23 1.43 (1.15) -- --
1990 $20.23 1.11 0.12 1.23 (1.15) -- --
1991 $20.31 1.05 0.74 1.79 (1.05) -- --
1992 $21.05 0.98 0.26 1.24 (0.98) -- --
1993 $21.31 0.96 0.73 1.69 (0.96) -- --
1994 $22.04 0.99 (1.55) (0.56) (0.98) -- --
<CAPTION>
FIXED INCOME SECURITIES
<S> <C> <C> <C> <C> <C> <C> <C>
1989** $20.00 0.60 0.02 0.62 (0.60) -- --
1990 $20.02 1.44 (0.03) 1.41 (1.48) -- --
1991 $19.95 1.43 1.65 3.08 (1.35) (0.10) --
1992 $21.58 1.37 (0.02) 1.35 (1.47) (0.12) (0.02)
1993 $21.32 1.28 0.88 2.16 (1.39) (0.06) --
1994 $22.03 1.28 (2.28) (1.00) (1.34) -- --
<CAPTION>
MORTGAGE SECURITIES
<S> <C> <C> <C> <C> <C> <C> <C>
1992***(c) $10.00 0.63 0.29 0.92 (0.61) (0.04) --
1993(c) $10.27 1.50 (0.28) 1.22 (1.46) (0.10) --
1994(c) $ 9.93 0.89 (3.19) (2.30) (0.93) -- (0.01)
<CAPTION>
SHORT/INTERMEDIATE FIXED INCOME SECURITIES
<S> <C> <C> <C> <C> <C> <C> <C>
1989** $20.00 0.72 0.05 0.77 (0.66) -- --
1990 $20.11 1.50 0.10 1.60 (1.54) -- --
1991 $20.17 1.49 1.14 2.63 (1.51) (0.11) (0.03)
1992 $21.15 1.36 (0.09) 1.27 (1.36) (0.32) (0.11)
1993 $20.63 1.19 0.31 1.50 (1.31) (0.25) --
1994 $20.57 1.13 (1.33) (0.20) (1.23) -- --
- --------------------------------------------------------------------------------------------------------
</TABLE>
*Commenced operations on October 18, 1988.
**Commenced operations on July 3, 1989.
***Reflects operations for the period from June 2, 1992 (date of initial
public investment) to December 31, 1992.
+ Distributions in excess of net investment income were the result of certain
book and timing differences. These distributions do not represent a return
of capital for federal income tax purposes.
++Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a)Computed on an annualized basis.
(b)This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(c) Per share information presented is based upon the monthly number of shares
outstanding due to large fluctuations in the number of shares outstanding
during the period.
Further information about the Funds' performance is contained in the Funds'
Annual Report dated February 28, 1995, which can be obtained free of charge.
<TABLE>
<CAPTION>
NET ASSETS,
NET ASSET NET END OF PORTFOLIO
TOTAL VALUE, END TOTAL INVESTMENT EXPENSE WAIVER/ PERIOD (000 TURNOVER
DISTRIBUTIONS OF PERIOD RETURN++ EXPENSES INCOME REIMBURSEMENT(B) OMITTED) RATE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
(0.22) $19.95 0.59% 0.88%(a) 5.42%(a) -- $ 15,724 76%
(1.15) $20.23 7.37% 0.87% 5.88% -- $ 28,040 86%
(1.15) $20.31 6.28% 0.91% 5.59% -- $ 29,886 5%
(1.05) $21.05 9.06% 0.90% 5.13% -- $ 38,112 13%
(0.98) $21.31 6.04% 0.91% 4.62% -- $ 47,557 3%
(0.96) $22.04 8.08% 0.82% 4.39% 0.04% $ 59,541 2%
(0.98) $20.50 (2.57%) 0.77% 4.68% 0.04% $ 56,469 12%
(0.60) $20.02 3.14% 0.88%(a) 7.14%(a) -- $ 26,502 19%
(1.48) $19.95 7.49% 0.82% 7.56% -- $ 38,131 7%
(1.45) $21.58 16.13% 0.90% 7.12% -- $ 54,525 21%
(1.61) $21.32 6.54% 0.83% 6.49% -- $ 87,107 15%
(1.45) $22.03 10.32% 0.74% 5.87% 0.04% $112,103 7%
(1.34) $19.69 (4.62%) 0.75% 6.26% 0.04% $119,117 23%
(0.65) $10.27 9.12% 0.58%(a) 10.60%(a) 0.19%(a) $ 90,677 50%
(1.56) $ 9.93 12.10% 0.78% 14.20% 0.04% $ 90,461 154%
(0.94) $ 6.69 (24.59%) 0.88% 11.16% 0.12% $ 54,164 91%
(0.66) $20.11 3.91% 0.76%(a) 7.54%(a) -- $ 84,702 24%
(1.54) $20.17 8.34% 0.74% 7.59% -- $104,218 20%
(1.65) $21.15 13.62% 0.78% 7.23% -- $101,519 50%
(1.79) $20.63 6.25% 0.74% 6.44% -- $123,400 41%
(1.56) $20.57 7.43% 0.71% 5.70% -- $123,897 24%
(1.23) $19.14 (0.98%) 0.72% 5.76% -- $125,112 38%
- -------------------------------------------------------------------------------------------------
</TABLE>
THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of the various Funds are described
below. There can, of course, be no guarantee that a Fund will achieve its
investment objective.
Each Fund's investment objective is fundamental and may be changed only by a
vote of a majority of the outstanding shares of that Fund. Unless otherwise
noted in this Prospectus or in the Statement of Additional Information, the
investment policies of the Funds are not fundamental and may be changed by the
Trust's Board of Trustees (the "Trustees"). Except with respect to borrowing
money or downgrades of securities in the Money Market Funds, any percentage
limitation on a Fund's investments (or other activities) will be considered to
be violated only if such limitation is exceeded immediately after, and is
caused by, an acquisition of an investment (or the taking of such other
action).
For a description of the ratings of nationally recognized statistical rating
organizations (individually, an "NRSRO") utilized by The Huntington Trust
Company, N.A. ("Huntington") in managing the Funds' investments, see the
Appendix to the Statement of Additional Information.
MONEY MARKET FUNDS
Each of the Money Market Funds described below is designed for investors
seeking current income with stability of principal. The Money Market Funds
intend to limit their investments by operating in a manner consistent with
Rule 2a-7 (as amended) under the Investment Company Act of 1940 (the "Rule").
The Rule permits funds to utilize the amortized cost method of valuation in
order to offer their shares at a net asset value of $1.00 per share. (See
also, the section of the Statement of Additional Information entitled,
"Determination of Net Asset Value.") The Rule imposes certain risk limiting
conditions on the Funds which in some instances restrict a Fund's investment
policies. These risk limiting conditions include the following:
. The Funds must limit their investments to "Eligible Securities" as defined
under the Rule, and which Huntington has determined present minimal credit
risks under guidelines adopted by the Trustees. (For an explanation of some
of the terms defined by the Rule, see Appendix I to this Prospectus.)
. Each Fund (except the Ohio Municipal Money Market Fund) must limit
investments in "Second Tier Securities" to 5% of total assets and 1% of total
assets in the securities of a single Second Tier issuer.
. The Funds may invest without limit in "First Tier Securities" subject to the
Funds' 5% issuer diversification limitation where applicable. In addition,
the portfolio investments of each Fund must have a maturity of 397 days or
less from the time of purchase by a Fund, although securities owned pursuant
to a repurchase agreement and certain adjustable interest rate instruments
may bear longer maturities. The dollar-weighted average maturity of each
Fund's portfolio must not exceed 90 days. Of course, a Fund's yield, and
under unusual circumstances, the value of its portfolio securities, will be
affected by changes in interest rates.
MONEY MARKET FUND
The objective of the Money Market Fund is to maximize current income while
preserving capital and maintaining liquidity by investing in a portfolio of
high quality money market instruments. The Fund's portfolio investments may
include:
(a) obligations, such as notes, bills or bonds, issued by or guaranteed as
to principal and interest by the U.S. Government or its agencies or
instrumentalities;
(b)commercial paper, including U.S. dollar denominated eurodollar
commercial paper, considered under the Rule to be rated in the highest
category by an NRSRO(s) or, if not rated, of comparable quality as
determined by Huntington pursuant to guidelines established by the
Trustees;
(c)negotiable certificates of deposit and bankers' acceptances issued by
domestic banks and U.S. branches of foreign banks which are subject to
the same regulation as U.S. banks and which, at the time of purchase,
have capital, surplus, and undivided profits in excess of $100,000,000
(as of the bank's most recently published financial statements);
(d)corporate debt obligations, including bonds, notes and debentures
considered under the Rule to be rated in the two highest categories by
an NRSRO(s) or, if not rated, of comparable quality as determined by
Huntington pursuant to guidelines established by the Trustees; and
(e)repurchase agreements and master demand notes.
RESTRICTED AND ILLIQUID SECURITIES. The Fund intends to invest in
restricted securities. Restricted securities are any securities in which
the Fund may otherwise invest pursuant to its investment objective and
policies but which are subject to restriction on resale under federal
securities law. However, the Fund will limit investments in illiquid
securities, including certain restricted securities not determined by the
Trustees to be liquid, non-negotiable time deposits, and repurchase
agreements providing for settlement in more than seven days after notice,
to 10% of its net assets.
The Fund may invest in commercial paper issued in reliance on the
exemption from registration afforded by Section 4(2) of the Securities Act
of 1933. Section 4(2) commercial paper is restricted as to disposition
under federal securities law, and is generally sold to institutional
investors, such as the Fund, who agree that they are purchasing the paper
for investment purposes and not with a view to public distribution. Any
resale by the purchaser must be in an exempt transaction. Section 4(2)
commercial paper is normally resold to other institutional investors like
the Fund through or with the assistance of the issuer or investment
dealers who make a market in Section 4(2) commercial paper, thus providing
liquidity. The Fund believes that Section 4(2) commercial paper and
possibly certain other restricted securities which meet the criteria for
liquidity established by the Trustees are quite liquid. The Fund intends,
therefore, to treat the restricted securities which meet the criteria for
liquidity established by the Trustees, including Section 4(2) commercial
paper, as determined by Huntington, as liquid and not subject to the
investment limitation applicable to illiquid securities. In addition,
because Section 4(2) commercial paper is liquid, the Fund intends to not
subject such paper to the limitation applicable to restricted securities.
OHIO MUNICIPAL MONEY MARKET FUND
The objective of the Ohio Municipal Money Market Fund is to provide income
exempt from both federal regular income tax and Ohio personal income taxes
while preserving capital and maintaining liquidity. As a fundamental policy,
the Fund invests its assets so that at least 80% of its annual interest income
is exempt from federal regular income tax. The Fund invests primarily in Ohio
tax-exempt securities which, under normal market conditions, will comprise at
least 65% of the Fund's assets. Ohio tax-exempt securities are debt
obligations issued by or on behalf of the State of Ohio, its political
subdivisions, or agencies, or financing authorities of any of these, the
income from which is, in the
opinion of qualified legal counsel, exempt from both federal regular income
tax and the personal income taxes imposed by the State of Ohio. Examples of
tax-exempt securities include, but are not limited to:
.tax and revenue anticipation notes ("TRANs") issued to finance working
capital needs in anticipation of receiving taxes or other revenues;
.bond anticipation notes ("BANs") that are intended to be refinanced
through a later issuance of longer-term bonds;
.municipal commercial paper and other short-term notes;
.variable rate demand notes;
.municipal bonds (including bonds having serial maturities and pre-funded
bonds); and
.participation, trust and partnership interests in any of the foregoing
obligations.
VARIABLE RATE DEMAND OBLIGATIONS. Variable rate demand obligations are
long-term tax-exempt securities that have variable or floating interest
rates and provide the Fund with the right to tender the security for
repurchase at its stated principal amount plus accrued interest. Such
securities typically bear interest at a rate that is intended to cause the
securities to trade at par. The interest rate may float or be adjusted at
regular intervals (ranging from daily to annually), and is normally
established by the remarketing agent of the respective securities. Most
variable rate demand obligations allow the Fund to demand the repurchase
of the security on not more than seven days prior notice. Other
obligations only permit the Fund to tender the security at the time of
each interest rate adjustment or at other fixed intervals. See "Demand
Features." The Fund treats variable rate demand obligations as maturing on
the later of the date of the next interest adjustment or the date on which
the Fund may next tender the security for redemption.
PARTICIPATION INTERESTS. The Fund may purchase interests in tax-exempt
securities from financial institutions such as commercial and investment
banks, savings and loan associations and insurance companies. These
interests may take the form of participations, beneficial interests in a
trust, partnership interests or any other form of indirect ownership that
allows the Fund to treat the income from the investment as exempt from
federal income tax. The Fund invests in these participation interests in
order to obtain credit enhancement or demand features that would not be
available through direct ownership of the underlying tax-exempt
securities.
CREDIT ENHANCEMENT. Certain of the portfolio investments of the Fund may
have been credit enhanced by a guaranty, letter of credit or insurance.
The Fund typically evaluates the credit quality and ratings of credit
enhanced securities based upon the financial condition and ratings of the
party providing the credit enhancement (the "credit enhancer"), rather
than the issuer. However, credit enhanced securities will not be treated
as having been issued by the credit enhancer for diversification purposes,
unless the Fund has invested more than 10% of its assets in securities
issued, guaranteed or otherwise credit enhanced by the credit enhancer, in
which case the securities will be treated as having been issued both by
the issuer and the credit enhancer. The bankruptcy, receivership or
default of the credit enhancer will adversely affect the quality and
marketability of the underlying security.
The Fund may have more than 25% of its total assets invested in securities
credit enhanced by banks.
DEMAND FEATURES. The Fund may acquire securities that are subject to puts
and standby commitments ("demand features") to purchase the securities at
their principal amount (usually with accrued interest) within a fixed
period (usually seven days) following a demand by the Fund. The demand
feature may be issued by the issuer of the underlying securities, a dealer
in the securities or by another third party, and may not be transferred
separately from the underlying security. The Fund uses these arrangements
to provide the Fund with liquidity and not to protect against changes in
the market value of the underlying securities. The bankruptcy,
receivership or default by the issuer of the demand feature, or a default
on the underlying security or other event that terminates the demand
feature before its exercise, will adversely affect the liquidity of the
underlying security. Demand features that are exercisable even after a
payment default on the underlying security may be treated as a form of
credit enhancement.
TEMPORARY INVESTMENTS. The Fund invests its assets so that at least 80% of
its annual interest income is exempt from federal regular income taxes and
at least 65% of its assets are invested in securities the income from
which is exempt from Ohio personal income taxes. However, from time to
time, when Huntington determines that market conditions call for a
temporary defensive posture, the Fund may invest in temporary investments
with remaining maturities of 13 months or less at the time of purchase by
the Fund, or hold Fund assets in cash. Interest income from temporary
investments may be taxable to shareholders as ordinary income. These
temporary investments include: obligations issued by or on behalf of
municipal or corporate issuers having the same quality characteristics as
Ohio tax-exempt securities purchased by the Fund; marketable obligations
issued or guaranteed by the U.S. Government, its agencies, or
instrumentalities; instruments issued by a U.S. branch of a domestic bank
or other depository institutions having capital, surplus, and undivided
profits in excess of $100,000,000 at the time of investment; repurchase
agreements (arrangements in which the organization selling the Fund a
temporary investment agrees at the time of sale to repurchase it at a
mutually agreed upon time and price); and commercial paper rated in one of
the two highest short-term rating categories by an NRSRO(s).
Although the Fund is permitted to make taxable, temporary investments
that may have Ohio state tax implications, there is no current intention
of generating income subject to federal regular or Ohio personal income
taxes.
U.S. TREASURY MONEY MARKET FUND
The objective of the U.S. Treasury Money Market Fund is to maximize current
income while preserving capital and maintaining liquidity by investing
exclusively in obligations issued by the U.S. Government and backed by its
full faith and credit and in repurchase agreements with respect to such
obligations. At least 65% of the Fund's total assets will be invested in
Treasury bills, notes and bonds which are direct obligations of the U.S.
Treasury, and repurchase agreements with respect to such obligations.
EQUITY FUNDS
GROWTH FUND
The objective of the Growth Fund is to achieve long-term capital
appreciation primarily through investments in equity securities. Current
income will be only an incidental consideration in the selection of
investments. Equity securities in which the Fund may invest include common
stocks, preferred stocks, securities convertible into or exchangeable for
common stocks, and other securities which
Huntington believes have common stock characteristics, such as rights and
warrants. The Fund may invest in foreign securities and, subject to its
investment restrictions, securities restricted as to resale under federal
securities laws. The Fund's common stock selection emphasizes those companies
which Huntington believes have characteristics such as above average earnings
and dividend growth, superior balance sheets, and potential for capital gains,
but the Fund's investment policy recognizes that securities of other companies
may be attractive for capital appreciation purposes by virtue of special
developments or depression in price believed to be temporary. The Fund will be
primarily invested in large capitalization growth companies but will also
include representation in medium-sized companies with similar financial and
growth characteristics. In managing the investments of the Fund, Huntington
seeks to purchase equity securities whose potential for capital gains is
balanced by an ability to better withstand overall downward market movements.
As a matter of fundamental policy, under normal market conditions, the Fund
will invest at least 65% of its total assets in the equity securities
described in this paragraph. The Fund may also, under normal market
conditions, invest a portion of its assets in cash equivalents, including
repurchase agreements and the shares of money market mutual funds, for
liquidity purposes.
INCOME EQUITY FUND
The objective of the Income Equity Fund is to achieve high current income
and moderate appreciation of capital primarily through investment in income-
producing equity securities. Consistent with this objective, the Fund may
invest in preferred stocks, in securities convertible into or exchangeable for
common stocks and securities which Huntington believes have common stock
characteristics, such as rights and warrants. The Fund may invest in foreign
securities and, subject to its investment restrictions, in securities
restricted as to resale under federal securities laws. As a matter of
fundamental policy, under normal market conditions, the Fund will invest at
least 65% of its total assets in the equity securities described in this
paragraph. The Fund may also, under normal market conditions, invest a portion
of its assets in cash equivalents, including repurchase agreements and the
shares of money market mutual funds, for liquidity purposes.
INCOME FUNDS
The investment objectives and policies of the Income Funds are described
below. Each of the Income Funds invests primarily in debt securities. The
prices of fixed income securities fluctuate inversely to the direction of
interest rates. Thus, a decrease in interest rates will generally result in an
increase in the values of debt securities held by a Fund. Conversely, during
periods of rising interest rates, the values of an Income Fund's assets will
generally decline. The values of such securities are also affected by changes
in the financial condition of their issuers. Changes in the values of a Fund's
securities will not generally affect the income derived from such securities
but will affect a Fund's net asset value.
MORTGAGE SECURITIES FUND
The investment objective of the Mortgage Securities Fund is current income.
The Fund seeks to achieve this investment objective by investing at least 65%
of the value of its total assets in mortgage-related securities issued by the
U.S. Government, government-related entities, and private entities. These
mortgage-related securities include derivative mortgage securities. The market
experience of 1994 has shown that certain derivative mortgage securities may
be extremely sensitive to changes in interest rates and in prepayment rates on
the underlying mortgage assets, and, as a result, the prices of such
securities may be highly volatile.
The Fund may invest up to 35% of the value of its total assets in:
(i) non-mortgage related securities issued or guaranteed by the U.S.
Government, its agencies, or instrumentalities;
(ii) certificates of deposit, bankers' acceptances and interest-bearing
savings deposits of banks having total assets of more than $1 billion and
which are members of the Federal Deposit Insurance Corporation (the
"FDIC"); and
(iii) commercial paper rated A-1 by Standard & Poor's Ratings Group
("S&P") or P-1 by Moody's Investors Service, Inc. ("Moody's") or, if not
rated, issued by companies which have an outstanding debt issue rated AAA
by S&P or Aaa by Moody's.
The Fund will maintain a dollar-weighted average portfolio maturity of more
than three years but no more than ten years. A mortgage-related security will
be deemed to have an average maturity equal to its average life as determined
by the portfolio manager based upon the prepayment experience of the
underlying mortgage pools. In order to maintain a dollar-weighted average
portfolio maturity, Huntington will monitor the prepayment experience of the
underlying mortgage pools of the mortgage-related securities and will purchase
and sell securities in the portfolio to shorten or lengthen the average
maturity of the portfolio, as appropriate.
MORTGAGE-RELATED SECURITIES. Mortgage-related securities are securities that,
directly or indirectly, represent participations in, or are secured by and
payable from, loans secured by real property. Mortgage-related securities, as
the term is used in this Prospectus, include mortgage pass-through securities,
adjustable rate mortgage securities and derivative mortgage securities such as
collateralized mortgage obligations and stripped mortgage-backed securities.
Mortgage-related securities fall into three categories: (a) those issued or
guaranteed by the United States Government or one of its agencies or
instrumentalities, such as Government National Mortgage Association ("GNMA"),
Federal National Mortgage Association ("FNMA") and Federal Home Loan Mortgage
Corporation ("FHLMC"); (b) those issued by non-governmental issuers that
represent interests in, or are collateralized by, mortgage-related securities
issued or guaranteed by the United States Government or one of its agencies or
instrumentalities; and (c) those issued by non-governmental issuers that
represent an interest in, or are collateralized by, whole mortgage loans or
mortgage-related securities without a government guarantee but usually with
over-collateralization or some other form of private credit enhancement. Non-
governmental issuers referred to in (b) and (c) above include originators of
and investors in mortgage loans, including savings and loan associations,
mortgage bankers, commercial banks, investment banks and special purpose
subsidiaries of the foregoing.
MORTGAGE PASS-THROUGH SECURITIES. The mortgage pass-through securities in
which the Fund invests provide for the pass-through to investors of their pro-
rata share of monthly payments (including any prepayments) made by the
individual borrowers on the pooled mortgage loans, net of any fees paid to the
guarantor of such securities and the servicer of the underlying mortgage
loans. The Fund invests both in U.S. Government pass-through securities issued
by GNMA, FNMA and FHLMC, and in pass-through securities issued by non-
governmental issuers. Each of GNMA, FNMA and FHLMC guarantee timely
distributions of interest to certificate holders. GNMA and FNMA guarantee
timely distributions of scheduled principal. FHLMC generally guarantees only
ultimate collection of principal of the underlying mortgage loans.
ADJUSTABLE RATE MORTGAGE SECURITIES. The Fund may also invest in adjustable
rate mortgage securities ("ARMS"). ARMS are pass-through mortgage securities
collateralized by mortgages with
interest rates that are adjusted from time to time. The adjustments usually
are determined in accordance with a predetermined interest rate index and may
be subject to certain limits. While the values of ARMS, like other debt
securities, generally vary inversely with changes in market interest rates
(increasing in value during periods of declining interest rates and decreasing
in value during periods of increasing interest rates), the values of ARMS
should generally be more resistant to price swings than other debt securities
because the interest rates of ARMS move with market interest rates. The
adjustable rate feature of ARMS will not, however, eliminate fluctuations in
the prices of ARMS, particularly during periods of extreme fluctuations in
interest rates. Also, since many adjustable rate mortgages only reset on an
annual basis, it can be expected that the prices of ARMS will fluctuate to the
extent that changes in prevailing interest rates are not immediately reflected
in the interest rates payable on the underlying adjustable rate mortgages.
COLLATERALIZED MORTGAGE OBLIGATIONS. The Fund may invest in CMOs
(collateralized mortgage obligations and multi-class pass-through securities
unless the context otherwise indicates), which are derivative mortgage
securities. Collateralized mortgage obligations are debt instruments issued by
special purpose entities which are secured by pools of mortgage loans or other
mortgage-related securities. Multi-class pass-through securities are equity
interests in a trust composed of mortgage loans or other mortgage-related
securities. Payments of principal and interest on underlying collateral
provide the funds to pay debt service on the collateralized mortgage
obligation or make scheduled distributions on the multi-class pass-through
security. The Fund will invest only in CMOs which are rated AAA by an NRSRO.
In a CMO, a series of bonds or certificates is issued in multiple classes.
Each class of CMO, often referred to as a "tranche," is issued at a specific
coupon rate and has a stated maturity or final distribution date. Principal
prepayments on collateral underlying a CMO may cause it to be retired
substantially earlier than the stated maturities or final distribution dates.
The principal and interest on the underlying mortgages may be allocated
among the several tranches of a CMO in many ways. For example, certain
tranches may have variable or floating interest rates and others may be
stripped securities which provide only the principal or interest feature of
the underlying security. See "Stripped Mortgage-Backed Securities," below.
Generally, the purpose of the allocation of the cash flow of a CMO to the
various tranches is to obtain a more predictable cash flow to certain of the
individual tranches than exists with the underlying collateral of the CMO. As
a general rule, the more predictable the cash flow is on a CMO tranche, the
lower the anticipated yield will be on that tranche at the time of issuance
relative to prevailing market yields on mortgage-related securities. As part
of the process of creating more predictable cash flows on most of the tranches
of a CMO, one or more tranches generally must be created that absorb most of
the volatility in the cash flows on the underlying mortgage loans. The yields
on these tranches, which may include inverse floaters, IOs, POs, and Z
tranches, discussed below, are generally higher than prevailing market yields
on mortgage-related securities with similar maturities. As a result of the
uncertainty of the cash flows of these tranches, the market prices of and
yield on these tranches generally are more volatile.
The Fund may invest in any CMO tranche, including "inverse floaters" and "Z
tranches." An inverse floater is a CMO tranche with a coupon rate that moves
inversely to a designated index, such as LIBOR (London Inter-Bank Offered
Rate) or COFI (Cost of Funds Index). Like most other fixed-income securities,
the value of inverse floaters will decrease as interest rates increase.
Inverse
floaters, however, exhibit greater price volatility than the majority of
mortgage pass-through securities or CMOs. Coupon rates on inverse floaters
typically change at a multiple of the changes in the relevant index rate.
Thus, any rise in the index rate (as a consequence of an increase in interest
rates) causes a correspondingly greater drop in the coupon rate of an inverse
floater while any drop in the index rate causes a correspondingly greater
increase in the coupon of an inverse floater. Some inverse floaters also
exhibit extreme sensitivity to changes in prepayments. Inverse floaters would
be purchased by the Fund to attempt to protect against a reduction in the
income earned on the Fund's investments due to a decline in interest rates.
Z tranches of CMOs defer interest and principal payments until one or more
other classes of the CMO have been paid in full. Interest accretes on the Z
tranche, being added to principal, and is compounded through the accretion
period. After the other classes have been paid in full, interest payments
begin and continue through maturity. Z tranches have characteristics similar
to zero coupon bonds. Like a zero coupon bond, during its accretion period a Z
tranche has the advantage of eliminating the risk of reinvesting interest
payments at lower rates during a period of declining market interest rates. At
the same time, however, and also like a zero coupon bond, the market value of
a Z tranche can be expected to fluctuate more widely with changes in market
interest rates than would the market value of a tranche which pays interest
currently. In addition, changes in prepayment rates on the underlying mortgage
loans will affect the accretion period of a Z tranche, and therefore also will
influence its market value.
STRIPPED MORTGAGE-BACKED SECURITIES. Some of the mortgage-related securities
purchased by the Fund may represent an interest solely in the principal
repayments or solely in the interest payments on mortgage-backed securities
(stripped mortgage-backed securities or "SMBSs"). SMBSs are derivative multi-
class securities. SMBSs are usually structured with two classes and receive
different proportions of the interest and principal distributions on the pool
of underlying mortgage-backed securities. Due to the possibility of
prepayments on the underlying mortgages, SMBSs may be more interest-rate
sensitive than other securities purchased by the Fund. If prevailing interest
rates fall below the level at which SMBSs were issued, there may be
substantial prepayments on the underlying mortgages, leading to the relatively
early prepayments of principal-only SMBSs (the principal-only or "PO" class)
and a reduction in the amount of payments made to holders of interest-only
SMBSs (the interest-only or "IO" class). Therefore, interest-only SMBSs
generally increase in value as interest rates rise and decrease in value as
interest rates fall, counter to changes in value experienced by most fixed
income securities. If the underlying mortgages experience slower than
anticipated prepayments of principal, the yield on a PO class will be affected
more severely than would be the case with a traditional mortgage-related
security. Because the yield to maturity of an IO class is extremely sensitive
to the rate of principal payments (including prepayments) on the related
underlying mortgage-backed securities, it is possible that the Fund might not
recover its original investment on interest-only SMBSs if there are
substantial prepayments on the underlying mortgages. The Fund's inability to
fully recoup its investment in these securities as a result of a rapid rate of
principal prepayments may occur even if the securities are rated by an NRSRO.
In view of these considerations, Huntington or Piper intends to use these
characteristics of interest-only SMBSs to reduce the effects of interest rate
changes on the value of the Fund's portfolio, while continuing to pursue
current income.
U.S. GOVERNMENT SECURITIES. The U.S. Government securities in which the Fund
invests are either issued or guaranteed as to payment of principal and
interest by the U.S. Government, its agencies, or instrumentalities. The
current market prices for such securities are not guaranteed and will
fluctuate. Investments in U.S. Government securities are limited to:
(a)direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
(b)notes, bonds, and discount notes of U.S. Government agencies or
instrumentalities, such as the: Farm Credit System, including the
National Bank for Cooperatives and Banks for Cooperatives; Federal Home
Loan Banks; Federal Home Loan Mortgage Corporation; Federal National
Mortgage Association; Government National Mortgage Association; Export-
Import Bank of the United States; Commodity Credit Corporation; Federal
Financing Bank; The Student Loan Marketing Association; National Credit
Union Administration; and Tennessee Valley Authority.
Some obligations issued or guaranteed by agencies or instrumentalities of
the U.S. Government, such as Government National Mortgage Association
participation certificates, are backed by the full faith and credit of the
U.S. Treasury. No assurances can be given that the U.S. Government will
provide financial support to other agencies or instrumentalities, since it is
not obligated to do so. These instruments are supported by:
(a)the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
(b)the discretionary authority of the U.S. Government to purchase certain
obligations of an agency or instrumentality; or
(c)the credit of the agency or instrumentality.
SHORT-TERM TRADING. The Fund will use short-term trading to benefit from yield
disparities among different issues of securities or otherwise to achieve its
investment objective. To the extent that the Fund engages in short-term
trading, such activities will cause the Fund to pay greater mark-up charges.
The Fund's portfolio turnover rate is set forth in "Financial Highlights."
INVESTMENT RISKS. The Fund is subject to interest rate risk, which is the
potential for a decline in bond prices due to rising interest rates. In
general, bond prices vary inversely with interest rates. When interest rates
rise, bond prices generally fall. Conversely, when interest rates fall, bond
prices generally rise. Interest rate risk applies to U.S. Government
securities as well as other bonds. U.S. Government securities are guaranteed
only as to the payment of interest and principal. The current market prices
for such securities are not guaranteed and will fluctuate.
The Fund invests a significant portion of its assets in mortgage-related
securities and, as a result, is subject to prepayment risk. Prepayment risk
results because, as interest rates fall, homeowners are more likely to
refinance their home mortgages. When home mortgages are refinanced, the
principal on mortgage-related securities held by the Fund is "prepaid" earlier
than expected. The Fund must then reinvest the unanticipated principal
payments, just at a time when interest rates on new mortgage investments are
falling. Prepayment risk has two important effects on the Fund:
. When interest rates fall and additional mortgage prepayments must be
reinvested at lower interest rates, the income of the Fund will be reduced.
. When interest rates fall, prices on mortgage-backed securities may not rise
as much as comparable Treasury bonds because bond market investors may
anticipate an increase in mortgage prepayments and a likely decline in
income.
The Fund's investments in mortgage-related securities also subject the Fund
to extension risk. Extension risk is the possibility that rising interest
rates may cause prepayments to occur at a slower than expected rate. This
particular risk may effectively change a security which was considered short-
or intermediate-term at the time of purchase into a long-term security. Long-
term securities generally fluctuate more widely in response to changes in
interest rates than short- or intermediate-term securities.
The Fund's investments in mortgage-related securities include derivative
mortgage securities such as CMOs and stripped mortgage-backed securities
which, as discussed above, may involve risks in addition to those found in
other mortgage-related securities. The market experience of 1994 has shown
that certain derivative mortgage securities may be highly sensitive to changes
in interest and prepayment rates and, as a result, the prices of such
securities may be highly volatile. In addition, the market experience of 1994
has shown that during periods of rising interest rates, the market for certain
derivative mortgage securities may become more unstable and such securities
may become more difficult to sell as market makers either choose not to
repurchase such securities or offer prices, based on current market
conditions, which are unacceptable to the Fund.
OHIO TAX-FREE FUND
The objective of the Ohio Tax-Free Fund is to provide current income exempt
from federal income tax and Ohio personal income taxes. The Fund will attempt
to achieve its objective by investing in Ohio tax-exempt securities. "Ohio
tax-exempt securities" are debt obligations which (i) are issued by or on
behalf of the State of Ohio or its respective authorities, agencies,
instrumentalities and political subdivisions, and (ii) produce interest which,
in the opinion of bond counsel at the time of issuance, is exempt from federal
income tax and Ohio personal income taxes. As a matter of fundamental policy,
under normal market conditions at least 80% of the Fund's net assets will be
invested in Ohio tax-exempt securities. In addition, the Fund will not, as a
matter of fundamental policy, invest in securities the income from which is
treated as a preference item for purposes of the federal alternative minimum
tax. This policy will restrict the Fund's ability to invest in certain private
activity bonds issued after August 7, 1986.
The Fund will only invest in Ohio tax-exempt securities that are rated at
the time of purchase in one of the top three categories by an NRSRO(s) or, if
not rated, of comparable quality as determined by Huntington under guidelines
established by the Trustees. Based on current market conditions, it is
anticipated that the dollar-weighted average portfolio maturity of the Fund
will be between four and seven years. Under normal market conditions, the Fund
will not invest in obligations with a remaining maturity of more than 15 years
at the time of purchase.
The Fund may also invest in numerous types of short-term tax-exempt
instruments, which may be used to fund short-term cash requirements such as
interim financing in anticipation of tax collections, revenue receipts or bond
sales to finance various public purposes.
From time to time, the Fund may invest in obligations the interest on which
is subject to federal income tax or Ohio personal income taxes pending
investment in Ohio tax-exempt securities or for liquidity purposes. The Fund
may also hold a portion of its assets in cash or money market instruments, the
interest on which may not be exempt from federal or Ohio income taxes.
CREDIT ENHANCEMENT. Certain of the portfolio investments of the Fund may
have been credit enhanced by a guaranty, letter of credit or insurance. The
Fund typically evaluates the credit quality and ratings of credit enhanced
securities based upon the financial condition and ratings of the party
providing the credit enhancement (the "credit enhancer"), rather than the
issuer. However, credit enhanced securities will not be treated as having been
issued by the credit enhancer for diversification purposes, unless the Fund
has invested more than 10% of its assets in securities issued, guaranteed or
otherwise credit enhanced by the credit enhancer, in which case the securities
will be treated as having been issued both by the issuer and the credit
enhancer. The bankruptcy, receivership or default of the credit enhancer will
adversely affect the quality and marketability of the underlying security.
FIXED INCOME SECURITIES FUND
The objective of the Fixed Income Securities Fund is to achieve high current
income through investment in fixed income securities where the average
maturity of the Fund will not exceed 10 years.
The Fund may purchase obligations of the U.S. Government and its agencies and
instrumentalities, corporate bonds, debentures, nonconvertible fixed income
preferred stocks, mortgage pass-through securities, eurodollar certificates of
deposit and eurodollar bonds. The Fund may also invest up to 10% of its net
assets in non-U.S. dollar denominated bonds. Both fixed and variable rate
issues may be purchased. Debt securities will be rated at the time of purchase
in one of the top three categories by an NRSRO(s) or, if not rated, of
comparable quality as determined by Huntington under guidelines established by
the Trustees. As a matter of fundamental policy, under normal market
conditions, the Fund will invest at least 65% of its assets in fixed income
securities. The Fund may also, under normal market conditions, invest a
portion of its assets in cash equivalents, including repurchase agreements and
the shares of money market mutual funds, for liquidity purposes.
SHORT/INTERMEDIATE FIXED INCOME SECURITIES FUND
The objective of the Short/Intermediate Fixed Income Securities Fund is to
achieve current income through investment in fixed income securities with a
maximum maturity or average life for individual issues of 5 years or less at
the time of purchase and a dollar-weighted average portfolio maturity of more
than 2 but less than 5 years. The Fund may purchase obligations of the U.S.
Government and its agencies and instrumentalities, corporate bonds,
debentures, non-convertible fixed income preferred stocks, mortgage pass-
through securities, eurodollar certificates of deposit and eurodollar bonds.
The Fund may also invest up to 10% of its net assets in non-U.S. dollar
denominated bonds and non-convertible fixed-income European Currency Unit
bonds. Both fixed and variable rate issues may be purchased. Debt securities
will be rated at the time of purchase in one of the top three categories by an
NRSRO(s) or, if not rated, of comparable quality as determined by Huntington.
As a matter of fundamental policy, under normal market conditions the Fund
will invest at least 65% of its assets in fixed income securities. The Fund
may also, under normal market conditions, invest a portion of its assets in
cash equivalents, including repurchase agreements and the shares of money
market mutual funds, for liquidity purposes.
ADDITIONAL INFORMATION ON PORTFOLIO INVESTMENTS AND STRATEGIES
OHIO TAX-EXEMPT SECURITIES
The two principal classifications of Ohio tax-exempt securities are general
obligation and limited obligation (or revenue) securities. General obligation
securities involve the credit of an issuer possessing taxing power and are
payable from the issuer's general unrestricted revenues. The characteristics
and methods of enforcement of general obligation securities vary according to
the law applicable to the particular issuer. Limited obligation securities are
payable only from the revenues derived from a particular facility or class of
facilities, or a specific revenue source, and generally are
not payable from the unrestricted revenues of the issuer. Private activity
bonds and industrial development bonds generally are limited obligation
securities, the credit and quality of which are usually directly related to
the credit of the private user of the facilities.
The economy of Ohio, while diversifying more into the service area,
continues to rely in part on durable goods manufacturing, which is largely
concentrated in motor vehicles and equipment, steel, rubber products and
household appliances. As a result, general economic activity in Ohio, as in
many other industrially-developed states, tends to be more cyclical than in
some other states and in the nation as a whole. Agriculture also is an
important segment of the economy in the State, and the State has instituted
several programs to provide financial assistance to farmers. Ohio's economy,
including particularly an unemployment rate usually somewhat higher than the
national average, has had varying effects on the different geographic areas of
the State and the political subdivisions located in such geographic areas.
Although revenue obligations of the State or its political subdivisions may be
payable from a specific source or project, there can be no assurance that
future economic difficulties and the resulting impact on state and local
government finances will not adversely affect the market value of the Ohio
tax-exempt securities in an Ohio Fund, as defined below, or the ability of the
respective obligors to make timely payment of interest and principal on such
obligations. See the Statement of Additional Information for further
discussion of special considerations regarding investments in Ohio tax-exempt
securities.
NON-DIVERSIFICATION
The Ohio Municipal Money Market Fund and the Ohio Tax-Free Fund (the "Ohio
Funds") are non-diversified Funds under the Investment Company Act of 1940,
which means that they may invest their assets in the obligations of fewer
issuers than would be the case if they were "diversified". The Ohio Funds'
ability to invest a relatively high percentage of their assets in the
securities of a limited number of issuers involves an increased risk of loss
to an Ohio Fund if any one issuer is unable to make interest or principal
payments or if the market value of the issuer's securities declines.
Although non-diversified under the Investment Company Act, the Ohio Funds
intend to comply with Subchapter M of the Internal Revenue Code. This
undertaking requires that at the end of each quarter of the taxable year, with
regard to at least 50% of each Ohio Fund's total assets, no more than 5% of
its total assets are invested in the assets of a single issuer; beyond that,
no more than 25% of its total assets are invested in the securities of a
single issuer.
DEFENSIVE INVESTMENT STRATEGIES
At times Huntington may judge that conditions in securities markets may make
pursuing a Fund's basic investment strategy inconsistent with the best
interests of the Fund's shareholders. At such times, Huntington may
temporarily use alternative strategies, primarily designed to reduce
fluctuations in the value of a Fund's assets. In implementing these temporary
"defensive" strategies, a Fund may temporarily place all or a portion of its
assets in cash, U.S. Government securities, debt securities which Huntington
considers to be of comparable quality to the acceptable investments of the
Fund and other investments which Huntington considers consistent with such
strategies. In the case of the Ohio Funds, a Fund's alternative strategies may
give rise to income which is not exempt from federal or state taxes.
OPTIONS AND FUTURES CONTRACTS (ALL FUNDS OTHER THAN THE MONEY MARKET FUNDS AND
THE OHIO TAX-FREE FUND)
A Fund may seek to increase its current return by writing covered call
options and covered put options on its portfolio securities or other
securities in which it may invest. A Fund receives a premium
from writing a call or put option, which increases a Fund's return if the
option expires unexercised or is closed out at a net profit. A Fund may also
buy and sell put and call options on its securities for hedging purposes. When
a Fund writes a call option on a portfolio security, it gives up the
opportunity to profit from any increases in the price of the security above
the exercise price of the option. When it writes a put option, a Fund takes
the risk that it will be required to purchase a security from the option
holder at a price above the current market price of the security. A Fund may
terminate an option that it has written prior to expiration by entering into a
closing purchase transaction in which it purchases an option having the same
terms as the option written.
A Fund may purchase and sell futures contracts and related options to hedge
against changes in the value of securities it owns or expects to purchase.
Futures contracts on a variety of stock and bond indices are currently
available. An index is intended to represent a numerical measure of market
performance by the securities making up the index. A Fund may purchase and
sell futures contracts on any index approved for trading by the Commodity
Futures Trading Commission to hedge against general changes in market values
of securities which a Fund owns or expects to purchase. A Fund may also
purchase and sell put and call options on index futures or directly on the
underlying indices for hedging purposes. In addition, a Fund may purchase and
sell futures contracts and related options on individual debt securities which
a Fund owns or expects to purchase, if and when such futures contracts and
options become available.
In connection with its futures transactions, a Fund will be required to
deposit as "initial margin" an amount of cash and/or securities. Thereafter,
subsequent payments (referred to as "variation margin") are made to and from
the broker to reflect changes in the value of the futures contract. A Fund
will not generally purchase or sell futures contracts or purchase or sell
options on futures contracts if as a result the sum of initial margin deposits
on a Fund's existing futures contracts and options written by a Fund plus
premiums paid for outstanding options on futures contracts purchased by a
Fund, would exceed 5% of a Fund's net assets.
Options and futures transactions involve various risks, including the risk
that a Fund may be unable at times to close out its positions, that such
transactions may not accomplish their purposes because of imperfect market
correlations, or that Huntington may not forecast market movements correctly.
Options and futures transactions involve costs and may result in losses. The
effective use of options and futures strategies by a Fund is dependent upon,
among other things, a Fund's ability to terminate options and futures
positions at times when Huntington deems it desirable to do so. Although a
Fund will enter into an options or futures contract position only if
Huntington believes that a liquid secondary market exists for such options or
futures contract, there is no assurance that a Fund will be able to effect
closing transactions at a particular time or at an acceptable price.
The Funds generally expect that their options and futures transactions will
be conducted on recognized exchanges. In certain instances, however, a Fund
may purchase and sell options in the over-the-counter ("OTC") market. A Fund's
ability to terminate options in the OTC market may be more limited than for
exchange-traded options and may also involve the risk that securities dealers
participating in such transactions would be unable to meet their obligations
to a Fund. A Fund will, however, engage in OTC market transactions only when
appropriate exchange-traded transactions are unavailable and when, in the
opinion of Huntington, the pricing mechanism and liquidity of the OTC market
is satisfactory and the participants are responsible parties likely to meet
their contractual obligations.
The use of options and futures strategies also involves the risk of
imperfect correlation between movements in the prices of options and futures
contracts and movements in the value of the underlying securities that are the
subject of a hedge. The successful use of these strategies further depends on
the ability of Huntington to forecast market movements correctly.
For more information about any of the options or futures portfolio
transactions described above, see the Statement of Additional Information.
FOREIGN INVESTMENTS
Except as otherwise limited in this Prospectus, a Fund may invest some or
all of its assets in securities principally traded in foreign markets. Since
foreign securities are normally denominated and traded in foreign currencies,
the value of a Fund's assets may be affected favorably or unfavorably by
currency exchange rates and exchange control regulation. Exchange rates with
respect to certain currencies may be particularly volatile. There may be less
information publicly available about a foreign company than about a U.S.
company, and foreign companies are not generally subject to accounting,
auditing, and financial reporting standards and practices comparable to those
in the United States. The securities of some foreign companies are less liquid
and at times more volatile than securities of comparable U.S. companies.
Foreign brokerage commissions and other fees are also generally higher than in
the United States. Foreign settlement procedures and trade regulations may
involve certain risks (such as delays in payment or delivery of securities or
in the recovery of a Fund's assets held abroad) and expenses not present in
the settlement of domestic investments.
In addition, with respect to certain foreign countries, there is a
possibility of nationalization or expropriation of assets, confiscatory
taxation, political or financial instability and diplomatic developments which
could affect the value of investments in those countries. In certain
countries, legal remedies available to investors may be more limited than
those available with respect to investments in the United States or other
countries. The laws of some foreign countries may limit a Fund's ability to
invest in securities of certain issuers located in those countries. Special
tax considerations apply to foreign securities.
A Fund may buy or sell foreign currencies and forward foreign currency
exchange contracts for hedging purposes in connection with its foreign
investments.
A more detailed explanation of foreign investments, and the risks associated
with them, is included in the Statement of Additional Information.
REPURCHASE AGREEMENTS
Certain securities in which a Fund invests may be purchased pursuant to
repurchase agreements. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S.
Government securities or other securities to a Fund and agree at the time of
sale to repurchase them at a mutually agreed upon time and price. A Fund or
its custodian will take possession of the securities subject to repurchase
agreements and these securities will be marked to market daily. To the extent
that the original seller does not repurchase the securities from a Fund, a
Fund could receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by a Fund might be delayed
pending court action. The Trustees believe that under the regular procedures
normally in effect for custody of a Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor
of a Fund and allow retention or disposition of such securities. A Fund will
only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker/dealers, which are found by Huntington
to be creditworthy pursuant to guidelines established by the Trustees.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
A 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. The seller's failure to
complete these transactions may cause a Fund to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices. Accordingly, a Fund may pay more
or less than the market value of the securities on the settlement date.
A Fund may dispose of a commitment prior to settlement if the Fund's adviser
deems it appropriate to do so.
In connection with its ability to purchase securities on a when-issued or
delayed delivery basis, the Mortgage Securities Fund may enter into mortgage
"dollar rolls" in which the Fund sells securities for delivery in the current
month and simultaneously contracts with the same counterparty to repurchase
similar (same type, coupon and maturity) but not identical securities on a
specified future date. The Fund gives up the right to receive principal and
interest paid on the securities sold. However, the Fund would benefit to the
extent of any difference between the price received for the securities sold
and the lower forward price for the future purchase plus any fee income
received. Unless such benefits exceed the income, capital appreciation and
gain or loss due to mortgage prepayments that would have been realized on the
securities sold as part of the mortgage dollar roll, the use of this technique
will diminish the investment performance of the Fund compared with what such
performance would have been without the use of mortgage dollar rolls. The Fund
will hold and maintain in a segregated account until the settlement date, cash
or liquid high-grade debt securities in an amount equal to the forward
purchase price. The benefits derived from the use of mortgage dollar rolls may
depend upon Piper's ability to predict correctly mortgage prepayments and
interest rates. There is no assurance that mortgage dollar rolls can be
successfully employed. In addition, the use of mortgage dollar rolls by the
Fund while remaining substantially fully invested increases the amount of the
Fund's assets that are subject to market risk to an amount that is greater
than the Fund's net asset value, which could result in increased volatility of
the price of the Fund's shares. The Mortgage Securities Fund may invest up to
35% of its total assets in securities purchased on a when-issued or delayed
delivery basis.
LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, a Fund may lend its portfolio
securities on a short-term basis to brokers, dealers or other financial
institutions. A Fund will only enter into loan arrangements with brokers,
dealers or other financial institutions which Huntington has determined are
creditworthy under guidelines established by the Trustees and must receive
collateral equal to at least 102% of the current market value of the
securities loaned. The collateral received when the Fund lends portfolio
securities must be valued daily and, should the market value of the loaned
securities increase, the borrower must furnish additional collateral to the
Fund. As a matter of fundamental policy, the aggregate value of all securities
loaned by a Fund may not exceed 20% of the Fund's total assets.
There is the risk that, when lending portfolio securities, the securities
may not be available to a Fund on a timely basis and a Fund may, therefore,
lose the opportunity to sell the securities at a desirable price. In addition,
in the event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
INVESTMENT RESTRICTIONS
Each Fund has adopted certain investment restrictions and limitations for
the purpose of reducing its exposure in specific situations. These investment
limitations are fundamental policies and may be changed with respect to any
Fund only by a vote of a majority of the outstanding shares of that Fund.
No Fund will:
(1)Except for the Ohio Funds, invest more than 5% of the value of its
total assets in the securities of any one issuer (this limitation does
not apply to securities issued or guaranteed by the U.S. Government or
any of its agencies or instrumentalities or to repurchase agreements
secured by such obligations);
(2)Invest 25% or more of the value of its total assets (i) in securities
of companies primarily engaged in any one industry (other than the U.S.
Government, its agencies and instrumentalities), and (ii) with respect
to the Ohio Funds, in municipal obligations of one issuer or which are
related in such a way that, in the opinion of Huntington, an economic,
business or political development other than an Ohio state-wide,
national or international development, affecting one such obligation
would also affect the others in a similar manner. Such concentration
may occur as a result of changes in the market value of portfolio
securities, but such concentration may not result from investment;
(3)Except for investments by the Money Market Fund in commercial paper
issued under Section 4(2) of the Securities Act of 1933 and certain
other restricted securities which meet the criteria for liquidity as
established by the Trustees, invest more than 10% of the value of its
total assets in illiquid securities, including restricted securities,
repurchase agreements of over seven days' duration and OTC options; and
(4)Borrow in excess of 5% of its total assets (borrowings are permitted
only as a temporary measure for extraordinary or emergency purposes) or
pledge (mortgage) its assets as security for any indebtedness.
HOW THE FUNDS VALUE THEIR SHARES
Each Money Market Fund attempts to stabilize the net asset value of its
Trust Shares at $1.00 by valuing its portfolio securities using the amortized
cost method. The net asset value per Trust Share is determined by adding the
interest of the Trust Shares in the value of all securities and other assets
of a Fund, subtracting the interest of the Trust Shares in the liabilities of
a Fund and those attributable to Trust Shares, and dividing the remainder by
the total number of Trust Shares outstanding.
A Fund cannot guarantee that its net asset value will always remain at $1.00
per share.
The net asset value for Trust Shares of each of the other Funds is
determined by adding the interest of the Trust Shares in the market value of
all securities and other assets of a Fund, subtracting the interest of the
Trust Shares in the liabilities of a Fund and those attributable to Trust
Shares, and dividing the remainder by the total number of Trust Shares
outstanding. The net asset value of a
Fund's Trust Shares will differ from that of Investment Shares due to the
expense of the Rule 12b-1 fee applicable to a Fund's Investment Shares.
Securities for which market quotations are readily available are stated at
market value. Short-term investments with remaining maturities of 60 days or
less at the time of purchase are stated at amortized cost, which approximates
market value. Debt securities for which market quotations are not readily
available will be valued on the basis of valuations provided by pricing
services approved by the Trustees. Pricing services often use information with
respect to transactions in bonds, quotations from bond dealers, market
transactions in comparable securities, and various relationships between
securities in determining value. All other Fund assets are valued at their
fair value following procedures approved by the Trustees.
The Money Market Funds calculate net asset value per Trust Share at 12:00
noon (Eastern Time) and as of the close of the New York Stock Exchange
(currently 4:00 p.m. Eastern Time) on each Business Day. The other Funds
calculate net asset value per Trust Share as of the close of the New York
Stock Exchange (currently 4:00 p.m. Eastern Time) on each Business Day. As
used herein, a "Business Day" constitutes Monday through Friday except (i)
days on which there are not sufficient changes in the value of a Fund's
portfolio securities that its net asset value might be materially affected;
(ii) days during which no shares are tendered for redemption and no orders to
purchase shares are received; and (iii) the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
HOW TO BUY TRUST SHARES
Investors may purchase Trust Shares in each of the Funds through procedures
established by the the Distributor in connection with the requirements of
fiduciary, advisory, agency and other similar accounts maintained by or on
behalf of customers of Huntington or its affiliates or correspondent banks
(collectively, the "Banks"). Texas residents must purchase shares through the
Distributor at 1-800-618-8573. Trust Shares of each Fund are purchased at the
appropriate net asset value per Trust Share next determined after the order is
transmitted to the Funds' transfer agent, Federated Services Company (the
"Transfer Agent"). Trust Shares in each Money Market Fund purchased prior to
10:30 a.m. (Eastern Time) begin earning dividends that day; Trust Shares
purchased after such time begin earning dividends on the following day.
Trust Shares will normally be held in the name of the Bank effecting the
purchase on the shareholder's behalf, and it is the Bank's responsibility to
transmit purchase or redemption orders to the Transfer Agent. Shareholders
will receive a confirmation of each transaction in their account, which will
show the total number of Trust Shares of each Fund owned. The Funds will not
issue certificates representing Trust Shares.
If a shareholder pays for Trust Shares by check and the check does not
clear, the purchase will be cancelled, and such shareholder may be charged a
fee and will be liable for any losses incurred. Neither initial nor subsequent
investments will be made by third party check. For more information or
assistance regarding the purchase of Trust Shares of any Fund, call the Mutual
Fund Services Center at (in Ohio) 614-463-5580, or (outside the 614 Area Code)
800-253-0412.
From time to time, the Trust may temporarily suspend the offering of shares
of one or more of the Funds or any class thereof. During the period of any
such suspension and depending on the reasons for the suspension, persons who
are already shareholders of any such Fund or class may be permitted
to continue to purchase additional shares and to have dividends reinvested.
The Trust or the Distributor may refuse any order to purchase shares or waive
any minimum purchase requirements.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Trust Shares of a Fund is $1,000.
Subsequent investments in a Fund may be made at any time in amounts of at
least $500.
SYSTEMATIC INVESTMENT PROGRAM
Once an account has been opened, holders of Trust Shares of a Fund may add
to their investment on a regular basis in minimum amounts of at least $50.
Under this program, funds will be automatically withdrawn periodically from
the shareholder's account and invested in Trust Shares of a Fund at the
applicable public offering price per share next determined after an order is
received by the Transfer Agent. Shareholders may apply for participation in
this program by contacting the Mutual Fund Services Center.
HOW TO EXCHANGE TRUST SHARES AMONG THE FUNDS
Shareholders may exchange Trust Shares in any Fund for Trust Shares in any
other Fund at the respective net asset values per Trust Share next determined
after receipt of the request in good order. This privilege is available to
shareholders resident in any state in which the Fund shares being acquired may
be sold. Exchange requests received prior to 4:00 p.m. (Eastern Time) will be
effected at the next determined net asset value per Trust Share as of that
Business Day. Exchange requests received after 4:00 p.m. (Eastern Time) will
be effected at the next determined net asset value per Trust Share on the
following Business Day. Holders of Trust Shares automatically receive the
Trust's telephone exchange service unless they have instructed their Bank to
the contrary. Exchange instructions given by telephone may be electronically
recorded and will be binding upon the shareholder. Because telephone exchange
requests will be honored from anyone who provides the correct information
(described below), this service involves a possible risk of loss if someone
uses the service without the shareholder's permission.
1.By Phone:Mutual Fund Services Center (in Ohio) 614-463-5580 (outside the
614 Area Code) 800-253-0412
2.By Mail:The Huntington Trust Company, N.A. 41 South High Street (HC 1131)
Columbus, OH 43287 Attn: Mutual Fund Services Center
In order to make an exchange, shareholders will be required to maintain the
applicable minimum account balance in each Fund in which shares are owned and
must satisfy the minimum initial and subsequent purchase amounts of the Fund
into which shares are exchanged.
To exchange by letter or by telephone, a shareholder must state (1) the name
of the Fund from which the exchange is to be made (and designating that Trust
Shares are involved), (2) the name(s) and address on the shareholder account,
(3) the account number, (4) the dollar amount or number of Trust Shares to be
exchanged, and (5) the Fund into which the Trust Shares are to be exchanged.
Written exchange requests must be endorsed by the shareholder, and it may be
necessary to have the shareholder's signature guaranteed by a member firm of a
national securities exchange or by a commercial bank, savings and loan
association or trust company. Further documentation may be
required, and a signature guarantee is generally required from corporations,
executors, administrators, trustees and guardians. (See "Redeeming By Mail"
below.)
An exchange is treated as a sale for federal income tax purposes and,
depending on the circumstances, a short or long-term capital gain or loss may
be realized.
The Trust's exchange privileges may be terminated or modified. Except as
indicated below, shareholders will be given 60 days' prior notice of any such
termination or any material amendment of existing exchange privileges. No
notice will be given when the only material effect of an amendment is to
reduce or eliminate any charges payable at the time of an exchange or under
certain extraordinary circumstances, such as in connection with the suspension
of the sale or redemption of Fund shares. If reasonable procedures are not
followed by the Funds, they may be liable for losses due to unauthorized or
fraudulent telephone instructions.
HOW TO REDEEM TRUST SHARES
Shareholders may redeem all or any portion of the Trust Shares in their
account on any Business Day at the appropriate net asset value per Trust Share
next determined after a redemption request in proper form is received by the
Transfer Agent. As described below, shareholders may redeem Trust Shares by
telephone or in writing, and may receive redemption proceeds by wire.
If an investor purchases Trust Shares by check and wishes to redeem those
Trust Shares before the check has cleared, the Trust may delay payment of any
redemption proceeds until the check clears. Under unusual circumstances, a
Fund may suspend redemptions or postpone payment for more than seven days, as
permitted by federal securities law.
REDEEMING BY TELEPHONE
Telephone requests for redemption may be made by calling the Mutual Fund
Services Center at (in Ohio) 614-463-5580 or (outside the 614 Area Code) 800-
253-0412.
Shareholders of the Money Market Fund, Ohio Municipal Money Market Fund and
U.S. Treasury Money Market Fund who request a redemption before 10:30 a.m.
(Eastern Time) will usually have the proceeds wired the same day but will not
be entitled to that day's dividend; redemption requests received after 10:30
a.m. (Eastern Time) will receive that day's dividend and the proceeds will
normally be wired the following Business Day. Telephone requests for
redemptions in the Income and Equity Funds must be received prior to 4:00 p.m.
(Eastern Time) to receive that day's net asset value and the redemption
proceeds will be paid in federal funds, normally on the next Business Day.
Holders of Trust Shares automatically receive the Trust's telephone
redemption service unless they have instructed their Bank to the contrary.
Because telephone redemption requests will be honored from anyone who provides
the correct information (described below), this service involves a possible
risk of loss if someone uses the service without the shareholder's permission.
Anyone making a telephone redemption request must furnish (1) the name and
address of record of the registered owner(s), (2) the account number, (3) the
amount to be withdrawn, and (4) the name of the person making the request.
Checks for telephone redemptions will be issued only to the registered
shareholder(s) and mailed to the last address of record. If at anytime the
Trust shall determine it necessary to terminate or modify this method of
redemption, shareholders will be promptly notified. Telephone redemption
instructions may be recorded.
In the event of extreme economic or market conditions, a shareholder may
experience difficulty in redeeming by telephone. If such a case should occur,
another method of redemption, such as through
written request, should be considered. If reasonable procedures are not
followed by the Funds, they may be liable for losses due to unauthorized or
fraudulent telephone instructions.
REDEEMING BY MAIL
Redemption requests may be made by writing The Huntington Trust Company,
N.A., 41 South High Street (HC 1131), Columbus, Ohio 43287, Attention: Mutual
Fund Services Center. Written redemption requests must be signed by the
shareholder, and it may be necessary to have the shareholder's signature
guaranteed. Further documentation may be required, and a signature guarantee
is generally required from corporations, executors, administrators, trustees,
and guardians.
Signatures on written redemption requests must be guaranteed by:
--a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the FDIC;
--a member of the New York, American, Midwest, or Pacific Stock Exchanges;
--a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
--any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Funds do not accept signatures guaranteed by a notary public.
The Funds and the Transfer Agent have adopted standards for accepting
signature guarantees from the above institutions. The Funds may elect in the
future to limit eligible signature guarantors to institutions that are members
of a signature guarantee program. The Funds and the Transfer Agent reserve the
right to amend these standards at any time without notice.
Shares will be redeemed at the net asset value determined as of the end of
the Business Day on which the written redemption request is received by the
Transfer Agent.
Redemptions with a value of up to $100,000 will be wired at a shareholder's
request, and a separate charge for this service may apply. Redemption proceeds
may be wired to any bank account specified by the shareholder in writing. If a
shareholder requests a wire transfer by telephone, redemption proceeds may be
wired only to the bank previously designated by the shareholder or otherwise
designated by the shareholder in writing as described below. If a shareholder
has authorized expedited wire redemption, Trust Shares will be redeemed at the
appropriate net asset value per Trust Share next determined after receipt of
the request, and the proceeds normally will be sent to the designated bank
account the following Business Day. In other circumstances, redemption
proceeds will normally be wired within seven days. The proceeds from the
redemption of Shares purchased by check are not available, and the shares may
not be exchanged, until the check has cleared. To change the name of the bank
account to which redemption proceeds will be wired, a shareholder should send
a written request (and, if necessary, with the shareholder's signature
guaranteed) to The Huntington Trust Company, N.A., 41 South High Street (HC
1131), Columbus, Ohio 43287, Attention: Mutual Fund Services Center.
If a shareholder owns fewer shares of a Fund than the minimum amount set by
the Trustees due to shareholder redemptions (presently, shares with a value of
$1,000 or less), the Trust may redeem those shares and forward the redemption
proceeds to the shareholder. A shareholder will receive at least 30 days'
written notice before the Trust redeems shares, and an additional purchase of
shares of the appropriate Fund can be made to avoid redemption. This
requirement does not apply because of changes to the Fund's net asset value.
MANAGEMENT OF THE TRUST
The Trustees of the Trust are responsible for generally overseeing the
conduct of each Fund's business. The Huntington Trust Company, National
Association, Huntington Center, 41 South High Street, Columbus, Ohio 43287,
serves as investment adviser to the Funds pursuant to an investment advisory
agreement with the Trust. Huntington is an indirect wholly-owned subsidiary of
Huntington Bancshares Incorporated, a registered bank holding company with
executive offices located at Huntington Center, 41 South High Street,
Columbus, Ohio 43287.
Subject to the supervision of the Trustees, Huntington provides a continuous
investment program for the Funds, including investment research and management
with respect to all securities, instruments, cash and cash equivalents in the
Funds. The Trust pays Huntington management fees, computed daily and payable
monthly, for each of the Funds at the following annual rates: Money Market
Fund and Ohio Municipal Money Market Fund: .30% of the first $500 million of
average daily net assets of the Fund, .25% of the next $500 million, and .20%
of any amount over $1 billion; U.S. Treasury Money Market Fund: .20% of the
Fund's average daily net assets; Growth Fund and Income Equity Fund: .60% of
the Fund's average daily net assets; and Mortgage Securities Fund, Ohio Tax-
Free Fund, Fixed Income Securities Fund and Short/Intermediate Fixed Income
Securities Fund: .50% of the Fund's average daily net assets. Huntington may
periodically waive all or a portion of its management fee with respect to any
Fund to increase the net income of the Fund available for distribution as
dividends.
Adviser's Background. The Huntington Trust Company, N.A., a national banking
association, is an indirect, wholly-owned subsidiary of Huntington Bancshares
Incorporated ("HBI"). With $18 billion in assets as of December 31, 1994, HBI
is a major Midwest regional bank holding company. Through its subsidiaries and
affiliates, HBI offers a full range of services to the public, including:
commercial lending, depository services, cash management, brokerage services,
retail banking, international services, mortgage banking, investment advisory
services, and trust services. Huntington, a recognized investment advisory and
fiduciary services subsidiary of HBI, provides investment advisory services
for corporate, charitable, governmental, institutional, personal trust and
other assets. Huntington is responsible for over $10 billion of assets, and
has investment discretion over approximately $3 billion of that amount.
Huntington has served as investment adviser to mutual funds since 1987 and
has over 75 years of experience providing investment advisory services to
fiduciary accounts.
As part of its regular banking operations, Huntington may make loans to
public companies. Thus, it may be possible, from time to time, for the Funds
to hold or acquire the securities of issuers which are also lending clients of
Huntington. The lending relationship will not be a factor in the selection of
securities for the Funds.
Sub-Adviser. Under the terms of a sub-advisory contract between Huntington
and Piper, Piper will assist Huntington in the purchase or sale of the
Mortgage Securities Fund's portfolio instruments. Huntington pays Piper
management fees, computed and paid monthly, for the Mortgage Securities Fund
at an annual rate of .15% of the Mortgage Securities Fund's average daily net
assets.
Sub-Adviser's Background. Piper, located at Piper Jaffray Tower, Post Office
Box 28, Minneapolis, Minnesota 55440, was formed in 1985. Piper is a wholly-
owned subsidiary of the publicly traded investment banking firm, Piper Jaffray
Companies, Inc. Piper provides investment management services, focusing on
ERISA/401 (k), public funds, Taft Hartley, endowment/foundation, pension
plans,
and personal wealth. As of March 31, 1995, Piper managed 38 mutual funds, five
commingled funds, and individual/institutional accounts in excess of $10.3
billion in assets.
Piper's investment staff is comprised of 25 managers, with an average of 15
years of experience. Piper's portfolio management expertise extends into
mortgage-backed securities, bonds, equities, balanced accounts, and short-term
cash management services.
Philip H. Farrington, a Vice President of Huntington Trust Company, N.A.,
has been a co-portfolio manager of the Growth Fund since April of 1994. Mr.
Farrington has more than 30 years of investment management experience. He has
held the positions of Chief Investment Officer, Portfolio Manager, and
Director of Research for major banks and asset management companies. He is a
member of the equity management team at Huntington. Mr. Farrington is a
graduate of Harvard University.
James Gibboney, Jr., a Vice President of Huntington Trust Company, N.A., has
been a co-portfolio manager of the Growth Fund since November of 1993. Mr.
Gibboney, a Chartered Financial Analyst, serves as one of Huntington's
balanced portfolio managers. Prior to joining Huntington in 1989, he gained
more than 11 years of investment management experience as portfolio manager
for a major investment firm, a trust company, and a state government agency.
He received his undergraduate degree in Finance from the Ohio State University
and an MBA from Xavier University.
Thomas J. Sauer, a Vice President of Huntington Trust Company, N.A., has
been a co-portfolio manager of the Growth Fund since November of 1993. Mr.
Sauer, a Chartered Financial Analyst, has more than 20 years of investment
experience including that of investment counselor and investment manager for a
major Midwest foundation and medical institution. He received his
undergraduate degree from Ohio University, completed graduate course work at
Case Western Reserve University, and received an MBA from Baldwin Wallace
College.
James M. Buskirk, Chief Investment Officer of Huntington Trust Company,
N.A., has been the portfolio manager of the Income Equity Fund since January
of 1991. As Chief Investment Officer of Huntington, Mr. Buskirk has ultimate
responsibility for all investment activities. He brings more than 14 years of
investment experience to Huntington. His background includes extensive
experience in managing both personal and employee benefit balanced portfolios
for a major investment advisory company and bank holding company. Mr. Buskirk
is a Chartered Financial Analyst. He received his undergraduate degree in
Finance from the Ohio State University and his MBA from the University of
Oregon.
Worth Bruntjen, a Senior Vice President of Piper Capital Management, has
been the senior portfolio manager of the Mortgage Securities Fund since its
inception. Mr. Bruntjen is the senior portfolio manager of open-end mutual
funds, distributed by Piper Jaffray, and closed-end bond funds listed on the
New York Stock Exchange. He is also fixed income manager for a variety of
client portfolios, including foundations, pension plans, state funds, and
individuals. He attended the University of Minnesota, the University of
Heidelberg, and Carleton College. Mr. Bruntjen has approximately 27 years of
investment experience.
Marijo Goldstein has been a Senior Vice President of Piper Capital
Management since November, 1993, prior to which she had been a Vice President
of Piper Capital Management since 1991. She has been a co-portfolio manager of
the Mortgage Securities Fund since its inception. Ms. Goldstein joined Piper
Capital Management as a fixed income analyst in 1988. Prior to that, she was
an analyst in the Technical Research Department at Piper Jaffray, Inc.
beginning in 1985. She earned her MBA from
the University of Minnesota and her B.S. degree in Information Systems
Management from the University of Maryland.
William G. Doughty, an Assistant Vice President of Huntington Trust Company,
N.A., has been the portfolio manager of the Ohio Tax-Free Fund since its
inception. Mr. Doughty has more than 24 years of experience in the investment
field. He is responsible for fixed income portfolio management and heads the
fixed income trading operation at Huntington. Mr. Doughty is a graduate of
Franklin University with a degree in Business Administration and has an MBA
from the University of Dayton.
Stephen M. Geis, a Vice President of Huntington Trust Company, N.A., has
been the portfolio manager of the Short/Intermediate Fixed Income Securities
Fund and the Fixed Income Securities Fund since October of 1989. Mr. Geis, a
Chartered Financial Analyst, serves as Huntington's senior fixed income
manager. Prior to joining Huntington in 1988, he spent nearly ten years as a
fixed income manager for a major insurance company and treasurer of a regional
bank. Mr. Geis received his undergraduate degree from the College of Wooster,
his MBA from the University of Dayton, and his Juris Doctorate from Capital
University.
DISTRIBUTION OF TRUST SHARES
Federated Securities Corp. is the principal distributor for shares of each
Fund. It is a Pennsylvania corporation organized on November 14, 1969, and is
the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
ADMINISTRATION OF THE FUNDS
Federated Administrative Services, a subsidiary of Federated Investors,
provides the Funds with certain administrative personnel and services
necessary to operate the Funds.
For these services, the Short/Intermediate Fixed Income Fund and the Income
Equity Fund pay a fee, computed and payable daily, to Federated Administrative
Services at a blended annual rate, based on the daily net assets of the Trust
taken as a whole, as specified below:
<TABLE>
<CAPTION>
ADMINISTRATIVE FEE AVERAGE AGGREGATE DAILY NET ASSETS OF THE TRUST
------------------ -----------------------------------------------
<C> <S>
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee paid by any Fund during any fiscal year will not be
less than $50,000 with regard to the above named Funds.
For these services, each of the Growth Fund, the Mortgage Securities Fund,
the Ohio Tax-Free Fund, the Fixed Income Securities Fund, the Money Market
Fund, the Ohio Municipal Money Market Fund, and the U.S. Treasury Money Market
Fund pays a fee, computed and payable daily, to Federated Administrative
Services at a blended annual rate, based on the daily net assets of the Trust
taken as a whole, as specified below:
<TABLE>
<CAPTION>
ADMINISTRATIVE FEE AVERAGE AGGREGATE DAILY NET ASSETS OF THE TRUST
------------------ -----------------------------------------------
<C> <S>
.160 of 1% on the first $750 million
.135 of 1% on the next $500 million
.110 of 1% on assets in excess of $1.25 billion
</TABLE>
The administrative fee paid by any Fund during any fiscal year will not be
less than $75,000 with regard to the above named Funds.
Federated Administrative Services has agreed to not enforce the applicable
minimum fee with respect to any Fund for a period of eighteen months following
the initiation of each Fund's public offering of shares. Federated
Administrative Services may limit voluntarily any portion of its fee at any
time.
CUSTODIAN, RECORDKEEPER, TRANSFER AGENT, AND DIVIDEND DISBURSING AGENT
Huntington acts as custodian and recordkeeper of the Trust's investments and
other assets. Huntington receives custody and recordkeeping fees of 5.6 basis
points (0.056%) for each Fund except the Mortgage Securities Fund, for which
Huntington receives 2.6 basis points (0.026%) for custody services only.
Federated Services Company, Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779, serves as the Trust's transfer agent and dividend
disbursing agent.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Trust are Price Waterhouse LLP,
Columbus, Ohio.
DISTRIBUTIONS AND TAXES
MONEY MARKET FUNDS
All of the net income of both classes of shares of each Money Market Fund is
declared each Business Day as a dividend to shareholders of record at the time
of the declaration. A Money Market Fund's net income from the time of the
immediately preceding dividend declaration consists of interest accrued or
discount earned during such period (including both original issue and market
discount) on the Money Market Fund's securities, less amortization of premium
and the estimated expenses of each class of shares of the Money Market Fund.
Shares purchased prior to 10:30 a.m. (Eastern Time) begin earning dividends
that day. Shares purchased after such time begin earning dividends on the
following day. Dividends are declared daily and payable monthly.
Although none of the Money Market Funds expects to realize long-term capital
gains, any net long-term capital gains that may be realized will be paid
annually. Each Money Market Fund expects to distribute any net realized short-
term gains once each year, although it may distribute them more frequently if
necessary in order to maintain the net asset value of a Fund at $1.00 per
share.
OTHER FUNDS
Dividends, if any, from the investment income of each Fund other than the
Money Market Funds are declared and paid monthly to both classes of shares.
Distributions resulting from any net realized capital gains of any Fund will
be paid at least annually.
DISTRIBUTION OPTIONS
Shareholders of the Money Market Funds may choose to receive all
distributions in cash or to reinvest all distributions in additional Trust
Shares of a Fund. Shareholders of other Funds may choose to receive all
distributions in cash, to reinvest all distributions in additional Trust
Shares, or to reinvest all capital gains distributions in additional Trust
Shares and to receive all other distributions in cash. Shareholders may choose
a distribution option by notifying the Mutual Fund Services Center of their
selection. If a shareholder fails to choose a distribution option, all
distributions will be reinvested in additional Trust Shares of the Fund making
the distribution.
FEDERAL INCOME TAXES
Each Fund intends to qualify as a "regulated investment company" for federal
income tax purposes and to meet all other requirements that are necessary for
it to be relieved of federal taxes on income (and gains, if any) paid to
shareholders in the form of dividends. In order to accomplish this goal, each
Fund must, among other things, distribute substantially all of its ordinary
income (and net short-term capital gains, if any) on a current basis and
maintain a portfolio of investments which satisfies certain diversification
criteria.
All distributions by a Fund to a shareholder (with the exception of
distributions of tax-exempt income by the Ohio Funds and other than long-term
capital gains distributions, if any) will be taxable as ordinary income to the
extent of a Fund's current and accumulated "earnings and profits." However,
shareholders not subject to tax on their income generally will not be required
to pay tax on amounts distributed to them. The dividends received deduction
for corporations will apply to ordinary income distributions to the extent the
distribution represents amounts that would qualify for the dividends received
deduction to the Fund if the Fund were a regular corporation, and to the
extent designated by the Fund as so qualifying. The Money Market Funds and the
Income Funds do not expect to pay any distributions that would be eligible for
the dividends received deduction. If a Fund were to have net long-term capital
gains in excess of short-term losses in a particular year, distributions by a
Fund of those gains will be taxable to a shareholder as long-term capital
gains, regardless of how long a shareholder has held the shares. If a
shareholder disposes of shares at a loss before holding such shares for longer
than six months, such loss will be treated as a long-term capital loss to the
extent the shareholder has received a long-term capital gains dividend on the
shares.
In general, dividends paid by the Ohio Funds that are designated by the
Funds as "exempt-interest dividends" will be exempt from federal regular
income tax. However, under the Internal Revenue Code of 1986, as amended (the
"Code"), dividends paid by the Ohio Funds attributable to interest on certain
private activity bonds issued after August 7, 1986 must be included as an item
of tax preference in computing alternative minimum taxable income for the
purpose of determining liability (if any) for the 26%-28% federal alternative
minimum tax for individuals and the 20% federal alternative minimum tax for
corporations. In addition, exempt-interest dividends paid by the Ohio Funds
will be included in a corporation's "adjusted current earnings" for purposes
of the alternative minimum tax. Thus, a corporation's alternative minimum tax
base would generally be increased by 75% of interest received which is
excluded from gross income for regular federal income tax purposes (other than
dividends paid by the Ohio Funds attributable to interest on certain private
activity bonds issued after August 7, 1986, which interest would already be
included in alternative minimum taxable income as a specific item of tax
preference).
