<PAGE>
As filed with the Securities and Exchange Commission on November 27, 1996
Registration Nos.33-11905, 811-5010
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 21 [X]
and
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 23 [X]
relating solely to:
THE MONITOR INCOME EQUITY FUND
and
THE MONITOR SHORT/INTERMEDIATE FIXED INCOME SECURITIES FUND
(no information relating to any other series of the
Registrant is amended or superseded hereby)
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
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It is proposed that this filing will become effective (check appropriate box):
[ ] 60 days after filing pursuant to Rule 485(a)(1), or
[ X ] On January 30, 1997, 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
[ ] On , 199 , pursuant to Rule 485(b)
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
- -------------------------------------------------------------------------------
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
<TABLE>
<CAPTION>
FORM N-1A PART A ITEM LOCATION IN PROSPECTUS
- --------------------- ----------------------
<S> <C> <C>
Item 1. Cover Page................................ Cover Page
Item 2. Synopsis.................................. Summary; Fee Table and Example
Item 3. Condensed Financial Information........... Not Applicable
Item 4. General Description of Registrant......... The Funds' Investment Objectives; Additional Information on
Portfolio Investments and Strategies; Investment Restrictions
Item 5. Management of the Fund.................... Management of the Trust
Item 5a. Management's Discussion of Fund
Performance............................... Not Applicable
Item 6. Capital Stock and Other Securities........ Distributions and Taxes; Organization of the Trust; Shareholder
Inquiries; Other Classes of Shares
Item 7. Purchase of Securities Being
Offered................................... How the Funds Value Their Shares; How to Buy Investment Shares;
How to Exchange Investment Shares Among the Funds; Management of
the Trust--Distribution of Investment Shares; Management of the
Trust--Distribution Plans
Item 8. Redemption or Repurchase.................. How to Redeem Investment Shares; Systematic Withdrawal Program;
Accounts with Low Balances
Item 9. Pending Legal Proceedings................. Not Applicable
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 Plans; 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, and the Trust's Combined Semi-
Annual Report dated June 30, 1996
</TABLE>
FORM N-1A PART C
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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
January 30, 1997
The Monitor Funds, a Massachusetts business trust (the "Trust"), consists of
separate series (the "Funds") which have different investment objectives and
policies. Investment Shares in each of the Funds named below 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:
EQUITY FUND--INVESTMENT SHARES
The Monitor Income Equity Fund
INCOME FUND--INVESTMENT SHARES
The Monitor Short/Intermediate 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 dated April 30, 1996, as supplemented on January 30,
1997, 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, AS SUPPLEMENTED, 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 FUND RESOURCES
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
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.
<PAGE>
TABLE OF CONTENTS
PAGE
SUMMARY........................................................................1
FEE TABLE AND EXAMPLE..........................................................2
THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES.................................3
Income Equity Fund............................................................3
Short/Intermediate Fixed Income Securities Fund...............................3
ADDITIONAL INFORMATION ON PORTFOLIO INVESTMENTS AND STRATEGIES.................4
Defensive Investment Strategies...............................................4
Options and Futures Contracts.................................................4
Foreign Investments...........................................................5
Repurchase Agreements.........................................................6
When-Issued and Delayed Delivery Transactions.................................6
Lending of Portfolio Securities...............................................6
INVESTMENT RESTRICTIONS........................................................7
HOW THE FUNDS VALUE THEIR SHARES...............................................7
HOW TO BUY INVESTMENT SHARES...................................................8
To Place an Order.............................................................8
Minimum Investment Required...................................................8
What Shares Cost..............................................................8
Income Equity Fund...........................................................9
Short/Intermediate Fixed Income Securities Fund..............................9
Purchases At Net Asset Value.................................................9
Dealer Concession............................................................9
Reducing the Sales Charge...................................................10
Quantity Discounts and Accumulated Purchases................................10
Letter of Intent............................................................10
PAGE
Reinstatement Privilege.....................................................11
