<PAGE>
As filed with the Securities and Exchange Commission on April 26, 1996
Registration Nos. 33-11905, 811-5010
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 20 [X]
and
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 22 [X]
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 OHIO TAX-FREE FUND, THE MONITOR FIXED INCOME
SECURITIES FUND, THE MONITOR SHORT/INTERMEDIATE FIXED INCOME
SECURITIES FUND and THE MONITOR MORTGAGE SECURITIES FUND
each a Series of
MONITOR FUNDS
(Exact Name of Registrant as Specified in Charter)
680 East Swedesford Road
Wayne, Pennsylvania 19087
(Address of Principal Executive Office)
(610) 254-1000
(Registrant's Telephone Number, Including Area Code)
David G. Lee, Senior Vice President
SEI Financial Management Corporation
680 East Swedesford Road
Wayne, Pennsylvania 19087
(Name and Address of Agent for Service)
Copy to:
Bradley J. Schram
Hertz, Schram & Saretsky, P.C.
1760 Telegraph Road, Suite 300
Bloomfield Hills, Michigan 48302-0183
- -------------------------------------------------------------------------------
It is proposed that this filing will become effective (check appropriate box):
[ ] 60 days after filing pursuant to Rule 485(a)(1), or
[ ] On , 199 , pursuant to Rule 485(a)(1), or
[ ] 75 days after filing pursuant to Rule 485(a)(2), or
[ ] On , 199 , pursuant to Rule 485(a)(2).
[ ] Immediately upon filing pursuant to Rule 485(b), or
[X] On April 30, 1996, pursuant to Rule 485(b)
- -------------------------------------------------------------------------------
The Registrant has previously registered an indefinite number of shares pursuant
to Rule 24f-2 under the Investment Company Act of 1940. The Registrant filed its
Rule 24f-2 Notice for the fiscal year ended December 31, 1995, on February 20,
1996.
<PAGE>
CROSS REFERENCE SHEET
The portfolios listed on the Cover Page are offered in either one or two
separate classes of shares known as Trust Shares or Investment Shares. All of
the Funds offer Trust Shares, while all of the Funds except The Monitor Income
Equity Fund and The Monitor Short/Intermediate Fixed Income Securities Fund
offer Investment Shares. This Cross-Reference Sheet includes information
relating to each Class of each Fund to facilitate the cross-reference process.
Form N-1A Part A Item Location in Prospectus
- --------------------- ----------------------
Item 1. Cover Page.............. Cover Page
Item 2. Synopsis................ Summary; Fee Table and Example
Item 3. Condensed Financial
Information............. Financial Highlights
Item 4. General Description of
Registrant.............. The Funds' Investment Objectives
Money Market Funds; Equity
Funds; Income Funds; Additional
Information on Portfolio
Investments and Strategies;
Investment Restrictions
Item 5. Management of the Fund.. Management of the Trust;
Administration of the Funds;
Custodian, Recordkeeper,
Transfer Agent and Dividend
Disbursing Agent; Independent
Accountants
Item 5a. Management's Discussion
of Fund Performance.... Not Applicable
Item 6. Capital Stock and Other
Securities.............. Distributions and Taxes;
Distribution Options; Federal
Income Taxes; Ohio Personal
Income Taxes; Organization of
the Trust; Voting Rights;
Shareholder Inquiries; Other
Classes of Shares
Item 7. Purchase of Securities
Being Offered........... 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 as Net Asset Value
(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);
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. 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............. Pending Legal Proceedings
Relating to Piper
Location in Statement of
Form N-1A Part B Item Additional Information
- --------------------- ------------------------
Item 10. Cover Page............. Cover Page
Item 11. Table of Contents...... Table of Contents
Item 12. General Information
and History............ Definitions; Additional Information About the
Trust and its Shares
Item 13. Investment Objectives
and Policies........... Investment Objectives and Policies of the
Trust; Investment Restrictions
Item 14. Management of the Fund.. Management of the Trust
Item 15. Control Persons and
Principal Holders of
Securities............. Fund Ownership
Item 16. Investment Advisory
and Other Services..... Investment Adviser; Administrator;
Distributor; Custodian; Transfer Agent and
Dividend Disbursing Agent; Independent
Accountants
Item 17. Brokerage Allocation
and Other Practices.... Portfolio Transactions; Brokerage and
Research Services
Item 18. Capital Stock and
Other Securities....... Dividends and Distributions
Item 19. Purchase, Redemption
and Pricing of
Securities Being
Offered................ Distribution Pl (Investment Shares Only);
Determination of Net Asset Value; Additional
Purchase Information--Payment in Kind
Item 20. Tax Status............. Taxes
Item 21. Underwriters........... Not Applicable
Item 22. Calculation of
Performance Data....... Performance Information
Item 23. Financial Statements... Incorporated by Reference
into the Combined Statement of Additional
Information by reference to the Trust's
Combined Annual Report dated December 31,
1995
Form N-1A Part C
- ----------------
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Post-Effective Amendment to the
Registration Statement.
<PAGE>
PROSPECTUS
April 30, 1996
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 SEI Financial Services
Company (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-
480-5580 OR (OUTSIDE THE 614 AREA CODE) 800-253-0412.
THE HUNTINGTON TRUST COMPANY, N.A.
Investment Adviser
SEI FINANCIAL MANAGEMENT CORPORATION
Administrator
SEI FINANCIAL SERVICE COMPANY
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 EACH MONEY MARKET
FUND WILL BE ABLE TO DO SO.
<PAGE>
TABLE OF CONTENTS
PAGE
SUMMARY....................................................................... 1
FEE TABLE AND EXAMPLE......................................................... 3
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
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 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
<PAGE>
SUMMARY
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
Incorporated ("Piper"), a wholly-owned subsidiary of Piper Jaffray Companies
Inc., serves as sub-adviser to the Mortgage Securities Fund.
1
<PAGE>
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. Recent market experience 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.
2
<PAGE>
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% 0.23% 0.63%
Ohio Municipal Money Market
Fund (4)* ................... 0.15% 0.10% 0.27% 0.52%
U.S. Treasury Money Market
Fund (4)..................... 0.20% 0.10% 0.23% 0.53%
Growth Fund................... 0.60% 0.25% 0.26% 1.11%
Mortgage Securities Fund (5)*. 0.30% 0.25% 0.49% 1.04%
Ohio Tax-Free Fund............ 0.50% 0.25% 0.28% 1.03%
Fixed Income Securities Fund.. 0.50% 0.25% 0.27% 1.02%
</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 services
provided with respect to Investment Shares. Total payments of up to 1% for
all Funds except the Mortgage 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. The
Distributor can terminate these voluntary waivers at any time in its sole
discretion. 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 0.82%, absent the voluntary waiver of
management fees and 12b-1 fees. The maximum management fee for Ohio
Municipal Money Market Fund is 0.30%. The Total Investment Shares
Operating Expenses for the Money Market Fund and the U.S. Treasury Money
Market Fund would have been 0.78% and 0.68%, respectively, absent the
voluntary waiver by the Distributor.
5) The Total Investment Shares Operating Expenses for the Mortgage Securities
Fund in the table above are different than those incurred during the fiscal
year ending December 31, 1995, due to a reduction, subsequent to December
31, 1995, in the level of fee waiver. Absent the voluntary waiver of
management and 12b-1 fees, the total fund operating expenses would be
1.49%. The maximum management fee is 0.50%.
* 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 $35 $ 79
Ohio Municipal Money Market Fund................ $ 5 $17 $29 $ 65
U.S. Treasury Money Market Fund................. $ 5 $17 $30 $ 66
Growth Fund..................................... $51 $74 $99 $170
Mortgage Securities Fund........................ $30 $52 $76 $143
Ohio Tax-Free Fund.............................. $30 $52 $76 $143
Fixed Income Securities Fund.................... $30 $52 $75 $142
</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.
3
<PAGE>
FINANCIAL HIGHLIGHTS--MONEY MARKET FUNDS (FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD)
The following information has been derived from the Trust's financial
statements, which were 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, 1995, is included in the Trust's
1995 Annual Report to Shareholders, and is incorporated by reference into the
Statement of Additional Information.
<TABLE>
<CAPTION>
NET ASSET DISTRIBUTIONS 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%
1995 1.00 0.05 (0.05) 1.00 5.48% 0.63%
<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%
1995 1.00 0.03 (0.03) 1.00 3.47% 0.52%
<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%
1995 1.00 0.05 (0.05) 1.00 5.43% 0.53%
</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.
4
<PAGE>
<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
5.30% 0.03% 91,288
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
3.42% 0.20% 55,469
2.65%(a) 0.16%(a) $948
3.66% 0.17% 20,390
5.28% 0.18% 38,973
</TABLE>
- --------------------------------------------------
5
<PAGE>
FINANCIAL HIGHLIGHTS--EQUITY FUNDS (FOR A SHARE OUTSTANDING THROUGHOUT EACH
PERIOD)
The following information has been derived from the Trust's financial
statements, which were 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, 1995, is included in the Trust's
1995 Annual Report to Shareholders, and is incorporated by reference into the
Statement of Additional Information.
<TABLE>
<CAPTION>
DISTRIBUTIONS TO
DISTRIBUTIONS 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+
- ------------------------------------------------------------------------------------------------------------
INVESTMENT SHARES
GROWTH
<S> <C> <C> <C> <C> <C> <C> <C>
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) --
1995 26.31 0.35 7.61 7.96 (0.35) (3.11) --
</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 tax 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.
6
<PAGE>
<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%
(3.46) 30.81 30.40% 1.11% 1.08% 0.05% 3,777 37%
</TABLE>
- --------------------------------------------------------------------------------
7
<PAGE>
FINANCIAL HIGHLIGHTS--INCOME FUNDS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following information has been derived from the Trust's financial
statements, which were 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, 1995, is included in the Trust's
1995 Annual Report to Shareholders, and is incorporated by reference into the
Statement of Additional Information.
<TABLE>
<CAPTION>
DISTRIBUTIONS TO
DISTRIBUTIONS 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+
- ------------------------------------------------------------------------------------------------------------
INVESTMENT SHARES
OHIO TAX-FREE
<S> <C> <C> <C> <C> <C> <C> <C>
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) -- --
1995 20.50 0.96 1.27 2.23 (0.96) -- --
<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) -- --
1995 19.70 1.29 2.09 3.38 (1.30) -- --
<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)
1995(c) 6.70 0.55 1.46 2.01 (0.55) -- (0.04)
- ------------------------------------------------------------------------------------------------------------
</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 tax 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.
8
<PAGE>
<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%
(0.96) 21.77 11.10% 1.03% 4.49% 0.08% 2,163 13%
(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%
(1.30) 21.78 17.63% 1.02% 6.17% 0.05% 2,176 20%
(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%
(0.59) 8.12 31.13% 0.76% 7.40% 0.73% 2,008 194%
- -------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
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., 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 under the Investment Company Act of 1940, as amended (the "1940
Act"). Rule 2a-7 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"). Rule 2a-7 imposes certain risk
limiting conditions on the Money Market Funds which in some instances restrict
a Money Market Fund's investment policies. These risk limiting conditions
include the following:
. The Money Market Funds must limit their investments to "Eligible Securities"
as defined under Rule 2a-7, 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 Rule 2a-7, see Appendix I to
this Prospectus.)
. Each Money Market 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 Money Market Funds may invest without limit in "First Tier Securities"
subject to the 5% issuer diversification limitation where applicable. In
addition, the portfolio investments of each Money Market Fund must have a
maturity of 397 days or less from the time of purchase by it, 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 Money Market Fund's portfolio must not exceed 90
days. Of course, a Money Market 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 Money Market 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;
10
<PAGE>
(b) commercial paper, including U.S. dollar denominated eurodollar
commercial paper, considered under Rule 2a-7 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 Rule 2a-7 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 Money Market Fund intends to invest
in restricted securities. Restricted securities are any securities in which
the Money Market 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 Money Market 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 Money Market 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 Money Market 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 Money Market 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 Money
Market 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 Money Market 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 Money Market 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 Ohio Municipal Money Market Fund invests its assets so that at least 80%
of its annual interest income is exempt from federal regular income tax. The
Ohio Municipal Money Market Fund invests primarily in Ohio tax-exempt
securities which, under normal market conditions, will comprise at least 65%
of its 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:
11
<PAGE>
. 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 Ohio Municipal Money Market 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 holder to demand the repurchase of
the security on not more than seven days prior notice. Other obligations only
permit the holder to tender the security at the time of each interest rate
adjustment or at other fixed intervals. See "Demand Features." The Ohio
Municipal Money Market Fund treats variable rate demand obligations as
maturing on the later of the date of the next interest adjustment or the date
on which it may next tender the security for redemption.
PARTICIPATION INTERESTS. The Ohio Municipal Money Market 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 holder to treat the income from the investment as
exempt from federal income tax. The Ohio Municipal Money Market 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 Ohio
Municipal Money Market Fund may have been credit enhanced by a guaranty,
letter of credit or insurance. The Ohio Municipal Money Market 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 Ohio Municipal Money Market
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 Ohio Municipal Money Market Fund may have more than 25% of its total
assets invested in securities credit enhanced by banks.
DEMAND FEATURES. The Ohio Municipal Money Market 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
12
<PAGE>
underlying security. The Ohio Municipal Money Market Fund uses these
arrangements to provide 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 Ohio Municipal Money Market 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 Ohio Municipal Money Market Fund
may invest in temporary investments with remaining maturities of 13 months or
less at the time of purchase, or hold 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 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 Ohio Municipal Money Market 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 U.S. Treasury Money Market 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 Growth 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 Growth Fund may invest
in foreign securities and, subject to its investment restrictions, securities
restricted as to resale under federal securities laws. The Growth 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 its
13
<PAGE>
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 Growth Fund will invest
in large and medium-sized capitalization growth companies which provide these
financial and growth characteristics. In managing the investments of the
Growth 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 Growth Fund will invest at least 65% of its total
assets in the equity securities described in this paragraph. The Growth 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 generally 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 an Income 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 an Income Fund's securities will not generally affect the income
derived from such securities but will affect an Income Fund's net asset value.
MORTGAGE SECURITIES FUND
The investment objective of the Mortgage Securities Fund is current income.
The Mortgage Securities 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. Recent market experience 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 Mortgage Securities 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 Mortgage Securities Fund will attempt to maintain a dollar-weighted
average portfolio life of more than three years but no more than ten years. In
order to maintain this dollar-weighted average portfolio life, 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 life of the portfolio, as
appropriate.
14
<PAGE>
It is important to understand that, while a valuable measure, average life
is based on certain assumptions and has several limitations. It is most useful
as a measure of the repayment of principal when interest rate changes are
small. In addition, average life is difficult to calculate precisely for bonds
with prepayment options, such as mortgage-related securities, because the
calculation requires assumptions about prepayment rates. For example, when
interest rates go down, homeowners may prepay their mortgages at a higher rate
than assumed in the initial securities. Conversely, if rates increase,
prepayments may decrease to a greater extent than assumed, extending the
average life of such securities. For these reasons, average lives of funds
which invest a significant portion of their assets in mortgage-related
securities can be greatly affected by changes in interest rates.
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, collateralized mortgage obligations and
stripped mortgage-backed securities. These mortgage-related securities include
derivative mortgage securities. Mortgage-related securities fall into three
categories: (a) those issued or guaranteed by the U.S. 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 Mortgage Securities 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 Mortgage Securities 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 Mortgage Securities 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
15
<PAGE>
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 Mortgage Securities 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 Mortgage Securities 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 Mortgage Securities 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.
16
<PAGE>
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 Mortgage Securities 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 Mortgage
Securities 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
Mortgage Securities Fund might not recover its original investment on
interest-only SMBSs if there are substantial prepayments on the underlying
mortgages. The Mortgage Securities 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 Mortgage Securities Fund's portfolio, while
continuing to pursue current income.
U.S. GOVERNMENT SECURITIES. The U.S. government securities in which the
Mortgage Securities 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-
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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 Mortgage Securities 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 Mortgage
Securities Fund engages in short-term trading, such activities will cause it
to pay greater mark-up charges. The Mortgage Securities Fund's portfolio
turnover rate is set forth in "Financial Highlights."
INVESTMENT RISKS. The Mortgage Securities 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 Mortgage Securities 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 is "prepaid" earlier than
expected. The Mortgage Securities 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:
. When interest rates fall and additional mortgage prepayments must be
reinvested at lower interest rates, the income will be reduced; and
. 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 Mortgage Securities Fund's investments in mortgage-related securities
also subject it 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.
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The Mortgage Securities 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. Recent market experience 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, recent market experience 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.
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 Ohio Tax-Free 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 Ohio
Tax-Free Fund's net assets will be invested in Ohio tax-exempt securities. In
addition, the Ohio Tax-Free 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
Ohio Tax-Free Fund's ability to invest in certain private activity bonds
issued after August 7, 1986.
The Ohio Tax-Free Fund will only invest in Ohio tax-exempt securities that
are rated at the time of purchase in one of the top four 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 will be between four and seven years. Under normal market conditions,
the Ohio Tax-Free Fund will not invest in obligations with a remaining
maturity of more than 15 years at the time of purchase.
The Ohio Tax-Free 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 Ohio Tax-Free 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 Ohio Tax-Free 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 Ohio Tax-
Free Fund may have been credit enhanced by a guaranty, letter of credit or
insurance. The Ohio Tax-Free 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 Ohio Tax-Free 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.
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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 Fixed Income Securities Fund will not exceed 10 years. The
Fixed Income Securities 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 Fixed
Income Securities 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 four 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 Fixed Income
Securities Fund will invest at least 65% of its assets in fixed income
securities. The Fixed Income Securities 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.
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NON-DIVERSIFICATION
The Ohio Municipal Money Market Fund and the Ohio Tax-Free Fund (the "Ohio
Funds") are non-diversified Funds under the 1940 Act, 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)
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.
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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 or its Subadviser 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 or its Subadviser deems
it desirable to do so. Although a Fund will enter into an options or futures
contract position only if Huntington or its Subadviser 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
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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 it 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 Mortgage Securities Fund gives up the right to receive
principal and interest paid on the securities sold. However, the Mortgage
Securities 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
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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 Mortgage Securities Fund
compared with what such performance would have been without the use of
mortgage dollar rolls. The Mortgage Securities 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 Mortgage Securities Fund
while remaining substantially fully invested increases the amount of its
assets that are subject to market risk to an amount that is greater than its
net asset value, which could result in increased volatility of the price of
its 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 a 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;
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(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 Money Market 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 Money Market 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 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
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Group") pursuant to respective agreements between The Huntington Investment
Company or The Huntington Trust Company, N.A. and the Distributor. Investors
may purchase Investment Shares of the Funds on all Business Days. Investment
Shares in each Money Market Fund other than the Ohio Municipal Money Market
Fund purchased prior to 11:30 a.m. (Eastern Time) begin earning dividends that
day; Investment Shares in the Ohio Municipal 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) 614-480-5580 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, SEI Financial Management Corporation (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.
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<PAGE>
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
27
<PAGE>
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.
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<PAGE>
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
29
<PAGE>
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) 614-480-5580 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.
30
<PAGE>
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) 614-480-5580 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.
31
<PAGE>
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.
32
<PAGE>
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. The Trust
requires two to three days to process a systematic withdrawal and uses
automated clearing house funds, which are transferred electronically and thus
have the potential to be uninvested for up to 48 hours.
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, N.A.
("Huntington"), 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.
33
<PAGE>
Adviser's Background. Huntington is an indirect, wholly-owned subsidiary of
Huntington Bancshares Incorporated ("HBI"). With $20.3 billion in assets as of
December 31, 1995, 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 $12.0 billion of assets, and has investment discretion
over approximately $3.0 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 0.15% of the Mortgage Securities Fund's average daily net
assets.
Sub-Adviser's Background. Piper, located at Piper Jaffray Tower, 222 South
Ninth Street, Minneapolis, Minnesota, 55440, was formed in 1985. Piper is a
wholly-owned subsidiary of Piper Jaffray Companies Inc., a publicly-held
corporation engaged through its subsidiaries in various aspects of the
financial services industry. Piper serves as the investment adviser to a
number of open-end and closed-end investment companies and to various other
concerns, including pension and profit-sharing funds, corporate funds and
individuals. As of March 31, 1996, Piper rendered investment advice with
regard to approximately $9.3 billion in assets.
Philip H. Farrington, a Vice President of Huntington, 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, 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, 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.
34
<PAGE>
Worth Bruntjen, a Senior Vice President of Piper, has been the senior
portfolio manager of the Mortgage Securities Fund since its inception. Mr.
Bruntjen is the senior portfolio manager of one open-end mutual fund
distributed by Piper Jaffray Inc., and three 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 28 years of
investment experience.
Bruce D. Salvog, a Senior Vice President of Piper, assists Mr. Bruntjen in
managing the portfolio investments of the Mortgage Securities Fund. Mr. Salvog
has been a Senior Vice President of Piper since 1992 and was a portfolio
manager at Kennedy Associates, Inc., in Seattle, Washington, from 1984 to 1992.
He is a graduate of Harvard University and has over 25 years of financial
experience.
William G. Doughty, an Assistant Vice President of Huntington, 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, 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
SEI Financial Services Company, 680 East Swedesford Road, Wayne, Pennsylvania
19087, is the principal distributor for shares of each Fund. It is a Delaware
corporation, and is the principal distributor for a number of investment
companies.
DISTRIBUTION PLANS
Each Fund offering Investment Shares has adopted a Distribution Plan pursuant
to Rule 12b-1 under the 1940 Act (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
35
<PAGE>
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 Huntington 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 0.25 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 1940 Act
(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 0.50 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
36
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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
SEI Financial Management Corporation, an affiliate of the Distributor,
provides the Funds with certain administrative personnel and services
necessary to operate the Funds. For these services, each of the Funds pays a
fee, computed and payable daily, to SEI Financial Management Corporation at an
annual rate of 0.11% of their average daily net assets. SEI Financial
Management Corporation has entered into an agreement with Huntington pursuant
to which Huntington provides certain administrative services to the Funds. The
fees paid to Huntington under this agreement are paid by SEI Financial
Services Corporation and not by the Funds.
CUSTODIAN, RECORDKEEPER, TRANSFER AGENT, AND DIVIDEND DISBURSING AGENT
Huntington acts as custodian and recordkeeper of the Trust's investments and
other assets, except for the Mortgage Securities Fund, where Huntington acts
only as custodian. 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.
American Data Services, Inc., acts as recordkeeper for the Mortgage Securities
Fund, for which it receives an annual fee of $75,000. SEI Financial Management
Corporation, serves as the Trust's transfer agent and dividend disbursing
agent. SEI Financial Management Corporation has entered into an agreement with
State Street Bank and Trust Company and Huntington pursuant to which State
Street Bank and Huntington provide certain transfer agency services to the
Funds. The fees paid under this agreement are paid by SEI Financial Management
Corporation and not by the Funds.
INDEPENDENT ACCOUNTANTS
The independent accountants for the Trust are Price Waterhouse LLP,
Columbus, Ohio.