Early in each year each Fund will notify each of its shareholders of the
amount and the federal income tax status of the distributions paid or deemed
paid to the shareholders by the Fund during the preceding year.
If a shareholder receives an exempt-interest dividend with respect to a
share and holds the share for six months or less, any loss on the sale or
exchange of the share will be disallowed to the extent of the amount of such
exempt-interest dividend. The Treasury Department is authorized to issue
regulations reducing the period to not less than 31 days for regulated
investment companies that regularly distribute at least 90% of their net tax-
exempt interest. No such regulations have been issued as of the date of this
Prospectus.
Distributions will be taxable as described above whether received in cash or
in shares through the reinvestment of distributions. A dividend paid to a
shareholder by a Fund in January of a year generally is deemed to have been
received by the shareholder on December 31 of the preceding year, if the
dividend was declared and payable to shareholders of record on a date in
October, November or December of that preceding year.
Additional information regarding federal income taxes is contained in the
Statement of Additional Information. The foregoing is a general and
abbreviated summary of certain applicable provisions of the Code and Treasury
regulations currently in effect. The Code and regulations are subject to
change by legislative or administrative action. A Fund's distributions may
also be subject to state and local taxes. Shareholders should consult their
own tax adviser to determine the precise effect of an investment in a Fund on
their particular tax situation.
OHIO PERSONAL INCOME TAXES
Dividends received from the Ohio Funds that are derived from interest on
Ohio tax-exempt securities are exempt from the Ohio personal income tax.
Specific state statutes authorizing the issuance of certain Ohio tax-exempt
securities provide that the interest on and gain from the sale or other
disposition of such obligations are exempt from all taxation in the State.
Dividends on shares of an Ohio Fund which are attributable to interest on or
gain from the sale of obligations issued pursuant to such statutes should be
exempt from the Ohio personal income tax. Ohio municipalities may not impose
income taxes on dividends or any intangible property including shares of the
Ohio Funds, except that municipalities that taxed the types of intangible
income which were not exempt from municipal income taxation on or before April
1, 1986, may tax such intangible income if such a tax was approved by the
electors of the municipality in an election held on November 8, 1988. Ohio
residents should consult their own tax adviser regarding potential municipal
income tax liability in connection with their investment in an Ohio Fund. The
description in this paragraph, which is only a summary of the Ohio tax
treatment of dividends paid by the Ohio Funds, is based upon current statutes
and regulations and upon current policies of the Ohio Department of Taxation,
all of which are subject to change.
ORGANIZATION OF THE TRUST
The Trust was organized as a Massachusetts business trust on February 10,
1987. A copy of the Trust's Declaration of Trust, which is governed by
Massachusetts law, is on file with the Secretary of State of The Commonwealth
of Massachusetts.
The Trust is an open-end management investment company, whose Declaration of
Trust permits the Trust to offer separate series of shares of beneficial
interest representing interests in separate portfolios of securities. The
shares in any one portfolio may be offered in two or more separate classes. As
of the date of this Prospectus, the Trustees have established two classes of
shares, known as Trust Shares and Investment Shares, in the Money Market Fund,
the Ohio Municipal Money Market Fund, the U.S. Treasury Money Market Fund, the
Growth Fund, the Mortgage Securities Fund, the Ohio Tax-Free Fund, and the
Fixed Income Securities Fund.
Trust Shares and Investment Shares of a Fund are fully transferable. Each
class is entitled to dividends from the respective class assets of the Fund as
declared by the Trustees, and if the Trust (or the Fund) were liquidated, the
shareholders of each class would receive the net assets of the Fund
attributable to each respective class.
VOTING RIGHTS
Shareholders are entitled to one vote for each share held on the record date
for any action requiring a vote by the shareholders, and a proportionate
fractional vote for each fractional share held. Shareholders of the Trust will
vote in the aggregate and not by Fund or class except (i) as otherwise
expressly required by law or when the Trustees determine that the matter to be
voted upon affects only the interests of the shareholders of a particular Fund
or class, and (ii) only holders of Investment Shares will be entitled to vote
on matters submitted to shareholder vote with respect to the Rule 12b-1 Plan
applicable to such class.
As of April 7, 1995, Huntington Trust Company, N.A., Columbus, Ohio, acting
in various capacities for numerous accounts, was the owner of record of
approximately 219,000,000 shares (82.71%) of the Trust Shares of the Money
Market Fund; 50,994,516 shares (99.93%) of the Trust Shares of the Ohio
Municipal Money Market Fund; 309,482,741 shares (99.87%) of the Trust Shares
of the U.S. Treasury Money Market Fund; 4,109,091 shares (99.98%) of the Trust
Shares of the Growth Fund; 5,184,665 shares (99.03%) of the Trust Shares of
the Income Equity Fund; 7,059,194 shares (91.27%) of the Trust Shares of the
Mortgage Securities Fund; 2,669,747 shares (95.37%) of the Trust Shares of the
Ohio Tax-Free Fund; 6,255,795 shares (99.49%) of the Trust Shares of the Fixed
Income Securities Fund; 6,609,293 shares (99.34%) of the Trust Shares of the
Short/Intermediate Fixed Income Securities Fund, and therefore, may, for
certain purposes, be deemed to control the respective Funds and be able to
affect the outcome of certain matters presented for a vote of shareholders.
As of April 7, 1995, National Financial Services Corp., New York, New York,
was the owner of record of approximately 23,911,484 shares (46.69%) of the
Investment Shares of the Money Market Fund; Huntington Trust Company, N.A.,
Columbus, Ohio, acting in various capacities for numerous accounts, was the
owner of record of approximately 37,252,887 shares (78.37%) of the Investment
Shares of the Ohio Municipal Money Market Fund, and therefore, may, for
certain purposes, be deemed to control the respective Funds and be able to
affect the outcome of certain matters presented for a vote of shareholders.
As a Massachusetts business trust, the Trust is not required to hold annual
meetings of shareholders, but may hold special meetings from time to time.
Trustees may be removed by the Trustees or by shareholders at a meeting
called for that purpose. For information about how shareholders may call such
a meeting and communicate with other shareholders for that purpose, see the
Statement of Additional Information.
To the extent that matters arise requiring a shareholder vote in which
Huntington may have a conflict of interest, Huntington will engage in a voting
practice known as reflexive voting, whereby the votes of those shares over
which it exercises discretion will be voted in proportion to the votes cast by
the other record owners.
As used in this Prospectus and in the Statement of Additional Information, a
"vote of a majority of the outstanding Shares" of the Trust or a particular
Fund or a particular class of shares of the Trust or a Fund means the
affirmative vote of the lesser of (a) more than 50% of the outstanding shares
of the Trust or such Fund or such class, or (b) 67% or more of the shares of
the Trust or such Fund or such class present at a meeting at which the holders
of more than 50% of the outstanding shares of the Trust or such Fund or such
class are represented in person or by proxy.
PERFORMANCE DATA AND COMPARISONS
Yield and total return data for both classes of shares may, from time to
time, be included in advertisements about the Funds.
Each of the Money Market Funds may show its yield and effective yield for
both classes of shares. A Money Market Fund's yield represents an
annualization of the change in value of a shareholder account excluding any
capital changes in the Fund for a specific seven-day period. Effective yield
compounds the Fund's yield for a year and is, for that reason, greater than
the Fund's yield.
Yield for both classes of shares of each of the other Funds is calculated by
dividing the Fund's annualized net investment income per share during a recent
30-day period by the maximum public offering price per share on the last day
of that period. With respect to the Ohio Funds, the tax-equivalent yield of
each class of shares shows the effect on performance of the tax-exempt status
of distributions received from a Fund. Tax-equivalent yield reflects the
approximate yield that a taxable investment must earn for shareholders at
stated income levels to produce an after-tax yield equivalent to a Fund's tax-
exempt yield. Total return for the one-year period and for the life of a Fund
through the most recent calendar quarter represents the average annual
compounded rate of return on a $1,000 investment in each class of the Fund.
Total return may also be presented for other periods.
Yield, effective yield, tax-equivalent yield, and total return will be
calculated separately for Trust Shares and Investment Shares. Because
Investment Shares are subject to 12b-1 fees, the yield, effective yield, tax-
equivalent yield, and total return for Investment Shares will be lower than
that of Trust Shares for the same period. In addition, the sales load
applicable to Investment Shares of the Growth Fund, Mortgage Securities Fund,
Ohio Tax-Free Fund and Fixed Income Securities Fund also contributes to a
lower total return for such Funds' Investment Shares. The total return figures
quoted in advertisements will normally reflect the effect of the maximum sales
load. However, from time to time, these advertisements may include total
returns which do not reflect the effect of an applicable sales load.
All data is based on a Fund's past investment results and is not intended to
indicate future performance. Investment performance for both classes is based
on many factors, including market conditions, the composition of a Fund's
portfolio, and the operating expenses of a Fund or a particular class.
Investment performance also often reflects the risks associated with the
Fund's investment objective and policies. These factors should be considered
when comparing a Fund's investment results to those of other mutual funds and
other investment vehicles.
From time to time, advertisements for a Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare a
Fund's performance to certain indices.
SHAREHOLDER INQUIRIES
Shareholder inquiries regarding the Funds should be directed to The
Huntington Trust Company N.A., Huntington Center, 41 South High Street,
Columbus, Ohio 43287, Attn: Mutual Fund Services Center.
OTHER CLASSES OF SHARES
Certain of the Funds also offer another class of shares called Investment
Shares. Investment Shares are sold primarily through The Huntington Investment
Company, Huntington Personal Bankers or the Mutual Fund Services Center
pursuant to respective agreements between The Huntington
Investment Company or The Huntington Trust Company, N.A. and the Distributor.
Investment Shares are sold at net asset value plus, in the case of the Growth
Fund, the Mortgage Securities Fund, the Ohio Tax-Free Fund and the Fixed
Income Securities Fund, an applicable sales charge. Purchases of Investment
Shares are subject to a minimum initial investment of $1,000.
Trust Shares and Investment Shares of any Fund are subject to certain of the
same expenses; however, Investment Shares are distributed under a Rule 12b-1
Plan pursuant to which the Distributor is paid a fee based upon a percentage
of the average daily net assets attributable to a Fund's Investment Shares.
Expense differences between a Fund's Trust Shares and Investment Shares may
affect the performance of each class.
Investors may obtain information about Investment Shares by contacting The
Huntington Investment Company, Huntington Personal Bankers or the Mutual Fund
Services Center.
PENDING LEGAL PROCEEDINGS RELATING TO PIPER
Complaints have been filed in U.S. District Court against Piper, relating to
several other investment companies for which Piper acts as investment adviser
or subadviser. These lawsuits do not involve the Mortgage Securities Fund and
Piper does not believe that the lawsuits will have a material adverse effect
upon their ability to perform under their agreement with The Huntington Trust
Company, N.A. An agreement in principle has been reached to settle one such
lawsuit. Piper intends to defend the other lawsuits vigorously. See "Pending
Litigation Relating to Piper" in the Statement of Additional Information.
APPENDIX I
Rule 2a-7, as amended, defines the terms NRSRO, Eligible Securities, Unrated
Securities, First Tier Securities and Second Tier Securities in establishing
risk limiting conditions for money market mutual funds.
A summary of those definitions follows.
NRSRO is any nationally recognized statistical rating organization as that
term is used in the Securities Exchange Act of 1934, that is not an affiliated
person of the issuer, guarantor or provider of credit support for the
instrument. (While the Appendix to the Statement of Additional Information
identifies each NRSRO, examples include Standard & Poor's Corporation
("Standard & Poor's"), Moody's Investors Service, Inc. ("Moody's") and Fitch
Investors Service, Inc.)
ELIGIBLE SECURITIES are defined as those with a remaining maturity of 397
days or less and which (i) have a short-term rating in one of the two highest
rating categories by an NRSRO (e.g. A-1/P-1 or A-2/P-2 by Standard & Poor's
and Moody's, respectively), (ii) securities that are comparable in priority
and security to other short-term debt of the issuer having a short-term rating
in one of the two highest rating categories or (iii) Unrated Securities that
are of comparable quality. A long-term security without a short-term rating
but with a long-term rating below the two highest rating categories (i.e. a
rating of A or below) is not an Eligible Security.
UNRATED SECURITIES include (i) securities that do not have a current short-
term rating and that are not comparable in priority or security to another
class of the issuer's securities having a short-term rating and (ii)
securities that do have a rating, but are subject to an external credit
support agreement that was not in effect when the rating was assigned.
FIRST TIER SECURITY means any Eligible Security which has, or is comparable
to short-term debt of the issuer having, the highest short-term rating by any
two NRSROs that have issued a rating with respect to a security or class of
debt obligations of an issuer. If only one NRSRO has issued a rating with
respect to such security it must be the highest short-term rating given by
such NRSRO.
SECOND TIER SECURITY means any Eligible Security that is not a First Tier
Security.
<PAGE>
[This Page Intentionally Left Blank]
INVESTMENT ADVISER
- -------------------------------------
The Huntington Trust Company, N.A.
Huntington Center
Columbus, OH 43287
1-800-253-0412
ADMINISTRATOR
- -------------------------------------
Federated Administrative Services
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
- -------------------------------------
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, PA 15222-3779
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 may not be relied upon as having been authorized by a Fund or
the Distributor. This Prospectus does not constitute an offering by a Fund or
by the Distributor in any jurisdiction in which such offering may not lawfully
be made.
609409107 609409776
609409305 609409404
609409503 609409800
609409602 609409883
609409701 1032204A-I (4/95)
[LOGO] RECYCLED PAPER
[LOGO]
THE MONITOR FUNDS
Trust Shares
MONEY MARKET FUNDS
- -----------------------------
The Monitor Money Market Fund
The Monitor Ohio Municipal Money Market Fund
The Monitor U.S. Treasury Money Market Fund
EQUITY FUNDS
- -----------------------------
The Monitor Growth Fund
The Monitor Income Equity Fund
INCOME FUNDS
- -----------------------------
The Monitor Mortgage Securities Fund
The Monitor Ohio Tax-Free Fund
The Monitor Fixed Income Securities Fund
The Monitor Short/Intermediate
Fixed Income Securities Fund
April 30, 1995
[LOGO]
PROSPECTUS
April 30, 1995
The Monitor Funds, a Massachusetts business trust (the "Trust"), consists of
separate series (the "Funds") which have different investment objectives and
policies. All seven of the Funds noted below offer two classes of shares.
Investment Shares in each of the Funds may be purchased through The Huntington
Investment Company, Huntington Personal Bankers or the Mutual Fund Services
Center pursuant to respective agreements between The Huntington Investment
Company or The Huntington Trust Company, N.A. and Federated Securities Corp.
(the "Distributor"), the Trust's distributor. The different Funds for which
Investment Shares are available through this Prospectus include:
MONEY MARKET FUNDS--INVESTMENT SHARES
The Monitor Money Market Fund
The Monitor Ohio Municipal Money Market Fund
The Monitor U.S. Treasury Money Market Fund
EQUITY FUND--INVESTMENT SHARES
The Monitor Growth Fund
INCOME FUNDS--INVESTMENT SHARES
The Monitor Mortgage Securities Fund
The Monitor Ohio Tax-Free Fund
The Monitor Fixed Income Securities Fund
These Funds also offer a second class of shares, known as Trust Shares. (A
Fund's Investment and Trust Shares may be hereinafter referred to collectively
as "shares.")
This Prospectus relates only to Investment Shares of the Funds listed above.
This Prospectus sets forth concisely what a shareholder should know before
investing in Investment Shares of any of the Funds and should be read
carefully and retained for future reference. The Combined Statement of
Additional Information for Investment Shares and Trust Shares has been filed
with the Securities and Exchange Commission and is incorporated into this
Prospectus by reference. FOR A FREE COPY OF THE COMBINED STATEMENT OF
ADDITIONAL INFORMATION CALL THE MUTUAL FUND SERVICES CENTER AT: (IN OHIO) 614-
463-5580 OR (OUTSIDE THE 614 AREA CODE) 800-253-0412.
THE HUNTINGTON TRUST COMPANY, N.A.
Investment Adviser
FEDERATED ADMINISTRATIVE SERVICES
Administrator
FEDERATED SECURITIES CORP.
Distributor
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 AC-
CURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE INVESTMENT COMPANY SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY, THE HUNTINGTON TRUST COMPANY,
N.A., NOR ARE THEY INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. AN
INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT
OR ANY AGENCY SPONSORED BY THE FEDERAL GOVERNMENT OR ANY STATE. INVESTMENT IN
THESE SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL. EACH MONEY MARKET FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE; THERE CAN BE NO ASSURANCE THAT A FUND WILL BE ABLE
TO DO SO.
TABLE OF CONTENTS
PAGE
SYNOPSIS...................................................................... 1
FEE TABLE AND EXAMPLE.................................................... 3
SUPPLEMENTARY INFORMATION-- FINANCIAL HIGHLIGHTS............................. 4
THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES................................10
MONEY MARKET FUNDS............................................................10
Money Market Fund............................................................10
Ohio Municipal Money Market Fund.............................................11
U.S. Treasury Money Market Fund..............................................13
EQUITY FUND...................................................................13
Growth Fund..................................................................13
INCOME FUNDS..................................................................14
Mortgage Securities Fund.....................................................14
Ohio Tax-Free Fund...........................................................19
Fixed Income Securities Fund.................................................19
ADDITIONAL INFORMATION ON PORTFOLIO INVESTMENTS AND STRATEGIES................20
Ohio Tax-Exempt Securities...................................................20
Non-Diversification..........................................................20
Defensive Investment Strategies..............................................21
Options and Futures Contracts................................................21
Foreign Investments..........................................................22
Repurchase Agreements........................................................23
When-Issued and Delayed Delivery Transactions................................23
Lending of Portfolio Securities..............................................24
INVESTMENT RESTRICTIONS.......................................................24
HOW THE FUNDS VALUE THEIR SHARES..............................................25
HOW TO BUY INVESTMENT SHARES..................................................25
To Place an Order............................................................26
Minimum Investment Required..................................................26
What Shares Cost.............................................................27
Money Market Funds..........................................................27
Equity Fund.................................................................27
Income Funds................................................................27
Purchases At Net Asset Value................................................27
Dealer Concession...........................................................27
Reducing the Sales Charge...................................................28
Quantity Discounts and Accumulated Purchases................................28
PAGE
Letter of Intent............................................................28
Reinstatement Privilege.....................................................29
Concurrent Purchases........................................................29
Systematic Investment Program................................................29
HOW TO EXCHANGE INVESTMENT SHARES AMONG THE FUNDS.............................29
By Telephone.................................................................30
By Mail......................................................................31
HOW TO REDEEM INVESTMENT SHARES...............................................31
Redeeming by Telephone.......................................................31
Redeeming by Mail............................................................32
Redeeming by Check...........................................................32
Redeeming by Fax.............................................................32
SYSTEMATIC WITHDRAWAL PROGRAM.................................................33
ACCOUNTS WITH LOW BALANCES....................................................33
MANAGEMENT OF THE TRUST.......................................................33
Adviser's Background........................................................33
Sub-Adviser.................................................................34
Sub-Adviser's Background....................................................34
Distribution of Investment Shares............................................35
Distribution Plans...........................................................35
Shareholder Servicing Arrangements..........................................37
Administration of the Funds..................................................37
Custodian, Recordkeeper, Transfer Agent, and Dividend Disbursing Agent.......37
Independent Public Accountants...............................................37
DISTRIBUTIONS AND TAXES.......................................................38
Money Market Funds...........................................................38
Other Funds..................................................................38
Distribution Options.........................................................38
Federal Income Taxes.........................................................38
Ohio Personal Income Taxes...................................................39
ORGANIZATION OF THE TRUST.....................................................40
Voting Rights................................................................40
PERFORMANCE DATA AND COMPARISONS..............................................41
SHAREHOLDER INQUIRIES.........................................................42
OTHER CLASSES OF SHARES.......................................................42
PENDING LEGAL PROCEEDINGS RELATING TO PIPER .............................42
APPENDIX I....................................................................43
SYNOPSIS
The Trust, a management investment company, was established as Massachusetts
business trust under a Declaration of Trust dated February 10, 1987. The
Declaration of Trust permits the Trust to offer separate series of shares of
beneficial interest representing interests in separate portfolios of
securities. The shares in any one Fund may be offered in separate classes. As
of the date of this Prospectus, the Board of Trustees has established two
classes of shares, known as Trust Shares and Investment Shares, in the Money
Market Fund, the Ohio Municipal Money Market Fund, the U.S. Treasury Money
Market Fund, the Growth Fund, the Mortgage Securities Fund, the Ohio Tax-Free
Fund, and the Fixed Income Securities Fund. All of the portfolios of the
Trust, with the exception of the Ohio Municipal Money Market Fund and the Ohio
Tax-Free Fund, are diversified. This Prospectus relates solely to the
Investment Shares of each Fund as set forth below.
As of the date of this Prospectus, the Funds offered in the Investment Share
class by this Prospectus are as follows:
MONEY MARKET FUNDS--INVESTMENT SHARES
MONEY MARKET FUND--seeks to maximize current income while preserving
capital and maintaining liquidity by investing in a portfolio of high
quality money market instruments;
OHIO MUNICIPAL MONEY MARKET FUND--seeks to provide income exempt from
both federal regular income tax and Ohio personal income taxes while
preserving capital and maintaining liquidity by investing in Ohio tax-
exempt securities;
U.S. TREASURY MONEY MARKET FUND--seeks to maximize current income while
preserving capital and maintaining liquidity by investing exclusively
in obligations issued by the U.S. Government and backed by its full
faith and credit, and in repurchase agreements with respect to such
obligations;
EQUITY FUND--INVESTMENT SHARES
GROWTH FUND--seeks to achieve long-term capital appreciation by
investing primarily in equity securities;
INCOME FUNDS--INVESTMENT SHARES
MORTGAGE SECURITIES FUND--seeks to achieve current income by investing
in mortgage securities and in U.S. Government securities;
OHIO TAX-FREE FUND--seeks to provide current income exempt from federal
income taxes and Ohio personal income taxes by investing in Ohio tax-
exempt securities; and
FIXED INCOME SECURITIES FUND--seeks to achieve high current income by
investing in fixed income securities where the average maturity of the
Fund will not exceed 10 years.
For information on how to purchase Investment Shares of any of the Funds,
please refer to "How to Buy Investment Shares." A minimum initial investment
of $1,000 is required for each Fund. Subsequent investments in a Fund must be
in amounts of at least $50. Investment Shares of each Fund are sold at net
asset value plus a sales charge where applicable. Shares of each Fund are
redeemed at net asset value. Information on redeeming shares may be found
under "How to Redeem Investment Shares." The Funds are advised by The
Huntington Trust Company, N.A. In addition, Piper Capital Management, Inc.
("Piper") serves as sub-adviser to the Mortgage Securities Fund.
RISK FACTORS. Investors should be aware of the following general observations.
There can be no assurance that a Fund will achieve its investment objective.
The market value of fixed-income securities, which constitute a major part of
the investments of several Funds, may vary inversely in response to changes in
prevailing interest rates ("interest rate risk"). Shareholders of the Ohio
Municipal Money Market Fund and the Ohio Tax-Free Fund may be subject to the
federal alternative minimum tax on that part of the Funds' dividends derived
from interest on certain municipal securities. One or more Funds may make
certain investments and employ certain investment techniques that involve
special risks, including the use of repurchase agreements, lending portfolio
securities, entering into futures contracts and related options as hedges,
investing in foreign securities, and purchasing securities on a when-issued or
delayed delivery basis, including the use of dollar rolls. These investments
and investment techniques may increase the volatility of a Fund's net asset
value. Their risks are described under "Additional Information on Portfolio
Investments and Strategies." The Mortgage Securities Fund may engage in short-
term trading in attempting to achieve its investment objective, which will
increase transaction costs. The Mortgage Securities Fund may purchase
mortgage-related securities including derivative mortgage securities. In
addition to interest rate risk, mortgage-related securities are subject to
prepayment risk. The market experience of 1994 has shown that certain
derivative mortgage securities may be extremely sensitive to changes in
interest rates and in prepayment rates on the underlying assets and, as a
result, the prices of such securities may be highly volatile.
FEE TABLE AND EXAMPLE
The following Fee Table and Example summarize the various costs and expenses
that a shareholder of Investment Shares will bear, either directly or
indirectly.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
MORTGAGE OHIO TAX-FREE FIXED INCOME
GROWTH FUND SECURITIES FUND FUND SECURITIES FUND
----------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
Maximum Sales Load Im-
posed on Purchases
(as a percentage of
offering price)....... 4.00% 2.00% 2.00% 2.00%
</TABLE>
ANNUAL INVESTMENT SHARES OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET
ASSETS)
<TABLE>
<CAPTION>
TOTAL
INVESTMENT
SHARES
OPERATING
NET EXPENSES NET OF
MANAGEMENT 12B-1 OTHER ANY WAIVERS OR
FEES (1) FEES (2) EXPENSES (3) REIMBURSEMENTS
---------- -------- ------------ ---------------
<S> <C> <C> <C> <C>
Money Market Fund............. 0.30% 0.10% 0.21% 0.61%
Ohio Municipal Money Market
Fund (4)* ................... 0.15% 0.10% 0.30% 0.55%
U.S. Treasury Money Market
Fund (4)..................... 0.20% 0.10% 0.22% 0.52%
Growth Fund................... 0.60% 0.25% 0.28% 1.13%
Mortgage Securities Fund (5)*. 0.00% 0.25% 0.52% 0.77%
Ohio Tax-Free Fund............ 0.50% 0.25% 0.27% 1.02%
Fixed Income Securities Fund.. 0.50% 0.25% 0.25% 1.00%
</TABLE>
- --------
(1) Fees paid by each Fund for investment advisory services. See "Management of
the Trust."
(2) Fees paid by Investment Shares of each Fund for distribution and/or
administrative services provided with respect to Investment Shares. Total
payments of up to 0.10 of 1% for the Money Market Fund and Ohio Municipal
Money Market Fund, up to 0.25 of 1% for the U.S. Treasury Money Market
Fund, Growth Fund, Ohio Tax-Free Fund and Fixed Income Securities Fund and
up to 0.50 of 1% for the Mortgage Securities Fund of the average daily net
assets attributable to Investment Shares are permitted under the
Distribution Plans. See "Management of the Trust--Distribution Plans."
(3) Includes administration fees. See "Management of the Trust--Administration
of the Funds."
(4) The Total Investment Shares Operating Expenses for the Ohio Municipal
Money Market Fund would have been 0.70%, absent the voluntary waiver of
management fees. The maximum management fee for Ohio Municipal Money
Market Fund is 0.30%. The Total Investment Shares Operating Expenses for
the U.S. Treasury Money Market Fund would have been 0.67%, absent the
voluntary waiver by the distributor.
5) The Total Investment Shares Operating Expenses for the Mortgage Securities
Fund in the table above are based on net expenses expected during the
fiscal year ending December 31, 1995. Absent the voluntary waiver of
management, administrative, custody and distribution fees, the anticipated
gross expenses are 1.60%. The maximum management, administrative and
custody fees are 0.50%, 0.06% and 0.026%, respectively. The Total
Investment Shares Operating Expenses were 1.13% for the fiscal year ended
December 31, 1994 and were 1.46% absent the voluntary waivers of the
management, administrative and distribution fees and the voluntary
reimbursement of certain other operating expenses.
* The adviser, administrator and/or custodian can terminate these voluntary
waivers at any time at their sole discretion.
EXAMPLE:
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period, and (3)
payment of maximum sales load:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Fund............................... $ 6 $20 $ 34 $ 76
Ohio Municipal Money Market Fund................ $ 6 $18 $ 31 $ 69
U.S. Treasury Money Market Fund................. $ 5 $17 $ 29 $ 65
Growth Fund..................................... $51 $74 $100 $172
Mortgage Securities Fund........................ $28 $44 $ 62 $114
Ohio Tax-Free Fund.............................. $30 $52 $ 75 $142
Fixed Income Securities Fund.................... $30 $51 $ 74 $140
</TABLE>
The purpose of the foregoing Example is to assist an investor in
understanding the various costs and expenses that a shareholder of Investment
Shares will bear directly or indirectly. The Example should not be considered
a representation of past or future expenses. Actual expenses may be greater or
less than those shown.
Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted under the rules of the National
Association of Securities Dealers, Inc.
FINANCIAL HIGHLIGHTS--MONEY MARKET FUNDS (FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD)
The following information has been audited by the Trust's independent
accountants, Price Waterhouse LLP. Their report on the Trust's financial
statements and financial highlights for the year ended December 31, 1994 is
included in the Annual Report to Shareholders which is incorporated by
reference into the Statement of Additional Information.
<TABLE>
<CAPTION>
NET ASSET DIVIDENDS TO NET ASSET
VALUE, NET SHAREHOLDERS VALUE,
YEAR ENDED BEGINNING INVESTMENT FROM NET END OF TOTAL
DECEMBER 31, OF PERIOD INCOME INVESTMENT INCOME PERIOD RETURN+ EXPENSES
- ---------------------------------------------------------------------------------
INVESTMENT SHARES
MONEY MARKET
<S> <C> <C> <C> <C> <C> <C>
1991* $1.00 0.04 (0.04) $1.00 3.56% 0.60%(a)
1992 $1.00 0.03 (0.03) $1.00 3.34% 0.60%
1993 $1.00 0.03 (0.03) $1.00 2.63% 0.61%
1994 $1.00 0.04 (0.04) $1.00 3.76% 0.61%
<CAPTION>
OHIO MUNICIPAL MONEY MARKET
<S> <C> <C> <C> <C> <C> <C>
1991* $1.00 0.03 (0.03) $1.00 2.51% 0.67%(a)
1992 $1.00 0.03 (0.03) $1.00 2.51% 0.59%
1993 $1.00 0.02 (0.02) $1.00 1.98% 0.55%
1994 $1.00 0.02 (0.02) $1.00 2.31% 0.55%
<CAPTION>
U.S. TREASURY MONEY MARKET
<S> <C> <C> <C> <C> <C> <C>
1993** $1.00 0.01 (0.01) $1.00 0.54% 0.50%(a)
1994 $1.00 0.04 (0.04) $1.00 3.68% 0.52%
</TABLE>
- -------------------------------------------------------------------------------
* Reflects operations for the period from May 1, 1991 (effective date of
Investment Shares) to December 31, 1991.
** Reflects operations for the period from October 19, 1993 (date of initial
public investment) to December 31, 1993.
+ Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
<TABLE>
<CAPTION>
NET NET ASSETS,
INVESTMENT EXPENSE WAIVER/ END OF PERIOD
INCOME REIMBURSEMENT(B) (000 OMITTED)
- ---------------------------------------------------
<S> <C> <C>
5.08%(a) -- $17,936
3.26% -- $19,962
2.60% 0.02% $21,583
3.85% 0.02% $41,629
3.69%(a) 0.02%(a) $425
2.35% 0.14% $2,452
1.88% 0.20% $20,312
2.30% 0.19% $37,134
2.65%(a) 0.16%(a) $948
3.66% 0.17% $20,390
</TABLE>
- --------------------------------------------------
FINANCIAL HIGHLIGHTS--EQUITY FUNDS (FOR A SHARE OUTSTANDING THROUGHOUT EACH
PERIOD)
The following information has been audited by the Trust's independent
accountants, Price Waterhouse LLP. Their report on the Trust's financial
statements and financial highlights for the year ended December 31, 1994 is
included in the Annual Report to Shareholders which is incorporated by
reference into the Statement of Additional Information.
<TABLE>
<CAPTION>
DISTRIBUTIONS TO
DIVIDENDS TO SHAREHOLDERS DISTRIBUTIONS
NET ASSET NET REALIZED SHAREHOLDERS FROM NET IN EXCESS
VALUE, NET AND UNREALIZED TOTAL FROM FROM NET REALIZED GAIN OF NET
YEAR ENDED BEGINNING INVESTMENT GAIN/(LOSS) ON INVESTMENT INVESTMENT ON INVESTMENT INVESTMENT
DECEMBER 31, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS INCOME+
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT SHARES
GROWTH
1991* $22.79 0.33 2.07 2.40 (0.33) (0.06) (0.02)
1992 $24.78 0.49 1.36 1.85 (0.48) (0.39) --
1993 $25.76 0.40 0.43 0.83 (0.41) (0.02) --
1994 $26.16 0.33 0.22 0.55 (0.33) (0.07) --
</TABLE>
- -------------------------------------------------------------------------------
*Reflects operations for the period from May 1, 1991 (effective date of
Investment Shares) to December 31, 1991.
+ Distributions in excess of net investment income were the result of
certain book and timing differences. These distributions do not represent
a return of capital for federal income tax purposes.
++Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a)Computed on an annualized basis.
(b)This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
Further information about the Funds' performance is contained in the Funds'
Annual Report dated February 28, 1995, which can be obtained free of charge.
<TABLE>
<CAPTION>
NET ASSET NET ASSETS,
VALUE, NET END OF PORTFOLIO
TOTAL END OF TOTAL INVESTMENT EXPENSE WAIVER/ PERIOD (000 TURNOVER
DISTRIBUTIONS PERIOD RETURN++ EXPENSES INCOME REIMBURSEMENT(B) OMITTED) RATE
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
(0.41) $24.78 9.20% 1.24%(a) 1.88%(a) 0.02%(a) $1,078 13%
(0.87) $25.76 7.57% 1.16% 2.03% 0.01% $3,637 36%
(0.43) $26.16 3.25% 1.10% 1.54% 0.04% $3,961 29%
(0.40) $26.31 2.08% 1.13% 1.27% 0.04% $3,212 42%
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--INCOME FUNDS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following information has been audited by the Trust's independent
accountants, Price Waterhouse LLP. Their report on the Trust's financial
statements and financial highlights for the year ended December 31, 1994 is
included in the Annual Report to Shareholders which is incorporated by
reference into the Statement of Additional Information.
<TABLE>
<CAPTION>
DISTRIBUTIONS TO
DIVIDENDS TO SHAREHOLDERS DISTRIBUTIONS
NET ASSET NET REALIZED SHAREHOLDERS FROM NET IN EXCESS
VALUE, NET AND UNREALIZED TOTAL FROM FROM NET REALIZED GAIN OF NET
YEAR ENDED BEGINNING INVESTMENT GAIN/(LOSS) ON INVESTMENT INVESTMENT ON INVESTMENT INVESTMENT
DECEMBER 31, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS INCOME+
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT SHARES
OHIO TAX-FREE
1991* $20.56 0.67 0.51 1.18 (0.69) -- --
1992 $21.05 0.93 0.26 1.19 (0.93) -- --
1993 $21.31 0.90 0.73 1.63 (0.90) -- --
1994 $22.04 0.94 (1.56) (0.62) (0.92) -- --
<CAPTION>
FIXED INCOME SECURITIES
<S> <C> <C> <C> <C> <C> <C> <C>
1991* $20.17 0.91 1.47 2.38 (0.87) (0.10) --
1992 $21.58 1.33 (0.04) 1.29 (1.37) (0.12) (0.06)
1993 $21.32 1.19 0.92 2.11 (1.33) (0.06) --
1994 $22.04 1.23 (2.29) (1.06) (1.28) -- --
<CAPTION>
MORTGAGE SECURITIES
<S> <C> <C> <C> <C> <C> <C> <C>
1992**(c) $10.00 0.62 0.28 0.90 (0.60) (0.03) --
1993(c) $10.27 1.47 (0.27) 1.20 (1.43) (0.10) --
1994(c) $ 9.94 0.87 (3.19) (2.32) (0.91) -- (0.01)
- --------------------------------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from May 1, 1991 (effective date of
Investment Shares) to December 31, 1991.
** Reflects operations for the period from June 2, 1992 (date of initial
public investment) to December 31, 1992.
+ Distributions in excess of net investment income were the result of certain
book and timing differences. These distributions do not represent a return
of capital for federal income tax purposes.
++ Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(c) Per share information presented is based upon the monthly number of shares
outstanding due to large fluctuations in the number of shares outstanding
during the period.
Further information about the Funds' performance is contained in the Funds'
Annual Report dated February 28, 1995, which can be obtained free of charge.
<TABLE>
<CAPTION>
NET ASSETS,
NET ASSET NET END OF PORTFOLIO
TOTAL VALUE, END TOTAL INVESTMENT EXPENSE WAIVER/ PERIOD (000 TURNOVER
DISTRIBUTIONS OF PERIOD RETURN++ EXPENSES INCOME REIMBURSEMENT(B) OMITTED) RATE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
(0.69) $21.05 5.78% 1.18%(a) 4.74%(a) -- $ 486 13%
(0.93) $21.31 5.76% 1.16% 4.36% -- $1,339 3%
(0.90) $22.04 7.78% 1.07% 4.13% 0.04% $2,838 2%
(0.92) $20.50 (2.83%) 1.02% 4.43% 0.04% $2,307 12%
(0.97) $21.58 12.12% 1.19%(a) 6.68%(a) -- $ 135 21%
(1.55) $21.32 6.25% 1.08% 6.16% -- $ 845 15%
(1.39) $22.04 10.07% 0.99% 5.61% 0.04% $2,563 7%
(1.28) $19.70 (4.88%) 1.00% 6.01% 0.04% $1,958 23%
(0.63) $10.27 8.97% 0.83%(a) 10.35%(a) 0.44%(a) $4,742 50%
(1.53) $ 9.94 11.94% 1.03% 13.95% 0.29% $8,533 154%
(0.92) $ 6.70 (24.72%) 1.13% 10.91% 0.37% $4,259 91%
- -------------------------------------------------------------------------------------------------
</TABLE>
THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of the various Funds are described
below. There can, of course, be no guarantee that a Fund will achieve its
investment objective.
Each Fund's investment objective is fundamental and may be changed only by a
vote of a majority of the outstanding shares of that Fund. Unless otherwise
noted in this Prospectus or in the Statement of Additional Information, the
investment policies of the Funds are not fundamental and may be changed by the
Trust's Board of Trustees (the "Trustees"). Except with respect to borrowing
money or downgrades of securities in the Money Market Funds, any percentage
limitation on a Fund's investments (or other activities) will be considered to
be violated only if such limitation is exceeded immediately after, and is
caused by, an acquisition of an investment (or the taking of such other
action).
For a description of the ratings of nationally recognized statistical rating
organizations (individually, an "NRSRO") utilized by The Huntington Trust
Company, N.A. ("Huntington") in managing the Funds' investments, see the
Appendix to the Statement of Additional Information.
MONEY MARKET FUNDS
Each of the Money Market Funds described below is designed for investors
seeking current income with stability of principal. The Money Market Funds
intend to limit their investments by operating in a manner consistent with
Rule 2a-7 (as amended) under the Investment Company Act of 1940 (the "Rule").
The Rule permits funds to utilize the amortized cost method of valuation in
order to offer their shares at a net asset value of $1.00 per share. (See
also, the section of the Statement of Additional Information entitled,
"Determination of Net Asset Value.") The Rule imposes certain risk limiting
conditions on the Funds which in some instances restrict a Fund's investment
policies. These risk limiting conditions include the following:
. The Funds must limit their investments to "Eligible Securities" as defined
under the Rule, and which Huntington has determined present minimal credit
risks under guidelines adopted by the Trustees. (For an explanation of some
of the terms defined by the Rule, see Appendix I to this Prospectus.)
. Each Fund (except the Ohio Municipal Money Market Fund) must limit
investments in "Second Tier Securities" to 5% of total assets and 1% of
total assets in the securities of a single Second Tier issuer.
. The Funds may invest without limit in "First Tier Securities" subject to the
Funds' 5% issuer diversification limitation where applicable. In addition,
the portfolio investments of each Fund must have a maturity of 397 days or
less from the time of purchase by a Fund, although securities owned pursuant
to a repurchase agreement and certain adjustable interest rate instruments
may bear longer maturities. The dollar-weighted average maturity of each
Fund's portfolio must not exceed 90 days. Of course, a Fund's yield, and
under unusual circumstances, the value of its portfolio securities, will be
affected by changes in interest rates.
MONEY MARKET FUND
The objective of the Money Market Fund is to maximize current income while
preserving capital and maintaining liquidity by investing in a portfolio of
high quality money market instruments. The Fund's portfolio investments may
include:
(a) obligations, such as notes, bills or bonds, issued by or guaranteed as
to principal and interest by the U.S. Government or its agencies or
instrumentalities;
(b) commercial paper, including U.S. dollar denominated eurodollar
commercial paper, considered under the Rule to be rated in the highest
category by an NRSRO(s) or, if not rated, of comparable quality as
determined by Huntington pursuant to guidelines established by the
Trustees;
(c) negotiable certificates of deposit and bankers' acceptances issued by
domestic banks and U.S. branches of foreign banks which are subject to
the same regulation as U.S. banks and which, at the time of purchase,
have capital, surplus, and undivided profits in excess of $100,000,000
(as of the bank's most recently published financial statements);
(d) corporate debt obligations, including bonds, notes and debentures
considered under the Rule to be rated in the two highest categories by
an NRSRO(s) or, if not rated, of comparable quality as determined by
Huntington pursuant to guidelines established by the Trustees; and
(e) repurchase agreements and master demand notes.
RESTRICTED AND ILLIQUID SECURITIES. The Fund intends to invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which
are subject to restriction on resale under federal securities law. However,
the Fund will limit investments in illiquid securities, including certain
restricted securities not determined by the Trustees to be liquid, non-
negotiable time deposits, and repurchase agreements providing for settlement
in more than seven days after notice, to 10% of its net assets.
The Fund may invest in commercial paper issued in reliance on the exemption
from registration afforded by Section 4(2) of the Securities Act of 1933.
Section 4(2) commercial paper is restricted as to disposition under federal
securities law, and is generally sold to institutional investors, such as the
Fund, who agree that they are purchasing the paper for investment purposes and
not with a view to public distribution. Any resale by the purchaser must be in
an exempt transaction. Section 4(2) commercial paper is normally resold to
other institutional investors like the Fund through or with the assistance of
the issuer or investment dealers who make a market in Section 4(2) commercial
paper, thus providing liquidity. The Fund believes that Section 4(2)
commercial paper and possibly certain other restricted securities which meet
the criteria for liquidity established by the Trustees are quite liquid. The
Fund intends, therefore, to treat the restricted securities which meet the
criteria for liquidity established by the Trustees, including Section 4(2)
commercial paper, as determined by Huntington, as liquid and not subject to
the investment limitation applicable to illiquid securities. In addition,
because Section 4(2) commercial paper is liquid, the Fund intends to not
subject such paper to the limitation applicable to restricted securities.
OHIO MUNICIPAL MONEY MARKET FUND
The objective of the Ohio Municipal Money Market Fund is to provide income
exempt from both federal regular income tax and Ohio personal income taxes
while preserving capital and maintaining liquidity. As a fundamental policy,
the Fund invests its assets so that at least 80% of its annual interest income
is exempt from federal regular income tax. The Fund invests primarily in Ohio
tax-exempt securities which, under normal market conditions, will comprise at
least 65% of the Fund's assets. Ohio tax-exempt securities are debt
obligations issued by or on behalf of the State of Ohio, its political
subdivisions, or agencies, or financing authorities of any of these, the
income from which is, in the opinion of qualified legal counsel, exempt from
both federal regular income tax and the personal income taxes imposed by the
State of Ohio. Examples of tax-exempt securities include, but are not limited
to:
. tax and revenue anticipation notes ("TRANs") issued to finance working
capital needs in anticipation of receiving taxes or other revenues;
. bond anticipation notes ("BANs") that are intended to be refinanced through
a later issuance of longer-term bonds;
. municipal commercial paper and other short-term notes;
. variable rate demand notes;
. municipal bonds (including bonds having serial maturities and pre-refunded
bonds); and
. participation, trust and partnership interests in any of the foregoing
obligations.
VARIABLE RATE DEMAND OBLIGATIONS. Variable rate demand obligations are long-
term tax-exempt securities that have variable or floating interest rates and
provide the Fund with the right to tender the security for repurchase at its
stated principal amount plus accrued interest. Such securities typically bear
interest at a rate that is intended to cause the securities to trade at par.
The interest rate may float or be adjusted at regular intervals (ranging from
daily to annually), and is normally established by the remarketing agent of
the respective securities. Most variable rate demand obligations allow the
Fund to demand the repurchase of the security on not more than seven days
prior notice. Other obligations only permit the Fund to tender the security at
the time of each interest rate adjustment or at other fixed intervals. See
"Demand Features." The Fund treats variable rate demand obligations as
maturing on the later of the date of the next interest adjustment or the date
on which the Fund may next tender the security for redemption.
PARTICIPATION INTERESTS. The Fund may purchase interests in tax-exempt
securities from financial institutions such as commercial and investment
banks, savings and loan associations and insurance companies. These interests
may take the form of participations, beneficial interests in a trust,
partnership interests or any other form of indirect ownership that allows the
Fund to treat the income from the investment as exempt from federal income
tax. The Fund invests in these participation interests in order to obtain
credit enhancement or demand features that would not be available through
direct ownership of the underlying tax-exempt securities.
CREDIT ENHANCEMENT. Certain of the portfolio investments of the Fund may
have been credit enhanced by a guaranty, letter of credit or insurance. The
Fund typically evaluates the credit quality and ratings of credit enhanced
securities based upon the financial condition and ratings of the party
providing the credit enhancement (the "credit enhancer"), rather than the
issuer. However, credit enhanced securities will not be treated as having been
issued by the credit enhancer for diversification purposes, unless the Fund
has invested more than 10% of its assets in securities issued, guaranteed or
otherwise credit enhanced by the credit enhancer, in which case the securities
will be treated as having been issued both by the issuer and the credit
enhancer. The bankruptcy, receivership or default of the credit enhancer will
adversely affect the quality and marketability of the underlying security.
The Fund may have more than 25% of its total assets invested in securities
credit enhanced by banks.
DEMAND FEATURES. The Fund may acquire securities that are subject to puts
and standby commitments ("demand features") to purchase the securities at
their principal amount (usually with accrued interest) within a fixed period
(usually seven days) following a demand by the Fund. The demand feature may be
issued by the issuer of the underlying securities, a dealer in the securities
or by another third party, and may not be transferred separately from the
underlying security. The Fund
uses these arrangements to provide the Fund with liquidity and not to protect
against changes in the market value of the underlying securities. The
bankruptcy, receivership or default by the issuer of the demand feature, or a
default on the underlying security or other event that terminates the demand
feature before its exercise, will adversely affect the liquidity of the
underlying security. Demand features that are exercisable even after a payment
default on the underlying security may be treated as a form of credit
enhancement.
TEMPORARY INVESTMENTS. The Fund invests its assets so that at least 80% of
its annual interest income is exempt from federal regular income taxes and at
least 65% of its assets are invested in securities the income from which is
exempt from Ohio personal income taxes. However, from time to time, when
Huntington determines that market conditions call for a temporary defensive
posture, the Fund may invest in temporary investments with remaining
maturities of 13 months or less at the time of purchase by the Fund, or hold
Fund assets in cash. Interest income from temporary investments may be taxable
to shareholders as ordinary income. These temporary investments include:
obligations issued by or on behalf of municipal or corporate issuers having
the same quality characteristics as Ohio tax-exempt securities purchased by
the Fund; marketable obligations issued or guaranteed by the U.S. Government,
its agencies, or instrumentalities; instruments issued by a U.S. branch of a
domestic bank or other depository institutions having capital, surplus, and
undivided profits in excess of $100,000,000 at the time of investment;
repurchase agreements (arrangements in which the organization selling the Fund
a temporary investment agrees at the time of sale to repurchase it at a
mutually agreed upon time and price); and commercial paper rated in one of the
two highest short-term rating categories by an NRSRO(s).
Although the Fund is permitted to make taxable, temporary investments that
may have Ohio state tax implications, there is no current intention of
generating income subject to federal regular or Ohio personal income taxes.
U.S. TREASURY MONEY MARKET FUND
The objective of the U.S. Treasury Money Market Fund is to maximize current
income while preserving capital and maintaining liquidity by investing
exclusively in obligations issued by the U.S. Government and backed by its
full faith and credit and in repurchase agreements with respect to such
obligations. At least 65% of the Fund's total assets will be invested in
Treasury bills, notes and bonds which are direct obligations of the U.S.
Treasury, and repurchase agreements with respect to such obligations.
EQUITY FUND
GROWTH FUND
The objective of the Growth Fund is to achieve long-term capital
appreciation primarily through investments in equity securities. Current
income will be only an incidental consideration in the selection of
investments. Equity securities in which the Fund may invest include common
stocks, preferred stocks, securities convertible into or exchangeable for
common stocks, and other securities which Huntington believes have common
stock characteristics, such as rights and warrants. The Fund may invest in
foreign securities and, subject to its investment restrictions, securities
restricted as to resale under federal securities laws. The Fund's common stock
selection emphasizes those companies which Huntington believes have
characteristics such as above average earnings and dividend growth, superior
balance sheets, and potential for capital gains, but the Fund's investment
policy recognizes
that securities of other companies may be attractive for capital appreciation
purposes by virtue of special developments or depression in price believed to
be temporary. The Fund will be primarily invested in large capitalization
growth companies but will also include representation in medium-sized
companies with similar financial and growth characteristics. In managing the
investments of the Fund, Huntington seeks to purchase equity securities whose
potential for capital gains is balanced by an ability to better withstand
overall downward market movements. As a matter of fundamental policy, under
normal market conditions, the Fund will invest at least 65% of its total
assets in the equity securities described in this paragraph. The Fund may
also, under normal market conditions, invest a portion of its assets in cash
equivalents, including repurchase agreements and the shares of money market
mutual funds, for liquidity purposes.
INCOME FUNDS
The investment objectives and policies of the Income Funds are described
below. Each of the Income Funds invests primarily in debt securities. The
prices of fixed income securities fluctuate inversely to the direction of
interest rates. Thus, a decrease in interest rates will generally result in an
increase in the values of debt securities held by a Fund. Conversely, during
periods of rising interest rates, the values of an Income Fund's assets will
generally decline. The values of such securities are also affected by changes
in the financial condition of their issuers. Changes in the values of a Fund's
securities will not generally affect the income derived from such securities
but will affect a Fund's net asset value.
MORTGAGE SECURITIES FUND
The investment objective of the Mortgage Securities Fund is current income.
The Fund seeks to achieve this investment objective by investing at least 65%
of the value of its total assets in mortgage-related securities issued by the
U.S. Government, government-related entities, and private entities. These
mortgage-related securities include derivative mortgage securities. The market
experience of 1994 has shown that certain derivative mortgage securities may
be extremely sensitive to changes in interest rates and in prepayment rates on
the underlying mortgage assets, and, as a result, the prices of such
securities may be highly volatile.
The Fund may invest up to 35% of the value of its total assets in:
(i) non-mortgage related securities issued or guaranteed by the U.S.
Government, its agencies, or instrumentalities;
(ii) certificates of deposit, bankers' acceptances and interest-bearing
savings deposits of banks having total assets of more than $1 billion and
which are members of the Federal Deposit Insurance Corporation (the
"FDIC"); and
(iii) commercial paper rated A-1 by Standard & Poor's Ratings Group
("S&P") or P-1 by Moody's Investors Service, Inc. ("Moody's") or, if not
rated, issued by companies which have an outstanding debt issue rated AAA
by S&P or Aaa by Moody's.
The Fund will maintain a dollar-weighted average portfolio maturity of more
than three years but no more than ten years. A mortgage-related security will
be deemed to have an average maturity equal to its average life as determined
by the portfolio manager based upon the prepayment experience of the
underlying mortgage pools. In order to maintain a dollar-weighted average
portfolio maturity, Huntington will monitor the prepayment experience of the
underlying mortgage pools of the mortgage-
related securities and will purchase and sell securities in the portfolio to
shorten or lengthen the average maturity of the portfolio, as appropriate.
MORTGAGE-RELATED SECURITIES. Mortgage-related securities are securities that,
directly or indirectly, represent participations in, or are secured by and
payable from, loans secured by real property. Mortgage-related securities, as
the term is used in this Prospectus, include mortgage pass-through securities,
adjustable rate mortgage securities and derivative mortgage securities such as
collateralized mortgage obligations and stripped mortgage-backed securities.
Mortgage-related securities fall into three categories: (a) those issued or
guaranteed by the United States Government or one of its agencies or
instrumentalities, such as Government National Mortgage Association ("GNMA"),
Federal National Mortgage Association ("FNMA") and Federal Home Loan Mortgage
Corporation ("FHLMC"); (b) those issued by non-governmental issuers that
represent interests in, or are collateralized by, mortgage-related securities
issued or guaranteed by the United States Government or one of its agencies or
instrumentalities; and (c) those issued by non-governmental issuers that
represent an interest in, or are collateralized by, whole mortgage loans or
mortgage-related securities without a government guarantee but usually with
over-collateralization or some other form of private credit enhancement. Non-
governmental issuers referred to in (b) and (c) above include originators of
and investors in mortgage loans, including savings and loan associations,
mortgage bankers, commercial banks, investment banks and special purpose
subsidiaries of the foregoing.
MORTGAGE PASS-THROUGH SECURITIES. The mortgage pass-through securities in
which the Fund invests provide for the pass-through to investors of their pro-
rata share of monthly payments (including any prepayments) made by the
individual borrowers on the pooled mortgage loans, net of any fees paid to the
guarantor of such securities and the servicer of the underlying mortgage
loans. The Fund invests both in U.S. Government pass-through securities issued
by GNMA, FNMA and FHLMC, and in pass-through securities issued by non-
governmental issuers. Each of GNMA, FNMA and FHLMC guarantee timely
distributions of interest to certificate holders. GNMA and FNMA guarantee
timely distributions of scheduled principal. FHLMC generally guarantees only
ultimate collection of principal of the underlying mortgage loans.
ADJUSTABLE RATE MORTGAGE SECURITIES. The Fund may also invest in adjustable
rate mortgage securities ("ARMS"). ARMS are pass-through mortgage securities
collateralized by mortgages with interest rates that are adjusted from time to
time. The adjustments usually are determined in accordance with a
predetermined interest rate index and may be subject to certain limits. While
the values of ARMS, like other debt securities, generally vary inversely with
changes in market interest rates (increasing in value during periods of
declining interest rates and decreasing in value during periods of increasing
interest rates), the values of ARMS should generally be more resistant to
price swings than other debt securities because the interest rates of ARMS
move with market interest rates. The adjustable rate feature of ARMS will not,
however, eliminate fluctuations in the prices of ARMS, particularly during
periods of extreme fluctuations in interest rates. Also, since many adjustable
rate mortgages only reset on an annual basis, it can be expected that the
prices of ARMS will fluctuate to the extent that changes in prevailing
interest rates are not immediately reflected in the interest rates payable on
the underlying adjustable rate mortgages.
COLLATERALIZED MORTGAGE OBLIGATIONS. The Fund may invest in CMOs
(collateralized mortgage obligations and multi-class pass-through securities
unless the context otherwise indicates), which are
derivative mortgage securities. Collateralized mortgage obligations are debt
instruments issued by special purpose entities which are secured by pools of
mortgage loans or other mortgage-related securities. Multi-class pass-through
securities are equity interests in a trust composed of mortgage loans or other
mortgage-related securities. Payments of principal and interest on underlying
collateral provide the funds to pay debt service on the collateralized
mortgage obligation or make scheduled distributions on the multi-class pass-
through security. The Fund will invest only in CMOs which are rated AAA by an
NRSRO.
In a CMO, a series of bonds or certificates is issued in multiple classes.
Each class of CMO, often referred to as a "tranche," is issued at a specific
coupon rate and has a stated maturity or final distribution date. Principal
prepayments on collateral underlying a CMO may cause it to be retired
substantially earlier than the stated maturities or final distribution dates.
The principal and interest on the underlying mortgages may be allocated
among the several tranches of a CMO in many ways. For example, certain
tranches may have variable or floating interest rates and others may be
stripped securities which provide only the principal or interest feature of
the underlying security. See "Stripped Mortgage-Backed Securities," below.
Generally, the purpose of the allocation of the cash flow of a CMO to the
various tranches is to obtain a more predictable cash flow to certain of the
individual tranches than exists with the underlying collateral of the CMO. As
a general rule, the more predictable the cash flow is on a CMO tranche, the
lower the anticipated yield will be on that tranche at the time of issuance
relative to prevailing market yields on mortgage-related securities. As part
of the process of creating more predictable cash flows on most of the tranches
of a CMO, one or more tranches generally must be created that absorb most of
the volatility in the cash flows on the underlying mortgage loans. The yields
on these tranches, which may include inverse floaters, IOs, POs, and Z
tranches, discussed below, are generally higher than prevailing market yields
on mortgage-related securities with similar maturities. As a result of the
uncertainty of the cash flows of these tranches, the market prices of and
yield on these tranches generally are more volatile.
The Fund may invest in any CMO tranche, including "inverse floaters" and "Z
tranches." An inverse floater is a CMO tranche with a coupon rate that moves
inversely to a designated index, such as LIBOR (London Inter-Bank Offered
Rate) or COFI (Cost of Funds Index). Like most other fixed-income securities,
the value of inverse floaters will decrease as interest rates increase.
Inverse floaters, however, exhibit greater price volatility than the majority
of mortgage pass-through securities or CMOs. Coupon rates on inverse floaters
typically change at a multiple of the changes in the relevant index rate.
Thus, any rise in the index rate (as a consequence of an increase in interest
rates) causes a correspondingly greater drop in the coupon rate of an inverse
floater while any drop in the index rate causes a correspondingly greater
increase in the coupon of an inverse floater. Some inverse floaters also
exhibit extreme sensitivity to changes in prepayments. Inverse floaters would
be purchased by the Fund to attempt to protect against a reduction in the
income earned on the Fund's investments due to a decline in interest rates.
Z tranches of CMOs defer interest and principal payments until one or more
other classes of the CMO have been paid in full. Interest accretes on the Z
tranche, being added to principal, and is compounded through the accretion
period. After the other classes have been paid in full, interest payments
begin and continue through maturity. Z tranches have characteristics similar
to zero coupon bonds. Like a zero coupon bond, during its accretion period a Z
tranche has the advantage of
eliminating the risk of reinvesting interest payments at lower rates during a
period of declining market interest rates. At the same time, however, and also
like a zero coupon bond, the market value of a Z tranche can be expected to
fluctuate more widely with changes in market interest rates than would the
market value of a tranche which pays interest currently. In addition, changes
in prepayment rates on the underlying mortgage loans will affect the accretion
period of a Z tranche, and therefore also will influence its market value.
STRIPPED MORTGAGE-BACKED SECURITIES. Some of the mortage-related securities
purchased by the Fund may represent an interest solely in the principal
repayments or solely in the interest payments on mortgage-backed securities
(stripped mortgage-backed securities or "SMBSs"). SMBSs are derivative multi-
class securities. SMBSs are usually structured with two classes and receive
different proportions of the interest and principal distributions on the pool
of underlying mortgage-backed securities. Due to the possibility of
prepayments on the underlying mortgages, SMBSs may be more interest-rate
sensitive than other securities purchased by the Fund. If prevailing interest
rates fall below the level at which SMBSs were issued, there may be
substantial prepayments on the underlying mortgages, leading to the relatively
early prepayments of principal-only SMBSs (the principal-only or "PO" class)
and a reduction in the amount of payments made to holders of interest-only
SMBSs (the interest-only or "IO" class). Therefore, interest-only SMBSs
generally increase in value as interest rates rise and decrease in value as
interest rates fall, counter to changes in value experienced by most fixed
income securities. If the underlying mortgages experience slower than
anticipated prepayments of principal, the yield on a PO class will be affected
more severely than would be the case with a traditional mortgage-related
security. Because the yield to maturity of an IO class is extremely sensitive
to the rate of principal payments (including prepayments) on the related
underlying mortgage-backed securities, it is possible that the Fund might not
recover its original investment on interest-only SMBSs if there are
substantial prepayments on the underlying mortgages. The Fund's inability to
fully recoup its investment in these securities as a result of a rapid rate of
principal prepayments may occur even if the securities are rated AAA by an
NRSRO. In view of these considerations, Huntington or Piper intends to use
these characteristics of interest-only SMBSs to reduce the effects of interest
rate changes on the value of the Fund's portfolio, while continuing to pursue
current income.
U.S. GOVERNMENT SECURITIES. The U.S. government securities in which the Fund
invests are either issued or guaranteed as to payment of principal and
interest by the U.S. Government, its agencies, or instrumentalities. The
current market prices for such securities are not guaranteed and will
fluctuate. Investments in U.S. Government securities are limited to:
(a)direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
(b)notes, bonds, and discount notes of U.S. Government agencies or
instrumentalities, such as the: Farm Credit System, including the
National Bank for Cooperatives and Banks for Cooperatives; Federal Home
Loan Banks; Federal Home Loan Mortgage Corporation; Federal National
Mortgage Association; Government National Mortgage Association; Export-
Import Bank of the United States; Commodity Credit Corporation; Federal
Financing Bank; The Student Loan Marketing Association; National Credit
Union Administration; and Tennessee Valley Authority.
Some obligations issued or guaranteed by agencies or instrumentalities of
the U.S. Government, such as Government National Mortgage Association
participation certificates, are backed by the full
faith and credit of the U.S. Treasury. No assurances can be given that the
U.S. Government will provide financial support to other agencies or
instrumentalities, since it is not obligated to do so. These instruments are
supported by:
(a)the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
(b)the discretionary authority of the U.S. Government to purchase certain
obligations of an agency or instrumentality; or
(c)the credit of the agency or instrumentality.
SHORT-TERM TRADING. The Fund will use short-term trading to benefit from yield
disparities among different issues of securities or otherwise to achieve its
investment objective. To the extent that the Fund engages in short-term
trading, such activities will cause the Fund to pay greater mark-up charges.
The Fund's portfolio turnover rate is set forth in "Financial Highlights."
INVESTMENT RISKS. The Fund is subject to interest rate risk, which is the
potential for a decline in bond prices due to rising interest rates. In
general, bond prices vary inversely with interest rates. When interest rates
rise, bond prices generally fall. Conversely, when interest rates fall, bond
prices generally rise. Interest rate risk applies to U.S. Government
securities as well as other bonds. U.S. Government securities are guaranteed
only as to the payment of interest and principal. The current market prices
for such securities are not guaranteed and will fluctuate.
The Fund invests a significant portion of its assets in mortgage-related
securities and, as a result, is subject to prepayment risk. Prepayment risk
results because, as interest rates fall, homeowners are more likely to
refinance their home mortgages. When home mortgages are refinanced, the
principal on mortgage-related securities held by the Fund is "prepaid" earlier
than expected. The Fund must then reinvest the unanticipated principal
payments, just at a time when interest rates on new mortgage investments are
falling. Prepayment risk has two important effects on the Fund:
. When interest rates fall and additional mortgage prepayments must be
reinvested at lower interest rates, the income of the Fund will be reduced.
. When interest rates fall, prices on mortgage-backed securities may not rise
as much as comparable Treasury bonds because bond market investors may
anticipate an increase in mortgage prepayments and a likely decline in
income.
The Fund's investments in mortgage-related securities also subject the Fund
to extension risk. Extension risk is the possibility that rising interest
rates may cause prepayments to occur at a slower than expected rate. This
particular risk may effectively change a security which was considered short-
or intermediate-term at the time of purchase into a long-term security. Long-
term securities generally fluctuate more widely in response to changes in
interest rates than short- or intermediate-term securities.
The Fund's investments in mortgage-related securities include derivative
mortgage securities such as CMOs and stripped mortgage-backed securities
which, as discussed above, may involve risks in addition to those found in
other mortgage-related securities. The market experience of 1994 has shown
that certain derivative mortgage securities may be highly sensitive to changes
in interest and
prepayment rates and, as a result, the prices of such securities may be highly
volatile. In addition, the market experience of 1994 has shown that during
periods of rising interest rates, the market for certain derivative mortgage
securities may become more unstable and such securities may become more
difficult to sell as market makers either choose not to repurchase such
securities or offer prices, based on current market conditions, which are
unacceptable to the Fund.
OHIO TAX-FREE FUND
The objective of the Ohio Tax-Free Fund is to provide current income exempt
from federal income tax and Ohio personal income taxes. The Fund will attempt
to achieve its objective by investing in Ohio tax-exempt securities. "Ohio
tax-exempt securities" are debt obligations which (i) are issued by or on
behalf of the State of Ohio or its respective authorities, agencies,
instrumentalities and political subdivisions, and (ii) produce interest which,
in the opinion of bond counsel at the time of issuance, is exempt from federal
income tax and Ohio personal income taxes. As a matter of fundamental policy,
under normal market conditions at least 80% of the Fund's net assets will be
invested in Ohio tax-exempt securities. In addition, the Fund will not, as a
matter of fundamental policy, invest in securities the income from which is
treated as a preference item for purposes of the federal alternative minimum
tax. This policy will restrict the Fund's ability to invest in certain private
activity bonds issued after August 7, 1986.
The Fund will only invest in Ohio tax-exempt securities that are rated at
the time of purchase in one of the top three categories by an NRSRO(s) or, if
not rated, of comparable quality as determined by Huntington under guidelines
established by the Trustees. Based on current market conditions, it is
anticipated that the dollar-weighted average portfolio maturity of the Fund
will be between four and seven years. Under normal market conditions, the Fund
will not invest in obligations with a remaining maturity of more than 15 years
at the time of purchase.
The Fund may also invest in numerous types of short-term tax-exempt
instruments, which may be used to fund short-term cash requirements such as
interim financing in anticipation of the collections, revenue receipts or bond
sales to finance various public purposes.
From time to time, the Fund may invest in obligations the interest on which
is subject to federal income tax or Ohio personal income taxes pending
investment in Ohio tax-exempt securities or for liquidity purposes. The Fund
may also hold a portion of its assets in cash or money market instruments, the
interest on which may not be exempt from federal or Ohio personal income
taxes.
CREDIT ENHANCEMENT. Certain of the portfolio investments of the Fund may
have been credit enhanced by a guaranty, letter of credit or insurance. The
Fund typically evaluates the credit quality and ratings of credit enhanced
securities based upon the financial condition and ratings of the party
providing the credit enhancement (the "credit enhancer"), rather than the
issuer. However, credit enhanced securities will not be treated as having been
issued by the credit enhancer for diversification purposes, unless the Fund
has invested more than 10% of its assets in securities issued, guaranteed or
otherwise credit enhanced by the credit enhancer, in which case the securities
will be treated as having been issued both by the issuer and the credit
enhancer. The bankruptcy, receivership or default of the credit enhancer will
adversely affect the quality and marketability of the underlying security.
FIXED INCOME SECURITIES FUND
The objective of the Fixed Income Securities Fund is to achieve high current
income through investment in fixed income securities where the average
maturity of the Fund will not exceed 10 years.
The Fund may purchase obligations of the U.S. Government and its agencies and
instrumentalities, corporate bonds, debentures, nonconvertible fixed income
preferred stocks, mortgage pass-through securities, eurodollar certificates of
deposit and eurodollar bonds. The Fund may also invest up to 10% of its net
assets in non-U.S. dollar denominated bonds. Both fixed and variable rate
issues may be purchased. Debt securities will be rated at the time of purchase
in one of the top three categories by an NRSRO(s) or, if not rated, of
comparable quality as determined by Huntington under guidelines established by
the Trustees. As a matter of fundamental policy, under normal market
conditions, the Fund will invest at least 65% of its assets in fixed income
securities. The Fund may also, under normal market conditions, invest a
portion of its assets in cash equivalents, including repurchase agreements and
the shares of money market mutual funds, for liquidity purposes.
ADDITIONAL INFORMATION ON PORTFOLIO INVESTMENTS AND STRATEGIES
OHIO TAX-EXEMPT SECURITIES
The two principal classifications of Ohio tax-exempt securities are general
obligation and limited obligation (or revenue) securities. General obligation
securities involve the credit of an issuer possessing taxing power and are
payable from the issuer's general unrestricted revenues. The characteristics
and methods of enforcement of general obligation securities vary according to
the law
applicable to the particular issuer. Limited obligation securities are payable
only from the revenues derived from a particular facility or class of
facilities, or a specific revenue source, and generally are not payable from
the unrestricted revenues of the issuer. Private activity bonds and industrial
development bonds generally are limited obligation securities, the credit and
quality of which are usually directly related to the credit of the private
user of the facilities.
The economy of Ohio, while diversifying more into the service area,
continues to rely in part on durable goods manufacturing, which is largely
concentrated in motor vehicles and equipment, steel, rubber products and
household appliances. As a result, general economic activity in Ohio, as in
many other industrially-developed states, tends to be more cyclical than in
some other states and in the nation as a whole. Agriculture also is an
important segment of the economy in the State, and the State has instituted
several programs to provide financial assistance to farmers. Ohio's economy,
including particularly an unemployment rate usually somewhat higher than the
national average, has had varying effects on the different geographic areas of
the State and the political subdivisions located in such geographic areas.
Although revenue obligations of the State or its political subdivisions may be
payable from a specific source or project, there can be no assurance that
future economic difficulties and the resulting impact on state and local
government finances will not adversely affect the market value of the Ohio
tax-exempt securities in an Ohio Fund, as defined below, or the ability of the
respective obligors to make timely payment of interest and principal on such
obligations. See the Statement of Additional Information for further
discussion of special considerations regarding investments in Ohio tax-exempt
securities.
NON-DIVERSIFICATION
The Ohio Municipal Money Market Fund and the Ohio Tax-Free Fund (the "Ohio
Funds") are non-diversified Funds under the Investment Company Act of 1940,
which means that they may invest their assets in the obligations of fewer
issuers than would be the case if they were "diversified". The Ohio Funds'
ability to invest a relatively high percentage of their assets in the
securities of a limited number
of issuers involves an increased risk of loss to an Ohio Fund if any one
issuer is unable to make interest or principal payments or if the market value
of the issuer's securities declines.
Although non-diversified under the Investment Company Act, the Ohio Funds
intend to comply with Subchapter M of the Internal Revenue Code. This
undertaking requires that at the end of each quarter of the taxable year, with
regard to at least 50% of each Ohio Fund's total assets, no more than 5% of
its total assets are invested in the assets of a single issuer; beyond that,
no more than 25% of its total assets are invested in the securities of a
single issuer.
DEFENSIVE INVESTMENT STRATEGIES
At times Huntington may judge that conditions in securities markets may make
pursuing a Fund's basic investment strategy inconsistent with the best
interests of the Fund's shareholders. At such times, Huntington may
temporarily use alternative strategies, primarily designed to reduce
fluctuations in the value of a Fund's assets. In implementing these temporary
"defensive" strategies, a Fund may temporarily place all or a portion of its
assets in cash, U.S. Government securities, debt securities which Huntington
considers to be of comparable quality to the acceptable investments of the
Fund and other investments which Huntington considers consistent with such
strategies. In the case of the Ohio Funds, a Fund's alternative strategies may
give rise to income which is not exempt from federal or state taxes.
OPTIONS AND FUTURES CONTRACTS (ALL FUNDS OTHER THAN THE MONEY MARKET FUNDS AND
THE OHIO TAX-FREE FUND)
A Fund may seek to increase its current return by writing covered call
options and covered put options on its portfolio securities or other
securities in which it may invest. A Fund receives a premium from writing a
call or put option, which increases a Fund's return if the option expires
unexercised or is closed out at a net profit. A Fund may also buy and sell put
and call options on its securities for hedging purposes. When a Fund writes a
call option on a portfolio security, it gives up the opportunity to profit
from any increases in the price of the security above the exercise price of
the option. When it writes a put option, a Fund takes the risk that it will be
required to purchase a security from the option holder at a price above the
current market price of the security. A Fund may terminate an option that it
has written prior to expiration by entering into a closing purchase
transaction in which it purchases an option having the same terms as the
option written.
A Fund may purchase and sell futures contracts and related options to hedge
against changes in the value of securities it owns or expects to purchase.
Futures contracts on a variety of stock and bond indices are currently
available. An index is intended to represent a numerical measure of market
performance by the securities making up the index. A Fund may purchase and
sell futures contracts on any index approved for trading by the Commodity
Futures Trading Commission to hedge against general changes in market values
of securities which a Fund owns or expects to purchase. A Fund may also
purchase and sell put and call options on index futures or directly on the
underlying indices for hedging purposes. In addition, a Fund may purchase and
sell futures contracts and related options on individual debt securities which
a Fund owns or expects to purchase, if and when such futures contracts and
options become available.
In connection with its futures transactions, a Fund will be required to
deposit as "initial margin" an amount of cash and/or securities. Thereafter,
subsequent payments (referred to as "variation margin") are made to and from
the broker to reflect changes in the value of the futures contract. A Fund
will not
generally purchase or sell futures contracts or purchase or sell options on
futures contracts if as a result the sum of initial margin deposits on a
Fund's existing futures contracts and options written by a Fund plus premiums
paid for outstanding options on futures contracts purchased by a Fund, would
exceed 5% of a Fund's net assets.
Options and futures transactions involve various risks, including the risk
that a Fund may be unable at times to close out its positions, that such
transactions may not accomplish their purposes because of imperfect market
correlations, or that Huntington may not forecast market movements correctly.
Options and futures transactions involve costs and may result in losses. The
effective use of options and futures strategies by a Fund is dependent upon,
among other things, a Fund's ability to terminate options and futures
positions at times when Huntington deems it desirable to do so. Although a
Fund will enter into an options or futures contract position only if
Huntington believes that a liquid secondary market exists for such options or
futures contract, there is no assurance that a Fund will be able to effect
closing transactions at a particular time or at an acceptable price.
The Funds generally expect that their options and futures transactions will
be conducted on recognized exchanges. In certain instances, however, a Fund
may purchase and sell options in the over-the-counter ("OTC") markets. A
Fund's ability to terminate options in the OTC market may be more limited than
for exchange-traded options and may also involve the risk that securities
dealers participating in such transactions would be unable to meet their
obligations to a Fund. A Fund will, however, engage in OTC market transactions
only when appropriate exchange-traded transactions are unavailable and when,
in the opinion of Huntington, the pricing mechanism and liquidity of the OTC
market is satisfactory and the participants are responsible parties likely to
meet their contractual obligations.
The use of options and futures strategies also involves the risk of
imperfect correlation between movements in the prices of options and futures
contracts and movements in the value of the underlying securities that are the
subject of a hedge. The successful use of these strategies further depends on
the ability of Huntington to forecast market movements correctly.
For more information about any of the options or futures portfolio
transactions described above, see the Statement of Additional Information.
FOREIGN INVESTMENTS
Except as otherwise limited in this Prospectus, a Fund may invest some or
all of its assets in securities principally traded in foreign markets. Since
foreign securities are normally denominated and traded in foreign currencies,
the value of a Fund's assets may be affected favorably or unfavorably by
currency exchange rates and exchange control regulation. Exchange rates with
respect to certain currencies may be particularly volatile. There may be less
information publicly available about a foreign company than about a U.S.
company, and foreign companies are not generally subject to accounting,
auditing, and financial reporting standards and practices comparable to those
in the United States. The securities of some foreign companies are less liquid
and at times more volatile than securities of comparable U.S. companies.
Foreign brokerage commissions and other fees are also generally higher than in
the United States. Foreign settlement procedures and trade regulations may
involve certain risks (such as delays in payment or delivery of securities or
in the recovery of a Fund's assets held abroad) and expenses not present in
the settlement of domestic investments.
In addition, with respect to certain foreign countries, there is a
possibility of nationalization or expropriation of assets, confiscatory
taxation, political or financial instability and diplomatic
developments which could affect the value of investments in those countries.
In certain countries, legal remedies available to investors may be more
limited than those available with respect to investments in the United States
or other countries. The laws of some foreign countries may limit a Fund's
ability to invest in securities of certain issuers located in those countries.
Special tax considerations apply to foreign securities.
A Fund may buy or sell foreign currencies and forward foreign currency
exchange contracts for hedging purposes in connection with its foreign
investments.
A more detailed explanation of foreign investments, and the risks associated
with them, is included in the Statement of Additional Information.
REPURCHASE AGREEMENTS
Certain securities in which a Fund invests may be purchased pursuant to
repurchase agreements. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S.