Concurrent Purchases........................................................11
Systematic Investment Program................................................11
HOW TO EXCHANGE INVESTMENT SHARES AMONG THE FUNDS.............................11
By Telephone.................................................................12
By Mail......................................................................12
HOW TO REDEEM INVESTMENT SHARES...............................................13
Redeeming by Telephone.......................................................13
Redeeming by Mail............................................................13
Redeeming by Fax.............................................................14
SYSTEMATIC WITHDRAWAL PROGRAM.................................................14
ACCOUNTS WITH LOW BALANCES....................................................14
MANAGEMENT OF THE TRUST.......................................................15
Adviser's Background........................................................15
Distribution of Investment Shares............................................16
Distribution Plan............................................................16
Shareholder Servicing Arrangements..........................................17
Administration of the Funds..................................................17
Custodian, Recordkeeper, Transfer Agent, and Dividend Disbursing Agent.......17
Independent Accountants......................................................17
DISTRIBUTIONS AND TAXES.......................................................17
Distribution Options.........................................................17
Federal Income Taxes.........................................................18
ORGANIZATION OF THE TRUST.....................................................19
Voting Rights................................................................19
PERFORMANCE DATA AND COMPARISONS..............................................20
SHAREHOLDER INQUIRIES.........................................................20
OTHER CLASSES OF SHARES.......................................................20
<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 all of the
Funds. This Prospectus relates solely to the Investment Shares of each Fund as
set forth below.
EQUITY FUND--INVESTMENT SHARES
INCOME EQUITY FUND--seeks to achieve high current income and moderate
appreciation of capital by investing in income-producing equity
securities;
INCOME FUND--INVESTMENT SHARES
SHORT/INTERMEDIATE FIXED INCOME SECURITIES FUND--seeks to achieve
current income by investing 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.
For information on how to purchase Investment Shares of either 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.
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 the Short/Intermediate Fixed Income Securities Fund, may
vary inversely in response to changes in prevailing interest rates ("interest
rate risk"). This Fund 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."
1
<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>
SHORT/INTERMEDIATE
INCOME EQUITY FIXED INCOME
FUND SECURITIES FUND
------------- ------------------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a
percentage of offering price)................ 4.00% 2.00%
</TABLE>
ANNUAL INVESTMENT SHARES OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET
ASSETS)
<TABLE>
<CAPTION>
TOTAL
INVESTMENT
SHARES
OPERATING
EXPENSES NET OF
MANAGEMENT 12B-1 OTHER ANY WAIVERS OR
FEES (1) FEES (2) EXPENSES (3) REIMBURSEMENTS
---------- -------- ------------ ---------------
<S> <C> <C> <C> <C>
Income Equity Fund............ 0.60% 0.25% 0.22% 1.07%
Short/Intermediate Fixed In-
come Securities Fund......... 0.50% 0.25% 0.24% 0.99%
</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
either Fund, of the average daily net assets attributable to Investment
Shares are permitted under the Distribution Plan. The Distributor can
terminate these voluntary waivers at any time in its sole discretion. See
"Management of the Trust--Distribution Plan."
(3)Includes administration fees. See "Management of the Trust--Administration
of the Funds."
*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>
Income Equity Fund............................. $50 $73 $97 $165
Short/Intermediate Fixed Income Securities
Fund.......................................... $30 $51 $74 $139
</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.
2
<PAGE>
THE FUNDS' INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of the Funds are described below.
There can, of course, be no guarantee that either 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"). 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.
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.
SHORT/INTERMEDIATE FIXED INCOME SECURITIES FUND
The investment objectives and policies of the Short/Intermediate Fixed
Income Securities Fund are described below. This Fund 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 this Fund. Conversely, during periods of rising interest rates, the
values of this 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 this Fund's securities will not generally
affect the income derived from such securities but will affect this Fund's net
asset value.
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,
3
<PAGE>
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 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
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.