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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 each Money Market 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
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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
39
<PAGE>
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 10, 1996, National Financial Services Corp., New York, New York,
was the owner of record of approximately 40,016,001 shares (46.4%) and
Huntington, acting in various capacities for numerous accounts, was the owner
of 18,824,031 (21.2%) of the Investment Shares of the Money Market Fund; as of
April 10, 1996, Huntington, acting in various capacities for numerous
accounts, was the owner of record of approximately 60,650,636 shares (78.0%)
of the Investment Shares of the Ohio Municipal Money Market Fund; as of April
10, 1996, Huntington, acting in various capacities for numerous accounts, was
the owner of 12,548,643 shares (28.1%), Lenora J. Petraca of Akron, Ohio was
the owner of 2,771,233 shares (6.2%) and Allied Fidelity Insurance Co.,
Indianapolis, Indiana was
40
<PAGE>
the owner of 3,610,280 shares (8.1%) of the Investment Shares of the U.S.
Treasury Market Fund. Such persons or entities 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 10, 1996, Huntington, acting in various capacities for numerous
accounts, was the owner of record of approximately 296,005,400 shares (99.8%)
of the Trust Shares of the Money Market Fund; 51,512,824 shares (99.9%) of the
Trust Shares of the Ohio Municipal Money Market Fund; 302,462,286 shares
(99.9%) of the Trust Shares of the U.S. Treasury Money Market Fund; 5,077,082
shares (99.0%) of the Trust Shares of the Growth Fund; 5,494,723 shares
(98.8%) of the Trust Shares of the Income Equity Fund; 6,055,815 shares
(98.6%) of the Trust Shares of the Mortgage Securities Fund; 2,610,200 shares
(93.8%) of the Trust Shares of the Ohio Tax-Free Fund; 6,442,907 shares
(99.4%) of the Trust Shares of the Fixed Income Securities Fund; and 6,154,618
shares (99.2%) 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 Money Market 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 an Ohio Fund. Tax-equivalent yield reflects the
approximate yield that a
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<PAGE>
taxable investment must earn for shareholders at stated income levels to
produce an after-tax yield equivalent to an Ohio 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
Distributor.
PENDING LEGAL PROCEEDINGS RELATING TO PIPER
A number of complaints and arbitrations have been filed against Piper
relating to several other investment companies for which Piper acts as
investment adviser or subadviser. These lawsuits and arbitrations do not
involve the Mortgage Securities Fund and Piper does not believe that the
lawsuits will have a material adverse effect upon its ability to perform under
their agreement with Huntington. Settlements have been reached with respect to
a number of such actions. Piper intends to defend, or in some cases negotiate
to settle, the remaining actions. See "Pending Litigation Relating to Piper"
in the Statement of Additional Information.
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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 Ratings Group
("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.
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Investment Adviser
- --------------------------------------------------------------------------------
The Huntington Trust Company, N.A.
Huntington Center
Columbus, OH 43287
1-800-253-0412
Administrator
- --------------------------------------------------------------------------------
SEI Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19087-1658
Distributor
- --------------------------------------------------------------------------------
SEI Financial Services Company
680 East Swedesford Road
Wayne, PA 19087-1658
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
609409807 609409834
609409768 609409826
609409842 1032204A-R 14, 95
LOGO
M logo FPO
The Monitor Funds
MARBLE SCREEN F.P.O.
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 FUND
- --------------------------------------------------------------------------------
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, 1996
ART
<PAGE>
PROSPECTUS
April 30, 1996
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 SEI Financial Services Company (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) 614-480-5580 OR (OUTSIDE THE 614 AREA CODE) 800-
253-0412.
THE HUNTINGTON TRUST COMPANY, N.A.
Investment Adviser
SEI FINANCIAL MANAGEMENT CORPORATION
Administrator
SEI FINANCIAL SERVICES COMPANY
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 EACH MONEY MARKET FUND WILL BE
ABLE TO DO SO.
<PAGE>
TABLE OF CONTENTS
PAGE
SUMMARY........................................................................1
FEE TABLE AND EXAMPLE..........................................................3
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
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 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
<PAGE>
SUMMARY
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
1
<PAGE>
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 Incorporated
("Piper"), a wholly-owned subsidiary of Piper Jaffray Companies Inc., 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. Recent market experience 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.
2
<PAGE>
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 0.23% 0.53%
Ohio Municipal Money Market
Fund (3)*.................... 0.15% None 0.27% 0.42%
U.S. Treasury Money Market
Fund ........................ 0.20% None 0.23% 0.43%
Growth Fund.................. 0.60% None 0.26% 0.86%
Income Equity Fund........... 0.60% None 0.22% 0.82%
Mortgage Securities Fund
(4)*......................... 0.30% None 0.49% 0.79%
Ohio Tax-Free Fund........... 0.50% None 0.28% 0.78%
Fixed Income Securities Fund. 0.50% None 0.27% 0.77%
Short/Intermediate Fixed
Income Securities Fund....... 0.50% None 0.24% 0.74%
</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 0.57%, 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 different than those incurred during the fiscal
year ending December 31, 1995 due to a reduction, subsequent to December
31, 1995, in the level of fee waiver. Absent the voluntary waiver of the
management fee, the total fund operating expenses would be 0.99%. The
maximum management fee is 0.50%.
* The adviser can terminate its voluntary waiver at any time at its 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 $17 $30 $ 66
Ohio Municipal Money Market Fund............... $4 $13 $24 $ 53
U.S. Treasury Money Market Fund................ $ 4 $14 $24 $ 54
Growth Fund.................................... $ 9 $27 $48 $106
Income Equity Fund............................. $ 8 $26 $46 $101
Mortgage Securities Fund....................... $ 8 $25 $43 $ 97
Ohio Tax-Free Fund............................. $ 8 $25 $43 $ 97
Fixed Income Securities Fund................... $ 8 $25 $43 $ 95
Short/Intermediate Fixed Income Securities
Fund.......................................... $ 8 $24 $41 $ 92
</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.
3
<PAGE>
FINANCIAL HIGHLIGHTS--MONEY MARKET FUNDS (FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD)
The following information has been derived from the Trust's financial
statements, which were 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, 1995, is included in the Trust's
1995 Annual Report to Shareholders, and is incorporated by reference into the
Statement of Additional Information.
<TABLE>
<CAPTION>
NET ASSET DISTRIBUTIONS 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%
1995 1.00 0.05 (0.05) 1.00 5.58% 0.53%
<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%
1995 1.00 0.04 (0.04) 1.00 3.57% 0.42%
<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%
1995 1.00 0.05 (0.05) 1.00 5.53% 0.43%
</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.
4
<PAGE>
<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
5.44% 0.03% 296,764
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
3.52% 0.20% 56,551
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
5.40% 0.03% 277,142
</TABLE>
- ---------------------------------------------------
5
<PAGE>
FINANCIAL HIGHLIGHTS--EQUITY FUNDS (FOR A SHARE OUTSTANDING THROUGHOUT EACH
PERIOD)
The following information has been derived from the Trust's financial
statements, which were 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, 1995, is included in the Trust's
1995 Annual Report to Shareholders, and is incorporated by reference into the
Statement of Additional Information.
<TABLE>
<CAPTION>
DISTRIBUTIONS TO
DISTRIBUTIONS 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) --
1995 26.30 0.43 7.62 8.05 (0.43) (3.11) --
<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) -- --
1995 21.93 0.94 5.34 6.28 (0.96) -- --
</TABLE>
- -------------------------------------------------------------------------------
* Commenced operations on July 3, 1989.
+ Distributions in excess of net investment income were the result of
certain book and tax 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.
6
<PAGE>
<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%
(3.54) 30.81 30.75% 0.86% 1.34% 0.05% 143,421 37%
$(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%
(0.96) 27.25 29.26% 0.82% 3.85% -- 141,892 17%
</TABLE>
- --------------------------------------------------------------------------------
7
<PAGE>
FINANCIAL HIGHLIGHTS--INCOME FUNDS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following information has been derived from the Trust's financial
statements, which were 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, 1995, is included in the Trust's
1995 Annual Report to Shareholders, and is incorporated by reference into the
Statement of Additional Information.
<TABLE>
<CAPTION>
DISTRIBUTIONS TO
DISTRIBUTIONS 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) -- --
1995 20.50 1.01 1.27 2.28 (1.01) -- --
<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) -- --
1995 19.69 1.34 2.09 3.43 (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)
1995(c) 6.69 0.55 1.46 2.01 (0.55) -- (0.06)
<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) -- --
1995 19.14 1.18 1.21 2.39 (1.18) -- --
- ------------------------------------------------------------------------------------------------------------
</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 tax 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.
8
<PAGE>
<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%
(1.01) 21.77 11.35% 0.78% 4.74% 0.08% 59,869 13%
$(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%
(1.34) 21.78 17.95% 0.77% 6.41% 0.05% 141,423 20%
$(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%
(0.61) 8.09 31.10% 0.49% 7.29% 0.63% 52,667 194%
$(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%
(1.18) 20.35 12.81% 0.74% 5.93% -- 133,951 40%
- -------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
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., 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 under the Investment Company Act of 1940, as amended (the "1940
Act"). Rule 2a-7 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"). Rule 2a-7 imposes certain risk
limiting conditions on the Money Market Funds which in some instances restrict
a Money Market Fund's investment policies. These risk limiting conditions
include the following:
. The Money Market Funds must limit their investments to "Eligible Securities"
as defined under Rule 2a-7, 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 Rule 2a-7, see Appendix I to this
Prospectus.)
. Each Money Market 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 Money Market Funds may invest without limit in "First Tier Securities"
subject to the 5% issuer diversification limitation where applicable. In
addition, the portfolio investments of each Money Market Fund must have a
maturity of 397 days or less from the time of purchase by a Money Market
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 Money Market Fund's portfolio must
not exceed 90 days. Of course, a Money Market 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 Money Market 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;
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(b)commercial paper, including U.S. dollar denominated eurodollar
commercial paper, considered under Rule 2a-7 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 Rule 2a-7 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 Money Market Fund intends to
invest in restricted securities. Restricted securities are any securities
in which the Money Market 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 Money Market 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 Money Market 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 Money Market 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 Money Market 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 Money Market
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 Money Market 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 Money
Market 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 Ohio Municipal Money Market Fund invests its assets so that at least 80%
of its annual interest income is exempt from federal regular income tax. The
Ohio Municipal Money Market Fund invests primarily in Ohio tax-exempt
securities which, under normal market conditions, will comprise at least 65%
of its 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
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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 Ohio Municipal Money Market 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
holder to demand the repurchase of the security on not more than seven
days prior notice. Other obligations only permit the holder to tender the
security at the time of each interest rate adjustment or at other fixed
intervals. See "Demand Features." The Ohio Municipal Money Market Fund
treats variable rate demand obligations as maturing on the later of the
date of the next interest adjustment or the date on which it may next
tender the security for redemption.
PARTICIPATION INTERESTS. The Ohio Municipal Money Market 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 holder to treat the income from the
investment as exempt from federal income tax. The Ohio Municipal Money
Market 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 Ohio
Municipal Money Market Fund may have been credit enhanced by a guaranty,
letter of credit or insurance. The Ohio Municipal Money Market 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 Ohio Municipal Money Market 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 Ohio Municipal Money Market Fund may have more than 25% of its total
assets invested in securities credit enhanced by banks.
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DEMAND FEATURES. The Ohio Municipal Money Market 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 Ohio Municipal Money Market Fund uses these
arrangements to provide 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 Ohio Municipal Money Market 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 Ohio Municipal
Money Market Fund may invest in temporary investments with remaining
maturities of 13 months or less at the time of purchase, or hold 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 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 Ohio Municipal Money Market 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 U.S. Treasury Money Market 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 Growth Fund may invest include
common stocks,
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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 Growth Fund may invest in
foreign securities and, subject to its investment restrictions, securities
restricted as to resale under federal securities laws. The Growth 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 its 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 Growth Fund will invest in large and
medium-sized capitalization growth companies which provide these financial and
growth characteristics. In managing the investments of the Growth 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 Growth Fund will invest at least 65% of its total assets in the equity
securities described in this paragraph. The Growth 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 Income Equity
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 Income Equity
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
Income Equity Fund will invest at least 65% of its total assets in the equity
securities described in this paragraph. The Income Equity Fund may invest up
to 35% of its assets in debt securities rated investment grade or better. The
Income Equity 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 generally 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 an Income 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 an Income Fund's securities will not generally affect the income
derived from such securities but will affect an Income Fund's net asset value.
MORTGAGE SECURITIES FUND
The investment objective of the Mortgage Securities Fund is current income.
The Mortgage Securities 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.
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Recent market experience 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 Mortgage Securities 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 Mortgage Securities Fund will attempt to maintain a dollar-weighted
average portfolio life of more than three years but no more than ten years. In
order to maintain a dollar-weighted average portfolio life, 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 life of the portfolio, as
appropriate.
It is important to understand that, while a valuable measure, average life
is based on certain assumptions and has several limitations. It is most useful
as a measure of the repayment of principal when interest rate changes are
small. In addition, average life is difficult to calculate precisely for bonds
with prepayment options, such as mortgage-related securities, because the
calculation requires assumptions about prepayment rates. For example, when
interest rates go down, homeowners may prepay their mortgages at a higher rate
than assumed in the initial average life calculation, thereby shortening the
average life of the Fund's mortgage-related securities. Conversely, if rates
increase, prepayments may decrease to a greater extent than assumed, extending
the average life of such securities. For these reasons, the average lives of
funds which invest a significant portion of their assets in mortgage-related
securities can be greatly affected by changes in interest rates.
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, collateralized mortgage obligations and
stripped mortgage-backed securities. These mortgage-related securities include
derivative mortgage securities. Mortgage-related securities fall into three
categories: (a) those issued or guaranteed by the U.S. 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.
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MORTGAGE PASS-THROUGH SECURITIES. The mortgage pass-through securities in
which the Mortgage Securities 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 Mortgage Securities 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 Mortgage Securities 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 Mortgage Securities 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 Mortgage Securities 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
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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 Mortgage Securities 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 to attempt to protect against a reduction
in the income earned on 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 Mortgage Securities 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. 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
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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 Mortgage
Securities Fund might not recover its original investment on interest-only
SMBSs if there are substantial prepayments on the underlying mortgages. The
Mortgage Securities 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
Mortgage Securities Fund's portfolio, while continuing to pursue current
income.
U.S. GOVERNMENT SECURITIES. The U.S. Government securities in which the
Mortgage Securities 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 Mortgage Securities 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 Mortgage
Securities Fund engages in short-term trading, such activities will cause it
to pay greater mark-up charges. The Mortgage Securities Fund's portfolio
turnover rate is set forth in "Financial Highlights."
INVESTMENT RISKS. The Mortgage Securities 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.
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The Mortgage Securities 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 is "prepaid" earlier than
expected. The Mortgage Securities 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:
. When interest rates fall and additional mortgage prepayments must be
reinvested at lower interest rates, income will be reduced; and
. 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 Mortgage Securities Fund's investments in mortgage-related securities
also subject it 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 Mortgage Securities 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. Recent market experience 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, recent market experience 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.
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 Ohio Tax-Free 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 Ohio
Tax-Free Fund's net assets will be invested in Ohio tax-exempt securities. In
addition, the Ohio Tax-Free 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
Ohio Tax-Free Fund's ability to invest in certain private activity bonds
issued after August 7, 1986.
The Ohio Tax-Free Fund will only invest in Ohio tax-exempt securities that
are rated at the time of purchase in one of the top four 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 will be between four and seven years. Under normal market conditions,
the Ohio Tax-Free Fund will not invest in obligations with a remaining
maturity of more than 15 years at the time of purchase.
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The Ohio Tax-Free 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 Ohio Tax-Free 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 Ohio Tax-Free 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 Ohio Tax-
Free Fund may have been credit enhanced by a guaranty, letter of credit or
insurance. The Ohio Tax-Free 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 Ohio Tax-Free 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 Fixed Income Securities Fund will not exceed 10 years. The
Fixed Income Securities 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 Fixed
Income Securities 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 four 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 Fixed Income
Securities Fund will invest at least 65% of its assets in fixed income
securities. The Fixed Income Securities 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 Short/Intermediate Fixed Income 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 Short/Intermediate Fixed Income 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
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securities will be rated at the time of purchase in one of the top four
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 Short/Intermediate Fixed Income Fund will invest at
least 65% of its assets in fixed income securities. The Short/Intermediate
Fixed Income 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 1940 Act, 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 1940 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.
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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)
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 or its Subadviser may not forecast market
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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 or its Subadviser deems
it desirable to do so. Although a Fund will enter into an options or futures
contract position only if Huntington or its Subadviser 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.
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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 it 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 Mortgage Securities Fund gives up the right to receive
principal and interest paid on the securities sold. However, the Mortgage
Securities 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 Mortgage Securities Fund compared with what such performance would have
been without the use of mortgage dollar rolls. The Mortgage Securities 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
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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 Mortgage Securities Fund
while remaining substantially fully invested increases the amount of its
assets that are subject to market risk to an amount that is greater than its
net asset value, which could result in increased volatility of the price of
its 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 a 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.
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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 Money Market Fund, subtracting the interest of the Trust Shares in the
liabilities of a Money Market Fund and those attributable to Trust Shares, and
dividing the remainder by the total number of Trust Shares outstanding. A
Money Market 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 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 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"). State securities laws may require banks and
financial institutions purchasing shares for their customers to register as
brokers pursuant to such laws. 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, SEI Financial Management Corporation
(the "Transfer Agent"). Trust Shares in each Money Market Fund other than the
Ohio Municipal Money Market Fund purchased prior to 11:30 a.m. (Eastern Time)
begin earning dividends that day; Trust Shares in the Ohio Municipal 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.
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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) 614-480-5580, 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) 614-480-5580 (outside the
614 Area Code) 800-253-0412
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2.By Mail:The Huntington Trust Company, N.A. 41 South High Street (HC 1116)
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) 614-480-5580 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
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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 1116), 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
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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, N.A.
("Huntington"), 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. Huntington is an indirect, wholly-owned subsidiary of
Huntington Bancshares Incorporated ("HBI"). With $20.3 billion in assets as of
December 31, 1995, 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 $12.0 billion of assets, and has investment discretion
over approximately $3.0 billion of that amount.
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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 0.15% of the Mortgage Securities Fund's average daily net
assets.
Sub-Adviser's Background. Piper, located at Piper Jaffray Tower, 222 South
Ninth Street, Minneapolis, Minnesota 55440, was formed in 1985. Piper is a
wholly-owned subsidiary of Piper Jaffray Companies Inc., a publicly held
corporation engaged through its subsidiaries in various aspects of the
financial services industry. Piper serves as the investment adviser to a
number of open-end and closed-end investments companies and to various other
concerns, including pension and profit-sharing funds, corporate funds and
individuals. As of March 31, 1996, Piper rendered investment advice with
regard to approximately $9.3 billion in assets.
Philip H. Farrington, a Vice President of Huntington, 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, 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, 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, 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, has been the senior
portfolio manager of the Mortgage Securities Fund since its inception. Mr.
Bruntjen is the senior portfolio manager of one open-
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end mutual fund distributed by Piper Jaffray Inc., and three 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
28 years of investment experience.
Bruce D. Salvog, a Senior Vice President of Piper, assists Mr. Bruntjen in
managing the portfolio investments of the Mortgage Securities Fund. Mr. Salvog
has been a Senior Vice President of Piper since 1992 and was a portfolio
manager at Kennedy Associates, Inc., in Seattle, Washington, from 1984 to
1992. He is a graduate of Harvard University and has over 25 years of
financial experience.
William G. Doughty, an Assistant Vice President of Huntington, 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, 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
SEI Financial Services Company, 680 East Swedesford Road, Wayne,
Pennsylvania 19087, is the principal distributor for shares of each Fund. It
is a Delaware corporation and is the principal distributor for a number of
investment companies.
ADMINISTRATION OF THE FUNDS
SEI Financial Management Corporation, an affiliate of the Distributor,
provides certain administrative personnel and services necessary to operate
the Funds. For these services, each of the Funds pays a fee, computed and
payable daily, to SEI Financial Management Corporation at an annual rate of
0.11% of their average daily net assets. SEI Financial Management Corporation
has entered into an agreement with Huntington pursuant to which Huntington
provides certain administrative services to the Funds. The fees paid to
Huntington under this agreement are paid by SEI Financial Management
Corporation and not by the Funds.
CUSTODIAN, RECORDKEEPER, TRANSFER AGENT, AND DIVIDEND DISBURSING AGENT
Huntington acts as custodian and recordkeeper of the Trust's investments and
other assets, except for the Mortgage Securities Fund, where Huntington acts
only as custodian. 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.
American Data Services, Inc., acts as recordkeeper for the Mortgage Securities
Fund for which it receives an annual fee of $75,000. SEI Financial Management
Corporation serves as the Trust's transfer agent and dividend disbursing
agent. SEI Financial Management Corporation has entered into an agreement with
State Street Bank and Trust Company and Huntington, pursuant to
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which State Street Bank and Huntington provide certain transfer agency
services to the Funds. The fees paid under this agreement are paid by SEI
Financial Management Corporation and not by the Funds.
INDEPENDENT ACCOUNTANTS
The independent 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 each Money Market 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.
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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
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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.
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As of April 10, 1996, Huntington, acting in various capacities for numerous
accounts, was the owner of record of approximately 296,005,400 shares (99.8%)
of the Trust Shares of the Money Market Fund; 51,512,824 shares (99.9%) of the
Trust Shares of the Ohio Municipal Money Market Fund; 302,462,286 shares
(99.9%) of the Trust Shares of the U.S. Treasury Money Market Fund; 5,077,082
shares (99.0%) of the Trust Shares of the Growth Fund; 5,494,723 shares
(98.8%) of the Trust Shares of the Income Equity Fund; 6,055,815 shares
(98.6%) of the Trust Shares of the Mortgage Securities Fund; 2,610,201 shares
(93.8%) of the Trust Shares of the Ohio Tax-Free Fund; 6,442,907 shares
(99.4%) of the Trust Shares of the Fixed Income Securities Fund; and 6,154,618
shares (99.2%) 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 10, 1996, National Financial Services Corp., New York, New York,
was the owner of record of approximately 40,016,001 shares (46.4%) and
Huntington, acting in various capacities for numerous accounts, was the owner
of 18,824,031 shares (21.2%) of the Investment Shares of the Money Market
Fund; as of April 10, 1996, Huntington, acting in various capacities for
numerous accounts, was the owner of record of approximately 60,650,636 shares
(78.0%) of the Investment Shares of the Ohio Municipal Money Market Fund; as
of April 10, 1996, Huntington, acting in various capacities for numerous
accounts, was the owner of 12,548,643 shares (28.1%), Lenora J. Petraca of
Akron, Ohio, was the owner of 2,771,233 shares (6.2%) and Allied Fidelity
Insurance Co., Indianapolis, Indiana, was the owner of 3,610,280 shares (8.1%)
of the Investment Shares of the U.S. Treasury Money Market Fund. Such persons
or entities 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.