Government securities or other securities to a Fund and agree at the time of
sale to repurchase them at a mutually agreed upon time and price. A Fund or
its custodian will take possession of the securities subject to repurchase
agreements and these securities will be marked to market daily. To the extent
that the original seller does not repurchase the securities from a Fund, a
Fund could receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by a Fund might be delayed
pending court action. The Trustees believe that under the regular procedures
normally in effect for custody of a Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor
of a Fund and allow retention or disposition of such securities. A Fund will
only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker/dealers, which are found by Huntington
to be creditworthy pursuant to guidelines established by the Trustees.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
A 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. The seller's failure to
complete these transactions may cause a Fund to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices. Accordingly, a Fund may pay more
or less than the market value of the securities on the settlement date.
A Fund may dispose of a commitment prior to settlement if the Fund's adviser
deems it appropriate to do so.
In connection with its ability to purchase securities on a when-issued or
delayed delivery basis, the Mortgage Securities Fund may enter into mortgage
"dollar rolls" in which the Fund sells securities for delivery in the current
month and simultaneously contracts with the same counterparty to repurchase
similar (same type, coupon and maturity) but not identical securities on a
specified future date. The Fund gives up the right to receive principal and
interest paid on the securities sold. However, the Fund would benefit to the
extent of any difference between the price received for the securities
sold and the lower forward price for the future purchase plus any fee income
received. Unless such benefits exceed the income, capital appreciation and
gain or loss due to mortgage prepayments that would have been realized on the
securities sold as part of the mortgage dollar roll, the use of this technique
will diminish the investment performance of the Fund compared with what such
performance would have been without the use of mortgage dollar rolls. The Fund
will hold and maintain in a segregated account until the settlement date, cash
or liquid high-grade debt securities in an amount equal to the forward
purchase price. The benefits derived from the use of mortgage dollar rolls may
depend upon Piper's ability to predict correctly mortgage prepayments and
interest rates. There is no assurance that mortgage dollar rolls can be
successfully employed. In addition, the use of mortgage dollar rolls by the
Fund while remaining substantially fully invested increases the amount of the
Fund's assets that are subject to market risk to an amount that is greater
than the Fund's net asset value, which could result in increased volatility of
the price of the Fund's shares. The Mortgage Securities Fund may invest up to
35% of its total assets in securities purchased on a when-issued or delayed
delivery basis.
LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, a Fund may lend its portfolio
securities on a short-term basis to brokers, dealers or other financial
institutions. A Fund will only enter into loan arrangements with brokers,
dealers or other financial institutions which Huntington has determined are
creditworthy under guidelines established by the Trustees and must receive
collateral equal to at least 102% of the current market value of the
securities loaned. The collateral received when the Fund lends portfolio
securities must be valued daily and, should the market value of the loaned
securities increase, the borrower must furnish additional collateral to the
Fund. As a matter of fundamental policy, the aggregate value of all securities
loaned by a Fund may not exceed 20% of the Fund's total assets.
There is the risk that, when lending portfolio securities, the securities
may not be available to a Fund on a timely basis and a Fund may, therefore,
lose the opportunity to sell the securities at a desirable price. In addition,
in the event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
INVESTMENT RESTRICTIONS
Each Fund has adopted certain investment restrictions and limitations for
the purpose of reducing its exposure in specific situations. These investment
limitations are fundamental policies and may be changed with respect to any
Fund only by a vote of a majority of the outstanding shares of that Fund.
No Fund will:
(1) Except for the Ohio Funds, invest more than 5% of the value of its
total assets in the securities of any one issuer (this limitation does
not apply to securities issued or guaranteed by the U.S. Government or
any of its agencies or instrumentalities or to repurchase agreements
secured by such obligations);
(2) Invest 25% or more of the value of its total assets (i) in securities
of companies primarily engaged in any one industry (other than the U.S.
Government, its agencies and instrumentalities), and (ii) with respect
to the Ohio Funds, in municipal obligations of one issuer or which are
related in such a way that, in the opinion of Huntington, an economic,
business or political development other than an Ohio state-wide,
national or international development, affecting one such obligation
would also affect the others in a similar manner. Such concentration
may occur as a result of changes in the market value of portfolio
securities, but such concentration may not result from investment;
(3) Except for investments by the Money Market Fund in commercial paper
issued under Section 4(2) of the Securities Act of 1933 and certain
other restricted securities which meet the criteria for liquidity as
established by the Trustees, invest more than 10% of the value of its
total assets in illiquid securities, including restricted securities,
repurchase agreements of over seven days' duration and OTC options; and
(4) Borrow in excess of 5% of its total assets (borrowings are permitted
only as a temporary measure for extraordinary or emergency purposes) or
pledge (mortgage) its assets as security for any indebtedness.
HOW THE FUNDS VALUE THEIR SHARES
Each Money Market Fund attempts to stabilize the net asset value of its
Investment Shares at $1.00 by valuing its portfolio securities using the
amortized cost method. The net asset value per Investment Share is determined
by adding the interest of the Investment Shares in the value of all securities
and other assets of a Fund, subtracting the interest of the Investment Shares
in the liabilities of a Fund and those attributable to Investment Shares, and
dividing the remainder by the total number of Investment Shares outstanding.
A Fund cannot guarantee that its net asset value will always remain at $1.00
per share.
The net asset value for Investment Shares of each of the other Funds is
determined by adding the interest of the Investment Shares in the market value
of all securities and other assets of a Fund, subtracting the interest of the
Investment Shares in the liabilities of a Fund and those attributable to
Investment Shares, and dividing the remainder by the total number of
Investment Shares outstanding. The net asset value of a Fund's Investment
Shares will differ from that of Trust Shares due to the expense of the Rule
12b-1 fee applicable to a Fund's Investment Shares.
Securities for which market quotations are readily available are stated at
market value. Short-term investments with remaining maturities of 60 days or
less at the time of purchase are stated at amortized cost, which approximates
market value. Debt securities for which market quotations are not readily
available will be valued on the basis of valuations provided by pricing
services approved by the Trustees. Pricing services often use information with
respect to transactions in bonds, quotations from bond dealers, market
transactions in comparable securities, and various relationships between
securities in determining value. All other Fund assets are valued at their
fair value following procedures approved by the Trustees.
The Money Market Funds calculate net asset value per Investment Share at
12:00 noon (Eastern Time) and as of the close of the New York Stock Exchange
(currently 4:00 p.m. Eastern Time) on each Business Day. The other Funds
calculate net asset value per Investment Share as of the close of the New York
Stock Exchange (currently 4:00 p.m. Eastern Time) on each Business Day. As
used herein, a "Business Day" constitutes Monday through Friday except (i)
days on which there are not sufficient changes in the value of a Fund's
portfolio securities that its net asset value might be materially affected;
(ii) days during which no shares are tendered for redemption and no orders to
purchase shares are received; and (iii) the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
HOW TO BUY INVESTMENT SHARES
Investment Shares of the Funds may be purchased through The Huntington
Investment Company, Huntington Personal Bankers or the Mutual Fund Services
Center (collectively, the "Huntington
Group") pursuant to respective agreements between The Huntington Investment
Company or The Huntington Trust Company, N.A. and the Distributor. Texas
residents must purchase shares through the Distributor at 1-800-618-8573.
Investors may purchase Investment Shares of the Funds on all Business Days.
Investment Shares in each Money Market Fund purchased prior to 10:30 a.m.
(Eastern Time) begin earning dividends that day; Investment Shares purchased
after such time begin earning dividends on the following day. In connection
with the sale of a Fund's Investment Shares, the Distributor may from time to
time offer certain items of nominal value to any shareholder.
From time to time, the Trust may temporarily suspend the offering of shares
of one or more of the Funds or any class thereof. During the period of any
such suspension and depending on the reasons for the suspension, persons who
are already shareholders of any such Fund or class may be permitted to
continue to purchase additional shares and to have dividends reinvested. The
Trust or the Distributor may refuse any order to purchase shares or waive any
minimum purchase requirements. The Funds will issue certificates representing
Investment Shares upon request.
TO PLACE AN ORDER
To purchase Investment Shares of the Funds, an investor may call The
Huntington Investment Company at 800-322-4600, or the investor's Personal
Banker directly. All other investors should call the Mutual Fund Services
Center at (in Ohio) 614-463-5580 or (outside the 614 Area Code) 800-253-0412.
Payment may be made either by check or wire transfer of federal funds. To
purchase by check, the check must be included with the order and made payable
to the name of the applicable Fund, designating Investment Shares. If a
shareholder pays for Investment Shares by check and the check does not clear,
the purchase will be cancelled, and the shareholder may be charged a fee and
will be liable for any losses incurred. Neither initial nor subsequent
investments will be made by third party check. Orders are considered received
after payment by check is converted into federal funds by the Funds' transfer
agent, Federated Services Company (the "Transfer Agent").
When payment is made through wire transfer of federal funds, the order is
considered received immediately upon receipt by the Transfer Agent. With
respect to the Money Market Fund, Ohio Municipal Money Market Fund and U.S.
Treasury Money Market Fund, payment by wire must be received by the applicable
member of the Huntington Group before 10:30 a.m. (Eastern Time) in order to
earn dividends for that day. With respect to the Growth Fund, Mortgage
Securities Fund, Ohio Tax-Free Fund and Fixed Income Securities Fund, payment
by wire must be received by the applicable member of the Huntington Group
before 4:00 p.m. (Eastern Time) in order for Investment Shares of a Fund to be
purchased at that day's price. Prior to purchasing by wire, investors should
call the applicable member of the Huntington Group. It is the responsibility
of the applicable member of the Huntington Group to transmit orders promptly
to the Transfer Agent. Federal funds should be wired as follows: Huntington
National Bank, ABA 044000024, Trust Department, Account Number 01891160404,
Monitor Retail, Attention: Shareholder Services.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Investment Shares of a Fund is $1,000.
Subsequent investments must be in amounts of at least $50.
WHAT SHARES COST
Money Market Funds
With respect to the Money Market Fund, Ohio Municipal Money Market Fund and
U.S. Treasury Money Market Fund, Investment Shares are sold at their net asset
value next determined after an order is received. There is no sales charge
imposed by these Funds.
Equity Fund
With respect to the Growth Fund, Investment Shares are sold at their net
asset value per share next determined after an order is received, plus a sales
charge as follows:
<TABLE>
<CAPTION>
SALES CHARGE AS SALES CHARGE AS
A PERCENTAGE OF A PERCENTAGE OF
AMOUNT OF TRANSACTION PUBLIC OFFERING PRICE NET AMOUNT INVESTED
--------------------- --------------------- -------------------
<S> <C> <C>
Less than $100,000 4.00% 4.17%
$100,000 but less than $250,000 3.50% 3.63%
$250,000 but less than $500,000 2.50% 2.56%
$500,000 but less than $750,000 1.50% 1.52%
$750,000 but less than $1 million 0.75% 0.76%
$1 million or more 0.25% 0.25%
</TABLE>
Income Funds
With respect to the Mortgage Securities Fund, Ohio Tax-Free Fund and Fixed
Income Securities Fund, Investment Shares are sold at their net asset value
per share next determined after an order is received, plus a sales charge as
follows:
<TABLE>
<CAPTION>
SALES CHARGE AS SALES CHARGE AS
A PERCENTAGE OF A PERCENTAGE OF
AMOUNT OF TRANSACTION PUBLIC OFFERING PRICE NET AMOUNT INVESTED
--------------------- --------------------- -------------------
<S> <C> <C>
Less than $500,000 2.00% 2.04%
$500,000 but less than $750,000 1.50% 1.52%
$750,000 but less than $1 million 0.75% 0.76%
$1 million or more 0.00% 0.00%
</TABLE>
Purchases at Net Asset Value. Investment Shares issued through reinvestment
of dividends and capital gains distributions are not subject to a sales
charge. In addition, Investment Shares of a Fund may be purchased at net asset
value, without a sales charge, by officers, directors, employees (and their
spouses and family members) and retirees of Huntington Bancshares Incorporated
and its subsidiaries.
Dealer Concession. For sales of Investment Shares of the Funds, a dealer
will normally receive up to 90% of the applicable sales charge. Any portion of
the sales charge which is not paid to a dealer will be retained by the
Distributor. However, the Distributor will, periodically, uniformly offer to
pay cash, or promotional incentives in the form of trips to sales seminars at
luxury resorts, tickets or other items, to all dealers selling Investment
Shares of the Funds, from that portion of the sales load which the Distributor
retains or any other source available to it. Such payments will be predicated
upon the amount of Investment Shares of the Funds that are sold by the dealer.
The sales charge for Investment Shares sold other than through registered
broker/dealers will be retained by the Distributor. The Distributor may pay
fees to banks out of the sales charge in exchange
for sales and/or administrative services performed on behalf of the banks'
customers in connection with the initiation of customer accounts and purchases
of Investment Shares of the Funds.
Reducing the Sales Charge. The sales charge can be reduced through:
. quantity discounts and accumulated purchases;
. signing a 13-month letter of intent;
. using the reinstatement privilege; or
. concurrent purchases.
Quantity Discounts and Accumulated Purchases. As shown in the table above,
larger purchases reduce the sales charge paid. The Distributor will combine
purchases made on the same day by the investor, his spouse, and his children
under age 21 when it calculates the sales charge. In addition, the sales
charge, if applicable, is reduced for purchases made at one time by a trustee
or fiduciary for a single trust estate or a single fiduciary account.
If an additional purchase of Investment Shares in a Fund which impose a
sales charge is made, the Distributor will aggregate such additional purchases
with previous purchases of Investment Shares of Funds imposing a sales charge
provided the prior purchase is still invested in the Funds. For example, if a
shareholder already owns Investment Shares having a current value at the
public offering price of $700,000 and he purchases $50,000 more at the current
public offering price, the sales charge on the additional purchase according
to the schedule now in effect would be 0.75%, not 1.5%.
To receive the sales charge reduction, an investor should complete the
appropriate section of the account application at the time the purchase is
made indicating that Investment Shares of Funds which impose a sales charge
have been purchased and are still invested or that such purchases are being
combined. The Distributor will reduce the sales charge after it confirms the
purchase.
Letter of Intent. If an investor intends to purchase at least $100,000 of
Investment Shares in a Fund that imposes a 4% sales charge or at least
$500,000 in one or more Funds that imposes a 2% sales charge, over the next 13
months, the sales charge may be reduced by completing the Letter of Intent
section of the account application. The Letter of Intent includes a provision
for a sales charge adjustment depending on the amount actually purchased
within the 13-month period. In addition, pursuant to a Letter of Intent, the
custodian will hold in escrow the difference between the sales charge
applicable to the amount initially purchased and the sales charge paid at the
time of the investment, which is based on the amount covered by the Letter of
Intent.
For example, assume an investor signs a Letter of Intent to purchase at
least $250,000 in Investment Shares of a Fund that imposes a 4% sales charge
and, at the time of signing the Letter of Intent, purchases $100,000 of
Investment Shares of one of these Funds. The investor would pay an initial
sales charge of 2.50% (the sales charge applicable to purchases of $250,000),
and 1.00% of the investment (representing the difference between the 3.50%
sales charge applicable to purchases of $100,000 and the 2.50% in sales
charges already paid) would be held in escrow until the investor has purchased
the remaining $150,000 or more of Investment Shares under his Letter of
Intent.
The amount held in escrow will be applied to the investor's account at the
end of the 13-month period unless the amount specified in the Letter of Intent
is not purchased. In order to qualify for a Letter of Intent, the investor
will be required to make a minimum initial investment of at least $25,000.
A Letter of Intent will not obligate the investor to purchase Investment
Shares, but if he does, each purchase during the period will be at the sales
charge applicable to the total amount intended to be purchased. The Letter of
Intent may be dated as of a prior date to include any purchases made within
the past 90 days.
Reinstatement Privilege. If Investment Shares in a Fund have been redeemed,
the shareholder has a one-time right, within 30 days of redemption, to
reinvest the redemption proceeds at the next-determined net asset value
without any sales charge. The applicable member of the Huntington Group must
be notified in writing of the reinvestment by the shareholder in order to
eliminate a sales charge. If the shareholder redeems his Investment Shares in
a Fund and utilizes the reinstatement privilege, there may be tax
consequences.
Concurrent Purchases. For purposes of qualifying for a sales charge
reduction, a shareholder has the privilege of combining concurrent purchases
of Investment Shares in two or more Funds in the Trust, the public offering
price of which includes a sales charge. For example, if a shareholder of the
Growth Fund concurrently invests $30,000 in one Fund with a sales charge, and
$70,000 in another Fund with a sales charge, the sales charge will be reduced.
In addition, if a shareholder of the Mortgage Securities Fund, Ohio Tax-Free
Fund or Fixed Income Securities Fund concurrently invests $50,000 in one Fund
with a sales charge, and $450,000 in another Fund with a sales charge, the
sales charge will be reduced.
To receive this sales charge reduction, the applicable Huntington Group
member must be notified in writing by the shareholder (at the address provided
below under "How to Exchange Investment Shares Among the Funds--By Mail") at
the time the concurrent purchases are made. The Distributor will reduce the
sales charge after it confirms the purchases.
SYSTEMATIC INVESTMENT PROGRAM
Once an account has been opened, holders of Investment Shares of a Fund may
add to their investment on a regular basis in minimum amounts of at least $50.
Under this program, funds will be automatically withdrawn periodically from
the shareholder's checking account and invested in Investment Shares of a Fund
at the applicable public offering price per share next determined after an
order is received by the Transfer Agent. Shareholders may apply for
participation in this program by completing the appropriate section of the
account application.
HOW TO EXCHANGE INVESTMENT SHARES AMONG THE FUNDS
Shareholders may exchange Investment Shares in any Fund for Investment
Shares in any other Fund offering Investment Shares at the respective net
asset values per Investment Share next determined after receipt of the request
in good order, plus the applicable sales charge (if any) as described below.
This privilege is available to shareholders resident in any state in which the
Fund shares being acquired may be sold.
No sales charge applies when Investment Shares are exchanged from a Fund
that imposes such a charge to a Fund with no sales charge. If, however, a
shareholder seeks to exchange shares of a Fund that does not have a sales
charge for shares of a Fund that imposes such a charge, the shareholder will
be required to pay the applicable sales charge of the Fund into which the
shares are exchanged. In all cases, shareholders will be required to pay a
sales charge only once. Thus, for example, no sales charge applies when shares
are exchanged among Funds that impose a sales charge. Similarly, no sales
charge applies where a shareholder exchanges shares of a Fund with a
sales charge for shares of a Fund that does not impose such a charge and
subsequently exchanges those shares back into a Fund with a sales charge.
In order to make an exchange, shareholders will be required to maintain the
applicable minimum account balance in each Fund in which shares are owned and
must satisfy the minimum initial and subsequent purchase amounts of the Fund
into which shares are exchanged.
If the exchanging shareholder does not have an account in the Fund whose
Investment Shares are being acquired, a new account will be established with
the same registration and reinvestment options for dividends and capital gains
distributions as the account of the Fund from which the Investment Shares are
exchanged, unless otherwise specified in writing by the shareholder. In the
event the new account registration is not identical to that of the existing
account, a signature guarantee will be required. (See "Redeeming By Mail"
below.)
An exchange is treated as a sale for federal income tax purposes and,
depending on the circumstances, a short or long-term capital gain or loss may
be realized. In addition, if a shareholder exchanges shares of a Fund that
imposes a sales charge into another Fund that imposes such a charge, there may
be special tax consequences.
The Trust's exchange privileges may be terminated or modified. Except as
indicated below, shareholders will be given 60 days' prior notice of any such
termination or any material amendment of existing exchange privileges. No
notice will be given when the only material effect of an amendment is to
reduce or eliminate any charges payable at the time of an exchange or under
certain extraordinary circumstances, such as in connection with the suspension
of the sale or redemption of Fund shares. Shareholders may obtain further
information on the exchange privilege by calling the applicable member of the
Huntington Group.
BY TELEPHONE
Shareholders may provide instructions for exchanges between Funds by
calling: The Huntington Investment Company at 800-322-4600; their Personal
Banker directly or Mutual Fund Services Center at (in Ohio) 614-463-5580 or
(outside the 614 Area Code) 800-253-0412. Investors may request the Trust's
telephone exchange privilege on their account application. Information on this
service can be obtained through the applicable member of the Huntington Group.
Investment Shares may be exchanged by telephone only between Fund accounts
having identical shareholder registrations. Exchange instructions given by
telephone may be electronically recorded and will be binding upon the
shareholder. Because telephone exchange requests will be honored from anyone
who provides the correct information (described below under "By Mail"), this
service involves a possible risk of loss if someone uses the service without
the shareholder's permission.
Telephone exchange instructions must be received by the applicable member of
the Huntington Group before 3:00 p.m. (Eastern Time) for Investment Shares to
be exchanged the same day. The telephone exchange privilege may be modified or
terminated at any time and shareholders will be notified of any such
modification or termination. Shareholders of a Fund may have difficulty in
making exchanges by telephone during times of extreme economic or market
conditions. If a shareholder cannot make contact by telephone, it is
recommended that an exchange request be made in writing and sent by overnight
mail to the appropriate member of the Huntington Group. Written instructions
may require a signature guarantee. If reasonable procedures are not followed
by the Funds, they may be liable for losses due to unauthorized or fraudulent
telephone instructions.
BY MAIL
Shareholders may provide instructions for exchanges between the Funds by
making a written request to the appropriate member of the Huntington Group at
Huntington Center, 41 South High Street, Columbus, Ohio 43287.
To exchange by letter or by telephone, a shareholder must state (1) the name
of the Fund from which the exchange is to be made (and designating that
Investment Shares are involved), (2) the name(s) and address on the
shareholder account, (3) the account number, (4) the dollar amount or number
of Investment Shares to be exchanged, and (5) the Fund into which the
Investment Shares are to be exchanged. Written exchange requests must be
signed by the shareholder, and it may be necessary to have the shareholder's
signature guaranteed by a member firm of a national securities exchange or by
a commercial bank, savings and loan association or trust company. Further
documentation may be required, and a signature guarantee is generally required
from corporations, executors, administrators, trustees and guardians.
HOW TO REDEEM INVESTMENT SHARES
Shareholders may redeem all or any portion of the Investment Shares in their
account on any Business Day at the appropriate net asset value per share next
determined after a redemption request in proper form is received by the
Transfer Agent. Under unusual circumstances, a Fund may suspend redemptions or
postpone payment for more than seven days, as permitted by federal securities
law.
REDEEMING BY TELEPHONE
A shareholder may redeem Investment Shares of a Fund by calling The
Huntington Investment Company at 800-322-4600, their Personal Banker directly
or the Mutual Fund Services Center at (in Ohio) 614-463-5580 or (outside the
614 Area Code) 800-253-0412.
Shareholders of the Money Market Fund, Ohio Municipal Money Market Fund, and
U.S. Treasury Money Market Fund who request a redemption before 10:30 a.m.
(Eastern Time) will usually have the proceeds wired the same day but will not
be entitled to that day's dividend; redemption requests received after 10:30
a.m. (Eastern Time) will receive that day's dividend and the proceeds will
normally be wired the following Business Day. Requests for redemptions in the
Income and Equity Funds must be received by the appropriate member of the
Huntington Group before 3:00 p.m. (Eastern Time) in order for Investment
Shares to be redeemed at that day's net asset value.
Members of the Huntington Group are responsible for promptly submitting
redemption requests and providing proper written redemption instructions to a
Fund. If at anytime the Trust shall determine it necessary to terminate or
modify this method of redemption, shareholders will be promptly notified.
Investors may request the Trust's telephone redemption privilege on their
account application. If not completed at the time of initial application,
authorization forms and information on this service can be obtained through
the members of the Huntington Group. Proceeds for redemptions will normally be
wired to the shareholder's account with proper authorization (at a domestic
commercial bank that is a member of the Federal Reserve System designated by
the shareholder in writing) or a check will be sent to the address of record.
Telephone redemption instructions may be recorded.
In the event of extreme economic or market conditions, a shareholder may
experience difficulty in redeeming by telephone. If such a case should occur,
another method of redemption, such as through written request, should be
considered. If reasonable procedures are not followed by the Funds, they may
be liable for losses due to unauthorized or fraudulent telephone instructions.
REDEEMING BY MAIL
Shareholders may redeem Investment Shares of a Fund by sending a written
request to the appropriate member of the Huntington Group. The written request
should include the shareholder's name, Fund name (designating Investment
Shares), the account number, and the Investment Share or dollar amount
requested.
Shareholders requesting a redemption of $50,000 or more, a redemption of any
amount to be sent to an address other than that on record with the Transfer
Agent, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
--a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the FDIC;
--a member of the New York, American, Midwest, or Pacific Stock Exchanges;
--a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is
administered by the FDIC; or
-- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Funds do not accept signatures guaranteed by a notary public.
The Funds and the Transfer Agent have adopted standards for accepting
signature guarantees from the above institutions. The Funds may elect in the
future to limit eligible signature guarantors to institutions that are members
of a signature guarantee program. The Funds and the Transfer Agent reserve the
right to amend these standards at any time without notice.
Normally, a check for the proceeds is mailed to the shareholder within one
business day, but in no event more than seven days, after receipt of a proper
written redemption request provided that Huntington has received payment for
Investment Shares from the shareholder. Shares will be redeemed at the net
asset value determined as of the end of the Business Day on which the written
redemption request is received by the Transfer Agent.
REDEEMING BY CHECK (MONEY MARKET FUNDS ONLY)
At the shareholder's request, the appropriate member of the Huntington Group
will establish a checking account for redeeming Investment Shares of the Money
Market Funds. Shareholders may be charged a fee for this service.
With a Fund checking account, Investment Shares may be redeemed simply by
writing a check for $250 or more. The redemption will be made at the
applicable net asset value per share on the date that the check is presented
to the Fund. A check may not be written to close an account. In addition, if a
shareholder wishes to redeem Investment Shares and have the proceeds
available, a check may be written and negotiated through the shareholder's
local bank. Checks should never be sent to the issuing bank to redeem
Investment Shares. Cancelled checks are sent to the shareholder each month.
REDEEMING BY FAX
Shareholders wishing to expedite the redemption process may Fax a copy of
their written request to the appropriate member of the Huntington Group at Fax
No. 614-480-4682 (The Huntington Investment Company) or 614-480-5516 (Mutual
Fund Services Center). Shareholders redeeming by Fax must call the appropriate
member of the Huntington Group to confirm receipt of the written request. See
"Redeeming By Telephone" in this Prospectus for a discussion of when
shareholders will receive redemption proceeds when redeeming by Fax.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may
take advantage of the Systematic Withdrawal Program. Under this program,
Investment Shares of a particular Fund are redeemed at the applicable net
asset value per Investment Share at the time of the withdrawal to provide for
periodic withdrawal payments in an amount directed by the shareholder.
Depending upon the amount of the withdrawal payments, the amount of dividends
paid and capital gains distributions with respect to Investment Shares, and
the fluctuation of the net asset value of Investment Shares redeemed under
this program, redemptions may reduce, and eventually deplete, the
shareholder's investment in Investment Shares of a particular Fund. For this
reason, payments under this program should not be considered as yield or
income on the shareholder's investment in Investment Shares of a Fund. To be
eligible to participate in this program, a shareholder must have an account
value of at least $10,000. A shareholder may apply for participation in this
program through the appropriate member of the Huntington Group.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, a Fund may
redeem Investment Shares in any account, except retirement plans, and pay the
proceeds to the shareholder if the account balance falls below the required
minimum value of $1,000 due to shareholder redemptions. This requirement does
not apply, however, if the balance falls below $1,000 because of changes in a
Fund's net asset value. Before Investment Shares are redeemed to close an
account, the shareholder will be notified in writing and allowed 30 days to
purchase additional Investment Shares to meet the minimum requirement.
MANAGEMENT OF THE TRUST
The Trustees of the Trust are responsible for generally overseeing the
conduct of each Fund's business. The Huntington Trust Company, National
Association, Huntington Center, 41 South High Street, Columbus, Ohio 43287,
serves as investment adviser to the Funds pursuant to an investment advisory
agreement with the Trust. Huntington is an indirect wholly-owned subsidiary of
Huntington Bancshares Incorporated, a registered bank holding company with
executive offices located at Huntington Center, 41 South High Street,
Columbus, Ohio 43287.
Subject to the supervision of the Trustees, Huntington provides a continuous
investment program for the Funds, including investment research and management
with respect to all securities, instruments, cash and cash equivalents in the
Funds. The Trust pays Huntington management fees, computed daily and payable
monthly, for each of the Funds at the following annual rates: Money Market
Fund and Ohio Municipal Money Market Fund: .30% of the first $500 million of
average daily net assets of the Fund, .25% of the next $500 million, and .20%
of any amount over $1 billion; U.S. Treasury Money Market Fund: .20% of the
Fund's average daily net assets; Growth Fund: .60% of the Fund's average daily
net assets; and Mortgage Securities Fund, Ohio Tax-Free Fund and Fixed Income
Securities Fund: .50% of the Fund's average daily net assets. Huntington may
periodically waive all or a portion of its management fee with respect to any
Fund to increase the net income of the Fund available for distribution as
dividends.
Adviser's Background. The Huntington Trust Company, N.A., a national banking
association, is an indirect, wholly-owned subsidiary of Huntington Bancshares
Incorporated ("HBI"). With $18 billion
in assets as of December 31, 1994, HBI is a major Midwest regional bank
holding company. Through its subsidiaries and affiliates, HBI offers a full
range of services to the public, including: commercial lending, depository
services, cash management, brokerage services, retail banking, international
services, mortgage banking, investment advisory services, and trust services.
Huntington, a recognized investment advisory and fiduciary services subsidiary
of HBI, provides investment advisory services for corporate, charitable,
governmental, institutional, personal trust and other assets. Huntington is
responsible for over $10 billion of assets, and has investment discretion over
approximately $3 billion of that amount.
Huntington has served as investment adviser to mutual funds since 1987 and
has over 75 years of experience providing investment advisory services to
fiduciary accounts.
As part of its regular banking operations, Huntington may make loans to
public companies. Thus, it may be possible, from time to time, for the Funds
to hold or acquire the securities of issuers which are also lending clients of
Huntington. The lending relationship will not be a factor in the selection of
securities for the Funds.
Sub-Adviser. Under the terms of a sub-advisory contract between Huntington
and Piper, Piper will assist Huntington in the purchase or sale of the
Mortgage Securities Fund's portfolio instruments. Huntington pays Piper
management fees, computed and paid monthly, for the Mortgage Securities Fund
at an annual rate of .15% of the Mortgage Securities Fund's average daily net
assets.
Sub-Adviser's Background. Piper, located at Piper Jaffray Tower, Post Office
Box 28, Minneapolis, Minnesota, 55440, was formed in 1985. Piper is a wholly-
owned subsidiary of the publicly traded investment banking firm, Piper Jaffray
Companies, Inc. Piper provides investment management services, focusing on
ERISA/401 (k), public funds, Taft Hartley, endowment/foundation, pension
plans, and personal wealth. As of March 31, 1995, Piper managed 38 mutual
funds, five commingled funds, and individual/institutional accounts in excess
of $10.3 billion in assets.
Piper's investment staff is comprised of 25 managers, with an average of 15
years of experience. Piper's portfolio management expertise extends into
mortgage-backed securities, bonds, equities, balanced accounts, and short-term
cash management services.
Philip H. Farrington, a Vice President of Huntington Trust Company, N.A.,
has been a co-portfolio manager of the Growth Fund since April of 1994. Mr.
Farrington has more than 30 years of investment management experience. He has
held the positions of Chief Investment Officer, Portfolio Manager, and
Director of Research for major banks and asset management companies. He is a
member of the equity management team at Huntington. Mr. Farrington is a
graduate of Harvard University.
James Gibboney, Jr., a Vice President of Huntington Trust Company, N.A., has
been a co-portfolio manager of the Growth Fund since November of 1993. Mr.
Gibboney, a Chartered Financial Analyst, serves as one of Huntington's
balanced portfolio managers. Prior to joining Huntington in 1989, he gained
more than 11 years of investment management experience as portfolio manager
for a major investment firm, a trust company, and a state government agency.
He received his undergraduate degree in Finance from the Ohio State University
and an MBA from Xavier University.
Thomas J. Sauer, a Vice President of Huntington Trust Company, N.A., has
been a co-portfolio manager of the Growth Fund since November of 1993. Mr.
Sauer, a Chartered Financial Analyst, has more than 20 years of investment
experience including that of investment counselor and investment manager for a
major Midwest foundation and medical institution. He received his
undergraduate
degree from Ohio University, completed graduate course work at Case Western
Reserve University, and received an MBA from Baldwin Wallace College.
Worth Bruntjen, a Senior Vice President of Piper Capital Management, has
been the senior portfolio manager of the Mortgage Securities Fund since its
inception. Mr. Bruntjen is the senior portfolio manager of open-end mutual
funds, distributed by Piper Jaffray, and closed-end bond funds listed on the
New York Stock Exchange. He is also fixed income manager for a variety of
client portfolios, including foundations, pension plans, state funds, and
individuals. He attended the University of Minnesota, the University of
Heidelberg, and Carleton College. Mr. Bruntjen has approximately 27 years of
investment experience.
Marijo Goldstein has been a Senior Vice President of Piper Capital
Management since November, 1993, prior to which she had been a Vice President
of Piper Capital Management since 1991. She has been a co-portfolio manager of
the Mortgage Securities Fund since its inception. Ms. Goldstein joined Piper
Capital Management as a fixed income analyst in 1988. Prior to that, she was
an analyst in the Technical Research Department at Piper Jaffray, Inc.
beginning in 1985. She earned her MBA from the University of Minnesota and her
B.S. degree in Information Systems Management from the University of Maryland.
William G. Doughty, an Assistant Vice President of Huntington Trust Company,
N.A., has been the portfolio manager of the Ohio Tax-Free Fund since its
inception. Mr. Doughty has more than 24 years of experience in the investment
field. He is responsible for fixed income portfolio management and heads the
fixed income trading operation at Huntington. Mr. Doughty is a graduate of
Franklin University with a degree in Business Administration and has an MBA
from the University of Dayton.
Stephen M. Geis, a Vice President of Huntington Trust Company, N.A., has
been the portfolio manager of the Fixed Income Securities Fund since October
of 1989. Mr. Geis, a Chartered Financial Analyst, serves as the Huntington's
senior fixed income manager. Prior to joining Huntington in 1988, he spent
nearly ten years as a fixed income manager for a major insurance company and
treasurer of a regional bank. Mr. Geis received his undergraduate degree from
the College of Wooster, his MBA from the University of Dayton, and his Juris
Doctorate from Capital University.
DISTRIBUTION OF INVESTMENT SHARES
Federated Securities Corp. is the principal distributor for shares of each
Fund. It is a Pennsylvania corporation organized on November 14, 1969, and is
the principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
DISTRIBUTION PLANS
Each Fund offering Investment Shares has adopted a Distribution Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"Distribution Plan"). The Distribution Plan provides for payments to be made
to the Distributor in connection with the provision of certain services
(described below) with respect to the Funds' Investment Shares.
In accordance with the Distribution Plan, the Distributor may enter into
agreements with brokers and dealers relating to distribution and/or
administrative services with respect to the Investment Shares of the Funds.
The Distributor may also enter into agreements with administrators (including
financial institutions, fiduciaries, custodians for public funds, and
investment advisers) to provide administrative services with respect to
Investment Shares. Administrative services may include, but are not limited
to, the following functions: providing office space, equipment, telephone
facilities, and various clerical,
supervisory, computer, and other personnel as necessary or beneficial to
establish and maintain shareholder accounts and records; processing purchase
and redemption transactions and automatic investments of customer account cash
balances; answering routine customer inquiries regarding Investment Shares;
assisting customers in changing dividend options, account designations, and
addresses; and providing such other services as the Distributor may reasonably
request in connection with investments in Investment Shares. As of the date of
this Prospectus, The Huntington Investment Company and The Huntington Trust
Company, N.A. have entered into agreements with the Distributor concerning the
provision of administrative services to customers of the Huntington Group who
purchase Investment Shares of the Funds.
In connection with the provision of the distribution and administrative
services described above, the Distributor will pay brokers, dealers and
administrators (including The Huntington Investment Company) a fee based on
the amount of Investment Shares owned by their customers. For all of the Funds
except the Mortgage Securities Fund and the U.S. Treasury Money Market Fund,
the schedules of such fees and the basis upon which such fees will be paid
will be determined, from time to time, by the Trustees. Under such
Distribution Plan, fees paid by the Distributor for services rendered with
respect to a Fund's Investment Shares will be reimbursed by the Fund in an
amount which may not exceed an annual rate of .25 of 1% of the average daily
net assets attributable to the Fund's Investment Shares held in customer
accounts for which brokers, dealers, and administrators provide such services.
Fees under the Distribution Plan with respect to each Fund's Investment Shares
are accrued daily, payable quarterly, and calculated on an annual basis.
The Mortgage Securities Fund and the U.S. Treasury Money Market Fund have
adopted a separate Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "Compensation Plan" and, with the
Distribution Plan, the "Distribution Plans"). The Mortgage Securities Fund
will pay to the Distributor an amount, computed at an annual rate of .50 of 1%
of the average daily net asset value of the Mortgage Securities Fund's
Investment Shares, to finance any activity which is principally intended to
result in the sale of Investment Shares subject to the Compensation Plan. The
U.S. Treasury Money Market Fund will pay to the Distributor an amount computed
at an annual rate of 0.25% of the average daily net asset value of the U.S.
Treasury Money Market Fund's Investment Shares to finance any activity which
is principally intended to result in the sale of Investment Shares subject to
the Compensation Plan. These activities are extremely similar, and in some
cases identical, to the types of administrative services that are furnished to
the Trust's other Funds pursuant to the Distribution Plan (and described
above). The Distributor may, from time to time and for such periods as it
deems appropriate, voluntarily reduce its compensation under the Compensation
Plan to the extent expenses attributable to the Mortgage Securities Fund's and
the U.S. Treasury Money Market Fund's Investment Shares exceed such lower
expense limitation as the Distributor may, by notice to the Trust, voluntarily
declare to be effective.
The Mortgage Securities and the U.S. Treasury Money Market Funds' plan is a
compensation type plan. As such, the Funds make no payments to the Distributor
except as described above. Therefore, the Funds do not pay for unreimbursed
expenses of the Distributor, including amounts expended by the Distributor in
excess of amounts received by it from the Funds, interest, carrying or other
financing charges in connection with excess amounts expended, or the
Distributor's overhead expenses. However, the Distributor may be able to
recover such amounts or may earn a profit from future payments made by the
Funds under the Compensation Plan.
The Glass-Steagall Act prohibits a depository institution (such as a
commercial bank or a savings and loan association) from being an underwriter
or distributor of most securities. In the event the Glass-Steagall Act is
deemed to prohibit depository institutions from acting in the administrative
capacities described above or should Congress relax current restrictions on
depository institutions, the Trustees will consider appropriate changes in the
administrative services performed in connection with the Distribution Plans.
State securities laws governing the ability of depository institutions to
act as underwriters or distributors of securities may differ from
interpretations given to the Glass-Steagall Act and, therefore, banks and
financial institutions may be required to register as brokers or dealers
pursuant to state law.
Shareholder Servicing Arrangements. In addition to the fees paid by the
Distributor to financial institutions under the Distribution Plans as
described above, the Distributor may also pay financial institutions a fee
based upon the average net asset value of Investment Shares held by their
customers for providing administrative services. This fee, if paid, will be
reimbursed by the Huntington and not the Funds.
ADMINISTRATION OF THE FUNDS
Federated Administrative Services, a subsidiary of Federated Investors,
provides the Funds with certain administrative personnel and services
necessary to operate the Funds.
For these services, each of the Growth Fund, the Mortgage Securities Fund,
Ohio Tax-Free Fund, Fixed Income Securities Fund, Money Market Fund, Ohio
Municipal Money Market Fund, and U.S. Treasury Money Market Fund pays a fee,
computed and payable daily, to Federated Administrative Services at a blended
annual rate, based on the daily net assets of the Trust taken as a whole, as
specified below:
<TABLE>
<CAPTION>
ADMINISTRATIVE FEE AVERAGE AGGREGATE DAILY NET ASSETS OF THE TRUST
------------------ -----------------------------------------------
<S> <C>
.160 of 1% on the first $750 million
.135 of 1% on the next $500 million
.110 of 1% on assets in excess of $1.25 billion
</TABLE>
The administrative fee paid by any Fund during any fiscal year will not be
less than $75,000 with regard to the above named Funds.
Federated Administrative Services has agreed not to enforce the applicable
minimum fee with respect to any Fund for a period of eighteen months following
the initiation of each Fund's public offering of shares. Federated
Administrative Services may limit voluntarily any portion of its fee at any
time.
CUSTODIAN, RECORDKEEPER, TRANSFER AGENT, AND DIVIDEND DISBURSING AGENT
Huntington acts as custodian and recordkeeper of the Trust's investments and
other assets. Huntington receives custody and recordkeeping fees of 5.6 basis
points (0.056%) for each Fund except the Mortgage Securities Fund, for which
Huntington receives 2.6 basis points (0.026%) for custody services only.
Federated Services Company, Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779, serves as the Trust's transfer agent and dividend
disbursing agent.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants for the Trust are Price Waterhouse LLP,
Columbus, Ohio.
DISTRIBUTIONS AND TAXES
MONEY MARKET FUNDS
All of the net income of both classes of shares of each Money Market Fund is
declared each Business Day as a dividend to shareholders of record at the time
of the declaration. A Money Market Fund's net income from the time of the
immediately preceding dividend declaration consists of interest accrued or
discount earned during such period (including both original issue and market
discount) on the Money Market Fund's securities, less amortization of premium
and the estimated expenses of each class of shares of the Money Market Fund.
Shares purchased prior to 10:30 a.m. (Eastern Time) begin earning dividends
that day. Shares purchased after such time begin earning dividends on the
following day. Dividends are declared daily and payable monthly.
Although none of the Money Market Funds expects to realize long-term capital
gains, any net long-term capital gains that may be realized will be paid
annually. Each Money Market Fund expects to distribute any net realized short-
term gains once each year, although it may distribute them more frequently if
necessary in order to maintain the net asset value of a Fund at $1.00 per
share.
OTHER FUNDS
Dividends, if any, from the investment income of each Fund other than the
Money Market Funds are declared and paid monthly to both classes of shares.
Distributions resulting from any net realized capital gains of any Fund will
be paid at least annually.
DISTRIBUTION OPTIONS
Shareholders of the Money Market Funds may choose to receive all
distributions in cash or to reinvest all distributions in additional
Investment Shares of a Fund. Shareholders of other Funds may choose to receive
all distributions in cash, to reinvest all distributions in additional
Investment Shares, or to reinvest all capital gains distributions in
additional Investment Shares and to receive all other distributions in cash.
Shareholders may choose a distribution option by selecting the appropriate
option on the Account Registration Form or by notifying the appropriate member
of the Huntington Group of their selection. If a shareholder fails to choose a
distribution option, all distributions will be reinvested in additional
Investment Shares of the Fund making the distribution.
FEDERAL INCOME TAXES
Each Fund intends to qualify as a "regulated investment company" for federal
income tax purposes and to meet all other requirements that are necessary for
it to be relieved of federal taxes on income (and gains, if any) paid to
shareholders in the form of dividends. In order to accomplish this goal, each
Fund must, among other things, distribute substantially all of its ordinary
income (and net short-term capital gains, if any) on a current basis and
maintain a portfolio of investments which satisfies certain diversification
criteria.
All distributions by a Fund to a shareholder (with the exception of
distributions of tax-exempt income by the Ohio Funds and other than long-term
capital gain distributions, if any) will be taxable as ordinary income to the
extent of a Fund's current and accumulated "earnings and profits." However,
shareholders not subject to tax on their income generally will not be required
to pay tax on amounts distributed to them. The dividends received deduction
for corporations will apply to ordinary income distributions to the extent the
distribution represents amounts that would qualify for the dividends received
deduction to the Fund if the Fund were a regular corporation, and to the
extent designated by the Fund as so qualifying. The Money Market Funds and the
Income Funds do not expect to pay
any distributions that would be eligible for the dividends received deduction.
If a Fund were to have net long-term capital gains in excess of short-term
losses in a particular year, distributions by a Fund of those gains will be
taxable to a shareholder as long-term capital gains, regardless of how long a
shareholder has held the shares. If a shareholder disposes of shares at a loss
before holding such shares for longer than six months, such loss will be
treated as a long-term capital loss to the extent the shareholder has received
a long-term capital gains dividend on the shares.
In general, dividends paid by the Ohio Funds that are designated by the
Funds as "exempt-interest dividends" will be exempt from regular income tax.
However, under the Internal Revenue Code of 1986, as amended (the "Code"),
dividends paid by the Ohio Funds attributable to interest on certain private
activity bonds issued after August 7, 1986 must be included as an item of tax
preference in computing alternative minimum taxable income for the purpose of
determining liability (if any) for the 26%-28% federal alternative minimum tax
for individuals and the 20% federal alternative minimum tax for corporations.
In addition, exempt-interest dividends paid by the Ohio Funds will be included
in a corporation's "adjusted current earnings" for purposes of the alternative
minimum tax. Thus, a corporation's alternative minimum tax base would
generally be increased by 75% of interest received which is excluded from
gross income for regular federal income tax purposes (other than dividends
paid by the Ohio Funds attributable to interest on certain private activity
bonds issued after August 7, 1986, which interest would already be included in
alternative minimum taxable income as a specific item of tax preference).
Early in each year each Fund will notify each of its shareholders of the
amount and the federal income tax status of the distributions paid or deemed
paid to the shareholder by the Fund during the preceding year.
If a shareholder receives an exempt-interest dividend with respect to a
share and holds the share for six months or less, any loss on the sale or
exchange of the share will be disallowed to the extent of the amount of such
exempt-interest dividend. The Treasury Department is authorized to issue
regulations reducing the period to not less than 31 days for regulated
investment companies that regularly distribute at least 90% of their net tax-
exempt interest. No such regulations have been issued as of the date of this
Prospectus.
Distributions will be taxable as described above whether received in cash or
in shares through the reinvestment of distributions. A dividend paid to a
shareholder by a Fund in January of a year generally is deemed to have been
received by the shareholder on December 31 of the preceding year, if the
dividend was declared and payable to shareholders of record on a date in
October, November or December of that preceding year.
Additional information regarding federal income taxes is contained in the
Statement of Additional Information. The foregoing is a general and
abbreviated summary of certain applicable provisions of the Code and Treasury
regulations currently in effect. The Code and regulations are subject to
change by legislative or administrative action. A Fund's distributions may
also be subject to state and local taxes. Shareholders should consult their
own tax adviser to determine the precise effect of an investment in a Fund on
their particular tax situation.
OHIO PERSONAL INCOME TAXES
Dividends received from the Ohio Funds that are derived from interest on
Ohio tax-exempt securities are exempt from the Ohio personal income tax.
Specific state statutes authorizing the issuance of certain Ohio tax-exempt
securities provide that the interest on and gain from the sale or
other disposition of such obligations are exempt from all taxation in the
State. Dividends on shares of an Ohio Fund which are attributable to interest
on or gain from the sale of obligations issued pursuant to such statutes
should be exempt from the Ohio personal income tax. Ohio municipalities may
not impose income taxes on dividends or any intangible property, including
shares of the Ohio Funds, except that municipalities that taxed the types of
intangible income which were not exempt from municipal income taxation on or
before April 1, 1986, may tax such intangible income if such a tax was
approved by the electors of the municipality in an election held on November
8, 1988. Ohio residents should consult their own tax adviser regarding
potential municipal income tax liability in connection with their investment
in an Ohio Fund. The description in this paragraph, which is only a summary of
the Ohio tax treatment of dividends paid by the Ohio Funds, is based upon
current statutes and regulations and upon current policies of the Ohio
Department of Taxation, all of which are subject to change.
ORGANIZATION OF THE TRUST
The Trust was organized as a Massachusetts business trust on February 10,
1987. A copy of the Trust's Declaration of Trust, which is governed by
Massachusetts law, is on file with the Secretary of State of The Commonwealth
of Massachusetts.
The Trust is an open-end management investment company, whose Declaration of
Trust permits the Trust to offer separate series of shares of beneficial
interest representing interests in separate portfolios of securities. The
shares in any one portfolio may be offered in two or more separate classes. As
of the date of this Prospectus, the Trustees have established two classes of
shares, known as Investment Shares and Trust Shares, in the Money Market Fund,
the Ohio Municipal Money Market Fund, the U.S. Treasury Money Market Fund, the
Growth Fund, the Mortgage Securities Fund, the Ohio Tax-Free Fund, and the
Fixed Income Securities Fund.
Investment Shares and Trust Shares of a Fund are fully transferable. Each
class is entitled to dividends from the respective class assets of the Fund as
declared by the Trustees, and, if the Trust (or the Fund) were liquidated, the
shareholders of each class would receive the net assets of the Fund
attributable to each respective class.
VOTING RIGHTS
Shareholders are entitled to one vote for each share held on the record date
for any action requiring a vote by the shareholders, and a proportionate
fractional vote for each fractional share held. Shareholders of the Trust will
vote in the aggregate and not by Fund or class except (i) as otherwise
expressly required by law or when the Trustees determine that the matter to be
voted upon affects only the interests of the shareholders of a particular Fund
or class, and (ii) only holders of Investment Shares will be entitled to vote
on matters submitted to shareholder vote with respect to the Rule 12b-1 Plan
applicable to such class.
As of April 7, 1995, National Financial Services Corp., New York, New York,
was the owner of record of approximately 23,911,484 shares (46.69%) of the
Investment Shares of the Money Market Fund; Huntington Trust Company, N.A.,
Columbus, Ohio, acting in various capacities for numerous accounts, was the
owner of record of approximately 37,252,887 shares (78.37%) of the Investment
Shares of the Ohio Municipal Money Market Fund, and therefore, may, for
certain purposes, be deemed to control the respective Funds and be able to
affect the outcome of certain matters presented for a vote of shareholders.
As of April 7, 1995, Huntington Trust Company, N.A., Columbus, Ohio, acting
in various capacities for numerous accounts, was the owner of record of
approximately 219,000,000 shares (82.71%) of the Trust Shares of the Money
Market Fund; 50,994,516 shares (99.93%) of the Trust Shares of the Ohio
Municipal Money Market Fund; 309,482,741 shares (99.87%) of the Trust Shares
of the U.S. Treasury Money Market Fund; 4,109,091 shares (99.98%) of the Trust
Shares of the Growth Fund; 5,184,665 shares (99.03%) of the Trust Shares of
the Income Equity Fund; 7,059,194 shares (91.27%) of the Trust Shares of the
Mortgage Securities Fund; 2,669,747 shares (95.37%) of the Trust Shares of the
Ohio Tax-Free Fund; 6,255,795 shares (99.49%) of the Trust Shares of the Fixed
Income Securities Fund; 6,609,293 shares (99.34%) of the Trust Shares of the
Short/Intermediate Fixed Income Securities Fund, and therefore, may, for
certain purposes, be deemed to control the respective Funds and be able to
affect the outcome of certain matters presented for a vote of shareholders.
As a Massachusetts business trust, the Trust is not required to hold annual
meetings of shareholders, but may hold special meetings from time to time.
Trustees may be removed by the Trustees or by shareholders at a meeting
called for that purpose. For information about how shareholders may call such
a meeting and communicate with other shareholders for that purpose, see the
Statement of Additional Information.
To the extent that matters arise requiring a shareholder vote in which
Huntington may have a conflict of interest, Huntington will engage in a voting
practice known as reflexive voting, whereby the votes of those shares over
which it exercises discretion will be voted in proportion to the votes cast by
the other record owners.
As used in this Prospectus and in the Statement of Additional Information, a
"vote of a majority of the outstanding shares" of the Trust or a particular
Fund or a particular class of shares of the Trust or a Fund means the
affirmative vote of the lesser of (a) more than 50% of the outstanding shares
of the Trust or such Fund or such class, or (b) 67% or more of the shares of
the Trust or such Fund or such class present at a meeting at which the holders
of more than 50% of the outstanding shares of the Trust or such Fund or such
class are represented in person or by proxy.
PERFORMANCE DATA AND COMPARISONS
Yield and total return data for both classes of shares may, from time to
time, be included in advertisements about the Funds.
Each of the Money Market Funds may show its yield and effective yield for
both classes of shares. A Money Market Fund's yield represents an
annualization of the change in value of a shareholder account excluding any
capital changes in the Fund for a specific seven-day period. Effective yield
compounds the Fund's yield for a year and is, for that reason, greater than
the Fund's yield.
Yield for both classes of shares of each of the other Funds is calculated by
dividing the Fund's annualized net investment income per share during a recent
30-day period by the maximum public offering price per share on the last day
of that period. With respect to the Ohio Funds, the tax-equivalent yield of
each class of shares shows the effect on performance of the tax-exempt status
of distributions received from a Fund. Tax-equivalent yield reflects the
approximate yield that a taxable investment must earn for shareholders at
stated income levels to produce an after-tax yield equivalent to a Fund's tax-
exempt yield. Total return for the one-year period and for the life of a Fund
through the most recent calendar quarter represents the average annual
compounded rate of return on a $1,000 investment in each class of the Fund.
Total return may also be presented for other periods.
Yield, effective yield, tax-equivalent yield, and total return will be
calculated separately for Investment Shares and Trust Shares. Because
Investment Shares are subject to 12b-1 fees, the yield, effective yield, tax-
equivalent yield, and total return for Investment Shares will be lower than
that of Trust Shares for the same period. In addition, the sales load
applicable to Investment Shares of the Growth Fund, Mortgage Securities Fund,
Ohio Tax-Free Fund and Fixed Income Securities Fund also contributes to a
lower total return for such Funds' Investment Shares. The total return figures
quoted in advertisements will normally reflect the effect of the maximum sales
load. However, from time to time, these advertisements may include total
returns which do not reflect the effect of an applicable sales load.
All data is based on a Fund's past investment results and is not intended to
indicate future performance. Investment performance for both classes is based
on many factors, including market conditions, the composition of a Fund's
portfolio, and the operating expenses of a Fund or a particular class.
Investment performance also often reflects the risks associated with the
Fund's investment objective and policies. These factors should be considered
when comparing a Fund's investment results to those of other mutual funds and
other investment vehicles.
From time to time, advertisements for a Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare a
Fund's performance to certain indices.
SHAREHOLDER INQUIRIES
Shareholder inquiries regarding the Funds should be directed to The
Huntington Investment Company, Huntington Center, 41 South High Street,
Columbus, Ohio 43287.
OTHER CLASSES OF SHARES
Certain of the Funds also offer another class of shares called Trust Shares.
Trust Shares are sold through procedures established by the Distributor in
connection with the requirements of fiduciary, advisory, agency, and other
similar accounts maintained by or on behalf of customers of The Huntington
Trust Company, N.A. or its affiliates or correspondent banks. Trust Shares are
sold at net asset value and are subject to a minimum initial investment of
$1,000.
Investment Shares and Trust Shares of any Fund are subject to certain of the
same expenses; however, Investment Shares are distributed under a Rule 12b-1
Plan pursuant to which the Distributor is paid a fee based upon a percentage
of the average daily net assets attributable to a Fund's Investment Shares.
Expense differences between a Fund's Investment Shares and Trust Shares may
affect the performance of each class.
Investors may obtain information about Trust Shares by contacting the Funds'
Distributor.
PENDING LEGAL PROCEEDINGS RELATING TO PIPER
Complaints have been filed in U.S. District Court against Piper, relating to
several other investment companies for which Piper acts as investment adviser
or subadviser. These lawsuits do not involve the Mortgage Securities Fund and
Piper does not believe that the lawsuits will have a material adverse effect
upon their ability to perform under their agreement with The Huntington Trust
Company, N.A. An agreement in principle has been reached to settle one such
lawsuit. Piper intends to defend the other lawsuits vigorously. See "Pending
Litigation Relating to Piper" in the Statement of Additional Information.
APPENDIX I
Rule 2a-7, as amended, defines the terms NRSRO, Eligible Securities, Unrated
Securities, First Tier Securities and Second Tier Securities in establishing
risk limiting conditions for money market mutual funds.
A summary of those definitions follows.
NRSRO is any nationally recognized statistical rating organization as that
term is used in the Securities Exchange Act of 1934, that is not an affiliated
person of the issuer, guarantor or provider of credit support for the
instrument. (While the Appendix to the Statement of Additional Information
identifies each NRSRO, examples include Standard & Poor's Corporation
("Standard & Poor's"), Moody's Investors Service, Inc. ("Moody's") and Fitch
Investors Service, Inc.)
ELIGIBLE SECURITIES are defined as those with a remaining maturity of 397 or
less days and which (i) have a short-term rating in one of the two highest
rating categories by an NRSRO (e.g. A-1/P-1 or A-2/P-2 by Standard & Poor's
and Moody's, respectively), (ii) securities that are comparable in priority
and security to other short-term debt of the issuer having a short-term rating
in one of the two highest rating categories or (iii) Unrated Securities that
are of comparable quality. A long-term security without a short-term rating
but with a long-term rating below the two highest rating categories (i.e., a
rating of A or below) is not an Eligible Security.
UNRATED SECURITIES include (i) securities that do not have a current short-
term rating and that are not comparable in priority or security to another
class of the issuer's securities having a short-term rating and (ii)
securities that do have a rating, but are subject to an external credit
support agreement that was not in effect when the rating was assigned.
FIRST TIER SECURITY means any Eligible Security which has, or is comparable
to short-term debt of the issuer having, the highest short-term rating by any
two NRSROs that have issued a rating with respect to a security or class of
debt obligations of an issuer. If only one NRSRO has issued a rating with
respect to such security, it must be the highest short-term rating given by
such NRSRO.
SECOND TIER SECURITY means any Eligible Security that is not a First Tier
Security.
<PAGE>
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INVESTMENT ADVISER
- -------------------------------------
The Huntington Trust Company, N.A.
Huntington Center
Columbus, OH 43287
1-800-253-0412
ADMINISTRATOR
- -------------------------------------
Federated Administrative Services
Federated Investors Tower
Pittsburgh, PA 15222-3779
DISTRIBUTOR
- -------------------------------------
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, PA 15222-3779
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 may not be relied upon as having been authorized by a Fund or
the Distributor. This Prospectus does not constitute an offering by a Fund or
by the Distributor in any jurisdiction in which such offering may not lawfully
be made.
609409875 609409784
609409867 609409834
609409768 609409826
609409842 1032204A-R (4/95)
[LOGO] RECYCLED PAPER
[LOGO]
THE MONITOR FUNDS
Investment Shares
MONEY MARKET FUNDS
- -----------------------------
The Monitor Money Market Fund
The Monitor Ohio Municipal Money Market Fund
The Monitor U.S. Treasury Money Market Fund
EQUITY FUNDS
- -----------------------------
The Monitor Growth Fund
INCOME FUNDS
- -----------------------------
The Monitor Mortgage Securities Fund
The Monitor Ohio Tax-Free Fund
The Monitor Fixed Income Securities Fund
April 30, 1995
[LOGO]
The Monitor Funds
Investment Shares
Trust Shares
The Monitor Money Market Fund
The Monitor Ohio Municipal Money Market Fund
The Monitor U.S. Treasury Money Market Fund
The Monitor Growth Fund
The Monitor Income Equity Fund*
The Monitor Mortgage Securities Fund
The Monitor Ohio Tax-Free Fund
The Monitor Fixed Income Securities Fund
The Monitor Short/Intermediate Fixed Income Securities Fund*
*Trust Shares Only
Form N-1A
Part B
Combined Statement of Additional Information
This Statement of Additional Information contains information
which may be of interest to investors in The Monitor Funds (the
"Trust") but which is not included in the
applicable Prospectuses for Trust Shares or Investment Shares.
This Statement is not a prospectus and is only authorized for
distribution when accompanied or preceded by the respective
Prospectus for Trust Shares or Investment Shares of the Trust
dated April 30, 1995. This Statement should be read
together with the applicable Prospectus. Investors may obtain a
free copy of a Prospectus by calling the Mutual Fund Services
Center: (in Ohio) 614/463-5580 or (outside the 614 Area Code)
800/253-0412.
April 30, 1995
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of
Federated Investors
Definitions 1
Investment Objectives and
Policies of the Trust 1
Foreign Securities 1
Shares of Other Mutual Funds 1
Securities Loans 1
When-Issued and Delayed
Delivery Transactions 2
Ohio Tax-Exempt Securities 2
Mortgage-Related Securities 3
Options on Securities 4
Risk Factors in Options
Transactions 5
Futures Contracts 6
Special Risks of Transactions
in Futures Contracts and
Related Options9
Foreign Currency Transactions 10
Zero-Coupon Securities 12
Investment Restrictions 13
Portfolio Turnover 14
Management of the Trust 15
Trustees and Officers 15
Fund Ownership 16
Trustees Compensation 17
Investment Adviser 18
Glass-Steagall Act 19
Portfolio Transactions 19
Brokerage and Research Services 20
Administrator 20
The Distribution Plans 21
Determination of Net Asset Value 22
Additional Purchase
Information-Payment in Kind 23
Taxes 24
Federal Income Taxation 24
Dividends and Distributions 26
Performance Information 27
Money Market Funds 27
Other Funds 27
Tax-Equivalent Yield 29
Tax-Equivalency Table 29
Custodian 30
Transfer Agent and Dividend
Disbursing Agent 30
Independent Public Accountants 30
Additional Information About the
Trust and Its Shares31
Shareholder Inquiries 31
Pending Litigation Relating to
Piper 31
Financial Statements 31
Appendix 32
Definitions
The "Trust" - The Monitor Funds.
"Huntington" - The Huntington Trust
Company,
N.A., the Trust's
investment adviser.
"Federated" - Federated Administrative
Services, the Trust's
administrator.
"Federated Securities Corp." - Federated
Securities Corp., the
Trust's distributor.
The Trust consists of nine separate investment portfolios (the
"Funds") with separate investment objectives and
policies. Seven of the Funds are offered in two classes, Investment
Shares and Trust Shares, and two of the Funds offer only Trust Shares.
The investment objectives and policies of each of the Funds of the Trust
are described in the applicable Prospectuses for Trust Shares or
Investment Shares. (The Prospectus for Trust Shares and the Prospectus
for Investment Shares may be hereinafter referred to collectively as the
"Prospectus.") This Statement relates to both Trust
Shares and Investment Shares. A Fund's Trust Shares and Investment
Shares may be hereinafter referred to collectively as
"shares". Capitalized terms used but not defined herein
have the meanings as set forth in the Prospectus.
Investment Objectives and Policies of the Trust
Except as described below under "Investment Restrictions"
or as otherwise indicated, the investment policies described in the
Prospectus and in this Statement are not fundamental.
The investment practices and techniques described below may be used by
certain of the Funds. See the Prospectus to determine whether a
particular Fund may engage in any such practice or technique.
Foreign Securities
Except as otherwise limited by a Fund's investment objective and
policies as described in the Prospectus, a Fund may invest in securities
principally traded in markets outside the United States. Foreign
investments can be affected favorably or unfavorably by changes in
currency rates and in exchange control regulations. There may be less
publicly available information about a foreign company than about a U.S.
company, and foreign companies may not be subject to accounting,
auditing and financial reporting standards and requirements comparable
to those applicable to U.S. companies. Securities of some foreign
companies are less liquid or more volatile than securities of U.S.
companies, and foreign brokerage commissions and custodian fees are
generally higher than in the United States. Investments in foreign
securities can involve other risks different from those affecting U.S.
investments, including local political or economic developments,
expropriation or nationalization of assets and imposition of withholding
taxes on dividend or interest payments. Foreign securities, like other
assets of a Fund, will be held by the Trust's custodian or by a
subcustodian. For information regarding transactions relating to foreign
currency exchange rates, see "Foreign Currency
Transactions" below.
Shares of Other Mutual Funds
Each of the Growth Fund, the Fixed Income Securities Fund, the Mortgage
Securities Fund, and the Short/ Intermediate Fixed Income Securities
Fund may invest up to 5% of its total assets in the shares of money
market mutual funds (other than the Trust's Money Market Funds) for
liquidity purposes. The Ohio Municipal Money Market Fund may also invest
up to 5% of its total assets in the shares of one or more tax-exempt
money market mutual funds for liquidity purposes. When a Fund invests in
the shares of other mutual funds, investment advisory and other fees
will apply, and the investment's yield will be reduced accordingly.
Under the Investment Company Act of 1940, a Fund may not invest more
than 5% of its total assets in the shares of any one mutual fund, nor
may a Fund own more than 3% of the shares of any one fund; in addition,
although each Fund intends to limit its investments in mutual funds to
no more than 5% of total assets, under the Investment Company Act of
1940, no more than 10% of a Fund's total assets may be invested at any
one time in the shares of other funds.
Securities Loans
In order to generate additional income, a Fund may make secured loans of
its portfolio securities amounting to not more than 20% of its total
assets. The risks in lending portfolio securities, as with other
extensions of credit, consist of possible delay in recovery of the
securities or possible loss of rights in the collateral should the
borrower fail financially. Securities loans may be made to brokers,
dealers or financial institutions pursuant to agreements requiring that
loans be continuously secured by collateral in cash or U.S. Government
obligations at least equal at all times to 102% of the value of the
securities on loan. The borrower pays to the Fund an amount equal to any
dividends or interest received on securities loaned. The Fund retains
all or a portion of the interest received on investment of the
collateral or receives a fee from the borrower. Although voting rights,
or rights to consent, with respect to the loaned securities pass to the
borrower, a Fund retains the right to call the loans at any time on
reasonable notice, and it will do so to enable a Fund to exercise voting
rights on any matters materially affecting the investment. A Fund may
also call such loans in order to sell the securities.
When-Issued and Delayed Delivery Transactions
These transactions are made to secure what is considered to
be an advantageous price or yield for a Fund. No fees or other expenses,
other than normal transaction costs, are incurred. However, liquid
assets of a Fund sufficient to make payment for the securities to be
purchased are segregated on the Fund's records at the trade date.
These assets are marked to market daily and are maintained until
the transaction has been settled. With the
exception of the Mortgage Securities Fund, which may invest a percentage
of its total assets in securities purchased on a when-issued or delayed
delivery basis which is disclosed in the Prospectus, a Fund
does not intend to engage in when-issued
and delayed delivery transactions to an extent
that would cause the segregation of more than 20% of the
total value of its assets.
Ohio Tax-Exempt Securities
As used in the Prospectus and this Statement, the term
"Ohio tax-exempt securities" refers to
debt obligations which (i) are issued by or on behalf of the State of
Ohio or its respective authorities, agencies, instrumentalities, and
political subdivisions, and (ii) produce interest which, in the opinion
of bond counsel at the time of issuance, is exempt from federal income
tax and Ohio personal income taxes. Ohio tax-exempt securities are
issued to obtain funds for various public purposes, including the
construction of a wide range of public facilities such as bridges,
highways, roads, schools, water and sewer works, and other utilities.
Other public purposes for which Ohio tax-exempt securities may be issued
include refunding outstanding obligations, obtaining funds for general
operating expenses and obtaining funds to lend to other public
institutions and facilities.
In addition, the Ohio Municipal Money Market Fund and the Ohio Tax-Free
Fund (the "Ohio Funds") may invest in certain debt
obligations known as "private activity bonds"
(or "industrial development bonds" under prior
federal law) so long as, in the case of the Ohio Tax-Free Fund, the
interest therefrom is not treated as a preference item for purposes of
the federal alternative minimum tax. Private activity bonds and
industrial development bonds may be issued by or on behalf of public
authorities to obtain funds to provide certain privately owned or
operated facilities. The Ohio Funds may not be a desirable investment
for "substantial users" of facilities financed by private
activity bonds or industrial development bonds or for
"related persons" of substantial users, for whom
dividends attributable to interest on such bonds may not be tax exempt.
Shareholders should consult their own tax adviser regarding the
potential effect on them (if any) of any investment in the Ohio Funds.
The two principal classifications of Ohio tax-exempt securities are
general obligation securities and limited obligation (or revenue)
securities. General obligation securities are obligations involving the
credit of an issuer possessing taxing power and are payable from the
issuer's general unrestricted revenues and not from any particular fund
or source. The characteristics and method of enforcement of general
obligation securities vary according to the law applicable to the
particular issuer. Limited obligation securities are payable only from
the revenues derived from a particular facility or class of facilities
or, in some cases, from the proceeds of a special excise or other
specific revenue source. Private activity bonds and industrial
development bonds generally are revenue securities and thus not payable
from the unrestricted revenues of the issuer. The credit and quality of
such bonds is usually directly related to the credit of the private user
of the facilities. Payment of principal of and interest on industrial
development revenue bonds is the responsibility of the private user (and
any guarantor). The Ohio Funds may also invest in numerous types of
short-term tax-exempt instruments, which may be used to fund short-term
cash requirements such as interim financing in anticipation of tax
collections, revenue receipts or bond sales to finance various public
purposes.
Prices and yields on Ohio tax-exempt securities are dependent on a
variety of factors, including general money market conditions, the
financial condition of the issuer, general conditions in the market for
tax-exempt obligations, the size of a particular offering, the maturity
of the obligation and ratings of particular issues, and are subject to
change from time to time. Information about the financial condition of
an issuer of tax-exempt bonds or notes may not be as extensive as that
which is made available by corporations whose securities are publicly
traded.
The ratings of Moody's Investors Service, Inc. ("Moody's") and
Standard & Poor's Ratings Group ("S&P") represent their opinions
and are not absolute standards of quality. Ohio tax-exempt securities
with the same maturity, interest rate and rating may have different
yields while tax-exempt obligations of the same maturity and interest
rate with different ratings may have the same yield.
Obligations of issuers of Ohio tax-exempt securities and notes are
subject to the provisions of bankruptcy, insolvency and other laws, such
as the Federal Bankruptcy Reform Act of 1978, affecting the rights and
remedies of creditors.
Congress or state legislatures may seek to extend the time for payment
of principal or interest, or both, or to impose other constraints upon
enforcement of such obligations. There is also the possibility that, as
a result of litigation or other conditions, the power or ability of
issuers to meet their obligations to pay interest on and principal of
their tax-exempt bonds or notes may be materially impaired or their
obligations may be found to be invalid or unenforceable. Such litigation
or conditions may from time to time have the effect of introducing
uncertainties in the market for tax-exempt obligations or certain
segments thereof, or may materially affect the credit risk with respect
to particular bonds or notes. Adverse economic, business, legal or
political developments might affect all or a substantial portion of the
Ohio Funds' Ohio tax-exempt securities in the same manner.
The Internal Revenue Code of 1986, as amended (the
"Code"), imposes certain continuing requirements on
issuers of tax-exempt bonds regarding the use, expenditure and
investment of bond proceeds and the payment of rebates to the United
States of America. Failure by the issuer to comply subsequent to the
issuance of tax-exempt bonds with certain of these requirements could
cause interest on the bonds to become includable in gross income
retroactive to the date of issuance.
The Ohio Funds may invest in Ohio tax-exempt securities either by
purchasing them directly or by purchasing certificates of accrual or
similar instruments evidencing direct ownership of interest payments or
principal payments, or both, on Ohio tax-exempt securities, provided
that, in the opinion of counsel to the initial seller of each such
certificate or instrument, any discount accruing on such certificate or
instrument that is purchased at a yield not greater than the coupon rate
of interest on the related Ohio tax-exempt securities will to the same
extent as interest on such Ohio tax-exempt securities be exempt from
federal regular income tax and Ohio personal income taxes and as to the
Ohio Tax-Free Fund not treated as a preference item for purposes of the
federal alternative minimum tax. The Ohio Funds may also invest in Ohio
tax-exempt securities by purchasing from banks participation interests
in all or part of specific holdings of Ohio tax-exempt securities. Such
participations may be backed in whole or in part by an irrevocable
letter of credit or guarantee of the selling bank. The selling bank may
receive a fee from the Ohio Funds in connection with the arrangement.
The Ohio Funds will not purchase participation interests unless it
receives an opinion of counsel or a ruling of the Internal Revenue
Service that interest earned by it on Ohio tax-exempt
securities in which it holds such participation interest is exempt from
federal regular income tax and Ohio personal income taxes and as to the
Ohio Tax-Free Fund not treated as a preference item for purposes of the
federal alternative minimum tax.
Risk considerations
Since the Ohio Funds invest primarily in Ohio tax-exempt
securities, the value of the Funds' shares may be especially
affected by factors pertaining to the economy of Ohio and other
factors specifically affecting the ability of issuers of Ohio tax-
exempt securities to meet their obligations. As a result, the
value of the Funds' shares may fluctuate more widely than the
value of shares of a fund investing in securities relating to a
number of different states. The ability of Ohio state, county, or
local governments to meet their obligations will depend primarily
on the availability of tax and other revenues to those governments
and on their fiscal conditions generally. The amounts of tax and
other revenues available to issuers of Ohio tax-exempt securities
may be affected from time to time by economic, political and
demographic conditions within the State. In addition,
constitutional or statutory restrictions may limit a government's
power to raise revenues or increase taxes. The availability of
federal, state, and local aid to issuers of Ohio tax-exempt
securities may also affect their ability to meet their
obligations. Payments of principal and interest on limited
obligation securities will depend on the economic condition of the
facility or specific revenue source from whose revenues the
payments will be made, which in turn could be affected by
economic, political, and demographic conditions in the State. Any
reduction in the actual or perceived ability to meet obligations
on the part of either an issuer of an Ohio tax-exempt security or
a provider of credit enhancement for such security (including a
reduction in the rating of its outstanding securities) would
likely affect adversely the market value and marketability of that
Ohio tax-exempt security and could affect adversely
the values of other Ohio tax-exempt securities as
well.
Mortgage-Related Securities
A Fund may invest in mortgage-related securities issued
by the Government National Mortgage Association ("GNMA")
representing GNMA Mortgage Pass-Through Certificates (also known as
"Ginnie Maes"), in other mortgage-related securities
issued or guaranteed by the U.S. Government, its agencies, or its
instrumentalities or those issued by nongovernmental entities, and in
collateralized mortgage obligations.
Mortgage-related securities represent pools of mortgage loans assembled
for sale to investors by various governmental agencies such as the GNMA
or by government-related organizations such as the Federal National
Mortgage Association and the Federal Home Loan Mortgage Corporation.
Mortgage-related securities may also be assembled and
sold by nongovernment entities such as commercial banks, savings and
loan institutions, mortgage bankers, and private mortgage insurance
companies. Although certain mortgage-related securities are guaranteed
by a third party or otherwise similarly secured, the market value of the
security, which may fluctuate, is not so secured. If a Fund purchases a
mortgage-related security at a premium, that portion may be lost if
there is a decline in the market value of the security whether resulting
from changes in interest rates or prepayments in the underlying mortgage
collateral. As with other interest-bearing securities, the prices of
mortgage-related securities are inversely affected by changes in
interest rates. However, though the value of a mortgage-related security
may decline when interest rates rise, the converse is not necessarily
true, since in periods of declining interest rates the mortgages
underlying the security are prone to prepayment. For this and other
reasons, a mortgage-related security's effective maturity may be
shortened by unscheduled prepayments on the underlying mortgages and,
therefore, it is not possible to predict accurately the security's
return to the Fund. In addition, regular payments received in respect of
mortgage-related securities include both interest and principal. No
assurance can be given as to the return a Fund will receive when these
amounts are reinvested.
There are a number of important differences both among the agencies and
instrumentalities of the U.S. Government that issue mortgage-related
securities and among the securities themselves. As noted above, Ginnie
Maes are issued by GNMA, which is a wholly-owned U.S. Government
corporation within the Department of Housing and Urban Development.
Ginnie Maes are guaranteed as to the timely payment of principal and
interest by GNMA and GNMA's guarantee is backed by the full faith and
credit of the U.S. Treasury. In addition, Ginnie Maes are supported by
the authority of GNMA to borrow funds from the U.S. Treasury to make
payments under GNMA's guarantee. Mortgage-related securities issued by
the Federal National Mortgage Association ("FNMA")
include FNMA Guaranteed Mortgage Pass-Through Certificates (also known
as "Fannie Maes") which are solely the obligations of the
FNMA. The FNMA is a government-sponsored organization owned entirely by
private stockholders. Fannie Maes are guaranteed as to timely payment of
principal and interest by FNMA but are not backed by or entitled to the
full faith and credit of the U.S. Treasury. Mortgage-related securities
issued by the Federal Home Loan Mortgage Corporation
("FHLMC") include FHLMC Mortgage Participation
Certificates (also known as "Freddie Macs" or "PCs"). The
FHLMC is a corporate instrumentality of the U.S. Government, created
pursuant to an Act of Congress, which is owned entirely by Federal Home
Loan Banks. Freddie Macs are not guaranteed by the U.S. Treasury or by
any Federal Home Loan Banks and do not constitute a debt or obligation
of the U.S. Government or of any Federal Home Loan Bank. Freddie Macs
entitle the holder to timely payment of interest, which is guaranteed by
the FHLMC. The FHLMC guarantees either ultimate collection or timely
payment of all principal payments on the underlying mortgage loans. When
the FHLMC does not guarantee timely payment of principal, FHLMC may
remit the amount due on account of its guarantee of ultimate payment of
principal at any time after default on an underlying mortgage, but in no
event later than one year after it becomes payable.