OPTIONS AND FUTURES CONTRACTS
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")
4
<PAGE>
are made to and from the broker to reflect changes in the value of the futures
contract. A Fund will not generally purchase or sell futures contracts or
purchase or sell options on futures contracts if as a result the sum of
initial margin deposits on a Fund's existing futures contracts and options
written by a Fund plus premiums paid for outstanding options on futures
contracts purchased by a Fund, would exceed 5% of a Fund's net assets.
Options and futures transactions involve various risks, including the risk
that a Fund may be unable at times to close out its positions, that such
transactions may not accomplish their purposes because of imperfect market
correlations, or that Huntington may not forecast market movements correctly.
Options and futures transactions involve costs and may result in losses. The
effective use of options and futures strategies by a Fund is dependent upon,
among other things, a Fund's ability to terminate options and futures
positions at times when Huntington deems it desirable to do so. Although a
Fund will enter into an options or futures contract position only if
Huntington believes that a liquid secondary market exists for such options or
futures contract, there is no assurance that a Fund will be able to effect
closing transactions at a particular time or at an acceptable price.
The Funds generally expect that their options and futures transactions will
be conducted on recognized exchanges. In certain instances, however, a Fund
may purchase and sell options in the over-the-counter ("OTC") markets. A
Fund's ability to terminate options in the OTC market may be more limited than
for exchange-traded options and may also involve the risk that securities
dealers participating in such transactions would be unable to meet their
obligations to a Fund. A Fund will, however, engage in OTC market transactions
only when appropriate exchange-traded transactions are unavailable and when,
in the opinion of Huntington, the pricing mechanism and liquidity of the OTC
market is satisfactory and the participants are responsible parties likely to
meet their contractual obligations.
The use of options and futures strategies also involves the risk of
imperfect correlation between movements in the prices of options and futures
contracts and movements in the value of the underlying securities that are the
subject of a hedge. The successful use of these strategies further depends on
the ability of Huntington to forecast market movements correctly.
For more information about any of the options or futures portfolio
transactions described above, see the Statement of Additional Information.
FOREIGN INVESTMENTS
Except as otherwise limited in this Prospectus, a Fund may invest some or
all of its assets in securities principally traded in foreign markets. Since
foreign securities are normally denominated and traded in foreign currencies,
the value of a Fund's assets may be affected favorably or unfavorably by
currency exchange rates and exchange control regulation. Exchange rates with
respect to certain currencies may be particularly volatile. There may be less
information publicly available about a foreign company than about a U.S.
company, and foreign companies are not generally subject to accounting,
auditing, and financial reporting standards and practices comparable to those
in the United States. The securities of some foreign companies are less liquid
and at times more volatile than securities of comparable U.S. companies.
Foreign brokerage commissions and other fees are also generally higher than in
the United States. Foreign settlement procedures and trade regulations may
involve certain risks (such as delays in payment or delivery of securities or
in the recovery of a Fund's assets held abroad) and expenses not present in
the settlement of domestic investments.
5
<PAGE>
In addition, with respect to certain foreign countries, there is a
possibility of nationalization or expropriation of assets, confiscatory
taxation, political or financial instability and diplomatic developments which
could affect the value of investments in those countries. In certain
countries, legal remedies available to investors may be more limited than
those available with respect to investments in the United States or other
countries. The laws of some foreign countries may limit a Fund's ability to
invest in securities of certain issuers located in those countries. Special
tax considerations apply to foreign securities.
A Fund may buy or sell foreign currencies and forward foreign currency
exchange contracts for hedging purposes in connection with its foreign
investments.
A more detailed explanation of foreign investments, and the risks associated
with them, is included in the Statement of Additional Information.
REPURCHASE AGREEMENTS
Certain securities in which a Fund invests may be purchased pursuant to
repurchase agreements. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S.