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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 Money Market Fund's yield for a year and is, for that reason,
greater than the Money Market 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 an Ohio 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 an Ohio
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
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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
A number of complaints and arbitrations have been filed against Piper
relating to several other investment companies for which Piper acts as
investment adviser or subadviser. These lawsuits and arbitrations do not
involve the Mortgage Securities Fund and Piper does not believe that the
lawsuits will have a material adverse effect upon its ability to perform under
their agreement with Huntington. Settlements have been reached with respect to
a number of such actions. Piper intends to defend, or in some cases negotiate
to settle, the remaining actions. 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 Ratings Group
("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.
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Investment Adviser
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The Huntington Trust Company, N.A.
Huntington Center
Columbus, OH 43287
1-800-253-0412
Administrator
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SEI Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19087-1658
Distributor
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SEI Financial Services Company
680 East Swedesford Road
Wayne, PA 19087-1658
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 1032203A-R 15, 95
LOGO
M logo FPO
The Monitor Funds
MARBLE SCREEN F.P.O.
Trust Shares
MONEY MARKET FUNDS
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The Monitor Money Market Fund
The Monitor Ohio Municipal Money Market Fund
The Monitor U.S. Treasury Money Market Fund
EQUITY FUNDS
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The Monitor Growth Fund
The Monitor Income Equity Fund
INCOME FUNDS
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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, 1996
ART
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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, 1996. 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) 614/480-
5580 or (outside the 614 Area Code) 800/253-0412.
April 30, 1996
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Table of Contents
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Definitions 1
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Investment Objectives and Policies of the Trust 1
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Foreign Securities 1
Shares of Other Mutual Funds 1
Securities Loans 2
When-Issued and Delayed Delivery Transactions 2
Ohio Tax-Exempt Securities 2
Mortgage-Related Securities 4
Options on Securities 5
Risk Factors in Options Transactions 6
Futures Contracts 7
Special Risks of Transactions in Futures
Contracts and Related Options 10
Foreign Currency Transactions 12
Zero-Coupon Securities 14
Investment Restrictions 15
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Portfolio Turnover 16
Management of the Trust 17
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Trustees and Officers 17
Fund Ownership 18
Trustees Compensation 20
Investment Adviser 20
Glass-Steagall Act 21
Portfolio Transactions 22
Brokerage and Research Services 22
Administrator 23
Distributor 24
The Distribution Plans 25
Determination of Net Asset Value 26
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Additional Purchase Information--Payment in Kind 27
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Taxes 28
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Federal Income Taxation 28
Ohio Income Taxation 30
Dividends and Distributions 30
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Money Market Funds 30
Other Funds 31
Performance Information 31
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Money Market Funds 31
Other Funds 32
Tax-Equivalent Yield 33
Tax-Equivalency Table 34
Custodian 35
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Transfer Agent and Dividend Disbursing Agent 35
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Independent Accountants 36
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Additional Information About the Trust and Its Shares 36
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Shareholder Inquiries 36
Pending Litigation Relating to Piper 36
Financial Statements 37
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Appendix 38
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i
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Definitions
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The "Trust" - The Monitor Funds.
"Huntington" - The Huntington Trust Company, N.A., the Trust's
investment adviser and sub-administrator.
"SEI Administrative" - SEI Financial Management Corporation, the
Trust's administrator.
"SEI Financial Services" - SEI Financial Services Company, 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
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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
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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, as amended (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
2
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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 collection, 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
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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 the
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
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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.
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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 transaction 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.
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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
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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.
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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 US.
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 US. 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.
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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, US. 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 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
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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.
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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 US. 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.
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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
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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 US. 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.
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Investment Restrictions
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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 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.
15
<PAGE>
(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)
of the Funds, including its investment manager and its affiliates, except
as permitted by the Investment Company Act of 1940 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.
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.
16
<PAGE>
For the fiscal years ended December 31, 1994 and 1995 the portfolio turnover
rates for each of the following Funds were as follows:
Fund 1994 1995
- ---- ---- ----
Growth Fund . . . . . . . . . . . . . 42% 37%
Income Equity Fund . . . . . . . . . . 50% 17%
Mortgage Securities Fund . . . . . . . 91% 194%
Ohio Tax-Free Fund . . . . . . . . . . 12% 13%
Fixed Income Securities Fund . . . . . 23% 20%
Short/Intermediate Fixed Income
Securities Fund . . . . . . . . . . . 38% 40%
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.
<TABLE>
<CAPTION>
Positions Held Principal Occupations
Name With The Trust During Past Five Years
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
David S. Schoedinger Trustee Chairman of the Board, Schoedinger Funeral Service;
229 East State Street President of Schoedinger Funeral Services, Inc.;
Columbus, OH Past President of Ohio Funeral Directors Association
Birthdate: November 27, 1942 (1986-1987); and Past President, Board of Directors of
National Selected Morticians (1922-1993).
- -----------------------------------------------------------------------------------------------------------------------------------
John M. Shary Trustee Former Member, Business Advisory Board, DPEC-Data
3097 Walden Ravine Processing Education Corp.; Member, Business Advisory
Columbus, Ohio 43321 Board, Hublink, Inc.; Former Member, Business Advisory
Birthdate: November 30, 1930 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 Trustee Formerly, Corporate Director of Financial Services and
613 Valley Forge Court Treasurer, Childrens Hospital, Columbus, Ohio; Associate
Westerville, OH Executive Director and Treasurer, Childrens Hospital,
Birthdate: October 20, 1931 Columbus, Ohio (1985-1989).
- -----------------------------------------------------------------------------------------------------------------------------------
Richard Sisson Trustee Senior Vice President for New Academic Affairs and
4250 Dublin Road Provost, The Ohio State University (1993-Present);
Columbus, Ohio 43210 Senior Vice Chancellor for Academic Affairs, UCLA
Birthdate: October 16, 1936 (1991-1993).
- -----------------------------------------------------------------------------------------------------------------------------------
David G. Lee President and Chief Senior Vice President of SEI Administrative and SEI
680 East Swedesford Road Executive Officer Financial Services since 1993. Vice President of SEI
Wayne, PA 19087 Administrative and SEI Financial Services (1991-1993);
Birthdate: April 16, 1952 President, GW Sierra Trust prior to 1991.
- -----------------------------------------------------------------------------------------------------------------------------------
Stephen G. Meyer Treasurer, Controller and Chief Vice President and Controller--Fund Resources, a division
680 East Swedesford Road Financial Officer of SEI Corporation, since March 1995; Director, Internal
Wayne, PA 19087 Audit and Risk Management--SEI Corporation (1992-1995);
Birthdate: July 12, 1965 Senior Associate with Coopers & Lybrand (1990-1992).
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
<TABLE>
<S> <C> <C>
Kathryn L. Stanton Vice President and Vice President and Assistant Secretary of SEI Corporation
680 East Swedesford Road Secretary since 1994; Associate attorney with Morgan, Lewis and
Wayne, PA 19087 Bockius (1989-1994).
Birthdate: November 19, 1958
- -----------------------------------------------------------------------------------------------------------------------------------
Sandra K. Orlow Vice President and Assistant Vice President and Assistant Secretary of SEI Corporation
680 East Swedesford Road Secretary since 1983.
Wayne, PA 19087
Birthdate: October 18, 1953
- -----------------------------------------------------------------------------------------------------------------------------------
Barbara A. Nugent Vice President and Assistant Vice President and Assistant Secretary of SEI Corporation
680 East Swedesford Road Secretary since April 1996. Associate attorney with Drinker, Biddle
Wayne, PA 19087 & Reath (1994-1996); Assistant Vice President/
Birhdate: June 18, 1956 Administration of Delaware Service Company, Inc. (1992-
1993); Assistant Vice President-Operatios of Delaware
Service Company, Inc. (1988-1992).
- -----------------------------------------------------------------------------------------------------------------------------------
Kevin P. Robins Vice President and Assistant Senior Vice President, General Counsel and Secretary of
680 East Swedesford Road Secretary SEI Corporation since 1994. Vice President and Assistant
Wayne, PA 19087 Secretary (1992-1994); Associate attorney with Morgan,
Birthdate: April 15, 1961 Lewis & Bockius (1988-1992).
- -----------------------------------------------------------------------------------------------------------------------------------
Todd Cipperman Vice President and Assistant Vice President and Assistant Secretary of SEI Corporation
680 East Swedesford Road Secretary since 1995; Associate attorney with Dewey Ballatine
Wayne, PA 19087 (1994-1995); Associate attorney with Winston & Strawn
Birthdate: February 14, 1966 (1991-1994).
- -----------------------------------------------------------------------------------------------------------------------------------
Joseph M. Lydon Vice President and Assistant Director of Administration-Fund Resources, a division of
680 East Swedesford Road Secretary SEI Corporation since 1995; Vice President of Fund Group,
Wayne, PA 19087 Vice President of the Advisor--Dreman Value Management,
Birthdate: September 27, 1959 L.P., and President of Dreman Financial Services, Inc.
(1989-1995).
</TABLE>
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 10, 1996, the Trustees and officers as a group owned less than 1%
of the shares of the Trust.
As of April 10, 1996, the following shareholders of record owned 5% or more of
the outstanding Investment Shares of The Monitor Money Market Fund: National
Financial Services Corp., New York, NY, owned approximately 40,016,001 shares
(46.4%); Huntington Trust Company, Columbus, OH, acting in various capacities
for numerous accounts, owned approximately 18,824,031 shares (21.2%).
As of April 10, 1996, 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 296,005,400 shares (99.8%).
As of April 10, 1996, 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 60,650,636 shares (78.0%).
As of April 10, 1996, 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 51,512,824 shares (99.9%).
18
<PAGE>
As of April 10, 1996, the following shareholders of record owned 5% or more of
the outstanding Investment Shares of The Monitor U.S. Treasury Money Market
Fund: Huntington Trust Company, Columbus, OH, acting in various capacities for
numerous accounts, owned approximately 12,548,643 shares (28.1%); Lenora J.
Petrarca, Akron, OH, owned approximately 2,771,233 shares (6.2%); Allied
Fidelity Insurance Co., Indianapolis, IN, owned approximately 3,610,280 shares
(8.1%).
As of April 10, 1996, 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 302,462,286 shares (99.9%).
As of April 10, 1996, no shareholders of record owned 5% or more of the
outstanding Investment Shares of The Monitor Growth Fund.
As of April 10, 1996, 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 1,611,117 shares (31.7%); Huntington Trust Company, Inc.,
Columbus, OH, acting in various capacities for numerous accounts, owned
approximately 3,412,856 shares (67.2%).
As of April 10, 1996, 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 1,802,617 shares (32.8%); Huntington Trust Company, Inc.,
Columbus, OH, acting in various capacities for numerous accounts, owned
approximately 3,624,621 shares (66.0%).
As of April 10, 1996, no shareholders of record owned 5% or more of the
outstanding Investment Shares of The Monitor Mortgage Securities Fund.
As of April 10, 1996, 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 6,055,815 shares (98.6%).
As of April 10, 1996, 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 5,927 shares (5.9%);
John W. and Arlene J. Warbritton, Westerville, OH, owned approximately 5,763
shares (5.8%); Ursula E.M. and William J. Umberg, Cincinnati, OH, owned
approximately 8,722 shares (8.7%); Florence M., Ralph E., and Gerald L.
Brinkman, Grove City, OH, owned approximately 10,671 shares (10.7%); and
National Financial Services Corp., New York, NY, owned approximately 5,098
shares (5.1%).
As of April 10, 1996, 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 2,610,200 shares (93.8%).
As of April 10, 1996, 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 6,007 shares (5.9%).
As of April 10, 1996, 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 2,491,685 shares (38.7%); Huntington
Trust Company, Inc., Columbus, OH, acting in various capacities for numerous
accounts, owned approximately 3,909,830 shares (60.7%).
19
<PAGE>
As of April 10, 1996, 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 6,154,618 shares
(99.2%).
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
COMPENSATION
NAME AND POSITION WITH TRUST FROM TRUST*
- ---------------------------- ------------
David S. Schoedinger, Trustee $12,500
John M. Shary, Trustee $14,500
William R. Wise, Trustee $12,500
Richard Sisson, Trustee $ 0
- -----------------
*Information is furnished for the fiscal year ended December 31, 1995; Dr.
Sisson assumed office as a Trustee at the January 1996 Board meeting. The
Trust 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 $20.3 billion in assets as of December 31, 1995, HBI
is a major Midwest regional bank holding company. Piper Capital Management
Incorporated ("Piper"), sub-adviser to the Monitor Mortgage Securities Fund, is
a wholly-owned subsidiary of the publicly traded investment banking firm,
Piper Jaffray Inc. ("PJI").
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.
20
<PAGE>
During the fiscal years ended 1993, 1994, and 1995, each of the Funds in
operation during such periods paid fees to Huntington pursuant to the Investment
Advisory Agreement as follows:
<TABLE>
<CAPTION>
Fund 1993 1994 1995
- ---- ---- ---- ----
<S> <C> <C> <C>
Money Market Fund................ $1,018,882 $1,018,586 $1,080,916
Ohio Municipal Money Market
Fund........................... $ 72,193* 102,856* $ 157,618*
U.S. Treasury Money Market
Fund........................... $ 374,536 $ 495,003 $ 648,805
Growth Fund...................... $ 624,290 $ 647,947 $ 790,352
Income Equity Fund............... $ 670,607 $ 754,255 $ 764,733
Mortgage Securities Fund......... $ 503,669 $ 379,126* $ 20,000*
Ohio Tax-Free Fund............... $ 284,430 $ 299,882 $ 307,084
Fixed Income Securities
Fund........................... $ 528,960 $ 578,719 $ 672,320
Short/Intermediate Fixed Income
Securities Fund................ $ 644,764 $ 636,447 $ 660,192
</TABLE>
____________
* 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. During the fiscal year ended December
31, 1995, gross investment advisory fees were $284,343 and $289,413, of
which $126,725 and $269,413 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 $15,000.
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. In 1996 Huntington also began serving as a sub-
administrator to the Trust. See "Sub-Administrator" below.
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
21
<PAGE>
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,
22
<PAGE>
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, 1993, 1994 and 1995, the Funds named
below paid the following brokerage commissions:
Fund 1993 1994 1995
- ---- ------- -------- -------
Growth Fund......... $89,776 $121,407 $88,688
Income Equity Fund.. $64,330 $121,749 $53,998
Administrator
SEI Administrative serves as administrator to the Trust pursuant to an
Administration Agreement dated January 11, 1996 (the "Administration
Agreement"). Pursuant to the Administration Agreement, SEI Administrative
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, SEI Administrative 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, 1996, and will
continue in effect for a period of one year, and thereafter will continue for
successive one year periods, unless terminated by either party on not less than
60 days' prior written notice. Under certain circumstances, the Administration
Agreement may be terminated by the Trust immediately, without prior notice.
The Administration Agreement provides that SEI Administrative 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,
23
<PAGE>
except a loss resulting from willful misfeasance, bad faith, or negligence in
the performance of its duties, or from the disregard by SEI Administrative of
its obligations and duties thereunder.
Prior to January 11, 1996, the Trust had retained Federated Administrative
Services ("Federated") as its administrator. For the fiscal years ended
December 31, 1993, 1994, and 1995, the Funds paid the following fees to
Federated, pursuant to the prior administration agreement that had been in
effect for those periods:
<TABLE>
<CAPTION>
Fund 1993 1994 1995
- ---- -------- ---------- ---------
<S> <C> <C> <C>
Money Market Fund....................... $442,605* $433,373* $436,919*
Ohio Municipal Money Market Fund........ $ 51,912* $ 73,218* $ 73,144*
U.S. Treasury Money Market Fund......... $202,984* $310,007* $392,753*
Growth Fund............................. $117,936* $119,967* $128,230*
Income Equity Fund...................... $117,976 $131,350 $132,530
Mortgage Securities Fund................ $114,000* $ 78,753* $ 9,502*
Ohio Tax-Free Fund...................... $ 60,265* $ 62,952* $ 45,020*
Fixed Income Securities Fund............ $120,126* $130,878* $134,965*
Short/Intermediate Fixed
Income Securities Fund................ $136,220 $133,654 $136,602
</TABLE>
- --------------
* 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 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. 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, repectively. During the fiscal year ended December 31,
1995, gross administrator fees were $536,546, $141,152, $483,058,
$196,498, $84,644, $91,463, and $200,254, of which $99,627, $68,008,
$90,305, $68,268, $75,142, $46,443, and $65,289 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, repectively.
Sub-Administrator
SEI Administrative has entered into a Sub-Administration Agreement with
Huntington pursuant to which Huntington provides certain administrative services
to the Trust. Under this Agreement, SEI Administrative (and not the Trust) will
pay Huntington a periodic fee at the annual rate of 0.04% of the average daily
net assets of all Funds, with a provision for such fee to increase to an annual
rate of 0.05% of average daily net assets at such time as Huntington begins to
perform a substantial portion of certain designated administrative services.
Distributor
The Trust has a Distribution Agreement with SEI Financial Services, 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 Distribution Agreement 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.
24
<PAGE>
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, 1993, 1994 and 1995, the Funds named
below paid the following fees pursuant to the Distribution Plans:
<TABLE>
<CAPTION>
Fund 1993 1994 1995
- ---- ------- ------- -------
<S> <C> <C> <C>
Money Market Fund.................. $20,986 $26,329 $70,305
Ohio Municipal Money Market Fund... $ 6,171 $31,216 $43,700
U.S. Treasury Money Market Fund.... $ 152 $ 6,160* $30,675
Growth Fund........................ $ 9,751 $ 8,652 $ 8,749
Mortgage Securities Fund........... $16,813 $15,644* $ 5,345
Ohio Tax-Free Fund................. $ 4,955 $ 6,638 $ 5,634
Fixed Income Securities Fund....... $ 4,257 $ 5,746 $ 5,079
- -----------
</TABLE>
* 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. For the fiscal year ended December
31, 1995, gross distribution fees were $76,912 and $10,690 of which $46,237
and $5,345 were voluntarily waived for the U.S. Treasury Money Market Fund
and the Mortgage Securities Fund, respectively.
25
<PAGE>
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
26
<PAGE>
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
27
<PAGE>
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 qualifies each year as a regulated investment
company under Subchapter M of the Code. In order 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
or other disposition 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 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.
28
<PAGE>
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.
29
<PAGE>
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 semiannual 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
obtain 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
30
<PAGE>
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 riot 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, 1995 (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................... 5.23% 5.37%
Ohio Municipal Money Market Fund.... 4.13% 4.21%
U.S. Treasury Money Market Fund..... 5.20% 5.34%
Based on the seven-day period ended December 31, 1995 (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................... 5.13% 5.26%
Ohio Municipal Money Market Fund.... 4.03% 4.11%
U.S. Treasury Money Market Fund..... 5.10% 5.23%
31
<PAGE>
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, 1995, was as follows:
Fund-Trust Shares Yield
- ----------------- -----
Growth Fund...................... 1.34%
Income Equity Fund............... 3.26%
Ohio Tax-Free Fund............... 3.70%
Fixed Income Securities Fund..... 5.25%
Short/Intermediate Fixed Income
Securities Fund................ 5.01%
Mortgage Securities Fund......... 7.35%
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, 1995, was as follows:
Fund-Investment Shares Yield
- ---------------------- -----
Growth Fund...................... 1.03%
Ohio Tax-Free Fund............... 3.38%
Fixed Income Securities Fund..... 4.90%
Mortgage Securities Fund......... 6.95%
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, 1995, were as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended Five-Years Ended Inception through
Fund-Trust Shares December 31, 1995 December 31, 1995 December 31, 1995
- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Growth Fund............... 30.75% 13.56% 11.08%
Income Equity Fund........ 29.26% 13.24% 9.04%
Ohio Tax-Free Fund........ 11.35% 6.28% 6.33%
Fixed Income Securities
Fund.................... 17.95% 8.95% 8.53%
Short/Intermediate Fixed
Income Securities
Fund..................... 12.81% 7.69% 7.81%
Mortgage Securities
Fund..................... 31.10% N/A 5.69%
</TABLE>
32
<PAGE>
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, 1995, were as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended Inception through
Fund-Investment Shares December 31, 1995 December 31, 1995
- ---------------------- ----------------- -----------------
<S> <C> <C>
Growth Fund................... 25.17% 9.84%
Ohio Tax-Free Fund............ 8.87% 5.35%
Fixed Income Securities Fund.. 15.29% 8.09%
Mortgage Securities Fund...... 28.45% 4.95%
</TABLE>
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 SEI Administrative 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. In calculating the yields shown below,
additional state and local taxes paid on comparable taxable investments were not
used to increase federal deductions.
The tax-equivalent yield for Trust Shares of the Ohio Municipal Money Market
Fund for the seven-day period ended December 31, 1995, was 6.18% (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, 1995, was 5.54% (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, 1995, was 6.03%
(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, 1995, was 5.06% (assuming a 28% federal
income tax bracket and a 5.201% Ohio income tax bracket).
33
<PAGE>
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. 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. 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 1996
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- $24,000- $58,151- $121,301- OVER
Single Return: $24,000 $58,150 $121,300 263,750 $263,750
- -------------------------------------------------------------------------------
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.
34
<PAGE>
TAXABLE YIELD EQUIVALENT FOR 1996
STATE OF OHIO
- -------------------------------------------------------------------------------
FEDERAL TAX BRACKET:
15.00% 28.00% 31.00% 36.00% 39.60%
COMBINED FEDERAL AND STATE TAX BRACKET:
20.201% 33.943% 37.900% 43.500% 47.100%
- -------------------------------------------------------------------------------
Joint Return: $1- $40,101- $96,901- $147,701- OVER
$40,100 $96,900 $147,700 $263,750 $263.750
- -------------------------------------------------------------------------------
TAX-EXEMPT
YIELD TAXABLE YIELD EQUIVALENT
- -------------------------------------------------------------------------------
1.50% 1.88% 2.27% 2.42% 2.65% 2.84%
2.00% 2.51% 3.03% 3.22% 3.54% 3.78%
2.50% 3.13% 3.78% 4.03% 4.42% 4.73%
3.00% 3.76% 4.54% 4.83% 5.31% 5.67%
3.50% 4.39% 5.30% 5.64% 6.19% 6.62%
4.00% 5.01% 6.06% 6.44% 7.08% 7.56%
4.50% 5.64% 6.81% 7.25% 7.96% 8.51%
5.00% 6.27% 7.57% 8.05% 8.85% 9.45%
5.50% 6.89% 8.33% 8.86% 9.73% 10.40%
6.00% 7.52% 9.08% 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, 1996, are for illustrative purposes only. They are not indicators of
past or future performance of a Fund.
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
record keeping services are based on a percentage of the average daily net
assets of the Funds.