Options on Securities
Writing covered options
A Fund may write covered call options and covered put options on
optionable securities held in its portfolio, when in the opinion
of Huntington such transactions are consistent with the Fund's
investment objectives and policies. Call options written by a Fund
give the purchaser the right to buy the underlying securities from
the Fund at a stated exercise price; put options give the
purchaser the right to sell the underlying securities to the Fund
at a stated price.
A Fund may write only covered options, which means that, so long
as the Fund is obligated as the writer of a call option, it will
own the underlying securities subject to the option (or comparable
securities satisfying the cover requirements of securities
exchanges). In the case of put options, a Fund will hold cash
and/or high-grade short-term debt obligations equal to the price
to be paid if the option is exercised. In addition, a Fund will be
considered to have covered a put or call option if and to the
extent that it holds an option that offsets some or all of the
risk of the option it has written. A Fund may write combinations
of covered puts and calls on the same underlying security.
A Fund will receive a premium from writing a put or call option,
which increases the Fund's return on the underlying security in
the event that option expires unexercised or is closed out at a
profit. The amount of the premium reflects, among other things,
the relationship between the exercise price and the current market
value of the underlying security, the volatility of the underlying
security, the amount of time remaining until expiration, current
interest rates, and the effect of supply and demand in the options
market and in the market for the underlying security. By writing a
call option, a Fund limits its opportunity to profit from any
increase in the market value of the underlying security above the
exercise price of the option but continues to bear the risk of a
decline in the value of the underlying security. By writing a put
option, a Fund assumes the risk that it may be required to
purchase the underlying security for an exercise price higher than
its then-current market value, resulting in a
potential capital loss unless the security substantially
appreciates in value.
A Fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction, in
which it purchases an offsetting option. A Fund realizes a profit
or loss from a closing transaction if the cost of the transaction
(option premium plus transaction costs) is less or more than the
premium received from writing the option. Because increases in the
market price of a call option generally reflect increases in the
market price of the security underlying the option, any loss
resulting from a closing purchase transaction may be offset in
whole or in part by unrealized appreciation of the underlying
security owned by a Fund.
Purchasing put options
A Fund may purchase put options to protect its portfolio holdings
in an underlying security against a decline in market value. Such
protection is provided during the life of the put option since the
Fund, as holder of the option, is able to sell the underlying
security at the option's exercise price regardless of any decline
in the underlying security's market price. In order for a put
option to be profitable, the market price of the underlying
security must decline sufficiently below the exercise price to
cover the premium and transaction costs. By using put options in
this manner a Fund will reduce any profit it might otherwise have
realized from appreciation of the underlying security by the
premium paid for the put option and by transaction costs.
Purchasing call options
A Fund may purchase call options to hedge against an increase in
the price of securities that the Fund wants ultimately to buy.
Such hedge protection is provided during the life of the call
option since the Fund, as holder of the call option, is able to
buy the underlying security at the exercise price regardless of
any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the
underlying security must rise sufficiently above the exercise
price to cover the premium and transaction costs.
Risk Factors in Options Transactions
The successful use of a Fund's options strategies depends on the ability
of Huntington to forecast interest rate and market movements. For
example, if a Fund were to write a call option based on Huntington's
expectation that the price of the underlying security would fall, but
the price were to rise instead, the Fund could be required to sell the
security upon exercise at a price below the current market price.
Similarly, if a Fund were to write a put option based on Huntington's
expectations that the price of the underlying security would rise, but
the price were to fall instead, the Fund could be required to purchase
the security upon exercise at a price higher than the current market
price.
When it purchases an option, a Fund runs the risk that it will lose its
entire investment in the option in a relatively short period of time,
unless the Fund exercises the option or enters into a closing sale
transaction with respect to the option during the life of the option. If
the price of the underlying security does not rise (in the case of a
call) or fall (in the case of a put) to an extent sufficient to cover
the option premium and transaction costs, a Fund will lose part or all
of its investment in the option. This contrasts with an investment by a
Fund in the underlying security, since the Fund will not lose any of its
investment in such security if the price does not change.
The effective use of options also depends on the Fund's ability to
terminate option positions at times when Huntington deems it desirable
to do so. Although a Fund will take an option position
only if Huntington believes there is a liquid secondary market for the
option, there is no assurance that the Fund will be able to effect
closing transactions at any particular time or at an acceptable price.
If a secondary trading market in options were to become unavailable, a
Fund could no longer engage in closing transactions. Lack of investor
interest might adversely affect the liquidity of the market for
particular options or series of options. A market may discontinue
trading of a particular option or options generally. In addition, a
market could become temporarily unavailable if unusual
events-such as volume in excess of trading or clearing
capability-were to interrupt its normal operations.
A market may at times find it necessary to impose restrictions on
particular types of options transactions, such as opening transactions.
For example, if an underlying security ceases to meet qualifications
imposed by the market or the Options Clearing Corporation, new series of
options on that security will no longer be opened to replace expiring
series, and opening transactions in existing series may be prohibited.
If an options market were to become unavailable, a Fund as a holder of
an option would be able to realize profits or limit losses only by
exercising the option, and the Fund, as option writer, would remain
obligated under the option until expiration.
Disruptions in the markets for the securities underlying options
purchased or sold by a Fund could result in losses on the options. If
trading is interrupted in an underlying security, the trading of options
on that security is normally halted as well. As a result, a Fund as
purchaser or writer of an option will be unable to close out its
positions until options trading resumes, and it may be faced with
considerable losses if trading in the security reopens at a
substantially different price. In addition, the Options Clearing
Corporation or other options markets may impose exercise restrictions.
If a prohibition on exercise is imposed at the time when trading in the
option has also been halted, a Fund as a purchaser or writer of an
option will be locked into its position until one of the two
restrictions has been lifted. If the Options Clearing Corporation were
to determine that the available supply of an underlying security appears
insufficient to permit delivery by the writers of all outstanding calls
in the event of exercise, it may prohibit indefinitely the exercise of
put options by holders who would be unable to deliver the underlying
interest. A Fund, as holder of such a put option, could lose its entire
investment if the prohibition remained in effect until the put option's
expiration and the Fund was unable either to acquire the underlying
security or to sell the put option in the market.
Special risks are presented by internationally-traded options. Because
of time differences between the United States and various foreign
countries, and because different holidays are observed in different
countries, foreign options markets may be open for trading during hours
or on days when U.S. markets are closed. As a result, option premium may
not reflect the current prices of the underlying interest in the United
States.
Risks involved in the sale of options
Options transactions involve certain risks, including the risks
that Huntington will not forecast interest rate or market
movements correctly, that a Fund may be unable at times to close
out such positions, or that hedging transactions may not
accomplish their purpose because of imperfect market correlations.
The successful use of these strategies depends on the ability of
Huntington to forecast market and interest rate movements
correctly.
An exchange-listed option may be closed out only on an exchange
which provides a secondary market for an option of the same
series. There is no assurance that a liquid secondary market on an
exchange will exist for any particular option or at any particular
time. If no secondary market were to exist, it would be impossible
to enter into a closing transaction to close out an option
position. As a result, a Fund may be forced to continue to hold,
or to purchase at a fixed price, a security on which it has sold
an option at a time when Huntington believes it is inadvisable to
do so.
Higher than anticipated trading activity or order flow or other
unforeseen events might cause the Options Clearing Corporation or
an exchange to institute special trading procedures or
restrictions that might restrict a Fund's use of options. The
exchanges have established limitations on the maximum number of
calls and puts of each class that may be held or written by an
investor or group of investors acting in concert. It is possible
that the Trust and other clients of Huntington may be considered
such a group. These position limits may restrict the Trust's
ability to purchase or sell options on particular securities.
Options which are not traded on national securities exchanges may
be closed out only with the other party to the option transaction.
For that reason, it may be more difficult to close out unlisted
options than listed options. Furthermore, unlisted options are not
subject to the protection afforded purchasers of listed options by
the Options Clearing Corporation.
Futures Contracts
Futures on debt securities and related options
A futures contract on a debt security is a binding contractual
commitment which, if held to maturity, will result in an
obligation to make or accept delivery, during a particular month,
of securities having a standardized face value and rate of return.
By purchasing futures on debt securities-assuming a
"long" position-a Fund will legally obligate itself to accept
the future delivery of the underlying security and pay the agreed
price. By selling futures on debt securities-assuming a
"short" position-it will legally obligate itself to make the
future delivery of the security against payment of the agreed
price. Open futures positions on debt securities will be valued at
the most recent settlement price, unless that price does not in
the judgment of the Trustees reflect the fair value of the
contract, in which case the positions will be valued by or under
the direction of the Trustees. Positions taken in the futures
markets are not normally held to maturity, but are instead
liquidated through offsetting transactions which may result in a
profit or a loss. While futures positions taken by a Fund will
usually be liquidated in this manner, a Fund may instead make or
take delivery of the underlying securities whenever it appears
economically advantageous to the Fund to do so. A clearing
corporation associated with the exchange on which futures are
traded assumes responsibility for such closing transactions and
guarantees that the Fund's sale and purchase obligations under
closed-out positions will be performed at the termination of the
contract.
Hedging by use of futures on debt securities seeks to establish
more certainly than would otherwise be possible the effective rate
of return on portfolio securities. A Fund may, for example, take a
"short" position in the futures market by selling
contracts for the future delivery of debt securities held by the
Fund (or securities having characteristics similar to those held
by the Fund) in order to hedge against an anticipated rise in
interest rates that would adversely affect the value of the Fund's
portfolio securities. When hedging of this character is
successful, any depreciation in the value of portfolio securities
may be offset by appreciation in the value of the futures
position.
On other occasions, a Fund may take a "long"
position by purchasing futures on debt securities. This would be
done, for example, when Huntington expects to purchase for a Fund
particular securities when it has the necessary cash, but expects
the rate of return available in the securities markets at that
time to be less favorable than rates currently available in the
futures markets. If the anticipated rise in the price of the
securities should occur (with its concomitant reduction in yield),
the increased cost to the Fund of purchasing the securities may be
offset by the rise in the value of the futures position taken in
anticipation of the subsequent securities purchase.
Successful use by a Fund of futures contracts on debt securities
is subject to Huntington's ability to predict correctly movements
in the direction of interest rates and other factors affecting
markets for debt securities. For example, if a Fund has hedged
against the possibility of an increase in interest rates which
would adversely affect the market prices of debt securities held
by it and the prices of such securities increase instead, the Fund
will lose part or all of the benefit of the increased value of its
securities which it has hedged because it will have offsetting
losses in its futures positions. In addition, in such situations,
if the Fund has insufficient cash, it may have to sell securities
to meet daily margin maintenance requirements. A Fund may have to
sell securities at a time when it may be disadvantageous to do so.
A Fund may purchase and write put and call options on debt futures
contracts, as they become available. Such options are similar to
options on securities except that options on futures contracts
give the purchaser the right, in return for the premium paid, to
assume a position in a futures contract (a long position if the
option is a call and a short position if the option is a put) at a
specified exercise price at any time during the period of the
option. As with options on securities, the holder or writer of an
option may terminate its position by selling or purchasing an
option of the same series. There is no guarantee that such closing
transactions can be effected. A Fund will be required to deposit
initial margin and variation margin with respect to put and call
options on futures contracts written by it pursuant to brokers'
requirements, and, in addition, net option premiums received will
be included as initial margin deposits. See "Margin
Payments" below. Compared to the purchase or sale of futures
contracts, the purchase of call or put options on futures
contracts involves less potential risk to a Fund because the
maximum amount at risk is the premium paid for the options plus
transactions costs. However, there may be circumstances when the
purchases of call or put options on a futures contract would
result in a loss to a Fund when the purchase or sale of the
futures contracts would not, such as when there is no movement in
the prices of debt securities. The writing of a put or call option
on a futures contract involves risks similar to those risks
relating to the purchase or sale of futures contracts.
U.S. Treasury security futures contracts and options
If a Fund invests in tax-exempt securities issued by a
governmental entity, the Fund may purchase and sell futures
contracts and related options on U.S. Treasury securities when, in
the opinion of Huntington, price movements in Treasury security
futures and related options will correlate closely with price
movements in the tax-exempt securities which are the subject of
the hedge. U.S. Treasury security futures contracts require the
seller to deliver, or the purchaser to take delivery of, the type
of U.S. Treasury security called for in the contract at a
specified date and price. Options on U.S. Treasury securities
futures contracts give the purchaser the right in return for the
premium paid to assume a position in a U.S. Treasury security
futures contract at the specified option exercise price at anytime
during the period of the option. Successful use of U.S. Treasury
security futures contracts by a Fund is subject to Huntington's
ability to predict movements in the direction of interest rates
and other factors affecting markets for debt securities. For
example, if a Fund has sold U.S. Treasury security futures
contracts in order to hedge against the possibility of an increase
in interest rates which would adversely affect tax-exempt
securities held in its portfolio, and the prices of the Fund's tax-
exempt securities increase instead as a result of a decline in
interest rates, the Fund will lose part or all of the benefit of
the increased value of its securities which it has hedged because
it will have offsetting losses in its futures positions. In
addition, in such situations, if the Fund has insufficient cash,
it may have to sell securities to meet daily maintenance margin
requirements at a time when it may be disadvantageous to do so.
There is also a risk that price movements in U.S. Treasury
security futures contracts and related options will not correlate
closely with price movements in markets for tax-exempt securities.
For example, if a Fund has hedged against a decline in the values
of tax-exempt securities held by it by selling Treasury securities
futures and the values of Treasury securities subsequently
increase while the values of its tax-exempt
securities decrease, the Fund would incur losses on both the
Treasury security futures contracts written by it and the tax-
exempt securities held in its portfolio. Huntington will seek to
reduce this risk by monitoring movements in markets for U.S.
Treasury security futures and options and for tax-exempt
securities closely. A Fund will only purchase or sell Treasury
security futures or related options when, in the opinion of
Huntington, price movements in Treasury security futures and
related options will correlate closely with price movements in tax-
exempt securities in which the Fund invests.
Index futures contracts and options
A Fund may invest in debt index futures contracts and stock index
futures contracts, and in related options. A debt index futures
contract is a contract to buy or sell units of a specified debt
index at a specified future date at a price agreed upon when the
contract is made. A unit is the current value of the index. A
stock index futures contract is a contract to buy or sell units of
a stock index at a specified future date at a price agreed upon
when the contract is made. A unit is the current value of the
stock index.
The following example illustrates generally the manner in which
index futures contracts operate. The Standard & Poor's 100 Stock
Index is composed of 100 selected common stocks, most of which are
listed on the New York Stock Exchange. The S&P 100 Index assigns
relative weightings to the common stocks included in the Index,
and the Index fluctuates with changes in the market values of
those common stocks. In the case of the S&P 100 Index, contracts
are to buy or sell 100 units. Thus, if the value of the S&P 100
Index were $180, one contract would be worth $18,000 (100 units X
$180). The stock index futures contract specifies that no delivery
of the actual stocks making up the index will take place. Instead,
settlement in cash must occur upon the termination of the
contract, with the settlement being the difference between the
contract price and the actual level of the stock index at the
expiration of the contract. For example, if a Fund enters into a
futures contract to buy 100 units of the S&P 100 Index at a
specified future date at a contract price of $180 and the S&P 100
Index is at $184 on that future date, the Fund will gain $400 (100
units X gain of $4). If the Fund enters into a futures contract to
sell 100 units of the stock index at a specified future date at a
contract price of $180 and the S&P 100 Index is at $182 on that
future date, the Fund will lose $200 (100 units X loss of $2). A
Fund may purchase or sell futures contracts with respect to any
stock index. Positions in index futures may be closed out only on
an exchange or board of trade which provides a secondary market
for such futures.
A Fund will purchase and sell index futures in order to hedge its
investments. To hedge its investments successfully, however, a
Fund must invest in futures contracts with respect to indexes or
sub-indexes the movements of which will, in its
judgment, have a significant correlation with
movements in the prices of the Fund's securities.
Options on index futures contracts are similar to options on
securities except that options on index futures contracts give the
purchaser the right, in return for the premium paid, to assume a
position in an index futures contract (a long position if the
option is a call and a short position if the option is a put) at a
specified exercise price at any time during the period of the
option. Upon exercise of the option, the holder would assume the
underlying futures position and would receive a variation margin
payment of cash or securities approximating the increase in the
value of the holder's option position. If an option is exercised
on the last trading day prior to the expiration date of the
option, the settlement will be made entirely in cash based on the
difference between the exercise price of the option and the
closing level of the index on which the futures contract is based
on the expiration date. Purchasers of options who fail to exercise
their options prior to the exercise date suffer a loss of the
premium paid.
As an alternative to purchasing call and put options on index
futures contracts, a Fund may purchase call and put options on the
underlying indexes themselves to the extent that such options are
traded on national securities exchanges. Index options are similar
to options on individual securities in that the purchaser of an
index option acquires the right to buy, and the writer undertakes
the obligation to sell, an index at a stated exercise price during
the term of the option. Instead of giving the right to take or
make actual delivery of securities, the holder of an index option
has the right to receive a cash "exercise
settlement amount". This
amount is equal to the amount by which the fixed exercise price of
the option exceeds (in the case of a put) or is less than (in the
case of a call) the closing value of the underlying index on the
date of the exercise, multiplied by a fixed "index
multiplier".
Margin payments
When a Fund purchases or sells a futures contract, it is required
to deposit with its custodian an amount of cash, U.S. Treasury
bills, or other permissible collateral equal to a small percentage
of the amount of the futures contract. This amount is known as
"initial margin". The nature of initial margin is
different from that of margin in security transactions in that it
does not involve borrowing money to finance transactions. Rather,
initial margin is similar to a performance bond or good faith
deposit that is returned to the Fund upon termination of the
contract, assuming the Fund satisfies its contractual obligations.
Subsequent payments to and from the broker occur on a daily basis
in a process known as "marking to market". These
payments are called "variation margin" and are made
as the value of the underlying futures contract fluctuates. For
example, when a Fund sells a futures contract and the price of the
underlying debt security rises above the delivery price, the
Fund's position declines in value. The Fund then pays the broker a
variation margin payment equal to the difference between the
delivery price of the futures contract and the market price of the
securities underlying the futures contract. Conversely, if the
price of the underlying security falls below the delivery price of
the contract, the Fund's futures position increases in value. The
broker then must make a variation margin payment equal to the
difference between the delivery price of the futures contract and
the market price of the securities underlying the futures
contract.
When a Fund terminates a position in a futures contract, a final
determination of variation margin is made, additional cash is paid
by or to the Fund, and the Fund realizes a loss or a gain. Such
closing transactions involve additional commission costs.
Special Risks of Transactions in Futures Contracts and Related Options
Liquidity risks
Positions in futures contracts may be closed out only on an
exchange or board of trade which provides a secondary market for
such futures. Although the Trust intends to purchase or sell
futures only on exchanges or boards of trade where there appears
to be an active secondary market, there is no assurance that a
liquid secondary market on an exchange or board of trade will
exist for any particular contract or at any particular time. If
there is not a liquid secondary market at a particular time, it
may not be possible to close a futures position at such time and,
in the event of adverse price movements, a Fund would continue to
be required to make daily cash payments of variation margin.
However, in the event financial futures are used to hedge
portfolio securities, such securities will not generally be sold
until the financial futures can be terminated. In such
circumstances, an increase in the price of the portfolio
securities, if any, may partially or completely offset losses on
the financial futures.
In addition to the risks that apply to all options transactions,
there are several special risks relating to options on futures
contracts. The ability to establish and close out positions in
such options will be subject to the development and maintenance of
a liquid secondary market. It is not certain that such a market
will develop. Although a Fund generally will purchase only those
options for which there appears to be an active secondary market,
there is no assurance that a liquid secondary market on an
exchange will exist for any particular option or at any particular
time. In the event no such market exists for particular options,
it might not be possible to effect closing transactions in such
options, with the result that the Fund would have to exercise the
options in order to realize any profit.
Hedging risks
There are several risks in connection with the use by a Fund of
futures contracts and related options as a hedging device. One
risk arises because of the imperfect correlation between movements
in the prices of the futures contracts and options and movements
in the prices of securities which are the subject of the hedge.
Huntington will, however, attempt to reduce this risk by
purchasing and selling, to the extent possible, futures contracts
and related options on securities and indexes the movements of
which will, in its judgment, correlate closely with movements in
the prices of the portfolio securities sought to be hedged.
Successful use of futures contracts and options by a Fund for
hedging purposes is also subject to Huntington's ability to
predict correctly movements in the direction of the market. It is
possible that, where a Fund has purchased puts on futures
contracts to hedge its portfolio against a decline in the market,
the securities or index on which the puts are purchased may
increase in value and the value of securities held in the
portfolio may decline. If this occurred, the Fund would lose money
on the puts and also experience a decline in value in its
portfolio securities. In addition, the prices of futures, for a
number of reasons, may not correlate perfectly with movements in
the underlying securities or index due to certain market
distortions. First, all participants in the futures market are
subject to margin deposit requirements. Such requirements may
cause investors to close futures contracts through offsetting
transactions which could distort the normal relationship between
the underlying security or index and futures markets. Second, the
margin requirements in the futures markets are less onerous than
margin requirements in the securities markets in general, and as a
result the futures markets may attract more speculators than the
securities markets do. Increased participation by speculators in
the futures markets may also cause temporary price distortions.
Due to the possibility of price distortion, even a correct
forecast of general market trends by Huntington may still not
result in a successful hedging transaction over a very short time
period.
Other risks
Funds will incur brokerage fees in connection with their futures
and options transactions. In addition, while futures contracts and
options on futures will be purchased and sold to reduce certain
risks, those transactions themselves entail certain other risks.
Thus, while a Fund may benefit from the use of futures and related
options, unanticipated changes in interest rates or stock price
movements may result in a poorer overall performance for the Fund
than if it had not entered into any futures contracts or options
transactions. Moreover, in the event of an imperfect correlation
between the futures position and the portfolio position which is
intended to be protected, the desired protection may not be
obtained and the Fund may be exposed to risk of loss.
Foreign Currency Transactions
A Fund may engage in currency exchange transactions to protect against
uncertainty in the level of future foreign currency exchange rates and
to increase current return. A Fund may engage in both
"transaction hedging" and "position hedging".
When it engages in transaction hedging, a Fund enters into foreign
currency transactions with respect to specific receivables or payables
generally arising in connection with the purchase or sale of its
portfolio securities. A Fund will engage in transaction hedging when it
desires to "lock in" the U.S. dollar price of a security
it has agreed to purchase or sell, or the U.S. dollar equivalent of a
dividend or interest payment in a foreign currency. By transaction
hedging a Fund will attempt to protect against a possible loss resulting
from an adverse change in the relationship between the U.S. dollar and
the applicable foreign currency during the period between the date on
which the security is purchased or sold or on which the dividend or
interest payment is declared, and the date on which such payments are
made or received.
A Fund may purchase or sell a foreign currency on a spot (or cash) basis
at the prevailing spot rate in connection with transaction hedging. A
Fund may also enter into contracts to purchase or sell foreign
currencies at a future date ("forward contracts") and
purchase and sell foreign currency futures contracts. For transaction
hedging purposes a Fund may also purchase exchange-listed and over-the-
counter call and put options on foreign currency futures contracts and
on foreign currencies. A put option on a futures contract gives a Fund
the right to assume a short position in the futures contract until
expiration of the option. A put option on currency gives a Fund the
right to sell a currency at an exercise price until the expiration of
the option. A call option on a futures contract gives a Fund the right
to assume a long position in the futures contract until the expiration
of the option. A call option on currency gives a Fund the right to
purchase a currency at the exercise price until the expiration of the
option.
When it engages in position hedging, a Fund enters into foreign currency
exchange transactions to protect against a decline in the values of the
foreign currencies in which securities held by it are denominated or are
quoted in their principle trading markets or an increase in the value of
currency for securities which the Fund expects to purchase. In
connection with position hedging, a Fund may purchase put or call
options on foreign currency and foreign currency futures contracts and
buy or sell forward contracts and foreign currency futures contracts.
The Trust may also purchase or sell foreign currency on a spot basis.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in
foreign currencies will change as a consequence of market movements in
the values of those securities between the dates the currency exchange
transactions are entered into and the dates they mature.
It is impossible to forecast with precision the market value of a Fund's
portfolio securities at the expiration or maturity of a forward or
futures contract. Accordingly, it may be necessary for a Fund to
purchase additional foreign currency on the spot market (and bear the
expense of such purchase) if the market value of the security or
securities being hedged is less than the amount of foreign currency the
Fund is obligated to deliver and if a decision is made to sell the
security or securities and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of the
foreign currency received upon the sale of the portfolio security or
securities of a Fund if the market value of such security or securities
exceeds the amount of foreign currency the Fund is obligated to deliver.
To offset some of the costs of hedging against fluctuations in currency
exchange rates, a Fund may write covered call options on those
currencies. Transaction and position hedging do not eliminate
fluctuations in the underlying prices of the securities which a Fund
owns or intends to purchase or sell. They simply establish a rate of
exchange which one can achieve at some future point in time.
Additionally, although these techniques tend to minimize the risk of
loss due to a decline in the value of the hedged currency, they tend to
limit any potential gain which might result from the increase in the
value of such currency.
A Fund may also seek to increase its current return by purchasing and
selling foreign currency on a spot basis, and by purchasing and selling
options on foreign currencies and on foreign currency futures contracts,
and by purchasing and selling foreign currency forward contracts.
Forward foreign currency exchange contracts and foreign currency
futures contracts
A forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a future
date, which may be any fixed number of days from the date of the
contract as agreed by the parties, at a price set at the time of
the contract. In the case of a cancelable forward contract, the
holder has the unilateral right to cancel the contract at maturity
by paying a specified fee. The contracts are traded in the
interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A forward
contract generally has no deposit requirement, and no commissions
are charged at any stage for trades. A foreign currency futures
contract is a standardized contract for the future delivery of a
specified amount of a foreign currency at a future date at a price
set at the time of the contract. Foreign currency futures
contracts traded in the United States are designed by and traded
on exchanges regulated by the Commodity Futures Trading Commission
(the "CFTC"), such as the New York Mercantile
Exchange.
Forward foreign currency exchange contracts differ from foreign
currency futures contracts in certain respects. For example, the
maturity date of a forward contract may be any fixed number of
days from the date of the contract agreed upon by the parties,
rather than a predetermined date in a given month. Forward
contracts may be in any amounts agreed upon by the parties rather
than predetermined amounts. Also, forward foreign exchange
contracts are traded directly between currency traders so that no
intermediary is required. A forward contract generally requires no
margin or other deposit.
At the maturity of a forward or futures contract, a Fund may
either accept or make delivery of the currency specified in the
contract, or at or prior to maturity enter into a closing
transaction involving the purchase or sale of an offsetting
contract. Closing transactions with respect to forward contracts
are usually effected with the currency trader who is a party to
the original forward contract. Closing transactions with respect
to futures contracts are effected on a commodities exchange; a
clearing corporation associated with the exchange assumes
responsibility for closing out such contracts.
Positions in foreign currency futures contracts and related
options may be closed out only on an exchange or board of trade
which provides a secondary market in such contracts or options.
Although it is intended that a Fund will purchase or sell foreign
currency futures contracts and related options only on exchanges
or boards of trade where there appears to be an active secondary
market, there is no assurance that a secondary market on an
exchange or board of trade will exist for any particular contract
or option or at any particular time. In such event, it may not be
possible to close a futures or related option position and, in the
event of adverse price movements, a Fund would continue to be
required to make daily cash payments of variation margin on its
futures positions.
Foreign currency options
Options on foreign currencies operate similarly to options on
securities, and are traded primarily in the over-the-counter
market, although options on foreign currencies have recently been
listed on several exchanges. Such options will be purchased or
written only when Huntington believes that a liquid secondary
market exists for such options. There can be no assurance that a
liquid secondary market will exist for a particular option at any
specific time. Options on foreign currencies are affected by all
of those factors which influence exchange rates and investments
generally.
The value of a foreign currency option is dependent upon the value
of the foreign currency and the U.S. dollar, and may have no
relationship to the investment merits of a foreign security.
Because foreign currency transactions occurring in the interbank
market involve substantially larger amounts than those that may be
involved in the use of foreign currency options, investors may be
disadvantaged by having to deal in an odd lot market (generally
consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable
than for round lots.
There is no systematic reporting of last sale information for
foreign currencies and there is no regulatory requirement that
quotations available through dealers or other market sources be
firm or revised on a timely basis. Available quotation information
is generally representative of very large transactions in the
interbank market and thus may not reflect relatively smaller
transactions (less than $1 million) where rates may be less
favorable. The interbank market in foreign currencies is a global,
around-the-clock market. To the extent that the U.S. options
markets are closed while the markets for the underlying currencies
remain open, significant price and rate movements may take place
in the underlying markets that cannot be reflected in the U.S.
options markets.
Foreign currency conversion
Although foreign exchange dealers do not charge a fee for currency
conversion, they do realize a profit based on the difference (the
"spread") between prices at which they buy and sell
various currencies. Thus, a dealer may offer to sell a foreign
currency to a Fund at one rate, while offering a lesser rate of
exchange should a Fund desire to resell that currency to the
dealer.
Zero-Coupon Securities
Zero-coupon securities in which a Fund may invest are debt obligations
which are generally issued at a discount and payable in full at
maturity, and which do not provide for current payments of interest
prior to maturity. Zero-coupon securities usually trade at a deep
discount from their face or par value and are subject to greater market
value fluctuations from changing interest rates than debt obligations of
comparable maturities which make current distributions of interest. As a
result, the net asset value of shares of a Fund investing in zero-coupon
securities may fluctuate over a greater range than shares of other Funds
and other mutual funds investing in securities making current
distributions of interest and having similar maturities.
Zero-coupon securities may include U.S. Treasury bills issued directly
by the U.S. Treasury or other short-term debt obligations, and longer-
term bonds or notes and their unmatured interest coupons which have been
separated by their holder, typically a custodian bank or investment
brokerage firm. A number of securities firms and banks have stripped the
interest coupons from the underlying principal (the
"corpus") of U.S. Treasury securities and resold them in
custodial receipt programs with a number of different names, including
Treasury Income Growth Receipts ("TIGRS") and
Certificates of Accrual on Treasuries ("CATS"). The
underlying U.S. Treasury bonds and notes themselves are held in book-
entry form at the Federal Reserve Bank or, in the case of bearer
securities (i.e., unregistered securities which are owned ostensibly by
the bearer or holder thereof), in trust on behalf of the owners thereof.
In addition, the U.S. Treasury has facilitated transfers of ownership of
zero-coupon securities by accounting separately for the
beneficial ownership of particular interest coupons and corpus payments
on U.S. Treasury securities through the Federal Reserve book-entry
record-keeping system. The Federal Reserve program, as established by
the U.S. Treasury Department, is known as "STRIPS" or
"Separate Trading of Registered Interest and Principal of
Securities." Under the STRIPS program, a Fund will be
able to have its beneficial ownership of U.S. Treasury zero-coupon
securities recorded directly in the book-entry record-keeping system in
lieu of having to hold certificates or other evidence of ownership of
the underlying U.S. Treasury securities. When debt obligations have been
stripped of their unmatured interest coupons by the holder, the stripped
coupons are sold separately. The principal or corpus is sold at a deep
discount because the buyer receives only the right to receive a future
fixed payment on the security and does not receive any rights to
periodic cash interest payments. Once stripped or separated, the corpus
and coupons may be sold separately. Typically, the coupons are sold
separately or grouped with other coupons with like maturity dates and
sold in such bundled form. Purchasers of stripped obligations acquire,
in effect, discount obligations that are economically identical to the
zero-coupon securities issued directly by the obligor.
Investment Restrictions
Without a vote of a majority of the outstanding shares of a Fund, the
Trust shall not take any of the following actions with respect to such
Fund:
(1) Except for the Ohio Funds, invest more than 5% of the value of
its total assets in the securities of any one issuer (this
limitation does not apply to securities issued or guaranteed by
the U.S. Government or any of its agencies or instrumentalities or
to repurchase agreements secured by such obligations).
(2) Purchase more than 10% of the voting securities of any issuer.
(3) Invest 25% or more of the value of its total assets (i) in
securities of companies primarily engaged in any one industry
(other than the U. S. Government, its agencies and
instrumentalities), and (ii) with respect to the Ohio Funds, in
municipal obligations of one issuer or which are related in such a
way that, in the opinion of Huntington, an economic, business or
political development other than an Ohio state-wide, national or
international development, affecting one such obligation would
also affect others in a similar manner. Such concentration may
occur as a result of changes in the market value of portfolio
securities, but such concentration may not result from investment.
(4) Loan more than 20% of the Funds' portfolio
securities to brokers, dealers or other financial organizations.
All such loans will be collateralized by cash or U.S. Government
obligations that are maintained at all times in an amount equal to
at least 102% of the current value of the loaned securities.
(5) Except for investments by the Money Market Fund in commercial
paper issued under Section 4(2) of the Securities Act of 1933 and
certain other restricted securities which meet the criteria for
liquidity as established by the Trustees, invest more than 10% of
the value of its total assets in illiquid securities including
restricted securities, repurchase agreements of over seven days'
duration and OTC options.
(6) Borrow in excess of 5% of its total assets (borrowings are
permitted only as a temporary measure for extraordinary or
emergency purposes) or pledge (mortgage) its assets as security
for an indebtedness.
(7) Invest more than 5% of its total assets in securities of any
issuer which, together with any predecessor, has been in operation
for less than three years.
(8) Purchase or sell real estate or real estate mortgage loans;
provided, however, that the Funds may invest in securities secured
by real estate or interests therein or issued by companies which
invest in real estate or interests therein.
(9) Purchase or sell commodities or commodities contracts, or
interests in oil, gas, or other mineral exploration or development
programs provided, however, that the Funds may invest in futures
contracts for bona fide hedging transactions, as defined in the
General Regulations under the Commodity Exchange Act, or for other
transactions permitted to entities exempt from the definition of
the term commodity pool operator, as long as, immediately after
entering a futures contract no more than 5% of the fair market
value of the Funds' assets would be committed to
initial margins.
(10) Purchase securities on margin or effect short sales (except
that the Funds may obtain such short-term credits as may be
necessary for the clearance of purchases or sales of securities).
(11) Engage in the business of underwriting securities issued by
others or purchase securities, other than time deposits and
restricted securities (i.e., securities which cannot be sold
without registration or an exemption from registration), subject
to legal or contractual restrictions on disposition.
(12) Make loans to any person or firm except as provided below;
provided, however, that the making of a loan shall not be
construed to include (i) the acquisition for investment of bonds,
debentures, notes or other evidences of indebtedness of any
corporation or government which are publicly distributed or of a
type customarily purchased by institutional investors (which are
debt securities, generally rated not less than A by Moody's or
S&P, or the equivalent, privately issued and
purchased by such entities as banks, insurance companies and
investment companies), or (ii) the entry into repurchase
agreements. However, the Funds may lend their portfolio securities
to brokers, dealers or other institutional investors deemed by
Huntington, the Trust's manager, pursuant to criteria adopted by
the Trustees, to be creditworthy if, as a result thereof, the
aggregate value of all securities loaned does not exceed 20% of
the value of the total assets of the Funds and the
loan is collateralized by cash or U.S. Government obligations that
are maintained at all times in an amount equal to at least 102% of
the current market value of the loaned securities. Such
transactions will comply with all applicable laws and regulations.
(13) Purchase from or sell portfolio securities to officers,
Trustees or other "interested
persons" (as defined in the Investment Company Act of
1940, as amended) of the Funds,
including its investment manager and its affiliates, except as
permitted by the Investment Company Act of 1940, as amended and
exemptive Rules or Orders thereunder.
(14) Issue senior securities.
(15) Purchase or retain the securities of any issuer if, to the
Funds' knowledge, one or more of the officers,
directors or Trustees of the Trust, the investment adviser or the
administrator, individually own beneficially more than one-half of
one percent of the securities of such issuer and together own
beneficially more than 5% of such securities.
(16) Purchase the securities of other investment companies except
by purchase in the open market where no commission or profit to a
sponsor or dealer results from such purchase other than the
customary broker's commission or except when such purchase is part
of a plan of merger, consolidation, reorganization or acquisition
and except as permitted pursuant to Section 12(d)(1) of the
Investment Company Act of 1940, as amended.
All percentage limitations on investments will apply at the time of the
making of an investment and should not be considered violated unless an
excess or deficiency occurs or exists immediately after and as a result
of such investment.
To comply with certain state requirements, the Trust, with respect to
each Fund, agrees as follows: (1) A Fund will not invest more than 5% of
its net assets in warrants, valued at the lower of cost or market. No
more than 2% of this 5% may be warrants not listed on the New York or
American Stock Exchanges. (2) A Fund will not invest in oil, gas, or
mineral leases. (3) A Fund will not invest in real estate limited
partnerships. If state requirements change, these restrictions may be
modified or terminated without notice to shareholders.
In order to comply with requirements of a particular state, the Funds
will invest in other investment companies only to invest short-term cash
on a temporary basis. Huntington will waive its investment advisory fee
on assets invested in securities of other investment companies.
Portfolio Turnover
The portfolio turnover rate of a Fund is defined by the Securities and
Exchange Commission as the ratio of the lesser of annual sales or
purchases to the monthly average value of the portfolio, excluding from
both the numerator and the denominator securities with maturities at the
time of acquisition of one year or less. Under that definition, the
Money Market Funds will have no portfolio turnover. Portfolio turnover
generally involves some expense to a Fund, including brokerage
commissions or dealer mark-ups and other transactions costs on the sale
of securities and reinvestment in other securities.
For the fiscal years ended December 31, 1994 and 1993 the portfolio
turnover rates for each of the following Funds were as follows:
Fund 1994 1993
Growth Fund 42% 29%
Income Equity Fund 50% 10%
Mortgage Securities Fund 91% 154%
Ohio Tax-Free Fund 12% 2%
Fixed Income Securities Fund 23% 7%
Short/Intermediate Fixed Income Securities Fund 38% 24%
Management of the Trust
Trustees and Officers
Trustees and officers of the Trust and their principal occupations
during the past five years are as set forth below.
("Federated Funds" refers to certain investment companies
distributed, administered and/or advised by subsidiaries or affiliates
of Federated Investors.)
Positions Held Principal Occupations
Name With The Trust During Past Five Years
David S. Schoedinger
229 East State Street
Columbus, OH
Birthdate: November 27, 1942
Trustee
Chairman of the Board, Schoedinger Funeral Service; President of
Schoedinger Financial Services, Inc.; Past President of Ohio Funeral
Directors Association (1986-1987); and Past President, Board of
Directors of National Selected Morticians (1992-1993).
John M. Shary
7677 Riverside Drive
Dublin, OH
Birthdate: November 30, 1930
Trustee
Member, Business Advisory Board, DPEC-Data Processing Education Corp.;
Member, Business Advisory Board, Hublink, Inc.; Member, Business
Advisory Board, Miratel Corporation; Member, Board of Directors, Applied
Information Technology Research Center (1988-1992); Member, Board of
Directors, AIT (1987-1992); Chief Financial Officer of OCLC Online
Computer Library Center, Inc. (1972-1992).
William R. Wise
613 Valley Forge Court
Westerville, OH
Birthdate: October 20, 1931
Trustee
Formerly, Corporate Director of Financial Services and Treasurer,
Childrens Hospital, Columbus, Ohio; Associate Executive Director and
Treasurer, Childrens Hospital, Columbus, Ohio (1985-1989).
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
President and Treasurer
Vice President, Treasurer, and Trustee, Federated Investors; Vice
President and Treasurer, Federated Advisers, Federated Management,
Federated Research, Federated Research Corp., and Passport Research,
Ltd.; Executive Vice President, Treasurer, and Director, Federated
Securities Corp.; Trustee, Federated Services Company and Federated
Shareholder Services; Chairman, Treasurer, and Trustee, Federated
Administrative Services; Trustee or Director of some of the Federated
Funds; Vice President and Treasurer of the Federated Funds.
Ronald M. Petnuch
Federated Investors Tower
Pittsburgh, PA
Birthdate: February 27, 1960
Vice President and Assistant Treasurer
Vice President, Federated Administrative Services; Vice President and
Assistant Treasurer of some of the Federated Funds; formerly, Associate
Corporate Counsel, Federated Investors.
Joseph M. Huber
Federated Investors Tower
Pittsburgh, PA
Birthdate: August 18, 1949
Secretary
Corporate Counsel, Federated Investors.
Except as stated above, the principal occupations of the officers and
Trustees for the last five years have been with the employers as shown
above, although in some cases they have held different positions with
such employers.
Fund Ownership
As of April 7, 1995, the Trustees and officers as a group
owned less than 1% of the shares of the Trust.
As of April 7, 1995, the following shareholders of record
owned 5% or more of the outstanding Investment Shares of The Monitor
Money Market Fund: Telamon Electronics Corp., Indianapolis,
IN, owned approximately 5,061,087 shares (9.88%); Huntington Trust
Company, Columbus, OH, acting in various capacities for numerous
accounts, owned approximately 8,863,623 shares (17.31%); National
Financial Services, Corp., New York, NY, owned approximately 23,911,484
shares (46.69%).
As of April 7, 1995, the following shareholder of record
owned 5% or more of the outstanding Trust Shares of The Monitor Money
Market Fund: Huntington Trust Company, N.A., Columbus,
OH, acting in various capacities for numerous accounts,
owned approximately 260,728,615 shares (98.47%).
As of April 7, 1995, the following shareholder of record
owned 5% or more of the outstanding Investment Shares of The Monitor
Ohio Municipal Money Market Fund: Huntington Trust Company, Columbus,
OH, acting in various capacities for numerous accounts, owned
approximately 37,252,887 shares (78.37%).
As of April 7, 1995, the following shareholder of record
owned 5% or more of the outstanding Trust Shares of The Monitor Ohio
Municipal Money Market Fund: Huntington Trust Company, N.A.,
Columbus, OH, acting in various capacities for numerous accounts, owned
approximately 50,994,516 shares (99.93%).
As of April 7, 1995, the following shareholders of record
owned 5% or more of the outstanding Investment Shares of The Monitor
U.S. Treasury Money Market Fund: Medical Center Company,
Cleveland, OH, owned approximately 1,802,570 shares (7.09%); Huntington
Trust Company, Columbus, OH, acting in various capacities for numerous
accounts, owned approximately 2,914,749 shares (11.47%); Lenora J.
Petrarca, Akron, OH, owned approximately 3,252,898 shares (12.80%);
Allied Fidelity Insurance Co., Indianapolis, IN, owned approximately
3,428,038 shares (13.49%).
As of April 7, 1995, the following shareholder of record
owned 5% or more of the outstanding Trust Shares of The Monitor U.S.
Treasury Money Market Fund: Huntington Trust Company, N.A.,
Columbus, OH, acting in various capacities for numerous accounts, owned
approximately 309,482,741 shares (99.87%).
As of April 7, 1995, no shareholders of record owned 5%
or more of the outstanding Investment Shares of The Monitor Growth Fund.
As of April 7, 1995, the following shareholders of record
owned 5% or more of the outstanding Trust Shares of The Monitor Growth
Fund: Huntington Trust Company, N.A., Columbus, OH, acting in
various capacities for numerous accounts, owned approximately 1,359,044
shares (32.74%); Huntington Trust Company, Inc., Columbus, OH, acting in
various capacities for numerous accounts, owned approximately 2,750,047
shares (66.24%).
As of April 7, 1995, the following shareholders of record
owned 5% or more of the outstanding Trust Shares of The Monitor Income
Equity Fund: Huntington Trust Company, N.A., Columbus, OH,
acting in various capacities for numerous accounts, owned approximately
1,706,813 shares (32.60%); Huntington Trust Company, Inc., Columbus, OH,
acting in various capacities for numerous accounts, owned approximately
3,477,852 shares (66.43%).
As of April 7, 1995, the following shareholder of record
owned 5% or more of the outstanding Investment Shares of The Monitor
Mortgage Securities Fund: Alex Barna, Shaker Heights, OH,
owned approximately 23,300 shares (8.80%).
As of April 7, 1995, the following shareholder of record
owned 5% or more of the outstanding Trust Shares of The Monitor Mortgage
Securities Fund: Huntington Trust Company, N.A., Columbus,
OH, acting in various capacities for numerous accounts, owned
approximately 7,628,741 shares (98.63%).
As of April 7, 1995, the following shareholders of record
owned 5% or more of the outstanding Investment Shares of The Monitor
Ohio Tax-Free Fund: Leroy L. and Louise E. Sawatsky,
Columbus, OH, owned approximately 5,670 shares (5.13%); John W. and
Arlene J. Warbritton, Westerville, OH, owned approximately 5,738 shares
(5.20%); Charles M. Ridenour, Lima, OH, owned approximately 6,419 shares
(5.81%); Ursula E.M. and William J. Umberg, Cincinnati, OH, owned
approximately 9,514 shares (8.61%); Florence M., Ralph E., and
Gerald L. Brinkman, Grove City, OH, owned approximately
10,209 shares (9.24%).
As of April 7, 1995, the following shareholder of record
owned 5% or more of the outstanding Trust Shares of The Monitor Ohio Tax-
Free Fund: Huntington Trust Company, N.A., Columbus, OH,
acting in various capacities for numerous accounts, owned approximately
2,669,747 shares (95.37%).
As of April 7, 1995, the following shareholder of record
owned 5% or more of the outstanding Investment Shares of The Monitor
Fixed Income Securities Fund: Robert S. Obenour, Columbus,
OH, owned approximately 5,650 shares (5.85%).
As of April 7, 1995, the following shareholder of record
owned 5% or more of the outstanding Trust Shares of The Monitor Fixed
Income Securities Fund: Huntington Trust Company, N.A., Columbus, OH,
acting in various capacities for numerous accounts, owned approximately
6,255,795 shares (99.49%).
As of April 7, 1995, the following shareholder of record
owned 5% or more of the outstanding Trust Shares of The Monitor
Short/Intermediate Fixed Income Securities Fund: Huntington
Trust Company, N.A., Columbus, OH, acting in various capacities for
numerous accounts, owned approximately 6,609,293 shares (99.34%).
The Declaration of Trust of the Trust provides that the Trust will, to
the fullest extent permitted by law, indemnify its Trustees and officers
against all liabilities and against all expenses reasonably incurred in
connection with any claim, action, suit or proceeding in which they may
be involved because of their offices with the Trust, except if it is
determined in the manner specified in the Declaration of Trust that they
have not acted in good faith in the reasonable belief that their actions
were in the best interests of the Trust or that such indemnification
would relieve any officer or Trustee of any liability to the Trust or
its shareholders by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of his or her duties. The Trust, at
its expense, may provide liability insurance for the benefit of its
Trustees and officers.
Trustees Compensation
AGGREGATE
NAME, COMPENSATION
POSITION WITH FROM
TRUST TRUST*#
David S. Schoedinger $13,000.00
Trustee
John M. Shary $13,000.00
Trustee
William R. Wise $14,000.00
Trustee
*Information is furnished for the fiscal year ended December 31, 1994.
The Trust is the only investment company in the Fund Complex.
#The aggregate compensation is provided for the Trust which is comprised
of nine portfolios.
Investment Adviser
Huntington Trust Company, National Association, a national banking
association, is an indirect, wholly-owned subsidiary of Huntington
Bancshares Incorporated ("HBI"). With $18
billion in assets as of December 31, 1994, HBI is a major
Midwest regional bank holding company. Piper Capital Management, Inc.,
sub-adviser to the Monitor Mortgage Securities Fund, is a
wholly-owned subsidiary of the publicly traded investment banking firm,
Piper Jaffray, Inc.
Under the investment advisory agreement between the Trust and Huntington
(the "Investment Advisory Agreement"),
Huntington, at its expense, furnishes continuously an investment program
for the various Funds and makes investment decisions on their behalf,
all subject to such policies as the Trustees may determine.
In providing investment advisory services to the various Funds,
Huntington regularly provides the Funds with investment research,
advice, and supervision and continuously furnishes investment programs
consistent with the investment objectives and policies of the various
Funds, and determines, for the various Funds, what securities shall be
purchased, what securities shall be held or sold, and what portion of a
Fund's assets shall be held uninvested, subject always to the provisions
of the Trust's Declaration of Trust and By-laws, and of the Investment
Company Act of 1940, and to a Fund's investment objectives, policies,
and restrictions, and subject further to such policies and instructions
as the Trustees may, from time to time, establish.
During the fiscal years ended 1992, 1993, and
1994, each of the Funds in operation during such periods paid fees
to Huntington pursuant to the Investment Advisory Agreement as follows:
Fund 1992 1993 1994
Money Market Fund $1,001,809
$1,018,882 $1,018,586
Ohio Municipal Money Market Fund $93,856*
$72,193* $102,856*
U.S. Treasury Money Market Fund $312,690
$374,536 $495,003
Growth Fund $493,531*
$624,290 $647,947
Income Equity Fund $517,410*
$670,607 $754,255
Mortgage Securities Fund $169,508*
$503,669 $379,126*
Ohio Tax-Free Fund $220,585
$284,430 $299,882
Fixed Income Securities Fund $351,252* $528,960 $578,719
Short/Intermediate Fixed Income Securities Fund $566,811*
$644,764 $636,447
*During the fiscal year ended December 31, 1992, gross
investment advisory fees were $173,024, $504,841, $530,350, $249,276,
$355,112, and $569,736, of which $79,168, $11,310, $12,940, $79,768,
$3,860, and $2,925 was voluntarily waived for the Ohio Municipal Money
Market Fund, Growth Fund, Income Equity Fund, Mortgage Securities Fund,
Fixed Income Securities Fund, and Short/Intermediate Fixed Income
Securities Fund, respectively. During the fiscal year ended December 31,
1993, gross investment advisory fees were $144,386 of which $72,193 was
voluntarily waived for the Ohio Municipal Money Market Fund. During
the fiscal year ended December 31, 1994, gross investment advisory fees
were $205,712 and $387,126, of which $102,856 and $8,000 were
voluntarily waived for the Ohio Municipal Money Market Fund and the
Mortgage Securities Fund, respectively. In addition, the Mortgage
Securities Fund was reimbursed for other operating expenses in the
amount of $50,000.
The Investment Advisory Agreement provides that Huntington shall not be
subject to any liability for any error of judgment or mistake of law or
for any loss suffered by the Trust in connection with the matters to
which the Investment Advisory Agreement relates, except a loss resulting
from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance,
bad faith, gross negligence, or reckless disregard of its obligations
and duties on the part of Huntington.
The Investment Advisory Agreement may be terminated without penalty with
respect to any Fund at any time by the vote of the Trustees or by the
shareholders of that Fund upon 60 days' written notice, or by Huntington
on 90 days' written notice. It may be amended only by a vote of the
shareholders of the affected Fund(s). The Agreement also terminates
without payment of any penalty in the event of its assignment. The
Investment Advisory Agreement provides that it will continue in effect
from year to year only so long as such continuance is approved at least
annually with respect to each Fund by the vote of either the Trustees or
the shareholders of the Fund, and, in either case, by a majority of the
Trustees who are not "interested persons" of Huntington.
Because of the internal controls maintained by The Huntington Trust
Company, N.A. to restrict the flow of non-public information, the Funds'
investments are typically made without any knowledge of Huntington's or
its affiliates' lending relationships with an issuer.
Glass-Steagall Act
In 1971, the United States Supreme Court held in Investment Company
Institute v. Camp that the federal statute commonly referred to as the
Glass-Steagall Act prohibits a national bank from operating a mutual
fund for the collective investment of managing agency accounts.
Subsequently, the Board of Governors of the Federal Reserve System (the
"Board") issued a regulation and interpretation to the
effect that the Glass-Steagall Act and such decision: (a) forbid a bank
holding company registered under the Federal Bank Holding Company Act of
1956 (the "Holding Company Act") or any
non-bank affiliate thereof from sponsoring, organizing, or controlling a
registered, open-end investment company continuously engaged in the
issuance of its shares, but (b) do not prohibit such a holding company
or affiliate from acting as investment adviser, transfer agent, and
custodian to such an investment company. In 1981, the United States
Supreme Court held in Board of Governors of the Federal Reserve System
v. Investment Company Institute that the Board did not exceed its
authority under the Holding Company Act when it adopted its regulation
and interpretation authorizing bank holding companies and their non-bank
affiliates to act as investment advisers to registered closed-end
investment companies. In the Board of Governors case, the Supreme Court
also stated that if a national bank complies with the restrictions
imposed by the Board in its regulation and interpretation authorizing
bank holding companies and their non-bank affiliates to act as
investment advisers to investment companies, a national bank performing
investment advisory services for an investment company would not violate
the Glass-Steagall Act.
Huntington believes that it possesses the legal authority to perform the
services for the Trust contemplated by the Investment Advisory
Agreement. Future changes in either federal or state statutes and
regulations relating to the permissible activities of banks or bank
holding companies and the subsidiaries or affiliates of those entities,
as well as further judicial or administrative decisions or
interpretations of present and future statutes and regulations could
prevent or restrict Huntington from continuing to perform such services
for the Trust. Depending upon the nature of any changes in the services
which could be provided by Huntington, the Board of Trustees of the
Trust would review the Trust's relationship with Huntington and consider
taking all action necessary in the circumstances.
Should further legislative, judicial, or administrative action prohibit
or restrict the activities of Huntington, its affiliates, and its
correspondent banks in connection with customer purchases of shares of
the Trust, such banks might be required to alter materially or
discontinue the services offered by them to customers. It is not
anticipated, however, that any change in the Funds' method of operations
would affect their net asset values per share or result in financial
losses to any customer.
State securities laws governing the ability of depository institutions
to act as underwriters or distributors of securities may differ from
interpretations given to the Glass-Steagall Act and, therefore, banks
and financial institutions may be required to register as dealers
pursuant to state law.
Portfolio Transactions
Huntington may place portfolio transactions with broker-dealers which
furnish, without cost, certain research, statistical, and quotation
services of value to Huntington and its affiliates in advising the Trust
and other clients, provided that they shall always seek best price and
execution with respect to the transactions. Certain investments may be
appropriate for the Trust and for other clients advised by Huntington.
Investment decisions for the Trust and other clients are made with a
view to achieving their respective investment objectives and after
consideration of such factors as their current holdings, availability of
cash for investment, and the size of their investments generally.
Frequently, a particular security may be bought or sold for only one
client or in different amounts and at different times for more than one
but less than all clients. Likewise, a particular security may be bought
for one or more clients when one or more other clients are selling the
security. In addition, purchases or sales of the same security may be
made for two or more clients of an investment adviser on the same day.
In such event, such transactions will be allocated among the clients in
a manner believed by Huntington to be equitable to each. In some cases,
this procedure could have an adverse effect on the price or amount of
the securities purchased or sold by the Trust. Purchase and sale orders
for the Trust may be combined with those of other clients of Huntington
in the interest of achieving the most favorable net results for the
Trust.
Brokerage and Research Services
Transactions on U.S. stock exchanges and other agency transactions
involve the payment by a Fund of negotiated brokerage commissions. Such
commissions vary among different brokers. Also, a particular broker may
charge different commissions according to such factors as the difficulty
and size of the transaction. Transactions in foreign securities often
involve the payment of fixed brokerage commissions, which are generally
higher than those in the United States. There is generally no stated
commission in the case of securities traded in the over-the-counter
markets, but the price paid by a Fund usually includes an undisclosed
dealer commission or mark-up. In underwritten offerings, the price paid
by a Fund includes a disclosed, fixed commission or discount retained by
the underwriter or dealer.
Huntington places all orders for the purchase and sale of portfolio
securities for a Fund and buys and sells securities for a Fund through a
substantial number of brokers and dealers. In so doing, it uses its best
efforts to obtain for a Fund the best price and execution available. In
seeking the best price and execution, Huntington, having in mind a
Fund's best interests, considers all factors it deems relevant,
including, by way of illustration, price, the size of the transaction,
the nature of the market for the security, the amount of the commission,
the timing of the transaction taking into account market prices and
trends, the reputation, experience, and financial stability of the
broker-dealer involved, and the quality of service rendered by the
broker-dealer in other transactions.
It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional
investors to receive research, statistical, and quotation services from
broker-dealers that execute portfolio transactions for the clients of
such advisers. Consistent with this practice, Huntington receives
research, statistical, and quotation services from many broker-dealers
with which it places a Fund's portfolio transactions. These services,
which in some cases may also be purchased for cash, include such matters
as general economic and security market reviews, industry and company
reviews, evaluations of securities, and recommendations as to the
purchase and sale of securities. Some of these services are of value to
Huntington and its affiliates in advising various of their clients
(including the Trust), although not all of these services are
necessarily useful and of value in managing the Trust. The fee paid by a
Fund to Huntington is not reduced because Huntington and its affiliates
receive such services.
As permitted by Section 28(e) of the Securities Exchange Act of 1934, as
amended, and by the Investment Advisory Agreement, Huntington may cause
a Fund to pay a broker-dealer that provides brokerage and research
services to Huntington an amount of disclosed commission for effecting a
securities transaction for the Fund in excess of the commission which
another broker-dealer would have charged for effecting
that transaction. Huntington's authority to cause a Fund to pay any such
greater commissions is also subject to such policies as the Trustees may
adopt from time to time.
In the fiscal years ended December 31, 1992, 1993 and
1994, the Funds named below paid the following brokerage
commissions:
Fund 1992 1993
1994
Growth Fund $117,343
$89,776 $121,407
Income Equity Fund $ 56,616
$64,330 $121,749
Administrator
Federated serves as administrator to the Trust pursuant to an
Administrative Services Agreement dated January 11, 1991 (the
"Administration Agreement"). Pursuant to the
Administration Agreement, Federated maintains office facilities for the
Trust, maintains the Trust's financial accounts and records, and
furnishes the Trust statistical and research data, data processing,
clerical, accounting, and bookkeeping services, and certain other
services required by the Trust. In addition, Federated prepares annual
and semi-annual reports to the Securities and Exchange Commission,
prepares federal and state tax returns, prepares filings with state
securities commissions, and generally assists in all aspects of the
Trust's operations.
The Administration Agreement became effective on January 11, 1991 and
will continue in effect for a period of five years from that date,
unless sooner terminated by the Trust for cause, as provided in the
Agreement.
The Administration Agreement provides that Federated shall not be liable
for any error of judgment or mistake of law or any loss suffered by the
Trust in connection with the matters to which the Administration
Agreement relates, except a loss resulting from willful misfeasance, bad
faith, or gross negligence in the performance of its duties, or from the
disregard by Federated of its obligations and duties thereunder.
For the fiscal years ended December 31, 1992,
1993, and 1994, the Funds paid the following fees to
Federated, pursuant to the administration
agreement in effect for those periods:
Fund 1992 1993
1994
Money Market Fund $510,119
$442,605* $433,373*
Ohio Municipal Money Market Fund
$ 88,206 $ 51,912*
$73,218*
U.S. Treasury Money Market Fund $172,715 $202,984*
$310,007*
Growth Fund $128,630 $117,936*
$119,967*
Income Equity Fund $ 97,864 $117,976
$131,350
Mortgage Securities Fund $ 62,692* $114,000*
$78,753*
Ohio Tax-Free Fund $ 67,417 $
60,265* $62,952*
Fixed Income Securities Fund $108,440
$120,126* $130,878*
Short/Intermediate Fixed Income Securities Fund $125,943
$136,220 $133,654
* During the fiscal year ended December 31, 1992, gross
administrator fees were $75,616, of which $12,924 was voluntarily waived
for the Mortgage Securities Fund. During the fiscal year ended December
31, 1993, gross administrator fees were $509,368, $71,994, $213,122,
$156,023, $151,016, $85,257, and $158,636 of which $66,763, $20,082,
$10,138, $38,087, $37,016, $24,992, and $38,510 was voluntarily waived
for the Money Market Fund, Ohio Municipal Money Market Fund, U.S.
Treasury Money Market Fund, Growth Fund, Mortgage Securities Fund, Ohio
Tax-Free Fund, and Fixed Income Securities Fund, respectively. During
the fiscal year ended December 31, 1994, gross administrator fees were
$506,567, $102,392, $370,331, $160,907, $115,132, $89,540, and $172,811,
of which $73,194, $29,174, $60,324, $40,940, $36,379, $26,588, and
$41,933 were voluntarily waived for the Money Market Fund, Ohio
Municipal Money Market Fund, U.S. Treasury Money Market Fund, Growth
Fund, Mortgage Securities Fund, Ohio Tax-Free Fund, and Fixed Income
Securities Fund, respectively.
Distributor
The Trust has a Distributor's Contract with Federated Securities Corp.,
under which the Distributor sells and distributes shares of each of the
Funds. The Distributor is not obligated to sell any specific amount of
shares of any Fund. The Contract may be terminated at any time as to any
Fund on not more than 60 days' notice by vote of a majority of the
Trustees who are not parties to such agreement or "interested
persons" of any such party or by the vote of a majority of the
outstanding voting securities of the Fund.
The Distribution Plans
The services provided and the fees payable under the Distribution Plans
to which Investment Shares are subject are described in the Prospectus
for Investment Shares under "Distribution of Investment
Shares-Distribution Plans."
The Distribution Plan for all Funds (except the Plan for the Mortgage
Securities Fund, which was approved by the Trustees on January 22, 1992,
and the Plan for the U.S. Treasury Money Market Fund, which was approved
by the Trustees on May 26, 1993) was initially approved on February 21,
1991 by the Trustees, including a majority of the Trustees who are not
interested persons of the Trust (as defined in the Investment Company
Act of 1940) and who have no direct or indirect financial interest in
the Distribution Plan (the "Independent Trustees").
In accordance with Rule 12b-1 under the Investment Company Act of 1940,
the Distribution Plans may be terminated with respect to any Fund by a
vote of a majority of the Independent Trustees, or by a vote of a
majority of the outstanding Investment Shares of that Fund. The
Distribution Plans may be amended by vote of the Trustees, including a
majority of the Independent Trustees, cast in person at a meeting called
for such purpose, except that any change in the Distribution Plans that
would materially increase the fee payable thereunder with respect to a
Fund requires the approval of the holders of that Fund's Investment
Shares. The Trustees will review on a quarterly and annual basis written
reports of the amounts received and expended under the Distribution
Plans (including amounts expended by the Distributor to brokers, dealers
and administrators pursuant to the agreement entered into under the
Distribution Plans) indicating the purposes for which such expenditures
were made.
The Distribution Plans provides that they will continue in effect with
respect to each Fund for successive one-year periods, provided that each
such continuance is specifically approved (i) by the vote of a majority
of the Independent Trustees and (ii) by the vote of a majority of all
the Trustees, cast in person at a meeting called for such purpose. For
so long as the Distribution Plans remains in effect, the selection and
nomination of those Trustees who are not interested persons of the Trust
(as defined in the Investment Company Act of 1940) shall be committed to
the discretion of such disinterested persons.
For the fiscal years ended December 31, 1992, 1993 and
1994, the Funds named below paid the following fees pursuant to the
Distribution Plans:
Fund 1992 1993
1994
Money Market Fund $21,858 $20,986
$26,329
Ohio Municipal Money Market Fund $1,651 $6,171
$31,216
U.S. Treasury Money Market Fund - $152*
$6,160*
Growth Fund $6,788 $9,751
$8,652
Mortgage Securities Fund $37,220
$16,813 $15,644*
Ohio Tax-Free Fund $2,069 $4,955
$6,638
Fixed Income Securities Fund $1,288 $4,257
$5,746
*For the fiscal year ended December 31, 1992, gross
distribution fees were $41,786, of which $4,566 was voluntarily
waived for the Mortgage Securities Fund. For the fiscal
year ended December 31, 1993, gross distribution fees were $379 and
$33,627, of which $227 and $16,814 were voluntarily waived
for the U.S. Treasury Money Market Fund and the Mortgage Securities
Fund, respectively. For the fiscal year ended December 31, 1994, gross
distribution fees were $15,399 and $31,289, of which $9,239 and $15,645
were voluntarily waived for the U.S. Treasury Money Market Fund and
the Mortgage Securities Fund, respectively.
Determination of Net Asset Value
The times and days on which the net asset value of each of the Funds is
calculated is described in the Prospectus.
The Money Market Funds have elected to use the amortized cost method of
valuation pursuant to Rule 2a-7 under the Investment Company Act of
1940. The amortized cost method involves valuing an instrument at its
cost initially and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. This
method may result in periods during which value, as determined by
amortized cost, is higher or lower than the price a Fund would receive
if it sold the instrument. The value of securities in a Fund can be
expected to vary inversely with changes in prevailing interest rates.
Pursuant to Rule 2a-7, each of the Money Market Funds will maintain a
dollar-weighted average portfolio maturity appropriate to
maintaining a stable net asset value per share, provided that no Fund
will purchase any security with a remaining maturity of more than 397
days (except as described below) nor maintain a dollar-weighted average
maturity of greater than 90 days. Repurchase agreements involving the
purchase of securities with remaining maturities of greater than 397
days will be treated as having a maturity equal to the period remaining
until the date on which the repurchase is scheduled to occur or, where
no date is specified and the agreement is subject to a demand feature,
the notice period applicable to the demand to repurchase those
securities. A variable rate instrument, the principal amount of which is
scheduled to be repaid in more than 397 days but which is subject to a
demand feature, shall be deemed to have a maturity equal to the longer
of the period remaining until the next readjustment of the interest rate
or the period remaining until the principal amount may be recovered
through exercise of the demand feature. A floating rate instrument, the
principal amount of which is scheduled to be repaid in more than 397
days but which is subject to a demand feature, shall be deemed to have a
maturity equal to the period remaining until the principal amount can be
recovered through demand. The Trustees have undertaken to establish
procedures reasonably designed, taking into account current market
conditions and each of the Money Market Funds' investment objective, to
stabilize the net asset value per share of each Money Market Fund for
purposes of sales and redemptions at $1.00. These procedures include a
review by the Trustees, at such intervals as they deem appropriate, to
determine the extent, if any, to which the net asset value per share of
each Fund, calculated by using available market quotations, deviates
from $1.00 per share. In the event such deviation exceeds one-half of
one percent, Rule 2a-7 requires that the Trustees promptly consider what
action, if any, should be initiated. If the Trustees believe that the
extent of any deviation from a Fund's $1.00 amortized cost price per
share may result in material dilution or other unfair results to
investors, the Trustees will take such steps as they deem appropriate to
eliminate or reduce to the extent reasonably practicable any such
dilution or unfair results. These steps may include selling portfolio
instruments prior to maturity, shortening the Fund's average portfolio
maturity, withholding or reducing dividends, reducing the number of a
Fund's outstanding shares without monetary consideration, or utilizing a
net asset value per share based on available market quotations. In
addition, if Huntington becomes aware that any Second Tier Security or
Unrated Security held by a Fund has received a rating from any NRSRO
below the NRSRO's two highest rating categories, the procedures adopted
by the Trustees in accordance with Rule 2a-7 require Huntington to
dispose of such security unless (i) the sale would cause the deviation
between the Fund's amortized cost and market-determined values per share
to exceed .40 of one percent (in which case the Trustees will meet to
determine what action to take) or (ii) the Trustees reassess the credit
quality of the security and determine that it is in the best interests
of shareholders to retain the investment. In the event a Fund holds a
defaulted security, a security that has ceased to be an Eligible
Security, or a security that has been determined to no longer present
minimal credit risks, Rule 2a-7 requires the Fund to dispose of the
security unless the Trustees determine that such action is not in the
best interest of shareholders. The Rule requires each Fund to limit its
investments to securities determined to present minimal credit risks
based on factors in addition to ratings assigned a security by an NRSRO
and which are at the time of acquisition Eligible Securities. (See
Appendix I to the Prospectus for a summary of the definition under Rule
2a-7 of capitalized terms used above and see the Appendix to this
Statement of Additional Information for a description of the ratings
assigned by the NRSROs utilized by Huntington in managing the Funds'
investments.)
Securities traded on a national securities exchange or quoted on the
NASDAQ National Market System are valued at their last-reported sale
price on the principal exchange or reported by NASDAQ or, if there is no
reported sale, and in the case of over-the-counter securities not
included in the NASDAQ National Market System, at a bid price estimated
by a broker or dealer. Debt securities, including zero-coupon
securities, and certain foreign securities will be valued by a pricing
service. Other foreign securities will be valued by the Trust's
custodian. Securities for which current market quotations are not
readily available and all other assets are valued at fair value as
determined in good faith by the Trustees, although the actual
calculations may be made by persons acting pursuant to the direction of
the Trustees.
If any securities held by a Fund are restricted as to resale, their fair
value is generally determined as the amount which the Fund could
reasonably expect to realize from an orderly disposition of such
securities over a reasonable period of time. The valuation procedures
applied in any specific instance are likely to vary from case to case.
However, consideration is generally given to the financial position of
the issuer and other fundamental analytical data relating to the
investment and to the nature of the restrictions on disposition of the
securities (including any registration expenses that might be borne by
the Fund in connection with such disposition). In addition, specific
factors are also generally considered, such as the cost of the
investment, the market value of any unrestricted securities of the same
class (both at the time of purchase and at the time of valuation), the
size of the holding, the prices of any recent transactions or offers
with respect to such securities, and any available analysts' reports
regarding the issuer.
Generally, trading in certain securities (such as foreign securities) is
substantially completed each day at various times prior to the close of
the New York Stock Exchange. The values of these securities used in
determining the net asset value of the Fund's shares are computed as of
such times. Also, because of the amount of time required to collect and
process trading information as to large numbers of securities issues,
the values of certain securities (such as convertible bonds and U.S.
Government securities) are determined based on market quotations
collected earlier in the day at the latest practicable time prior to the
close of the Exchange. Occasionally, events affecting the value of such
securities may occur between such times and the close of the Exchange
which will not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair
value, in the manner described above.
The proceeds received by each Fund for each issue or sale of its shares,
and all income, earnings, profits, and proceeds thereof, subject only to
the rights of creditors, will be specifically allocated to such Fund,
and constitute the underlying assets of that Fund. The underlying assets
of each Fund will be segregated on the Trust's books of account, and
will be charged with the liabilities in respect of such Fund and with a
share of the general liabilities of the Trust. Expenses with respect to
any two or more Funds are to be allocated in proportion to the net asset
values of the respective Funds except where allocations of direct
expenses can otherwise be fairly made.
Additional Purchase Information-Payment in Kind
In addition to payment by check, shares of a Fund may be purchased by
customers of Huntington in exchange for securities held by an investor
which are acceptable to that Fund. Investors interested in exchanging
securities must first telephone Huntington at (800) 253-0412 for
instructions regarding submission of a written description of the
securities the investor wishes to exchange. Within five business days of
the receipt of the written description, Huntington will advise the
investor by telephone whether the securities to be exchanged are
acceptable to the Fund whose shares the investor desires to purchase and
will instruct the investor regarding delivery of the securities. There
is no charge for this review.
Securities accepted by a Fund are valued in the manner and on the days
described in the section entitled "Determination of Net
Asset Value" as of 4:00 p.m. (Eastern Time). Acceptance
may occur on any day during the five-day period afforded Huntington to
review the acceptability of the securities. Securities which have been
accepted by a Fund must be delivered within five days following
acceptance.
The value of the securities to be exchanged and of the shares of the
Fund may be higher or lower on the day Fund shares are offered than on
the date of receipt by Huntington of the written description of the
securities to be exchanged. The basis of the exchange of such securities
for shares of the Fund will depend on the value of the securities and
the net asset value of Fund shares next determined following acceptance
on the day Fund shares are offered. Securities to be exchanged must be
accompanied by a transmittal form which is available from Huntington.
A gain or loss for federal income tax purposes may be realized by the
investor upon the securities exchange depending upon the cost basis of
the securities tendered. All interest, dividends, subscription or other
rights with respect to accepted securities which go "ex"
after the time of valuation become the property of the Fund and must be
delivered to the Fund by the investor forthwith upon receipt from the
issuer. Further, the investor must represent and agree that all
securities offered to the Fund are not subject to any restrictions upon
their sale by the Fund under the Securities Act of 1933, or otherwise.
Taxes
Federal Income Taxation
It is intended that each Fund qualify each year as a regulated
investment company under Subchapter M of the Code. In order so to
qualify and to qualify for the special tax treatment accorded regulated
investment companies and their shareholders, a Fund must, among other
things:
(a) derive at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, and
gains from the sale of stock, securities and foreign currencies,
or other income (including but not limited to gains from options,
futures, or forward contracts) derived with respect to its
business of investing in such stock, securities, or currencies;
(b) derive less than 30% of its gross income from gains from the
sale or other disposition of assets (including securities) held
for less than three months;
(c) distribute with respect to each taxable year at least 90% of
its "investment company taxable
income" (as that term is defined in the Code) and
tax-exempt income (less deductions attributable to that income)
for such year; and
(d) diversify its holdings so that, at the end of each fiscal
quarter (i) at least 50% of the market value of the Fund's assets
is represented by cash or cash items, U.S. Government securities,
securities of other regulated investment companies, and other
securities limited in respect of any one issuer to a value not
greater than 5% of the value of the Fund's total assets and 10% of
the outstanding voting securities of such issuer, and (ii) not
more than 25% of the value of its assets is invested in the
securities (other than those of the U.S. Government or other
regulated investment companies) of any one issuer or of two or
more issuers which the Fund controls and which are engaged in the
same, similar, or related trades or businesses.
If a Fund qualifies as a regulated investment company that is accorded
special tax treatment, the Fund will not be subject to federal income
tax on income paid to its shareholders in the form of dividends
(including capital gain dividends).
If a Fund fails to qualify as a regulated investment company accorded
special tax treatment in any taxable year, the Fund would be subject to
tax on its income at corporate rates, and could be required to recognize
unrealized gains, pay substantial taxes and interest and make
substantial distributions before requalifying as a regulated investment
company that is accorded special tax treatment. In addition, all
distributions by the Fund would be taxed as if made by a regular
corporation; thus a Fund could not pay exempt interest or capital gains
dividends.
If a Fund fails to distribute in a calendar year substantially all of
its ordinary income for such year and substantially all of its net
capital gains for the year ending October 31 (or later if the Fund is
permitted so to elect and so elects), plus any retained amount from the
prior year, the Fund will be subject to a 4% excise tax on the
undistributed amounts. Each Fund intends generally to make distributions
sufficient to avoid imposition of the 4% excise tax.
Return of capital distributions
If a Fund makes a distribution in excess of its current and
accumulated "earnings and profits" in any taxable
year, the excess distribution will be treated as a non-taxable
return of capital to the extent of a shareholder's tax basis in
his shares. If the shareholder's basis has been reduced to zero,
any additional return of capital distributions will be taxable as
capital gain.
Exempt-interest dividends
A Fund will be qualified to pay exempt-interest dividends to its
shareholders only if, at the close of each quarter of the Fund's
taxable year, at least 50% of the total value of the Fund's assets
consists of obligations the interest on which is exempt from
federal income tax. If a Fund intends to pay only exempt-interest
dividends, the Fund may be limited in its ability to engage in
such taxable transactions as forward commitments, repurchase
agreements, financial futures, and options contracts on financial
futures, tax-exempt bond indices, and other assets.
In general, exempt-interest dividends, if any, attributable to
interest received on certain private activity bonds and certain
industrial development bonds will not be tax-exempt to any
shareholders who are "substantial users" of the
facilities financed by such bonds or who are "related
persons" of such substantial users (within the meaning of
Section 147(a) of the Code). Recipients of certain Social Security
and Railroad Retirement benefits may have to take into account
exempt-interest dividends from the Fund in
determining the taxability of such benefits. Shareholders should
consult their own tax adviser regarding the potential effect on
them (if any) of any investment in the Fund.