Government securities or other securities to a Fund and agree at the time of
sale to repurchase them at a mutually agreed upon time and price. A Fund or
its custodian will take possession of the securities subject to repurchase
agreements and these securities will be marked to market daily. To the extent
that the original seller does not repurchase the securities from a Fund, a
Fund could receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by a Fund might be delayed
pending court action. The Trustees believe that under the regular procedures
normally in effect for custody of a Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor
of a Fund and allow retention or disposition of such securities. A Fund will
only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker/dealers, which are found by Huntington
to be creditworthy pursuant to guidelines established by the Trustees.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
A Fund may purchase securities on a when-issued or delayed delivery basis.
These transactions are arrangements in which a Fund purchases securities with
payment and delivery scheduled for a future time. The seller's failure to
complete these transactions may cause a Fund to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices. Accordingly, a Fund may pay more
or less than the market value of the securities on the settlement date. A Fund
may dispose of a commitment prior to settlement if the Fund's adviser deems it
appropriate to do so.
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
6
<PAGE>
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) 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 in securities of
companies primarily engaged in any one industry (other than the U.S.
Government, its agencies and instrumentalities).
(3) 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
The net asset value for Investment Shares of each Fund 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 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
7
<PAGE>
Day" constitutes Monday through Friday except (i) days on which there are not
sufficient changes in the value of a Fund's portfolio securities that its net
asset value might be materially affected; (ii) days during which no shares are
tendered for redemption and no orders to purchase shares are received; and
(iii) the following holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas
Day.
HOW TO BUY INVESTMENT SHARES
Investment Shares of the Funds may be purchased through The Huntington
Investment Company, Huntington Personal Bankers or the Mutual Fund Services
Center (collectively, the "Huntington Group") pursuant to respective
agreements between The Huntington Investment Company or The Huntington Trust
Company, N.A. and the Distributor. Investors may purchase Investment Shares of
the Funds on all Business Days. 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 only 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. 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.
8
<PAGE>
WHAT SHARES COST
Income Equity Fund
With respect to the Income Equity 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>
Short/Intermediate Fixed Income Securities Fund
With respect to the Short/Intermediate Fixed Income 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, the Distributor has agreed to waive all sales loads
imposed on purchases of Investment Shares of each present Series of The
Monitor Funds and any other Investment Shares hereafter offered by any other
Series of The Monitor Funds by the following persons: (a) current officers,
directors, employees (and their spouses or immediate family members) and
retired officers and employees (including their spouses) of Huntington
Bancshares Incorporated or any of its subsidiaries; (b) persons who
participate in certain financial services programs offered by the banking
subsidiaries of Huntington Bancshares Incorporated; and (c) persons who are
current members of certain affinity groups (such as trade associations or
membership associations) that have entered into written agreements with the
Trust's Investment Advisor and the Distributor providing for such a sales load
waiver. Potential investors who believe that they are eligible for this sales
load waiver may contact The Monitor Funds Shareholder Services Department )1-
800-253-0412) for further information.
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.
9
<PAGE>
The sales charge for Investment Shares sold other than through registered
broker/dealers will be retained by the Distributor. The Distributor may pay
fees to banks out of the sales charge in exchange for sales and/or
administrative services performed on behalf of the banks' customers in
connection with the initiation of customer accounts and purchases of
Investment Shares of the Funds.
Reducing the Sales Charge. The sales charge can be reduced through:
. quantity discounts and accumulated purchases;
. signing a 13-month letter of intent;
. using the reinstatement privilege; or
. concurrent purchases.
Quantity Discounts and Accumulated Purchases. As shown in the table above,
larger purchases reduce the sales charge paid. The Distributor will combine
purchases made on the same day by the investor, his spouse, and his children
under age 21 when it calculates the sales charge. In addition, the sales
charge, if applicable, is reduced for purchases made at one time by a trustee
or fiduciary for a single trust estate or a single fiduciary account.