Transfer Agent and Dividend Disbursing Agent
- -------------------------------------------------------------------------------
SEI Administrative 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. SEI Administrative
has, in turn, contracted with The Huntington Trust Company and with State Street
Bank and Trust Company, for certain shareholder accounting and servicing
functions in support of its role as transfer agent and dividend disbursing agent
for the Trust. The fees and expenses of these two Sub-Transfer Agents are paid
by SEI Administrative, and not by the Trust or any of the Funds.
35
<PAGE>
SEI Administrative 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 Accountants
- --------------------------------------------------------------------------------
The independent 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 federal and state court complaints and arbitrations before self-
regulatory orgainzations have been filed against Piper, Piper Jaffray Inc.
("PJI") and certain affiliated companies, and certain individuals affiliated
with Piper. These actions relate to one mutual fund and a number of closed-end
investment companies managed by Piper and to two mutual funds for which Piper
has acted as sub-adviser. 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 several plaintiffs purporting to represent a class of investors in
one of these funds. This complaint alleged certain violations of federal and
state securities laws, common law negligent misrepresentation, and breach of
fiduciary duty. In July 1995, the named plaintiffs and the defendants in this
action entered into a settlement agreement which was approved by the Court and
became effective on February 13, 1996. A number of other complaints and
arbitrations have also settled. The pending litigation and arbitration
proceedings
36
<PAGE>
generally allege certain violations of federal and state securities laws, the
federal Racketeer Influenced and Corrupt Organizations Act, state consumer
protection laws, common law negligent misrepresentation, breach of contract,
breach of fiduciary duty, and fraud. Piper and its affiliates intend to defend
or, in some cases, negotiate to settle these actions. None of these complaints
involve the Mortgage Securities Fund. Piper, PJI and certain other affiliates
have also been subject to regulatory inquiries relating to various funds or
assets managed by Piper. Without admitting or denying any findings, PJI has
agreed to a settlement with the National Association of Securities Dealers, Inc.
Additionally, both PJI and Piper have agreed to a settlement with the Minnesota
Department of Commerce, which resolved a joint investigation primarily related
to disclosure and sales practices with respect to one of the other funds managed
by Piper. PJI and Piper are continuing to cooperate in an investigation being
conduted by the U.S. Securities and Exchange Commission, and have been
responding to requests for information from a number of other regulatory
authorities.
Financial Statements
- -------------------------------------------------------------------------------
The report of Price Waterhouse LLP, independent accountants, and the audited
financial statements of The Monitor Funds for the year ended December 31,
1995, are incorporated herein by reference from the Trust's Combined Annual
Report to Shareholders for the year ended December 31, 1995, which has been
previously sent to shareholders of each Fund pursuant to Section 30(d) of the
Investment Company Act of 1940 and previously filed with the Securities and
Exchange Commission. A copy of the Annual Report to Shareholders may be
obtained without charge by contacting the Trust.
37
<PAGE>
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-I+.' A-Bonds
considered to be investment grade and of high credit quality. The obligor's
ability
38
<PAGE>
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
39
<PAGE>
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:
. Leading market positions in well-established industries.
. High rates of return on funds employed.
. Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
. Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
. 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. n& 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 riot as
great as for issues assigned F-1 + or F-1 ratings.
40
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements: The following financial statements have been
incorporated into the Combined Statement of Additional Information by
reference to the Trust's Combined Annual Report to Shareholders, dated
December 31, 1995:
Statements of Operations for the year ended December 31, 1995
Statements of Assets and Liabilities as of December 31, 1995
Statements of Changes in Net Assets for the year ended December 31, 1995
Statements of Cash Flows for the year ended December 31, 1995
Portfolios of Investments as of December 31 1995
Financial Highlights for the years ended December 31, 1995
Combined Notes to Financial Statements as of and for the year ended
December 31, 1995
Report of Price Waterhouse LLP, Independent Accountants
(b) Exhibits:
(1) Amended and Restated Declaration of Trust of the Registrant
(previously filed as Exhibit 1 to Post-Effective Amendment No. 19 and
incorporated herein by reference)
(2) By-Laws of the Registrant (previously filed as Exhibit 2 to
Post-Effective Amendment No. 19 and incorporated herein by reference)
(3) Not applicable
(4) Not applicable
(5) (i) Investment Advisory Agreement of the Registrant (previously
filed as Exhibit 5(i) to Post-Effective Amendment No. 19 and
incorporated herein by reference)
(ii) Sub-Advisory Agreement of the Registrant (previously filed as
Exhibit 5(ii) to Post-Effective Amendment No. 19 and incorporated
herein by reference)
(6) Distribution Agreement, dated January 11, 1996, between the
Registrant and SEI Financial Services Company (filed herewith)
(7) Not applicable
(8) Custodian Contract of the Registrant (previously filed as Exhibit 8
to Post-Effective Amendment No. 19 and incorporated herein by
reference)
(9) (i) Transfer Agency and Service Agreement, dated January 11, 1996,
between the Registrant and SEI Financial Management Corporation
(filed herewith)
(ii) Sub-Transfer Agency and Service Agreement, dated February 10,
1996, between SEI Financial Management Corporation and State Street
Bank and Trust Company (filed herewith)
(iii) Administration Agreement, dated January 11, 1996, between
the Registrant and SEI Financial Management Corporation (filed
herewith)
(iv) Sub-Administration Agreement, dated January 11, 1996, between
SEI Financial Management Corporation and The Huntington Trust
Company, N.A. (filed herewith)
(10) Opinion and Consent of Counsel as to legality of shares being
registered (filed herewith)
(11) Consent of Independent Accountants (filed herewith)
(12) Not applicable
(13) Initial Capital Understanding (filed herewith)
(14) Not applicable
(15) (i) Distribution Plan dated April 24, 1992 (previously filed as
Exhibit 15(i) to Post-Effective Amendment No. 19 and incorporated
herein by reference)
C-1
<PAGE>
(ii) Distribution Plan dated May 1, 1991 (previously filed as
Exhibit 15(ii) to Post-Effective Amendment No. 19 and incorporated
herein by reference)
(iii) Sales Agreement of the Registrant (previously filed as
Exhibit 15(iii) to Post-Effective Amendment No. 19 and incorporated
herein by reference)
(16) Not applicable
(18) Multiple Class Plan (previously filed as Exhibit 18 to Post-
Effective Amendment No. 19 and incorporated herein by reference)
(19) Power of Attorney (filed herewith)
(27) Financial Data Schedules (EDGAR filing only)(filed herewith)
Item 25. Persons Controlled by or Under Common Control with Registrant
None.
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Class as of April 10, 1996
- -------------- ------------------------
Shares of Beneficial Interest of:
The Monitor Money Market Fund
Trust Shares . . . . . . . . . . . . . . . . . 80
Investment Shares . . . . . . . . . . . . . . 1,498
The Monitor Ohio Municipal Money Market Fund
Trust Shares . . . . . . . . . . . . . . . . . 8
Investment Shares. . . . . . . . . . . . . . . 277
The Monitor U.S. Treasury Money Market Fund
Trust Shares . . . . . . . . . . . . . . . . . 10
Investment Shares. . . . . . . . . . . . . . . 362
The Monitor Growth Fund
Trust Shares . . . . . . . . . . . . . . . . . 96
Investment Shares. . . . . . . . . . . . . . . 736
The Monitor Income Equity Fund
Trust Shares . . . . . . . . . . . . . . . . . 82
The Monitor Mortgage Securities Fund
Trust Shares . . . . . . . . . . . . . . . . . 57
Investment Shares. . . . . . . . . . . . . . . 394
The Monitor Ohio Tax-Free Fund
Trust Shares . . . . . . . . . . . . . . . . . 22
Investment Shares. . . . . . . . . . . . . . . 178
The Monitor Fixed Income Securities Fund
Trust Shares . . . . . . . . . . . . . . . . . 62
Investment Shares. . . . . . . . . . . . . . . 316
The Monitor Short/Intermediate Fixed
Income Securities Fund
Trust Shares . . . . . . . . . . . . . . . . . 76
C-2
<PAGE>
Item 27. Indemnification
The response to this Item 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)
Name During at Least the Last Two Fiscal Years
- ---- -----------------------------------------
Officers and Directors of Huntington
Elaine H. Hairston. . . . . . Chancellor, Ohio Board of Regents
W. Lee Hoskins. . . . . . . . Vice Chairman, Huntington Bancshares Incorporated
Edgar W. Ingram III . . . . . Chairman and Chief Executive Officer of White
Castle Systems
Norman A. Jacobs. . . . . . . President and Chief Executive Officer, The
Huntington Trust Company, National Association
Robert W. Rahal . . . . . . . President, Bobby Rahal, Inc.
Zuheir Sofia. . . . . . . . . President and Chief Operating Officer,
Huntington Bancshares Incorporated
Rodney Wasserstrom. . . . . . President and Chief Executive Officer, The
Wasserstrom Company
Frank Wobst . . . . . . . . . Chairman and Chief Executive Officer,
Huntington Bancshares Incorporated
Piper Capital Management Incorporated was formed in 1985 and is a wholly-owned
subsidiary of Piper Jaffray Companies Incorporated, a publicly held corporation
engaged through its subsidiaries in various aspects of the financial services
industry. The officers and directors of Piper Capital Management Inc. are as
follows: William H. Ellis, Director and President; Bruce C. Huber, Director;
David E. Rosedahl, Director; Charles N. Hayssen, Director; Momchilo Vucenich,
Director; James A. Berman, Senior Vice President; Worth Bruntjen, Senior Vice
President; Michael C. Derck, Senior Vice President; Richard W. Filippone,
Senior Vice President; John J. Gibas, Senior Vice President; Marijo A.
Goldstein, Senior Vice President; Jerry F. Gudmundson, Senior Vice President;
Mark R. Grotte, Senior Vice President; Robert C. Hannah, Senior Vice President;
Lynne Harrington, Senior Vice President; Lisa A. Kenyon, Senior Vice President;
Mark S. Lee, Senior Vice President; Steven B. Markusen, Senior Vice President;
Thomas S. McGlinch, Senior Vice President; Curt D. McLeod, Senior Vice
President; Paula R. Meyer, Senior Vice President; Susan S. Miley, Senior Vice
President
C-3
<PAGE>
and General Counsel; Robert H. Nelson, Senior Vice President; Edward P.
Nicoski, Senior Vice President; Gary Norstrem, Senior Vice President; Nancy S.
Olsen, Senior Vice President; Ronald R. Reuss, Senior Vice President; Maxine D.
Rossini, Senior Vice President; Bruce D. Salvog, Senior Vice President; John K.
Schonberg, Senior Vice President; Sandra K. Shrewsbury, Senior Vice President;
David M. Steele, Senior Vice President; J. Bradley Stone, 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; Julie
Deutz, Vice President; Joan L. Harrod, Vice President; Newby Herrod, Vice
President; Amy K. Johnson, Vice President; Russ Kappenman, Vice President;
Kimberly F. Kaul, Vice President; John Kightlinger, Vice President; Wan-Chong
Kung, Vice President; Stephan C. Meyer, Vice President; Thomas Moore, Vice
President; Paul D. Pearson, Vice President; Daniel Phillips, Vice President;
Eric L. Siedband, Vice President; Catherine M. Stienstra, Vice President;
Shaista Tajamal, Vice President; Bonnie L. Theis, Vice President; Michael S.
Wallace, Vice President; Jane K. Welter, Vice President; John G. Wenker, Vice
President; Fong P. Woo, Vice President; Marcy K. Winson, Vice President.
Item 29. Principal Underwriters
(a) Furnish the name of each investment company (other than the Registrant) for
which each principal underwriter currently distributing securities of the
Registrant also acts as a principal underwriter, distributor or investment
adviser:
SEI Financial Services Company ("SEI Financial") is the Distributor of the
Registrant's shares. SEI Financial also acts as distributor for the
following other investment companies: SEI Daily Income Trust, SEI Liquid
Asset Trust, SEI Tax Exempt Trust, SEI Index Funds, SEI Institutional
Managed Trust, SEI International Trust, Stepstone Funds, The Advisors'
Inner Circle Fund, The Pillar Funds, CUFUND, STI Classic Funds, CoreFunds,
Inc., First American Funds, Inc., First American Investment Funds, Inc.,
The Arbor Fund, 1784 Funds, The PBHG Funds, Inc., Marquis Funds,
Morgan-Grenfell Investment Trust, Inventor Funds, Inc., The Achievement
Funds Trust, Insurance Investment Products Trust, CrestFunds, Inc., STI
Classic Variable Trust, ARK Funds, Bishop Street Funds, FMB Funds, Inc.
and SEI Asset Allocation Trust.
SEI Financial provides numerous financial services to investment managers,
pension plan sponsors and bank trust departments. These services include
portfolio evaluation, performance measurement and consulting services and
automated execution, clearing and settlement of securities transactions.
(b) Furnish the information required by the following table with respect to
each director, officer or partner of each principal underwriter named in the
answer to Item 21 of Part B. Unless otherwise noted, the business address of
each director or officer is 680 East Swedesford Road, Wayne, Pennsylvania
19087:
<TABLE>
<CAPTION>
Position and Office Position and Office
Name with Underwriter with Registrant
- ---- ------------------- -------------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman and CEO None
Henry H. Greer Director, President and COO None
Carmen V. Romeo Director, Executive Vice President and Treasurer None
Gilbert L. Beebower Executive Vice President None
Richard B. Lieb Executive Vice President None
</TABLE>
C-4
<PAGE>
<TABLE>
<S> <C> <C>
Charles A. Marsh Executive Vice President--Capital Resources Div. None
Leo J. Dolan, Jr. Senior Vice President None
Carl A. Guarino Senior Vice President None
Jerome Hickey Senior Vice President None
David G. Lee Senior Vice President President and CEO
William Madden Senior Vice President None
A. Keith McDowell Senior Vice President None
Dennis J. McGonigle Senior Vice President None
Hartland J. McKeown Senior Vice President None
James V. Morris Senior Vice President None
Steven Onofrio Senior Vice President None
Kevin P. Robins Senior Vice President, General Counsel and Vice President and
Secretary Assistant Secretary
Robert Wagner Senior Vice President None
Patrick K. Walsh Senior Vice President None
Kenneth Zimmer Senior Vice President None
Robert Crudup Managing Director None
Vic Galef Managing Director None
Kim Kirk Managing Director None
John Krzeminski Managing Director None
Carolyn McLaurin Managing Director None
Barbara Moore Managing Director None
Donald Pepin Managing Director None
Mark Samuels Managing Director None
Wayne M. Withrow Managing Director None
Mick Duncan Team Leader None
Robert Ludwig Team Leader None
Vicki Malloy Team Leader None
Robert Aller Vice President None
Steve Bendinelli Vice President None
Gordon W. Carpenter Vice President None
Barbara A. Nugent Vice President and Assistant Secretary Vice President and
Assistant Secretary
Todd Cipperman Vice President and Assistant Secretary Vice President and
Assistant Secretary
Ed Daly Vice President None
Jeff Drennen Vice President None
Lucinda Duncalfe Vice President None
Kathy Heilig Vice President None
Larry Hutchison Vice President None
Michael Kantor Vice President None
Samuel King Vice President None
Donald H. Korytowski Vice President None
Robert S. Ludwig Vice President None
Jack May Vice President None
W. Kelso Morrill Vice President None
Sandra K. Orlow Vice President and Assistant Secretary Vice President and
Assistant Secretary
Larry Pokora Vice President None
Kim Rainey Vice President None
</TABLE>
C-5
<PAGE>
<TABLE>
<S> <C> <C>
Paul Sachs Vice President None
Steve Smith Vice President None
Daniel Spaventa Vice President None
Kathryn L. Stanton Vice President and Assistant Secretary Vice President and
Assistant Secretary
William Zawaski Vice President None
James Dougherty Director of Brokerage Services None
</TABLE>
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 3la-3 promulgated
thereunder are maintained at one of the following locations:
SEI Financial Management Corporation 680 East Swedesford Road
(Administrator, Transfer Agent and Wayne, PA 19087
Dividend Disbursing Agent)
The Huntington Trust Company, N.A. Huntington Center
(Adviser, Custodian and Portfolio 41 South High Street
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.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933, as amended,
and 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 Columbus,
State of Ohio, on the 24th day of April, 1996.
THE MONITOR FUNDS
By: /S/ DAVID G. LEE
-----------------------
David G. Lee, President
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
/S/ DAVID G. LEE President April 24, 1996
- ----------------------------- (Principal Executive Officer)
David G. Lee
/S/ STEPHEN G. MEYER Treasurer and Controller April 24, 1996
- ----------------------------- (Principal Financial and
Stephen G. Meyer Accounting Officer)
/S/ DAVID S. SCHOEDINGER Trustee April 24, 1996
- -----------------------------
David S. Schoedinger
/S/ WILLIAM R. WISE Trustee April 24, 1996
- -----------------------------
William R. Wise
/S/ JOHN M. SHARY Trustee April 24, 1996
- -----------------------------
John M. Shary
/S/ RICHARD SISSON Trustee April 24, 1996
- -----------------------------
Richard Sisson
C-7
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
(1) Amended and Restated Declaration of Trust of the Registrant (previously
filed as Exhibit 1 to Post-Effective Amendment No. 19 and incorporated
herein by reference)
(2) By-Laws of the Registrant (previously filed as Exhibit 2 to Post-Effective
Amendment No. 19 and incorporated herein by reference)
(3) Not applicable
(4) Not applicable
(5) (i) Investment Advisory Agreement of the Registrant (previously filed as
Exhibit 5(i) to Post-Effective Amendment No. 19 and incorporated herein by
reference)
(ii) Sub-Advisory Agreement of the Registrant (previously filed as
Exhibit 5(ii) to Post-Effective Amendment No. 19 and incorporated herein
by reference)
(6) Distribution Agreement, dated January 11, 1996, between the Registrant and
SEI Financial Services Company (filed herewith)
(7) Not applicable
(8) Custodian Contract of the Registrant (previously filed as Exhibit 8 to
Post-Effective Amendment No. 19 and incorporated herein by reference)
(9) (i) Transfer Agency and Service Agreement, dated January 11, 1996, between
the Registrant and SEI Financial Management Corporation (filed herewith)
(ii) Sub-Transfer Agency and Service Agreement, dated February 10, 1996,
between SEI Financial Management Corporation and State Street Bank and
Trust Company (filed herewith)
(iii) Administration Agreement, dated January 11, 1996, between the
Registrant and SEI Financial Management Corporation (filed herewith)
(iv) Sub-Administration Agreement, dated January 11, 1996, between SEI
Financial Management Corporation and The Huntington Trust Company, N.A.
(filed herewith)
(10) Opinion and Consent of Counsel as to legality of shares being registered
(filed herewith)
(11) Consent of Independent Accountants (filed herewith)
(12) Not applicable
(13) Initial Capital Understanding (filed herewith)
(14) Not applicable
(15) (i) Distribution Plan dated April 24, 1992 (previously filed as Exhibit
15(i) to Post-Effective Amendment No. 19 and incorporated herein by
reference)
(ii) Distribution Plan dated May 1, 1991 (previously filed as
Exhibit 15(ii) to Post-Effective Amendment No. 19 and incorporated herein
by reference)
(iii) Sales Agreement of the Registrant (previously filed as
Exhibit 15(iii) to Post-Effective Amendment No. 19 and incorporated herein
by reference)
(16) Not applicable
(18) Multiple Class Plan (previously filed as Exhibit 18 to Post-Effective
Amendment No. 19 and incorporated herein by reference)
(19) Power of Attorney (filed herewith)
(27) Financial Data Schedules (EDGAR filing only)(filed herewith)
<PAGE>
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this 11th day of January, 1996, between
Monitor Funds (the "Trust"), a Massachusetts business trust and SEI Financial
Services Company (the "Distributor"), a Pennsylvania corporation.
WHEREAS, the Trust is registered as an investment company with the
Securities and Exchange Commission (the "SEC") under the Investment Company Act
of 1940, as amended (the "1940 Act"), and its shares are registered with the SEC
under the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Trust and Distributor hereby agree as follows:
ARTICLE 1. Sale of Shares. The Trust grants to the Distributor the
--------------
exclusive right to sell units (the"Shares") of the portfolios (the "Portfolios")
of the Trust at the net asset value per Share, plus any applicable sales charges
in accordance with the current prospectus, as agent and on behalf of the Trust,
during the term of this Agreement and subject to the registration requirements
of the 1933 Act, the rules and regulations of the SEC and the laws governing the
sale of securities in the various states ("Blue Sky Laws").
ARTICLE 2. Solicitation of Sales. In consideration of these rights
---------------------
granted to the Distributor, the Distributor agrees to use all reasonable
efforts, consistent with its other business, in connection with the distribution
of Shares of the Trust; provided, however, that the Distributor shall not be
prevented from entering into like arrangements with other issuers. The
provisions of this paragraph do not obligate the Distributor to register as a
broker or dealer under the Blue Sky Laws of any jurisdiction when it determines
it would be uneconomical for it to do so or to maintain its registration in any
jurisdiction in which it is now registered nor obligate the Distributor to sell
any particular number of Shares.
ARTICLE 3. Authorized Representations. The Distributor is not authorized
--------------------------
by the Trust to give any information or to make any representations other than
those contained in the current registration statements and prospectuses of the
Trust filed with the SEC or contained in Shareholder reports or other material
that may be prepared by or on behalf of the Trust for the Distributor's use.
The Distributor may prepare and distribute sales literature and other material
as it may deem appropriate, provided that such literature and materials have
been approved by the Trust prior to their use.
ARTICLE 4. Registration of Shares. The Trust agrees that it will take all
----------------------
action necessary to register Shares under the federal and state securities laws
so that there will be available for sale the number of Shares the Distributor
may reasonably be expected to sell and to pay all fees associated with said
registration. The Trust shall make available to the Distributor such number of
copies of its currently effective prospectus and statement of additional
information as the Distributor may reasonably request. The Trust shall furnish
to the Distributor copies of all information, financial statements and other
papers which the Distributor may reasonably request for use in connection with
the distribution of Shares of the Trust.
<PAGE>
ARTICLE 5. Compensation. As compensation for providing the services under
------------
this Agreement:
(a) The Distributor shall receive from the Trust:
(1) all distribution and service fees, as applicable, at the rate and
under the terms and conditions set forth in each Distribution and
Shareholder Services Plan adopted by the appropriate class of shares
of each of the Portfolios, as such Plans may be amended from time to
time, and subject to any further limitations on such fees as the Board
of Trustees of the Trust may impose;
(2) all contingent deferred sales charges ("CDSCs") applied on
redemptions of CDSC Class Shares of each Portfolio on the terms and
subject to such waivers as are described in the Trust's Registration
Statement and current prospectuses, as amended from time to time, or
as otherwise required pursuant to applicable law; and
(3) all front-end sales charges, if any, on purchases of Class A
Shares of each Portfolio sold subject to such charges as described in
the Trust's Registration Statement and current prospectuses, as
amended from time to time. The Distributor, or brokers, dealers and
other financial institutions and intermediaries that have entered into
sub-distribution agreements with the Distributor, may collect the
gross proceeds derived from the sale of such Class A Shares, remit the
net asset value thereof to the Trust upon receipt of the proceeds and
retain the applicable sales charge.