A Fund which is qualified to pay exempt-interest dividends will
inform investors within 60 days of the Fund's fiscal year end of
the percentage of its income distributions designated as tax-
exempt. The percentage is applied uniformly to all distributions
made during the year.
Hedging transactions
Certain investment and hedging activities of a Fund, including
transactions in options, futures contracts, straddles, forward
contracts, foreign currencies, foreign securities, or other
similar transactions will be subject to special tax rules. In a
given case, these rules may accelerate income to the Fund, defer
losses to the Fund, cause adjustments in the holding periods of
the Fund's assets, or convert short-term capital losses into long-
term capital losses. These rules could therefore affect the
amount, timing, and character of the Fund's income and
distributions to shareholders. Income earned as a result of these
transactions would, in general, not be eligible for the dividends
received deduction or for treatment as exempt-interest dividends
when distributed to shareholders. Each Fund will endeavor to make
any available elections pertaining to such transactions in a
manner believed to be in the best interests of the Fund.
Under the 30% of gross income test described above (see
"Federal Income Taxation"), a Fund
will be restricted in selling assets held or considered under Code
rules to have been held for less than three months, and in
engaging in certain hedging transactions (including hedging
transactions in options and futures) that could cause certain Fund
assets to be treated as held for less than three months.
Foreign currency-denominated securities and related hedging
transactions
A Fund's transactions in foreign currency-denominated debt
securities, certain foreign currency options, futures contracts,
and forward contracts may give rise to ordinary income or loss to
the extent such income or loss results from fluctuations in the
value of the foreign currency concerned.
Foreign Tax Credit
If more than 50% of a Fund's assets at year end consist of the
debt and equity securities of foreign corporations, that Fund
intends to qualify for and make the election permitted under
Section 853 of the Code so that shareholders will be able to claim
a credit or deduction on their income tax returns for, and will be
required to treat as part of the amount distributed to them, their
pro rata portion of qualified taxes paid by the Fund to foreign
countries (which taxes relate primarily to investment income).
Shareholders who do not itemize on their federal income tax
returns may claim a credit (but no deduction) for such foreign
taxes. A shareholder's ability to claim such a foreign tax credit
will be subject to certain limitations imposed by the Code, as a
result of which shareholders may not get full credit for the
amount of foreign taxes so paid by the Fund.
The foregoing is only a summary of some of the important federal
income tax considerations generally affecting purchases of shares
of a Fund. No attempt is made to present a detailed explanation of
the federal income tax treatment of each Fund or its shareholders,
and this discussion is not intended as a substitute for careful
tax planning. Accordingly, investors are urged to consult their
tax advisors with specific reference to their own tax situation.
Ohio Income Taxation
For a summary of the Ohio income tax treatment of dividends paid
by the Ohio Funds, see "Distributions and
Taxes-Ohio Personal Income Taxes" in the
Prospectus.
Dividends and Distributions
Money Market Funds
The net investment income of each class of shares of each Money
Market Fund is determined as of 4:00 p.m. (Eastern Time) each
Business Day. All of the net investment income so determined
normally will be declared as a dividend daily to shareholders of
record of each class as of the close of business and prior to the
determination of net asset value. Unless the Business Day before a
weekend or holiday is the last day of an accounting period, the
dividend declared on that day will include an amount in respect of
the Fund's income for the subsequent non-business day or days. No
daily dividend will include any amount of net income in respect of
a subsequent semi-annual accounting period. Dividends declared
during any month will be invested as of the close of business on
the last calendar day of that month (or the next Business Day
after the last calendar day
of the month if the last calendar day of the month is a non-
business day) in additional shares of the same class of the Fund
at the net asset value per share, normally $1.00, determined as of
the close of business on that day, unless payment of the dividend
in cash has been requested.
Net income of a class of shares of a Money Market Fund consists of
all interest income accrued on portfolio assets less all expenses
of the Fund and the class and amortized market premium. Amortized
market discount is included in interest income. None of the Money
Market Funds anticipates that it will normally realize any long-
term capital gains with respect to its portfolio securities.
Normally each class of shares of the Money Market Funds will have
a positive net income at the time of each determination thereof.
Net income may be negative if an unexpected liability must be
accrued or a loss realized. If the net income of a class or
classes of shares of a Money Market Fund determined at any time is
a negative amount, the net asset value per share of such class or
classes will be reduced below $1.00 unless one or more of the
following steps, for which the Trustees have authority, are taken:
(1) reduce the number of shares in each shareholder's account of
the applicable class or classes, (2) offset each shareholder's pro
rata portion of negative net income against the shareholder's
accrued dividend account or against future dividends with regard
to the applicable class or classes, or (3) combine these methods
in order to seek to maintain the net asset value per share of the
applicable class or classes at $1.00. The Trustees may endeavor to
restore a Fund's net asset value per share to $1.00 by not
declaring dividends from net income on subsequent days until
restoration, with the result that the net asset value per share
will increase to the extent of positive net income which is not
declared as a dividend.
Should a Money Market Fund incur or anticipate, with respect to
its portfolio, any unusual or unexpected significant expense or
loss which would affect disproportionately the Fund's income for a
particular period, the Trustees would at that time consider
whether to adhere to the dividend policy described above or to
revise it in light of the then prevailing circumstances in order
to ameliorate, to the extent possible, the disproportionate effect
of such expense or loss on then existing shareholders. Such
expenses or losses may nevertheless result in a shareholder's
receiving no dividends for the period during which the shares are
held and receiving upon redemption a price per share lower than
that which was paid.
Other Funds
Each of the Funds other than the Money Market Funds will declare
and distribute dividends from net investment income of each class
of shares, if any, and will distribute its net realized capital
gains, with respect to each class of shares, if any, at least
annually.
Performance Information
Investors may use financial publications and/or indices to obtain a more
complete view of a Fund's performance. When comparing performance,
investors should consider all relevant factors, such as the composition
of any index used, prevailing market conditions, portfolio compositions
of other funds, and methods used to value portfolio securities and
compute offering price. The financial publications and/or indices which
a Fund uses in advertising may include: Morningstar, Inc., Lipper
Analytical Services, Inc., CDA Investment Technologies, Wisenberger
Dealer Services, Computer Directions Advisor Services, Inc., Moody's
Bond Survey Index, Salomon Brothers Corporate Bond Rate-of-Return Index,
Lehman Brothers Municipal Bond Index, Bond-20 Index, Standard & Poor's
Daily Stock Price Index of 500 Common Stocks, Dow Jones Industrial
Average, Lehman Brothers Government/Corporate (Total) Index, Merrill
Lynch 2-Year Treasury Index, Merrill Lynch 3-Year Treasury Index,
Donaghue's Money Fund Report, Lehman Brothers Intermediate
Government/Corporate Index, Lehman Brothers 5-Year Bond Index, and
Lehman Brothers Government (LT) Index. Advertisements may quote
performance information which does not reflect the effect of the sales
load. In addition, data may be used comparing the differences between
the yields of income funds, Ginnie Maes and U.S. Treasury notes. All
data is based on past performance and is not intended to indicate future
results.
Money Market Funds
Based on the seven-day period ended December 31, 1994 (the
"base period"), the yield and effective yield of the Trust Shares of
each of the Money Market Funds were as follows:
Fund-Trust Shares Yield
Effective Yield
Money Market Fund 5.33% 5.48%
Ohio Municipal Money Market Fund 4.11% 4.20%
U.S. Treasury Money Market Fund 5.21% 5.34%
Based on the seven-day period ended December 31, 1994, (the
"base period"), the yield and effective yield of the Investment
Shares of the Money Market Funds listed below were as follows:
Fund-Investment Shares Yield
Effective Yield
Money Market Fund 5.23% 5.37%
Ohio Municipal Money Market Fund 4.01% 4.09%
U.S. Treasury Money Market Fund 5.11% 5.24%
The yield for each class of shares of a Fund is computed by determining
the percentage net change, excluding capital changes, in the value of an
investment in one share of the class over the base period, and
multiplying the net change by 365/7 (or approximately 52 weeks). The
effective yield for each class of shares of a Fund represents a
compounding of the yield by adding 1 to the number representing the
percentage change in value of the investment during the base period,
raising the sum to a power equal to 365/7, and subtracting 1 from the
result.
Other Funds
(A) A Fund's yield for each class of shares is presented for a specified
30-day period (the "base period"). Yield is based on the
amount determined by (i) calculating the aggregate of dividends and
interest earned by the class during the base period less expenses
accrued for that period by the class, and (ii) dividing that amount by
the product of (A) the average daily number of shares of the class
outstanding during the base period and entitled to receive dividends and
(B) the offering price per share of the class on the last day of the
base period. The result is annualized on a compounding basis to
determine the yield of the class of shares of the Fund. For this
calculation, interest earned on debt obligations held by a Fund is
generally calculated using the yield to maturity (or first expected call
date) of such obligations based on their market values (or, in the case
of receivables-backed securities such as Ginnie Maes, based on cost).
Dividends on equity securities are accrued daily at their stated
dividend rates.
The yield of Trust Shares of each of the following Funds for the 30-day
period ended December 31, 1994 was as follows:
Fund-Trust Shares Yield
Growth Fund 1.34%
Income Equity Fund 4.40%
Ohio Tax-Free Fund 4.75%
Fixed Income Securities Fund 7.35%
Short/Intermediate Fixed Income Securities Fund 7.13%
Mortgage Securities Fund 9.29%
The yield of Investment Shares of each of the following Funds based on
the maximum offering price per share of the Funds for the 30-day period
ended December 31, 1994 was as follows:
Fund-Investment Shares Yield
Growth Fund 1.05%
Ohio Tax-Free Fund 4.41%
Fixed Income Securities Fund 6.95%
Mortgage Securities Fund 8.84%
The average annual total returns for Trust Shares
of each of the following Funds for the one-year and five-year periods
and for the life of the respective Fund through December 31, 1994 were
as follows:
Fiscal Year Ended Five-Years
Ended Inception through
Fund-Trust Shares December 31, 1994
December 31, 1994 December 31, 1994
Growth Fund 2.28% 7.67% 7.85%
Income Equity Fund (1.82%) 5.61% 5.73%
Ohio Tax-Free Fund (2.57%) 5.29% 5.55%
Fixed Income Securities Fund (4.62%) 6.95% 6.91%
Short/Intermediate Fixed Income Securities Fund (0.98%) 6.83% 6.94%
Mortgage Securities Fund (24.59%) N/A (2.78%)
The average annual total returns for Investment Shares of each of the
following Funds for the one-year period and for the life of the
respective Fund through December 31, 1994 were as
follows:
Fiscal Year Ended
Inception through
Fund-Investment Shares December 31, 1994
December 31, 1994
Growth Fund (2.00%)
4.83%
Ohio Tax-Free Fund (4.78%)
3.86%
Fixed Income Securities Fund (6.79%)
5.64%
Mortgage Securities Fund (26.19%)
(3.73%)
The average annual total return for each Fund is the average compounded
rate of return for a given period that would equate a $1,000 initial
investment to the ending redeemable value of that investment. The ending
redeemable value is computed by multiplying the number of shares owned
at the end of the period by the offering price value per share at the
end of the period. The number of shares owned at the end of the period
is based on the number of shares purchased at the beginning of the
period with $1,000, less any applicable sales load, adjusted over the
period by any additional shares, assuming the monthly/quarterly
reinvestment of all dividends and distributions. Any applicable
redemption fee is deducted from the ending value of the investment based
on the lesser of the original purchase price or the net asset value of
shares redeemed.
From time to time, Huntington and/or Federated may reduce its
compensation or assume expenses of a Fund in order to reduce the Fund's
expenses, as described in the Prospectus. Any such waiver or assumption
would increase a Fund's yield and total return during the period of the
waiver or assumption.
Tax-Equivalent Yield
With respect to the Ohio Funds, the Funds' tax-equivalent yield (or
effective yield) for each class of shares during the applicable base
period may be presented for shareholders in one or more stated tax
brackets. Tax-equivalent yield is calculated by adjusting a Fund's tax-
exempt yield with respect to the class by a factor designed to show the
approximate yield that a taxable investment would have to earn to
produce the same after-tax yield for that period. A Fund's tax-
equivalent yield with respect to each class will differ for shareholders
in different tax brackets.
The tax-equivalent yield for Trust Shares of the Ohio Municipal Money
Market Fund for the seven-day period ended December 31,
1994 was 6.29% (assuming a 28% federal income tax bracket
and a 5.201% Ohio income tax bracket).
The tax-equivalent yield for the Trust Shares of the Ohio
Tax-Free Fund for the thirty-day period ended December
31, 1994 was 7.11% (assuming a 28% federal income tax
bracket and a 5.201% Ohio income tax bracket).
The tax-equivalent yield for Investment Shares of the Ohio Municipal
Money Market Fund for the seven-day period ended December 31,
1994 was 6.12% (assuming a 28% federal income tax bracket
and a 5.201% Ohio income tax bracket).
The tax-equivalent yield for the Investment Shares of the Ohio
Tax-Free Fund for the thirty-day period
ended December 31, 1994 was 6.60% (assuming a 28% federal
income tax bracket and a 5.201% Ohio income tax bracket).
Ohio Municipal Money Market Fund and Ohio Tax-Free Fund
Tax-Equivalency Table
The Ohio Municipal Money Market Fund and the Ohio Tax-Free Fund, with
respect to both classes of shares, may use a tax-equivalency table in
advertising and sales literature. The interest earned on tax-exempt
securities in a Fund's portfolio generally remains free
from federal regular income tax and is free from Ohio personal income
taxes.* The table below provides tax-equivalent yields for selected tax-
exempt yields. As the table below indicates, a "tax-free"
investment is an attractive choice for investors, particularly in times
of narrow spreads between tax-free and taxable yields.
TAXABLE YIELD EQUIVALENT FOR 1995
STATE OF OHIO
FEDERAL TAX BRACKET:
15.00% 28.00% 31.00% 36.00% 39.60%
COMBINED FEDERAL AND STATE TAX BRACKET:
19.457% 33.201% 37.900% 43.500% 47.100%
$1- $23,351- $56,551- $117,951- OVER
Single Return:$23,350 $56,550 $117,950 $256,500 $256,500
TAX-EXEMPT
YIELD TAXABLE YIELD EQUIVALENT
1.50% 1.86% 2.25% 2.42% 2.65%
2.84%
2.00% 2.48% 2.99% 3.22% 3.54%
3.78%
2.50% 3.10% 3.74% 4.03% 4.42%
4.73%
3.00% 3.72% 4.49% 4.83% 5.31%
5.67%
3.50% 4.35% 5.24% 5.64% 6.19%
6.62%
4.00% 4.97% 5.99% 6.44% 7.08%
7.56%
4.50% 5.59% 6.74% 7.25% 7.96%
8.51%
5.00% 6.21% 7.49% 8.05% 8.85%
9.45%
5.50% 6.83% 8.23% 8.86% 9.73%
10.40%
6.00% 7.45% 8.98% 9.66% 10.62%
11.34%
NOTE: THE MAXIMUM MARGINAL TAX RATE FOR EACH BRACKET WAS USED IN
CALCULATING THE TAXABLE YIELD EQUIVALENT. FURTHERMORE, ADDITIONAL STATE
AND LOCAL TAXES PAID ON COMPARABLE TAXABLE INVESTMENTS WERE NOT USED TO
INCREASE FEDERAL DEDUCTIONS.
TAXABLE YIELD EQUIVALENT FOR 1995
STATE OF OHIO
FEDERAL TAX BRACKET:
15.00% 28.00% 31.00% 36.00% 39.60%
COMBINED FEDERAL AND STATE TAX BRACKET:
20.201% 34.900% 37.900% 43.500% 47.100%
$1- $39,001- $94,251- $143,601- OVER
Joint Return:$39,000 $94,250 $143,600 $256,500 $256,500
TAX-EXEMPT
YIELD TAXABLE YIELD EQUIVALENT
1.50% 1.88% 2.30% 2.42% 2.65%
2.84%
2.00% 2.51% 3.07% 3.22% 3.54%
3.78%
2.50% 3.13% 3.84% 4.03% 4.42%
4.73%
3.00% 3.76% 4.61% 4.83% 5.31%
5.67%
3.50% 4.39% 5.38% 5.64% 6.19%
6.62%
4.00% 5.01% 6.14% 6.44% 7.08%
7.56%
4.50% 5.64% 6.91% 7.25% 7.96%
8.51%
5.00% 6.27% 7.68% 8.05% 8.85%
9.45%
5.50% 6.89% 8.45% 8.86% 9.73%
10.40%
6.00% 7.52% 9.22% 9.66% 10.62%
11.34%
NOTE: THE MAXIMUM MARGINAL TAX RATE FOR EACH BRACKET WAS USED IN
CALCULATING THE TAXABLE YIELD EQUIVALENT. FURTHERMORE, ADDITIONAL STATE
AND LOCAL TAXES PAID ON COMPARABLE TAXABLE INVESTMENTS WERE NOT USED TO
INCREASE FEDERAL DEDUCTIONS.
The above charts, which are based on the federal income tax schedule
effective January 1, 1995, are for illustrative purposes
only. They are not indicators of past or future performance of
a Fund.
* Some portion of a Fund's income may result in liability
under the federal alternative minimum tax and may be subject to state
and local taxes.
Custodian
The Huntington Trust Company N.A. is the custodian of the Trust's
assets. The custodian's responsibilities include safeguarding and
controlling the Trust's cash and securities, handling the receipt and
delivery of securities, and collecting interest and dividends on the
Trust's investments. The custodian does not determine the investment
policies of the Funds or decide which securities the Funds will buy or
sell. The custodian's fees for custody and recordkeeping services are
based on a percentage of the average daily net assets of the Funds.
Transfer Agent and Dividend Disbursing Agent
Federated Services Company serves as transfer agent and dividend
disbursing agent for the Funds. The fee paid to the transfer agent is
based upon the size, type and number of accounts and transactions made
by shareholders.
Federated Services Company also maintains the Funds' accounting records.
The fee paid for this service is based upon the level of the Funds'
average net assets for the period plus out-of-pocket expenses.
Independent Public Accountants
The independent public accountants for the Trust are Price
Waterhouse LLP, Columbus, Ohio.
Additional Information About the Trust and Its Shares
The Trust is not required to hold annual meetings of shareholders for
the purpose of electing Trustees except that (i) the Trust is required
to hold a shareholders' meeting for the election of Trustees at such
time as less than a majority of the Trustees holding office have been
elected by shareholders and (ii) if, as a result of a vacancy on the
Board of Trustees, less than two-thirds of the Trustees
holding office have been elected by the shareholders, that vacancy may
only be filled by a vote of the shareholders. In addition, Trustees may
be removed from office by a written consent signed by the holders of
shares representing two-thirds of the outstanding shares of the Trust at
a meeting duly called for the purpose, which meeting must be held upon
written request of not less than 10% of the outstanding shares of the
Trust. Upon written request by the holders of shares representing 1% of
the outstanding shares of the Trust stating that such shareholders wish
to communicate with the other shareholders for the purpose of obtaining
the signatures necessary to demand a meeting to consider removal of a
Trustee, the Trust will provide a list of shareholders or disseminate
appropriate materials (at the expense of the requesting shareholders).
Except as set forth above, the Trustees may continue to hold office and
may appoint successor Trustees.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the
Trust. However, the Declaration of Trust disclaims shareholder liability
for acts or obligations of the Trust and requires that notice of such
disclaimer be given in each agreement, obligation, or instrument entered
into or executed by the Trust or the Trustees. The Declaration of Trust
provides for indemnification out of a Fund's property for all loss and
expense of any shareholder held personally liable for the obligations of
a Fund. Thus the risk of a shareholder's incurring financial loss on
account of shareholder liability is limited to circumstances in which
the Fund would be unable to meet its obligations.
Shareholder Inquiries
Shareholder inquiries regarding those Funds offering Trust Shares should
be directed to The Huntington Trust Company, N.A., 41 South High Street,
Columbus, Ohio 43215, Attn: Mutual Fund Services Center.
Shareholder inquiries regarding those Funds offering Investment Shares
should be directed to The Huntington Investment Company, 41 South High
Street, Columbus, Ohio 43287.
Pending Litigation Relating to Piper
Several complaints have been filed in federal court against Piper,
certain affiliated companies, and certain individuals affiliated with
Piper. An Amended Consolidated Class Action Complaint, representing a
consolidation of a number of previously filed complaints, was filed on
October 5, 1994 in the United States District Court for the District of
Minnesota, by Richard J. Rodney, Jr., Doug Shonka, Carl Patrick Monahan,
Jerry Hoehnen, Rosemary Boris, Thomas W. Newcome, Delvin D. Junker,
Printing Mailing Trade District, affiliated with the Newspaper Drivers'
Division of the International Brotherhood of the Teamsters, The History
Theater, Inc., Paul Gold and Bernard Friedman. The complaint alleges
certain violations of federal and state securities laws, common law
negligent misrepresentation and breach of fiduciary duty. A similar
complaint was filed in the same court against the same parties on
October 21, 1994, by Eltrax Systems, Inc. A third complaint was filed on
September 30, 1994, in the United States District Court for the District
of Colorado. The complaint alleges certain violations of federal and
state securities laws and common law fraud. Plaintiffs in the complaint
are Gary Pashel and Gregg S. Hayutin, Trustees of the Mae Pashel Trust;
Mae Pashel, individually; Gary Pashel and Michael H. Feinstein, Trustees
of the Robert Hayutin Insurance Trust; and Dennis E. Hayutin, Gregg S.
Hayutin and Gary Pashel, Trustees of the Marie Ellen Hayutin Trust. An
additional complaint has been filed in United States District Court for
the District of Minnesota relating to two closed-end investment
companies managed by Piper. Piper intends to defend these lawsuits
vigorously. These complaints do not involve the Mortgage Securities
Fund.
Financial Statements
The financial statements for the fiscal year ended December 31,
1994, are incorporated herein by reference to the Trust's
Combined Annual Report dated December 31, 1994. A copy of
this Report may be obtained without charge by contacting the Trust.
Appendix
Standard & Poor's Ratings Group Corporate and Municipal
Bond Rating Definitions
AAA-Debt rated "AAA" has the highest
rating assigned by Standard & Poor's Ratings Group.
Capacity to pay interest and repay principal is extremely strong.
AA-Debt rated "AA" has a very strong
capacity to pay interest and repay principal and differs from the higher
rated issues only in small degree.
A-Debt rated "A" has a strong capacity to
pay interest and repay principal although it is somewhat more
susceptible to the adverse effect of changes in circumstances and
economic conditions than debt in higher rated categories.
S&P may apply a plus (+) or minus (-) to the above rating
classifications to show relative standing within the classifications.
Moody's Investors Service, Inc. Corporate and Municipal Bond Rating
Definitions
Aaa-Bonds which are rated Aaa are judged to be of the
best quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edged." Interest payments
are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa-Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they comprise what
are generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long
term risks appear somewhat larger than in Aaa securities.
A-Bonds which are rated A possess many favorable
investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Duff & Phelps, Inc. Corporate Bond Rating Definitions
AAA-Highest credit quality. The risk factors are
negligible, being only slightly more than for risk-free U.S. Treasury
debt.
AA+, AA, AA- -High credit quality protection factors are
strong. Risk is modest but may vary slightly from time to time because
of economic conditions.
A+, A, A- -Protection factors are average but adequate.
However, risk factors are more variable and greater in periods of
economic stress.
Fitch Investors Service, Inc. Corporate Bond Rating Definitions
AAA-Bonds considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability
to pay interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events. AA-Bonds considered to be
investment grade and of very high credit quality. The obligor's ability
to pay interest and repay principal is very strong, although not quite
as strong as bonds rated "AAA". Because bonds rated in
the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these
issues is generally rated "F-1+." A-Bonds considered to
be investment grade and of high credit quality. The obligor's ability to
pay interest and repay principal is considered to be strong, but may be
more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
IBCA Long-Term Rating Definitions
AAA-Obligations for which there is the lowest expectation
of investment risk. Capacity for timely repayment of principal and
interest is substantial, such that adverse changes in business, economic
or financial conditions are unlikely to increase investment risk
significantly.
AA-Obligations for which there is a very low expectation
of investment risk. Capacity for timely repayment of principal and
interest is substantial. Adverse changes in business, economic or
financial conditions may increase investment risk albeit not very
significantly.
A-Obligations for which there is a low expectation of
investment risk. Capacity for timely repayment of principal and interest
is strong, although adverse changes in business, economic or financial
conditions may lead to increased investment risk.
Standard & Poor's Ratings Group Short-Term Municipal
Obligation Rating Definitions
SP-1-Very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
SP-2-Satisfactory capacity to pay principal and interest.
Moody's Investors Service, Inc. Short-Term Municipal Obligation Rating
Definitions
MIG1/VMIG1-This designation denotes best quality. There
is present strong protection by established cash flows, superior
liquidity support, or demonstrated broad-based access to the market for
refinancing.
MIG2/VMIG2-This designation denotes high quality. Margins
of protection are ample although not so large as in the preceding group.
IBCA Short-Term Rating Definitions
A1+-Obligations supported by the highest capacity for
timely repayment.
A1-Obligations supported by a very strong capacity for
timely repayment.
A2-Obligations supported by a strong capacity for timely
repayment, although such capacity may be susceptible to adverse changes
in business, economic or financial conditions.
Standard and Poor's Ratings Group Commercial Paper Rating
Definitions
A-1-This designation indicates that the degree of safety
regarding timely payment strong. Those issues determined to have
extremely strong safety characteristics are denoted with a plus (+)
sign.
A-2-Capacity for timely payment on issues with this
designation is satisfactory. However, the relative degree of safety is
not as high as for issues designated "A-1".
Moody's Investors Service , Inc. Commercial Paper Rating Definitions
P-1-Issuers (or supporting institutions) rated Prime-1 (P-
1) have a superior capacity for repayment of senior short-term
promissory obligations. P-1 repayment capacity will normally be
evidenced by many of the following characteristics:
o Leading market positions in well-established industries.
o High rates of return on funds employed.
o Conservative capitalization structure with moderate reliance
on debt and ample asset protection.
o Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
o Well-established access to a range of financial markets and
assured sources of alternate liquidity.
P-2-Issuers (or supporting institutions) rated Prime-2 (P-
2) have a strong capacity for repayment of senior short-term debt
obligations. This will normally be evidenced by many of the
characteristics cited above, but to a lesser degree. Earnings trends and
coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is
maintained.
NR indicates the bonds are not currently rated by Moody's or
S&P. However, management considers them to be of good
quality.
Duff & Phelps, Inc. Commercial Paper Rating Definitions
Duff 1+-Highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.
Duff 1-Very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental protection
factors. Risk factors are minor. Duff 1-High certainty of
timely payment. Liquidity factors are strong and supported by good
fundamental protection factors. Risk factors are very small. Duff
2-Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is good.
Risk factors are small.
Fitch Investors Service, Inc. Commercial Paper Rating Definitions
Plus or minus signs are used with a rating symbol to indicate the
relative portion of the credit within the rating category:
F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating
are regarded as having the strongest degree of assurance for timely
payment.
F-1: Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues
rated F1+.
F-2: Good Credit Quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as for issues assigned F-1+ or F-1 ratings.
609409107 609409701
609409875 609409404
609409305 609409834
609409867 609409800
609409503 609409826
609409768 609409776
609409602 609409784
609409842 609409883
1032204B (4/95)
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements: Incorporated into the Combined
Statement of Additional Information by reference to
the Trust's Combined Annual Report, dated
December 31, 1994.
(b) Exhibits:
(1) Conformed copy of Amended and Restated Declaration of
Trust of the Registrant;+
(2) Copy of By-Laws of the Registrant;+
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of Beneficial
Interest of the Registrant;
(5) (i) Conformed copy of Investment Advisory
Agreement of the Registrant;+
(ii) Conformed copy of Sub-Advisory Agreement of the
Registrant;+
(6) Conformed copy of Distributor's Contract of the
Registrant;+
(7) Not applicable;
(8) Conformed copy of Custodian Contract of the
Registrant;+
(9) (i) Conformed copy of Transfer Agency and
Service Agreement of the Registrant;+
(ii) Conformed copy of Administrative Services
Agreement of the Registrant;+
(10) Conformed Copy of Opinion and Consent of Counsel
as to legality of shares being registered;
(11) Conformed copy of Consent of Independent Public
Accountants;+
(12) Not applicable;
(13) Conformed copy of Initial Capital Understanding;
(14) Not applicable;
(15) (i) Conformed copy of Distribution Plan dated
April 24, 1992;+
(ii) Conformed copy of Distribution Plan dated May 1,
1991;+
(iii) Copy of Sales Agreement of the Registrant;+
(16) Copy of Schedule for Computation of Fund
Performance Data;
(17) Copy of Financial Data Schedules;+
(18) Conformed Copy of Multiple Class Plan;+
(19) Conformed copy of Power of Attorney;+
Item 25. Persons Controlled by or Under Common Control with Registrant:
None.
+ All Exhibits are being filed electronically.
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of April 7, 1995
Shares of Beneficial Interest of:
The Monitor Money Market Fund
Trust Shares 82
Investment Shares 993
The Monitor Ohio Municipal
Money Market Fund
Trust Shares 8
Investment Shares 335
The Monitor U.S. Treasury
Money Market Fund
Trust Shares 9
Investment Shares 258
The Monitor Growth Fund
Trust Shares 114
Investment Shares 1,024
The Monitor Income Equity Fund
Trust Shares 89
The Monitor Mortgage Securities Fund
Trust Shares 75
Investment Shares 679
The Monitor Ohio Tax-Free Fund
Trust Shares 25
Investment Shares 247
The Monitor Fixed Income
Securities Fund
Trust Shares 64
Investment Shares 446
The Monitor Short/Intermediate
Fixed Income Securities Fund
Trust Shares 93
Item 27. Indemnification: (1)
1. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 18 on Form N-1A filed April 26, 1994. (File Nos. 33-11905 and
811-5010).
Item 28. Business and Other Connections of Investment Adviser:
The Huntington Trust Company, Inc., N.A. ("Huntington") serves as
investment adviser to the Registrant. Huntington is wholly-owned
subsidiary of The Huntington Financial Services Company which in
turn is a wholly-owned subsidiary of Huntington Bancshares
Incorporated ("Bancshares"). Huntington conducts a variety of
trust activities.
To the knowledge of Registrant, none of the directors or executive
officers of Huntington, except those set forth below, is or has
been at any time during the past two fiscal years engaged in any
other business, profession, vocation or employment of a
substantial nature, except that certain directors and executive
officers also hold various positions with and engage in business
for Bancshares. Set forth below are the names and principal
businesses of the directors and executive officers of Huntington
who are or during the past two fiscal years have been engaged in
any other business, profession, vocation or employment of a
substantial nature for their own account or in the capacity of
director, officer, employee, partner or trustee.
Principal Other Business(es) During
Name at Least the Last Two Fiscal years
Officers & Directors of Huntington
Elaine H. Hairston Chancellor, Ohio Board of
Regents
Robert W. Rahal President, Bobby Rahal, Inc.
George A. Skestos Former Chairman & Chief
Executive Officer, Homewood
Corporation
Rodney Wasserstrom President & Chief Executive
Officer, The Wasserstrom
Company
Frank Wobst Chairman & Chief Executive
Officer, Huntington Bancshares
Incorporated
W. Lee Hoskins Vice Chairman, Huntington
Bancshares Incorporated
Norman A. Jacobs President and Chief Executive
Officer, The Huntington Trust
Company National Association
Zuheir Sofia President & Chief Operating
Officer, Huntington Bancshares
Incorporated
Piper Capital Management, Inc. was formed in 1985
as a wholly-owned subsidiary of the publicly traded investment
banking firm, Piper Jaffray Companies, Inc. The officers and
directors of Piper Capital Management, Inc. are as follows:
William H. Ellis, Director and President; Bruce C. Huber, Director
and Vice President; David E. Rosedahl, Director and Secretary;
Charles N. Hayssen, Director, Treasurer, COO, and CFO; Delos
Steenson, Director; Momchilo Vucenich, Director; Beverly Zimmer,
Director; James Berman, Senior Vice President; Worth Bruntjen,
Senior Vice President; Michael Derck, Senior Vice President; Paul
A. Dow, Senior Vice President; Richard W. Filippone, Senior Vice
President; John J. Gibas, Senior Vice President; Marijo A.
Goldstein, Senior Vice President; Jeffrey B. Griffin, Senior Vice
President; Mark R. Grotte, Senior Vice President; Michael Jansen,
Senior Vice President; Lisa A. Kenyon, Senior Vice President;
Steven B. Markusen, Senior Vice President; Paula R. Meyer, Senior
Vice President; Robert Nelson, Senior Vice President; Gary
Norstrem, Senior Vice President; Nancy S. Olsen, Senior Vice
President; Ronald R. Reuss, Senior Vice President; Maxine Rossini,
Senior Vice President; Bruce Salvog, Senior Vice President; Sandra
Shrewsbury, Senior Vice President; David M. Steele, Senior Vice
President; Randall J. Sukovich, Senior Vice President; Robert H.
Weidenhammer, Senior Vice President; John G. Wenker, Senior Vice
President; Douglas J. White, Senior Vice President; Cythia K.
Castle, Vice President; Richard Daly, Vice President; Molly J.
Destro, Vice President; Joan L. Harrod, Vice President; Newby H.
Herrod, Vice President; Amy K. Johnson, Vice President; Scott
Jacobson, Vice President; Kevin Jansen, Vice President; Russ
Kappenman, Vice President; Kimberly F. Kaul, Vice President; John
Kightlinger, Vice President; Wan-Chong Kung, Vice President; Mark
S. Leo, Vice President; Thomas S. McGlinch, Vice President;
Stephan C. Meyer, Vice President; Siobann Moran, Vice President;
Thomas Moore, Vice President; Edward P. Nicoski, Vice President;
Daniel Phillips, Vice President; John K. Schonberg, Vice
President; Eric L. Siedband, Vice President; Bradley Stone, Vice
President; Bonnie L. Theis, Vice President; Jane K. Welter, Vice
President; Eric H. Wesman, Vice President; Fong P. Woo, Vice
President; Marcy K. Winson, Vice President.
Item 29. Principal Underwriters:
(a) Federated Securities Corp., the Distributor for
shares of the Registrant, also acts as principal underwriter for
the following open-end investment companies: Alexander Hamilton
Funds; American Leaders Fund, Inc.; Annuity Management Series;
Arrow Funds; Automated Cash Management Trust; Automated Government
Money Trust; BayFunds; The Biltmore Funds; The Biltmore Municipal
Funds; California Municipal Cash Trust; Cash Trust Series, Inc.;
Cash Trust Series II; DG Investor Series; Edward D. Jones & Co.
Daily Passport Cash Trust; Federated ARMs Fund; Federated
Exchange Fund, Ltd.; Federated GNMA Trust; Federated Government
Trust; Federated Growth Trust; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust;
Federated Index Trust; Federated Institutional Trust; Federated
Intermediate Government Trust; Federated Master Trust; Federated
Municipal Trust; Federated Short-Intermediate Government Trust;
Federated Short-Term U.S. Government Trust; Federated Stock Trust;
Federated Tax-Free Trust; Federated U.S. Government Bond Fund;
First Priority Funds; First Union Funds; Fixed Income Securities,
Inc.; Fortress Adjustable Rate U.S. Government Fund, Inc.;
Fortress Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.;
Fountain Square Funds; Fund for U.S. Government Securities, Inc.;
Government Income Securities, Inc.; High Yield Cash Trust;
Independence One Mutual Funds; Insight Institutional Series, Inc.;
Insurance Management Series; Intermediate Municipal Trust;
International Series Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty Equity Income Fund, Inc.; Liberty
High Income Bond Fund, Inc.; Liberty Municipal Securities Fund,
Inc.; Liberty U.S. Government Money Market Trust; Liberty Utility
Fund, Inc.; Liquid Cash Trust; Managed Series Trust; Marshall
Funds, Inc.; Money Market Management, Inc.; The Medalist Funds;
Money Market Obligations Trust; Money Market Trust; Municipal
Securities Income Trust; Newpoint Funds; New York Municipal Cash
Trust; 111 Corcoran Funds; Peachtree Funds; The Planters Funds;
RIMCO Monument Funds; The Shawmut Funds; Short-Term Municipal
Trust; SouthTrust Vulcan Funds; Star Funds; The Starburst Funds;
The Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst Funds;
Targeted Duration Trust; Tax-Free Instruments Trust; Tower Mutual
Funds; Trademark Funds; Trust for Financial Institutions; Trust
for Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; Vision Fiduciary
Funds, Inc.; Vision Group of Funds, Inc.; and World Investment
Series, Inc.
Federated Securities Corp. also acts as principal underwriter for
the following closed-end investment company: Liberty Term Trust,
Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief --
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice President and
Federated Investors Tower President, and Treasurer, Treasurer
Pittsburgh, PA 15222-3779 Federated Securities
Corp.
John W. McGonigle Director, Executive Vice --
Federated Investors Tower President, and Assistant
Pittsburgh, PA 15222-3779 Secretary, Federated
Securities Corp.
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph L. Epstein Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael D. Fitzgerald Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
David C. Glabicki Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William J. Kerns Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Stephen A. LaVersa Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Francis J. Matten, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Jeffrey Niss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charles A. Robison Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John C. Shelar, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Charlene H. Jennings Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, Assistant
Federated Investors Tower Federated Securities Corp. Secretary
Pittsburgh, PA 15222-3779
(c) Not applicable.
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section
31(a) of the Investment Company Act of 1940 and Rules 31a-1
through 31a-3 promulgated thereunder are maintained at one of the
following locations:
The Monitor Funds Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Services Company Federated Investors Tower
("Transfer Agent and Dividend Pittsburgh, PA 15222-3779
Disbursing Agent")
Federated Administrative Federated Investors Tower
Services Pittsburgh, PA 15222-3779
("Administrator")
The Huntington Trust Company, N.A. Huntington Center
("Adviser") 41 South High Street
Columbus, OH 43287
The Huntington Trust Company, N.A. Huntington Center
("Custodian and 41 South High Street
Portfolio Recordkeeper") Columbus, OH 43287
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
(a) Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant
to the foregoing provisions, or otherwise, the registrant has
been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of
such issue.
(b) Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
(c) Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's
latest annual report to shareholders, upon request and
without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, THE MONITOR FUNDS, has
duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, in the City of
Pittsburgh and Commonwealth of Pennsylvania, on the 25th day of April,
1995.
THE MONITOR FUNDS
BY: /s/Karen M. Brownlee
Karen M. Brownlee, Assistant Secretary
Attorney in Fact for John F. Donahue
April 25, 1995
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE DATE
By: /s/Karen M. Brownlee
Karen M. Brownlee Attorney In Fact April 25, 1995
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
Edward C. Gonzales* President and Treasurer
(Chief Executive Officer,
Principal Financial and
Accounting Officer)
David S. Schoedinger* Trustee
William R. Wise* Trustee
John M. Shary* Trustee
* By Power of Attorney
Exhibit No. 1 under Form N-1A
Exhibit No. 3(a) under Item 601/Reg. S-K
THE MONITOR FUNDS
AMENDED AND RESTATED DECLARATION OF TRUST
TABLE OF CONTENTS
Page
ARTICLE I -- NAME AND DEFINITIONS 2
Section 1.1 Name 2
Section 1.2 Definitions 2
ARTICLE II -- TRUSTEES 6
Section 2.1 General Powers 6
Section 2.2 Investments 7
Section 2.3 Legal Title 11
Section 2.4 Issuance and Repurchase of Shares 12
Section 2.5 Delegation; Committees 12
Section 2.6 Collection and Payment 13
Section 2.7 Expenses 13
Section 2.8 Manner of Acting; By-laws 13
Section 2.9 Miscellaneous Powers 14
Section 2.10 Principal Transactions 16
Section 2.11 Number of Trustees 17
Section 2.12 Election and Term 17
Section 2.13 Resignation and Removal 18
Section 2.14 Vacancies 18
Section 2.15 Delegation of Power 19
ARTICLE III -- CONTRACTS 20
Section 3.1 Underwriting Contract 20
Section 3.2 Advisory or Management Contract 20
Section 3.3 Transfer Agency and Administrative
Contracts 22
Section 3.4 Affiliations of Trustees or
Officers, Etc. 22
Section 3.5 Compliance with 1940 Act 23
ARTICLE IV -- LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS 24
Section 4.1 No Personal Liability of
Shareholders, Trustees, Etc. 24
Section 4.2 Non-Liability of Trustees, Etc. 25
Section 4.3 Mandatory Indemnification 25
Section 4.4 No Bond Required of Trustees 29
Section 4.5 No Duty of Investigation; Notice in
Trust Instruments, Etc. 29
Section 4.6 Reliance on Experts, Etc. 31
ARTICLE V -- SHARES OF BENEFICIAL INTEREST 31
Section 5.1 Beneficial Interest 31
Section 5.2 Rights of Shareholders 32
Section 5.3 Trust Only 33
Section 5.4 Issuance of Shares 34
Section 5.5 Register of Shares 34
Section 5.6 Transfer of Shares 35
Section 5.7 Notices 36
Section 5.8 Treasury Shares 36
Section 5.9 Voting Powers 37
Section 5.10 Meetings of Shareholders 38
Section 5.11 Establishments and Designation of
Series or Class 39
ARTICLE VI -- REDEMPTION AND REPURCHASE OF SHARES 45
Section 6.1 Redemption of Shares 45
Section 6.2 Price 46
Section 6.3 Payment 46
Section 6.4 Effect of Suspension of
Determination of Net Asset value 46
Section 6.5 Repurchase by Agreement 47
Section 6.6 Redemption of Shareholder's Interest 48
Section 6.7 Redemption of Shares in Order to
Qualify as Regulated Investment 48
Section 6.8 Reductions in Number of Outstanding
Shares Pursuant to Net Asset Value
Formula 49
Section 6.9 Suspension of Right of Redemption 49
ARTICLE VII -- DETERMINATION OF NET ASSET VALUE
AND DISTRIBUTIONS 51
Section 7.1 Net Asset Value 51
Section 7.2 Distributions to Shareholders 53
Section 7.3 Power to Modify Foregoing Procedures 55
ARTICLE VIII -- DURATION, TERMINATION OF TRUST;
AMENDMENT; MERGERS, ETC. 55
Section 8.1 Duration 55
Section 8.2 Termination of Trust or Series or
Class 55
Section 8.3 Amendment Procedure 58
Section 8.4 Merger, Consolidation and Sale of
Assets 60
Section 8.5 Incorporation 61
ARTICLE IX -- REPORTS TO SHAREHOLDERS 62
ARTICLE X -- MISCELLANEOUS 63
Section 10.1 Filing 63
Section 10.2 Governing Law 63
Section 10.3 Counterparts 64
Section 10.4 Reliance by Third Parties 64
Section 10.5 Provisions in Conflict with Law or
Regulations 65
AMENDED AND RESTATED DECLARATION OF TRUST
OF THE MONITOR FUNDS
AMENDMENT AND RESTATEMENT, dated as of April 29, 1991, to the
DECLARATION OF TRUST made February 10, 1987 by Michael E. Portnoy and Joseph
P. Campbell (together with all other persons from time to time duly elected,
qualified and serving as Trustees in accordance with the provisions of Article
II hereof, the "Trustees");
WHEREAS, the Trustees desire to establish a trust under the laws of
Massachusetts for the investment and reinvestment of funds contributed
thereto; and
WHEREAS, the Trustees desire that the beneficial interest in the trust
assets be divided into transferable shares of beneficial interest, as
hereinafter provided;
NOW, THEREFORE, the Trustees declare that all money, securities and
other assets contributed to the Trust established hereunder, or any Series or
Class (as hereinafter defined), shall be held, managed and disposed of in
trust for the pro rata benefit of the holders from time to time of the shares
of beneficial interest of this Trust, or any such Series or Class, which
shares shall be issued hereunder and subject to the provisions hereof.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The name of the trust created hereby is the
"The Monitor Funds," and the Trustees shall conduct the business of the Trust
under that name or any other name as they may from time to time adopt pursuant
to Section 8.3(a) hereof.
Section 1.2. Definitions. Whenever they are used herein, the
following terms have the following respective meanings:
(a) "Administrator" means the party to provide administrative
services to the Trust pursuant to an administrative services contract pursuant
to Section 3.3 hereof.
(b) "By-laws" means the By-laws referred to in Section 2.8 hereof,
as from time to time amended.
(c) "Class" means any class of Shares of a Series established in
accordance with the provisions of Section 5.11 hereof.
(d) The terms "Commission," "Interested Person" and "Majority
Shareholder Vote" (the 67% or 50% requirement of the third sentence of Section
2(a)(42) of the 1940 Act, whichever may be applicable) have the meanings given
them in the 1940 Act.
(e) "Custodian" means any Person other than the Trust who has
custody of any Trust Property as required by S17(f) of the 1940 Act, but does
not include a system for the central handling of securities described in said
S17(f).
(f) "Declaration" means this Declaration of Trust as amended from
time to time. Reference in this Declaration of Trust the "Declaration,"
"hereof," and "hereunder" shall be deemed to refer to this Declaration rather
than exclusively to the article or section in which such words appear.
(g) "Distributor" means the party or parties, other than the Trust,
to the contract or contracts described in Section 3.1 hereof.
(h) "His" shall include the feminine and neuter, as well as the
masculine, genders.
(i) "Investment Advisor" means the party or parties, other than the
Trust, to the contract or contracts described in Section 3.2 hereof.
(j) "Municipal Bonds" means obligations issued by or on behalf of
states, territories and of the United States and the District of Columbia and
their political subdivisions, agencies and instrumentalities, the interest
from which is exempt from federal income tax.
(k) "Net Asset Value" means the net asset value of each Series and
each Class determined in the manner provided in Section 7.1 hereof.
(l) The "1940 Act" means the Investment Company Act of 1940, as
amended from time to time, and the rules, regulations and interpretations
promulgated from time to time thereunder.
(m) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities, whether
or not legal entities, and governments and agencies and political subdivisions
thereof.
(n) "Series" means any series of Shares of the Trust established in
accordance with the provisions of Section 5.11 hereof.
(o) "Shareholder" means a record owner of Outstanding Shares.
(p) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest in the Trust shall be divided from
time to time, or, if more than one Series or Class is authorized by the
Trustees pursuant to Section 5.11 hereof, the equal proportionate transferable
units into which each Series or Class shall be divided from time to time, and
includes fractions of Shares as well as whole Shares. "Outstanding Shares"
means those Shares of each Series and each Class, if any, shown from time to
time on the books of the Trust or of its Transfer Agency as them issued and
outstanding, but shall not include Shares which have been redeemed or
repurchased by the Trust and which are at the time held in the treasury of the
Trust.
(q) "Transfer Agent" means any Person other than the Trust who
maintains the Shareholder records of the Trust, such as the list of
Shareholders, the number of Shares credited to each account, and the like
pursuant to a transfer agency contract entered pursuant to Section 3.3 hereof.
(r) The "Trust" means The Monitor Funds, as established by this
Declaration. Reference to the Trust, when applicable to one or more Series or
Classes, shall include any such Series and Classes.
(s) The "Trust Property" means any and all property, real or
personal, tangible or intangible, which is owned or held by or for the account
of the Trust, or any Series or Class, or the Trustees in their capacity as
Trustees.
(t) The "Trustees" means the persons who have signed this
Declaration, so long as they shall continue in office in accordance with the
terms hereof, and all other persons who may from time to time be duly elected,
qualified and serving as Trustees in accordance with the provisions of Article
II hereof, and reference herein to a Trustee or the Trustees shall refer to
such person or persons in his capacity or their capacities as trustees
hereunder.
ARTICLE II
TRUSTEES
Section 2.1 General Powers. The Trustees shall have exclusive and
absolute control over the Trust Property and over the business of the Trust
and each Series and Class to the same extent as if the Trust and each Series
and Class to the same extent as if the Trustees were the sole owners of the
Trust Property and business in their own right, but with such powers of
delegation as may be permitted by this Declaration. The Trustees shall have
power to conduct the business of the Trust and each Series and Class and to
carry on the operations of Trust and each Series and Class in any and all of
the Trust's branches and maintain offices both within and without the
Commonwealth of Massachusetts, in any and all states of the United States of
America, in the District of Columbia, and in any and all commonwealths,
territories of the United States of America and of foreign nations, and to do
all such other things and execute all such instruments as they deem necessary,
proper or desirable in order to promote the interests of the Trust or any
Series or Class although such things are not herein specifically mentioned.
Any determination as to what is in the interests of the Trust or any Series or
Class made by the Trustees in good faith shall be conclusive. In construing
the provisions of this Declaration, the presumption shall be in favor of a
grant of power to the Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
Section 2.2. Investments. The Trustees shall have the power:
(a) To operate as, and carry on the business of, an investment company,
and exercise all the powers necessary and appropriate to the conduct of such
operations.
(b) To invest in, hold for investment, or reinvest cash and other
property in securities, including common and preferred stocks and, to the
extent permitted by the 1940 Act, shares of other investment companies;
warrants; bonds, debentures, bills, time notes and all other evidences of
indebtedness; negotiable or non-negotiable instruments; government securities,
including securities of any state, municipality or other political subdivision
thereof, or any governmental or quasi-governmental agency or instrumentality;
and money market instruments including bank certificates of deposit, finance
paper, commercial paper, bankers acceptances and all kinds of repurchase
agreements, of any corporation, company, trust, association, firm or other
business organization, however established, and of any country, state,
municipality or other political subdivision, or any governmental or quasi-
governmental agency or instrumentality.
(c) To acquire (by purchase, subscription or otherwise), to hold, to
trade in and deal in, to acquire any rights or options to purchase or sell, to
sell or otherwise dispose of, to lend, and to pledge any such securities and
repurchase agreements.
(d) To purchase put and call options written by others and to write put
and covered call options covering the types of securities in which a
particular Series or Class may invest and to enter into contracts for the
future delivery of fixed income securities.
(e) To exercise all rights, powers and privileges of ownership or
interest in all securities and repurchase agreements included in the Trust
Property, including the right to vote thereon and otherwise act with respect
thereto, and to do all acts for the preservation, protection, improvement and
enhancement in value of all such securities and repurchase agreements.
(f) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop and dispose of (by sale or otherwise) any property, real or
personal, including cash, and any interest therein.
(g) To borrow money on behalf of any Series or Class, and in this
connection issue notes or other evidence of indebtedness; to secure borrowings
by mortgaging, pledging or otherwise subjecting as security the assets
belonging to the Series or Class on behalf of which such borrowings are made;
to endorse, guarantee or undertake the performance of any obligation or
engagement of any other Person; and to lend Trust Property in respect of any
Series or Class but only out of the assets belonging to such Series or Class.
(h) To aid by further investment with respect to any Series or Class
any corporation, company, trust, association or firm, any obligation of or
interest in which is included in the Trust Property in respect of such Series
or Class or in the affairs of which the Trustees have any direct or indirect
interest; to do all acts and things designed to protect, preserve, improve or
enhance the value of such obligation or interest; to guarantee or become
surety on any or all of the contracts, stocks, bonds, notes, debentures and
other obligations of any such corporation, company, trust, association or
firm.
(i) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary,
suitable or proper for the accomplishment of any purchase or the attainment of
any object or the furtherance of any power herein before set forth, either
alone or in association with others, and to do every other act or thing
incidental or appurtenant to or growing out of or connected with the aforesaid
business or purposes, objects or powers.
The foregoing clauses shall be construed both as objects and powers, and
the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust or any Series or Class, nor shall
the Trustees be limited by any law limiting the investments which may be made
by fiduciaries but shall have full authority and power to make any and all
investments which they, in their sole discretion, shall deem proper to
accomplish the purposes of this Trust and any Series or Class. However, each
of the powers herein before mentioned shall be subject to any investment
policies or restrictions applicable to the Trust or a particular Series or
Class contained in any effective registration statement filed with the
Commission on behalf of the Trust.
Section 2.3. Legal Title. Legal title to all the Trust Property
shall be vested in the Trustees as joint tenants except that the Trustees
shall have power to cause legal title to any Trust Property in respect of the
Trust or any Series or Class to be held by or in the name of one or more of
the Trustees, or in the name of the Trust or the appropriate Series or Class,
or in the name of any other Person as nominee, on such terms as the Trustees
may determine, provided that the interest of the Trust and each Series and
Class is deemed appropriately protected. The right, title and interest of the
Trustees in the Trust Property shall vest automatically in each Person who may
hereafter become a Trustee. The Trust Property shall be held by the Trustee
separate and apart from any assets now or hereafter held in any capacity other
than as Trustee hereunder. Upon the termination of the term of office,
resignation, removal or death of a Trustee, he shall automatically cease to
have any right, title or interest in any of the Trust Property, and the right,
title and interest or such Trustee in the Trust Property shall vest
automatically in the remaining Trustees. Such cessation and vesting of title
shall be effective whether or not conveyancing documents have been executed
and delivered.
Section 2.4. Issuance and Repurchase of Shares. The Trustees shall
have the power to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares of
the Trust and each Series and Class, and, subject to the provisions set forth
in Articles VI and VII and Section 5.11 hereof, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust or the appropriate Series or Class, whether
capital or surplus or otherwise, to the full extent now or hereafter permitted
by the laws of The Commonwealth of Massachusetts governing business
corporations.
Section 2.5. Delegation; Committees. The Trustees shall have power
to delegate from time to time to such of their number or to officers,
employees or agents of the Trust the doing of such things and the execution of
such instruments, either in the name of the Trust or in the name of the
Trustees, or otherwise, as the Trustees may deem expedient, to the same extent
as such delegation is permitted by the 1940 Act.
Section 2.6. Collection and Payment. The Trustee shall have power
to collect all property due to the Trust and each Series and Class; to pay all
claims, including taxes, out of the assets belonging to a Series or Class or
owned by the Trust; to prospectus, defend, compromise or abandon any claims
relating to the Trust Property in respect of the Trust or any Series or Class;
to foreclose any security interest securing any obligations, by virtue of
which any property is owed to the Trust or any Series or Class; and to enter
into releases, agreements and other instruments.
Section 2.7. Expenses. The Trustees shall have the power to incur
and pay any expenses which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of this Declaration, and to pay
reasonable compensation, out of the asses belonging to each Series or Class or
owned by the Trust, to themselves as Trustees. The Trustees shall fix the
compensation of all officers, employees and Trustees.
Section 2.8. Manner of Acting; By-laws. Except as otherwise
provided herein or in the By-laws or as otherwise required by the 1940 Act,
any action to be taken by the Trustees may be taken by a majority of the
Trustees present at a meeting of Trustees (a quorum being present), including
any meeting held be means of a conference telephone circuit or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, or by written consents of a majority of the
Trustees then in office. The Trustees may adopt By-laws not inconsistent with
this Declaration to provide for the conduct of the business of the Trust and
any Series or Class, and may amend or repeal such By-laws to the extent such
power is not reserved to the Shareholders.
Notwithstanding the foregoing provisions of this Section 2.8, and in
addition to such provisions or any other provision of this Declaration or of
the By-laws with respect to the appointment and powers of committees, the
Trustees may by resolution appoint a committee consisting of less than the
whole number of Trustees then in office, which committee may be empowered to
act for and bind the Trustees and the Trust, as if the acts of such committee
were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of
any action, suit or proceeding which shall be pending or threatened to be
brought before any court, administrative agency or other adjudicatory body.
Section 2.9. Miscellaneous Powers. The Trustees shall have the
power to: (a) employ or contract with such Persons as the Trustees may deem
desirable for the transaction of the business of the Trust and any Series or
Class including, but not limited to, one or more Transfer Agents,
Administrators, Distributors, Custodians or Investment Advisors; (b) enter
into joint ventures, partnerships and any other combinations or associations;
(c) remove Trustees or fill vacancies in or add to their number, elect and
remove such officers and appoint and terminate such agents or employees as
they consider appropriate, and appoint from their own number, and terminate,
any one or more committees which may exercise some or all of the power and
authority of the Trustees as the Trustees may determine; (d) purchase, and
pay for out of the assets belonging to a Series or Class or owned by the
Trust, insurance policies insuring the Shareholders, Trustees, officers,
employees, agents, Investment Advisors, Distributors, selected dealers or
independent contractors of the Trust against all claims arising by reason of
holding any such position or by reason of any action taken or omitted by any
such Person in such capacity, whether or not constituting negligence, or
whether or not the Trust or a Person against such liability; (e) establish
pension, profit-sharing, share purchase, and other retirement, incentive and
benefit plans for any Trustees, officers, employees or agents of the Trust;
(f) to the extent permitted by law, indemnify any person with whom the Trust
has dealings, including the Investment Advisor; Distributor, Transfer Agent
and selected dealers, to such extent as the Trustees shall determine; (g)
guarantee indebtedness or contractual obligations of others; (h) determine
and change the fiscal year of the Trust and the method by which its accounts
shall be kept; (i) establish Series and Classes of Shares in accordance with
the provisions of Section 5.11 hereof; (j) allocate assets, liabilities and
expenses of the Trust to a particular Series or Class or to apportion the same
between or among two or more Series or Classes, provided that any liabilities
or expenses attributable to a particular Series or Class shall be payable
solely out of the assets belonging to that Series or Class as provided in
Section 5.11 hereof; (k) establish from time to time a minimum Share purchase
requirement with respect to any Series or Class and to require the redemption
of the Shares of any Shareholder of such Series or Class whose investment is
less than the established minimum selected by the Trustees, upon notice to
each such Shareholder; and (1) adopt a seal for the Trust, but the absence of
such seal shall not impair the validity of any instrument executed on behalf
of the Trust.
Section 2.10. Principal Transactions. Unless otherwise permitted by
the 1940 Act, the Trustees may not, on behalf of the Trust or any Series or
Class, buy any securities (other than Shares) from, or sell any securities
(other than Shares) to, or lend any assets belonging to any Series or Class or
owned by the Trust to, any Trustee or officer of the Trust or any firm of
which any such Trustee or officer is a member acting as principal, or have any
such dealings with the Investment Advisor, Distributor or Transfer Agent or
with any Interested Person of any such Person; provided, however, that the
Trust may employ any such Person, or firm or company in which such Person is
an Interested Person, as broker, legal counsel, registrar, Transfer Agent,
dividend disbursing agent or Custodian so long as such action is not
prohibited by the 1940 Act.
Section 2.11. Number of Trustees. The number of Trustees shall
initially be two (2), and thereafter shall be such number as shall be fixed
from time to time by a written instrument signed by a majority of the
Trustees, provided, however, that the number of Trustees shall in no event be
less than one (1) nor more than seven (7).
Section 2.12. Election and Term. Except for the Trustees named
herein or appointed to fill vacancies pursuant to Section 2.14 hereof, the
Trustees shall be elected by the Shareholders owning of record a plurality of
the Outstanding Shares of the Trust entitled to vote at a meeting of
Shareholders, with the Shareholders of all Series and Classes voting together
as a single class. Except in event of the resignation or removal pursuant to
Section 2.13 hereof, each Trustee shall hold office during the lifetime of the
Trust, and until its termination as provided in Section 8.2 hereof, or, if
sooner, until the next meeting of Shareholders called for the purpose of
electing Trustees and until his successor is elected and qualified.
Section 2.13. Resignation and Removal. Any Trustee may resign his
trust (without need for prior or subsequent accounting) by an instrument in
writing signed by him and delivered to the other Trustees, and such
resignation shall be effective upon such delivery, or at a later date
according to the terms of the instrument. Any of the Trustees may be removed
(provided the aggregate number of Trustees after such removal shall not be
less than two) with cause, by the action of two-thirds of the remaining
Trustees. Upon the resignation or removal of a Trustee, or his otherwise
ceasing to be a Trustee, he shall execute and deliver such documents as the
remaining Trustees shall require for the purpose of conveying to the Trust or
the remaining Trustees any Trust Property held in the name of the resigning or
removed Trustee. Upon the incapacity or death of any Trustee, his legal
representative shall execute and deliver on his behalf such documents as the
remaining Trustees shall require as provided in the preceding sentence.
Section 2.14. Vacancies. The term of office of a Trustee shall
terminate and a vacancy shall occur in the event of the death, resignation,
removal, bankruptcy, adjudicated incompetence or other incapacity to perform
the duties of the office of a Trustee. No such vacancy shall operate to annul
the Declaration or to revoke any existing agency created pursuant to the terms
of the Declaration. In the case of an existing vacancy, including a vacancy
existing by reason of an increase in the number of Trustees subject to the
provisions of Section 16(a) of the 1940 Act, the remaining Trustees shall fill
such vacancy by the appointment of such other person as they in their
discretion shall see fit, made by a written instrument signed by a majority of
the Trustees then in office. Any such appointment shall not become effective,
however, until the person named in the written instrument of appointment shall
have accepted in writing such appointment and agreed in writing to be bound by
the terms of the Declaration. An appointment of a Trustee may be made in
anticipation of a vacancy to occur at a later date by reason of retirement,
resignation or increase in the number of Trustees, provided that such
appointment shall not become effective prior to such retirement, resignation
or increase in the number of Trustees. Whenever a vacancy in the number of
Trustees shall occur, until such vacancy is filled as provided in this Section
2.14 or in Section 5.10, the Trustees in office, regardless of their number,
shall have all the duties imposed upon the Trustees by the Declaration. A
written instrument certifying the existence of such vacancy signed by a
majority of the Trustees in office shall be conclusive evidence of the
existence of such vacancy.
Section 2.15. Delegation of Power. Any Trustee may, by power of
attorney, delegate his power for such period or periods of time deemed
appropriate by such Trustee to any other Trustee or Trustees or any other
individual; provided that such delegation shall be consistent with applicable
law and any provision of this Declaration contemplating the Trustee to
personally exercise the powers granted hereunder.
ARTICLE III
CONTRACTS
Section 3.1. Underwriting Contract. The Trustees may in their
discretion from time to time enter into an exclusive or non-exclusive contract
or contracts with respect to any or all Series or Classes providing for the
sale of Shares of such Series or Class at not less than the applicable Net
Asset Value as determined in accordance with Section 7.1 hereof, whereby the
Trustees may either agree to sell the Shares to the other party to the
contract or appoint such other party their sales agent for the Shares, and in
either case on such terms and conditions as may be prescribed in the By-laws,
if any, and such further terms and conditions as the Trustees may in their
discretion determine not inconsistent with the provisions of this Article III
or of the By-laws, and such contract may also provide for the redemption,
repurchase or sale of the Shares by such other party as agent of the Trustees.
Section 3.2. Advisory or Management Contract. Subject to a
Majority Shareholder Vote by the relevant Series or Class, the Trustees may in
their discretion from time to time enter into one or more investment advisory
or management contracts with respect to such Series or Class whereby the other
party to any such contract shall undertake to furnish to the Series or Class
such administrative, management, investment advisory, statistical and research
facilities and services, and such other facilities and services, if any, all
upon such terms and conditions as the Trustees may in their discretion
determine, including the grant of authority to such other party to determine
what securities shall be purchased or sold by the Series or Class and what
portion of the assets thereof shall be uninvested, which authority shall
include the power to effect on behalf of the Trustees purchases, sales or
exchanges of portfolio securities and other investment instruments belonging
to the Series or Class as determined by such Investment Advisor without
further consultation with the Trustees or may authorize any officer, agent or
Trustee to effect such purchases, sales or exchanges pursuant to instructions
or recommendations of the Investment Advisor (and all without further action
by the Trustees). Any such purchases, sales and exchanges shall be deem to
have been authorized by all of the Trustees.
The Trustees may, subject to a Majority Shareholder Vote by the relevant
Series or Class and all other applicable requirements of the 1940 Act,
authorize the Investment Advisor to employ with respect to such Series or
Class one or more sub-advisors from time to time perform such of the acts and
services of the Investment Advisor, and upon such terms and conditions, as may
be agreed upon between the Investment Advisor and any such sub-advisor.
Section 3.3. Transfer Agency and Administrative Contracts. The
Trustees may, in their discretion from time to time, enter into transfer
agency and administrative services contracts whereby the Trustees delegate to
the other party or parties to such contracts the responsibility to furnish
transfer agency services and administrative services to the Shareholders
and/or the Trust. The contracts shall be on such terms and conditions as the
Trustees may in their discretion determine no inconsistent with the provisions
of this Declaration. Such services may be provided by one ore more entities
with respect to any or all Series or Classes.
Section 3.4. Affiliations of Trustees or Officers, Etc. The fact
that
(i) any of the Shareholders, Trustees or officers of the Trust is
a shareholder, director, officer, partner, trustee, employee, manager,
advisor or distributor of or for any partnership, corporation, trust,
association or other organization, or of or for any parent or affiliate
of any organization, with which a contract of the character described in
Sections 3.1, 3.2, or 3.3 above, of for services as Custodian, or
disbursing agent or for related services may have been or may hereafter
be made, or that any such organization, or any parent or affiliate
thereof, is a Shareholder of or has an interest in the Trust or that
(ii) any partnership, corporation, trust association or
other organization with which a contract of the character described in
Sections 3.1, 3.2 or 3.3 above or for services as Custodian, or
disbursing agent or for related services may have been or may hereafter
be made also has any one or more of such contracts with one or more
other partnerships, corporations, trusts, associations or other
organizations, or has other business or interests, shall not affect the
validity of any such contract or disqualify any Shareholder, Trustee or
officer of the Trust from voting upon or executing the same or create
any liability or accountability to this Trust or its Shareholders.
Section 3.5. Compliance with 1940 Act. Any contract entered into
pursuant to Section 3.1 or 3.2 shall be consistent with or subject to the
requirements of Section 15 of the 1940 Act (including any amendment thereof or
other applicable Act of Congress hereafter enacted) with respect to its
continuance in effect, its termination and the method of authorization and
approval of such contract or renewal thereof and no amendment to any contract
entered into pursuant to Section 3.2 shall be effective unless assented to by
a Majority Shareholder Vote by the relevant Series or Class.
ARTICLE IV
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
Section 4.1. No Personal Liability of Shareholders, Trustees, Etc.
No Shareholder shall be subject to any personal liability whatsoever to any
Person in connection with Trust Property or the acts, obligations or affairs
of the Trust or any Series or Class. No Trustee, officer, employee or agent
of the Trust shall be subject to any personal liability whatsoever to any
Person, other than to the Trust or relevant Series or Class or to the
Shareholders thereof, in connection with the Trust Property or the affairs of
the Trust or such Series or Class, save only the arising from bad faith,
willful misfeasance, gross negligence or reckless disregard of his duties with
respect to such Person, and all such Persons shall look solely to the Trust
Property in respect of the Trust or the relevant Series or Class for
satisfaction of claims of any nature arising in connection with the affairs of
the Trust or such Series or Class. If any Shareholder, Trustee, officer,
employee, or agent, as such, of the Trust, is made a party to any suit or
proceeding to enforce any such liability of the Trust or any Series or Class,
he shall not, on account thereof, be held to any personal liability. The
Trust or the relevant Series or Class shall indemnify and hold each
Shareholder harmless from and against all claims and liabilities, to which
such Shareholder may become subject by reason of his being or having been a
Shareholder of the Trust or such Series or Class, and shall reimburse such
Shareholder for all legal and other expenses reasonably incurred by him in
connection with any such claim or liability. The rights accruing to a
Shareholder under this Section 4.1 shall not exclude any other right to which
such Shareholder may be lawfully entitled, nor shall anything herein contained
restrict the right of the Trust or any Series or Class to indemnify or
reimburse a Shareholder in any appropriate situation even though not
specifically provided herein.
Section 4.2. Non-Liability of Trustees, Etc. No Trustee, officer,
employee or agent of the Trust shall be liable to the Trust or any Series or
Class or to any Shareholder, Trustee, officer, employee, or agent thereof for
any action or failure to act (including without limitation the failure to
compel in any way any former or acting Trustee to redress any breach of trust)
except for his own bad faith, willful misfeasance, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
Section 4.3. Mandatory Indemnification. (a) Subject to the
exceptions and limitations contained in paragraph (b) below:
(i) every person who is, or has been, a Trustee or officer of the
Trust shall be indemnified by the Trust or relevant Series or Class to
the fullest extent permitted by law against all liability and against
all expenses reasonably incurred or paid by him in connection with any
claim, action, suit or proceeding in respect of the Trust or such Series
or Class in which he became involved as a party or otherwise by virtue
of his being or having been a Trustee or officer and against amounts
paid or incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal, or other, including appeals), actual or threatened; the words
"liability" and "expenses" shall include, without limitation, attorneys'
fees, costs, judgments, amounts paid in settlement, fines, penalties and
other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or
officer:
(i) against any liability to the Trust or any Series or Class or
to the Shareholders thereof by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office;
(ii) with respect to any matter as to which he shall have
been finally adjudicated not to have acted in good faith in the
reasonable belief that his action was in the best interest of the Trust
or the relevant Series or Class;
(iii) in the event of a settlement or other disposition not
involving a final adjudication as provided in paragraph (b)(i) resulting
in a payment by a Trustee or officer, unless there has been a
determination that such Trustees or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office:
(A) by the court or other body approving the settlement or
other disposition; or
(B) based upon a review of readily available facts (as
opposed to a full trial-type inquiry) by (x) vote of a majority of
the Disinterested Trustees acting on the matter (provided that a
majority of the Disinterested Trustees then in office act on the
matter) or (y) written opinion of independent legal counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust or any Series or Class, shall be
severable, shall not affect any other rights to which any Trustee or officer
may now or hereafter be entitled, shall continue as to a person who has ceased
to be such Trustee or Officer and shall inure to the benefit of the heirs,
executors, administrators and assigns of such a person. Nothing contained
herein shall affect any rights to indemnification to which personnel of the
Trust other than Trustees and officers may be entitled by contract or
otherwise under law.
(d) Expenses or preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in paragraph (a) of this
Section 4.3 may be advanced by the Trust or relevant Series or Class prior to
final disposition thereof upon receipt of an undertaking by or on behalf of
the recipient to repay such amount if it is ultimately determined that he is
not entitled to indemnification under this Section 4.3, provided that either
(i) such undertaking is secured by a surety bond or some other
appropriate security provided by the recipient, or the Trust or relevant
Series or Class shall be insured against losses arising out of any such
advances; or
(ii) a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees act on
the matter), on an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts (as opposed to
a full trial-type inquiry), that there is reason to believe that the
recipient ultimately will be found entitled to indemnification.
As used in this Section 4.3, a "Disinterested Trustee" is one who
is not (i) an "Interested Person" of the Trust or relevant Series or
Class (including anyone who has been exempted from being an "Interested
Person" by any rule, regulation or order of the Commission), or (ii)
involved in the claim, action, suit or proceeding.
Section 4.4. No Bond Required of Trustees. No Trustee shall be
obligated to give any bond or other security for the performance of any of his
duties hereunder.
Section 4.5. No Duty of Investigation; Notice in Trust Instruments,
Etc. No purchaser, lender, Transfer Agent or other Person dealing with the
Trustees or any officer, employee or agent of the Trust shall be bound to make
any inquiry concerning the validity of any transaction purporting to be made
by the Trustees or by said officer, employee or agent, or, be liable for the
application of money or property paid, loaned, or delivered to or on the order
of the Trustees or of said officer, employee or agent. Every obligation,
contract, instrument, certificate, Share other security of the Trust or any
Series or Class or undertaking, and every other act or thing whatsoever
executed in connection with the Trust or any Series or Class shall be
conclusively presumed to have been executed or done by the executors thereof
only in their capacity as Trustees under this Declaration or in their capacity
as officers, employees or agents of the Trust. Every written obligation,
contract, instrument, certificate, Share, other security of the Trust or any
Series or Class or undertaking made or issued by the Trustees shall recite
that the same is executed or made by them not individually, but as Trustees
under this Declaration, and that the obligations of the Trust or such Series
or Class under any such instrument are not binding upon any of the Trustees or
Shareholders individually, but bind only the assets of the Trust or the assets
belonging to the relevant Series or Class, as the case may be, and may contain
any further recital which they or he may deem appropriate, but the omission of
such recital shall not operate to bind the Trustees individually. The
Trustees shall at all times maintain insurance for the protection of the Trust
Property, its Shareholders, Trustees, officers, employees and agents in such
amount as the Trustees shall deem adequate to cover possible tort liability,
and such other insurance as the Trustees in their sole judgment shall deem
advisable.
Section 4.6. Reliance on Experts, Etc. Each Trustee and officer,
employee or agent of the Trust shall, in the performance of his duties, be
fully and completely justified and protected with regard to any act or any
failure to act resulting from reliance in good faith upon the books of account
or other records of the Trust or any Series or Class, upon an opinion of
counsel, or upon reports made to the Trust or any Series or Class by any of
the Trust's officers or employees or by the Investment Advisor, Distributor,
Transfer Agent, selected dealers, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers or
employees of the Trust, regardless of whether such counsel or expert may also
be a Trustee.
ARTICLE V
SHARES OF BENEFICIAL INTEREST
Section 5.1. Beneficial Interest. The interest of the
beneficiaries hereunder shall be divided into Shares, which may be further
divided into Series and Classes as provided in Section 5.11 hereof, with a par
value of $.001 per Share. The number of Shares authorized hereunder is
unlimited. All Shares issued hereunder including, without limitation, Shares
issued in connection with a dividend in Shares or a split of Shares, shall be
fully paid and non-assessable.
Section 5.2. Rights of Shareholders. The ownership of the Trust
Property of every description and the right to conduct any business herein
before described are vested exclusively in the Trustees, and the Shareholders
shall have no interest therein other than the proportionate undivided
beneficial interest conferred by their Shares, and they shall have no right to
call for any partition or division of any property, profits, rights or
interests of the Trust or of any Series or Class, nor can they be called upon
to share or assume any losses of the Trust or of any Series or Class or suffer
an assessment of any kind by virtue of their ownership of Shares. All persons
acquiring Shares shall acquire the same subject to the provisions of this
Declaration and the By-laws established hereunder as in effect from time to
time, and by virtue of having become a Shareholder, shall be held to have
expressly assented and agreed to the terms hereof and to have become a party
hereto. The Shares of a particular Series or Class shall be personal property
giving only the rights in this Declaration specifically set forth. The Shares
of a Series or Class shall not entitle the holder thereof to preference,
preemptive, appraisal, conversion or exchange rights, except as the Trustees
may determine and designate with respect to such Series or Class established
pursuant to Section 5.11 hereof. The death of a Shareholder during the
continuance of the Trust or any Series or Class shall not operate to terminate
the same nor entitle the representative of any deceased Shareholder to an
accounting or to take any action in court or elsewhere against the Trust or
such Series or Class or against the Trustees, but shall entitle the
representative only to the rights of said decedent under this Declaration.
Section 5.3. Trust Only. It is the intention of the Trustees to
create only the relationship of Trustee and beneficiary between the Trustees
and each Shareholder from time to time. Neither the Trust nor the Trustees,
nor any officer, employee or agent of the Trust, shall have any power to bind
any Shareholder personally or, except as specifically provided herein, to call
upon any Shareholders for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time personally agree
to pay be way of subscription for any Shares or otherwise. It is not the
intention of the Trustees to create a general partnership, limited
partnership, joint stock association, corporation, bailment or any form of
legal relationship other than a trust. Nothing in this Declaration shall be
construed to make the Shareholders, either by themselves or with the Trustees,
partners or members of a joint stock association. All persons extending
credit to, contracting with or having any claim against the Trust or the
Trustees or a particular Series or Class shall look only to the assets of the
Trust or the assets belonging to such Series or Class, whichever may be
applicable, for payment under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of the Trust's officers, employees or
agents, whether past, present or future, shall be personally liable therefor.
Section 5.4. Issuance of Shares. The Trustees in their discretion
may, from time to time without vote of the Shareholders, issue Shares, in
addition to the then issued and outstanding Shares and Shares held in the
treasury, to such party or parties and for such amount and type of
consideration, including cash or property, at such time or times and on such
terms as the Trustees may deem best, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection with
the assumption of liabilities) and businesses. In connection with any
issuance of Shares, the Trustees may issue fractional Shares and Shares held
in the treasury. The Trustees may from time to time divide or combine the
Shares of any Series or Class into a greater or lesser number without thereby
changing the proportionate beneficial interests in such Series or Class.
Contributions to the Trust may be accepted for, and Shares shall be redeemed
as, whole Shares and/or 1/1,000ths of a Share or integral multiples thereof.