If an additional purchase of Investment Shares in a Fund which impose a
sales charge is made, the Distributor will aggregate such additional purchases
with previous purchases of Investment Shares of Funds imposing a sales charge
provided the prior purchase is still invested in the Funds. For example, if a
shareholder already owns Investment Shares having a current value at the
public offering price of $700,000 and he purchases $50,000 more at the current
public offering price, the sales charge on the additional purchase according
to the schedule now in effect would be 0.75%, not 1.5%.
To receive the sales charge reduction, an investor should complete the
appropriate section of the account application at the time the purchase is
made indicating that Investment Shares of Funds which impose a sales charge
have been purchased and are still invested or that such purchases are being
combined. The Distributor will reduce the sales charge after it confirms the
purchase.
Letter of Intent. If an investor intends to purchase at least $100,000 of
Investment Shares in a Fund that imposes a 4% sales charge or at least
$500,000 in one or more Funds that imposes a 2% sales charge, over the next 13
months, the sales charge may be reduced by completing the Letter of Intent
section of the account application. The Letter of Intent includes a provision
for a sales charge adjustment depending on the amount actually purchased
within the 13-month period. In addition, pursuant to a Letter of Intent, the
custodian will hold in escrow the difference between the sales charge
applicable to the amount initially purchased and the sales charge paid at the
time of the investment, which is based on the amount covered by the Letter of
Intent.
For example, assume an investor signs a Letter of Intent to purchase at
least $250,000 in Investment Shares of a Fund that imposes a 4% sales charge
and, at the time of signing the Letter of Intent, purchases $100,000 of
Investment Shares of one of these Funds. The investor would pay an initial
sales charge of 2.50% (the sales charge applicable to purchases of $250,000),
and 1.00% of the investment (representing the difference between the 3.50%
sales charge applicable to purchases of $100,000 and the 2.50% in sales
charges already paid) would be held in escrow until the investor has purchased
the remaining $150,000 or more of Investment Shares under his Letter of
Intent.
The amount held in escrow will be applied to the investor's account at the
end of the 13-month period unless the amount specified in the Letter of Intent
is not purchased. In order to qualify for a Letter of Intent, the investor
will be required to make a minimum initial investment of at least $25,000.
10
<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
Income Equity 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 Short/Intermediate Fixed
Income Securities Fund concurrently invests $50,000 in one Fund with a sales
charge, and $450,000 in another Fund with a sales charge, the sales charge
will be reduced.
To receive this sales charge reduction, the applicable Huntington Group
member must be notified in writing by the shareholder (at the address provided
below under "How to Exchange Investment Shares Among the Funds--By Mail") at
the time the concurrent purchases are made. The Distributor will reduce the
sales charge after it confirms the purchases.
SYSTEMATIC INVESTMENT PROGRAM
Once an account has been opened, holders of Investment Shares of a Fund may
add to their investment on a regular basis in minimum amounts of at least $50.
Under this program, funds will be automatically withdrawn periodically from
the shareholder's checking account and invested in Investment Shares of a Fund
at the applicable public offering price per share next determined after an
order is received by the Transfer Agent. Shareholders may apply for
participation in this program by completing the appropriate section of the
account application.
HOW TO EXCHANGE INVESTMENT SHARES AMONG THE FUNDS
Shareholders may exchange Investment Shares in any Fund for Investment
Shares in any other Fund offering Investment Shares at the respective net
asset values per Investment Share next determined after receipt of the request
in good order, plus the applicable sales charge (if any) as described below.
This privilege is available to shareholders resident in any state in which the
Fund shares being acquired may be sold.
No sales charge applies when Investment Shares are exchanged from a Fund
that imposes such a charge to a Fund with no sales charge. If, however, a
shareholder seeks to exchange shares of a Fund that does not have a sales
charge for shares of a Fund that imposes such a charge, the shareholder will
be required to pay the applicable sales charge of the Fund into which the
shares are exchanged. In all cases, shareholders will be required to pay a
sales charge only once. Thus, for example, no sales charge applies when shares
are exchanged among Funds that impose a sales charge. Similarly, no sales
charge applies where a shareholder exchanges shares of a Fund with a sales
charge for shares of a Fund that does not impose such a charge and
subsequently exchanges those shares back into a Fund with a sales charge.