(b) The Distributor may reallow any or all of the distribution or service
fees, contingent deferred sales charges and front-end sales charges which
it is paid by the Trust to such brokers, dealers and other financial
institutions and intermediaries as the Distributor may from time to time
determine.
ARTICLE 6. Indemnification of Distributor. The Trust agrees to indemnify
------------------------------
and hold harmless the Distributor and each of its directors and officers and
each person, if any, who controls the Distributor within the meaning of Section
15 of the 1933 Act against any loss, liability, claim, damages or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, claim, damages, or expense and reasonable counsel fees and
disbursements incurred in connection therewith), arising by reason of any person
acquiring any Shares, based upon the ground that the registration statement,
prospectus, Shareholder reports or other information filed or made public by the
Trust (as from time to time amended) included an untrue statement of a material
fact or omitted to state a material fact required to be stated or necessary in
order to make the statements made not misleading. However, the Trust does not
agree to indemnify the Distributor or hold it harmless to the extent that the
statements or omission was made in reliance upon, and in conformity with,
information furnished to the Trust by or on behalf of the Distributor.
In no case (i) is the indemnity of the Trust to be deemed to protect the
Distributor against any liability to the Trust or its Shareholders to which the
Distributor or such person otherwise would be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties under this
Agreement, or (ii) is the Trust to be liable to the Distributor under the
indemnity agreement contained in this paragraph with respect to any claim made
against the Distributor or any person indemnified unless the Distributor or
other person shall have notified the Trust in writing of the claim within a
reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the
Distributor or such other person (or after the Distributor or the person shall
have received notice of service on any designated agent). However, failure to
notify the Trust of any claim shall not relieve the Trust from any liability
which it may have to the Distributor or any person against whom such action is
brought otherwise than on account of its indemnity agreement contained in this
<PAGE>
paragraph.
The Trust shall be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this indemnity provision. If the Trust elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the Trust and satisfactory to the indemnified defendants in the suit
whose approval shall not be unreasonably withheld. In the event that the Trust
elects to assume the defense of any suit and retain counsel, the indemnified
defendants shall bear the fees and expenses of any additional counsel retained
by them. If the Trust does not elect to assume the defense of a suit, it will
reimburse the indemnified defendants for the reasonable fees and expenses of any
counsel retained by the indemnified defendants.
The Trust agrees to notify the Distributor promptly of the commencement of
any litigation or proceedings against it or any of its officers or Trustees in
connection with the issuance or sale of any of its Shares.
ARTICLE 7. Indemnification of Trust. The Distributor covenants and agrees
------------------------
that it will indemnify and hold harmless the Trust and each of its Trustees and
officers and each person, if any, who controls the Trust within the meaning of
Section 15 of the Act, against any loss, liability, damages, claim or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, damages, claim or expense and reasonable counsel fees incurred in
connection therewith) based upon the 1933 Act or any other statute or common law
and arising by reason of any person acquiring any Shares, and alleging a
wrongful act of the Distributor or any of its employees or alleging that the
registration statement, prospectus, Shareholder reports or other information
filed or made public by the Trust (as from time to time amended) included an
untrue statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon and in conformity
with information furnished to the Trust by or on behalf of the Distributor.
In no case (i) is the indemnity of the Distributor in favor of the Trust or
any other person indemnified to be deemed to protect the Trust or any other
person against any liability to which the Trust or such other person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (ii) is the
Distributor to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Trust or any person
indemnified unless the Trust or person, as the case may be, shall have notified
the Distributor in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the nature of
the claim shall have been served upon the Trust or upon any person (or after the
Trust or such person shall have received notice of service on any designated
agent). However, failure to notify the Distributor of any claim shall not
relieve the Distributor from any liability which it may have to the Trust or any
person against whom the action is brought otherwise than on account of its
indemnity agreement contained in this paragraph.
The Distributor shall be entitled to participate, at its own expense, in
the defense or, if it so elects, to assume the defense of any suit brought to
enforce the claim, but if the Distributor elects to assume the defense, the
defense shall be conducted by counsel chosen by the Distributor and satisfactory
to the indemnified defendants whose approval shall not be unreasonably withheld.
In the event that the Distributor elects to assume the defense of any suit and
retain counsel, the defendants in the suit shall bear the fees and expenses of
any additional counsel retained by them. If the Distributor does not elect to
assume the defense of any suit, it will reimburse the indemnified defendants in
the suit for the reasonable fees and expenses of any counsel retained by them.
The Distributor agrees to notify the Trust promptly of the commencement of
any litigation or proceedings against it in connection with the issue and sale
of any of the Trusts' Shares.
<PAGE>
ARTICLE 8. Effective Date. This Agreement shall be effective upon its
--------------
execution, and unless terminated as provided, shall continue in force for
[one/two] year(s) from the effective date and thereafter from year to year,
provided that such annual continuance is approved by (i) either the vote of a
majority of the Trustees of the Trust, or the vote of a majority of the
outstanding voting securities of the Trust, and (ii) the vote of a majority of
those Trustees of the Trust who are not parties to this Agreement or the Trust's
Distribution Plan or interested persons of any such party ("Qualified
Trustees"), cast in person at a meeting called for the purpose of voting on the
approval. This Agreement shall automatically terminate in the event of its
assignment. As used in this paragraph the terms "vote of a majority of the
outstanding voting securities", "assignment" and "interested person" shall have
the respective meanings specified in the 1940 Act. In addition, this Agreement
may at any time be terminated without penalty by SFS, by a vote of a majority of
Qualified Trustees or by vote of a majority of the outstanding voting securities
of the Trust upon not less than sixty days prior written notice to the other
party.
ARTICLE 9. Notices. Any notice required or permitted to be given by
-------
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Trust, at c/o Norman A. Jacobs, President and Chief Executive
Officer, Huntington Trust Company, N.A., 41 S. High Street, 11th Floor,
Columbus, Ohio 43287, and if to the Distributor, 680 East Swedesford Road,
Wayne, Pennsylvania 19087-1658, attention: General Counsel.
ARTICLE 10. Limitation of Liability. A copy of the Declaration of Trust
-----------------------
of the Trust is on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that this Agreement is executed on
behalf of the Trustees of the Trust as Trustees and not individually and that
the obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Trust individually but binding only upon the
assets and property of the Trust.
ARTICLE 11. Governing Law. This Agreement shall be construed in
-------------
accordance with the laws of the Commonwealth of Massachusetts and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the
Commonwealth of Massachusetts, or any of the provisions herein, conflict with
the applicable provisions of the 1940 Act, the latter shall control.
ARTICLE 12. Multiple Originals. This Agreement may be executed in two or
------------------
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
IN WITNESS, the Trust and Distributor have each duly executed this
Agreement, as of the day and year above written.
MONITOR FUNDS
By: /S/ KATHRYN L. STANTON
Kathryn L. Stanton, Vice President
SEI FINANCIAL SERVICES COMPANY
By: /S/ KEVIN P. ROBINS, SR.
Kevin P. Robins, Sr. Vice President
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 9th day of February, 1996 by and between Monitor
Funds, a Massachusetts business trust, having its principal office and place of
business at 680 E. Swedesford Road, Wayne, PA 19087(the "Fund"), and SEI
Financial Management Corporation, a Delaware corporation having its principal
office and place of business at 680 E. Swedesford Road, Wayne, PA 19087("SFM").
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund currently offers shares in (11) eleven series listed on
Schedule A hereto (each such series, together with all other series subsequently
established by the Fund and made subject to this Agreement in accordance with
Article 10, herein referred to as a "Portfolio", and collectively as the
"Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint SFM as its
transfer agent, dividend disbursing agent, and agent in connection with certain
other activities, and SFM 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; Duties of SFM
1.01 Subject to the terms and conditions set forth in this Agreement, the
Fund, on behalf of the Portfolios, hereby employs and appoints SFM to act as,
and SFM agrees to act as its transfer agent for the authorized and issued shares
of beneficial interest of the Fund representing interests in each of the
respective Portfolios ("Shares"), dividend disbursing agent, and agent in
connection with any accumulation, open-account or similar plans provided to the
shareholders of each of the respective Portfolios of the Fund ("Shareholders")
and set out in the currently effective prospectus and statement of additional
information ("prospectus") of the Fund on behalf of the applicable Portfolio,
including without limitation any periodic investment plan or periodic withdrawal
program.
1.02 SFM agrees that it will perform the following services:
(a) In accordance with any procedures which may be established from time
to time by written agreement between the Fund on behalf of each of the
Portfolios, as applicable and SFM, SFM shall:
(i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation thereof to the
Custodian of the Fund authorized pursuant to the Declaration of Trust
of the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof to the
Custodian;
<PAGE>
(iv) In respect to the transactions in items (i), (ii) and (iii)
above, SFM shall execute transactions directly with broker-dealers
authorized by the Fund (or the Distributor) who shall thereby be
deemed to be acting on behalf of the Fund;
(v) At the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption, pay over or
cause to be paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
(vi) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and distributions
declared by the Fund on behalf of the applicable Portfolio;
(viii) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing, which records shall in any event
include a record for each Shareholder's account of: (a) name,
address, and tax identifying number (and whether such number has been
certified); (b) numbers 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 any account for which the
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; and (h) any information required in order for
SEI to perform the calculations contemplated or required by this
Agreement; and
(ix) Record the issuance of Shares of the Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total number of
Shares which are authorized, based upon data provided to it by the
Fund, and issued and outstanding. SFM shall also provide the Fund
on a regular basis with the total number of Shares which are
authorized and issued and outstanding and shall have no obligation,
when recording the issuance of Shares, 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 Fund.
(x) SFM shall provide additional services on behalf of the Fund
(i.e., escheatment services) which may be agreed upon in writing
between the Fund and SFM.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), SFM shall: (i) perform 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, mailing Shareholder reports and prospectuses to current
Shareholders, withholding taxes on U.S. resident and non-resident alien
accounts, preparing and filing U.S. Treasury Department Forms 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 (ii)
provide a system which will enable the Fund to monitor the total number of
Shares sold in each State.
(c) In addition, the Fund shall (i) identify to SFM in writing those
transactions and assets to
<PAGE>
be treated as exempt from blue sky reporting for each State and (ii) verify
the establishment of transactions for each State on the system prior to the
effective date of this Agreement. The responsibility of SFM for the Fund's
blue sky State registration status is solely limited to monitoring the
daily activity for each State, the initial establishment of transactions
subject to blue sky compliance by the Fund and the reporting of such
transactions to the Fund as provided above.
(d) Procedures as to who shall provide certain of these services in
Article 1 may be established from time to time by written agreement
between the Fund and SFM, whereby SFM may perform only a portion of these
services and the Fund or other agent may perform these services on each
Portfolio's behalf.
Article 2 Fees and Expenses
2.01 For the performance by SFM pursuant to this Agreement, the Fund
agrees on behalf of each of the Portfolios to pay SFM an annual maintenance fee
for each Shareholder account as set out in Schedule B attached hereto. Such
fees and out-of-pocket expenses and advances identified under Section 2.02 below
may be changed from time to time subject to mutual written agreement between the
Fund and SFM.
2.02 In addition to the fee paid under Section 2.01 above, the Fund agrees
on behalf of each of the Portfolios to reimburse SFM for out-of-pocket expenses
as set forth in Schedule B hereto, or advances incurred by SFM for the items
set out in Schedule B attached hereto. In addition, any other expenses incurred
by SFM at the request or with the consent of the Fund, will be reimbursed by the
Fund on behalf of the applicable Portfolio.
2.03 The Fund agrees on behalf of each of the Portfolios to pay all fees
and reimbursable expenses within five days following the receipt of the
respective billing notice. Postage for mailing of dividends, proxies, Fund
reports and other mailings to all Shareholder accounts shall be advanced to SFM
by the Fund at least seven (7) days prior to the mailing date of such materials.
Article 3 Representations and Warranties of SFM. SFM represents and warrants
to the Fund that:
3.01 It is a corporation duly organized and existing and in good standing
under the laws of the State of Delaware.
3.02 It is duly qualified to carry on its business in the State of
Delaware.
3.03 It is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
Article 4 Representations and Warranties of the Fund. The Fund represents and
warrants to SFM that:
4.01 It is a business trust duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
4.02 It is empowered under applicable laws and by its Declaration of Trust
and Code of
<PAGE>
Regulations to enter into and perform this Agreement.
4.03 All proceedings required by said Declaration of Trust and Code of
Regulations have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end and management investment company registered under
the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933, as
amended, on behalf of each of the Portfolios is currently effective and will
remain effective.
Article 5 Data Access and Proprietary Information.
5.01 The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals furnished to the Fund by SFM as part of the Fund's ability to access
certain Fund-related data ("Customer Data") maintained by SFM on data bases
under the control and ownership of SFM or other third party ("Data Access
Services") constitute copyrighted, trade secret, or other proprietary
information (collectively, "Proprietary Information") of substantial value to
SFM or other third party. In no event shall Proprietary Information be deemed
Customer Data. The Fund agrees to treat all Proprietary Information as
proprietary to SFM and further agrees that it shall not divulge any Proprietary
Information to any person or organization except as may be provided hereunder.
Without limiting the foregoing, the Fund agrees for itself and its employees and
agents:
(a) to access Customer Data solely from locations as may be
designated in writing by SFM and solely in accordance with SFM's
applicable user documentation;
(b) to refrain from copying or duplicating in any way the
Proprietary Information;
(c) to refrain from obtaining unauthorized access to any portion of
the Proprietary Information, and if such access is inadvertently
obtained, to inform in a timely manner of such fact and dispose of
such information in accordance with SFM's instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any unauthorized computer
facility or other location, except with the prior written consent of
SFM;
(e) that the Fund shall have access only to those authorized
transactions agreed upon by the parties;
(f) to honor all reasonable written requests made by SFM to
protect at SFM's expense the rights of SFM in Proprietary
Information at common law, under federal copyright law and under
other federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Article 5. The obligations of this Article shall
survive any earlier termination of this Agreement.
5.02 If the Fund notifies SFM that any of the Data Access Services do not
operate in material compliance with the most recently issued user documentation
for such services, SFM shall endeavor in a timely manner to correct such
failure. Organizations from which SFM may obtain certain data included in the
Data Access Services are solely responsible for the contents of such data and
the Fund agrees to make no claim against SFM arising out of the contents of such
third-party data, including, but not limited to, the accuracy thereof. DATA
ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN
CONNECTION THEREWITH ARE PROVIDED ON AN
<PAGE>
AS IS, AS AVAILABLE BASIS. SFM EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE
EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
5.03 If the transactions available to the Fund include the ability to
originate electronic instructions to SFM in order to (i) effect the transfer or
movement of cash or Shares or (ii) transmit Shareholder information or other
information (such transactions constituting a "COEFI"), then in such event SFM
shall be entitled to rely on the validity and authenticity of such instruction
without undertaking any further inquiry as long as such instruction is
undertaken in conformity with security procedures established by SFM from time
to time.
Article 6 Indemnification
6.01 SFM shall not be responsible for, and the Fund shall indemnify and
hold SFM harmless from and against, any and all losses, damages, costs, charges,
reasonable counsel fees, payments, expenses and liability arising out of or
attributable to:
(a) All actions of SFM or its agent or subcontractors required to
be taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or willful misconduct
which arise out of the breach of any representation or warranty of
the Fund hereunder.
(c) The reliance on or use by SFM or its agents or subcontractors
of information, records, documents or services which (i) are
received by SFM or its agents or subcontractors, and (ii) have been
prepared, maintained or performed by the Fund or any other person or
firm on behalf of the Fund including but not limited to any previous
transfer agent or registrar, provided that such actions are taken in
good faith and without negligence or willful misconduct.
(d) The reliance on, or the carrying out by SFM or its agents or
subcontractors of any instructions or requests of the Fund on behalf
of the applicable Portfolio, provided that such actions are taken in
good faith and without negligence or willful misconduct.
(e) 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 that such
actions are taken in good faith and without negligence or willful
misconduct.
6.02 At any time SFM may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by SFM under this
Agreement, and SFM and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund on behalf of the applicable Portfolio for any
action taken or omitted by it in reliance upon such instructions or upon the
written opinion of such counsel. SFM, its agents and subcontractors shall be
protected and indemnified in acting upon any paper or document furnished by or
on behalf of the Fund, reasonably believed to be genuine and to have been signed
by the proper person or persons, or upon any instruction, information, data,
records or documents provided SFM or its agents or subcontractors by machine
readable input, telex, CRT data entry or other similar means authorized by the
Fund, and shall not be held to have notice of any change of authority of any
person, until receipt of written notice thereof from the Fund. SFM, its agents
and subcontractors shall also be protected and indemnified in recognizing stock
certificates which are reasonably believed to bear the
<PAGE>
proper manual or facsimile signatures of the officers of the Fund, and the
proper countersignature of any former transfer agent or former registrar, or of
a co-transfer agent or co-registrar.
6.03 In order that the indemnification provisions contained in this
Article 6 shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify SFM, SFM shall promptly notify the Fund of such assertion,
and shall keep the Fund advised with respect to all developments concerning such
claim. The Fund shall have the option to participate with SFM in the defense of
such claim or to defend against said claim in its own name or in the name of
SFM. SFM shall in no case confess any claim or make any compromise in any case
in which the Fund may be required to indemnify SFM except with the Fund's prior
written consent.
Article 7 Standard of Care
7.01 SFM shall at all times act in good faith and agrees to use its best
efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement, but assumes no responsibility and shall not be
liable for loss or damage due to errors unless said errors are caused by its
negligence, bad faith, or willful misconduct of that of its employees.
Article 8 Covenants of the Fund and SFM
8.01 The Fund shall promptly furnish to SFM the following:
(a) A certified copy of the resolution of the Board of Trustees of
the Fund authorizing the appointment of SFM and the execution and
delivery of this Agreement.
(b) A copy of the Declaration of Trust and By-Laws of the Fund and
amendments thereto.
8.02 SFM hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Fund for safekeeping of check forms and facsimile
signature imprinting devices, if any; and for the preparation or use, and for
keeping account of, such forms and devices.
8.03 SFM shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, SFM agrees that all such records prepared or maintained by
SFM relating to the services to be performed by SFM hereunder are the property
of the Fund and will be preserved, maintained and made available in accordance
with such Section and Rules, and will be surrendered promptly to the Fund on and
in accordance with its request.
8.04 SFM and the Fund agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other person, except
as may be required by law.
8.05 In case of any requests or demands for the inspection of the
Shareholder records of any of the Fund, SFM will endeavor to notify the Fund and
to secure instructions from an authorized officer of the Fund as to such
inspection. SFM reserves the right, however, to exhibit the Shareholder records
to any person whenever it is advised by counsel acceptable to the Trust that it
may be held liable for the failure to exhibit the Shareholder records to such
person.
Article 9 Termination of Agreement
9.01 This Agreement may be terminated by either party upon ninety (90)
days written notice to the other.
<PAGE>
9.02 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund on behalf of the applicable Portfolio(s). Additionally, SFM reserves
the right to charge for any other reasonable expenses associated with such
termination up to a maximum of $20,000.
Article 10. Additonal Funds
10.01 In the event that the Fund establishes one or more additional series
of Shares with respect to which it desires to have SFM render services as
transfer agent under the terms hereof, it shall notify SFM in writing, and if
SFM agrees in writing to provided such services, such series of Shares shall
become a Portfolio hereunder.
Article 11 Assignment
11.01 Except as provided in Section 10.03 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either party without
the written consent of the other party. As used in this paragraph, the term
"assignable" shall be construed by reference to the term "assignment" as defined
in the 1940 Act.
11.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
11.03 SFM may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) 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, as amended ("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly registered
as a transfer agent pursuant to Section 17A(c)(1) or (iii) a BFDS affiliate;
provided, however, that SFM shall be as fully responsible to the Fund for the
acts and omissions of any subcontractor as it is for its own acts and omissions.
Article 12 Amendment
12.01 This Agreement may be amended or modified by a written agreement
executed by both parties.
Article 13 Massachusetts Law to Apply
13.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
Article 14 Force Majeure
-------------
14.01 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes. Notwithstanding the above, the Transfer Agent shall, within forty
eight (48) hours of an event causing its performance to be materially affected,
transfer the operations contemplated by this Agreement to its disaster recovery
site.
<PAGE>
Article 15 Merger of Agreement
15.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
Article 16 Approvals and Limitations
16.01 All agreements and consents on behalf of the Fund in connection with
this Agreement shall require the approval of the Board of Trustees of the Fund.
16.02 The names "Monitor Funds" and "Trustees of Monitor Funds" refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under a Declaration of
Trust dated February 10, 1987 which is hereby referred to and a copy of which is
on file at the office of the State Secretary of the Commonwealth of
Massachusetts and at the principal office of the Trust. The obligations of
"Monitor Funds" entered into in the name or on behalf thereof by any of the
Trustees, represenatives or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, Shareholders or
represenatives of the Trust personally, but bind only the Trust property, and
all persons dealing with any class of shares of the Trust must look solely to
the Trust property belonging to such class for the enforcement of any claims
against the Trust.
Article 17 Counterparts
17.01 This Agreement may be executed by the parties hereto on any number
of counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
MONITOR FUNDS
BY: /S/ KATHRYN L. STANTON
Kathryn L. Stanton, Vice President
SEI FINANCIAL MANAGEMENT
CORPORATION
BY: /S/ KEVIN P. ROBINS
Kevin P. Robins, Sr.Vice President
<PAGE>
SCHEDULE A
TO THE TRANSFER AGENCY
AND SERVICE AGREEMENT
DATED FEBRUARY 9, 1996
The Monitor Fixed Income Securities Fund
The Monitor Growth Fund
The Monitor Income Equity Fund
The Monitor Mortgage Securities Fund
The Monitor Ohio Tax Free Fund
The Monitor Short/Intermediate Fixed Income Securities Fund
The Monitor Money Market Fund
The Monitor Ohio Municipal Money Market Fund
The Monitor U.S. Treasury Money Market Fund
<PAGE>
SCHEDULE B
TO THE TRANSFER AGENCY
AND SERVICE AGREEMENT
DATED FEBRUARY 9, 1996
Pursuant to Article 2, the Fund shall pay SFM $12,500.00 per portfolio, per
class, plus $24,000 for out-of-pocket expenses which include but are not limited
to: confirmation statements, postage, forms, audio response, telephone, records
retention, transcripts, microfiche, and expenses incurred at the specific
direction of the Fund.
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 10th day of February, 1996, by and among SEI
Financial Management Corporation ("SFM"), a Delaware corporation, having its
principal office and place of business at 680 East Swedesford Road, Wayne, PA
19087 (the "Transfer Agent"), STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company having its principal office and place of business at
225 Franklin Street, Boston, Massachusetts 02110 ("State Street"), and The
Huntington Trust Company, N.A., a national banking association, having its
principal office and place of business at 41 South High Street, Columbus, Ohio
43287 ("Huntington").