Section 5.5. Register of Shares. A register shall be kept at the
principal office of the Trust or an office of the Transfer Agent which shall
contain the names and addresses of the Shareholders of each Series and each
Class, if any, and the number of Shares of each Series and each Class held by
the Shareholders respectively and a record of all transfers thereof. Such
register shall be conclusive as to who are the holders of the Shares of each
Series and each Class and who shall be entitled to receive dividends or
distributions or otherwise to exercise or enjoy the rights of the Shareholders
of such Series or Class. No Shareholder shall be entitled to receive payment
of any dividend or distribution, nor to have notice given to him as herein or
in the By-laws provided, until he has given his address to the Transfer Agent
or such other officer or agent of the Trustees as shall keep the said register
for entry thereon. It is not contemplated that certificates will be issued
for the Shares; however, the Trustees, in their discretion, may authorize the
issuance of Share certificates for any or all Series or Classes and promulgate
appropriate rules and regulations as to their use.
Section 5.6. Transfer of Shares. Shares shall be transferable on
the records of the Trust only by the record holder thereof or by his agent
thereunto duly authorized in writing, upon delivery to the Trustees or the
Transfer Agent of a duly executed instrument of transfer, together with such
evidence of the genuineness of each such execution and authorization and of
other matters as may reasonably be required. Upon such delivery the transfer
shall be recorded on the register of the Trust. Until such record is made,
the Shareholder of record shall be deemed to be the holder of such Shares for
all purposes hereunder and neither the Trustees nor any Transfer Agent or
registrar nor any officer, employee or agent of the Trust shall be affected by
any notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of the Trust as the holder of such
Shares upon production of the proper evidence thereof to the Trustees or the
Transfer Agent, but until such record is made, the Shareholder of record shall
be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor any Transfer Agent or registrar nor any officer or
agent of the Trust shall be affected by any notice of such death, bankruptcy
or incompetence, or other operation of law.
Section 5.7. Notices. Any and all notices to which any Shareholder
may be entitled, and any and all communications, shall bee deemed duly served
or given if mailed, postage-prepaid, addressed to any Shareholder or record at
his last known address as recorded on the register of the Trust.
Section 5.8. Treasury Shares. Shares held in the treasury shall,
until reissued pursuant to Section 5.4, not confer any voting rights on the
Trustees, nor shall such Shares be entitled to any dividends or other
distributions declared with respect to such Shares.
Section 5.9. Voting Powers. Subject to the provisions set forth in
Section 5.11 of this Article V, the Shareholders shall have power to vote only
(i) for the election of Trustees as provided in Section 2.12 hereof; (ii) with
respect to any investment advisory or management contract entered into
pursuant to Section 3.2 hereof; (iii) with respect to termination of the Trust
or a Series or Class as provided in Section 8.2 hereof; (iv) with respect to
any amendment of this Declaration to the extent and as provided in Section 8.3
hereof; (v) with respect to any merger, consolidation or sale of assets as
provided in Section 8.4 hereof; (vi) with respect to incorporation of the
Trust to the extent and as provided in Section 8.5 hereof; (vii) to the same
extent as the stockholders of a Massachusetts business corporation as to
whether or not a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the Trust
or the Shareholders provided, however, that a Shareholder of a particular
Series or Class shall not be entitled to bring any derivative or class action
on behalf of any other Series or Class; and (viii) with respect to such
additional matters relating to the Trust as may be required by this
Declaration, the By-laws or because of any registration of the Trust as an
investment company under the 1940 Act with the Commission (or any successor
agency) or as the Trustees may consider necessary or desirable. Each whole
Share shall be entitled to one vote as to any matter on which it is entitled
to vote and each fractional Share shall be entitled to a proportionate
fractional vote. There shall be no cumulative voting in the election of
Trustees. Until Shares of a particular Series or Class are issued, the
Trustees may exercise all rights of the Shareholders of such Series or Class
with respect to matters affecting such Series or Class, and may take any
action with respect to the Trust or such Series or Class required or permitted
by law, this Declaration or the By-laws to be taken by Shareholders. The By-
laws may include further provisions for Shareholders' votes and meetings and
related matters.
Section 5.10. Meetings of Shareholders. Special meetings of the
Shareholders of any or all Series or Classes may be called by the Trustees and
shall be called by the Trustees for the purpose of voting upon the question of
the removal of any Trustee or Trustees when requested in writing to do so by
the holders of not less than 10% of the Outstanding Shares of the Trust, with
the Shares of all Series and Classes considered as a whole. At any time when
less than a majority of the Trustees holding office have been elected by the
Shareholders, the then remaining Trustees shall forthwith call a special
meeting of Shareholders to be held as promptly as possible and in any event
within 60 days for the purpose of electing Trustees to fill any existing
vacancies. All such meetings shall be held either at the principal office of
the Trust, or at such other place as may be designated by the Trustees.
Whenever ten or more Shareholders meeting the qualifications set forth in
Section 16(c) of the 1940 Act seek the opportunity of furnishing materials to
the other Shareholders with a view to obtaining signatures on such a request
for a meeting, the Trustees shall comply with the provisions of said Section
16(c) with respect to providing such Shareholders access to the list of
Shareholders or the mailing of such materials to Shareholders.
Section 5.11. Establishment and Designation of Series or Class.
Subject to, and in accordance with this Section 5.11, the Trustees, in their
sole discretion and without Shareholder approval, may authorize the division
of Shares into two or more Series and the further division of the Shares of
any Series into two or more Classes. The establishment of any such Series or
Class shall be effective upon the adoption by a majority of the Trustees then
in office of a resolution establishing such Series or Class and setting the
voting rights, preferences, designations, conversion or other rights,
restrictions, limitations as to distributions, conditions of redemption,
qualifications or other terms of the Shares of such Series or Class. Under
the Trustees have authorized the division of Shares of a Series into two or
more Classes, each Share of a Series shall represent an equal proportionate
interest in the assets and liabilities of the Series with each other Share of
the same Series, none having priority or preference over another. If the
Trustees have authorized the division of Shares of a Series into two or more
Classes, each Share of a Class shall represent an equal proportionate interest
in the assets and liabilities of the Class with each other Share of the same
Class, none having priority or preference over another. Any fractional Share
of a Series or Class shall carry proportionately all the rights and
obligations of a whole Share of that Series or Class, including rights with
respect to voting, receipt of dividends and distributions, redemption of
Shares and termination of the Trust or such Series or Class. All references
to Shares in this Declaration shall be deemed to be Shares of any or all
Series and/or Classes as the context may require.
If the Trustee shall divide the Shares of the Trust into two or more
Series or Classes, the following provisions shall be applicable:
(a) The number of authorized Shares and the number of Shares of each
Series and each Class that may be issued shall be unlimited. The Trustees may
classify or reclassify and unissued Shares or any Shares previously issued and
reacquired of any Series or Class into one or more Series or Classes that may
be established and designated from time to time. The Trustees may hold as
treasury Shares (of the same or some other Series or Class), reissue for such
consideration and on such terms as they may determine, or cancel any Shares of
any Series or Class reacquired by the Trust at their discretion from time to
time.
(b) All consideration received by the Trust for the issue or sale of
Shares of a particular Series or Class, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever from the same may be, shall
irrevocably belong to that Series or Class for all purposes, subject only to
the rights of creditors and except as may otherwise be required by applicable
tax laws, shall be so recorded upon the books of account of the Trust and
shall be held by the Trustees in trust for the benefit of the holders of
Shares of that Series or Class. Such consideration, assets, income, earnings,
profits and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments derived from
any reinvestment of such proceeds in whatever form the same may be are herein
referred to as "assets belonging to" that Series or Class. In the event that
there are any assets, income, earnings, profits and proceeds thereof, funds,
or payments which are not readily identifiable as belonging to any particular
Series or Class (collectively "General Assets"), the Trustees shall allocate
such General Assets to, between or among any one or more of the Series or
Classes established and designated from time to time in such manner and on
such basis as they, in their sole discretion, deem fair and equitable, and any
General Assets so allocated to a particular Series or Class shall belong to
that Series or Class. Each such allocation by the Trustees shall be
conclusive and binding upon the Shareholders of all Series and Classes for all
purposes.
(c) The assets belonging to each particular Series or Class shall be
charged with the liabilities of the Trust is respect of that Series or Class
and all expenses, costs, charges and reserves attributable to that Series or
Class. Any general liabilities, expenses, costs, charges or reserves of the
Trust which are not readily identifiable as belonging to any particular Series
or Class shall be allocated and charged by the Trustees to and among any one
or more of the Series of Classes established and designated from time to time
in such manner and on such basis as the Trustees, in their sole discretion,
deem fair and equitable. Each allocation of liabilities, expenses, costs,
charges and reserves by the Trustees shall be conclusive and binding upon the
Shareholders of all Series and Classes for all purposes. The liabilities,
expenses, costs, charges and reserves so charge to a Series or Class are
herein referred to as "liabilities belonging to" that Series or Class. The
Trustees shall have full discretion, to the extent not inconsistent with the
1940 Act, to determine which items are capital, and each such determination
and allocation shall be conclusive and binding upon the Shareholders. Any
creditor of any Series or Class may look only to the assets of that Series or
Class to satisfy such creditor's debt.
(d) Notwithstanding any other provisions of this Declaration,
including, without limitation, Articles VI and VII, no dividends or
distribution (including, without limitation, any distribution paid upon
termination of the Trust or any Series or Class) with respect to, nor any
redemption or repurchase of, the Shares of any Series or Class shall be
effected by the Trust other than from the assets belonging to such Series or
Class, nor except as specifically provided in Section 4.1 of Article IV
hereof, shall any Shareholder of any particular Series or Class otherwise have
any right or claim against the assets belonging to any other Series or Class
except to the extent that such Shareholders has such a right or claim
hereunder as a Shareholder of such other Series or Class.
(e) Notwithstanding any of the other provisions of this Declaration,
including, without limitation, Section 5.9 hereof, only Shareholders of a
particular Series or Class shall be entitled to vote on any matter affecting
such Series or Class; provided, however, that where a particular matter
affects a Series as a whole and not a particular Class thereof, the
Shareholders of such Series (including all Classes thereof) shall be entitled
to vote as a single class. Except with respect to matters as to which any
particular Series or Class is affected, all of the Shares of each Series or
Class shall, on matters as to which such Series or Class is entitled to vote,
vote with other Series or Classes so entitled as a single class.
Notwithstanding the foregoing, with respect to matters which would otherwise
be voted on by two or more Series or Classes as a single class, the Trustees
may, in their sole discretion, submit such matters to the Shareholders of any
or all such Series or Classes, separately.
(f) The Trustees shall have the authority to provide that the holders
of Shares of any Series or Class shall have the right to exchange said Shares
for Shares of one or more other Series or Classes in accordance with such
requirements and procedures as may be established by the Trustees.
(g) The Trustees shall have the authority, without the approval of the
Shareholders of any Series or Class, unless otherwise required by applicable
law, to combine the assets and liabilities belonging to a single Series or
Class with the assets and liabilities of one or more Series or Classes.
(h) At any time that there are no Shares outstanding of any particular
Series or Class previously established and designated, the Trustees may, by
resolution by a majority of the Trustees then in office, abolish that Series
or Class and the establishment and designation thereof.
ARTICLE VI
REDEMPTION AND REPURCHASE OF SHARES
Section 6.1. Redemption of Shares. All Shares shall be redeemable
at the redemption price determined in the manner set out in this Declaration.
Upon redemption, Shares shall have the status of authorized but unissued
Shares. Redeemed or repurchased Shares may be resold by the Trust.
The Shares of a particular Series or Class shall be redeemed at the
price determine as hereinafter set forth, upon the appropriately verified
written application of the record holder thereof (or upon such other form of
request as the Trustees may determined) at such office or agency of the Trust
or that Series or Class as may be designated from time to time specify
additional conditions, not inconsistent with the 1940 Act, regarding the
redemption of Shares of any Series or Class in the Trust's then effective
prospectus under the Securities Act of 1933.
Section 6.2 Price. Shares of a particular Series or Class shall
be redeemed at their Net Asset Value determined as set forth in Section 7.1
hereof as of such time as the Trustees shall have theretofore prescribed by
resolution. In the absence of such resolution, the redemption price of Shares
of a particular Series or Class shall be the Net Asset Value of such Shares
next determined as set forth in Section 7.1 hereof after receipt of such
redemption application.
Section 6.3 Payment. Payment for the Shares of a particular
Series or Class shall be made in cash or in property, out of the assets
belonging to such Series or Class, to the Shareholder of record thereof at
such time and in the manner, not inconsistent with the 1940 Act or other
applicable laws, as may be specified from time to time in the Trust's then
effective prospectus under the Securities Act of 1933, subject to the
provisions of Section 6.4 hereof.
Section 6.4 Effect of Suspension of Determination of Net Asset
Value. If, pursuant to Section 6.9 hereof, the Trustees shall declare a
suspension of the determination of Net Asset Value with regard to any Series
or Class, the rights of Shareholders of such Series or Class (including those
who shall have applied for redemption pursuant to Section 6.1 hereof but who
shall not yet have received payment) to have their Shares redeemed and paid
for out of the assets belonging to the Series or Class shall be suspended
until the termination of such suspension is declared. Any record holder who
shall have his redemption right so suspended may, during the period of such
suspension, by appropriate written notice of revocation at the office or
agency where application was made, revoke any application for redemption not
honored and withdraw any certificates on deposit. The redemption price of
Shares of a particular Series or Class for which redemption applications have
not been revoked shall be the Net Asset Value of such Shares next determined,
as set forth in Section 7.1, after the termination of such suspension, and
payment shall be made within seven (7) days after the date upon which the
application was made plus the period after such application during which the
determination of net asset value was suspended.
Section 6.5 Repurchase by Agreement. The Trust may repurchase the
Shares of any Series or Class directly, or through the Distributor or another
agent designated for the purpose, by agreement with the owner thereof at a
price not exceeding the Net Asset Value per Share of such Series or Class
determined as of the time when the purchase or contract of purchase is made,
or the Net Asset Value of such Series or Class as of any time which may be
later determined pursuant to Section 7.1 hereof, provided payment is not made
for such Shares prior to the time as of which such Net Asset Value is
determined.
Section 6.6 Redemption of Shareholder's Interest. The Trust shall
have the right at any time without prior notice to the Shareholder to redeem
the Shares of any Series or Class held by such Shareholder at the applicable
then current Net Asset Value per Share if at such time the Shareholder owns
Shares in such Series or Class having an aggregate Net Asset Value less than
the minimum amount applicable to that Series or Class as established by the
Trustees, provided such redemption shall be subject to such terms and
conditions as the Trustees may approve and subject to the Trust's giving
general notice to all Shareholders of the relevant Series or Class of its
intention to avail itself of such right, either by publication in the Trust's
then current prospectus, if any, or by such other means as the Trustees may
determine.
Section 6.7. Redemption of Shares in Order to Qualify as Regulated
Investment Company; Disclosure of Holding. If the Trustees shall, at any time
and in good faith, be of the opinion that direct or indirect ownership of
Shares or other securities of any Series or Class has or may become
concentrated in any Person to an extent which would disqualify such Series or
Class as a regulated investment company under the Internal Revenue Code of
1986, as amended, (the "Code"), then the Trustees shall have the power, by lot
or other means deemed equitable by them, (i) to call for redemption by any
such Person a number, or principal amount, of Shares or other securities of
the relevant Series or Class sufficient to maintain or bring the direct or
indirect ownership of Shares or other securities of such Series or Class into
conformity with the requirements for such qualification, and (ii) to refuse to
transfer or issue Shares or other securities of such Series or Class to any
Person whose acquisition of the Shares or other securities of the Series or
Class in question would result in such disqualification. The redemption shall
be effected at the redemption price and in the manner provided in Section 6.1
The holders of Shares or other securities of any Series or Class shall
upon demand disclose to the Trustees in writing such information with respect
to direct and indirect ownership of Shares or other securities of such Series
or Class as the Trustees deem necessary to comply with the provisions of the
Code, or to comply with the requirements of any other taxing authority.
Section 6.8. Reductions in Number of Outstanding Shares Pursuant to
Net Asset Value Formula. The Trust may also reduce the number of Outstanding
Shares of any Series or Class pursuant to the provisions of Section 7.1
Section 6.9. Suspension of Right of Redemption. The Trustees may
declare a suspension of the right of redemption or postpone the date of
payment on redemption with respect to any Series or Class for the whole or any
part of any period (i) during which the New York Stock Exchange or Ohio Banks
are closed other than customary weekend and holiday closings, (ii) during
which trading on the New York Stock Exchange is restricted, (iii) during which
an emergency exists as a result of which disposal by the Series or Class of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Trust fairly to determine the Net Asset Value with regard
to such Series or Class, or (iv) during any other period when the Commission
may for the protection of security holders of the Trust or any Series or Class
by order permit suspension of the right of redemption or postponement of the
date of payment on redemption; provided that applicable rules and regulations
of the Commission shall govern as to whether the conditions prescribed in
(ii), (iii), or (iv) exist. Such suspension shall take effect at such time as
the Trustees shall specify, but not later than the close of business on the
business day next following the declaration of suspension, and thereafter
there shall be no right of redemption or payment on redemption until the
Trustees shall declare the suspension at an end, except that the suspension
shall terminate in any event on the first day on which said stock exchange
and/or such Banks shall have reopened or the period specified in (ii) or (iii)
shall have expired (as to which, in the absence of an official ruling by the
Commission, the determination of the Trustees shall be conclusive). In the
case of a suspension of the right of redemption with respect to any Series or
Class, a Shareholder of that Series or Class may either withdraw his request
for redemption or receive payment based on the Net Asset Value of the Series
or Class existing after the termination of the suspension.
ARTICLE VII
DETERMINATION OF NET ASSET VALUE
AND DISTRIBUTIONS
Section 7.1. Net Asset Value. The value of the assets of a
particular Series or Class shall be determined by appraisal of the securities
owned by such Series or Class, such appraisal to be on the basis of the
amortized cost of such securities, or by such other method as shall be deemed
to reflect the fair value thereof, determined in good faith by or under the
direction of the Trustees. From the total value of said assets belonging to
such Series or Class, there shall bee deducted all indebtedness; interest;
taxes payable or accrued, including estimated taxes on unrealized book
profits; expenses and management charges accrued to the appraisal date; net
income determined and declared as a distribution and all other items in the
nature of liabilities belonging to that Series or Class which shall be deemed
appropriate. The resulting amount, which shall represent the total net assets
of the particular Series or Class, shall be divided by the number of Shares of
such Series or Class outstanding at the time, and the quotient so obtained
shall be deemed to be the Net Asset Value of the Shares of such Series or
Class. The Net Asset Value shall be determined separately for each Series and
each Class, if any, and shall be determined at least once on each business
day, as of the close of trading on the New York Stock Exchange, or as of such
other time or times as the Trustees shall determine. The power and duty to
make the daily calculations with regard to any or all Series or Classes may be
delegated by the Trustees to the Investment Advisor, the Custodian, the
Transfer Agent or such other Person as the Trustees by resolution may
determine. The Trustees may suspend the daily determination of the Net Asset
Value with regard to any Series or Class to the extent permitted by the 1940
Act.
For the purpose of allowing the Net Asset Value per Share of any Series
or Class to remain constant as deemed appropriate by the Trustees, the
Trustees shall be entitled to declare, pay and credit as dividends in respect
of such Series or Class daily the net income (which may include or give effect
to realized and unrealized gains and losses, as determined in accordance with
applicable accounting and portfolio valuation policies) of the Series or
Class. If the amount so determined for any day is negative, the Trustees
shall be entitled, without the payment of monetary compensation but in
consideration of the interest of the relevant Series or Class and the
Shareholders thereof in maintaining a constant Net Asset Value per Share, to
redeem pro rata from all Shareholders of the Series or Class at the time of
such redemption (in proportion to their respective holdings of Shares) such
number of Outstanding Shares of the Series or Class, or fractions thereof, as
shall be required to permit the Net Asset Value per Share in regard to such
Series or Class to remain constant. The Trustees may delegate the powers and
duties specified in this Section 7.1
Section 7.2. Distributions to Shareholders. The Trustees shall
from time to time distribute ratably among the Shareholders of each Series and
each Class, if any, such proportion of the net profits, surplus (including
paid-in surplus), capital or assets belonging to such Series or Class as the
Trustees may deem proper. Such distribution may be made in cash or property
(including without limitation any type of obligations of the Series or Class
or any assets belonging to such Series or Class), and the Trustees may
distribute ratably among the Shareholders of the Series or Class additional
Shares issuable hereunder in such manner, at such times and on such terms as
the Trustees may deem proper. Such distributions may be among the
Shareholders of record of the Series or Class at the time of declaring a
distribution, or among the Shareholders of record of the Series or Class at
such other date or time or dates or times as the Trustees shall determine.
The Trustees may in their discretion determine that, solely for the purposes
of such distributions, the Outstanding Shares of a Series or Class shall
exclude Shares for which orders have been placed subsequent to a specified
time on the date the distribution is declared or on the next preceding day if
the distribution is declared as of a day on which Ohio or Boston Banks are not
open for business, all as described in the then effective prospectus of the
Trust under the Securities Act of 1933. The Trustees may always retain from
the net profits in respect of a particular Series or Class such amount as they
may deem necessary to pay the debts or expenses applicable to that Series or
Class or to meet obligations of the Trust or such Series or Class, or as they
may deem desirable to use in the conduct of the affairs of the Trust or Series
or Class or to retain for future requirements or extensions of the business
thereof. The Trustees may adopt and offer to Shareholders of any or all
Series or Classes such cash dividend payout plans or related plans as the
Trustees shall deem appropriate. Unless the Shareholder has notified the
Transfer Agent in writing of his election to receive distribution in cash,
distributions in respect of any Series or Class will be reinvested at the Net
Asset Value per Share of such Series or Class at the close of business on the
reinvestment date established by the Trustees. If authorized by the Trustees
and permitted by applicable law, distributions in respect of a particular
Series or Class may be reinvested at the Net Asset Value per Share of any
other Series or Class in accordance with the procedures described in the
Trust's then current prospectus.
Inasmuch as the computation of net income and gains for federal income
tax purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable any Series or Class to avoid or reduce liability for taxes.
Section 7.3. Power to Modify Foregoing Procedures. Notwithstanding
any of the foregoing provisions of this Article VII, the Trustees may
prescribe, in their absolute discretion, such other bases and times for
determining the per Share Net Asset Value or the net income of any or all
Series or Classes, or the declaration and payment of dividends and
distributions in regard to any or all Series or Classes as they may deem
necessary or desirable.
ARTICLE VIII
DURATION, TERMINATION OF TRUST; AMENDMENT; MERGERS, ETC.
Section 8.1. Duration. The Trust (including any Series or Class
established in accordance with section 5.11 hereof) shall continue without
limitation of time buy subject to the provisions of this Article VIII.
Section 8.2. Termination of Trust or Series or Class.
(a) The Trust may be terminated by the affirmative vote of the
holders of not less than two-thirds of the Outstanding Shares of the
Trust entitled to vote at any meeting of Shareholders with the
Shareholders of all Series and Classes voting together as a single
class, or by an instrument in writing, without a meeting, signed by a
majority of the Trustees and consented to by the holders of not less
than two-thirds of such Shares. Any Series or Class may be terminated
by the affirmative vote of the holders of not less than two-thirds of
the Outstanding Shares of such Series or Class entitled to vote at any
meeting of Shareholders, or by an instrument in writing, without a
meeting, by a majority of the Trustees and consented to by the holders
of not less than two-thirds of such Shares. Upon the termination of the
Trust or any Series or Class:
(i) The Trust or such Series or Class shall carry on no business
except for the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of
the Trust or such Series or Class and all of the powers of the Trustees
under this Declaration shall continue until the affairs of the Trust or
Series or Class shall have been would up, including the power to fulfill
or discharge the contracts of the Trust or Series or Class, collect the
assets thereof, sell, convey, assign, exchange, transfer or otherwise
dispose of all or any part of the remaining Trust Property in respect of
the Trust or Series or Class to one or more Persons at public or private
sale for consideration which may consist in whole or in part of cash,
securities or other property of any kind, discharge or pay the
liabilities of the Trust or Series or Class, and do all other acts
appropriate to liquidate the business thereof; provided that any sale,
conveyance, assignment, exchange, transfer or other disposition of all
or substantially all the Trust Property in respect of the Trust or
Series or Class shall require Shareholder approval in accordance with
Section 8.4 hereof.
(iii) In the case of the termination of the Trust, the
Trustees may, after paying or adequately providing for the payment of
all liabilities of the Trust (including the liabilities of all Series
and Classes), and upon receipt of such releases, indemnities and
refunding agreements as they deem necessary for their protection, the
Trustees may distribute the remaining Trust Property in respect of each
Series or each Class, in cash or in kind or partly each, ratably among
the holders of the Shares of such Series or Class then outstanding in
accordance with the preferences and special or relative rights and
privileges, if any, of such Series or Class. The Trustees shall have
the same power and authority, but subject to the same procedures and
requirements, with respect to the termination of any Series or Class as
provided in this paragraph (iii) with regard to the termination of the
Trust.
(b) After termination of the Trust or any Series or Class and
distribution to the Shareholders as herein provided, a majority of the
Trustees shall execute and lodge among the records of the Trust an
instrument in writing setting forth the fact of such termination, and
the Trustees shall thereupon be discharged from all further liabilities
and duties hereunder as regards the Trust or such Series or Class, and
the rights and interests of all Shareholders of the Trust or such Series
or Class shall thereupon cease.
Section 8.3. Amendment Procedure. (a) This Declaration may be
amended by a Majority Shareholder Vote of the Outstanding Shares of the Trust
with the Shareholders of all Series and Classes voting together as a single
class or by any instrument in writing, without a meeting, signed by a majority
of the Trustees and consented to by the holders of a majority of such Shares.
However, an amendment which will affect the Shareholders of a particular
Series or Class shall be authorized by a Majority Shareholder Vote of such
Series or Class affected, and no vote of Shareholders of a Series or Class not
affected shall be required. The Trustees may also amend this Declaration,
without the vote or consent of Shareholders, to change the name of the Trust
or if they deem it necessary to conform this Declaration to the requirements
of applicable federal laws or regulations or the requirements of the regulated
investment company provisions of the Code (including those provisions of the
Code relating to the retention of the exemption from federal income tax with
respect to dividends paid by any Series or Class out of interest income
received with respect to such Series or Class on municipal bonds), but the
Trustees shall not be liable for failing so to do.
(b) No amendment may be made under this Section 8.3 which would change
any rights with respect to the Shares of any Series or Class by reducing the
among payable thereon upon liquidation of the Trust or such Series or Class or
by diminishing or eliminating any voting rights pertaining thereto, except
with the vote or consent of the holders of two-thirds of the Shares of the
relevant Series or Class outstanding and entitled to vote. Nothing contained
in this Declaration shall permit the amendment of this Declaration to impair
the exemption from personal liability of the Shareholders, Trustees officers,
employees and agents of the Trust or to permit assessments upon Shareholders.
(c) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid, or a copy of the Declaration, as amended, and executed
by a majority of the Trustees, shall be conclusive evidence of such amendment
when lodged among the records of the Trust.
Notwithstanding any other provisions hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of securities of the Trust shall have become
effective, this Declaration may be terminated or amended in any respect by the
affirmative vote of a majority of the Trustees or by an instrument signed by a
majority of the Trustees. Until Shares of a particular Series or Class are
issued, the Trustees may exercise all rights of the Shareholders of such
Series or Class with respect to matters affecting such Series or Class, and
may take any action with respect to the Trust or such Series or Class required
or permitted by law, this Declaration or the By-Laws to be taken by
Shareholders.
Section 8.4. Merger, Consolidation and Sale of Assets. Any or all
Series or Classes may merge or consolidate with any other corporation,
association, trust or other organization or may sell, lease or exchange all or
substantially all of the assets belonging to such Series or Class, including
good will, upon such terms and conditions and for such consideration when and
as authorized at any meeting of Shareholders called for the purpose by the
affirmative vote of the holders of two-thirds of the Shares of such Series or
Class outstanding and entitled to vote, or by an instrument or instruments in
writing without a meeting, consented to by the holders of two-thirds of such
Shares; provided, however, that, if such merger, consolidation, sale, lease or
exchange is recommended by the Trustees, a Majority Shareholder Vote of the
relevant Series or Class or the written consent of the holders of a majority
of such Shares, shall be sufficient authorization, and any such merger,
consolidation, sale, lease or exchange shall be deemed for all purposes to
have been accomplished under and pursuant to me statutes of The Commonwealth
of Massachusetts.
Section 8.5. Incorporation. Subject to a Majority Shareholder Vote
of the relevant Series or Class, the Trustees may cause to be organized, or
may assist in organizing, a corporation or corporations under the laws of any
jurisdiction or any other trust, partnership, association or other
organization to take over all of the assets belonging to such Series or Class
or to carry on any business in which the Series or Class shall directly or
indirectly have any interest and to sell, convey and transfer the assets
belonging to such Series or Class to any such corporation, trust, association
or organization in exchange for the share of securities thereof or otherwise,
and to lend money to, subscribe for the shares or securities of, and enter
into any contracts with any such corporation, trust, partnership, association
or organization, or any corporation, partnership, trust, association or
organization in which the Series or Class holds or is about to acquire shares
or any other interest. The Trustees may also cause a merger or consolidation
between any Series or Class or any successor thereto and any such corporation,
trust, partnership, association or other organization if and to the extent
permitted by law, as provided under the law then in effect. Unless otherwise
required by law, nothing contained herein shall be construed as requiring
approval of Shareholders for the Trustees to organize or assist in organizing
one or more corporations, trusts, partnerships, associations or other
organizations, and selling, conveying or transferring a portion of the assets
belonging to a particular Series or Class to such organizations or entities.
ARTICLE IX
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the Shareholders a
written financial report, which may be included in the Trust's prospectus, of
the transactions of the Trust, specifying the transactions attributable to
each Series and each Class, if any, including financial statements which shall
at least annually be certified by independent public accountants.
ARTICLE X
MISCELLANEOUS
Section 10.1. Filing. This Declaration and any amendment hereto
shall be filed in the office of the Secretary of State of The Commonwealth of
Massachusetts, and in such other places as may be required under the laws of
Massachusetts, and may also be filed or recorded in such other places as the
Trustees deem appropriate. Each amendment so filed shall be accompanied by a
certificate signed and acknowledged by a Trustee stating that such action was
duly taken in a manner provided herein, and unless such amendment or such
certificate sets forth some later time for the effectiveness of such
amendment, such amendment shall be effective upon its filing. A restated
Declaration, integrating into a single instrument all of the provisions of the
Declaration which are then in effect and operative, may be executed from time
to time by a majority of the Trustees, and shall, upon filing with the
Secretary of State of The Commonwealth of Massachusetts, be conclusive
evidence of all amendments contained therein and may thereafter be referred to
in lied of the original Declaration and the various amendments thereto.
Section 10.2. Governing Law. This Declaration is executed by the
Trustees and delivered in The Commonwealth of Massachusetts and with reference
to the laws thereof, and the rights of all parties and the validity and
construction of every provision hereof shall be subject to and construed
according to the laws of said Commonwealth.
Section 10.3. Counterparts. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
Section 10.4. Reliance by Third Parties. Any certificate executed
by an individual who, according to the records of the Trust appears to be a
Trustee hereunder, certifying to: (a) the number or identity of Trustees or
Shareholders, (b) the due authorization of the execution of any instrument or
writing, (c) the form of any vote passed at a meeting of Trustees or
Shareholders, (d) the fact that the number of Trustees or Shareholders present
at any meeting or executing any written instrument satisfies the requirements
of this Declaration, (e) the form of any By-laws adopted by or the identity of
any officers elected by the Trustees or (f) the existence of any fact or facts
which in any manner relate to the affairs of the Trust, shall be conclusive
evidence as to the matters to certified in favor of any Person dealing with
the Trustees and their successors.
Section 10.5. Provisions in Conflict with Law or Regulations. (a)
The provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any such provisions are in
conflict with the 1940 Act, the regulated investment company provisions of the
Code or with other applicable laws and regulations, the conflicting provisions
shall be deemed never to have constituted a part of this Declaration;
provided, however, that such determination shall not affect any of the
remaining provisions of this Declaration or render invalid or improper any
action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
enforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
IN WITNESS WHEREOF, the undersigned have executed this instrument this
29th day of April, 1991.
[SEAL] Address: 229 East State St. /s/David S. Schoedinger (Trustee)
Columbus, Ohio 43215 David S. Schoedinger
Address: 700 Children's Drive /s/William R. Wise (Trustee)
Columbus, Ohio 43205 William R. Wise
STATE OF OHIO ss.
COUNTY OF FRANKLIN
Then personally appeared the above-named David S. Schoedinger and
William R. Wise each of whom executed and acknowledged the foregoing
instrument to be their free act and deed.
/s/Alice J. Alexander
Notary Public
My Commission Expires:
Alice J. Alexander
Notary Public - State of Ohio
My Commission Expires June 9, 1992
Address of the Trust:
Federated Investors Tower
Pittsburgh, PA 15222-3779
THE MONITOR FUNDS
Amendment No. 1
to
AMENDED AND RESTATED DECLARATION OF TRUST
dated April 29, 1991
This Declaration of Trust is amended as follows:
A. Strike Section 5 of Article V from the Declaration of Trust and
substitute in its place the following:
"Section 5. Establishment and Designation of Series or Class.
Without limiting the authority of the Trustees set forth in
Article V, Section 5, inter alia, to establish and designate any
additional Series or Class or to modify the rights and
preferences of any existing Series or Class, the Series and
Classes of the Trust shall be and are established and designated
as The Monitor Money Market Fund - Trust Shares, The Monitor
Money Market Fund - Investment Shares, The Monitor Ohio Tax-Free
Money Market Fund - Trust Shares, The Monitor Ohio Tax-Free Money
Market Fund - Investment Shares, The Monitor U.S. Government
Money Market Fund - Trust Shares, The Monitor U.S. Government
Money Market Fund - Investment Shares, The Monitor U.S. Treasury
Money Market Fund, The Monitor Growth Fund - Trust Shares, The
Monitor Growth Fund - Investment Shares, The Monitor Income
Equity Fund, The Monitor Ohio Tax-Free Fund - Trust Shares, The
Monitor Ohio Tax-Free Fund - Investment Shares, The Monitor Fixed
Income Securities Fund - Trust Shares, The Monitor Fixed Income
Securities Fund - Investment Shares, The Monitor
Short/Intermediate Fixed Income Securities Fund, The Monitor
Mortgage Securities Fund -Investment Shares, and The Monitor
Mortgage Securities Fund - Trust Shares."
The undersigned Secretary of The Monitor Funds hereby certifies that the
above-stated amendment is a true and correct Amendment to the Declaration of
Trust, as adopted by the Board of Trustees on January 22, 1992.
WITNESS the due execution hereof this 22nd day of January, 1992.
/s/ Peter J. Germain
Peter J. Germain, Secretary
THE MONITOR FUNDS
Amendment No. 2
to
AMENDED AND RESTATED DECLARATION OF TRUST
dated April 29, 1991
This Declaration of Trust is amended as follows:
A. Strike Section 5.11 of Article V from the Declaration of Trust and
substitute in its place the following:
"Section 5.11. Establishment and Designation of Series or Class.
Without limiting the authority of the Trustees set forth in
Article V, Section 5.11, inter alia, to establish and designate
any additional Series or Class or to modify the rights and
preferences of any existing Series or Class, the Series and
Classes of the Trust shall be and are established and designated
as The Monitor Money Market Fund - Trust Shares, The Monitor
Money Market Fund - Investment Shares, The Monitor Ohio Municipal
Money Market Fund - Trust Shares, The Monitor Ohio Municipal
Money Market Fund - Investment Shares, The Monitor U.S.
Government Money Market Fund - Trust Shares, The Monitor U.S.
Government Money Market Fund - Investment Shares, The Monitor
U.S. Treasury Money Market Fund, The Monitor Growth Fund - Trust
Shares, The Monitor Growth Fund - Investment Shares, The Monitor
Income Equity Fund, The Monitor Ohio Tax-Free Fund - Trust
Shares, The Monitor Ohio Tax-Free Fund - Investment Shares, The
Monitor Fixed Income Securities Fund - Trust Shares, The Monitor
Fixed Income Securities Fund - Investment Shares, The Monitor
Short/Intermediate Fixed Income Securities Fund, The Monitor
Mortgage Securities Fund -Investment Shares, and The Monitor
Mortgage Securities Fund - Trust Shares."
The undersigned Secretary of The Monitor Funds hereby certifies that the
above-stated amendment is a true and correct Amendment to the Declaration of
Trust, as adopted by the Board of Trustees on April 22, 1992.
WITNESS the due execution hereof this 22nd day of April, 1992.
/s/ Peter J. Germain
Peter J. Germain, Secretary
Exhibit No. 2 under Form N-1A
Exhibit No. 3(b) under Item 601/Reg. S-K
BY-LAWS
OF
THE MONITOR FUNDS
DATED April 29, 1991
TABLE OF CONTENTS
Page
ARTICLE I -- DEFINITIONS 1
ARTICLE II -- OFFICES 1
Section 1. Principal Office 1
Section 2. Other Offices 1
ARTICLE III -- SHAREHOLDERS 2
Section 1. Meetings 2
Section 2. Notice of Meetings 2
Section 3. Record Date for Meetings and Other
Purposes 3
Section 4. Proxies 3
Section 5. Inspection of Records 4
Section 6. Action Without Meeting 4
ARTICLE IV -- TRUSTEES 5
Section 1. Meetings of the Trustees 5
Section 2. Quorum and Manner of Acting 6
ARTICLE V -- COMMITTEES 7
Section 1. Executive and Other Committees 7
Section 2. Meetings, Quorum and Manner of
Acting 7
ARTICLE VI -- OFFICERS 8
Section 1. General Provisions 8
Section 2. Term of Office and Qualifications 9
Section 3. Removal 9
Section 4. Powers and Duties of the President 9
Section 5. Powers and Duties of Vice President 10
Section 6. Powers and Duties of the Treasurer 10
Section 7. Powers and Duties of the Secretary 11
Section 8. Powers and Duties of Assistant
Treasurers 11
Section 9. Powers and Duties of Assistant
Secretaries 12
Section 10. Compensation of Officers and
Trustees and Members of the
Advisory Board 12
ARTICLE VII -- FISCAL YEAR 13
ARTICLE VIII -- SEAL 13
ARTICLE IX -- WAIVERS OF NOTICE 13
ARTICLE X -- CUSTODY OF SECURITIES 14
Section 1. Employment of a Custodian 14
Section 2. Action Upon Termination of Custodian
Agreement 14
Section 3. Custodian Contract 15
Section 4. Central Certificate System 15
Section 5. Acceptance of Receipts in Lieu of
Certificate 16
ARTICLE XI -- AMENDMENTS 16
ARTICLE XII -- MISCELLANEOUS 17
BY-LAWS
OF
THE MONITOR FUNDS
ARTICLE I
DEFINITIONS
The terms "Class," "Commission," "Custodian," "Declaration,"
"Distributor," "Investment Advisor," "Municipal Bonds," "1940 Act," "Series,"
"Shares," "Shareholder," "Transfer Agent," "Trust," "Trust Property,"
"Trustees," and "Majority Shareholder Vote," have the respective meanings
given them in the Amended and Restated Declaration of Trust of The Monitor
Funds (the "Trust") dated as of April 29, 1991; as amended from time to time.
ARTICLE II
OFFICES
Section 1. Principal Office. Until changed by the Trustees, the
principal office of the Trust shall be located at Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779.
Section 2. Other Offices. The Trust may have offices in such other
places without as well as within the Commonwealths of Massachusetts or
Pennsylvania as the Trustees may from time to time determine.
ARTICLE III
SHAREHOLDERS
Section 1. Meetings; Quorum. Meetings of the Shareholders shall be
held as provided in the Declaration at such place within or without the
Commonwealth of Massachusetts or Pennsylvania as the Trustees shall designate.
The holders of a majority of the outstanding Shares entitled to vote, present
in person or by proxy, shall constitute a quorum at any meeting of the
Shareholders.
Section 2. Notice of Meetings. Notice of all meetings of the
Shareholders, stating the time, place and purposes of the meeting, shall be
given by the Trustees by mail to each Shareholder at his address as recorded
on the register of the Trust mailed at least (10) days, but not more than
sixty (60) days, before the meeting. Only the business stated in the notice
of the meeting shall be considered at such meeting. Any adjourned meeting may
be held as adjourned without further notice. No notice need be given to any
Shareholder who shall have failed to inform the Trust of his current address
or if a written waiver of notice, executed before or after the meeting by the
Shareholder or his attorney thereunto authorized, is filed with the records of
the meeting.
Section 3. Record Date for Meetings and Other Purposes. For the
purpose of determining the Shareholders of any Series or Class who are
entitled to notice of an to vote at any meeting, or to participate in any
distribution, or for the purpose of any other action, the Trustees may from
time to time close the transfer books of the Trust with respect to such Series
or Class for such period, not exceeding thirty (30) days, as the Trustees may
determine; or without closing the transfer books the Trustees may fix a date
not more than sixty (60) days prior to the date of any meeting of Shareholders
or distribution or other action as a record date for the determination of the
persons to be treated as Shareholders of record for such purposes, except for
dividend payments which shall be governed by the Declaration.
Section 4. Proxies. At any meeting of Shareholders, any holder of
Shares of any Series of Class entitled to vote there at may vote by proxy,
provided that no proxy shall be voted at any meeting unless it shall have been
placed on file with the Secretary, or with such other officer or agent of the
Trust as the Trustees may direct, for verification prior to the time at which
such vote shall be taken. Proxies may be solicited in the name of one or more
Trustees or one or more of the officers of the Trust. Only Shareholders of
record shall be entitled to vote. Each whole Share shall be entitled to one
vote as to any matter on which it is entitled by the Declaration to vote, and
each fractional Share shall be entitled to a proportionate fractional vote.
When any Share is held jointly by several persons, any one of them may vote at
any meeting in person or by proxy in respect of such Share, but if more than
one of them shall be present at such meeting in person or by proxy, and such
joint owners or their proxies so present disagree as to any vote to be cast,
such vote shall not be received in respect of such Share. A proxy purporting
to be executed by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise, and the burden of proving invalidity
shall rest on the challenger. If the holder of any such Share is a minor or a
person of unsound mind, and subject to guardianship or the legal control of
any other person as regards the charge or management of such Share, he may
vote by his guardian or such other person appointed or having such control,
and such vote may be given in person or by proxy.
Section 5. Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
shareholders of a Massachusetts business corporation.
Section 6. Action without Meeting. Any action which may be taken by
Shareholders may be taken without a meeting if a majority of Shareholder
entitled to vote on the matter (or such larger proportion thereof as shall be
required by law, the Declaration or these By-laws for approval of such matter)
consent to the action in writing and the written consents are filed with the
records of the meetings of Shareholders. Such consents shall be treated for
all purposes as a vote taken at a meeting of Shareholders called for such
purpose.
ARTICLE IV
TRUSTEES
Section 1. Meetings of the Trustees. The Trustees may in their
discretion provide for regular or stated meetings of the Trustees. Notice of
regular or stated meetings need not be given. Meetings of the Trustees other
than regular or stated meetings shall be held whenever called by the
President, or by any one of the Trustees, at the time being the office.
Notice of the time and place of each meeting other than regular or stated
meetings shall be given by the Secretary or an Assistant Secretary or by the
officer or Trustee calling the meeting and shall be mailed to each Trustee at
least two days before the meeting, or shall be telegraphed, cabled, or
wirelessed to each Trustee at his business address, or personally delivered to
him at least one day before the meeting. Such notice may, however, be waived
by any Trustee. Notice of a meeting need not be given to any Trustee if a
written waiver of notice, executed by him before or after the meeting, is
filed with the records of the meeting, or to any Trustee who attends the
meeting without protesting prior thereto or at its commencement the lack of
notice to him. A notice or waiver of notice need not specify the purpose of
any meeting. The Trustees may meet by means of a telephone conference circuit
or similar communications equipment by means of which all persons
participating in the meeting are connected, which meeting shall be deemed to
have been held at a place designated by the Trustees at the meeting.
Participation in a telephone conference meeting shall constitute presence in
person at such meeting. Any action required or permitted to be taken at any
meeting of the Trustees may be taken by the Trustees without a meeting if a
majority of the Trustees consent to the action in writing and the written
consents are filed with the records of the Trustees' meetings. Such consents
shall be treated as a vote for all purposes.
Section 2. Quorum and Manner of Acting. A majority of the Trustees
shall be present in person at any regular or special meeting of the Trustees
in order to constitute a quorum for the transaction of business at such
meeting and (except as otherwise required by law, the Declaration or these By-
laws) the act of a majority of the Trustees present at any such meeting, at
which a quorum is present, shall be the act of the Trustees. In the absence
of a quorum, a majority of the Trustees present may adjourn the meeting from
time to time until a quorum shall be present. Notice of an adjourned meeting
need not be given.
ARTICLE V
COMMITTEES
Section 1. Executive and Other Committees. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than two (2) to hold office at the pleasure
of the Trustees, which shall have the power to conduct the current and
ordinary business of the Trust while the Trustees are not in session,
including the purchase and sale of securities and the designation of
securities to be delivered upon redemption of Shares of any Series or Class,
and such other powers of the Trustees as the Trustees may, from time to time,
delegate to them except those powers which by law, the Declaration or these By-
laws they are prohibited from delegating. The Trustees may also elect from
their own number other Committees from time to time, the number composing such
Committees, the powers conferred upon the same (subject to the same
limitations as with respect to the Executive Committee) and the term of
membership on such Committees to be determined by the Trustees. The Trustees
may designate a chairman of any such Committee. In the absence of such
designation the Committee may elect its own chairman.
Section 2. Meetings, Quorum and Manner of Acting. The Trustees may (1)
provide for regular or stated meetings of any Committee, (2) specify the
manner of calling and notice required for special meetings of any Committee,
(3) specify the number of members of a Committee required to constitute a
quorum and the number of members of a Committee required to exercise specified
powers delegated to such Committee, (4) authorize the making of decisions to
exercise specified powers by written assent of the requisite number of members
of a Committee without a meeting, and (5) authorize the members of a Committee
to meet by means of a telephone conference circuit or similar communications
equipment be means of which all persons participating in the meeting are
connected.
The Executive Committee and any other Committee created as above
provided or as provided in the Declaration shall keep regular minutes of its
meetings and records of decisions taken without a meeting and cause them to be
recorded in a book designated for that purpose and kept in the office of the
Trust.
ARTICLE VI
OFFICERS
Section 1. General Provisions. The officers of the Trust shall be a
President, a Treasurer and a Secretary, who shall be elected by the Trustees.
The Trustees may elect or appoint such other officers or agents as the
business of the Trust may require, including one or more Vice Presidents, one
or more Assistant Secretaries, and one or more Assistant Treasurers. The
Trustees may delegate to any officer or committee the power to appoint any
subordinate officers or agents.
Section 2. Term of Office and Qualifications. Except as otherwise
provided by law, the Declaration or these By-laws, the President, the
Treasurer and the Secretary shall each hold office until his successor shall
have been duly elected and qualified, and all other officers shall hold office
at the pleasure of the Trustees. Any two or more offices may be held by the
same person. Any officer may be, but none need by, a Trustee or Shareholder.
Section 3. Removal. The Trustees, at any regular or special meeting of
the Trustees, may remove any officer without cause, by a vote of a majority of
the Trustees then in office. Any officer or agent appointed by an officer or
committee may be removed with or without cause by such appointing officer or
committee.
Section 4. Powers and Duties of the President. The President may call
meetings of the Trustees and of any Committee thereof when he deems it
necessary and shall preside at all meetings of the Shareholders. Subject to
the control of the Trustees and to the control of any Committees of the
Trustees, within their respective spheres, as provided by the Trustees, the
President shall at all times exercise general supervision and direction over
the affairs of the Trust. The President shall have the power to employ
attorneys and counsel for the Trust and to employ such subordinate officers,
agents, clerks and employees as he may find necessary to transact the business
of the Trust. The President shall also have the power to grant, issue,
execute or sign such powers of attorney, proxies or other documents as may be
deemed advisable or necessary in furtherance of the interests of the Trust.
The President shall have such other powers and duties, as from time to time
may be conferred upon or assigned to him by the Trustees.
Section 5. Powers and Duties of Vice Presidents. In the absence or
disability of the President, the Vice President or, if there be more than one
Vice President, any Vice President designated by the Trustees, shall perform
all the duties and may exercise any of the powers of the President, subject to
the control of the Trustees. Each Vice President shall perform such other
duties as may be assigned to him from time to time by the Trustees and the
President.
Section 6. Powers and Duties of the Treasurer. The Treasurer shall be
the principal financial and accounting officer of the Trust. The Treasury
shall deliver all funds of the Trust which may come into his hands to such
Custodian as the Trustees may employ pursuant to Article X of these By-laws.
The Treasurer shall render a statement of condition of the finances of the
Trust to the Trustees as often as they shall require the same and he shall in
general perform all the duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to him by the Trustees. The
Treasurer shall give a bond for the faithful discharge of his duties, if
required to do so by the Trustees, in such sum and with such surety or
sureties as the Trustees shall require.
Section 7. Powers and Duties of the Secretary. The Secretary shall
keep the minutes of all meetings of the Trustees and of the Shareholders in
proper books provided for that purpose. The Secretary shall have custody of
the seal of the Trust, if any, and shall have charge of the Share transfer
books, lists and records unless the same are in the charge of the Transfer
Agent. The Secretary shall attend to the giving and serving of all notices by
the Trust in accordance with the provisions of these By-laws and as required
by law; and as subject to these By-laws, the Secretary shall in general
perform all duties incident to the office of Secretary and such other duties
as from time to time may be assigned to him by the Trustees.
Section 8. Powers and Duties of Assistant Treasurers. In the absence
or disability of the Treasurer, any Assistant Treasurer designated by the
Trustees shall perform all the duties, and may exercise any of the powers, of
the Treasurer. Each Assistant Treasurer shall perform such other duties as
from time to time may be assigned to him by the Trustees. Each Assistant
Treasurer shall give a bond for the faithful discharge of his duties, if
required to do so by the Trustees, in such sum and with such surety or
sureties as the Trustees shall require.
Section 9. Powers and Duties of Assistant Secretaries. In the absence
or disability of the Secretary, any Assistant Secretary designated by the
Trustees shall perform all the duties, and may exercise any of the powers, of
the Secretary. Each Assistant Secretary shall perform such other duties as
from time to time be assigned to him by the Trustees.
Section 10. Compensation of Officers and Trustees and Members of the
Advisory Board. Subject to any applicable provisions of the Declaration, the
compensation of the officers and Trustees and members of the Advisory Board,
if any, shall be fixed from time to time by the Trustees or, in the case of
officers, by any committee or officer upon whom such power may be conferred by
the Trustees. No officer shall be prevented from receiving such compensation
as such officer by reason of the fact that he is also a Trustee.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Trust shall begin on the first day of January in
each year and shall end on the thirty-first day of December in each year,
provided, however, that the Trustees may from time to time change the fiscal
year.
ARTICLE VIII
SEAL
The Trustees may adopt a seal which shall be in such form and shall have
such inscription thereon as the Trustees may from time to time prescribe.
However, unless otherwise required by the Trustees, the seal shall not be
necessary to be placed on, and its absence shall not impair the validity of,
any document, instrument or other paper executed and delivered by or on behalf
of the Trust.
ARTICLE IX
WAIVERS OF NOTICE
Whenever any notice whatever is required to be given by law, the
Declaration or these By-laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. A notice shall be deemed
to have been telegraphed, cabled or wirelessed for the purposes of these By-
laws when it has been delivered to a representative of any telegraph, cable or
wireless company with instructions that it be telegraphed, cabled or
wirelessed.
ARTICLE X
CUSTODY OF SECURITIES
Section 1. Employment of a Custodian. The Trust shall place and at all
times maintain in the custody of a Custodian (including any sub-custodian for
the Custodian) all funds, securities and similar investments included in the
Trust Property. The Custodian (and any sub-custodian) shall be a bank or
trust company having not less than $2,000,000 aggregate capital, surplus and
undivided profits and shall be appointed from time to time by the Trustees,
who shall fix its remuneration.
Section 2. Action Upon Termination of Custodian Agreement. Upon
termination of a custodian agreement or inability of the Custodian to continue
to serve, the Trustees shall promptly appoint a successor Custodian, but in
the event that no successor Custodian can be found which has the required
qualifications and is willing to serve, the Trustees shall call as promptly as
possible a special meeting of the Shareholders to determine whether the Trust
shall function without a Custodian or shall be liquidated. If so directed by
a Majority Shareholder Vote, the Custodian shall deliver and pay over all
Trust Property held by it as specified in such vote.
Section 3. Custodian Contract. The Trust shall enter into a written
contract with each Custodian regarding the powers, duties and compensation of
such Custodian with respect to the cash and securities of the Trust held by
such Custodian. Said contract and all amendments thereto shall be approved by
the Trustees.
Section 4. Central Certificate System. Subject to such rules,
regulations and orders as the Commission may adopt, the Trustees may direct
the Custodian to deposit all or any part of the securities owned by the Trust
in a system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, or such other person as
may be permitted by the Commission, or otherwise in accordance with the 1940
Act, pursuant to which system all securities of any particular class or series
of any issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be subject to withdrawal
only upon the order of the Trustees or their duly authorized agent.
Section 5. Acceptance of Receipts in Lieu of Certificates. Subject to
such rules, regulations and orders as the Commission may adopt, the Trustees
may direct the Custodian to accept written receipts or other written evidences
indicating purchases of securities held in book-entry from in the Federal
Reserve System in accordance with regulations promulgated by the Board of
Governors of the Federal Reserve System and the local Federal Reserve Banks in
lieu of receipt of certificates representing such securities.
ARTICLE XI
AMENDMENTS
These By-laws, or any of them, may be altered, amended or repealed, or
new By-laws may be adopted by the Trustees, provided, however, that no By-law
may be amended, adopted or repealed by the Trustees if such amendment,
adoption or repeal requires, pursuant to law, the Declaration or these By-
laws, a vote of the Shareholders.
ARTICLE XII
MISCELLANEOUS
(A) Except as hereinafter provided, no officer or Trustees of the
Trust and no partner, officer, director or shareholder of the Investment
Advisor or of the Distributor, and no Investment Advisor or Distributor, shall
take long or short positions in the securities issued by the Trust.
(1) The foregoing provisions shall not prevent the Distributor
from purchasing Shares from the Trust if such purchases are limited (except
for reasonable allowances for clerical errors, delays and errors of
transmission and cancellation of orders) to purchase for the purpose of
filling orders for such Shares received by the Distributor and provided that
orders to purchase from the Trust are entered with the Trust or the Custodian
promptly upon receipt by the Distributor of purchase orders for such Shares,
unless the Distributor is otherwise instructed by its customer.
(2) The foregoing provisions shall not prevent the Distributor
from purchasing Shares as agent to the account of the Trust.
(3) The foregoing provisions shall not prevent the purchase from
the Trust or from the Distributor of Shares by any officer or Trustee of the
Trust or by any partner, officer, director of shareholder of the Investment
Advisor or of the Distributor at the price available to the public generally
at the moment of such purchase, or as described in the then currently
effective Prospectus of the Trust.
(4) The foregoing shall not prevent the Investment Advisor, the
Distributor, or any affiliates of either, from purchasing Shares of any Series
or Class for investment purposes or prior to the effective date of the
registration statement relating to such Shares under the Securities Act of
1933.
(B) The Trust shall not lend assets of the Trust to any officer or
Trustee of the Trust, or to any partner, officer, director or shareholder of,
or person financially interested in, the Investment Advisor or the
Distributor, or to the Investment Advisor or to the Distributor.
(C) The Trust shall not impose any restrictions upon the transfer of
the Shares of the Trust except as provided in e Declaration, but this
requirement shall not prevent the charging of customary transfer agent fees.
(D) The Trust shall not permit any officer or Trustee of the Trust, or
any partner, officer or director of the Investment Advisor or Distributor to
deal for or on behalf of the Trust with himself as principal or agent, or with
any partnership, association or corporation in which he has a financial
interest; provided that the foregoing provisions shall not prevent (a)
officers and Trustees of the Trust or partners, officers or directors of the
Investment Advisor or Distributor from buying, holding or selling Shares, or
from being partners, officers or directors of, or otherwise financially
interested in, the Investment Advisor or Distributor; (b) purchases or sales
of securities or other property by the Trust from or to an affiliated person
or to the Investment Advisor or Distributor if such transaction is exempt from
the applicable provisions of the 1940 Act; (c) purchases of investments for
the portfolio of the Trust or sales of investments owned by the Trust through
a securities dealer who is, or one or more of whose partners, shareholders,
officers or directors is, an officer or Trustees of the Trust, or a partner,
officer or director of the Investment Advisor or Distributor, if such
transactions are handled in the capacity of broker only and commissions
charged do not exceed customary brokerage charges for such services; (d)
employment of legal counsel, registrar, Transfer Agent, dividend disbursing
agent or Custodian who is, or has a partner, shareholder, officer, or director
who is, an officer or Trustee of the Trust, or a partner, officer or director
of the Investment Advisor or Distributor, if only customary fees are charge
for services to the Trust; (e) sharing statistical, research, legal and
management expenses and office hire and expenses with any other investment
company or other company in which an officer or Trustee of the Trust, or a
partner, officer or director of the Investment Advisor or Distributor, is an
officer or director or otherwise financially interested.
Exhibit No. 5(i) under Form N-1A
Exhibit No. 10 under Item 601/Reg. S-K
THE MONITOR FUNDS
INVESTMENT ADVISORY AGREEMENT
This Agreement is made this 24th day of April, 1992 by and between The
Monitor Funds, a business trust organized under the laws of the Commonwealth
of Massachusetts (herein called the "Trust", and The Huntington Trust Company,
N.A., a national banking association limited to trust powers (herein called
the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940;
WHEREAS, the Trust has retained the Investment Adviser to render
investment advisory and other services to the Trust for its Money Market Fund,
U.S. Government Money Market Fund, Tax-Free Money Market Fund and Ohio Tax-
Free Portfolios pursuant to a separate Investment Advisory Agreement dated
September 15, 1988 and for its U.S. Treasury Money Market Fund, Growth Fund,
Income Equity Fund, Fixed Income Securities Fund and Short/Intermediate Fixed
Income Securities Fund pursuant to a separate Investment Advisory Agreement
dated April 25, 1989; and
WHEREAS, the Trust desires to retain the Investment Adviser to render
investment advisory and other services to the Trust for The Monitor Mortgage
Securities Fund (the "Fund"), and the
Investment Adviser is willing to render such services as a discretionary
investment adviser on the terms and conditions hereinafter set forth;
WITNESSETH: That in consideration of the promises and mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. Appointment. The Trust being duly authorized hereby appoints the
Investment Adviser to act as discretionary investment adviser to the Trust for
the Fund for the period and on the terms set forth in this Agreement. The
Investment Adviser accepts such appointment and agrees to render the services
herein set forth for the compensation herein provided.
2. Management. Subject to the supervision of the Board of Trustees of
the Trust (the "Trustees"), the Investment Adviser will provide a continuous
investment program for the Fund, including investment research and management
with respect to all securities, investments, cash and cash equivalents in the
Funds. The Investment Adviser will determine from time to time what
securities and other instruments will be purchased, retained or sold by the
Trust for the Fund. The Investment Adviser will provide the services rendered
by it hereunder in accordance with the Fund's investment objectives and
policies as stated in the Prospectus which is a part of the Trust's effective
Registration Statement as amended from time to time. The Investment Adviser
agrees that it:
(a) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission (herein called the "Rules") and with the
Securities Act of 1933, the Securities Exchange Act of 1934, the Investment
Company Act of 1940 and the Investment Advisers Act of 1940, all as amended,
and will in addition conduct its activities under this Agreement in accordance
with all applicable Rules and Regulations of the Comptroller of the Currency
pertaining to the investment advisory activities of national banks;
(b) will place orders pursuant to its investment determinations for
the Fund either directly with the issuer of the instrument to be purchased or
with any broker or dealer selected by it. In placing orders with brokers and
dealers, the Investment Adviser will use its reasonable best efforts to obtain
the best net price and execution of its orders, after taking into account all
factors it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission,
if any, both for the specific transaction and on a continuing basis. However,
this responsibility shall not be deemed to obligate the Investment Adviser to
solicit competitive bids for each transaction. Consistent with this
obligation, the Investment Adviser may, to the extent permitted by law,
purchase and sell portfolio securities to and from brokers and dealers who
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934), statistical quotations,
specifically the quotations necessary to determine the Fund's net asset value,
and other information provided to the Fund or to the Investment Adviser or its
affiliates to or for the benefit of the Fund and/or other accounts over which
the Investment Adviser or any of its affiliates exercises investment
discretion. Subject to the review of the Trustees from time to time with
respect to the extent and continuation of the policy, the Investment Adviser
is authorized to pay to a broker or dealer who provides such brokerage and
research services a commission for effecting a securities transaction for the
Fund which is in excess of the amount of commission another broker or dealer
would have charged for effecting the transaction if the Investment Adviser
determines in good faith that such commission was reasonable in relation to
the value of the brokerage and research services provided by such broker or
dealer, viewed in terms of either that particular transaction or the overall
responsibilities of the Investment Adviser with respect to the accounts as to
which it or its affiliates exercise investment discretion; and
(c) will maintain books and records with respect to the securities
transactions of the Fund and will render to the Trustees such periodic and
special reports as the Trustees may reasonably request.
3. Services Not Exclusive. The investment management services rendered
by the Investment Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser shall be free to render similar services to others so long
as its services under this Agreement are not impaired thereby. The Investment
Adviser shall provide fair and equitable treatment to the Fund in the
selection of portfolio instruments and the allocation of investment
opportunities; the Investment Adviser is not required to give the Fund
preferential treatment.
4. Books and Records. In compliance with the requirements of Rule 31a-3
promulgated under the Investment Company Act of 1940, as amended, the
Investment Adviser hereby agrees that all records which it maintains for the
Fund are the property of the Trust and further agrees to surrender promptly to
the Trust any of such records upon the Trust's request. The Investment
Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
the records required to be maintained by Rule 31a-1 and to comply in full with
the requirements of Rule 204-2 under the Investment Advisers Act of 1940
pertaining to the maintenance of books and records.
5. Expenses. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities (including brokerage
commissions and taxes, if any) or other investment instruments purchased for
the Funds.
In addition, if the expenses borne by the Fund (including fees payable
pursuant to this Agreement and the Administration Agreement but excluding
interest, taxes, brokerage and, if permitted by the relevant state securities
commissions, extraordinary expenses) in any fiscal year of the Fund exceed the
applicable expense limitations imposed by the securities regulations of any
state in which the shares of the Fund are registered or qualified for sale to
the public, the Investment Adviser shall reimburse the Fund monthly for a
portion of any such excess in an amount equal to the proportion that the fees
otherwise payable to the Investment Adviser bear to the total amount of
investment advisory and administration fees otherwise payable to the
Investment Adviser during such fiscal year pursuant to paragraph 6 hereof.
6. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, the Trust will pay the Investment Adviser, and the
Investment Adviser will accept as full compensation therefore, a fee, computed
daily and payable monthly at the annual rate of 0.50 of one percent of the
average daily net assets ("Net Assets") of the Fund.
7. Limitation of Liability of the Investment Adviser; Indemnification.
(a) The Investment Adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in connection
with the matters to which this Agreement relates, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Investment Adviser in the performance of its
duties or from reckless disregard by it of its obligations and duties under
this Agreement.
(b) Subject to the limitations contained in Section 7(c) below:
(i) the Trust shall indemnify and hold harmless the Investment
Adviser, its directors, officers and employees and each person who controls
the Investment Adviser (hereinafter referred to as "Covered Persons") to the
fullest extent permitted by law, against any and all claims, demands and
liabilities (and all reasonable expenses in connection therewith) to which the
Investment Adviser or any of its directors, officers, employees or controlling
persons may become subject by virtue of the Investment Adviser being or having
been the Investment Adviser of the Trust;
(ii) the words "claims," "actions," "suits," or "proceedings"
shall apply to all claims, actions, suits or proceedings (civil, criminal or
other, including appeals), actual or threatened while in office or thereafter,
and the words "liabilities" and "expenses" shall include, without limitation,
attorneys' fees and expenses, costs, judgments, amounts paid in settlement,
fines, penalties and other liabilities.
(c) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body before
which the proceedings was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of its office or (B)
not to have acted in good faith in the reasonable belief that its action was
in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Covered Person did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in
the conduct of his office,
(A) by the court or other body approving the
settlement; or
(B) by at least a majority of those Trustees who are
neither Interested Persons of the Trust (as defined in the Investment Company
Act of 1940, as amended) nor are parties to the matter, based upon a review of
readily available facts (as opposed to a full trial-type inquiry); or
(C) by written opinion of independent legal counsel
based upon a review of readily available facts (as opposed to a full trial-
type inquiry).
(d) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, shall continue as to a person who has ceased to be a
Covered Person and shall inure to the benefit of the personal representatives,
successors and assigns of each such person. Nothing contained herein shall
affect any rights to indemnification to which Trust personnel and any other
persons, other than a Covered Person, may be entitled by contract or otherwise
under law.
(e) Expenses in connection with the investigation, preparation and
presentation of a defense to any claim, suit or proceeding of the character
described in subsection (b) of this Section 7 shall be paid by the Trust or
the Fund from time to time prior to final disposition thereof, upon receipt of
an undertaking by or on behalf of such Covered Person that such amount will be
paid over by him to the Trust or the Fund if it is ultimately determined that
he is not entitled to indemnification under this Section 7; provided, however,
that either (i) such Covered Person shall have provided appropriate security
for such undertaking, (ii) the Trust shall be insured against losses arising
out of any such advance payments, or (iii) either a majority of the Trustees
who are neither Interested Persons of the Trust nor parties to the matter, or
independent legal counsel in a written opinion, shall have determined, based
upon a review of readily available facts (as opposed to a trail-type inquiry),
that there is reason to believe that such Covered Person will be entitled to
indemnification under this Section 7.
8. Duration and Termination. This Agreement shall be effective as of the
date on which the Fund is declared effective and, unless sooner terminated as
provided herein, shall continue until September 1, 1993. Thereafter, if not
terminated, this Agreement shall continue in effect as to the Fund for
successive periods of 12 months each, provided such continuance is
specifically approved at least annually (a) by the vote of a majority of those
Trustees who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval, and (b) by the Trustees or, with respect to the Fund, by vote
of a majority of the outstanding voting securities of the Fund; provided,
however, that this Agreement may be terminated by the Trust as to the Funds at
any time, without the payment of any penalty, by the Trustees or, with respect
to the Fund, by vote of a majority of the outstanding voting securities of the
Fund on 60 days' written notice to the Investment Adviser, or by the
Investment Adviser as to the Fund at any time, without payment of any penalty,
on 90 days' written notice to the Trust. This Agreement will immediately
terminate in the event of its assignment by either party hereto or by
operation of law. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person" and "assignment" shall
have the same meanings as such terms have in the Investment Company Act of
1940, as amended).
9. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall
be effective with respect to the Fund until approved by vote of a majority of
the Fund's outstanding voting securities.
10. (A) Representations and Warranties. The Investment Adviser hereby
represents and warrants as follows:
(1) The Investment Adviser is exempt from registration under
the Investment Advisers Act of 1940, as amended;
(2) The Investment Adviser has all requisite authority to
enter into, execute, deliver and perform its obligations
under this Agreement;
(3) This Agreement is the legal, valid and binding obligation
of the Investment Adviser, and is enforceable in accordance
with its terms; and
(4) The performance by the Investment Adviser of its
obligations under this Agreement does not conflict with any
law or regulation to which it is subject.
(B) Covenants. The Investment Adviser hereby covenants and agrees
that, so long as this Agreement shall remain in effect,
(1) The Investment Adviser shall remain exempt from
registration or shall become registered under the Investment
Advisers Act of 1940; and
(2) the performance by the Investment Adviser of its
obligations under this Agreement shall not conflict with any
law to which it is then subject.
(C) The Trust hereby covenants and agrees that, so long as this
Agreement shall remain in effect, it shall furnish the Investment Adviser from
time to time with copies of the following documents, if and when effective,
pertaining to the Trust or the Funds and all amendments and supplements
thereto: Declaration of Trust, By-laws, Registration Statement (including
Prospectus and Statement of Additional Information), Custodial Agreement,
Transfer Agency Agreement, Administration Agreement, Distribution Agreement,
Rule 12b-1 Service Plan, Proxy Statement and any other documents filed with
the Securities and Exchange Commission, State securities law administrators or
other governmental agencies, and any other documents the Investment Adviser
may reasonably request.
11. Notices. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid, (1) to the Investment Adviser at 41 South High Street, Columbus, Ohio
43287, or (2) to the Trust at Federated Investors Tower, Pittsburgh,
Pennsylvania, 15222.
12. Waiver. With full knowledge of the circumstances and the effect of
its action, the Investment Adviser hereby waives any and all rights which it
may acquire in the future against the property of any shareholder of the
Trust, other than shares of the Trust at their net asset value; which arise
out of any action or inaction of the Trust under this Agreement.
13. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
14. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
15. Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors.
16. Governing Law. This Agreement is executed in the state of Ohio and
shall be governed by the laws of such State, without reference to conflict of
laws principles.
IN WITNESS WHEREOF, each of the parties hereto has caused this instrument
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed as of the date first above
written.
Attest: THE MONITOR FUNDS
/s/ Peter J. Germain By:/s/ Edward C. Gonzales
[Seal]
Attest: THE HUNTINGTON TRUST COMPANY, N.A.
/s/ Sheila J. Williams By:/s/ Norman A. Jacobs
[Seal]
Exhibit No. 5(ii) under Form N-1A
Exhibit No. 10 under Item 601/Reg. S-K
The Monitor Funds
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made between The Huntington Trust Company, N.A., a
national banking association (hereinafter referred to as "Adviser") and Piper
Capital Management, Incorporated, a registered investment adviser located in
Minneapolis, Minnesota (hereinafter referred to as the "Sub-Adviser").
WITNESSETH:
That the parties hereto, intending to be legally bound hereby agree as
follows:
1. Sub-Adviser hereby agrees to furnish to Adviser in its capacity as
investment adviser to the The Monitor Mortgage Securities Fund (the "Fund"), a
portfolio of The Monitor Funds ("Trust"), such investment advice, statistical
and other factual information, as may from time to time be reasonably
requested by Adviser for the Fund which may be offered in one or more classes
of shares ("Classes").
2. For its services under this Agreement, Sub-Adviser shall receive from
Adviser an annual fee ("the Sub-Advisory Fee"), as set forth in the exhibits
hereto. In the event that the fee due from the Trust to the Adviser on behalf
of the Fund is reduced in order to meet expense limitations imposed on the
Fund by state securities laws or regulations, the Sub-Advisory Fee shall be
reduced by one-half of said reduction in the fee due from the Trust to the
Adviser on behalf of the Fund.
Notwithstanding any other provision of this Agreement, the Sub-Adviser
may from time to time and for such periods as it deems appropriate, reduce its
compensation (and, if appropriate, assume expenses of the Fund or Class of the
Fund) to the extent that the Fund's expenses exceed such lower expense
limitation as the Sub-Adviser may, by notice to the Trust on behalf of the
Fund, voluntarily declare to be effective.
3. This Agreement shall begin for the Fund on the date that the parties
execute an exhibit to this Agreement relating to such Fund. This Agreement
shall remain in effect for the Fund until the first meeting of Shareholders
held after the execution date of an exhibit relating to the
Fund, and if approved at such meeting by the shareholders of the Fund, shall
continue in effect for the Fund for two years from the date of its execution
and from year to year thereafter, subject to the provisions for termination
and all of the other terms and conditions hereof if: (a) such continuation
shall be specifically approved at least annually by the vote of a majority of
the Trustees of the Trust, including a majority of the Trustees who are not
parties to this Agreement or interested persons of any such party (other than
as Trustees of the Trust) cast in person at a meeting called for that purpose;
and (b) Adviser shall not have notified the Trust in writing at least sixty
(60) days prior to the anniversary date of this Agreement in any year
thereafter that it does not desire such continuation with respect to the Fund.
4. Notwithstanding any provision in this Agreement, it may be terminated
at any time without the payment of any penalty: (a) by the Trustees of the
Trust or by a vote of a majority of the outstanding voting securities (as
defined in Section 2(a)(42) of the Act) of the Fund on sixty (60) days'
written notice to Adviser; (b) by Sub-Adviser or Adviser upon 120 days'
written notice to the other party to the Agreement.
5. This Agreement shall automatically terminate: (a) in the event of
its assignment (as defined in the Investment Company Act of 1940); or (b) in
the event of termination of the Investment Advisory Contract for any reason
whatsoever.
6. So long as both Adviser and Sub-Adviser shall be legally qualified to
act as an investment adviser to the Fund, neither Adviser nor Sub-Adviser
shall act as an investment adviser (as such term is defined in the Investment
Company Act of 1940) to the Fund except as provided herein and in the
Investment Advisory Contract or in such other manner as may be expressly
agreed between Adviser and Sub-Adviser.
Provided, however, that if the Adviser or Sub-Adviser shall resign prior
to the end of any term of this Agreement or for any reason be unable or
unwilling to serve for a successive term which has been approved by the
Trustees of the Trust pursuant to the provisions of Paragraph 3 of this
Agreement or Paragraph 6 of the Investment Advisory Contract, the remaining
party, Sub-Adviser or Adviser as the case may be, shall not be prohibited from
serving as an investment adviser to such Fund by reason of the provisions of
this Paragraph 6.
7. This Agreement may be amended from time to time by agreement of the
parties hereto provided that such amendment shall be approved both by the vote
of a majority of Trustees of the Trust, including a majority of Trustees who
are not parties to this Agreement or interested persons, as defined in Section
2(a)(19) of the Investment Company Act of 1940, of any such party at a meeting
called for that purpose, and by the holders of a majority of the outstanding
voting securities (as defined in Section 2(a)(42) of the Investment Company
Act of 1940) of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on their behalf by their duly authorized officers, and their
corporate seals to be affixed hereto this 24th day of April, 1992.
ATTEST: The Huntington Trust Company, N.A.
/s/ David Jones By: /s/ Norman A. Jacobs
Assistant Vice President Vice President
Piper Capital Management, Inc.
/s/ David Evans Rosedahl By: /s/ Worth Bruntjen
Secretary Senior Vice President
Exhibit A
The Monitor Funds
The Monitor Mortgage Securities Fund
Sub-Advisory Contract
For all services rendered by Sub-Adviser hereunder, Adviser shall pay Sub-
Adviser a Sub-Advisory Fee equal to .15 of 1% of the average daily net assets
of the above-mentioned portfolio. The Sub-Advisory Fee shall be accrued daily
and paid monthly as set forth in the Primary Advisory Contract dated April 24,
1992.
This Exhibit duly incorporates by reference the Sub-Advisory Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on their behalf by their duly authorized officers, and their
corporate seals to be affixed hereto this 24th day of April, 1992.
ATTEST: The Huntington Trust Company, N.A.
/s/ David Jones By: /s/ Norman A. Jacobs
Assistant Vice President Vice President
Piper Capital Management, Inc.
/s/ David Evans Rosedahl By: /s/ Worth Bruntjen
Secretary Senior Vice President
Exhibit No. 6 under Form N-1A
Exhibit No. 1 under Item 601/Reg. S-K
THE MONITOR FUNDS
DISTRIBUTOR'S CONTRACT
AGREEMENT made this 29th day of November, 1990, by and between THE
MONITOR FUNDS (the "Trust"), a Massachusetts business trust, on behalf of the
portfolios (the "Portfolios") of the Trust, and FEDERATED SECURITIES CORP.
("FSC"), a Pennsylvania Corporation.
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. (a) The Trust hereby appoints FSC its agent to sell and distribute
shares of each of the Portfolios ("Shares") set forth on one or more exhibits
to this Agreement at the current offering price thereof as described and set
forth in the current prospectus for each Portfolio. FSC hereby accepts such
appointment and agrees to provide such other services for each Portfolio, if
any, and accepts such compensation from each Portfolio, if any, as set forth
in the applicable exhibit to this Agreement.