11
<PAGE>
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.
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.
12
<PAGE>
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. Requests for redemptions in either of the Funds
must be received by the appropriate member of the Huntington Group before 3:00
p.m. (Eastern Time) in order for Investment Shares to be redeemed at that
day's net asset value.
Members of the Huntington Group are responsible for promptly submitting
redemption requests and providing proper written redemption instructions to a
Fund. If at anytime the Trust shall determine it necessary to terminate or
modify this method of redemption, shareholders will be promptly notified.
Investors may request the Trust's telephone redemption privilege on their
account application. If not completed at the time of initial application,
authorization forms and information on this service can be obtained through
the members of the Huntington Group. Proceeds for redemptions will normally be
wired to the shareholder's account with proper authorization (at a domestic
commercial bank that is a member of the Federal Reserve System designated by
the shareholder in writing) or a check will be sent to the address of record.
Telephone redemption instructions may be recorded.
In the event of extreme economic or market conditions, a shareholder may
experience difficulty in redeeming by telephone. If such a case should occur,
another method of redemption, such as through written request, should be
considered. If reasonable procedures are not followed by the Funds, they may
be liable for losses due to unauthorized or fraudulent telephone instructions.
REDEEMING BY MAIL
Shareholders may redeem Investment Shares of a Fund by sending a written
request to the appropriate member of the Huntington Group. The written request
should include the shareholder's name, Fund name (designating Investment
Shares), the account number, and the Investment Share or dollar amount
requested.
Shareholders requesting a redemption of $50,000 or more, a redemption of any
amount to be sent to an address other than that on record with the Transfer
Agent, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
--a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the FDIC;
--a member of the New York, American, Midwest, or Pacific Stock Exchanges;
13
<PAGE>
--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 FAX
Shareholders wishing to expedite the redemption process may Fax a copy of
their written request to the appropriate member of the Huntington Group at Fax
No. 614-480-4682 (The Huntington Investment Company) or 614-480-5516 (Mutual
Fund Services Center). Shareholders redeeming by Fax must call the appropriate
member of the Huntington Group to confirm receipt of the written request. See
"Redeeming By Telephone" in this Prospectus for a discussion of when
shareholders will receive redemption proceeds when redeeming by Fax.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may
take advantage of the Systematic Withdrawal Program. Under this program,
Investment Shares of either 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
14
<PAGE>
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: Income Equity
Fund: .60% of the Fund's average daily net assets; 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.
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.
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.
Stephen M. Geis, a Vice President of Huntington, has been the portfolio
manager of the Short/Intermediate Fixed Income Securities Fund since October
of 1989. Mr. Geis, a Chartered
15
<PAGE>
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 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 PLAN
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 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 each 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 Glass-Steagall Act prohibits a depository institution (such as a
commercial bank or a savings and loan association) from being an underwriter or
distributor of most securities. In the event the Glass-Steagall Act is deemed
to prohibit depository institutions from acting in the administrative
capacities described above or should Congress relax current restrictions on
depository institutions, the
16
<PAGE>
Trustees will consider appropriate changes in the administrative services
performed in connection with the Distribution Plan.
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 Plan 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 Fund Resources, 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 Fund Resources at an annual rate of 0.11% of their average daily net
assets. SEI Fund Resources 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 Fund
Resources 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. Huntington receives custody and recordkeeping fees of 5.6 basis
points (0.056%) for each Fund. 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.
DISTRIBUTIONS AND TAXES
Dividends, if any, from the investment income of each Fund 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 either Fund 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.
17
<PAGE>
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 (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 Short/Intermediate Fixed
Income Securities Fund does 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.
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.