WHEREAS, the Transfer Agent has been appointed by Monitor Funds (the
"Trust") an open-end diversified management investment company registered under
the Investment Company Act of 1940, as amended, as transfer agent, dividend
disbursing agent and shareholder servicing agent in connection with certain
activities, and the Transfer Agent has accepted such appointment;
WHEREAS, the Transfer Agent has entered into a Transfer Agency and Service
Agreement with the Trust (including each series thereof now or hereafter
created) pursuant to which the Transfer Agent is responsible for certain
transfer agency, dividend disbursing and shareholder servicing functions and the
Transfer Agent is authorized to subcontract for the performance of its
obligations and duties thereunder in whole or in part with State Street and
with Huntington;
WHEREAS, the Transfer Agent is desirous of having State Street and
Huntington perform certain shareholder accounting, administrative and servicing
functions (collectively "Shareholder and Record-Keeping Services");
WHEREAS, the Transfer Agent desires to appoint each of State Street and
Huntington as its agent, and each of State Street and Huntington desire 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; Duties of State Street and Huntington.
1.01 Subject to the terms and conditions set forth in this Agreement, the
Transfer Agent
<PAGE>
hereby employs and appoints State Street and Huntington to act as, and State
Street and Huntington agrees to act as, the agent of the Transfer Agent for the
Shares of the Trust to perform certain transfer agency, dividend disbursing and
Shareholder and Recordkeeping Services, as described herein As used herein, the
term "Shares" means the authorized and issued shares of beneficial interest, of
the Trust (including each series thereof).
1.02 In accordance with procedures established from time to time by
agreement between the Transfer Agent and State Street, or the Transfer Agent and
Huntington, as the case may be, each of State Street and Huntington agrees
that it will perform the Shareholder and Record-Keeping services outlined in
Schedule A attached hereto as well as such additional services on behalf of the
Transfer Agent (e.g. escheatment services) which may be agreed upon in writing
between the Transfer Agent and State Street or Huntington.
(a) In addition to the services set forth in Schedule A, State
Street and Huntington shall provide a system which will enable the Trust to
monitor the total number of Shares of each series of the Trust sold in each
State. In addition, the Transfer Agent shall (i) identify to State Street
and Huntington in writing those transactions and assets to be treated as
exempt from blue sky reporting for each State and (ii) verify the
establishment of transactions for each State on the system prior to the
effective date of this Agreement. The responsibility of State Street and
Huntington for the status of each series of the Trust blue sky State
registration is solely limited to the initial establishment of transactions
subject to blue sky compliance by each series of the Trust and the
reporting of such transactions to the Trust as provided above.
(b) Procedures as to who shall provide certain of these services in
Article 1 may be established from time to time by written agreement between
the Transfer Agent, State Street and Huntington whereby State Street or
Huntington perform only a portion of these services and the Transfer Agent,
or other agent may perform these services on the Trust's behalf.
Article 2 Fees and Expenses.
2.01 For the performance by State Street pursuant to this Agreement, the
Transfer Agent agrees to pay State Street an annual fee as set out in Schedule
B attached hereto. Such fees and out-of-pocket expenses and advances identified
under Section 2.02 below may be changed from time to time subject to mutual
written agreement between the Transfer Agent and State Street. Huntington
acknowledges that payment for its services under this Agreement is included in
the fee it receives from the Transfer Agent for performing sub-administrative
services to the Trust. In addition, Huntington agrees that all costs and
expenses incurred by it in the performance of its obligations under this
Agreement shall be its sole responsibility.
2.02 In addition to the fee paid under Section 2.01 above, the Transfer
Agent agrees to reimburse State Street for reasonable out-of-pocket expenses
incidental to State Street's performance of its responsibilities hereunder,
including but not limited to confirmation production, postage, forms, telephone,
microfilm, microfiche, tabulating proxies, records storage, or advances incurred
by State Street or its agent for the items set out in Schedule A attached
hereto. In addition, any other expenses incurred by State Street at the
request or with the consent of the Transfer Agent, will be reimbursed by the
Transfer Agent.
2.03 The Transfer Agent agrees to pay all fees and reimbursable expenses
within five days following the receipt of the respective billing notice. If
appropriate, postage for mailing of dividends, proxies, Trust reports and other
mailings to all shareholder accounts shall be advanced to the State Street by
the Transfer Agent at least seven (7) days prior to the mailing date of such
materials.
<PAGE>
Article 3 Representations and Warranties of State Street. State Street
represents and warrants to the Transfer Agent that:
3.01 It is a trust company duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the Commonwealth of
Massachusetts.
3.03 It is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
Article 4 Representations and Warranties of Huntington. The Huntington
represents and warrants to the Transfer Agent that:
4.01 It is a national banking association duly organized and existing
and in good standing under applicable federal banking laws.
4.02 It is duly qualified to carry on its business in the State of Ohio.
4.03 It is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform this Agreement.
4.04 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
4.05 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
Article 5 Representations and Warranties of the Transfer Agent. The Transfer
Agent represents and warrants to State Street and Huntington that:
5.01 It is a corporation duly organized and existing and in good standing
under the laws of the State of Delaware.
5.02 It is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform this Agreement.
5.03 All corporate proceedings required by said Charter and By-Laws have
been taken to authorize it to enter into and perform this Agreement.
5.04 The Trust is an open-end and diversified management investment
company registered under the Investment Company Act of 1940, as amended.
5.05 A registration statement under the Securities Act of 1933, as
amended, for the Trust is currently effective and will remain effective, and
appropriate state securities law filings have been made and will continue to be
made, with respect to all Shares of the Trust being offered for sale.
<PAGE>
Article 6 Data Access and Proprietary Information
6.01 Each of the Transfer Agent and Huntington acknowledges that the data
bases, computer programs, screen formats, report formats, interactive design
techniques, and documentation manuals furnished to the Transfer Agent and
Huntington by State Street as part of the Trust's ability to access certain
Trust-related data ("Customer Data") maintained by State Street on data bases
under the control and ownership of State Street or other third party ("Data
Access Services") constitute copyrighted, trade secret, or other proprietary
information (collectively, "Proprietary Information") of substantial value to
State Street or other third party. In no event shall Proprietary Information be
deemed Customer Data. Each of the Transfer Agent and Huntington agrees to treat
all Proprietary Information as proprietary to State Street and further agrees
that it shall not divulge any Proprietary Information to any person or
organization except as may be provided hereunder. Without limiting the
foregoing, each of the Transfer Agent and Huntington agrees for itself and its
respective employees and agents:
(a) to access Customer Data solely from locations as may be designated in
writing by State Street and solely in accordance with State Street's
applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained, to
inform in a timely manner of such fact and dispose of such information in
accordance with State Street's instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any unauthorized computer facility
or other location, except with the prior written consent of State Street;
(e) to have access only to those authorized transactions agreed upon by
the parties;
(f) to honor all reasonable written requests made by State Street to
protect at State Street's expense the rights of State Street in
Proprietary Information at common law, under federal copyright law and
under other federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Article 6. The obligations of this Article shall
survive any earlier termination of this Agreement.
6.02 If the Transfer Agent or Huntington notifies State Street that any of
the Data Access Services do not operate in material compliance with the most
recently issued user documentation for such services, State Street shall
endeavor in a timely manner to correct such failure. Organizations from which
State Street may obtain certain data included in the Data Access Services are
solely responsible for the contents of such data and the Transfer Agent and
Huntington agree to make no claim against State Street arising out of the
contents of such third-party data, including, but not limited to, the accuracy
thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE
SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS
AVAILABLE BASIS. STATE STREET EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE
EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
6.03 If the transactions available to the Transfer Agent and Huntington
include the ability to originate electronic instructions to State Street in
order to (i) effect the transfer or movement of cash or Shares or (ii) transmit
Shareholder information, then in such event State Street shall be entitled to
rely on the validity and authenticity of such instruction without undertaking
any further inquiry as long as such instruction is undertaken in conformity with
security procedures established by State Street from time to time.
<PAGE>
Article 7. Indemnification
7.01 State Street and Huntington (the "Sub-Transfer Agents") shall not be
responsible for, and the Transfer Agent shall indemnify and hold the Sub-
Transfer Agents harmless from and against, any and all losses, damages, costs,
charges, reasonable counsel fees, payments, expenses and liability arising out
of or attributable to:
(a) All actions of the Sub-Transfer Agents or their agents or
subcontractors required to be taken pursuant to this Agreement,
provided that such actions are taken in good faith and without
negligence or willful misconduct.
(b) The Transfer Agent's negligent or willful misconduct or a
breach of any material representation or warranty of the Transfer
Agent hereunder.
(c) The good faith reliance on or use by the Sub-Transfer Agents
or their agents or subcontractors of information, records, documents
or services which (i) are received by the Sub-Transfer Agents or
their agents or subcontractors, and (ii) have been prepared,
maintained or performed by the Transfer Agent or the Trust or any
other person or firm on behalf of the Transfer Agent or the Trust
including but not limited to any previous transfer agent or
registrar, provided that such actions are taken in good faith and
without negligence or willful misconduct.
(d) The good faith reliance on, or the carrying out by the Sub-
Transfer Agents or their agents or subcontractors of any
instructions or requests reasonably believed by the Sub-Transfer
Agents to have been signed or authorized by the Transfer Agent or
the Trust, provided that such actions are taken in good faith and
without negligence or willful misconduct.
(e) 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 that such
actions are taken in good faith and without negligence or willful
misconduct and further provided, that the Sub-Transfer Agents shall
not be indemnified with respect to claims based solely on the fact
that Shares of the Trust were not registered in a state if the
Sub-Transfer Agents and State Street had been notified previously by
the Trust or the Transfer Agent that the Trust is not registered in
such state.
7.02 At any time the Sub-Transfer Agents may apply to any officer of the
Transfer Agent for instructions, and may consult with legal counsel acceptable
to the Transfer Agent with respect to any matter arising in connection with the
services to be performed by the Sub-Transfer Agents by under this Agreement,
and the Sub-Transfer Agents and their agents or subcontractors shall not be
liable and shall be indemnified by the Transfer Agent for any action taken or
omitted by them in reliance upon such instructions or upon the written opinion
of such counsel. the Sub-Transfer Agents, their agents and subcontractors
shall be protected and indemnified in acting upon any paper or document
furnished by or on behalf of the Transfer Agent or each Fund, reasonably
believed to be genuine and to have been signed by the proper person or persons,
or upon any instruction, information, data, records or documents provided the
Sub-Transfer Agents or their agents or subcontractors by machine readable
input, telex, CRT data entry or other similar means authorized by the Transfer
Agent and reasonably believed by the Sub-Transfer Agents to be genuine, and
shall not be held to have notice of any change of authority of any person, until
receipt of written notice thereof from the Transfer Agent.
7.03 In order that the indemnification provisions contained in this
Article 7 shall apply, upon
<PAGE>
the assertion of a claim for which the Transfer Agent may be required to
indemnify, the Sub-Transfer Agents shall promptly notify the Transfer Agent of
such assertion, and shall keep the Transfer Agent advised with respect to all
developments concerning such claim. The Transfer Agent shall have the option to
participate with the Sub-Transfer Agents in the defense of such claim or to
defend against said claim in its own name or in the name of the Sub-Transfer
Agents. the Sub-Transfer Agents shall in no case confess any claim or make any
compromise in any case in which the Transfer Agent may be required to indemnify
the Sub-Transfer Agents except with the Transfer Agent's prior written consent.
Article 8 Standard of Care.
8.01 Each of State Street and Huntington shall at all times act in good
faith and agrees to use its best efforts within reasonable limits to insure the
accuracy of all services performed under this Agreement, but assumes no
responsibility and shall not be liable for loss or damage due to errors unless
said errors are caused by its negligence, bad faith, or willful misconduct or
that of its officers, employees and agents. Such liability hereunder shall
include reasonable counsel fees incurred by the Transfer Agent.
Article 9 Covenants of the Transfer Agent, State Street and Huntington
9.01 Each of State Street and Huntington hereby agree to establish and
maintain facilities and procedures reasonably acceptable to the Transfer Agent
for safekeeping of check forms and facsimile signature imprinting devices, if
any; and for the preparation or use, and for keeping account of, such forms and
devices.
9.02 Each of State Street and Huntington shall keep records relating to
the services to be performed hereunder, in the form and manner as it may deem
advisable. To the extent required by Section 31 of the Investment Company Act
of 1940, as amended, and the Rules thereunder, each of State Street and
Huntington agree that all such records prepared or maintained by State Street
or Huntington relating to the respective services to be performed by each of
them hereunder are the property of the Trust and will be preserved, maintained
and made available in accordance with such Section and Rules, and will be
surrendered promptly to the Trust on and in accordance with its request.
9.03 State Street, Huntington and the Transfer Agent agree that all
books, records, information and data pertaining to the business of the other
parties which are exchanged or received pursuant to the negotiation or the
carrying out of this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except as may be required by law.
9.04 In case of any requests or demands for the inspection of the
shareholder records of the Trust, the party receiving such request will
endeavor to notify the Transfer Agent and to secure instructions from an
authorized officer of the Transfer Agent as to such inspection. State Street
and Huntington each reserve the right, however, to exhibit the shareholder
records to any person whenever they are advised by counsel acceptable to the
Transfer Agent, as applicable that it may be held liable for the failure to
exhibit the shareholder records to such person.
Article 10 Termination of Agreement
10.01 This Agreement may be terminated by any party upon ninety (90) days
written notice to the other parties hereto.
10.02 Should the Transfer Agent exercise its right to terminate, all
reasonable out-of-pocket expenses associated with the movement of records and
material will be borne by the Transfer Agent. Additionally, State Street
reserves the right to charge as liquidated damages associated with such
termination a charge equivalent to the prior one month transfer agency fees if
termination occurs within the first year of this Agreement.
<PAGE>
Article 11 Assignment
11.01 Except as provided in Section 11.03 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by any party without the
written consent of the other parties.
11.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
11.03 State Street may, without further consent on the part of the
Transfer Agent, subcontract for the performance hereof with (i) 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, as amended ("Section 17A(c)(2)"), (ii) a BFDS subsidiary
duly registered as a transfer agent pursuant to Section 17A(c)(1) or (iii) a
BFDS affiliate; provided, however, that State Street shall be as fully
responsible to the Transfer Agent for the acts and omissions of any
subcontractor as it is for its own acts and omissions.
Article 12 Amendment
12.01 This Agreement may be amended or modified only by a written
agreement executed by all parties.
Article 13 Massachusetts Law to Apply
13.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
Article 14 Force Majeure
14.01 In the event any party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its reasonable control, or
other causes reasonably beyond its control, such party shall not be liable for
damages to the other parties for any damages resulting from such failure to
perform or otherwise from such causes. Notwithstanding the above, each party
shall use its best efforts to ensure that, within forty-eight (48) hours of an
event causing its performance to be materially affected, its material operations
contemplated by this Agreement are transferred to its disaster recovery site.
Article 15 Amendment
15.01 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
Article 16 Merger of Agreement
16.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
Article 17 Counterparts
17.01 This Agreement may be executed by the parties hereto on any number
of counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
SEI FINANCIAL MANAGEMENT CORPORATION
By: /S/ KATHRYN L.STANTON
Vice President
STATE STREET BANK AND TRUST COMPANY
By: /S/
Executive Vice President
THE HUNTINGTON TRUST COMPANY, N.A.
By: /S/
<PAGE>
SCHEDULE A
TO THE SUB-TRANSFER AGENCY
AND SERVICE AGREEMENT
Shareholder and Recordkeeping Services
SEI Financial Services - Fund Resources - "SEI"
BFDS/State Street - "BFDS"
The Huntington - "Bank"
<TABLE>
<CAPTION>
Service Performed SEI BFDS Bank
-------------------------------------------- --- ----------- -----------
<C> <S> <C> <C> <C>
1. Receives for acceptance, orders for the X
purchase of Investment Shares, and
promptly deliver payment and
appropriate documentation thereof to the
Custodian of the Fund authorized
pursuant to the Declaration of Trust of
the Fund.
2. Receives for acceptance, orders for the X
purchase of Trust Shares, and promptly
deliver payment and appropriate
documentation thereof to the Custodian
of the Fund authorized pursuant to the
Declaration of Trust of the Fund.
3. Pursuant to purchase orders, issue the X
appropriate number of Shares and hold
such Shares in the appropriate
Shareholder account.
4. Receive for acceptance redemption X
requests and redemption directions for
Investment Shares and deliver the
appropriate documentation thereof to the
Custodian
5. Receive for acceptance redemption X
requests and redemption directions for
Trust Shares and deliver the appropriate
documentation thereof to the Custodian
6. In respect to the transactions in items 1 X
through 5 above, the responsible party
shall execute transactions directly with
broker-dealers authorized by the Fund
(or the Distributor) who shall thereby be
deemed to be acting on behalf of
the Fund.
7. At the appropriate time as when it X X
receives monies paid to it by the check ACH and
Custodian with respect to any redemptions wire
redemption, pay over or cause to be only redemptions
paid over in the appropriate manner only
such monies as instructed by the
redeeming shareholders
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Service Performed SEI BFDS Bank
-------------------------------------------- --- ----------- -----------
<C> <S> <C> <C> <C>
8. Effect transfers of shares by the
registered owners thereof upon receipt of X
appropriate instructions.
9. Prepare and transmit payments for X X
dividends and distributions declared by
the Fund on behalf of hte applicable
Portfolio.
10. Reporting of abandoned property X
11. Maintain records of account for and X
advise the Fund and its Shareholders as
to the foregoing, which records in any
event include a record for each
Shareholder's account of: (a) name,
address, and tax identifying number (and
whether such number has been
certified); (b) numbers 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 any account for which
the 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; and (h) any
information required in order for SEI to
perform the calculations contemplated or
required by this Agreement.
12. Record the issuance of shares of each X
Fund and maintain pursuant to SEC
Rule 17Ad-10(e) a record of the total
number of shares of each Fund which
are authorized, based upon data
provided to it by each Fund on a regular
basis with the total number of shares
which are authorized and issued and
outstanding and shall have no obligation,
when recording the issuance of shares,
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 each Fund.
13. Mail proxies. X X
14. Mail shareholder reports. X X
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Service Performed SEI BFDS Bank
-------------------------------------------- --- ----------- -----------
<C> <S> <C> <C> <C>
15. Mail prospectuses to current X X
shareholders.
16. Withhold taxes on U.S. resident and X X
non-resident alien accounts.
17. Prepare and file U.S. Treasury X
Department forms
18. Prepare and mail account and X X
confirmation statements for shareholders
19. Provide shareholder account information. X
20. Blue Sky reporting. X
21. Service the Fund's tollfree line. X
22. Literature fulfillment. X
23. Provide broker/dealer support services X
24. Reconcile DDA accounts. X
25. Process maintenances on all X
shareholder accounts.
26. Preparation and mailing of required tax X
forms for shareholders (1099-DIV, 1099-
INT, etc.)
</TABLE>
<PAGE>
SCHEDULE B
TO THE SUB-TRANSFER AGENCY
AND SERVICE AGREEMENT
Pursuant to Article 2 the following sets forth the fees to be paid to State
Street in conjunction with its services pursuant to this agreement.
Annual fees (per class/per fund) $15,000
- --------------------------------
Fees are billable on a monthly basis at the rate of 1/12 of the annual fee.
Out of pocket expenses include but are not limited to: confirmation statements,
postage, forms, audio response, telephone, records retention, transcripts,
microfilm, microfiche, and expenses incurred at the specific direction of the
fund.
<PAGE>
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 11th day of January, 1996, by and between
The Monitor Funds, a Massachusetts business trust (the "Trust"), and SEI
Financial Management Corporation (the "Administrator"), a Delaware corporation.
WHEREAS, the Trust is an open-end diversified management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares of Common Stock; and
WHEREAS, the Trust desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
such portfolios of the Trust as the Trust and the Administrator may agree on
("Portfolios") and as listed on the schedules attached hereto ("Schedules") and
made a part of this Agreement, on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Administrator hereby agree as follows:
ARTICLE 1. Retention of the Administrator. The Trust hereby retains the
------------------------------
Administrator to act as the administrator of the Portfolios and to furnish the
Portfolios with the management and administrative services as set forth in
Article 2 below. The Administrator hereby accepts such employment to perform the
duties set forth below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust in any way and shall
not be deemed an agent of the Trust.
ARTICLE 2. Administrative and Accounting Services. The Administrator
--------------------------------------
shall perform
<PAGE>
or supervise the performance by others of other administrative services in
connection with the operations of the Portfolios, and, on behalf of the Trust,
will investigate, assist in the selection of and conduct relations with
custodians, depositories, accountants, legal counsel, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Portfolios' operations. The
Administrator shall provide the Trustees of the Trust with such reports
regarding investment performance and compliance with investment policies and
applicable laws, rules and regulations as they may reasonably request but shall
have no responsibility for supervising the performance by any investment adviser
or sub-adviser of its responsibilities. The Administrator may appoint a sub-
administrator to perform certain of the services to be performed by the
Administrator hereunder.
The Administrator shall provide the Trust with administrative services,
regulatory reporting, fund accounting and related portfolio accounting services,
all necessary office space, equipment, personnel, compensation and facilities
(including facilities for Shareholders' meetings but not Trustees' meetings that
are not held at offices of the Administrator) for handling the affairs of the
Portfolios and such other services as the Trustees may, from time to time,
reasonably request and the Administrator shall, from time to time, reasonably
determine to be necessary to perform its obligations under this Agreement. In
addition, at the request of the Trust's Board of Trustees (the "Trustees"), the
Administrator shall make reports to the Trustees concerning the performance of
its obligations hereunder.