(b) FSC agrees to use appropriate efforts to solicit or to
facilitate the solicitation of orders for the sale of shares. As part of such
efforts, FSC will undertake, or facilitate others in their undertaking, such
advertising and promotion as it believes reasonable in connection with such
solicitation.
(c) FSC will transmit promptly any orders received by it for the
purchase or redemption of Shares to the Trust's transfer agent.
2. The sale of Shares may be suspended by the Trustees at any time
without prior notice.
3. Neither FSC nor any other person is authorized by the Trust to give
any information or to make any representation relative to the Shares other
than those contained in the Registration Statement of the Trust or Prospectus
of any Portfolio filed with the Securities and Exchange Commission, as the
same may be amended from time to time, or in any supplemental information to
said Prospectus approved by the Trust. FSC agrees that any other information
or representations other than those specified above which it or any dealer or
other person who purchases Shares through FSC may make in connection with the
offer or sale of Shares, shall be made entirely without liability on the part
of the Trust or Portfolios. No person or dealer, other than FSC, is
authorized to act as agent for the Trust for any purpose. FSC agrees that in
offering or selling Shares as agent of the Portfolios, it will, in all
respects, duly conform to all applicable state and federal laws and the rules
and regulations of the National Association of Securities Dealers, Inc.,
including its Rules of Fair Practice. FSC will submit to the Trust copies of
all sales literature before using the same and will not use such sales
literature unless approved by the Trust.
4. This Agreement shall continue in effect for one year from the date
of its execution (or in the case of a Portfolio that is added to the Trust
following the date of such execution, the date that the applicable exhibit
with respect to such Portfolio is added hereto) and thereafter for successive
periods of one year, provided that such continuance is approved at least
annually by the Trustees of the Trust including a majority of the members of
the Board of Trustees of the Trust who are not interested persons of the Trust
and have no direct or indirect financial interest in the operation of any
Distribution Plan relating to any of the Portfolios or in any related
documents to such Plan ("Disinterested Trustees") cast in person at a meeting
for that purpose.
5. This Agreement may be terminated with respect to any Portfolio at
any time, without the payment of any penalty, by the vote of a majority of the
Disinterested Trustees or by a majority of the outstanding voting securities
of the particular Portfolio on not more than sixty (60) days' written notice
to FSC. This Agreement may be terminated with respect to any Portfolio by FSC
on sixty (60) days' written notice to the particular Trust.
6. This Agreement may not be assigned by FSC and shall automatically
terminate in the event of an assignment by FSC as defined in the Investment
Company Act of 1940, provided, however, that FSC may employ such other person,
persons, corporation or corporations as it shall determine in order to assist
it in carrying out its duties under this Agreement. Any such employment or
delegation carried out pursuant to this section shall not reduce or limit
FSC's responsibilities under this Agreement in any way.
7. Except as otherwise contemplated by this Agreement, FSC shall not be
liable to the Trust or to any of the Portfolios or to any shareholder of the
Portfolios for anything done or omitted by it, except acts or omissions
involving willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties imposed by this Agreement.
8. This Agreement may be amended at any time by mutual agreement in
writing of all the parties hereto, provided that such amendment is approved by
the Trustees of the Trust including a majority of the Disinterested Trustees
of the Trust cast in person at a meeting called for that purpose.
9. This Agreement shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania.
10. (a) Subject to the conditions set forth below, the Trust agrees to
indemnify and hold harmless FSC and each person, if any, who controls FSC
within the meaning of Section 15 of the Securities Act of 1933 and Section 20
of the Securities Act of 1934, as amended, against any and all loss,
liability, claim, damage and expense whatsoever (including but not limited to
any and all expenses whatsoever reasonably incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or any
claim whatsoever) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
any Prospectus (as from time to time amended and supplemented) or the omission
or alleged omission therefrom of a material fact required to be stated therein
or necessary to make the statements therein not misleading, unless such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Trust by or on behalf of FSC expressly for use in
the Registration Statement or any Prospectus, or any amendment or supplement
thereof.
If any action is brought against FSC or any controlling person thereof
with respect to which indemnity may be sought against the Trust pursuant to
the foregoing paragraph, FSC shall promptly notify the Trust in writing of the
institution of such action and the Trust shall assume the defense of such
action, including the employment of counsel selected by the Trust and payment
of expenses. FSC or any such controlling person thereof shall have the right
to employ separate counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of FSC or such controlling person unless the
employment of such counsel shall have been authorized in writing by the Trust
in connection with the defense of such action or the Trust shall not have
employed counsel to have charge of the defense of such action, in any of which
events such fees and expenses shall be borne by the Trust and allocated to the
Portfolios, as appropriate. Anything in this paragraph to the contrary
notwithstanding, the Trust or any of the Portfolios shall not be liable for
any settlement of any such claim or action effected without its written
consent. The Trust agrees promptly to notify FSC of the commencement of any
litigation or proceedings against the Trust or any of its Portfolios or any of
its officers or Trustees or controlling persons in connection with the issue
and sale of Shares or in connection with the Registration Statement or any
Prospectus.
(b) FSC agrees to indemnify and hold harmless each of the Portfolios,
the Trust, each of its Trustees, each of its officers who have signed the
Registration Statement and each other person, if any, who controls the Trust
within the meaning of Section 15 of the Securities Act of 1933, against any
and all loss, liability, claim, damage, and expense whatsoever, (i) with
respect to statements or omissions, if any, made in the Registration Statement
or any Prospectus or any amendment or supplement thereof in reliance upon, and
in conformity with, information furnished to the Trust about FSC by or on
behalf of FSC expressly for use in the Registration Statement or any
Prospectus or any amendment or supplement thereof; with respect to statements
or omissions, if any, made in the Registration Statement or any Prospectus or
any amendment or supplement thereof in reliance upon, and in conformity with,
information furnished to the Trust about FSC by or on behalf of FSC expressly
for use in the Registration Statement or any Prospectus or any amendment or
supplement thereof; (ii) arising out of any misrepresentation or omission to
state a material fact, or out of any alleged misrepresentation or omission to
state a material fact, on the part of FSC or any employee of FSC unless such
misrepresentation or omission was made in reliance upon written information
furnished by the Trust; and (iii) arising out of, or alleged to arise out of,
FSC's failure to exercise reasonable care and diligence in connection with its
services rendered pursuant to its obligations pursuant to this Agreement. In
case any action shall be brought against the Trust or any of the Portfolios or
any other person so indemnified with respect to which indemnity may be sought
against FSC, FSC shall have the rights and duties given to the Trust, and the
Trust and each other person so indemnified shall have the rights and duties
given to FSC by the provisions of subsection (a) above.
(c) Nothing herein contained shall be deemed to protect any person
against liability to any of the Portfolios or the Trust or its shareholders to
which such person would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of the duties of such person
or by reason of the reckless disregard by such person of the obligations and
duties of such person under this Agreement.
(d) FSC shall be an independent contractor, and neither FSC nor any of
its officers or employees as such is or shall be an employee of the Trust.
FSC is responsible for its own conduct and the employment, control and conduct
of its employees and for injury to such employees or to others through its
employees. FSC assumes full responsibility for its employees under applicable
statutes and agrees to pay all employer taxes thereunder.
(e) The Trust will not be required to indemnify any person in any manner
or amount which might violate any applicable law or any applicable rule on
regulation of the SEC or any banking authority. In particular, insofar as
indemnification for liabilities may be permitted pursuant to Section 17 of the
Investment Company Act of 1940 for Trustees, officers, FSC and controlling
persons of the Trust by the Trust pursuant to this Agreement, the Trust is
aware of the position of the Securities and Exchange Commission as set forth
in the Investment Company Act Release No. IC-11330. Therefore, the Trust
undertakes that in addition to complying with the applicable provisions of
this Agreement, in the absence of a final decision on the merits by a court or
other body before which the proceeding was brought, that an indemnification
payment will not be made unless in the absence of such a decision, a
reasonable determination based upon factual review has been made (i) by a
majority vote of a quorum of non-party Disinterested Trustees, or (ii) by
independent legal counsel in a written opinion that the indemnitee was not
liable for an act of willful misfeasance, bad faith, gross negligence or
reckless disregard of duties. The Trust further undertakes that advancement
of expenses incurred in the defense of a proceeding (upon undertaking for
repayment unless it is ultimately determined that indemnification is
appropriate) against an officer, Trustee, FSC or controlling person of the
Trust will not be made absent the fulfillment of at least one of the following
conditions: (i) the indemnitee provides security for his undertaking; (ii) the
Trust is insured against losses arising by reason of any lawful advances; or
(iii) a majority of a quorum of non-party Disinterested Trustees or
independent legal counsel in a written opinion makes a factual determination
that there is reason to believe the indemnitee will be entitled to
indemnification.
11. FSC is hereby expressly put on notice of the limitation of liability
as set forth in Article IV of the Declaration of Trust and agrees that the
obligations assumed by the Trust pursuant to this agreement shall be limited
in any case to the Trust and its assets and neither FSC nor any other person
shall seek satisfaction of any such obligation from the shareholders of the
Trust, the Trustees, officers, employees or agents of the Trust, or any of
them.
12. This Agreement will become binding on the parties hereto with
respect to each Portfolio upon the execution of the attached exhibit to this
Agreement relating to such portfolios.
13. FSC agrees on behalf of itself and its affiliates and employees to
treat confidentially and as proprietary information of the Trust all records
and other information relative to prior, present, or potential Shareholders of
the Trust, and not to use such records and information for any purpose other
than performance of its responsibilities and duties hereunder, except after
prior notification to and approval in writing by the Trust which approval
shall not be unreasonably withheld and may not be withheld where FSC may be
exposed to civil or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted authorities, or when
so requested by the Trust. Provided, however, that FSC shall not be bound by
this provision with regard to information (i) which it receives from another
service not subject to confidential treatment; (ii) which is hereafter made
public by the Fund; or (iii) which otherwise becomes part of the public domain
through no action of FSC.
Exhibit A
THE MONITOR FUNDS
The Monitor Money Market Fund
The Monitor Tax-Free Money Market Fund
The Monitor U.S. Treasury Money Market Fund
The Monitor U.S. Government Money Market Fund
The Monitor Growth Fund
The Monitor Income Equity Fund
The Monitor Ohio Tax-Free Fund
The Monitor Fixed Income Securities Fund
The Monitor Short/Intermediate Fixed Income Securities Fund
In consideration of the mutual covenants set forth in the Distributor's
Contract dated November 29, 1990 between THE MONITOR FUNDS and FEDERATED
SECURITIES CORP., The Monitor Funds executes and delivers this Exhibit on
behalf of Portfolios first set forth in this Exhibit.
Witness the due execution hereof this 29th day of November, 1990
ATTEST: THE MONITOR FUNDS
/s/ Peter J. Germain By:/s/ Byron F. Bowman
Secretary Vice President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ S. Elliott Cohan By:/s/ James F. Getz
Secretary Vice President
(SEAL)
Exhibit B
THE MONITOR FUNDS
Distributor's Contract
The Monitor Money Market Fund (Investment Shares)
The Monitor Tax-Free Money Market Fund (Investment Shares)
The Monitor U.S. Government Money Market Fund (Investment Shares)
The Monitor Growth Fund (Investment Shares)
The Monitor Ohio Tax-Free Fund (Investment Shares)
The Monitor Fixed Income Securities Fund (Investment Shares)
The following provisions are hereby incorporated and made part of the
Distributor's Contract dated the 29th day of November 1990, between THE
MONITOR FUNDS and FEDERATED SECURITIES CORP. with respect to the above-listed
Portfolios:
1. The Trust hereby appoints FSC to select a group of brokers
("Brokers") to sell Shares, at the current offering price thereof as described
and set forth in the prospectus of each Portfolio, and to render
administrative support services to the Portfolios and its shareholders. In
addition, the Trust hereby appoints FSC to select a group of Administrators
("Adminstrators") to render administrative support services to the Portfolios
and its shareholders.
2. Administrative support services may include, but are not limited
to, the following eleven functions: (1) account openings: the Broker or
Administrator communicates account openings via computer terminals located on
the Broker or Administrator's premises; (2) account closings: the Broker or
Administrator communicates account closings via computer terminals; (3) enter
purchase transactions: purchase transactions are entered through the Broker
or Administrator's own personal computer or through the use of a toll-free
telephone number; (4) enter redemption transactions: Broker or Administrator
enters redemption transactions in the same manner as purchases; (5) account
maintenance: Broker or Administrator provides or arranges to provide
accounting support for all transactions. Broker or Administrator also wires
funds and receives funds for Portfolio share purchases and redemptions,
confirms and reconciles all transactions, reviews the activity in the
Portfolio's accounts, and provides training and supervision of its personnel;
(6) interest posting: Broker or Administrator posts and reinvests dividends
to the Portfolio's accounts; (7) prospectus and shareholder reports: Broker
or Administrator maintains and distributes current copies of prospectuses and
shareholder reports; (8) advertisements: the Broker or Administrator
continuously advertises the availability of its services and products; (9)
customer lists: the Broker or Administrator continuously provides names of
potential customers; (10) design services: the Broker or Administrator
continuously designs material to send to customers and develops methods of
making such materials accessible to customers; and (11) consultation services:
the Broker or Administrator continuously provides information about the
product needs of customers.
3. FSC will enter into separate written agreements, as set forth in
the Rule 12b-1 Plan adopted on behalf of the Portfolios of the Trust listed
above, with various firms to provide the services set forth in Paragrah 1
herein. During the term of this Agreement, the Portfolio will reimburse FSC
for payments made by FSC to obtain services pursuant to this Agreement, a
quarterly fee computed at the annual rate of up to .25% of the average daily
net asset value of the Shares held in the Portfolio during the quarter. For
the quarter in which this Agreement becomes effective or terminates, there
shall be an appropriate proration of any fee payable on the basis of the
number of days that the Agreement is in effect during the quarter. The fees
paid hereunder shall be in an amount equal to the aggregate amount of periodic
fees paid by FSC to Brokers and Administrators pursuant to Paragraph 4 herein.
4. FSC, in its sole discretion, may pay Brokers and Administrators a
periodic fee in respect to Shares of the Portfolios owned from time to time by
their clients or customers. The schedules of such fees and the basis upon
which such fees will be paid shall be determined from time to time by the
Trust's Board of Trustees.
5. FSC will prepare reports to the Board of Trustees of the Trust on
a quarterly basis showing amounts paid to the various firms and the purpose
for such payments.
6. In the event any amendment to this Agreement materially increases
the fees set forth in Paragraph 3, such amendment must be approved by a vote
of a majority of the outstanding voting securities of the particular Portolio.
In consideration of the mutual covenants set forth in the Distributor's
Contract dated November 29, 1990 between The Monitor Funds and Federated
Securities Corp., The Monitor Funds executes and delivers this Exhibit on
behalf of the Fund first set forth in this Exhibit.
Witness the due execution hereof this 1st day of May, 1991.
ATTEST: THE MONITOR FUNDS
/s/ Peter J. Germain By:/s/ Edward C. Gonzales
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ S. Elliott Cohan By:/s/ Richard B. Fisher
Secretary President
(SEAL)
Exhibit C
THE MONITOR FUNDS
Distributor's Contract
The Monitor Mortgage Securities Fund (Trust Shares)
In consideration of the mutual covenants set forth in the Distributor's
Contract dated November 29, 1990 between THE MONITOR FUNDS and FEDERATED
SECURITIES CORP., The Monitor Funds executes and delivers this Exhibit on
behalf of Portfolios first set forth in this Exhibit.
Witness the due execution hereof this 24th day of April, 1992.
ATTEST: THE MONITOR FUNDS
/s/ Peter J. Germain By:/s/ Ronald M. Petnuch
Secretary Vice President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ S. Elliott Cohan By:/s/ Richard B. Fisher
Secretary President
(SEAL)
Exhibit D
THE MONITOR FUNDS
Distributor's Contract
The Monitor Mortgage Securities Fund (Investment Shares)
The following provisions are hereby incorporated and made part of the
Distributor's Contract dated the 29th day of November 1990, between THE
MONITOR FUNDS and FEDERATED SECURITIES CORP. with respect to the Class of the
Portfolio set forth above.
1. The Trust hereby appoints FSC to engage in activities principally
intended to result in the sale of shares ("Shares") of the Class described
above. Pursuant to this appointment, FSC is authorized to select a group of
brokers ("Brokers") to sell Shares, at the current offering price thereof as
described and set forth in the prospectus of the Portfolio, and to render
administrative support services to the Class of Shares of the Portfolio and
its shareholders. In addition, the Trust hereby appoints FSC to select a
group of Administrators ("Administrators") to render administrative support
services to the Class of Shares of the Portfolio and its shareholders.
2. Administrative support services may include, but are not limited
to, the following eleven functions: (1) account openings: the Broker or
Administrator communicates account openings via computer terminals located on
the Broker or Administrator's premises; (2) account closings: the Broker or
Administrator communicates account closings via computer terminals; (3) enter
purchase transactions: purchase transactions are entered through the Broker
or Administrator's own personal computer or through the use of a toll-free
telephone number; (4) enter redemption transactions: Broker or Administrator
enters redemption transactions in the same manner as purchases; (5) account
maintenance: Broker or Administrator provides or arranges to provide
accounting support for all transactions. Broker or Administrator also wires
funds and receives funds for Portfolio share purchases and redemptions,
confirms and reconciles all transactions, reviews the activity in the
Portfolio's accounts, and provides training and supervision of its personnel;
(6) interest posting: Broker or Administrator posts and reinvests dividends
to the Portfolio's accounts; (7) prospectus and shareholder reports: Broker
or Administrator maintains and distributes current copies of prospectuses and
shareholder reports; (8) advertisements: the Broker or Administrator
continuously advertises the availability of its services and products; (9)
customer lists: the Broker or Administrator continuously provides names of
potential customers; (10) design services: the Broker or Administrator
continuously designs material to send to customers and develops methods of
making such materials accessible to customers; and (11) consultation services:
the Broker or Administrator continuously provides information about the
product needs of customers.
3. During the term of this Agreement, the Portfolio will pay FSC a
quarterly fee computed at the annual rate of .50% of the average daily net
asset value of the Shares held in the Portfolio during the quarter. For the
quarter in which this Agreement becomes effective or terminates, there shall
be an appropriate proration of any fee payable on the basis of the number of
days that the Agreement is in effect during the quarter.
4. FSC may from time to time and for such periods as it deems
appropriate reduce its compensation to the extent any class expenses exceed
such lower expense limitation as FSC may, by notice to the Trust, voluntarily
declare to be effective.
5. FSC will enter into separate agreements with various firms to
provide certain of the services set forth in Paragraph 1 herein. FSC in its
sole discretion, may pay Brokers and Administrators a periodic fee in respect
of Shares owned from time to time by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid shall
be determined from time to time by FSC in its sole discretion.
6. FSC will prepare reports to the Board of Trustees of the Trust on
a quarterly basis showing amounts expended hereunder including amounts paid to
Brokers and Administrators and the purpose for such payments.
7. In the event any amendment to this Agreement materially increases
the fees set forth in Paragraph 3, such amendment must be approved by a vote
of a majority of the outstanding voting securities of the particular class of
the Portfolio.
In consideration of the mutual covenants set forth in the Distributor's
Contract dated November 29, 1990 between The Monitor Funds and Federated
Securities Corp., The Monitor Funds executes and delivers this Exhibit on
behalf of the Portfolio first set forth in this Exhibit.
Witness the due execution hereof this 24th day of April, 1992.
ATTEST: THE MONITOR FUNDS
/s/ Peter J. Germain By:/s/ Ronald M. Petnuch
Secretary Vice President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ S. Elliott Cohan By:/s/ Richard B. Fisher
Secretary President
(SEAL)
Exhibit E
THE MONITOR FUNDS
Distributor's Contract
The Monitor U.S. Treasury Money Market Fund (Investment Shares)
The following provisions are hereby incorporated and made part of the
Distributor's Contract dated the 29th day of November 1990, between THE
MONITOR FUNDS and FEDERATED SECURITIES CORP. with respect to the Class of the
Portfolio set forth above.
1. The Trust hereby appoints FSC to engage in activities principally
intended to result in the sale of shares ("Shares") of the Class described
above. Pursuant to this appointment, FSC is authorized to select a group of
brokers ("Brokers") to sell Shares, at the current offering price thereof as
described and set forth in the prospectus of the Portfolio, and to render
administrative support services to the Class of Shares of the Portfolio and
its shareholders. In addition, the Trust hereby appoints FSC to select a
group of Administrators ("Administrators") to render administrative support
services to the Class of Shares of the Portfolio and its shareholders.
2. Administrative support services may include, but are not limited
to, the following eleven functions: (1) account openings: the Broker or
Administrator communicates account openings via computer terminals located on
the Broker or Administrator's premises; (2) account closings: the Broker or
Administrator communicates account closings via computer terminals; (3) enter
purchase transactions: purchase transactions are entered through the Broker
or Administrator's own personal computer or through the use of a toll-free
telephone number; (4) enter redemption transactions: Broker or Administrator
enters redemption transactions in the same manner as purchases; (5) account
maintenance: Broker or Administrator provides or arranges to provide
accounting support for all transactions. Broker or Administrator also wires
funds and receives funds for Portfolio share purchases and redemptions,
confirms and reconciles all transactions, reviews the activity in the
Portfolio's accounts, and provides training and supervision of its personnel;
(6) interest posting: Broker or Administrator posts and reinvests dividends
to the Portfolio's accounts; (7) prospectus and shareholder reports: Broker
or Administrator maintains and distributes current copies of prospectuses and
shareholder reports; (8) advertisements: the Broker or Administrator
continuously advertises the availability of its services and products; (9)
customer lists: the Broker or Administrator continuously provides names of
potential customers; (10) design services: the Broker or Administrator
continuously designs material to send to customers and develops methods of
making such materials accessible to customers; and (11) consultation services:
the Broker or Administrator continuously provides information about the
product needs of customers.
3. During the term of this Agreement, the Portfolio will pay FSC a
quarterly fee computed at the annual rate of .25% of the average daily net
asset value of the Shares held in the Portfolio during the quarter. For the
quarter in which this Agreement becomes effective or terminates, there shall
be an appropriate proration of any fee payable on the basis of the number of
days that the Agreement is in effect during the quarter.
4. FSC may from time to time and for such periods as it deems
appropriate reduce its compensation to the extent any class expenses exceed
such lower expense limitation as FSC may, by notice to the Trust, voluntarily
declare to be effective.
5. FSC will enter into separate agreements with various firms to
provide certain of the services set forth in Paragraph 1 herein. FSC in its
sole discretion, may pay Brokers and Administrators a periodic fee in respect
of Shares owned from time to time by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid shall
be determined from time to time by FSC in its sole discretion.
6. FSC will prepare reports to the Board of Trustees of the Trust on
a quarterly basis showing amounts expended hereunder including amounts paid to
Brokers and Administrators and the purpose for such payments.
7. In the event any amendment to this Agreement materially increases
the fees set forth in Paragraph 3, such amendment must be approved by a vote
of a majority of the outstanding voting securities of the particular class of
the Portfolio.
In consideration of the mutual covenants set forth in the Distributor's
Contract dated November 29, 1990 between The Monitor Funds and Federated
Securities Corp., The Monitor Funds executes and delivers this Exhibit on
behalf of the Portfolio first set forth in this Exhibit.
Witness the due execution hereof this 1st day of June, 1993.
ATTEST: THE MONITOR FUNDS
/s/ Joseph M. Huber By: /s/ Ronald M. Petnuch
Secretary Vice President
ATTEST: FEDERATED SECURITIES CORP.
/s/ S. Elliott Cohan By: /s/ Edward C. Gonzales
Secretary Executive Vice
President
Exhibit No. 8 under Form N-1A
Exhibit No. 10 under Item 601/Reg. S-K
CUSTODIAN CONTRACT
Between
THE MONITOR FUNDS
and
HUNTINGTON TRUST COMPANY, N.A.
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by It............ 1
2. Duties of the Custodian With Respect to Property
of the Funds Held by the Custodian............................... 1
2.1 Holding Securities........................................ 1
2.2 Delivery of Securities.................................... 2
2.3 Registration of Securities................................ 4
2.4 Bank Accounts............................................. 4
2.5 Payments for Shares....................................... 4
2.6 Availability of Federal Funds............................. 4
2.7 Collection of Income...................................... 5
2.8 Payment of Fund Moneys.................................... 5
2.9 Liability for Payment in Advance of
Receipt of Securities Purchased........................... 6
2.10 Payments for Repurchases or Redemptions
of Shares of a Fund....................................... 6
2.11 Appointment of Agents..................................... 6
2.12 Deposit of Fund Assets in Securities System............... 7
2.13 Segregated Account........................................ 8
2.14 Joint Repurchase Agreements............................... 8
2.15 Ownership Certificates for Tax Purposes................... 8
2.16 Proxies................................................... 9
2.17 Communications Relating to Fund Portfolio Securities...... 9
2.18 Proper Instructions....................................... 9
2.19 Actions Permitted Without Express Authority............... 9
2.20 Evidence of Authority.....................................10
2.21 Notice to Trust by Custodian Regarding Cash Movement......10
3. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income....................10
4. Records..........................................................10
5. Opinion of Funds' Independent Public Accountants.................11
6. Reports to Trust by Independent Public Accountants...............11
7. Compensation of Custodian........................................11
8. Responsibility of Custodian......................................11
9. Effective Period, Termination and Amendment......................13
10. Successor Custodian..............................................13
11. Interpretive and Additional Provisions...........................14
12. Massachusetts Law to Apply.......................................14
13. Notices..........................................................14
14. Counterparts.....................................................14
15. Limitations of Liability.........................................15
CUSTODIAN CONTRACT
This Contract between THE MONITOR FUNDS, (the "Trust"), a
Massachusetts business trust, on behalf of the portfolios (hereinafter
collectively called the "Funds" and individually referred to as a "Fund") of
the Trust, organized and existing under the laws of the Commonwealth of
Massachusetts, having its principal place of business at Federated Investors
Tower, Pittsburgh, Pennsylvania, 15222-3779, and HUNTINGTON TRUST COMPANY,
N.A., a national banking association, having its principal place of business
at Huntington Center, 41 South High Street, Columbus, Ohio 43287,
hereinafter called the "Custodian",
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Trust hereby employs the Custodian as the custodian of the assets
of each of the Funds of the Trust. Except as otherwise expressly provided
herein, the securities and other assets of each of the Funds shall be
segregated from the assets of each of the other Funds and from all other
persons and entities. The Trust will deliver to the Custodian all
securities and cash owned by the Funds and all payments of income, payments
of principal or capital distributions received by them with respect to all
securities owned by the Funds from time to time, and the cash consideration
received by them for shares ("Shares") of beneficial interest of the Funds
as may be issued or sold from time to time. The Custodian shall not be
responsible for any property of the Funds held or received by the Funds and
not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Section
2.18), the Custodian shall from time to time employ one or more sub-
custodians upon the terms specified in the Proper Instructions.
2. Duties of the Custodian With Respect to Property of the Funds Held
by the Custodian
2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of each Fund all non-cash property, including all
securities owned by each Fund, other than securities which are
maintained pursuant to Section 2.12 in a clearing agency which acts as
a securities depository or in a book-entry system authorized by the
U.S. Department of the Treasury, collectively referred to herein as
"Securities System", or securities which are subject to a joint
repurchase agreement with affiliated funds pursuant to Section 2.14.
The Custodian shall maintain records of all receipts, deliveries and
locations of such securities, together with a current inventory
thereof, and shall conduct periodic physical inspections of
certificates representing stocks, bonds and other securities held by
it under this Contract in such manner as the Custodian shall determine
from time to time to be advisable in order to verify the accuracy of
such inventory. With respect to securities held by any agent
appointed pursuant to Section 2.11 hereof, and with respect to
securities held by any sub-custodian appointed pursuant to Section 1
hereof, the Custodian may rely upon certificates from such agent as to
the holdings of such agent and from such sub-custodian as to the
holdings of such sub-custodian, it being understood that such reliance
in no way relieves the Custodian of its responsibilities under this
Contract. The Custodian will promptly report to the Trust the results
of such inspections, indicating any shortages or discrepancies
uncovered thereby, and take appropriate action to remedy any such
shortages or discrepancies.
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by a Fund held by the Custodian or in a Securities
System account of the Custodian only upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
(1) Upon sale of such securities for the account of a Fund and
receipt of payment therefor;
(2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Trust;
(3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
(4) To the depository agent in connection with tender or other
similar offers for portfolio securities of a Fund, in accordance
with the provisions of Section 2.17 hereof;
(5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
(6) To the issuer thereof, or its agent, for transfer into the name
of a Fund or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.11 or into the name or nominee name of any
sub-custodian appointed pursuant to Section 1; or for exchange
for a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be
delivered to the Custodian;
(7) Upon the sale of such securities for the account of a Fund, to
the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery custom"; provided
that in any such case, the Custodian shall have no responsibility
or liability for any loss arising from the delivery of such
securities prior to receiving payment for such securities except
as may arise from the Custodian's own failure to act in
accordance with the standard of reasonable care or any higher
standard of care imposed upon the Custodian by any applicable law
or regulation if such above-stated standard of reasonable care
were not part of this Contract;
(8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
(9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that, in
any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
(10) For delivery in connection with any loans of portfolio securities
of a Fund, but only against receipt of adequate collateral in the
form of (a) cash, in an amount specified by the Trust, (b)
certificated securities of a description specified by the Trust,
registered in the name of the Fund or in the name of a nominee of
the Custodian referred to in Section 2.3 hereof or in proper form
for transfer, or (c) securities of a description specified by the
Trust, transferred through a Securities System in accordance with
Section 2.12 hereof;
(11) For delivery as security in connection with any borrowings
requiring a pledge of assets by a Fund, but only against receipt
of amounts borrowed, except that in cases where additional
collateral is required to secure a borrowing already made,
further securities may be released for the purpose;
(12) For delivery in accordance with the provisions of any agreement
among the Trust or a Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934, as amended,
(the "Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with
the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions for a Fund;
(13) For delivery in accordance with the provisions of any agreement
among the Trust or a Fund, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity Futures
Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transaction for a Fund;
(14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for a Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, in
satisfaction of requests by holders of Shares for repurchase or
redemption; and
(15) For any other proper corporate purpose, but only upon receipt of,
in addition to Proper Instructions, a certified copy of a
resolution of the Executive Committee of the Trust on behalf of a
Fund signed by an officer of the Trust and certified by its
Secretary or an Assistant Secretary, specifying the securities to
be delivered, setting forth the purpose for which such delivery
is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of
such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian (other
than bearer securities) shall be registered in the name of a
particular Fund or in the name of any nominee of the Fund or of any
nominee of the Custodian which nominee shall be assigned exclusively
to the Fund, unless the Trust has authorized in writing the
appointment of a nominee to be used in common with other registered
investment companies affiliated with the Fund, or in the name or
nominee name of any agent appointed pursuant to Section 2.11 or in the
name or nominee name of any sub-custodian appointed pursuant to
Section 1. All securities accepted by the Custodian on behalf of a
Fund under the terms of this Contract shall be in "street name" or
other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the name of each Fund, subject only to draft or
order by the Custodian acting pursuant to the terms of this Contract,
and shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of each Fund,
other than cash maintained in a joint repurchase account with other
affiliated funds pursuant to Section 2.14 of this Contract or by a
particular Fund in a bank account established and used in accordance
with Rule 17f-3 under the Investment Company Act of 1940, as amended,
(the "1940 Act"). Funds held by the Custodian for a Fund may be
deposited by it to its credit as Custodian in the Banking Department
of the Custodian or in such other banks or trust companies as it may
in its discretion deem necessary or desirable; provided, however, that
every such bank or trust company shall be qualified to act as a
custodian under the 1940 Act and that each such bank or trust company
and the funds to be deposited with each such bank or trust company
shall be approved by vote of a majority of the Board of Trustees
("Board") of the Trust. Such funds shall be deposited by the
Custodian in its capacity as Custodian for the Fund and shall be
withdrawable by the Custodian only in that capacity. If requested by
the Trust, the Custodian shall furnish the Trust, not later than
twenty (20) days after the last business day of each month, an
internal reconciliation of the closing balance as of that day in all
accounts described in this section to the balance shown on the daily
cash report for that day rendered to the Trust.
2.5 Payments for Shares. The Custodian shall make such arrangements with
the Transfer Agent of each Fund as will enable the Custodian to
receive the cash consideration due to each Fund and will deposit into
each Fund's account such payments as are received from the Transfer
Agent. The Custodian will provide timely notification to the Trust
and the Transfer Agent of any receipt by it of payments for Shares of
the respective Fund.
2.6 Availability of Federal Funds. Upon mutual agreement between the
Trust and the Custodian, the Custodian shall make federal funds
available to the Funds as of specified times agreed upon from time to
time by the Trust and the Custodian in the amount of checks, clearing
house funds, and other non-federal funds received in payment for
Shares of the Funds which are deposited into the Funds' accounts.
2.7 Collection of Income.
(1) The Custodian shall collect on a timely basis all income and
other payments with respect to registered securities held
hereunder to which each Fund shall be entitled either by law or
pursuant to custom in the securities business, and shall collect
on a timely basis all income and other payments with respect to
bearer securities if, on the date of payment by the issuer, such
securities are held by the Custodian or its agent thereof and
shall credit such income, as collected, to each Fund's custodian
account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and
other income items requiring presentation as and when they become
due and shall collect interest when due on securities held
hereunder. The collection of income due the Funds on securities
loaned pursuant to the provisions of Section 2.2 (10) shall be
the responsibility of the Trust. The Custodian will have no duty
or responsibility in connection therewith, other than to provide
the Trust with such information or data as may be necessary to
assist the Trust in arranging for the timely delivery to the
Custodian of the income to which each Fund is properly entitled.
(2) The Trust shall promptly notify the Custodian whenever income due
on securities is not collected in due course and will provide the
Custodian with monthly reports of the status of past due income.
The Trust will furnish the Custodian with a weekly report of
accrued/past due income for the Fund. Once an item is identified
as past due and the Trust has furnished the necessary claim
documentation to the Custodian, the Custodian will then initiate
a claim on behalf of the Trust. The Custodian will furnish the
Trust with a status report monthly unless the parties otherwise
agree.
2.8 Payment of Fund Moneys. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the parties,
the Custodian shall pay out moneys of each Fund in the following cases
only:
(1) Upon the purchase of securities, futures contracts or options on
futures contracts for the account of a Fund but only (a) against
the delivery of such securities, or evidence of title to futures
contracts, to the Custodian (or any bank, banking firm or trust
company doing business in the United States or abroad which is
qualified under the 1940 Act to act as a custodian and has been
designated by the Custodian as its agent for this purpose)
"pursuant to Section 2.11 hereof" registered in the name of the
Fund or in the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer, (b) in the
case of a purchase effected through a Securities System, in
accordance with the conditions set forth in Section 2.12 hereof
or (c) in the case of repurchase agreements entered into between
the Trust and any other party, (i) against delivery of the
securities either in certificate form or through an entry
crediting the Custodian's account at the Federal Reserve Bank
with such securities or (ii) against delivery of the receipt
evidencing purchase for the account of the Fund of securities
owned by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities from the
Fund;
(2) In connection with conversion, exchange or surrender of
securities owned by a Fund as set forth in Section 2.2 hereof;
(3) For the redemption or repurchase of Shares of a Fund issued by
the Trust as set forth in Section 2.10 hereof;
(4) For the payment of any expense or liability incurred by a Fund,
including but not limited to the following payments for the
account of the Fund: interest; taxes; management, accounting,
transfer agent and legal fees; and operating expenses of the
Fund, whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
(5) For the payment of any dividends on Shares of a Fund declared
pursuant to the governing documents of the Trust;
(6) For payment of the amount of dividends received in respect of
securities sold short;
(7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Board of Trustees of the Trust on behalf of a Fund signed
by an officer of the Trust and certified by its Secretary or an
Assistant Secretary, specifying the amount of such payment,
setting forth the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and naming the
person or persons to whom such payment is to be made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased.
In any and every case where payment for purchase of securities for the
account of a Fund is made by the Custodian in advance of receipt of
the securities purchased, in the absence of specific written
instructions from the Trust to so pay in advance, the Custodian shall
be absolutely liable to the Fund for such securities to the same
extent as if the securities had been received by the Custodian.
2.10 Payments for Repurchases or Redemptions of Shares of a Fund. From
such funds as may be available for the purpose of repurchasing or
redeeming Shares of a Fund, but subject to the limitations of the
Declaration of Trust and any applicable votes of the Board of the
Trust pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment
to holders of shares of such Fund who have delivered to the Transfer
Agent a request for redemption or repurchase of their shares including
without limitation through bank drafts, automated clearinghouse
facilities, or by other means. In connection with the redemption or
repurchase of Shares of the Funds, the Custodian is authorized upon
receipt of instructions from the Transfer Agent to wire funds to or
through a commercial bank designated by the redeeming shareholders.
2.11 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the 1940 Act and any
applicable state law or regulation, to act as a custodian, as its
agent to carry out such of the provisions of this Section 2 as the
Custodian may from time to time direct; provided, however, that the
appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.12 Deposit of Fund Assets in Securities System. The Custodian may
deposit and/or maintain securities owned by the Funds in a clearing
agency registered with the Securities and Exchange Commission ("SEC")
under Section 17A of the Exchange Act, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "Securities System", in accordance with
applicable Federal Reserve Board and SEC rules and regulations, if
any, and subject to the following provisions:
(1) The Custodian may keep securities of each Fund in a Securities
System provided that such securities are represented in an
account ("Account") of the Custodian in the Securities System
which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for customers;
(2) The records of the Custodian with respect to securities of the
Funds which are maintained in a Securities System shall identify
by book-entry those securities belonging to each Fund;
(3) The Custodian shall pay for securities purchased for the account
of each Fund upon (i) receipt of advice from the Securities
System that such securities have been transferred to the Account,
and (ii) the making of an entry on the records of the Custodian
to reflect such payment and transfer for the account of the Fund.
The Custodian shall transfer securities sold for the account of a
Fund upon (i) receipt of advice from the Securities System that
payment for such securities has been transferred to the Account,
and (ii) the making of an entry on the records of the Custodian
to reflect such transfer and payment for the account of the Fund.
Copies of all advices from the Securities System of transfers of
securities for the account of a Fund shall identify the Fund, be
maintained for the Fund by the Custodian and be provided to the
Trust at its request. Upon request, the Custodian shall furnish
the Trust confirmation of each transfer to or from the account of
a Fund in the form of a written advice or notice and shall
furnish to the Trust copies of daily transaction sheets
reflecting each day's transactions in the Securities System for
the account of a Fund.
(4) The Custodian shall provide the Trust with any report obtained by
the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the Securities System;
(5) The Custodian shall have received the initial certificate,
required by Section 9 hereof;
(6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Trust for any loss or damage to
a Fund resulting from use of the Securities System by reason of
any negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from failure
of the Custodian or any such agent to enforce effectively such
rights as it may have against the Securities System; at the
election of the Trust, it shall be entitled to be subrogated to
the rights of the Custodian with respect to any claim against the
Securities System or any other person which the Custodian may
have as a consequence of any such loss or damage if and to the
extent that a Fund has not been made whole for any such loss or
damage.
4.(7) The authorization contained in this Section 2.12 shall not
relieve the Custodian from using reasonable care and diligence in
making use of any Securities System.
2.13 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts
for and on behalf of each Fund, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Section 2.12 hereof, (i) in
accordance with the provisions of any agreement among the Trust, the
Custodian and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered
under the Commodity Exchange Act), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements
in connection with transactions for a Fund, (ii) for purpose of
segregating cash or government securities in connection with options
purchased, sold or written for a Fund or commodity futures contracts
or options thereon purchased or sold for a Fund, (iii) for the purpose
of compliance by the Trust or a Fund with the procedures required by
any release or releases of the SEC relating to the maintenance of
segregated accounts by registered investment companies and (iv) for
other proper corporate purposes, but only, in the case of clause (iv),
upon receipt of, in addition to Proper Instructions, a certified copy
of a resolution of the Board signed by an officer of the Trust and
certified by the Secretary or an Assistant Secretary, setting forth
the purpose or purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
2.14 Joint Repurchase Agreements. Upon the receipt of Proper Instructions,
the Custodian shall deposit and/or maintain any assets of a Fund and
any affiliated funds which are subject to joint repurchase
transactions in an account established solely for such transactions
for the Fund and its affiliated funds. For purposes of this Section
2.14, "affiliated funds" shall include all investment companies and
their portfolios for which subsidiaries or affiliates of Federated
Investors serve as investment advisers, distributors or administrators
in accordance with applicable exemptive orders from the SEC. The
requirements of segregation set forth in Section 2.1 shall be deemed
to be waived with respect to such assets.
2.15 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to securities of a Fund held by it and in
connection with transfers of securities.
2.16 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in
the name of a Fund or a nominee of a Fund, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Trust such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.17 Communications Relating to Fund Portfolio Securities. The Custodian
shall transmit promptly to the Trust and the investment adviser of the
Trust all written information (including, without limitation, pendency
of calls and maturities of securities and expirations of rights in
connection therewith and notices of exercise of call and put options
written by the Fund and the maturity of futures contracts purchased or
sold by the Fund) received by the Custodian from issuers of the
securities being held for the Trust. With respect to tender or
exchange offers, the Custodian shall transmit promptly to the Trust
and the investment adviser of the Trust all written information
received by the Custodian from issuers of the securities whose tender
or exchange is sought and from the party (or his agents) making the
tender or exchange offer. If the Trust or the investment adviser of
the Trust desires to take action with respect to any tender offer,
exchange offer or any other similar transaction, the Trust shall
notify the Custodian in writing at least three business days prior to
the date on which the Custodian is to take such action. However, the
Custodian shall nevertheless exercise its best efforts to take such
action in the event that notification is received three business days
or less prior to the date on which action is required. For securities
which are not held in nominee name, the Custodian will act as a
secondary source of information and will not be responsible for
providing corporate action notification to the Trust.
2.18 Proper Instructions. Proper Instructions as used throughout this
Section 2 means a writing signed or initialed by one or more person or
persons as the Board shall have from time to time authorized. Each
such writing shall set forth the specific transaction or type of
transaction involved. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been
given by a person previously authorized in Proper Instructions to give
such instructions with respect to the transaction involved. The Trust
shall cause all oral instructions to be confirmed in writing. Upon
receipt of a certificate of the Secretary or an Assistant Secretary as
to the authorization by the Board of the Trust accompanied by a
detailed description of procedures approved by the Board, Proper
Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board and
the Custodian are satisfied that such procedures afford adequate
safeguards for a Fund's assets.
2.19 Actions Permitted Without Express Authority. The Custodian may in its
discretion, without express authority from the Trust:
(1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under
this Contract, provided that all such payments shall be accounted
for to the Trust in such form that it may be allocated to the
affected Fund;
(2) surrender securities in temporary form for securities in
definitive form;
(3) endorse for collection, in the name of a Fund, checks, drafts and
other negotiable instruments; and
(4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and
other dealings with the securities and property of each Fund
except as otherwise directed by the Trust.
2.20 Evidence of Authority. The Custodian shall be protected in acting
upon any instructions, notice, request, consent, certificate or other
instrument or paper reasonably believed by it to be genuine and to
have been properly executed on behalf of a Fund. The Custodian may
receive and accept a certified copy of a vote of the Board of the
Trust as conclusive evidence (a) of the authority of any person to act
in accordance with such vote or (b) of any determination of or any
action by the Board pursuant to the Declaration of Trust as described
in such vote, and such vote may be considered as in full force and
effect until receipt by the Custodian of written notice to the
contrary.
2.21 Notice to Trust by Custodian Regarding Cash Movement. The Custodian
will provide timely notification to the Trust of any receipt of cash,
income or payments to the Trust and the release of cash or payment by
the Trust.
3. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of the Trust to keep the books
of account of each Fund and/or compute the net asset value per share of the
outstanding Shares of each Fund or, if directed in writing to do so by the
Trust, shall itself keep such books of account and/or compute such net asset
value per share. If so directed, the Custodian shall also calculate daily
the net income of a Fund as described in the Fund's currently effective
prospectus and Statement of Additional Information ("Prospectus") and shall
advise the Trust and the Transfer Agent daily of the total amounts of such
net income and, if instructed in writing by an officer of the Trust to do
so, shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset
value per share and the daily income of a Fund shall be made at the time or
times described from time to time in the Fund's currently effective
Prospectus.
4. Records.
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet
the obligations of the Trust and the Funds under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, and specifically including identified cost records used for tax
purposes. All such records shall be the property of the Trust and shall at
all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the Trust and
upon notice to the Trust, employees and agents of the SEC. In the event of
termination of this Contract, the Custodian will deliver all such records to
the Trust to a successor Custodian, or to such other person as the Trust may
direct. The Custodian shall supply daily to the Trust a tabulation of
securities owned by a Fund and held by the Custodian and shall, when
requested to do so by the Trust and for such compensation as shall be agreed
upon between the Trust and the Custodian, include certificate numbers in
such tabulations. In addition, the Custodian shall electronically transmit
daily to the Trust information pertaining to security trading and other
investment activity and all other cash activity of a Fund.
5. Opinion of Trust's Independent Public Accountants.
The Custodian shall take all reasonable action to obtain from year to
year favorable opinions from independent public accountants with respect to
its activities hereunder in connection with the preparation of the Trust's
registration statement, periodic reports, or any other reports to the SEC
and with respect to any other requirements of such Commission.
6. Reports to Trust by Independent Public Accountants.
The Custodian shall provide the Trust, at such times as the Trust may
reasonably require, with reports by independent public accountants for each
Fund on the accounting system, internal accounting control and procedures
for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian for the Trust
under this Contract; such reports shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Trust, to provide
reasonable assurance that any material inadequacies would be disclosed by
such examination and, if there are no such inadequacies, the reports shall
so state.
7. Compensation of Custodian.
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between
the Trust and the Custodian, and as reflected on Schedule A attached hereto.
8. Responsibility of Custodian.
The Custodian shall be held to a standard of reasonable care in
carrying out the provisions of this Contract; provided, however, that the
Custodian shall be held to any higher standard of care which would be
imposed upon the Custodian by any applicable law or regulation if such above
stated standard of reasonable care was not part of this Contract. The
Custodian shall be entitled to rely on and may act upon advice of counsel
(who may be counsel for the Trust) on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to such
advice, provided that such action is not in violation of applicable federal
or state laws or regulations, and is in good faith and without negligence.
Subject to the limitations set forth in Section 15 hereof, the Custodian
shall be kept indemnified by the Trust but only from the assets of the Fund
involved in the issue at hand and be without liability for any action taken
or thing done by it that is reasonably related to its responsibility to
carry out the terms and provisions of this Contract in accordance with the
above standards.
In order that the indemnification provisions contained in this
Section 8 shall apply, however, it is understood that if in any case the
Trust may be asked to indemnify or save the Custodian harmless, the Trust
shall be fully and promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that the Custodian will
use all reasonable care to identify and notify the Trust promptly concerning
any situation which presents or appears likely to present the probability of
such a claim for indemnification. The Trust shall have the option to defend
the Custodian against any claim which may be the subject of this
indemnification, and in the event that the Trust so elects it will so notify
the Custodian and thereupon the Trust shall take over complete defense of
the claim, and the Custodian shall in such situation initiate no further
legal or other expenses for which it shall seek indemnification under this
Section. The Custodian shall in no case confess any claim or make any
compromise in any case in which the Trust will be asked to indemnify the
Custodian except with the Trust's prior written consent.
Notwithstanding the foregoing, the responsibility of the Custodian
with respect to redemptions effected by check shall be in accordance with a
separate Agreement entered into between the Custodian and the Trust.
If the Trust requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may,
in the reasonable opinion of the Custodian, result in the Custodian or its
nominee assigned to a Fund being liable for the payment of money or
incurring liability of some other form, the Custodian may request the Trust,
as a prerequisite to requiring the Custodian to take such action, to provide
indemnity to the Custodian in an amount and form satisfactory to the
Custodian.
Subject to the limitations set forth in Section 15 hereof, the Trust
agrees to indemnify and hold harmless the Custodian and its nominee from and
against all taxes, charges, expenses, assessments, claims and liabilities
(including reasonable counsel fees) (referred to herein as authorized
charges) incurred or assessed against it or its nominee in connection with
the performance of this Contract, except such as may arise from it or its
nominee's own failure to act in accordance with the standard of care set
forth herein or any higher standard of care which would be imposed upon the
Custodian by any applicable law or regulation if such above-stated standard
of care were not part of this Contract. To secure any authorized charges
and any advances of cash or securities made by the Custodian to or for the
benefit of a Fund for any purpose which results in the Fund incurring an
overdraft at the end of any business day or for extraordinary or emergency
purposes during any business day, the Trust hereby grants to the Custodian a
security interest in and pledges to the Custodian securities held for the
Fund by the Custodian in an amount not to exceed 10 percent of the Fund's
gross assets, the specific securities to be designated in writing from time
to time by the Trust or the Fund's investment adviser. Should the Trust
fail to make such designation, or should it instruct the Custodian to make
advances exceeding the percentage amount set forth above and should the
Custodian do so, the Trust hereby agrees that the Custodian shall have a
security interest in all securities or other property purchased for a Fund
with the advances by the Custodian, which securities or property shall be
deemed to be pledged to the Custodian, and the written instructions of the
Trust instructing their purchase shall be considered the requisite
description and designation of the property so pledged for purposes of the
requirements of the Uniform Commercial Code. Should the Trust fail to cause
a Fund to repay promptly any authorized charges or advances of cash or
securities, subject to the provision of the second paragraph of this
Section 8 regarding indemnification, the Custodian shall be entitled to use
available cash and to dispose of pledged securities and property as is
necessary to repay any such advances.
9. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided,
may be amended at any time by mutual agreement of the parties hereto and may
be terminated by either party by an instrument in writing delivered or
mailed, postage prepaid, to the other party, such termination to take effect
not sooner than sixty (60) days after the date of such delivery or mailing;
provided, however that the Custodian shall not act under Section 2.12 hereof
in the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of the Trust has approved the initial use
of a particular Securities System as required in each case by Rule 17f-4
under the 1940 Act; provided further, however, that the Trust shall not
amend or terminate this Contract in contravention of any applicable federal
or state regulations, or any provision of the Declaration of Trust, and
further provided, that the Trust may at any time by action of its Board
(i) substitute another bank or trust company for the Custodian by giving
notice as described above to the Custodian, or (ii) immediately terminate
this Contract in the event of the appointment of a conservator or receiver
for the Custodian by the Comptroller of the Currency or upon the happening
of a like event at the direction of an appropriate regulatory agency or
court of competent jurisdiction.
Upon termination of the Contract, the Trust shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its reasonable costs, expenses and
disbursements incurred in connection with its performance of this agreement
through the date of termination.
10. Successor Custodian.
If a successor custodian shall be appointed by the Board of the Trust,
the Custodian shall, upon termination, deliver to such successor custodian
at the office of the Custodian, duly endorsed and in the form for transfer,
all securities then held by it hereunder for each Fund and shall transfer to
separate accounts of the successor custodian all of each Fund's securities
held in a Securities System.
If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the
Board of the Trust, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian
or certified copy of a vote of the Board shall have been delivered to the
Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or
trust company, which is a "bank" as defined in the 1940 Act, of its own
selection, having an aggregate capital, surplus, and undivided profits, as
shown by its last published report, of not less than $100,000,000, all
securities, funds and other properties held by the Custodian and all
instruments held by the Custodian relative thereto and all other property
held by it under this Contract for each Fund and to transfer to separate
accounts of such successor custodian all of each Fund's securities held in
any Securities System. Thereafter, such bank or trust company shall be the
successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Trust to procure the certified copy of the vote referred to
or of the Board to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties
and the provisions of this Contract relating to the duties and obligations
of the Custodian shall remain in full force and effect.
11. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the Custodian and
the Trust may from time to time agree on such provisions interpretive of or
in addition to the provisions of this Contract as may in their joint opinion
be consistent with the general tenor of this Contract. Any such
interpretive or additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Declaration of Trust. No interpretive
or additional provisions made as provided in the preceding sentence shall be
deemed to be an amendment of this Contract.
12. Massachusetts Law to Apply.
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.
13. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Trust at Federated
Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to the Custodian
at Huntington Center, 41 South High Street, Columbus, Ohio 43215, or to
such other address as the Trust or the Custodian may hereafter specify,
shall be deemed to have been properly delivered or given hereunder to the
respective address.
14. Counterparts.
This Contract may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
15. Limitations of Liability.
The Custodian is expressly put on notice of the limitation of
liability as set forth in Article IV of the Declaration of Trust and agrees
that the obligations and liabilities assumed by the Trust and any Fund
pursuant to this Contract, including, without limitation, any obligation or
liability to indemnify the Custodian pursuant to Section 8 hereof, shall be
limited in any case to the relevant Fund and its assets and that the
Custodian shall not seek satisfaction of any such obligation from the
shareholders of the relevant Fund, from any other Fund or its shareholders
or from the Trustees, Officers, employees or agents of the Trust, or any of
them. In addition, in connection with the discharge and satisfaction of any
claim made by the Custodian against the Trust, for whatever reasons,
involving more than one Fund, the Trust shall have the exclusive right to
determine the appropriate allocations of liability for any such claim
between or among the Funds.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed as of the 27th day of January, 1993.
ATTEST: THE MONITOR FUNDS
/s/ Joseph M. Huber By: /s/ Ronald M. Petnuch
Assistant Secretary Vice President
ATTEST HUNTINGTON TRUST COMPANY, N.A.
/s/ David Jones By /s/Norman A. Jacobs
Assistant Vice President President
Custodian Contract
Schedule A
For its services under the Custodian Contract, the Custodian will
receive an annual fee as follows:
For Custody Services
.026 of 1% of the average daily net assets of The Monitor Funds.
For Recordkeeping Services
.030 of 1% of the average daily net assets of The Monitor Funds.
All fees are to be accrued daily and paid monthly.
Exhibit No. 9(i) under Form N-1A
Exhibit No. 10 under Item 601/Reg. S-K
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 29th day of November, 1990, by and between THE
MONITOR FUNDS, a Massachusetts business trust, having its principal office and
place of business at Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779 (the "Trust"), on behalf of the portfolios (the "Funds") and the
classes of shares (the "Classes") of the Trust set forth in Exhibit A hereto,
and FEDERATED SERVICES COMPANY, a Delaware business trust having its principal
office and place of business at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779 ("Services").
WHEREAS, the Trust desires to appoint Services as its transfer agent,
dividend disbursing agent, and agent in connection with certain other
activities, and Services desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
Article 1. Terms of Appointment
Subject to the terms and conditions set forth in this Agreement, the
Trust hereby employs and appoints Services to act as, and Services agrees to
act as, transfer agent for each Fund's authorized and issued shares of
beneficial interest ("Shares"), dividend disbursing agent, and agent in
connection with any accumulation, open-account or similar plans provided to
the shareholders of any Fund ("Shareholders"), including without limitation
any periodic investment plan or periodic withdrawal program.
Proper Instructions as used throughout this Agreement means a writing
signed or initialed by one or more person or persons as the Board of Trustees
shall have from time to time authorized. Each such writing shall set forth
the specific transaction or type of transaction involved. Oral instructions
will be considered Proper Instructions if Services reasonably believes them to
have been given by a person previously authorized in Proper Instructions to
give such instructions with respect to the transaction involved. The Trust
and Services shall cause all oral instructions to be confirmed in writing.
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Trust and Services
are satisfied that such procedures afford adequate safeguards for a Fund's
assets. Proper Instructions may only be amended in writing.
Article 2. Duties of Services
Services agrees that it will perform the following services in accordance
with Proper Instructions as may be provided from time to time by the Trust as
to any Fund:
A. Purchases
(1) Services shall receive orders and payment for the purchase of
shares and promptly deliver payment and appropriate
documentation therefor to the custodian of the relevant Fund,
which may be Services (the "Custodian"). Services shall notify
the Trust and the Custodian on a daily basis of the total
amount of orders and payments so delivered.
(2) Pursuant to purchase orders and in accordance with the Trust's
current prospectuses, Services shall compute and issue the
appropriate number of shares and hold such shares in the
appropriate Shareholder accounts.
(3) If a Shareholder or its agent requests a certificate, Services,
as Transfer Agent, shall countersign and mail by first class
mail, a certificate to the Shareholder at his address as set
forth on the transfer books of the Trust, subject to any Proper
Instructions regarding the delivery of certificates.
(4) In the event that any check or other order for the purchase of
Shares of a Fund or Class is returned unpaid for any reason,
Services shall debit the Share account of the Shareholder by
the number of Shares that had been credited to his account upon
receipt of the check or other order, promptly mail a debit
advice to the Shareholder, and notify the Trust of its action.
In the event that the amount paid for such Shares exceeds
proceeds of the redemption of such Shares plus the amount of
any dividends paid with respect to such Shares, Services will
receive reimbursement of such excess from the relevant Fund or
Class or its distributor.
B. Distribution
(1) Upon notification by the Trust of the declaration of any
distribution to shareholders, Services shall act as Dividend
Disbursing Agent for the Fund or Class in accordance with the
provisions of its governing documents and the then current
Prospectus of the Fund or Class and as such shall prepare and
mail or credit income, capital gain, or any other payments to
Shareholders. As the Dividend Disbursing Agent, Services
shall, on or before the payment date of any such distribution,
notify the Custodian of the estimated amount required to pay
any portion of said distribution which is payable in cash and
request the Custodian to make available sufficient funds for
the cash amount to be paid out. Services shall reconcile the
amounts so requested and the amounts actually received with the
Custodian on a daily basis. If a Shareholder is entitled to
receive additional Shares by virtue of any such distribution or
dividend, appropriate credits shall be made to the
Shareholder's account and certificates delivered where
requested; and
(2) Services shall maintain records of account for each Fund and
Class and advise the Trust and its Shareholders as to the
foregoing.
C. Redemptions and Transfers
(1) Services shall receive redemption requests and redemption
directions and, if such redemption requests comply with the
procedures as may be described in the Fund or Class prospectus
or set forth in Proper Instructions, deliver the appropriate
instructions therefor to the Custodian.
(2) At the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption, Services
shall pay over or cause to be paid over in the appropriate
manner such monies as instructed by the redeeming Shareholders,
pursuant to procedures described in the then current prospectus
of the Fund or Class.
(3) If any such certificate or request for redemption does not
comply with the procedures for redemption approved by the
Trust, Services shall promptly notify the Shareholder and the
Trust of such fact, together with the reason therefor, and
shall effect such redemption at the price applicable to the
date and time of receipt of documents complying with said
procedures.
(4) Services shall effect transfers of Shares by the registered
owners thereof.
(5) Services shall identify and process abandoned accounts and
uncashed checks for state escheat requirements on an annual
basis and report such actions to the Trust.
D. Recordkeeping
(1) Services shall record the issuance of shares of each Fund and
Class and maintain pursuant to applicable Rules of the
Securities and Exchange Commission a record of the total number
of shares of the Fund or Class which are authorized, based upon
data provided to it by the Trust, and issued and outstanding.
Services shall also provide the Trust on a regular basis or
upon reasonable request with the total number of Shares which
are authorized and issued and outstanding, but shall have no
obligation when recording the issuance of Shares, except as
otherwise set forth herein, to monitor the issuance of such
shares or to take cognizance of any laws relating to the issue
or sale of such Shares, which functions shall be the sole
responsibility of the Trust.
(2) Services shall establish and maintain records pursuant to
applicable Rules of the Securities and Exchange Commission
relating to the services to be performed hereunder in the form
and manner as agreed to by the Trust, which shall in any event
include a record for each Shareholder's account of the
following:
(a) Name, address and tax identifying number (and whether such
number has been certified);
(b) Number of Shares held;
(c) Historical information regarding the account, including
dividends paid and date and price for all transactions;
(d) Any stop or restraining order placed against the account;
(e) Information with respect to withholdings in the case of a
foreign account or an account for which withholding is
required by the Internal Revenue Code;
(f) Any dividend reinvestment order, plan application,
dividend address and correspondence relating to the
current maintenance of the account;
(g) Certificate numbers and denominations for any Shareholder
holding certificates;
(h) Any information required in order for Services to perform
the calculations contemplated or required by this
Agreement.
(3) Services shall preserve any such records required to be
maintained pursuant to the rules of the Securities and Exchange
Commission for the periods prescribed in said Rules as
specifically noted below. Such record retention shall be at
the expense of the appropriate Fund or Class, and such records
may be inspected by the Trust at reasonable times. Services
may, at its option at any time, and shall forthwith upon the
Trust's demand, turn over to the Trust and cease to retain in
the Services's files, records and documents created and
maintained by Services pursuant to this Agreement, which are no
longer needed by Services in performance of its services or for
its protection. If not so turned over to the Trust, such
records and documents will be retained by Services for six
years from the year of creation, during the first two of which
such documents will be in readily accessible form, and, at the
end of the six year period, such records and documents will
either be turned over to the Trust or destroyed in accordance
with Proper Instructions. Services agrees that, to the extent
required by applicable law, all records relating to the
services provided hereunder are the property of the Trust.
E. Confirmations/Reports
(1) Services shall furnish to the Trust periodically in accordance
with proper instructions the following information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and outstanding in each
state for "blue sky" purposes as determined according to
Proper Instructions delivered from time to time by the
Trust to Services;
(d) Shareholder lists and statistical information;
(e) Payments to third parties relating to distribution
agreements, allocations of sales loads, redemption fees,
or other transaction- or sales-related payments;
(f) Such other information as may be agreed upon from time to
time.
(2) Services shall prepare in the appropriate form, file with the
Internal Revenue Service and appropriate state agencies, and,
if required, mail to Shareholders, such notices for reporting
dividends and distributions paid as are required to be so filed
and mailed and shall withhold such sums as are required to be
withheld under applicable federal and state income tax laws,
rules and regulations.
(3) In addition to and not in lieu of the services set forth above,
Services shall:
(a) Perform all of the customary services of a transfer agent,
dividend disbursing agent and, as relevant, agent in
connection with accumulation, open-account or similar
plans (including without limitation any periodic
investment plan or periodic withdrawal program), including
but not limited to: maintaining all Shareholder accounts,
preparing Shareholder meeting lists, mailing proxies,
receiving and tabulating proxies, mailing Shareholder
reports and prospectuses to current Shareholders,
withholding taxes on accounts subject to back-up or other
withholding (including non-resident alien accounts),
preparing and filing reports on U.S. Treasury Department
Form 1099 and other appropriate forms required with
respect to dividends and distributions by federal
authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares
and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account
information; and
(b) provide a system which will enable the Trust to monitor
the total number of Shares of each Fund and Class sold in
each state ("blue sky reporting"). The Trust shall by
Proper Instructions (i) identify to Services those
transactions and assets to be treated as exempt from the
blue sky reporting for each state and (ii) verify the
classification of transactions for each state on the
system prior to activation and thereafter monitor the
daily activity for each state. The responsibility of
Services for each Fund's blue sky state registration
status is solely limited to the recording of the initial
classification of transactions or accounts with regard to
blue sky compliance and the reporting of such transactions
and accounts to the Trust as provided above.
F. Other Duties
(1) Services shall answer correspondence from Shareholders relating
to their Share accounts and such other correspondence as may
from time to time be addressed to Services;
(2) Services shall mail proxy cards and other material supplied to
it by the Trust in connection with Shareholder Meetings of each
Fund or Class; receive, examine and tabulate returned proxies;
and certify the vote of the Shareholders;
(3) Services shall establish and maintain facilities and procedures
for safekeeping of stock certificates, check forms and
facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such
certificates, forms and devices.
Article 3. Duties of the Trust
A. Compliance
The Trust assumes full responsibility for the preparation, contents
and distribution of each Prospectus of the Fund or Class and for
complying with all applicable requirements of the Securities Act of
1933, as amended, the Investment Company Act of 1940, as amended,
and any laws, rules and regulations of government authorities having
jurisdiction.
B. Share Certificates
The Trust shall supply Services with a sufficient supply of blank
Share certificates and from time to time shall renew such supply
upon request of Services. Such blank Share certificates shall be
properly signed, manually or by facsimile, if authorized by the
Trust and shall bear the seal of the Trust or facsimile thereof; and
notwithstanding the death, resignation or removal of any officer of
the Trust authorized to sign certificates, Services may continue to
countersign certificates which bear the manual or facsimile
signature of such officer until otherwise directed by the Trust.
C. Distributions
The Trust shall promptly inform Services of the declaration of any
dividend or distribution on account of any Fund's shares.
D. Documents
(1) In connection with the appointment of Services as Transfer
Agent, the Trust shall deliver to Services the following
documents:
(a) A copy of the Declaration of Trust and By-Laws of the
Trust and all amendments thereto;
(b) A copy of the resolution of the Board of Trustees of the
Trust authorizing this Agreement;
(c) Specimens of all forms of outstanding Share certificates
of the Funds and Classes in the forms approved by the
Board of the Trust with a certificate of the Secretary of
the Trust as to such approval;
(d) All account application forms and other documents relating
to Shareholders accounts;
(e) A copy of the current prospectuses.
(2) The Trust will also furnish from time to time the following
documents:
(a) Copies of each resolution of the Board of Trustees of the
Trust authorizing the original issuance of Shares of each
Fund and Class;
(b) Copies of each Registration Statement filed with the
Securities and Exchange Commission and amendments thereof
and orders relating thereto in effect with respect to the
sale of Shares of any Fund or Class;
(c) A certified copy of each amendment to the Delcaration of
Trust or the By-Laws of the Trust;
(d) Certified copies of each vote of the Board authorizing
officers to give Proper Instructions to the Transfer
Agent;
(e) Specimens of all new Share certificates representing
Shares of any Fund or Class, accompanied by Board
resolutions approving such forms;
(f) Such other certificates, documents or opinions which
Services may, in its discretion, reasonably deem necessary
or appropriate in the proper performance of its duties;
(g) Revisions to the prospectus of any Fund or Class;
Article 4. Representations and Warranties
A. Representations and Warranties of Services
Services represents and warrants to the Trust that:
(1) It is a business trust duly organized and existing and in good
standing under the laws of the State of Delaware;
(2) It is duly qualified to carry on its business in the State of
Delaware.
(3) It is empowered under applicable laws and by its Declaration of
Trust and by-laws to enter into and perform this Agreement.
(4) All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
(5) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
(6) It is in compliance with federal securities law requirements
and in good standing as a transfer agent.
B. Representations and Warranties of the Trust
The Trust represents and warrants to Services that:
(1) It is a business trust duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
(2) It is empowered under applicable laws and by its Declaration of
Trust and By-Laws to enter into and perform this Agreement.
(3) All corporate proceedings required by said Declaration of Trust
and By-Laws have been taken to authorize it to enter into and
perform this Agreement.
(4) It is an open-end investment company registered under the
Investment Company Act of 1940.
(5) A registration statement under the Securities Act of 1933 will
be effective, and appropriate state securities law filings have
been made and will continue to be made, with respect to all
Shares of each Fund and Class being offered for sale.
Article 5. Fees and Expenses
A. Annual Fee
For performance by Services pursuant to this Agreement, the Trust
agrees to pay Services an annual maintenance fee for each
Shareholder account as set out in the fee schedule attached hereto.
Such fees may be changed from time to time subject to mutual written
agreement between the Trust and Services.
B. Reimbursements
In addition to the fee paid under Article 5 A above, the Trust
agrees to reimburse Services for out-of-pocket expenses or advances
incurred by Services for the items set out in the fee schedule
attached hereto. In addition, any other expenses incurred by
Services at the request or with the consent of the Trust, will be
reimbursed by the appropriate Fund or Class.
C. Payment
Services shall issue billing notices with respect to fees and
reimbursable expenses on a timely basis, generally within 15 days
following the end of the month in which the fees and expenses have
been incurred. The Trust agrees to pay all fees and reimbursable
expenses within 30 days following the receipt of the respective
billing notices.
Article 6. Standard of Care/Indemnification
A. Standard of Care
Services shall be held to a standard of reasonable care in carrying
out the provisions of this contract; provided, however that Services
shall be held to any higher standard of care which would be imposed
upon Services by any applicable law or regulation even though such
stated standard of care was not part of the contract.
B. Indemnification by Trust
Services shall not be responsible for and the Trust shall indemnify
and hold Services harmless against any and all losses, damages,
costs, charges, counsel fees, payments, expenses and liability
arising out of or attributable to:
(1) The Trust's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Trust's lack of good
faith, negligence or willful misconduct or which arise out of
the breach of any representation or warranty of the Trust
hereunder.
(2) The reliance on or use by Services or its agents or
subcontractors in the performance of Services' duties hereunder
of information, records and documents in proper form which
(a) are received by Services or its agents or subcontractors
and furnished to it by or on behalf of the Trust, its
shareholders or investors regarding the purchase,
redemption or transfer of shares and shareholder account
information, or
(b) have been prepared and/or maintained by the Trust or its
affiliates or any other person or firm on behalf of the
Trust.
(3) The reliance on, or the carrying out by Services or its agents
or subcontractors of Proper Instructions of the Trust.
(4) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the
securities laws or regulations of any state that such Shares be
registered in such state or in violation of any stop order or
other determination or ruling by any federal agency or any
state with respect to the offer or sale of such Shares in such
state.
Provided, however, that Services shall not be protected by this
Article 6.B. from liability for any act or omission resulting from
Services's lack of good faith, negligence, willful misconduct, or
failure to meet the standard of care set forth in Article 6.A.,
above.
C. Indemnification by Services
Services shall indemnify and hold each Fund or Class harmless from
and against any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liability arising out of or attributed
to any action or failure or omission to act by Services as a result
of Services's lack of good faith, negligence, willful misconduct, or
failure to meet the standard of care set forth in Article 6A above.
D. Reliance
At any time Services may apply to any officer of the Trust for
instructions, and may consult with legal counsel with respect to any
matter arising in connection with the services to be performed by
Services under this Agreement, and Services and its agents or
subcontractors shall not be liable and shall be indemnified by the
appropriate Fund or Class for any action reasonably taken or omitted
by it in reliance upon such instructions or upon the opinion of such
counsel provided such action is not in violation of applicable
Federal or state laws or regulations. Services, its agents and
subcontractors shall be protected and indemnified in recognizing
stock certificates which are reasonably believed to bear the proper
manual or facsimile signatures of the officer of the Trust, and the
proper countersignature of any former transfer agent or registrar,
or of a co-transfer agent or co-registrar.
E. Notification
In order that the indemnification provisions contained in this
Article 6 shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party
seeking indemnification shall promptly notify the other party of
such assertion, and shall keep the other party advised with respect
to all developments concerning such claim. The party who may be
required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The
party seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may be
required to indemnify it except with the other party's prior written
consent.
Article 7. Terms of the Agreement
A. Termination of Agreement
This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.
B. Expenses
Should the Trust exercise its rights to terminate all out-of-pocket
expenses associated with the movement of records and materials will
be bourne by the appropriate Fund or Class. Additionally, Services
reserves the right to charge for any other reasonable expenses
associated with such termination.
C. Assignment
Except as provided below, neither this Agreement nor any rights or
obligations hereunder may be assigned by either party without the
written consent of the other party.
(1) This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and
assigns.
(2) Services may without further consent on the part of the Trust
subcontract for the performance hereof with (A) Boston
Financial Data Services, Inc., a Massachusetts corporation
("BFDS"), which is duly registered as a transfer agent pursuant
to Section 17A(c)(1) of the Securities Exchange Act of 1934, or
any succeeding statute ("Section 17A(c)(1)"), or (B) a BFDS
subsidiary duly registered as a transfer agent pursuant to
Section 17A(c)(1), or (C) a BFDS affiliate; provided, however,
that Services shall be as fully responsible to the Trust for
the acts and omissions of any subcontractor as it is for its
own acts and omissions.
D. Amendment
This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution
of the Trustees of the Trust.
Article 8. Miscellaneous
A. Massachusetts Law to Apply
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the
Commonwealth of Massachusetts.
B. Merger of Agreement
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the
subject hereof whether oral or written.
C. Limitation of Liability
Services is hereby expressly put on notice of the limitation of
liability as set forth in Article IV of the Declaration of Trust and
agrees that the obligations assumed by the Trust pursuant to this
agreement shall be limited in any case to the Trust and its assets
and Services shall not seek satisfaction of any such obligation from
the shareholders of the Trust, the Trustees, officers, employees or
agents of the Trust, or any of them.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
ATTEST: THE MONITOR FUNDS
/s/ Peter J. Germain By:/s/ Byron F. Bowman
Secretary Vice President
ATTEST: FEDERATED SERVICES COMPANY
/s/ Joseph M. Huber By:/s/ Edward C. Gonzales
Assistant Secretary Vice President
Exhibit A
TRANSFER AGENCY AND SERVICE AGREEMENT
PORTFOLIOS OF THE MONITOR FUNDS
The Monitor Funds (the "Trust") consists of the following portfolios
(the "Funds") effective as of the dates set forth below:
Name Date
The Monitor Growth Fund January 11, 1991*
The Monitor Short-Intermediate Fixed Income Fund January 11, 1991*
The Monitor U.S. Treasury Money Market Fund January 11, 1991*
The Monitor Money Market Fund January 11, 1991*
The Monitor Tax-Free Money Market Fund January 11, 1991*
The Monitor U.S Government Money Market Fund January 11, 1991*
The Monitor Ohio Tax-Free Fund January 11, 1991*
The Monitor Fixed Income Securities Fund January 11, 1991*
The Monitor Income Equity Fund January 11, 1991*
* Denotes effective date of Agreement.
Amendment No. 1 to Exhibit A
to the
TRANSFER AGENCY AND SERVICE AGREEMENT
between
THE MONITOR FUNDS
and
FEDERATED SERVICES COMPANY
The Monitor Funds (the "Trust") consists of the following portfolios
(the "Funds") or classes of shares (the "Classes") effective as of the dates
set forth below:
Name Date
Trust Shares
The Monitor Growth Fund January 11, 1991
The Monitor Short-Intermediate Fixed Income Fund January 11, 1991
The Monitor U.S. Treasury Money Market Fund January 11, 1991
The Monitor Money Market Fund January 11, 1991
The Monitor Tax-Free Money Market Fund January 11, 1991
The Monitor U.S Government Money Market Fund January 11, 1991
The Monitor Ohio Tax-Free Fund January 11, 1991
The Monitor Fixed Income Securities Fund January 11, 1991
The Monitor Income Equity Fund January 11, 1991
Investment Shares
The Monitor Growth Fund May 1, 1991
The Monitor Money Market Fund May 1, 1991
The Monitor Tax-Free Money Market Fund May 1, 1991
The Monitor U.S Government Money Market Fund May 1, 1991
The Monitor Ohio Tax-Free Fund May 1, 1991
The Monitor Fixed Income Securities Fund May 1, 1991
In witness whereof, the parties hereto have caused this Amendment
No. 1 to Exhibit to the Agreement to be executed in their names and on their
behalf by and through their duly authorized officers, as of this 1st day of
May, 1991.
Attest: The Monitor Funds
/s/ Peter J. Germain By: /s/ Byron F. Bowman
Secretary Vice President
Attest: Federated Services Company
/s/ Joseph M. Huber By: /s/ John W. McGonigle
Assistant Secretary Vice President
Amendment No. 2 to Exhibit A
to the
TRANSFER AGENCY AND SERVICE AGREEMENT
between
THE MONITOR FUNDS
and
FEDERATED SERVICES COMPANY
The Monitor Funds (the "Trust") consists of the following portfolios
(the "Funds") or classes of shares (the "Classes") effective as of the dates
set forth below:
Name Date
Trust Shares
The Monitor Growth Fund January 11, 1991
The Monitor Short-Intermediate Fixed Income Fund January 11, 1991
The Monitor U.S. Treasury Money Market Fund January 11, 1991
The Monitor Money Market Fund January 11, 1991
The Monitor Tax-Free Money Market Fund January 11, 1991
The Monitor U.S Government Money Market Fund January 11, 1991
The Monitor Ohio Tax-Free Fund January 11, 1991
The Monitor Fixed Income Securities Fund January 11, 1991
The Monitor Income Equity Fund January 11, 1991
The Monitor Mortgage Securities Fund April 24, 1992
Investment Shares
The Monitor Growth Fund May 1, 1991
The Monitor Money Market Fund May 1, 1991
The Monitor Tax-Free Money Market Fund May 1, 1991
The Monitor U.S Government Money Market Fund May 1, 1991
The Monitor Ohio Tax-Free Fund May 1, 1991
The Monitor Fixed Income Securities Fund May 1, 1991
The Monitor Mortgage Securities Fund April 24, 1992
In witness whereof, the parties hereto have caused this Amendment
No. 2 to Exhibit to the Agreement to be executed in their names and on their
behalf by and through their duly authorized officers, as of this 24th day of
April, 1992.