18
<PAGE>
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 Income Equity Fund, the Mortgage Securities Fund, the Ohio
Tax-Free Fund, the Short/Intermediate Fixed Income Securities 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 October 31, 1996, Huntington, acting in various capacities for
numerous accounts, was the owner of record of approximately 5,639,157 shares
(98.9%) of the Trust Shares of the Income Equity Fund, and 6,223,104 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 those
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
19
<PAGE>
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. Yield for both classes of
shares of each of the 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. 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 Income Equity Fund and the
Short/Intermediate 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
Both 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 each 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.
20
<PAGE>
[This Page Intentionally Left Blank]
<PAGE>
Investment Adviser
- --------------------------------------------------------------------------------
The Huntington Trust Company, N.A.
Huntington Center
Columbus, OH 43287
1-800-253-0412
Administrator
- --------------------------------------------------------------------------------
SEI Fund Resources
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
EQUITY FUND
- --------------------------------------------------------------------------------
The Monitor Income Equity Fund
INCOME FUND
- --------------------------------------------------------------------------------
The Monitor Short/Intermediate Fixed Income Securities Fund
January 30, 1997
ART
<PAGE>
THE MONITOR FUNDS
INVESTMENT SHARES AND TRUST SHARES
- ---------------------------------------------------------------------------
SUPPLEMENT, DATED JANUARY 30, 1997, TO THE COMBINED STATEMENT OF ADDITIONAL
INFORMATION, DATED APRIL 30, 1996 ("SAI"):
1. On the Cover Page of the SAI, delete the asterisks following The Monitor
Income Equity Fund and The Monitor Short/Intermediate Fixed Income
Securities Fund and the related footnote; all Series of The Monitor Funds
presently offer both Investment Shares and Trust Shares.
2. On page 3 of the SAI, delete the second sentence of the first paragraph
under the caption "Definitions" and replace it with the following:
"All of the Funds are offered in two classes, Investment Shares and
Trust Shares."
3. On page 18 of the SAI, delete the information under the caption "Fund
Ownership" and replace it with the following:
"FUND OWNERSHIP
As of October 31, 1996, the Trustees and officers as a group owned
less than 1% of the shares of the Trust.
As of October 31, 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 45,462,544 shares (47.4%); Huntington Trust Company,
Columbus, OH, acting in various capacities for numerous accounts,
owned approximately 19,860,815 shares (20.7%).
As of October 31, 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 304,328,116
shares (99.8%).
As of October 31, 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 54,964,190 shares (77.0%).
As of October 31, 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 58,646,549 shares (99.9%).
As of October 31, 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 21,993,390 shares (45.5%); Allied Fidelity Insurance
Co., Indianapolis, IN, owned approximately 3,805,804 shares (7.9%).
As of October 31, 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.,
1
<PAGE>
Columbus, OH, acting in various capacities for numerous accounts,
owned approximately 479,399,882 shares (99.9%).
As of October 31, 1996, no shareholders of record owned 5% or more of
the outstanding Investment Shares of The Monitor Growth Fund.
As of October 31, 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 5,048,572 shares
(98.9%).
As of October 31, 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 5,639,157 shares
(98.9%).
As of October 31, 1996, the following shareholder of record owned 5%
or more of the outstanding Investment Shares of The Monitor Mortgage
Securities Fund: Alex Barna, Shaker Heights, OH, 26,020 shares
(12.2%).
As of October 31, 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
5,254,448 shares (98.4%).
As of October 31, 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 5,611 shares (6.2%); John W. and Arlene J. Warbritton,
Westerville, OH, owned approximately 5,917 shares (6.5%); Ursula E.M.
and William J. Umberg, Cincinnati, OH, owned approximately 8,954
shares (9.9%); Florence M. and Ralph E. Brinkman, Grove City, OH,
owned approximately 13,715 shares (15.2%); and Michael M. and Mary Ann
Machowsky, Rossford, OH, owned approximately 4,612 shares (5.1%).
As of October 31, 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 2,896,144 shares
(98.8%).