Without limiting the generality of the foregoing, the Administrator shall:
(a) calculate contractual Trust expenses and control all disbursements
for the Trust, and as appropriate compute the Trust's yields, total return,
expense ratios, portfolio turnover rate and, if required, portfolio average
dollar-weighed maturity;
(b) assist Trust counsel with the preparation of prospectuses, statements
of additional information, registration statements, and proxy materials;
(c) prepare such reports, applications and documents (including reports
regarding the sale and redemption of Shares as may be required in order to
comply with Federal and state securities law) as may be necessary or
desirable to register the Trust's shares with state securities authorities,
monitor sale of Trust shares for compliance with state securities laws, and
file with the appropriate state securities authorities the registration
statements and reports for the Trust and the Trust's shares and all
amendments thereto, as may be necessary or convenient to register and keep
effective the Trust and the Trust's shares with state securities
authorities to enable the Trust to make a continuous offering of its
shares;
(d) develop and prepare communications to shareholders, including the
annual report to shareholders, coordinate mailing prospectuses, notices,
proxy statements, proxies and other reports to Trust shareholders, and
supervise and facilitate the solicitation of proxies solicited by the Trust
for all shareholder meetings, including tabulation process for shareholder
meetings;
(e) coordinate with Trust counsel the preparation and negotiation of, and
administer, contracts on behalf of the Trust with, among others, the
Trust's investment adviser, distributor, custodian, and transfer agent;
(f) maintain the Trust's general ledger and prepare the Trust's financial
statements, including expense accruals and payments, determine the net
asset value of the Trust's assets and of the Trust's shares, and supervise
the Trust's transfer agent
<PAGE>
with respect to the payment of dividends and other distributions to
shareholders;
(g) calculate performance data of the Trust and its portfolios for
dissemination to information services covering the investment company
industry;
(h) coordinate and supervise the preparation and filing of the Trust's
tax returns;
(i) examine and review the operations and performance of the various
organizations providing services to the Trust or any Portfolio of the
Trust, including, without limitation, the Trust's investment adviser,
distributor, custodian, transfer agent, Trust counsel and independent
public accountants, and at the request of the Trustees, report to the
Trustees on the performance of organizations;
(j) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and printing of the
Trust's semi-annual and annual reports to shareholders;
(k) provide internal legal and administrative services as requested by
the Trust from time to time;
(l) assist with the design, development, and operation of the Trust,
including new portfolio and class investment objectives, policies and
structure;
(m) provide individuals acceptable to the 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
Trustees;
(n) advise the Trust and its Trustees on matters concerning the Trust and
its affairs;
(o) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Trust in
accordance with the requirements of Rules 17g-1 and 17d-1(7) under the 1940
Act as such bonds and policies are approved by the Trust's Board of
Trustees;
(p) monitor and advise the Trust and its Portfolios on their registered
investment company status under the Internal Revenue Code of 1986, as
amended;
(q) perform all administrative services and functions of the Trust and
each Portfolio to the extent administrative services and functions are not
provided to the Trust or such Portfolio pursuant to the Trust's or such
Portfolio's investment advisory agreement, distribution agreement,
custodian agreement and transfer agent agreement;
(r) furnish advice and recommendations with respect to other aspects of
the business and affairs of the Portfolios as the Trust and the
Administrator shall determine desirable;
(s) prepare and file with the SEC the semi-annual report for the Trust on
Form N-SAR and all required notices pursuant to Rule 24f-2;
(t) review, and file with the National Association of Securities Dealers
where necessary, marketing materials relating to the Trust; and
(u) assist in the training and oversight of third parties used to perform
any of the
<PAGE>
services described herein.
The Administrator shall also be available, at its expense, to perform
internal audit examinations no more frequently that once annually at the request
of the Trust. In addition, , the Administrator will perform other services for
the Trust as agreed from time to time, including, but not limited to mailing
the annual reports of the Portfolios; preparing an annual list of shareholders;
and mailing notices of shareholders' meetings, proxies and proxy statements, for
all of which the Trust will pay the Administrator's out-of-pocket expenses.
In the performance of its duties hereunder, the Administrator will comply
with the provisions of the Declaration of Trust and the Bylaws of the Trust,
will safeguard and promote the welfare of the Trust, and will comply with the
policies that 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, jor any applicable statutes or regulations.
ARTICLE 3. Allocation of Charges and Expenses.
----------------------------------
(A) The Administrator. The Administrator shall furnish at its own
-----------------
expense the executive, supervisory and clerical personnel necessary to perform
its obligations under this Agreement. The Administrator shall also provide the
items which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Trust as well as all Trustees of the
Trust who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Trust retained by the Trustees of the Trust
to perform services on behalf of the Trust.
(B) The Trust. The Trust assumes and shall pay or cause to be paid all
---------
other expenses of the Trust not otherwise allocated herein, including, without
limitation, organizational costs, taxes, expenses for legal and auditing
services, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing Shareholders, all expenses
incurred in connection with issuing and redeeming Shares, the costs of custodial
services, the cost of initial and ongoing registration of the Shares under
Federal and state securities laws, fees and out-of-pocket expenses of Trustees
who are not affiliated persons of the Administrator or the investment adviser to
the Trust or any affiliated corporation of the Administrator or the Investment
Adviser, the costs of Trustees' meetings, insurance, interest, brokerage costs,
litigation and other extraordinary or nonrecurring expenses, and all fees and
charges of investment advisers to the Trust.
ARTICLE 4. Compensation of the Administrator.
---------------------------------
(a) Administration Fee. For the services to be rendered, the facilities
------------------
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Trust shall pay to the Administrator compensation at an annual
rate specified in the Schedules. Such compensation shall be calculated and
accrued daily, and paid to the Administrator monthly.
If this Agreement becomes effective subsequent to the first day of a month
or terminates before the last day of a month, the Administrator's compensation
for that part of the month in which this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees as set forth
above. Payment of the Administrator's compensation for the preceding month shall
be made promptly.
(b) Compensation from Transactions. The Trust hereby authorizes any
------------------------------
entity or person associated with the Administrator which is a member of a
national securities exchange to effect
<PAGE>
any transaction on the exchange for the account of the Trust which is permitted
by Section 11 (a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T)
thereunder, and the Trust hereby consents to the retention of compensation for
such transactions in accordance with Rule 11a2-2(T) (a) (2) (iv).
(c) Survival of Compensation Rates. All rights of compensation under
------------------------------
this Agreement for services performed as of the termination date shall survive
the termination of this Agreement.
ARTICLE 5. Standard of Care of the Administrator; Indemnification. The
------------------------------------------------------
duties of the Administrator shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be asserted against the
Administrator hereunder. The Administrator shall not be liable for any error of
judgment or mistake of law or for any loss arising out of any investment or for
any act or omission in carrying out its duties hereunder, except a loss
resulting from willful misfeasance, bad faith or negligence in the performance
of its duties, or by reason of reckless disregard of its obligations and duties
hereunder, except as may otherwise be provided under provisions of applicable
law which cannot be waived or modified hereby. (As used in this Article 7, the
term "Administrator" shall include directors, officers, employees and other
agents of the Administrator as well as that corporation itself.)
So long as the Administrator or its agents act in good faith and with due
diligence and without negligence, the Trust assumes full responsibility and
shall indemnify the Administrator and hold it harmless from and against any and
all actions, suits and claims, whether groundless or otherwise, and from and
against any and all losses, damages, costs, charges, reasonable counsel fees and
disbursements, payments, expenses and liabilities (including reasonable
investigation expenses) arising directly or indirectly out of said
administration, transfer agency, and dividend disbursing relationships to the
Trust or any other service rendered to the Trust hereunder. The indemnity and
defense provisions set forth herein shall indefinitely survive the termination
of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Trust may be asked to indemnify or hold the
Administrator 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 Administrator 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, but good faith failure to do so shall not affect the rights
hereunder.
The Trust shall be entitled to participate at its own expense or, if it so
elects, to assume the defense of any suit brought to enforce any claims subject
to this indemnity provision. If the Trust elects to assume the defense of any
such claim, the defense shall be conducted by counsel chosen by the Trust and
satisfactory to the Administrator, whose approval shall not be unreasonably
withheld. In the event that the Trust elects to assume the defense of any suit
and retain counsel, the Administrator shall bear the fees and expenses of any
additional counsel retained by it. If the Trust does not elect to assume the
defense of a suit, it will reimburse the Administrator for the reasonable fees
and expenses of any counsel retained by the Administrator.
The Administrator may apply to the Trust at any time for instructions and
may consult counsel or the independent accountants for the Trust with respect
to any matter arising in connection with the Administrator's duties, and the
Administrator shall not be liable or
<PAGE>
accountable for any action taken or omitted by it in good faith in accordance
with such instruction or with the opinion of such counsel or accountants.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. Nor shall the Administrator be held to have
notice of any change of authority of any officers, employee or agent of the
Trust until receipt of written notice thereof from the Trust.
ARTICLE 6. Activities of the Administrator. The services of the
-------------------------------
Administrator rendered to the Trust are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that Trustees, officers, employees
and Shareholders of the Trust are or may be or become interested in the
Administrator, as directors, officers, employees and shareholders or otherwise
and that directors, officers, employees and shareholders of the Administrator
and its counsel are or may be or become similarly interested in the Trust, and
that the Administrator may be or become interested in the Trust as a Shareholder
or otherwise.
ARTICLE 7. Confidentiality. The Administrator agrees on behalf of itself
---------------
and its employees to treat confidentially all records and other information
relative to the Trust and its prior, present or potential Shareholders and
relative to the Adviser and its prior, present or potential customers, 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 the
Administrator 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.
ARTICLE 8. Equipment Failures. In the event of equipment failures beyond
------------------
the Administrator's control, the Administrator shall, at no additional expense
to the Trust, take reasonable steps to minimize service interruptions but shall
have no liability with respect to such service interruptions if such reasonable
steps are taken. The Administrator shall develop and maintain a plan for
recovery from equipment failures which may include contractual arrangements with
appropriate parties making reasonable provision for emergency use of electronic
data processing equipment to the extent appropriate equipment is available.
ARTICLE 9. Compliance With Governmental Rules and Regulations. The
--------------------------------------------------
Administrator undertakes to comply with all applicable requirements of the 1933
Act, the 1934 Act, the 1940 Act and any laws, rules and regulations of
governmental authorities having jurisdiction with respect to the duties to be
performed by the Administrator hereunder.
ARTICLE 10. Duration of this Agreement. The Term of this Agreement shall
--------------------------
be as specified in the Schedules.
This Agreement shall not be assignable by either party without the written
consent of the other party. As used in this paragraph, the term "assignment"
shall be construed by reference to the term as defined and interpreted under the
1940 Act.
The Administrator shall be entitled to collect form the Trust, in addition
to any other compensation owing to the Administrator, the amount of all the
Administrator's cash disbursements for services in connection with the
Administrator's activities in effecting such termination, including without
limitation, the delivery to the Trust and/or its designess of the Trust's
property, records, instruments and documents, or any copies thereof. Subsequent
to such termination for a reasonable fee to be paid by the Trust, the
Administrator will provide the Trust with reasonable access to any Trust
documents or records remaining in its possession.
<PAGE>
ARTICLE 11. Amendments. This Agreement or any part hereof may be changed
----------
or waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
ARTICLE 12. Certain Records. The Administrator shall maintain customary
---------------
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and 31a-
2 under the 1940 Act which are prepared or maintained by the Administrator on
behalf of the Trust shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Trust and will be made available
to or surrendered promptly to the Trust on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection.
ARTICLE 13. Definitions of Certain Terms. The terms "interested person"
----------------------------
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 14. Notice. Any notice required or permitted to be given by
-------
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Trust, at c/o Norman A. Jacobs, President and Chief Executive
Officer, Huntington Trust Company, N.A., 41 S. High Street, 11th Floor,
Columbus, Ohio 43287; and if to the Administrator at 680 East Swedesford Road,
Wayne, PA 19087-1658, attention: General Counsel.
ARTICLE 15. Governing Law. This Agreement shall be construed in
--------------
accordance with the laws of the Commonwealth of Massachusetts and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the
Commonwealth of Massachusetts, or any of the provisions herein, conflict with
the applicable provisions of the 1940 Act, the latter shall control.
ARTICLE 16. Multiple Originals. This Agreement may be executed in two or
------------------
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
ARTICLE 17. Limitation of Liability. The Administrator is hereby
------------------------
expressly put on notice of the limitation of liability as set forth in Article
IV of the Trust's Declaration of Trust and agrees that the obligations pursuant
to this Agreement of a particular Portfolio and of the Trust with respect to
that Portfolio shall be limited solely to the assets of that Portfolio, and the
Administrator shall not seek satisfaction of any such obligation from any other
Portfolio, the shareholders of any Portfolio, the Trustees, officers, employees
or agents of the Trust, or any of them.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
THE MONITOR FUNDS
By: /S/ KATHRYN. L. STANTON
Kathryn L. Stanton, Vice President
SEI FINANCIAL MANAGEMENT CORPORATION
By: /S/ KEVIN P. ROBINS, SR.
Kevin P. Robins, Sr. Vice President
<PAGE>
SCHEDULE
TO THE ADMINISTRATION AGREEMENT
DATED AS OF JANUARY 11, 1996
BETWEEN
THE MONITOR FUNDS
AND
SEI FINANCIAL MANAGEMENT CORPORATION
Portfolios: This Agreement shall apply to all Portfolios of the Trust, either
now in the future created. The following is a listing of the
current portfolios of the Trust: Money Market Fund, Ohio Municipal
Money Market Fund, U.S. Treasury Money Market Fund, Fixed Income
Securities Fund, Growth Fund, Income Equity Fund, Mortgage
Securities Fund, Short/Intermediate Fixed Income Securities Fund,
and Ohio Tax Free Fund (collectively, the "Portfolios").
Fees: Pursuant to Article 4, Section A, the Trust shall pay the
Administrator compensation for services rendered to the Portfolios
at an annual rate, which is calculated daily and paid monthly, at
a maximum administrative fee equal to the greater of .11% of each
Portfolios' average daily net assets.
Term: Pursuant to Article 10, the term of this Agreement shall commence
on January 11, 1996 and shall remain in effect through January 11,
1997 ("Initial Term"). This Agreement shall continue in effect for
successive periods of one year after the Initial Term, unless
terminated by either party, with or without cause, on not less
than 60 days prior written notice to the other party. In the event
of a material breach of this Agreement by either party, the
non-breaching party shall notify the breaching party in writing of
such breach and upon receipt of such notice, the breaching party
shall have 45 days to remedy the breach or the nonbreaching party
may immediately terminate this Agreement.
In addition, the Trust may terminate this Agreement immediately upon:
(i) 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 the Administrator 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;
(ii) the dissolution or liquidation of the Administrator or other cessation of
its business other than a reorganization or recapitalization of the
Administrator as an ongoing business; or
(iii) (a) the authorization of commencement of a voluntary case regarding the
Administrator 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.
<PAGE>
SUB-ADMINISTRATION AGREEMENT
AGREEMENT made as of January 11, 1996, between SEI Financial Management
Corporation ("SEI") a Delaware corporation, and The Huntington Trust Company,
N.A. (the "Sub-Administrator"), a national banking association.
WHEREAS, SEI has entered into an Administration Agreement, dated as of
January 11, 1995 (the "Administration Agreement") with The Monitor Funds (the
"Trust"), a Massachusetts business trust, concerning the provision of management
and administrative services for the investment portfolios of the Trust
identified on Schedule A hereto, as such Schedule shall be amended from time to
time (individually referred to herein as the "Fund" and collectively as the
"Funds"); and
WHEREAS, SEI desires to retain the Sub-Administrator to assist it in
performing administrative services with respect to each Fund and the Sub-
Administrator is willing to perform such services on the terms and conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Sub-Administrator. (i) Effective upon the effective date of
this Agreement, the Sub-Administrator shall perform all of following services
on behalf of the Trust:
(a) calculate contractual Trust expenses, and as appropriate, compute the
Trust's yields (with the exception of the Mortgage Securities Fund),
expense ratios, portfolio turnover rate and, if required, portfolio average
dollar-weighted maturity;
(b) maintain the Trust's general ledger, including expense accruals and
payments, determine the net asset value of the Trust's assets and of the
Trust's shares, and provide daily mill the Trust's transfer agent;
(c) coordinate audits by the independent accountants;
(d) prepare Statements of Net Assets, Operations and Financial Highlights
for the Trust's financial statements, as well as the Management Discussion
and Analysis and Shareholder message;
(e) performe secondary compliance functions with guidelines set forth for
the Trust pursuant to the prospectus and the Investment Company Act of
1940;
(f) prepare and coordinate trustee meeting materials with SEI assistance.
(ii) The sub-administrator will assist SEI and SEI will provide training with
respect to the following activities for the Trust during 1996:
(a) development and preparation of the semi-annual and annual reports to
shareholders including drafting the 1996 semi-annual footnotes and
Preparation of the Schedule of Investments;
(b) preparation of the semi-annual and annual report for the Trust on Form
N-SAR and all required notices pursuant to 24(f)2;
(c) calculation of dividends and preparation of instructions to transfer
agent;
(d) preparation of supporting information for federal excise tax
requirements and capital gains distributions;
(e) review the Trust's expenses and accruals; prepare and finalize the 1997
budget;
(f) assist with the preparation and filing of the annual N-1A
registration statement.
(iii) As of January, 1997, the Sub-Administrator will perform the following
functions with oversight by SEI:
(a) calculate dividends and provide instructions to transfer agent;
(b) prepare the Trust's financial statements;
(c) finalize and prepare an analysis of 1997 expense budget;
(d) Prepare supporting information for federal excise tax requirements and
capital gains distributions.
(iv) The Sub-Administrator will assist SEI and SEI will provide training on the
following activities of the Trust during the first half of 1997. The
Sub-Administrator will perform these functions beginning third quarter, 1997:
(a) preparation of other SEC filings such as the N-1A checklist;
(b) review of reconcilement of third party billings and processing of
monthly expense payments.
(v) SEI will continue to perform the following activities for the Trust
throughout the contract period:
(a) Preparation of required tax returns for the Trust and continuously
monitor compliance with guidelines set forth in the Internal Revenue
Code for regulated investment companies;
(b) Register the Trust with each state pursuant to Blue Sky regulations;
monitor shareholder transactions by state to maintain current
registration limits;
(c) Overview and consultation of sub-administrator's general fund
administration activities;
(d) Consult on dividend calculation and specialized accounting issues
relating to the Monitor Mortgage Securities Fund;
(e) All EDGAR filings;
(f) Complete monthly and quarterly total return performance reporting.
<PAGE>
The Sub-Administrator will keep and maintain all books and records relating
to its services in accordance with Rule 31a-1 under the 1940 Act.
In the performance of its duties hereunder, the Sub-Administrator will
comply with the provisions of the Declaration of Trust and the Bylaws of the
Trust, will safeguard and promote the welfare of the Trust, and will comply with
the policies that 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.
2. Training of the Sub-Administrator. At the Sub-Administrator's
reasonable request the Administrator will provide training to the Sub-
Administrator with regard to the provision of certain administrative services,
including, but not limited to, training regarding: compliance monitoring,
preparation and monitoring of the Trust's fiscal budgets, the preparation of
financial statements, calculating dividend and capital gains distributions,
distribution requirements as mandated by the Internal Revenue Service,
regulatory filings required by the Securities and Exchange Commission, and the
analysis of the Trust's expense accruals.
3. Compensation* Reimbursement of Expenses. SEI shall pay the
Sub-Administrator for the services to be provided by the Sub-Administrator under
this Agreement in accordance with, and in the manner set forth in, Schedule B
hereto. In addition, SEI agrees to reimburse the Sub-Administrator for the Sub-
Administrator's reasonable out-of-pocket expenses in providing services
hereunder.
4. Effective Date. This Agreement shall become effective with respect to
a Fund as of the date first written above (or, if a particular Fund is not in
existence on that date, on the date specified in the amendment to Schedule A to
this Agreement relating to such Fund or, if no date is specified, the date on
which such amendment is executed) (the "Effective Date').
5. Term. This Agreement shall continue in effect with respect to a Fund,
unless
<PAGE>
earlier terminated by either party hereto as provided hereunder, until January
11, 1998; and thereafter shall be renewed automatically for successive one-year
terms unless written notice not to renew is given by the non-renewing party to
the other party at least 60 days prior to the expiration of the then-current
term; provided, however, that after such termination for so long as the Sub-
Administrator, with the written consent of SEI, in fact continues to perform any
one or more of the services contemplated by this Agreement or any schedule or
exhibit hereto, the provisions of this Agreement, including without limitation
the provisions dealing with indemnification, shall continue in full force and
effect. Notwithstanding anything to the contrary herein, this Agreement shall
terminate automatically upon termination of the Administration Agreement.
Either party to this Agreement may terminate such Agreement prior to the
expiration of the initial term set forth above by providing the other party with
written notice of such termination at least 60 days prior to the date upon which
such termination shall become effective. Compensation due the Sub-Administrator
and unpaid by SO upon such termination shall be immediately due and payable upon
and notwithstanding such termination. The Sub-Administrator shall be entitled
to collect from SEI, in addition to the compensation described under paragraph 2
hereof, the amount of all the SubAdministrator's cash disbursements for services
in connection with the Sub-Administrator's activities in effecting such
termination, including without limitation, the delivery to SEI, the Trust,
and/or their respective designees of the Trust's property, records, instruments
and documents, or any copies thereof. Subsequent to such termination for a
reasonable fee to be paid by SEI, the Sub-Administrator will provide SEI and/or
the Trust with reasonable access to any Trust documents or records remaining in
its possession.
6. Standard of Care of the Sub-Administrator: Indemnification. The
duties of the Sub-Administrator shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be asserted against the Sub-
Administrator hereunder. The Sub-Administrator shall not be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission in carrying out its duties hereunder, except a loss
resulting from willful misfeasance, bad faith or negligence in the performance
of its duties, or by reason of reckless disregard of its obligations and duties
hereunder, except as may otherwise be provided under provisions of applicable
law which cannot be waived or modified hereby. (As used in this Article 5, the
term "Sub-Administrator" shall include directors, officers, employees and other
agents of the Sub-Administrator as well as that corporation itself.)
So long as the Sub-Administrator or its agents act in good faith and with
due diligence and without negligence, the Trust assumes full responsibility and
shall indemnify the Sub-Administrator and hold it harmless from and against any
and all actions, suits and claims, whether groundless or otherwise, and from and
against any and all losses, damages, costs, charges, reasonable counsel fees and
disbursements, payments, expenses and liabilities (including reasonable
investigation expenses) arising directly or indirectly out of said
subadministration relationship to the Trust or any other service rendered to the
Trust hereunder. The indemnify and defense provisions set forth herein shall
indefinitely survive the termination of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Trust may be asked to indemnify or hold the
Sub-Administrator 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 Sub-Administrator will use all reasonable care to identify
and notify the Trust promptly concerning any situation which presents or appears
likely to present the
<PAGE>
probability of such a claim for indemnification against the Trust, but good
faith failure to do shall not affect the rights hereunder.
The Trust shall be entitled to participate at its own expense or, if it so
elects, to assume the defense of any suit brought to enforce any claims subject
to this indemnity provision. If the Trust elects to assume the defense of any
such claim, the defense shall be conducted by counsel chosen by the Trust and
satisfactory to the Sub-Administrator, whose approval shall not be unreasonably
withheld. In the event that the Trust elects to assume the defense of any suit
and retain counsel, the Sub-Administrator shall bear the fees and expenses of
any additional counsel retained by it. If the Trust does not elect to assume
the defense of a suit, it will reimburse the Sub-Administrator for the
reasonable fees and expenses of any counsel retained by the Sub-Administrator.
The Sub-Administrator may apply to the Trust at any time for instructions
and may consult counsel or the independent accountants for the Trust with
respect to any matter arising in connection with the Sub-Administrator's duties,
and the Sub-Administrator shall not be liable or accountable for any action
taken or omitted by it in good faith in accordance with such instruction or with
the opinion of such counsel or accountants.
Also, the Sub-Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. Nor shall the Sub-Administrator be held to
have notice of any change of authority of any officers, employee or agent of the
Trust until receipt of written notice thereof from the Trust.