Attest: The Monitor Funds
/s/ Peter J. Germain By: /s/ Byron F. Bowman
Secretary Vice President
Attest: Federated Services Company
/s/ Joseph M. Huber By:/s/ Ronald L. Cavanagh
Assistant Secretary Vice President
Amendment No. 3 to Exhibit A
to the
TRANSFER AGENCY AND SERVICE AGREEMENT
between
THE MONITOR FUNDS
and
FEDERATED SERVICES COMPANY
The Monitor Funds (the "Trust") consists of the following portfolios
(the "Funds") or classes of shares (the "Classes") effective as of the dates
set forth below:
Name Date
Trust Shares
The Monitor Growth Fund January 11, 1991
The Monitor Short-Intermediate Fixed Income Fund January 11, 1991
The Monitor U.S. Treasury Money Market Fund January 11, 1991
The Monitor Money Market Fund January 11, 1991
The Monitor Tax-Free Money Market Fund January 11, 1991
The Monitor U.S. Government Money Market Fund January 11, 1991
The Monitor Ohio Tax-Free Fund January 11, 1991
The Monitor Fixed Income Securities Fund January 11, 1991
The Monitor Income Equity Fund January 11, 1991
The Monitor Mortgage Securities Fund April 24, 1992
Investment Shares
The Monitor Growth Fund May 1, 1991
The Monitor Money Market Fund May 1, 1991
The Monitor Tax-Free Money Market Fund May 1, 1991
The Monitor U.S. Government Money Market Fund May 1, 1991
The Monitor Ohio Tax-Free Fund May 1, 1991
The Monitor Fixed Income Securities Fund May 1, 1991
The Monitor Mortgage Securities Fund April 24, 1992
The Monitor U.S. Treasury Money Market Fund September 28, 1993
In witness whereof, the parties hereto have caused this Amendment No. 3
to Exhibit to the Agreement to be executed in their names and on their behalf
by and through their duly authorized officers, as of this 1st day of June,
1993.
Attest: The Monitor Funds
/s/ Joseph M. Huber By: /s/ Ronald M. Petnuch
Secretary Vice President
Attest: Federated Services Company
/s/ Joseph M. Huber By: /s/ Ronald L. Cavanagh
Assistant Secretary Vice President
Exhibit No. 9(ii) under Form N-1A
Exhibit No. 10 under Item 601/Reg. S-K
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement is made as of this 11th day of
January, 1991, between THE MONITOR FUNDS, a Massachusetts business trust
(herein called the "Trust"), and FEDERATED ADMINISTRATIVE SERVICES, a Delaware
business trust (herein called "FAS").
WHEREAS, the Trust is a Massachusetts business trust, consisting of
multiple investment portfolios, which operates as an open-end management
investment company and has registered as such under the Investment Company Act
of 1940; and
WHEREAS, the Trust desires to retain FAS as its Administrator to provide
it with administrative services, and FAS is willing to render such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties hereto agree as follows:
1. Appointment of Administrator. The Trust hereby appoints FAS as
Administrator of the Trust on the terms and conditions set forth in this
Agreement; and FAS hereby accepts such appointment and agrees to perform the
services and duties set forth in this Agreement in consideration of the
compensation provided for herein.
2. Services and Duties. As Administrator, and subject to the
supervision and control of the Trust's Board of Trustees, FAS will provide
office facilities, equipment, and personnel to carry out the following
administrative services for operation of the business and affairs of the Trust
and each of its portfolios:
(a) prepare, file, and maintain the Trust's governing documents,
including the Declaration of Trust (which has already been prepared
and filed), the By-laws, minutes of meetings of Trustees and
shareholders, and proxy statements for meetings of shareholders;
(b) prepare and file with the Securities and Exchange Commission and the
appropriate state securities authorities the registration statements
for the Trust and the Trust's shares and all amendments thereto, the
Trust's reports pursuant to Investment Company Act Rule 24f-2 (or
any successor rule thereto), reports to regulatory authorities and
shareholders, prospectuses, proxy statements, and such other
documents as may be necessary or convenient to enable the Trust to
make a continuous offering of its shares in compliance with all
applicable laws;
(c) prepare, negotiate, and administer contracts on behalf of the Trust
with, among others, the Trust's investment adviser, distributor,
custodian, and transfer agent;
(d) supervise the Trust's custodian and accounting personnel of the
Trust in the maintenance of the Trust's general ledger and in the
preparation of the Trust's financial statements, including oversight
of expense accruals and payments on a monthly basis of the
determination of the net asset value of the Trust's assets and of
the Trust's shares, and of the payment of dividends and other
distributions to shareholders;
(e) calculate and disseminate performance data of the Trust to
information services covering the investment company industry;
(f) prepare and file on a timely basis the Trust's federal and state tax
returns and other required tax filings;
(g) examine and review the operations of the Trust's custodian and
transfer agent;
(h) coordinate the layout and printing of publicly disseminated
prospectuses and reports;
(i) perform internal audit examinations in accordance with a charter to
be adopted by FAS and the Trust;
(j) assist with the design, development, and operation of the Trust;
(k) provide individuals reasonably acceptable to the Trust's Board of
Trustees for nomination, appointment, or election as officers of
the Trust, who will be responsible for the management of certain of
the Trust's affairs as determined by the Trust's Board of Trustees;
(l) monitor the Trust's compliance with Sections 851 to 855 of the
Internal Revenue Code (or any successor provisions thereto) so as to
enable the Trust to maintain its status as a "regulated investment
company;" and
(m) advise the Trust and its Board of Trustees at quarterly meetings, or
as necessary between meetings, on matters concerning the Trust and
its affairs.
The foregoing, along with any additional services that FAS shall agree in
writing to perform for the Trust hereafter, shall hereafter be referred to as
"Administrative Services." In compliance with the requirements of Rule 31a-3
under the 1940 Act, FAS hereby agrees that all records which it maintains for
the Trust are the property of the Trust and further agrees to surrender
promptly to the Trust any such records upon the Trust's request.
Administrative Services shall not include any duties, functions, or services
to be performed for the Trust by the Trust's investment adviser, distributor,
custodian, or transfer agent pursuant to their agreements with the Trust.
In the performance of its duties hereunder, FAS will comply with the
provisions of the Declaration of Trust and By Laws of the Trust, will
safeguard and promote the welfare of the Trust, and will comply with the
policies which the Trustees may from time to time reasonably determine,
provided that such policies are not in conflict with this Agreement, the
Trust's governing documents, or any applicable statutes or regulations.
3. Expenses. FAS shall be responsible for all expenses incurred in
providing the Administrative Services to the Trust, including the compensation
of FAS employees who serve as Trustees or Officers of the Trust. The Trust
shall be responsible for all Trust expenses, including without limitation
postage and courier expenses, printing expenses, travel expenses, registration
fees, filing fees, fees of outside counsel and independent auditors to the
Trust, insurance premiums, fees payable to trustees who are not FAS employees,
and trade association dues.
4. Compensation. For the Administrative Services provided, the Trust
hereby agrees to pay from the assets of the applicable portfolio and FAS
hereby agrees to accept as full compensation for its services rendered
hereunder an administrative fee at an annual rate per portfolio of the Trust's
shares, computed and payable daily, as specified below:
The administrative service fee to be charged to each Retail Portfolio
daily shall be determined by multiplying the daily net assets of the Portfolio
by a single blended rate, calculated as follows: (Aggregate Daily Net Assets
of the Trust equal to or less than $750 million multiplied by 0.0016) plus
(Aggregate Daily Net Assets of the Trust greater than $750 million and less
than or equal to $1.25 billion multiplied by 0.00135) plus (Aggregate Daily
Net Assets of the Trust greater than $1.25 billion multiplied by 0.0011)) all
divided by (the product of the Aggregate Daily Net Assets of the Trust
multiplied by 365).
However, in no event shall the administrative service fee with respect to
any Retail Portfolio be paid at an annualized rate less than would yield
aggregate payments of $75,000 on an annual basis. FAS agrees not to enforce
this minimum portfolio fee rate during the first eighteen months of this
Agreement with respect to existing portfolios and for a period of eighteen
months following the initiation of the public offering of shares for any
portfolio which is hereafter created.
With regard to any Retail Portfolio, the fee payable to FAS in any year
shall be reduced in an amount equal to all asset-based custody fees, or fees
calculated using any substitute or equivalent method, charged by State Street
Bank and Trust Company or any successor custodian with respect to such
portfolio pursuant to the Trust's Custody Contract in such year (other than
expenses of trade transactions, portfolio pricing, and miscellaneous items).
The fees payable to FAS in any year with regard to all retail portfolios will
also be reduced in an amount equal to the aggregate of all per account charges
for the first 10,000 shareholder accounts of such portfolios charged by State
Street Bank and Trust Company or a like amount charged by any successor
Transfer Agent pursuant to its Transfer Agency Agreement with the Trust (other
than out-of-pocket expenses payable under the Transfer Agency Agreement).
The administrative service fee to be charged to each Institutional
Portfolio daily shall be determined by multiplying the daily net assets of the
Portfolio by a single blended rate, calculated as follows: (Aggregate Daily
Net Assets of the Trust less than or equal to $250 million multiplied by
0.0015) plus (Aggregate Daily Net Assets of the Trust greater than $250
million and less than or equal to $500 million multiplied by 0.00125) plus
(Aggregate Daily Net Assets of the Trust greater than $500 million and less
than or equal to $750 multiplied by 0.0010) plus (Aggregate Daily Net Assets
of the Trust greater than $750 million multiplied by 0.00075)) all divided by
(the product of the Aggregate Daily Net Assets of the Trust multiplied by
365).
However, in no event shall the Administrative fee received with respect
to any Institutional Portfolio during any year of this Agreement be less than,
or be paid at a rate less than would aggregate, $50,000. FAS agrees to waive
this minimum portfolio fee during the first eighteen months of this Agreement
with respect to existing portfolios and for a period of eighteen months
following the initiation of the public offering of shares for any portfolio
which is hereafter created.
In the event that any portfolio is offered as both a Retail Portfolio
and an Institutional Portfolio, the administrative fee shall be computed as
if such portfolio is only a Retail Portfolio.
5. Responsibility of Administrator.
(a) FAS shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Trust in connection with the matters
to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its
obligations or duties under this Agreement. FAS shall be entitled to
rely on and may act upon advice of counsel approved in each case by
the Trustees, for the Trust on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to such
advice. Any person, even though also an officer, director, partner,
employee or agent of FAS, who may be or become an officer, trustee,
employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust (other
than services or business relating to the performance by FAS of its
obligations hereunder) and when acting in accordance with his
responsibilities to the Trust as such Officer, Trustee, employee, or
agent, to be rendering such services to or acting solely for the
Trust and not as an officer, director, partner, employee or agent or
one under the control or direction of FAS even though paid by FAS.
(b) FAS shall be kept indemnified by the Trust and be without liability
for any action taken or thing done by it in performing the
Administrative Services in accordance with the above standards;
provided, however, that the Trust will not indemnify FAS for the
portion of any loss or claim which would be attributed to the
negligence of FAS. In order that the indemnification provisions
contained in this Section 5 shall apply, however, it is understood
that if in any case the Trust may be asked to indemnify or save FAS
harmless, the Trust shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is
further understood that FAS will use all reasonable care to identify
and notify the Trust promptly concerning any situation which presents
or appears likely to present the probability of such a claim for
indemnification against the Trust. The Trust shall have the option
to defend FAS against any claim which may be the subject of this
indemnification. In the event that the Trust so elects it will so
notify FAS and thereupon the Trust shall take over complete defense
of the claim, and FAS shall in such situation initiate no further
legal or other expenses for which it shall seek indemnification under
this Section. FAS shall in no case confess any claim or make any
compromise in any case in which the Trust will be asked to indemnify
FAS except with the Trust's written consent.
6. Duration and Termination.
(a) The initial term of this Agreement shall commence on the date hereof,
and extend for a period of five years thereafter.
(b) This Agreement shall be renewed for one additional term of one year,
unless notice of termination has been delivered by either party to
the other no less than sixty (60) days before the beginning of said
additional term.
(c) Thereafter, this Agreement shall be automatically renewed each year
for an additional term of one year, unless notice of termination has
been delivered by either party to the other no less than one year
before the beginning of any such additional term.
(d) The Trust may terminate this Agreement immediately upon:
(i) the material breach of this Agreement by FAS, provided, however,
that the Trust shall have given FAS written notice of any alleged
breach, that FAS shall not have cured any such alleged breach
within 45 days following the receipt of such notice, and, that an
arbitrator, selected and acting pursuant to the rules of the
American Arbitration Association, shall have found FAS to be in
material breach of this Agreement (Such arbitration shall be
mandatory and binding on both parties. Furthermore, both parties
agree to use their best efforts to expedite the holding of the
arbitration and to request that the arbitrator issue his finding
at the earliest possible date.);
(ii) the issuance of a final judgment by a court of competent
jurisdiction or of a final order by the Securities and Exchange
Commission, which judgment or order holds that FAS or Federated
Securities Corp. has committed a felony or a misdemeanor
involving the purchase or sale of any security, or arising out of
its conduct as an administrator, a distributor, or an affiliate
of an investment company;
(iii) the dissolution or liquidation of FAS or other cessation of its
business other than a reorganization or recapitalization of FAS
as an ongoing business; or
(iv) [a] the authorization or commencement of a voluntary case under
Title 11 of the United States Code, as from time to time amended,
or any other applicable law of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification
or alteration of the rights of creditors; [b] consent to or
acquiescence in any involuntary case under such Title 11 or other
such law; or [c] the commencement of any involuntary case under
such Title 11 or other such law, which case is not dismissed
within 30 days after the filing thereof.
7. Amendment; Assignment. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which an enforcement of the change,
waiver, discharge or termination is sought. This Agreement may not be
assigned by either party without the express written consent of the other
party.
8. Limitations of Liability. FAS is expressly put on notice of the
limitation of liability as set forth in the Declaration of Trust and agrees
that the obligations assumed by the Trust with respect to any portfolio
pursuant to this Agreement shall be limited in any case to such portfolio and
its assets and that FAS shall not seek satisfaction of any obligations under
this agreement from the shareholders of the Trust, the Trustees, officers,
employees or agents of the Trust, or any of them.
9. Notices. Notices of any kind to be given to the Trust hereunder by
FAS shall be in writing and shall be duly given if delivered to the Trust and
to its investment adviser at the following address: The Huntington Trust Co.,
N.A., 41 S. High Street, Columbus, OH 43287, Attention: President. Notices
of any kind to be given to FAS hereunder by the Trust shall be in writing and
shall be duly given if delivered to FAS at Federated Investors Tower,
Pittsburgh, PA 15222-3779, Attention: President.
10. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court or
regulatory agency decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. Subject to the provisions of Section
5 hereof, this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and shall be governed by
Pennsylvania law; provided, however, that nothing herein shall be construed in
a manner inconsistent with the Investment Company Act of 1940 or any rule or
regulation promulgated by the Securities and Exchange Commission thereunder.
11. Proprietary and Confidential Information. FAS agrees on behalf of
itself and its affiliates and employees to treat confidentially and as
proprietary information of the Trust all records and other information
relative to prior, present, or potential Shareholders of the Trust, and not to
use such records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Independent Trustees of the Trust which may not be
withheld where FAS may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Independent Trustees of
the Trust. Provided, however, that FAS shall not be bound by this provision
with regard to information (i) which it receives from another source not
subject to confidential treatment, which information became known to such
source through no action by FAS or any affiliate or agent of FAS; (ii) which
is hereafter made public by the Trust; or (iii) which otherwise becomes part
of the public domain through no action of FAS or any affiliate or agent of
FAS.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
The Monitor Funds
By/s/ Jeffrey W. Sterling
Its:Vice President
Attest:/s/ Joseph M. Huber
Its:Assistant Secretary
Federated Administrative Services
By/s/ J. Christopher Donahue
President
Attest:/s/ S. Elliott Cohan
Assistant Secretary
Exhibit No. 11 under Form N-1A
Exhibit No. 23 under Item 601/Reg S-K
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 19 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated February 20, 1995, relating to the financial
statements and financial highlights appearing in the December 31, 1994 Annual
Report to Shareholders of The Monitor Funds, which is also incorporated by
reference into the Registration Statement. We also consent to the references
to us under the headings "Financial Highlights" and "Independent Public
Accountants" in the Prospectus and under the heading "Independent Public
Accountants", in the Statement of Additional Information.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Columbus, Ohio
April 20, 1995
Exhibit No. 15(i) under Form N-1A
Exhibit No. 1 under Item 601/Reg. S-K
THE MONITOR FUNDS
PLAN
This Plan ("Plan") is adopted as of April 24, 1992, by the Board of
Trustees of THE MONITOR FUNDS (the "Trust"), a Massachusetts business trust,
with respect to certain classes of shares ("Classes") of the portfolios of the
Trust (the "Funds") set forth in exhibits hereto.
1. This Plan is adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940 ("Act"), so as to allow the Trust to make payments as
contemplated herein, in conjunction with the distribution of Classes of the
Funds ("Shares").
2. This Plan is designed to finance activities of Federated Securities
Corporation ("FSC") principally intended to result in the sale of Shares to
include: (a) providing incentive to broker/dealers ("Brokers") to sell Shares
and to provide administrative support services to the Funds and their
shareholders; (b) compensating other participating financial institutions and
other persons ("Administrators") for providing administrative support services
to the Funds and their shareholders; (c) paying for the costs incurred in
conjunction with advertising and marketing of Shares to include expenses of
preparing, printing and distributing prospectuses and sales literature to
prospective shareholders, Brokers or Administrators; and (d) other costs
incurred in the implementation and operation of the Plan. In compensation for
services provided pursuant to this plan FSC will be paid a fee in respect of
the following Classes set forth in the applicable exhibit.
3. Any payment to FSC in accordance with this Plan will be made
pursuant to the "Distributor's Contract" entered into by the Trust and FSC.
Any payments made by FSC to Brokers and Administrators with Funds received as
compensation under this Plan will be made pursuant to the "Rule 12b-1
Agreement" entered into by FSC and the Broker or Administrator.
4. FSC has the right (i) to select, in its sole discretion, the Brokers
and Administrators to participate in the Plan and (ii) to terminate without
cause and in its sole discretion any Rule 12b-1 Agreement.
5. Quarterly in each year that this Plan remains in effect, FSC shall
prepare and furnish to the Board of Trustees of the Trust, and the Board of
Trustees shall review, a written report of the amounts expended under the Plan
and the purpose for which such expenditures were made.
6. This Plan shall become effective with respect to each Class
(i) after approval by majority votes of: (a) the Trust's Board of Trustees;
(b) the Disinterested Trustees of the Trust, cast in person at a meeting
called for the purpose of voting on the Plan; and (c) the outstanding voting
securities of the particular Class, as defined in Section 2(a)(42) of the Act
and (ii) upon execution of an exhibit adopting this Plan with respect to such
Class.
7. This Plan shall remain in effect with respect to each Class
presently set forth on an exhibit and any subsequent Classes added pursuant to
an exhibit during the initial year of this Plan for a period of one year from
the date set forth above and may be continued thereafter if this Plan is
approved with respect to each Class at least annually by a majority of the
Trust's Board of Trustees and a majority of the Disinterested Trustees, cast
in person at a meeting called for the purpose of voting on such Plan. If this
Plan is adopted with respect to a Class after the first annual approval by the
Trustees as described above, this Plan will be effective as to that Class upon
execution of the applicable exhibit pursuant to the provisions of paragraph
6(ii) above and will continue in effect until the next annual approval of this
Plan by the Trustees and thereafter for successive periods of one year subject
to approval as described above.
8. All material amendments to this Plan must be approved by a vote of
the Board of Trustees of the Trust and of the Disinterested Trustees, cast in
person at a meeting called for the purpose of voting on it.
9. This Plan may not be amended in order to increase materially the
costs which the Classes may bear for distribution pursuant to the Plan without
being approved by a majority vote of the outstanding voting securities of the
Classes as defined in Section 2(a)(42) of the Act.
10. This Plan may be terminated with respect to a particular Class at
any time by: (a) a majority vote of the Disinterested Trustees; or (b) a vote
of a majority of the outstanding voting securities of the particular Class as
defined in Section 2(a)(42) of the Act; or (c) by FSC on 60 days notice to the
particular Trust.
11. While this Plan shall be in effect, the selection and nomination of
Disinterested Trustees of the Trust shall be committed to the discretion of
the Disinterested Trustees then in office.
12. All agreements with any person relating to the implementation of
this Plan shall be in writing and any agreement related to this Plan shall
be subject to termination, without penalty, pursuant to the provisions of
Paragraph 10 herein.
13. This Plan shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania.
EXHIBIT A
THE MONITOR FUNDS
The Monitor Mortgage Securities Fund
Investment Shares
The Plan is adopted by The Monitor Funds with respect to the class of
Shares of the portfolio of the Trust set forth above.
In compensation for the services provided pursuant to this Plan, FSC will
be paid a monthly fee computed at the annual rate of .50 of 1% of the average
aggregate net asset value of the Investment Shares of The Monitor Mortgage
Securities Fund held during the month.
Witness the due execution hereof this 24th day of April, 1992.
THE MONITOR FUNDS
By/s/ Ronald M. Petnuch
Vice President
EXHIBIT B
THE MONITOR FUNDS
The Monitor U.S. Treasury Money Market Fund
Investment Shares
The Plan is adopted by The Monitor Funds with respect to the class of
Shares of the portfolio of the Trust set forth above.
In compensation for the services provided pursuant to this Plan, FSC will
be paid a monthly fee computed at the annual rate of .25 of 1% of the average
aggregate net asset value of the Investment Shares of The Monitor U.S.
Treasury Money Market Fund held during the month.
Witness the due execution hereof this 1st day of June, 1993.
THE MONITOR FUNDS
By /s/ Ronald M. Petnuch
Vice President
Exhibit No. 15(ii) under Form N-1A
Exhibit No. 1 under Item 601/Reg. S-K
THE MONITOR FUNDS
PLAN
This Plan ("Plan") is entered into between THE MONITOR FUNDS (the
"Trust"), a Massachusetts business trust, on behalf of the portfolios (the
"Funds") of the Trust and/or the classes of shares (the "Classes") of Funds
set forth in Exhibit A hereto, and FEDERATED SECURITIES CORP. ("FSC"), a
Pennsylvania corporation which acts as principal distributor of shares of the
Trust.
1. The Securities and Exchange Commission adopted Rule 12b-1 under the
Investment Company Act of 1940 ("Act"), regulating the circumstances under
which an investment company may bear expenses associated with the distribution
of shares of open-end management investment companies. The Trustees of the
Trust who are not interested persons of the Trust and have no direct or
indirect financial interest in the operation of the Plan or in any related
documents to this Plan ("Disinterested Trustees") have been advised by legal
counsel that to make payments as contemplated herein, would require the
adoption of a plan pursuant to Rule 12b-1 to avoid the risk that such payments
might be held to violate the Act.
2. This Plan is designed to: (a) stimulate broker/dealers ("Brokers") to
sell shares and to provide administrative support services to the Funds or
Classes and their shareholders; (b) stimulate other persons and participating
financial institutions ("Administrators") to provide administrative support
services to the Funds or Classes and their shareholders; and (c) enable the
Funds or Classes to pay for the costs and expenses of preparing, printing and
distributing prospectuses and sales literature (including those sent to
shareholders, prospective shareholders, Brokers or Administrators) and the
costs of the expenses of the implementation and operation of the Plan. FSC
will pay Brokers and Administrators in respect of shares of the Funds or
Classes a fee as specified in Exhibit A hereto.
3. Any payments made to Brokers and Administrators will be made by FSC
pursuant to the "Distributor's Contract" which is a related document to the
Plan.
4. FSC has the right (i) to select, in its sole discretion, the Brokers
and Administrators to participate in the Plan and (ii) to terminate without
cause and in its sole discretion any Sales Agreement or Rule 12b-1 Agreement.
5. Quarterly in each year that this Plan remains in effect, FSC shall
prepare and furnish to the Board of Trustees of the Trust, and the Board of
Trustees shall review, a written report of the amounts expended under the Plan
and the purposes for which such expenditures were made.
6. This Plan shall become effective with respect to each Fund or Class
(i) after approval by majority votes of: (a) the Trust's Board of Trustees;
(b) the Disinterested Trustees of the Trust, cast in person at a meeting
called for the purpose of voting on the Plan; and (c) the outstanding voting
securities of the particular Fund or Class, as defined in Section 2(a)(42) of
the Act and (ii) upon execution of this Plan (or, in the case of a Fund or
Class that is added to the Trust following the date of such execution, the
date that the Fund or Class is added to Exhibit A hereto).
7. This Plan shall remain in effect with respect to each Fund or Class
for one year from the date of its execution pursuant to the provisions of
paragraph 6(ii) above and may be continued thereafter if this Plan is approved
with respect to each Fund or Class at least annually by a majority of the
Trust's Board of Trustees and a majority of the Disinterested Trustees, cast
in person at a meeting called for the purpose of voting on such Plan.
8. All material amendments to this Plan must be approved by a vote of
the Board of Trustees of the Trust and of the Disinterested Trustees, cast in
person at a meeting called for the purpose of voting on it.
9. This Plan may not be amended in order to increase materially the fees
which the Funds or Classes may bear for distribution pursuant to the Plan
without being approved by a majority vote of the outstanding voting securities
of the Funds or Classes as defined in Section 2(a)(42) of the Act.
10. This Plan may be terminated with respect to a particular Fund or
Class at any time by: (a) a majority vote of the Disinterested Trustees; (b) a
vote of a majority of the outstanding voting securities of the particular Fund
or Class as defined in Section 2(a)(42) of the Act; (c) by FSC on 60 days'
notice to the Trust; or (d) automatically in the event of an assignment as
defined under the Act.
11. While this Plan shall be in effect, the selection and nomination of
Disinterested Trustees of the Trust shall be committed to the discretion of
the Disinterested Trustees then in office.
12. All agreements with any person relating to the implementation of this
Plan shall be in writing and any agreement related to this Plan shall be
subject to termination, without penalty, pursuant to the provisions of
Paragraph 10 herein.
13. This Plan shall be construed in accordance with and governed by the
laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, this Plan has been executed for FSC and the Trust and
their respective seals affixed by their duly authorized officers hereto this
1st day of May, 1991.
THE MONITOR FUNDS
BY: /s/ Edward C. Gonzales
President
FEDERATED SECURITIES CORP.
By: /s/ Richard B. Fisher
President
EXHIBIT A
CLASSES OF THE MONITOR FUNDS
Plan
1. The following classes of shares ("Classes") of The Monitor Funds (the
"Trust") (as defined under the Plan) shall participate in the Plan effective
as of the dates set forth below:
Name Date
The Monitor Money Market Fund
(Investment Shares) May 1, 1991
The Monitor Tax-Free Money Market Fund
(Investment Shares) May 1, 1991
The Monitor U.S. Government Money Market Fund
(Investment Shares) May 1, 1991
The Monitor Growth Fund
(Investment Shares) May 1, 1991
The Monitor Ohio Tax-Free Fund
(Investment Shares) May 1, 1991
The Monitor Fixed Income Securities Fund
(Investment Shares) May 1, 1991
2. FSC shall pay Brokers and Administrators a quarterly fee in respect
of each Class, specified above, computed at an annual rate of .25% of the
average daily net asset value of shares of such Class held during the quarter
in accounts for which such Brokers and Administrators provide services
specified in paragraph 2 of the Plan, such fee shall be accrued daily and paid
quarterly.
Exhibit No. 15(iii) under Form N-1A
Exhibit No. 1 under Item 601/Reg. S-K
SALES AGREEMENT WITH FEDERATED SECURITIES CORP.
This Agreement is entered into between the financial institution executing
this Agreement ("Financial Institution") and Federated Securities Corp.
("FSC") for The Monitor Funds (the "Trust"), which may be offered in one or
more series (the "Funds") and classes (the "Classes") of shares ("Shares"),
for which FSC serves as Distributor of shares of beneficial interest or
capital stock. The Funds or Classes to which this Agreement applies are set
forth in Schedule A hereto.
1. Status of Financial Institution as "Bank" or Registered Broker-Dealer.
The Financial Institution represents and warrants to FSC that:
(a) It is either a "bank" as that term is defined in Section 3(a)(6) of
the Securities Exchange Act of 1934 ("Exchange Act") or a broker-
dealer registered with the Securities and Exchange Commission.
(b) If the Financial Institution is a "bank", it is a duly organized and
validly existing bank in good standing under the laws of the
jurisdiction in which it is organized. The Financial Institution
agrees to give written notice to FSC promptly in the event that it
shall cease to be a "bank" as defined in Section 3(a)(6) of the
Exchange Act. In that event, this Agreement shall be automatically
terminated upon such written notice.
(c) If the Financial Institution is a registered broker-dealer, it is a
member of the NASD and it agrees to abide by all of the rules and
regulations of the NASD including, without limitation, the NASD Rules
of Fair Practice. The Financial Institution agrees to notify FSC
immediately in the event of (1) its expulsion or suspension from the
NASD, or (2) its being found to have violated any applicable federal
or state law, rule or regulation arising out of its activities as a
broker-dealer or in connection with this Agreement, or which may
otherwise affect in any material way its ability to act in accordance
with the terms of this Agreement. The Financial Institution's
expulsion from the NASD will automatically terminate this Agreement
immediately without notice. Suspension of the Financial Institution
from the NASD for violation of any applicable federal or state law,
rule or regulation will terminate this Agreement effective
immediately upon FSC's written notice of termination to the Financial
Institution.
2. Financial Institution Acts as Agent for its Customers.
The parties agree that in each transaction in the Shares of the Trust: (a)
the Financial Institution is acting as agent for the customer; (b) each
transaction is initiated solely upon the order of the customer; (c) as between
the Financial Institution and its customer, the customer will have full
beneficial ownership of all Shares of the Trust to which this Agreement
applies; (d) each transaction shall be for the account of the customer and not
for the Financial Institution's account; and (e) each transaction shall be
without recourse to the Financial Institution provided that the Financial
Institution acts in accordance with the terms of this Agreement. The
Financial Institution shall not have any authority in any transaction to act
as FSC's agent or as agent for the Trust.
3. Execution of Orders for Purchase and Redemption of Shares.
(a) All orders for the purchase of any Shares shall be executed at the
then current public offering price per share (i.e., the net asset
value per share plus the applicable sales load, if any) and all
orders for the redemption of any Shares shall be executed at the net
asset value per share, plus any applicable redemption charge, in each
case as described in the prospectus of the Fund or Class. FSC and
the Trust reserve the right to reject any purchase request at their
sole discretion. If required by law, each transaction shall be
confirmed in writing on a fully disclosed basis and, if confirmed by
FSC, a copy of each confirmation shall be sent simultaneously to the
Financial Institution if the Financial Institution so requests.
(b) The procedures relating to all orders and the handling of them will
be subject to the terms of the prospectus of each Fund or Class and
FSC's written instructions to the Financial Institution from time to
time.
(c) Payments for Shares shall be made as specified in the applicable Fund
or Class prospectus. If payment for any purchase order is not
received in accordance with the terms of the applicable Fund or Class
prospectus, FSC reserves the right, without notice, to cancel the
sale and to hold the Financial Institution responsible for any loss
sustained as a result thereof.
(d) The Financial Institution agrees to provide such security as is
necessary to prevent any unauthorized use of the Trust's
recordkeeping system, accessed via any computer hardware or software
provided to the Financial Institution by FSC.
4. Fees Payable to the Financial Institution from Sales Loads.
(a) On each order accepted by FSC, in exchange for the performance of
sales and/or administrative services, the Financial Institution will
be entitled to receive from the amount paid by the Financial
Institution's customer the applicable percentage of the sales load,
if any, as established by FSC. The sales loads for any Fund or Class
shall be those set forth in its prospectus. The portion of the sales
load payable to the Financial Institution may be changed at any time
at FSC's sole discretion upon thirty (30) days' written notice to the
Financial Institution.
(b) Transactions may be settled by the Financial Institution: (1) by
payment of the full purchase price to FSC less an amount equal to the
Financial Institution's applicable percentage of the sales load, or
(2) by payment of the full purchase price to FSC, in which case FSC
shall pay to the Financial Institution, not less frequently than
monthly, the aggregate fees due it on orders received and settled.
5. Payment of Rule 12b-1 Fees to the Financial Institution.
Subject to and in accordance with the terms of each Fund or Class
prospectus and the Rule 12b-1 Plan, if any, adopted by resolution of the Board
of Trustees, and the shareholders of any Fund or Class pursuant to Rule 12b-1
under the Investment Company Act of 1940, FSC may pay fees for sales and/or
administrative support services to certain financial institutions (such as
banks and securities dealers). The Financial Institution may serve as an
Administrator, in accordance with the terms of the form of Rule 12b-1
Agreement attached as Appendix A, for all of its customers who purchase Shares
of any Funds or Classes whose prospectuses provide for the use of
Administrators.
6. Delivery of Prospectuses to Customers.
The Financial Institution will deliver or cause to be delivered to each
customer, at or prior to the time of any purchase of Shares, a copy of the
prospectus of the Fund or Class. The Financial Institution shall not make any
representations concerning any Shares other than those contained in the
prospectus of the Fund or Class or in any promotional materials or sales
literature furnished to the Financial Institution by FSC or the Fund or Class.
7. Indemnification.
(a) The Financial Institution shall indemnify and hold harmless FSC, the
Trust, the transfer agents of the Trust, and their respective
subsidiaries, affiliates, officers, directors, agents and employees
from all direct or indirect liabilities, losses or costs (including
attorneys fees) arising from, related to or otherwise connected with:
(1) any breach by the Financial Institution of any provision of this
Agreement; or (2) any actions or omissions of FSC, the Trust, the
transfer agents of the Trust, and their subsidiaries, affiliates,
officers, directors, agents and employees in reliance upon any oral,
written or computer or electronically transmitted instructions
believed to be genuine and to have been given by or on behalf of the
Financial Institution.
(b) FSC shall indemnify and hold harmless the Financial Institution and
its subsidiaries, affiliates, officers, directors, agents and
employees from and against any and all direct or indirect
liabilities, losses or costs (including attorneys fees) arising from,
related to or otherwise connected with: (1) any breach by FSC of any
provision of this Agreement; or (2) any alleged untrue statement of a
material fact contained in the Trust's Registration Statement or
Prospectuses, or as a result of or based upon any alleged omission to
state a material fact required to be stated, or necessary to make the
statements not misleading.
(c) The agreement of the parties in this Paragraph to indemnify each
other is conditioned upon the party entitled to indemnification
(Indemnified Party) giving notice to the party required to provide
indemnification (Indemnifying Party) promptly after the summons or
other first legal process for any claim as to which indemnity may be
sought is served on the Indemnified Party. The Indemnified Party
shall permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting from it, provided that counsel for
the Indemnifying Party who shall conduct the defense of such claim or
litigation shall be approved by the Indemnified Party (which approval
shall not unreasonably be withheld), and that the Indemnified Party
may participate in such defense at its expense. The failure of the
Indemnified Party to give notice as provided in this subparagraph (c)
shall not relieve the Indemnifying Party from any liability other
than its indemnity obligation under this Paragraph. No Indemnifying
Party, in the defense of any such claim or litigation, shall, without
the consent of the Indemnified Party, consent to entry of any
judgment or enter into any settlement that does not include as an
unconditional term the giving by the claimant or plaintiff to the
Indemnified Party of a release from all liability in respect to such
claim or litigation.
(d) The provisions of this Paragraph 7 shall survive the termination of
this Agreement.
8. Customer Names Proprietary to the Financial Institution.
(a) The names of the Financial Institution's customers are and shall
remain the Financial Institution's sole property and shall not be
used by FSC or its affiliates for any purpose except the performance
of its duties and responsibilities under this Agreement and except
for servicing and informational mailings relating to the Trust.
Notwithstanding the foregoing, this Paragraph 8 shall not prohibit
FSC or any of its affiliates from utilizing the names of the
Financial Institution's customers for any purpose if the names are
obtained in any manner other than from the Financial Institution
pursuant to this Agreement.
(b) Neither party shall use the name of the other party in any manner
without the other party's written consent, except as required by any
applicable federal or state law, rule or regulation, and except
pursuant to any mutually agreed upon promotional programs.
(c) The provisions of this Paragraph 8 shall survive the termination of
this Agreement.
9. Solicitation of Proxies.
The Financial Institution agrees not to solicit or cause to be solicited
directly, or indirectly, at any time in the future, any proxies from the
shareholders of the Trust in opposition to proxies solicited by management of
the Trust, unless a court of competent jurisdiction shall have determined that
the conduct of a majority of the Board of Trustees of the Trust constitutes
willful misfeasance, bad faith, gross negligence or reckless disregard of
their duties. This Paragraph 9 will survive the term of this Agreement.
10. Certification of Customers' Taxpayer Identification Numbers.
The Financial Institution agrees to obtain any taxpayer identification
number certification from its customers required under Section 3406 of the
Internal Revenue Code, and any applicable Treasury regulations, and to provide
FSC or its designee with timely written notice of any failure to obtain such
taxpayer identification number certification in order to enable the
implementation of any required backup withholding.
11. Notices.
Except as otherwise specifically provided in this Agreement, all notices
required or permitted to be given pursuant to this Agreement shall be given in
writing and delivered by personal delivery or by postage prepaid, registered
or certified United States first class mail, return receipt requested, or by
telex, telegram or similar means of same day delivery (with a confirming copy
by mail as provided herein). Unless otherwise notified in writing, all
notices to FSC shall be given or sent to FSC at its offices located at
Federated Investors Tower, Pittsburgh, PA 15222-3779, and all notices to the
Financial Institution shall be given or sent to it at its address shown below.
12. Termination and Amendment.
(a) This Agreement shall become effective in this form as of the date set
forth below and may be terminated at any time by either party upon
thirty (30) days' prior notice to the other party. This Agreement
supersedes any prior sales agreements between the parties.
(b) This Agreement may be amended by FSC from time to time by the
following procedure. FSC will mail a coy of the amendment to the
Financial Institution's address, as shown below. If the Financial
Institution does not object to the amendment within thirty (30) days
after its receipt, the amendment will become part of the Agreement.
The Financial Institution's objection must be in writing and be
received by FSC within such thirty (30) days.
13. Governing Law.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Pennsylvania.
_____________________________
Financial Institution Name
(Please Print or Type)
_____________________________
Address
_____________________________
City
State Zip Code
Dated:_______________________ By:__________________________
Authorized Signature
_____________________________
Title
_____________________________
Print Name or Type Name
FEDERATED SECURITIES CORP.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-
3779
By:__________________________
Richard B. Fisher, President
SCHEDULE FOR SALES AGREEMENT WITH
FEDERATED SECURITIES CORP.
________, 1991
THE MONITOR FUNDS
Fund and Class of Shares
The Monitor Money Market Fund
(Investment Shares)
The Monitor Tax-Free Money Market Fund
(Investment Shares)
The Monitor U.S. Government Money Market Fund
(Investment Shares)
The Monitor Growth Fund
(Investment Shares)
The Monitor Ohio Tax-Free Fund
(Investment Shares)
The Monitor Fixed Income Securities Fund
(Investment Shares)
SCHEDULE II FOR SALES AGREEMENT WITH
FEDERATED SECURITIES CORP.
April 24, 1992
THE MONITOR FUNDS
Fund and Class of Shares
The Monitor Money Market Fund
(Investment Shares)
The Monitor Ohio Municipal Money Market Fund
(Investment Shares)
The Monitor U.S. Government Money Market Fund
(Investment Shares)
The Monitor Growth Fund
(Investment Shares)
The Monitor Ohio Tax-Free Fund
(Investment Shares)
The Monitor Fixed Income Securities Fund
(Investment Shares)
The Monitor Mortgage Securities Fund
(Investment Shares)
APPENDIX A
RULE 12b-1 AGREEMENT
This Agreement is made between the Financial Institution executing this
Agreement ("Administrator") and Federated Securities Corp. ("FSC") for The
Monitor Funds (the "Trust"), which may be offered in one or more series (the
"Funds") and classes (the "Classes"), for which FSC serves as Distributor of
shares of beneficial interest or capital stock ("Shares") and which have
adopted a Rule 12b-1 Plan ("Plan") and approved this form of agreement
pursuant to Rule 12b-1 under the Investment Company Act of 1940. In
consideration of the mutual covenants hereinafter contained, it is hereby
agreed by and between the parties hereto as follows:
1. FSC hereby appoints Administrator to render or cause to be rendered
sales and administrative support services to the applicable Funds or Classes
and their respective shareholders.
2. The services to be provided under Paragraph 1 may include, but are
not limited to, the following:
(a) communicating account openings through computer terminals located on
the Administrator's premises ("computer terminals"), through a toll-
free telephone number or otherwise;
(b) communicating account closings via the computer terminals, through a
toll-free telephone number or otherwise;
(c) entering purchase transactions through the computer terminals, through
a toll-free telephone number or otherwise;
(d) entering redemption transactions through the computer terminals,
through a toll-free telephone number or otherwise;
(e) electronically transferring and receiving funds for appropriate Share
purchases and redemptions, and confirming and reconciling all such
transactions;
(f) reviewing the activity in applicable accounts;
(g) providing training and supervision of its personnel;
(h) maintaining and distributing current copies of prospectuses and
shareholder reports;
(i) advertising the availability of its services and products as they
relate to the Funds and Classes;
(j) providing assistance and review in designing materials to send to
customers and potential customers and developing methods of making
such materials accessible to customers and potential customers as they
relate to the Funds and Classes; and
(k) responding to customers' and potential customers' questions about the
Funds and Classes.
The services listed above are illustrative. The Administrator is not required
to perform each service and may at any time perform either more or fewer
services than described above.
3. During the term of this Agreement, FSC will pay the Administrator
fees for each Fund and Class as set forth in a written schedule delivered to
the Administrator pursuant to this Agreement. FSC's fee schedule for
Administrator may be changed by FSC sending a new fee schedule to
Administrator pursuant to Paragraph 12 of this Agreement. For the payment
period in which this Agreement becomes effective or terminates, there shall be
an appropriate proration of the fee on the basis of the number of days that
the Rule 12b-1 Agreement is in effect during the quarter.
4. The Administrator will not perform or provide any duties which would
cause it to be a fiduciary under Section 4975 of the Internal Revenue Code, as
amended. For purposes of that Section, the Administrator understands that any
person who exercises any discretionary authority or discretionary control with
respect to any individual retirement account or its assets, or who renders
investment advice for a fee, or has any authority or responsibility to do so,
or has any discretionary authority or discretionary responsibility in the
administration of such an account, is a fiduciary.
5. The Administrator understands that the Department of Labor views
ERISA as prohibiting fiduciaries of discretionary ERISA assets from receiving
administrative service fees or other compensation from funds in which the
fiduciary's discretionary ERISA assets are invested. To date, the Department
of Labor has not issued any exemptive order or advisory opinion that would
exempt fiduciaries from this interpretation. Without specific authorization
from the Department of Labor, fiduciaries should carefully avoid investing
discretionary assets in any fund pursuant to an arrangement where the
fiduciary is to be compensated by the fund for such investment. Receipt of
such compensation could violate ERISA provisions against fiduciary self-
dealing and conflict of interest and could subject the fiduciary to
substantial penalties.
6. The Administrator agrees not to solicit or cause to be solicited
directly, or indirectly at any time in the future, any proxies from the
shareholders of the Trust in opposition to proxies solicited by management of
the Trust, unless a court of competent jurisdiction shall have determined that
the conduct of a majority of the Board of Trustees of the Trust constitutes
willful misfeasance, bad faith, gross negligence or reckless disregard of
their duties. This paragraph 6 will survive the term of this Agreement.
7. With respect to each Fund and Class, this Agreement shall continue in
effect for one year from the date of its execution, and thereafter for
successive periods of one year if the form of this Agreement is approved at
least annually by the Trustees of the Trust, including a majority of the
members of the Board of Trustees of the Trust who are not interested persons
of the Trust and have no direct or indirect financial interest in the
operation of the Trust's Plan or in any related documents to the Plan
("Disinterested Trustees") cast in person at a meeting called for that
purpose.
8. Notwithstanding paragraph 7, this Agreement may be terminated as
follows:
(a) at any time, without the payment of any penalty, by the vote of a
majority of the Disinterested Trustees of the Trust or by a vote of a
majority of the outstanding voting securities of the appropriate Fund
or Class as defined in the Investment Company Act of 1940 on not more
than sixty (60) days' written notice to the parties to this Agreement;
(b) automatically in the event of the Agreement's assignment as defined in
the Investment Company Act of 1940 or upon the termination of the
"Distributor's Contract" between the Trust and FSC; and
(c) by either party to the Agreement without cause by giving the other
party at least sixty (60) days' written notice of its intention to
terminate.
9. The termination of this Agreement with respect to any one Fund or
Class will not cause the Agreement's termination with respect to any other
Fund or Class.
10. The Administrator agrees to obtain any taxpayer identification number
certification from its customers required under Section 3406 of the Internal
Revenue Code, and any applicable Treasury regulations, and to provide FSC or
its designee with timely written notice of any failure to obtain such taxpayer
identification number certification in order to enable the implementation of
any required backup withholding.
11. This Agreement supersedes any prior service agreements between the
parties for the Trust.
12. This Agreement may be amended by FSC from time to time by the
following procedure. FSC will mail a copy of the amendment to the
Administrator's address, as shown below. If the Administrator does not object
to the amendment within thirty (30) days after its receipt, the amendment will
become part of the Agreement. The Administrator's objection must be in
writing and be received by FSC within such thirty days.
13. This Agreement shall be construed in accordance with the Laws of the
Commonwealth of Pennsylvania.
_____________________________
Administrator
(Please Print or Type)
_____________________________
Address
_____________________________
City
State Zip Code
Dated:_______________________ By:__________________________
Authorized Signature
_____________________________
Title
_____________________________
Print Name of Authorized
Signature
FEDERATED SECURITIES CORP.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-
3779
By:__________________________
Richard B. Fisher, President
FEE SCHEDULE FOR RULE 12b-1 AGREEMENT WITH
FEDERATED SECURITIES CORP.
__________, 1991
THE MONITOR FUNDS
FSC will pay the Financial Institution a quarterly fee for the following
Funds and Classes computed at an annual rate of .25 of 1% of the average net
asset value of Shares held in each of these Funds and Classes during the
quarter in accounts for which the Financial Institution provides services
under the Sales Agreement, so long as the average net asset value of the
Shares in the Funds and Classes during the month is at least $100,000. Such
fee shall be accrued daily and paid quarterly. For the quarter in which the
Sales Agreement becomes effective or terminates, there shall be an appropriate
proration of the fee on the basis of the number of days that the Sales
Agreement is in effect during the quarter.
Fund and Class of Shares
The Monitor Money Market Fund
(Investment Shares)
The Monitor Tax-Free Money Market Fund
(Investment Shares)
The Monitor U.S. Government Money Market Fund
(Investment Shares)
The Monitor Growth Fund
(Investment Shares)
The Monitor Ohio Tax-Free Fund
(Investment Shares)
The Monitor Fixed Income Securities Fund
(Investment Shares)
FEE SCHEDULE II FOR RULE 12b-1 AGREEMENT WITH
FEDERATED SECURITIES CORP.
April 24, 1992
THE MONITOR FUNDS
FSC will pay the Financial Institution a quarterly fee for the following
Funds and Classes computed at an annual rate as set forth below based on the
average net asset value of Shares held in each of these Funds and Classes
during the quarter in accounts for which the Financial Institution provides
services under the Sales Agreement, so long as the average net asset value of
the Shares in the Funds and Classes during the month is at least $100,000.
Such fee shall be accrued daily and paid quarterly. For the quarter in which
the Sales Agreement becomes effective or terminates, there shall be an
appropriate proration of the fee on the basis of the number of days that the
Sales Agreement is in effect during the quarter.
Fund and Class of Shares Rate of Fee
The Monitor Money Market Fund .25 of 1%
(Investment Shares)
The Monitor Ohio Municipal Money Market Fund .25 of 1%
(Investment Shares)
The Monitor U.S. Government Money Market Fund .25 of 1%
(Investment Shares)
The Monitor Growth Fund .25 of 1%
(Investment Shares)
The Monitor Ohio Tax-Free Fund .25 of 1%
(Investment Shares)
The Monitor Fixed Income Securities Fund .25 of 1%
(Investment Shares)
The Monitor Mortgage Securities Fund .50 of 1%
(Investment Shares)
Exhibit No. 18 under Form N-1A
THE MONITOR FUNDS
MULTIPLE CLASS PLAN
This Multiple Class Plan ("Plan") is adopted by THE MONITOR FUNDS
(the "Trust"), a Massachusetts Business Trust with respect to the
classes of shares ("Classes") of the portfolios of the Trust (the
"Funds") set forth in exhibits hereto.
Purpose
1. This Plan is adopted pursuant to Rule 18f-3 under the Investment
Company Act of 1940, as amended (the "Rule"), so as to allow the
Trust to issue more than one class of shares of any or all of the
Funds ("Covered Classes") in reliance on the Rule and to make
payments as contemplated herein.
2. Separate Arrangements/Class Differences
a. Designation of Classes: The Funds set forth on Exhibit A offer
two classes of shares: Investment Shares and Trust Shares.
b. Sales Load and Expenses: Purchases of Investment Shares are
subject to a sales load as described in the Investment Shares
Prospectus. The only expenses allocated to Investment Shares as a
class are the expenses incurred under the applicable distribution
plan adopted pursuant to Rule 12b-1.
c. Distribution of Shares: Investment Shares may be purchased
through The Huntington Investment Company, Huntington Personal
Bankers or the Mutual Fund Services Center as well as from the
Distributor. Quantity discounts, accumulated purchases, concurrent
purchases, purchases in conjunction with a letter of intent,
reinstatement privileges, systematic withdrawal and purchases at net
asset value as they relate to Investment Shares, are as described in
the applicable prospectus. Trust Shares may be purchased through
procedures established by the Distributor in connection with the
requirements of fiduciary, advisory, agency and other similar
accounts maintained by or on behalf of customers of Huntington Bank
or its affiliates or correspondent banks.
d. Minimum Investment Amounts: The minimum investments in the
Covered Classes is $1,000.00 with minimum subsequent investments set
at $50.00 for Investment Shares and $500.00 for Trust Shares.
e. Voting Rights: Shareholders of each class are entitled to one
vote for each share held on the record date for any action requiring
a vote by the shareholders and a proportionate fractional vote for
each fractional share held. Shareholders of the Trust will vote in
the aggregate and not by Fund or class except (i) as otherwise
expressly required by law or when the Trustees determine that the
matter to be voted upon affects only the interests of the
shareholders of a particular Fund or class, and (ii) only holders of
Investment Shares will be entitled to vote on matters submitted to
shareholder vote with respect to the Rule 12b-1 Plan applicable to
such class.
3. Expense allocations
The expenses incurred pursuant to the Rule 12b-1 Plan will be borne
solely by the Investment Shares class of the applicable Fund, and
constitute the only expenses allocated to one class and not the
other.
4. Exchange Features
Shareholders may exchange Trust Shares in any Fund for Trust Shares
in any other Fund at the respective net asset value next determined
after receipt of the request in good order. Shareholders may
exchange Investment Shares in any Fund for Investment Shares in any
other Fund offering Investment Shares at the respective net asset
value next determined after receipt of the request in good order,
plus any applicable sales charge. No sales charge applies when
Investment Shares are exchanged from a Fund that imposes a sales
charge to a Fund with no sales charge. If a shareholder seeks to
exchange Investment Shares of a Fund that does not impose a sales
charge for Investment Shares of a Fund that imposes a sales charge,
the shareholder will be required to pay the applicable sales charge
of the Fund into which the Investment Shares are exchanged. In all
cases, shareholders will be required to pay a sales charge only
once.
Effectiveness
5. This Plan shall become effective with respect to each class, (i) to
the extent required by the Rule, after approval by a majority vote
of: (a) the Trust's Board of Trustees ; (b) the members of the Board
of the Trust who are not interested persons of the Trust and have no
direct or indirect financial interest in the operation of the
Trust's Plan , and/or (ii) upon execution of an exhibit adopting
this Plan with respect to such class.
EXHIBIT A
to the
Multiple Class Plan
THE MONITOR FUNDS
Investment Shares
Trust Shares
The Monitor Money Market Fund
The Monitor Ohio Municipal Money Market Fund
The Monitor U.S. Treasury Money Market Fund
The Monitor Growth Fund
The Monitor Mortgage Securities Fund
The Monitor Ohio Tax-Free Fund
The Monitor Fixed Income Securities Fund
This Multiple Class Plan is adopted by The Monitor Funds with
respect to the Class(es) of Shares of the portfolio of The Monitor
Funds set forth above.
Witness the due execution here of this April 18, 1995.
The Monitor Funds
By: /s/ Edward C. Gonzales
Title: President
Date: April 18, 1995
Exhibit No. 19 under Form N-1A
Exhibit No. 24 under Item 601/Reg. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretary of The Monitor Funds and the
Assistant General Counsel of Federated Investors, and each of them, their true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution for them and in their names, place and stead, in any and all
capacities, to sign any and all documents to be filed with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, the Securities
Exchange Act of 1934 and the Investment Company Act of 1940, by means of the
EDGAR; and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to sign and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as each of them might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by
virtue thereof.
SIGNATURES TITLE DATE
/s/ Edward C. Gonzales President and Treasurer February 10, 1992
Edward C. Gonzales (Chief Executive Officer,
Principal Financial and
Accounting Officer)
/s/ David S. Shoedinger Trustee February 10, 1992
David S. Shoedinger
/s/ William R. Wise Trustee February 10, 1992
William R. Wise
/s/ John M. Shary Trustee February 10, 1992
John M. Shary
Sworn to and subscribed before me this 10th day of February, 1992
/s/ Elaine T. Polens
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> Monitor Fixed Income Securities Fund
Trust Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Dec-31-1994
<INVESTMENTS-AT-COST> 122,726,481
<INVESTMENTS-AT-VALUE> 119,101,104
<RECEIVABLES> 2,152,751
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 121,253,855
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 178,595
<TOTAL-LIABILITIES> 178,595
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 126,402,795
<SHARES-COMMON-STOCK> 6,049,873
<SHARES-COMMON-PRIOR> 5,087,801
<ACCUMULATED-NII-CURRENT> 99,550
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,801,318)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,625,376)
<NET-ASSETS> 119,116,886
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,122,104
<OTHER-INCOME> 0
<EXPENSES-NET> 877,815
<NET-INVESTMENT-INCOME> 7,244,289
<REALIZED-GAINS-CURRENT> (1,801,318)
<APPREC-INCREASE-CURRENT> (10,946,585)
<NET-CHANGE-FROM-OPS> (5,503,613)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,377,469
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,499,552
<NUMBER-OF-SHARES-REDEEMED> 685,323
<SHARES-REINVESTED> 147,843
<NET-CHANGE-IN-ASSETS> 6,409,529
<ACCUMULATED-NII-PRIOR> 375,480
<ACCUMULATED-GAINS-PRIOR> (9,646)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 578,719
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 919,748
<AVERAGE-NET-ASSETS> 115,841,300
<PER-SHARE-NAV-BEGIN> 22.030
<PER-SHARE-NII> 1.280
<PER-SHARE-GAIN-APPREC> (2.280)
<PER-SHARE-DIVIDEND> 1.340
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 19.690
<EXPENSE-RATIO> 75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> Monitor Fixed Income Securities Fund
Investment Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Dec-31-1994
<INVESTMENTS-AT-COST> 122,726,481
<INVESTMENTS-AT-VALUE> 119,101,104
<RECEIVABLES> 2,152,751
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 121,253,855
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 178,595
<TOTAL-LIABILITIES> 178,595
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 126,402,795
<SHARES-COMMON-STOCK> 99,433
<SHARES-COMMON-PRIOR> 116,324
<ACCUMULATED-NII-CURRENT> 99,550
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,801,318)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,625,376)
<NET-ASSETS> 1,958,374
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,122,104
<OTHER-INCOME> 0
<EXPENSES-NET> 877,815
<NET-INVESTMENT-INCOME> 7,244,289
<REALIZED-GAINS-CURRENT> (1,801,318)
<APPREC-INCREASE-CURRENT> (10,946,585)
<NET-CHANGE-FROM-OPS> (5,503,613)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 142,751
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 27,382
<NUMBER-OF-SHARES-REDEEMED> 49,838
<SHARES-REINVESTED> 5,564
<NET-CHANGE-IN-ASSETS> 6,409,529
<ACCUMULATED-NII-PRIOR> 375,480
<ACCUMULATED-GAINS-PRIOR> (9,646)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 578,719
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 919,748
<AVERAGE-NET-ASSETS> 115,841,300
<PER-SHARE-NAV-BEGIN> 22.040
<PER-SHARE-NII> 1.230
<PER-SHARE-GAIN-APPREC> (2.290)
<PER-SHARE-DIVIDEND> 1.280
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 19.700
<EXPENSE-RATIO> 100
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> Monitor Growth Fund
Trust Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Dec-31-1994
<INVESTMENTS-AT-COST> 91,222,901
<INVESTMENTS-AT-VALUE> 107,352,887
<RECEIVABLES> 478,662
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 107,831,549
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,156,797
<TOTAL-LIABILITIES> 1,156,797
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 90,516,831
<SHARES-COMMON-STOCK> 3,933,482
<SHARES-COMMON-PRIOR> 4,187,307
<ACCUMULATED-NII-CURRENT> 27,826
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 16,129,985
<NET-ASSETS> 103,463,267
<DIVIDEND-INCOME> 2,367,214
<INTEREST-INCOME> 221,303
<OTHER-INCOME> 0
<EXPENSES-NET> 955,599
<NET-INVESTMENT-INCOME> 1,632,918
<REALIZED-GAINS-CURRENT> 289,204
<APPREC-INCREASE-CURRENT> 380,849
<NET-CHANGE-FROM-OPS> 2,302,971
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,568,363
<DISTRIBUTIONS-OF-GAINS> 280,620
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 718,374
<NUMBER-OF-SHARES-REDEEMED> 992,937
<SHARES-REINVESTED> 20,738
<NET-CHANGE-IN-ASSETS> 6,862,107
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (2,045)
<OVERDISTRIB-NII-PRIOR> (31,191)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 647,947
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 996,539
<AVERAGE-NET-ASSETS> 108,082,508
<PER-SHARE-NAV-BEGIN> 26.170
<PER-SHARE-NII> 0.390
<PER-SHARE-GAIN-APPREC> 0.210
<PER-SHARE-DIVIDEND> 0.400
<PER-SHARE-DISTRIBUTIONS> 0.070
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 26.300
<EXPENSE-RATIO> 88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> Monitor Growth Fund
Investment Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Dec-31-1994
<INVESTMENTS-AT-COST> 91,222,901
<INVESTMENTS-AT-VALUE> 107,352,887
<RECEIVABLES> 478,662
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 107,831,549
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,156,797
<TOTAL-LIABILITIES> 1,156,797
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 90,516,831
<SHARES-COMMON-STOCK> 122,071
<SHARES-COMMON-PRIOR> 151,376
<ACCUMULATED-NII-CURRENT> 27,826
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 16,129,985
<NET-ASSETS> 3,211,485
<DIVIDEND-INCOME> 2,367,214
<INTEREST-INCOME> 221,303
<OTHER-INCOME> 0
<EXPENSES-NET> 955,599
<NET-INVESTMENT-INCOME> 1,632,918
<REALIZED-GAINS-CURRENT> 289,204
<APPREC-INCREASE-CURRENT> 380,849
<NET-CHANGE-FROM-OPS> 2,302,971
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 42,488
<DISTRIBUTIONS-OF-GAINS> 8,599
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15,472
<NUMBER-OF-SHARES-REDEEMED> 46,679
<SHARES-REINVESTED> 1,903
<NET-CHANGE-IN-ASSETS> 6,862,107
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (2,045)
<OVERDISTRIB-NII-PRIOR> (31,191)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 647,947
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 996,539
<AVERAGE-NET-ASSETS> 108,082,508
<PER-SHARE-NAV-BEGIN> 26.160
<PER-SHARE-NII> 0.330
<PER-SHARE-GAIN-APPREC> 0.220
<PER-SHARE-DIVIDEND> 0.330
<PER-SHARE-DISTRIBUTIONS> 0.070
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 26.310
<EXPENSE-RATIO> 113
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> Monitor Income Equity Fund
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Dec-31-1994
<INVESTMENTS-AT-COST> 105,568,000
<INVESTMENTS-AT-VALUE> 114,551,000
<RECEIVABLES> 978,000
<ASSETS-OTHER> 2,000
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 115,531,000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 132,000
<TOTAL-LIABILITIES> 132,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 106,561,000
<SHARES-COMMON-STOCK> 5,263,000
<SHARES-COMMON-PRIOR> 5,844,307
<ACCUMULATED-NII-CURRENT> 145,000
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (290,000)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,983,000
<NET-ASSETS> 115,399,000
<DIVIDEND-INCOME> 4,717,000
<INTEREST-INCOME> 1,254,000
<OTHER-INCOME> 0
<EXPENSES-NET> 1,056,000
<NET-INVESTMENT-INCOME> 4,915,000
<REALIZED-GAINS-CURRENT> (290,000)
<APPREC-INCREASE-CURRENT> (7,216,000)
<NET-CHANGE-FROM-OPS> (2,591,000)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,805,000
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 610,000
<NUMBER-OF-SHARES-REDEEMED> 1,262,000
<SHARES-REINVESTED> 70,000
<NET-CHANGE-IN-ASSETS> (20,219,000)
<ACCUMULATED-NII-PRIOR> 35,451
<ACCUMULATED-GAINS-PRIOR> (265)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 754,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,056,000
<AVERAGE-NET-ASSETS> 125,808,205
<PER-SHARE-NAV-BEGIN> 23.210
<PER-SHARE-NII> 0.880
<PER-SHARE-GAIN-APPREC> (1.290)
<PER-SHARE-DIVIDEND> 0.870
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 21.930
<EXPENSE-RATIO> 84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> Monitor Money Market Fund
Trust Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Dec-31-1994
<INVESTMENTS-AT-COST> 330,796,000
<INVESTMENTS-AT-VALUE> 330,796,000
<RECEIVABLES> 217,000
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 331,013,000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,579,000
<TOTAL-LIABILITIES> 1,579,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 329,434,000
<SHARES-COMMON-STOCK> 287,805,000
<SHARES-COMMON-PRIOR> 337,276,401
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 287,805,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 14,467,000
<OTHER-INCOME> 0
<EXPENSES-NET> 1,745,000
<NET-INVESTMENT-INCOME> 12,722,000
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 12,722,000
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 11,713,000
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 593,566,000
<NUMBER-OF-SHARES-REDEEMED> 643,060,000
<SHARES-REINVESTED> 23,000
<NET-CHANGE-IN-ASSETS> (29,426,000)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,019,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,818,000
<AVERAGE-NET-ASSETS> 339,528,810
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.040
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.040
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 51
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> Monitor Money Market Fund
Investment Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Dec-31-1994
<INVESTMENTS-AT-COST> 330,796,000
<INVESTMENTS-AT-VALUE> 330,796,000
<RECEIVABLES> 217,000
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 331,013,000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,579,000
<TOTAL-LIABILITIES> 1,579,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 329,434,000
<SHARES-COMMON-STOCK> 41,629,000
<SHARES-COMMON-PRIOR> 21,583,178
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 41,629,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 14,467,000
<OTHER-INCOME> 0
<EXPENSES-NET> 1,745,000
<NET-INVESTMENT-INCOME> 12,722,000
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 12,722,000
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,009,000
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 62,107,000
<NUMBER-OF-SHARES-REDEEMED> 42,989,000
<SHARES-REINVESTED> 927,000
<NET-CHANGE-IN-ASSETS> (29,426,000)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,019,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,818,000
<AVERAGE-NET-ASSETS> 339,528,810
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.040
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.040
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> Monitor Mortgage Securities Fund
Trust Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Dec-31-1994
<INVESTMENTS-AT-COST> 101,420,000
<INVESTMENTS-AT-VALUE> 77,897,000
<RECEIVABLES> 5,499,000
<ASSETS-OTHER> 36,000
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 83,432,000
<PAYABLE-FOR-SECURITIES> 5,027,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19,982,000
<TOTAL-LIABILITIES> 25,009,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 92,849,000
<SHARES-COMMON-STOCK> 8,099,000
<SHARES-COMMON-PRIOR> 9,110,302
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (62,000)
<ACCUMULATED-NET-GAINS> (10,841,000)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (23,523,000)
<NET-ASSETS> 54,164,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9,318,000
<OTHER-INCOME> 0
<EXPENSES-NET> 700,000
<NET-INVESTMENT-INCOME> 8,618,000
<REALIZED-GAINS-CURRENT> (10,599,000)
<APPREC-INCREASE-CURRENT> (21,638,000)
<NET-CHANGE-FROM-OPS> (23,619,000)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8,255,000
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 139,000
<NUMBER-OF-SHARES-SOLD> 799,000
<NUMBER-OF-SHARES-REDEEMED> 2,188,000
<SHARES-REINVESTED> 378,000
<NET-CHANGE-IN-ASSETS> (40,571,000)
<ACCUMULATED-NII-PRIOR> 425,663
<ACCUMULATED-GAINS-PRIOR> (242,157)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 387,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 809,000
<AVERAGE-NET-ASSETS> 77,433,481
<PER-SHARE-NAV-BEGIN> 9.930
<PER-SHARE-NII> 0.890
<PER-SHARE-GAIN-APPREC> (3.190)
<PER-SHARE-DIVIDEND> 0.920
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.020
<PER-SHARE-NAV-END> 6.690
<EXPENSE-RATIO> 88
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> Monitor Mortgage Securities Fund
Investment Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Dec-31-1994
<INVESTMENTS-AT-COST> 101,420,000
<INVESTMENTS-AT-VALUE> 77,897,000
<RECEIVABLES> 5,499,000
<ASSETS-OTHER> 36,000
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 83,432,000
<PAYABLE-FOR-SECURITIES> 5,027,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19,982,000
<TOTAL-LIABILITIES> 25,009,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 92,849,000
<SHARES-COMMON-STOCK> 636,000
<SHARES-COMMON-PRIOR> 858,335
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (62,000)
<ACCUMULATED-NET-GAINS> (10,841,000)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (23,523,000)
<NET-ASSETS> 4,259,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9,318,000
<OTHER-INCOME> 0
<EXPENSES-NET> 700,000
<NET-INVESTMENT-INCOME> 8,618,000
<REALIZED-GAINS-CURRENT> (10,599,000)
<APPREC-INCREASE-CURRENT> (21,638,000)
<NET-CHANGE-FROM-OPS> (23,619,000)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 712,000
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 79,000
<NUMBER-OF-SHARES-REDEEMED> 368,000
<SHARES-REINVESTED> 67,000
<NET-CHANGE-IN-ASSETS> (40,571,000)
<ACCUMULATED-NII-PRIOR> 425,663
<ACCUMULATED-GAINS-PRIOR> (242,157)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 387,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 809,000
<AVERAGE-NET-ASSETS> 77,433,481
<PER-SHARE-NAV-BEGIN> 9.940
<PER-SHARE-NII> 0.880
<PER-SHARE-GAIN-APPREC> (3.200)
<PER-SHARE-DIVIDEND> 0.920
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 6.700
<EXPENSE-RATIO> 113
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> Monitor Ohio Municipal Money Market Fund
Trust Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Dec-31-1994
<INVESTMENTS-AT-COST> 76,611,000
<INVESTMENTS-AT-VALUE> 76,611,000
<RECEIVABLES> 427,000
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 77,038,000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 280,000
<TOTAL-LIABILITIES> 280,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 76,758,000
<SHARES-COMMON-STOCK> 39,624,000
<SHARES-COMMON-PRIOR> 40,141,321
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 39,624,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,945,000
<OTHER-INCOME> 0
<EXPENSES-NET> 337,000
<NET-INVESTMENT-INCOME> 1,608,000
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,608,000
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 882,000
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 70,571,000
<NUMBER-OF-SHARES-REDEEMED> 71,095,000
<SHARES-REINVESTED> 5,000
<NET-CHANGE-IN-ASSETS> 16,305,000
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 206,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 469,000
<AVERAGE-NET-ASSETS> 68,427,537
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.020
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.020
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> Monitor Ohio Municipal Money Market Fund
Investment Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Dec-31-1994
<INVESTMENTS-AT-COST> 76,611,000
<INVESTMENTS-AT-VALUE> 76,611,000
<RECEIVABLES> 427,000
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 77,038,000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 280,000
<TOTAL-LIABILITIES> 280,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 76,758,000
<SHARES-COMMON-STOCK> 37,134,000
<SHARES-COMMON-PRIOR> 20,311,762
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 37,134,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,945,000
<OTHER-INCOME> 0
<EXPENSES-NET> 337,000
<NET-INVESTMENT-INCOME> 1,608,000
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,608,000
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 726,000
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 89,672,000
<NUMBER-OF-SHARES-REDEEMED> 73,040,000
<SHARES-REINVESTED> 192,000
<NET-CHANGE-IN-ASSETS> 16,305,000
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 206,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 469,000
<AVERAGE-NET-ASSETS> 68,427,537
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.020
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.020
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> Monitor Ohio Tax-Free Fund
Trust Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Dec-31-1994
<INVESTMENTS-AT-COST> 58,571,000
<INVESTMENTS-AT-VALUE> 58,335,000
<RECEIVABLES> 510,000
<ASSETS-OTHER> 3,000
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 58,848,000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 72,000
<TOTAL-LIABILITIES> 72,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 58,980,000
<SHARES-COMMON-STOCK> 2,755,000
<SHARES-COMMON-PRIOR> 2,701,297
<ACCUMULATED-NII-CURRENT> 32,000
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (236,000)
<NET-ASSETS> 56,469,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,270,000
<OTHER-INCOME> 0
<EXPENSES-NET> 467,000
<NET-INVESTMENT-INCOME> 2,803,000
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (4,412,000)
<NET-CHANGE-FROM-OPS> (1,609,000)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,670,000
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 830,000
<NUMBER-OF-SHARES-REDEEMED> 783,000
<SHARES-REINVESTED> 6,000
<NET-CHANGE-IN-ASSETS> (3,603,000)
<ACCUMULATED-NII-PRIOR> 13,648
<ACCUMULATED-GAINS-PRIOR> (18)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 300,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 494,000
<AVERAGE-NET-ASSETS> 59,916,068
<PER-SHARE-NAV-BEGIN> 22.040
<PER-SHARE-NII> 0.990
<PER-SHARE-GAIN-APPREC> (1.550)
<PER-SHARE-DIVIDEND> 0.980
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 20.500
<EXPENSE-RATIO> 77
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> Monitor Ohio Tax-Free Fund
Investment Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Dec-31-1994
<INVESTMENTS-AT-COST> 58,571,000
<INVESTMENTS-AT-VALUE> 58,335,000
<RECEIVABLES> 510,000
<ASSETS-OTHER> 3,000
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 58,848,000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 72,000
<TOTAL-LIABILITIES> 72,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 58,980,000
<SHARES-COMMON-STOCK> 112,000
<SHARES-COMMON-PRIOR> 128,742
<ACCUMULATED-NII-CURRENT> 32,000
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (236,000)
<NET-ASSETS> 2,307,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,270,000
<OTHER-INCOME> 0
<EXPENSES-NET> 467,000
<NET-INVESTMENT-INCOME> 2,803,000
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (4,412,000)
<NET-CHANGE-FROM-OPS> (1,609,000)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 115,000
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20,000
<NUMBER-OF-SHARES-REDEEMED> 41,000
<SHARES-REINVESTED> 4,000
<NET-CHANGE-IN-ASSETS> (3,603,000)
<ACCUMULATED-NII-PRIOR> 13,648
<ACCUMULATED-GAINS-PRIOR> (18)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 300,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 494,000
<AVERAGE-NET-ASSETS> 59,916,068
<PER-SHARE-NAV-BEGIN> 22.040
<PER-SHARE-NII> 0.940
<PER-SHARE-GAIN-APPREC> (1.560)
<PER-SHARE-DIVIDEND> 0.920
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 20.500
<EXPENSE-RATIO> 102
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 14
<NAME> Monitor Short-Intermediate Fixed Income
Sec. F
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Dec-31-1994
<INVESTMENTS-AT-COST> 129,743,000
<INVESTMENTS-AT-VALUE> 125,362,000
<RECEIVABLES> 2,521,000
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 127,883,000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,771,000
<TOTAL-LIABILITIES> 2,771,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 129,577,000
<SHARES-COMMON-STOCK> 6,536,000
<SHARES-COMMON-PRIOR> 6,022,838
<ACCUMULATED-NII-CURRENT> 116,000
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (200,000)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (4,381,000)
<NET-ASSETS> 125,112,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,219,000
<OTHER-INCOME> 0
<EXPENSES-NET> 914,000
<NET-INVESTMENT-INCOME> 7,305,000
<REALIZED-GAINS-CURRENT> (200,000)
<APPREC-INCREASE-CURRENT> (8,318,000)
<NET-CHANGE-FROM-OPS> (1,213,000)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,912,000
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,732,000
<NUMBER-OF-SHARES-REDEEMED> 1,383,000
<SHARES-REINVESTED> 164,000
<NET-CHANGE-IN-ASSETS> 1,215,000
<ACCUMULATED-NII-PRIOR> 723,391
<ACCUMULATED-GAINS-PRIOR> (29,398)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 636,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 914,000
<AVERAGE-NET-ASSETS> 127,261,064
<PER-SHARE-NAV-BEGIN> 20.570
<PER-SHARE-NII> 1.130
<PER-SHARE-GAIN-APPREC> (1.330)
<PER-SHARE-DIVIDEND> 1.230
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 19.140
<EXPENSE-RATIO> 72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 15
<NAME> Monitor U.S. Treasury Money Market Fund
Trust Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Dec-31-1994
<INVESTMENTS-AT-COST> 277,945,000
<INVESTMENTS-AT-VALUE> 277,945,000
<RECEIVABLES> 168,000
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 278,113,000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,185,000
<TOTAL-LIABILITIES> 1,185,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 276,928,000
<SHARES-COMMON-STOCK> 256,538,000
<SHARES-COMMON-PRIOR> 231,125,253
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 256,538,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10,342,000
<OTHER-INCOME> 0
<EXPENSES-NET> 1,052,000
<NET-INVESTMENT-INCOME> 9,290,000
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 9,290,000
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9,022,000
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 535,341,000
<NUMBER-OF-SHARES-REDEEMED> 509,942,000
<SHARES-REINVESTED> 16,000
<NET-CHANGE-IN-ASSETS> 44,857,000
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 495,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,121,000
<AVERAGE-NET-ASSETS> 247,468,405
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.040
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.040
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 42
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 16
<NAME> Monitor U.S. Treasury Money Market Fund
Investment Shares
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Dec-31-1994
<INVESTMENTS-AT-COST> 277,945,000
<INVESTMENTS-AT-VALUE> 277,945,000
<RECEIVABLES> 168,000
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 278,113,000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,185,000
<TOTAL-LIABILITIES> 1,185,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 276,928,000
<SHARES-COMMON-STOCK> 20,390,000
<SHARES-COMMON-PRIOR> 948,149
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 20,390,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10,342,000
<OTHER-INCOME> 0
<EXPENSES-NET> 1,052,000
<NET-INVESTMENT-INCOME> 9,290,000
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 9,290,000
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 268,000
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 34,167,000
<NUMBER-OF-SHARES-REDEEMED> 14,940,000
<SHARES-REINVESTED> 215,000
<NET-CHANGE-IN-ASSETS> 44,857,000
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 495,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,121,000
<AVERAGE-NET-ASSETS> 247,468,405
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.040
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.040
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 52
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