So long as SEI acts in good faith and with due diligence and without
negligence, the Sub-Administrator shall assume full responsibility and shall
indemnify and hold SEI and hold it harmless from and against any and all
actions, claims, costs and expenses arising directly or indirectly out of the
services that the Sub-Administrator has agreed to undertake pursuant to the
terms of this Agreement. The indemnify and defense provisions set forth herein
shall indefinitely survive the termination of this Agreement.
7. Record Retention and Confidentiality. The Sub-Administrator shall
keep and maintain on behalf of the Trust all books and records which the Trust
and the Sub-Administrator are, or may be, required to keep and maintain in
connection with the services to be provided hereunder pursuant to any applicable
statutes, rules and regulations, including without limitation Rules 31a-1 and
31a-2 under the 1940 Act. The Sub-Administrator further agrees that all such
books and records shall be the property of the Trust and to make such books and
records available for inspection by the Trust, by SEI, or by the Securities and
Exchange Commission at reasonable times and otherwise to keep confidential all
books and records and other information relative to the Trust and its
shareholders; except when requested to divulge such information by duly-
constituted authorities or court process.
8. Uncontrollable Events. The Sub-Administrator assumes no
responsibility hereunder, and shall not be liable, for any damage, loss of data,
delay or any other loss whatsoever caused by events beyond its reasonable
control.
9. Rights of Ownership. All computer programs and procedures developed
to perform the services to be provided by the Sub-Administrator under this
Agreement are the property of the Sub-Administrator. All records and other data
except such computer programs and procedures are the exclusive property of the
Trust and all such other records and data will be furnished to SEI and/or the
Trust in appropriate form as soon as practicable after termination of this
Agreement for any reason.
<PAGE>
10. Return of Records. The Sub-Administrator may at its option at any
time, and shall promptly upon the demand of SEI and/or the Trust, turn over to
SEI and/or the Trust and cease to retain the Sub-Administrator's files, records
and documents created and maintained by the Sub-Administrator pursuant to this
Agreement which are no longer needed by the SubAdministrator in the performance
of its services or for its legal protection. If not so turned over to SEI
and/or the Trust, such documents and records will be retained by the
SubAdministrator for six years from the year of creation. At the end of such
six-year period, such records and documents will be turned over to SEI and/or
the Trust unless the Trust authorizes in writing the destruction of such records
and documents.
11. Representations of SEI. SEI certifies to the Sub-Administrator that
this Agreement has been duly authorized by SEI and, when executed and delivered
by SEI, will constitute a legal, valid and binding obligation of SEI,
enforceable against SEI in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
12. Representations of the Sub-Administrator. The Sub-Administrator
represents and warrants that: (1) the various procedures and systems which the
Sub-Administrator has implemented with regard to safeguarding from loss or
damage attributable to fire, theft, or any other cause of the records and other
data of the Trust and the Sub-Administrator's records, data, equipment
facilities and other property used in the performance of its obligations
hereunder are adequate and that it will make such changes therein from time to
time as are required for the secure performance of it obligations hereunder, and
(2) this Agreement has been duly authorized by the Sub-Administrator and, when
executed and delivered by the Sub-Administrator, will constitute a legal, valid
and binding obligation of the Sub-Administrator, enforceable against the Sub-
Administrator in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting the
rights and remedies of creditors and secured parties.
13. Insurance. The Sub-Administrator shall notify SEI should any of its
insurance coverage be cancelled or reduced. Such notification shall include the
date of change and the reasons therefor. The Sub-Administrator shall notify SEI
of any material claims against it with respect to services performed under this
Agreement, whether or not they may be covered by insurance, and shall notify SEI
from time to time as may be appropriate of the total outstanding claims made by
the Sub-Administrator under its insurance coverage.
14. Notices. Any notice provided hereunder shall be sufficiently given
when sent by registered or certified mail to SEI at the following address: 680
East Swedesford Road, Wayne, PA 19087, Attn: Legal Department, and to the Sub-
Administrator at the following address: 41 S. High Street, 11th Floor, Columbus,
Ohio 43287 or at such other address as either party may from time to time
specify in writing to the other party pursuant to this Section.
15. Headings. Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
16. Assignment. This Agreement and the rights and duties hereunder shall
not be assignable with respect to a Fund by either of the parties hereto except
by the specific written consent of the other party and with the specific written
consent of the Trust.
17. Governing Law. This Agreement shall be governed by and provisions
shall be construed in accordance with the laws of The Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
SEI FINANCIAL MANAGEMENT CORPORATION
By:
Title:
THE HUNTINGTON TRUST COMPANY, N.A.
By:
Title:
<PAGE>
Dated: January 11, 1996
SCHEDULE A
TO THE SUB-ADMINISTRATION AGREEMENT
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
THE HUNTINGTON TRUST COMPANY, N.A.
NAME OF FUND
- ------------
The Monitor Money Market Fund
The Monitor U.S. Treasury Money Market Fund
The Monitor Ohio Municipal Money Market Fund
The Monitor Growth Fund
The Monitor Income 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
SEI FINANCIAL MANAGEMENT CORPORATION
By:
Title:
THE HUNTINGTON TRUST COMPANY, N.A.
By:
Title:
<PAGE>
Dated: January 11, 1996
SCHEDULE B
TO THE SUB-ADMINISTRATION AGREEMENT
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
THE HUNTINGTON TRUST COMPANY, N.A.
<TABLE>
<CAPTION>
Name of Fund Compensation*
- ------------ ------------
<S> <C>
The Monitor Money Market Fund Annual Rate of four
The Monitor U.S. Treasury Money Market Fund one-hundredths of
The Monitor Ohio Municipal Money Market Fund one percent (.04%) of
The Monitor Growth Fund each such Fund's
The Monitor Income Fund average daily net
The Monitor Mortgage Securities Fund assets; provided that
The Monitor Ohio Tax-Free Fund at such time as the
The Monitor Fixed Income Securities Fund parties agree that
The Monitor Short/Intermediate Fixed Income Huntington is
Securities Fund performing a substantial
portion of all of the
activities described
in Section 1(iii)(a)-(h),
the compensation to be paid
hereunder shall be at
the annual rate of five
one-hundredths of one
percent (.05 %) of each
such Fund's average daily net
assets.
</TABLE>
SEI FINANCIAL MANAGEMENT CORPORATION
By:
Title:
THE HUNTINGTON TRUST COMPANY, N.A.
By:
Title:
*All fees are computed daily and paid periodically
<PAGE>
April 18, 1996
The Monitor Funds
The Huntington Trust Company, N.A.
41 South High Street
Columbus, Ohio 43215
Gentlemen:
You have registered under the Securities Act of 1933, as amended (the
"1933 Act"), an indefinite number of shares of beneficial interest of The
Monitor Funds ("Trust"), as permitted by Rule 24f-2 under the Investment Company
Act of 1940, as amended (the "1940 Act"). You propose to file a post-effective
amendment (the "Post-Effective Amendment") to your Registration Statement as
required by Section 10(a)(3) pf the 1933 Act.
We have examined your Agreement and Declaration of Trust on file in
the office of the Secretary of The Commonwealth of Massachusetts and the Clerk
of the City of Boston. We have also examined a copy of your Bylaws and such
other documents, receipts and records as we have deemed necessary for the
purpose of this opinion.
Based upon the foregoing, we are of the opinion that the issue and
sale of the authorized but unissued Shares of each Series of The Monitor Funds
have been duly authorized under Massachusetts law. Upon the original issue and
sale of your authorized but unissued Shares and upon receipt of the authorized
consideration therefor in an amount not less than the net asset value of the
Shares established and in force at the time of their sale, the Shares issued
will be validly issued, fully paid and non-assessable shares.
The Monitor Funds is an entity of the type commonly known as a
"Massachusetts business trust." Under Massachusetts law, shareholders could,
under certain circumstances, be held personally liable for the obligations of
the Trust. However, the Agreement and Declaration of Trust provides for
indemnification out of the property of a particular series of shares for all
loss and expense of any shareholder of that series held personally liable solely
by reason of his being or having been a shareholder. Thus, the risk of
shareholder liability is limited to circumstances in which that series of shares
itself would be unable to meet its obligations.
We understand that this opinion is to be used in connection with the
filing of the Post-Effective Amendment. We consent to the filing of this
opinion with and as a part of your Post-Effective Amendment.
Very truly yours,
/S/ ROPES & GRAY
Ropes & Gray
<PAGE>
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. 20 to the Registration Statement on Form N-1A (the "Registration
Statement") of our report dated February 20, 1996, relating to the financial
statements and financial highlights appearing in the December 31, 1995, Annual
Report to Shareholders of The Monitor Funds, which is also incorporated by
reference into the Registration Statement. We also consent to the reference to
us under the headings "Financial Highlights" and "Independent Accountants" in
the Prospectus and under the heading "Independent Accountants" in the Statement
of Additional Information.
PRICE WATERHOUSE LLP
Columbus, Ohio
April 24, 1996
<PAGE>
THE MONITOR FUNDS
SUBSCRIPTION AGREEMENT
The undersigned hereby subscribes for a total of 33,134 shares of
beneficial interest, with a par value of $.001 per share, of the Monitor Money
Market Fund, 33,333 shares of beneficial interest, with a par value of $.001 per
share, of the Monitor U.S. Government Money Market Fund, and 33,333 shares of
beneficial interest, with a par value of $.001 per share, of the Monitor Tax-
Free Money Market Fund, each Fund a series of a Massachusetts business trust
(the "Trust"), and agrees to pay therefor One Dollar ($1.00) per share with
respect to each Fund.
This Subscription Agreement between the Trust and EAI Securities Co.,
Inc. (the "Subscriber") for the sale of shares of beneficial interest, such that
the net amount to be realized by the Trust is $100,000, is being entered into
for the purpose of providing the Trust with the minimum capital required under
Section 14(a) of the Investment Company Act of 1940, as amended (the "Act"),
prior to the commencement of any investment activity, as defined in the Act.
This subscription shall be payable, and the shares subscribed for
hereby shall be issued, on or before the day on which The Monitor Funds'
Registration Statement first becomes effective under the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended. The payment of
this subscription shall be in cash.
The Trust reserves the right to reject this subscription for any
reason whatsoever which it, in its sole discretion, deems sufficient, by not
signing this agreement and refunding all funds paid herein, in which event the
Trust shall have no further obligations hereunder.
The Subscriber hereby represents that it is acquiring the shares
subscribed for hereby for its own account for investment and with no present
intention of reselling or otherwise distributing the same.
This Subscription Agreement contains the entire agreement between the
Trust and the Subscriber respecting the subject matter hereof, and no agent or
other representative of the Trust or any other person has any power to change or
alter its terms.
<PAGE>
The Declaration of Trust of the Trust is on file with the Secretary of
the Commonwealth of Massachusetts and notice is hereby given that this Agreement
is made and executed on behalf of the Trust, and not by the Trustees or officers
of the Trust individually, and the obligations of or arising out of this
Agreement are not binding upon the Trustees, officers or shareholders of the
Trust individually, but are binding only upon the assets and property of the
Trust.
EAI SECURITIES CO., INC.
Dated: February 10, 1987 By:/s/ Robert A. Jaeger
---------------------------
Robert A. Jaeger
Treasurer
By:/s/ Joseph P. Campbell
---------------------------
Joseph P. Campbell
Attorney in Fact
Accepted and agreed to this
10th day of February, 1987.
THE MONITOR FUNDS
By:/s/ Michael E. Portnoy
------------------------
Michael E. Portnoy
Trustee
<PAGE>
MONITOR FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of The Monitor Funds (the "Trust"), a business trust organized under
the laws of The Commonwealth of Massachusetts, hereby constitutes and appoints
David G. Lee, Kevin Robins, and Stephen G. Meyer, and each of them singly, his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, to sign for him and in his name, place and stead, and in the
capacity indicated below, to sign any or all amendments (including
post-effective amendments) to the Trust's Registration Statement on Form N-1A
under the provisions of the Investment Company Act of 1940 and the Securities
Act of 1933, each such Act as amended, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, acting alone, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.
/S/ DAVID SCHOEDINGER DATE: 3-25-96
<PAGE>
MONITOR FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of The Monitor Funds (the "Trust"), a business trust organized under
the laws of The Commonwealth of Massachusetts, hereby constitutes and appoints
David G. Lee, Kevin Robins, and Stephen G. Meyer, and each of them singly, his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, to sign for him and in his name, place and stead, and in the
capacity indicated below, to sign any or all amendments (including
post-effective amendments) to the Trust's Registration Statement on Form N-1A
under the provisions of the Investment Company Act of 1940 and the Securities
Act of 1933, each such Act as amended, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, acting alone, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.
/S/ DR. RICHARD SISSON DATE: MARCH 28, 1996
<PAGE>
MONITOR FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of The Monitor Funds (the "Trust"), a business trust organized under
the laws of The Commonwealth of Massachusetts, hereby constitutes and appoints
David G. Lee, Kevin Robins, and Stephen G. Meyer, and each of them singly, his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, to sign for him and in his name, place and stead, and in the
capacity indicated below, to sign any or all amendments (including
post-effective amendments) to the Trust's Registration Statement on Form N-1A
under the provisions of the Investment Company Act of 1940 and the Securities
Act of 1933, each such Act as amended, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, acting alone, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.
/S/ WILLIAM R. WISE DATE: 3/29/96
<PAGE>
MONITOR FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of The Monitor Funds (the "Trust"), a business trust organized under
the laws of The Commonwealth of Massachusetts, hereby constitutes and appoints
David G. Lee, Kevin Robins, and Stephen G. Meyer, and each of them singly, his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, to sign for him and in his name, place and stead, and in the
capacity indicated below, to sign any or all amendments (including
post-effective amendments) to the Trust's Registration Statement on Form N-1A
under the provisions of the Investment Company Act of 1940 and the Securities
Act of 1933, each such Act as amended, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, acting alone, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.
/S/ JOHN SHARY DATE: 4-1-96
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000810695
<NAME> THE MONITOR FUND
<SERIES>
<NUMBER> 010
<NAME> MONEY MARKET FUND TRUST CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 389,420
<INVESTMENTS-AT-VALUE> 389,420
<RECEIVABLES> 585
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 390,005
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,953
<TOTAL-LIABILITIES> 1,953
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 388,052
<SHARES-COMMON-STOCK> 296,764
<SHARES-COMMON-PRIOR> 287,805
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 388,052
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 21,473
<OTHER-INCOME> 0
<EXPENSES-NET> 1,965
<NET-INVESTMENT-INCOME> 19,508
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 19,508
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (15,778)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 570,950
<NUMBER-OF-SHARES-REDEEMED> (562,024)
<SHARES-REINVESTED> 33
<NET-CHANGE-IN-ASSETS> 12,689
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,081
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,065
<AVERAGE-NET-ASSETS> 360,333
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000810695
<NAME> THE MONITOR FUND
<SERIES>
<NUMBER> 011
<NAME> MONEY MARKET FUND INVESTMENT CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 389,420
<INVESTMENTS-AT-VALUE> 389,420
<RECEIVABLES> 585
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 390,005
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,953
<TOTAL-LIABILITIES> 1,953
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 388,052
<SHARES-COMMON-STOCK> 91,288
<SHARES-COMMON-PRIOR> 41,629
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 388,052
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 21,473
<OTHER-INCOME> 0
<EXPENSES-NET> 1,965
<NET-INVESTMENT-INCOME> 19,508
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 19,508
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,730)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 197,369
<NUMBER-OF-SHARES-REDEEMED> (150,421)
<SHARES-REINVESTED> 2,711
<NET-CHANGE-IN-ASSETS> 65,437
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,081
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,065
<AVERAGE-NET-ASSETS> 360,333
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .63
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000810695
<NAME> THE MONITOR FUND
<SERIES>
<NUMBER> 020
<NAME> OHIO MUNICIPAL MONEY MARKET TRUST CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 111,727
<INVESTMENTS-AT-VALUE> 111,727
<RECEIVABLES> 705
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 112,433
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 413
<TOTAL-LIABILITIES> 413
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 112,020
<SHARES-COMMON-STOCK> 56,551
<SHARES-COMMON-PRIOR> 39,624
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 112,020
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,728
<OTHER-INCOME> 0
<EXPENSES-NET> 440
<NET-INVESTMENT-INCOME> 3,288
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3,288
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,796)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 113,680
<NUMBER-OF-SHARES-REDEEMED> (96,755)
<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 18,419
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 284
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 634
<AVERAGE-NET-ASSETS> 94,697
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.04)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .42
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000810695
<NAME> THE MONITOR FUND
<SERIES>
<NUMBER> 021
<NAME> OHIO MUNICIPAL MONEY MARKET INVESTOR CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 111,727
<INVESTMENTS-AT-VALUE> 111,727
<RECEIVABLES> 705
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 112,433
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 413
<TOTAL-LIABILITIES> 413
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 112,020
<SHARES-COMMON-STOCK> 554,469
<SHARES-COMMON-PRIOR> 37,134
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 112,020
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,728
<OTHER-INCOME> 0
<EXPENSES-NET> 440
<NET-INVESTMENT-INCOME> 3,288
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3,288
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,492)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 91,978
<NUMBER-OF-SHARES-REDEEMED> (74,032)
<SHARES-REINVESTED> 389
<NET-CHANGE-IN-ASSETS> 20,131
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 284
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 634
<AVERAGE-NET-ASSETS> 94,697
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.03)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .52
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000810695
<NAME> THE MONITOR FUND
<SERIES>
<NUMBER> 030
<NAME> U.S. TREASURY MONEY MARKET TRUST CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 317,449
<INVESTMENTS-AT-VALUE> 317,449
<RECEIVABLES> 235
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 317,684
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,569
<TOTAL-LIABILITIES> 1,579
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 316,115
<SHARES-COMMON-STOCK> 277,142
<SHARES-COMMON-PRIOR> 256,538
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 316,115
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 18,910
<OTHER-INCOME> 0
<EXPENSES-NET> 1,415
<NET-INVESTMENT-INCOME> 17,495
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 17,495
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (15,870)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 837,829
<NUMBER-OF-SHARES-REDEEMED> (817,246)
<SHARES-REINVESTED> 21
<NET-CHANGE-IN-ASSETS> 22,229
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 649
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,551
<AVERAGE-NET-ASSETS> 324,402
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .43
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000810695
<NAME> THE MONITOR FUND
<SERIES>
<NUMBER> 031
<NAME> U.S. TREASURY MONEY MARKET INVESTMENT CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 317,449
<INVESTMENTS-AT-VALUE> 317,449
<RECEIVABLES> 235
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 317,684
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<OTHER-ITEMS-LIABILITIES> 1,569
<TOTAL-LIABILITIES> 1,569
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 316,115
<SHARES-COMMON-STOCK> 38,973
<SHARES-COMMON-PRIOR> 20,390
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 316,115
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 18,910
<OTHER-INCOME> 0
<EXPENSES-NET> 1,415
<NET-INVESTMENT-INCOME> 17,495
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 17,495
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,625)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 70,271
<NUMBER-OF-SHARES-REDEEMED> (52,711)
<SHARES-REINVESTED> 1,023
<NET-CHANGE-IN-ASSETS> 34,453
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 649
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,551
<AVERAGE-NET-ASSETS> 324,402
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000810695
<NAME> THE MONITOR FUND
<SERIES>
<NUMBER> 050
<NAME> GROWTH TRUST CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 112,611
<INVESTMENTS-AT-VALUE> 147,757
<RECEIVABLES> 358
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 148,115
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<TOTAL-LIABILITIES> 917
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 112,033
<SHARES-COMMON-STOCK> 4,654
<SHARES-COMMON-PRIOR> 3,933
<ACCUMULATED-NII-CURRENT> 19
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 35,146
<NET-ASSETS> 147,198
<DIVIDEND-INCOME> 2,395
<INTEREST-INCOME> 497
<OTHER-INCOME> 0
<EXPENSES-NET> 1,135
<NET-INVESTMENT-INCOME> 1,757
<REALIZED-GAINS-CURRENT> 13,943
<APPREC-INCREASE-CURRENT> 19,016
<NET-CHANGE-FROM-OPS> 34,716
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,727)
<DISTRIBUTIONS-OF-GAINS> (13,595)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 843
<NUMBER-OF-SHARES-REDEEMED> (438)
<SHARES-REINVESTED> 316
<NET-CHANGE-IN-ASSETS> 40,880
<ACCUMULATED-NII-PRIOR> 28
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 790
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,203
<AVERAGE-NET-ASSETS> 130,474
<PER-SHARE-NAV-BEGIN> 26.30
<PER-SHARE-NII> .43
<PER-SHARE-GAIN-APPREC> 7.62
<PER-SHARE-DIVIDEND> (.43)
<PER-SHARE-DISTRIBUTIONS> (3.11)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 30.81
<EXPENSE-RATIO> .86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000810695
<NAME> THE MONITOR FUND
<SERIES>
<NUMBER> 051
<NAME> GROWTH INVESTMENT CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 112,611
<INVESTMENTS-AT-VALUE> 147,757
<RECEIVABLES> 358
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<OTHER-ITEMS-LIABILITIES> 917
<TOTAL-LIABILITIES> 917
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 112,033
<SHARES-COMMON-STOCK> 123
<SHARES-COMMON-PRIOR> 122
<ACCUMULATED-NII-CURRENT> 19
<OVERDISTRIBUTION-NII> 0
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<PAGE>
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<CIK> 0000810695
<NAME> THE MONITOR FUND
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<NUMBER> 060
<NAME> INCOME EQUITY TRUST CLASS
<MULTIPLIER> 1,000
<S> <C>
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000810695
<NAME> THE MONITOR FUND
<SERIES>
<NUMBER> 070
<NAME> OHIO TAX-FREE TRUST CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000810695
<NAME> THE MONITOR FUND
<SERIES>
<NUMBER> 071
<NAME> OHIO TAX-FREE INVESTMENT CLASS
<MULTIPLIER> 1,000
<S> <C>
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000810695
<NAME> THE MONITOR FUNDS
<SERIES>
<NUMBER> 080
<NAME> FIXED INCOME SECURITIES TRUST CLASS
<MULTIPLIER> 1,000
<S> <C>
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<PERIOD-START> JAN-01-1995
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000810695
<NAME> THE MONITOR FUND
<SERIES>
<NUMBER> 081
<NAME> FIXED INCOME SECURITIES INVESTOR CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000810695
<NAME> THE MONITOR FUND
<SERIES>
<NUMBER> 090
<NAME> SHORT/INTERMEDIATE FIXED INCOME SECURITIES TRUST CLASS
<MULTIPLIER> 1,000
<S> <C>
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<PAGE>
<ARTICLE> 6
<CIK> 0000810695
<NAME> THE MONITOR FUND
<SERIES>
<NUMBER> 100
<NAME> MORTGAGE SECURITIES TRUST CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
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<PAGE>
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<CIK> 0000810695
<NAME> THE MONITOR FUND
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<NAME> MORTGAGE SECURITIES INVESTOR CLASS
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