As of October 31, 1996, the following shareholder of record owned 5%
or more of the outstanding Investment Shares of The Monitor Fixed
Income Securities Fund: William J. Umberg, Cincinnati, OH, owned
approximately 5,176 shares (5.9%); and The Cincinnati Institute for
Fine Arts, Cincinnati, OH, owned approximately 4,619 shares (5.2%).
As of October 31, 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
6,849,961 shares (99.4%).
As of October 31, 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 6,223,104 shares (99.2%).
The Declaration of Trust of the Trust provides that the Trust will, to
the fullest extent permitted by
2
<PAGE>
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."
4. On page 25 of the SAI, delete the second paragraph appearing under the
caption "The Distribution Plans" and replace it with the following:
"The Distribution Plan for all Funds was initially approved on
November 8, 1995, 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"), and was similarly approved for the Income Equity Fund and
the Short/Intermediate Fixed Income Securities Fund on October 23,
1996."
5. On page 37 of the SAI, delete the paragraph appearing under the caption
"Financial Statements" and replace it with the following:
"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 Annual Report 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. In addition, the unaudited financial statements
of The Monitor Funds as of and for the six month period ended June 30,
1996, are incorporated herein by reference from the Trust's Combined
Semi-Annual Report to Shareholders for the six months ended June
30, 1996, which Semi-Annual Report 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. Copies of such Annual Report to Shareholders and
such Semi-Annual Report to Shareholders may be obtained without charge
by contacting the Trust."
3
<PAGE>
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
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
<S> <C>
Definitions 1
- --------------------------------------------------------------------------------
Investment Objectives And Policies Of The Trust 1
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Appendix 38
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</TABLE>
i
<PAGE>
DEFINITIONS
- --------------------------------------------------------------------------------
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 Prospectuses for
Investment Shares may be hereinafter referred to collectively as the
"Prospectus.") This Statement relates to both Trust Shares and Investment
Shares. A Fund's Trust Shares and Investment Shares may be hereinafter referred
to collectively as "shares". Capitalized terms used but not defined herein have
the meanings as set forth in the Prospectus.
INVESTMENT OBJECTIVES AND POLICIES OF THE TRUST
- --------------------------------------------------------------------------------
Except as described below under "Investment Restrictions" or as otherwise
indicated, the investment policies described in the Prospectus and in this
Statement are not fundamental.
The investment practices and techniques described below may be used by certain
of the Funds. See the Prospectus to determine whether a particular Fund may
engage in any such practice or technique.
FOREIGN SECURITIES
Except as otherwise limited by a Fund's investment objective and policies as
described in the Prospectus, a Fund may invest in securities principally traded
in markets outside the United States. Foreign investments can be affected
favorably or unfavorably by changes in currency rates and in exchange control
regulations. There may be less publicly available information about a foreign
company than about a U.S. company, and foreign companies may not be subject to
accounting, auditing and financial reporting standards and requirements
comparable to those applicable to U.S. companies. Securities of some foreign
companies are less liquid or more volatile than securities of U.S. companies,
and foreign brokerage commissions and custodian fees are generally higher than
in the United States. Investments in foreign securities can involve other risks
different from those affecting U.S. investments, including local political or
economic developments, expropriation or nationalization of assets and imposition
of withholding taxes on dividend or interest payments. Foreign securities, like
other assets of a Fund, will be held by the Trust's custodian or by a
subcustodian. For information regarding transactions relating to foreign
currency exchange rates, see "Foreign Currency Transactions" below.
SHARES OF OTHER MUTUAL FUNDS
Each of the Growth Fund, the Fixed Income Securities Fund, the Mortgage
Securities Fund, and the Short/ Intermediate Fixed Income Securities Fund may
invest up to 5% of its total assets in the shares of money market mutual funds
(other than the Trust's Money Market Funds) for liquidity purposes. The Ohio
Municipal Money Market Fund may also invest up to 5% of its total assets in the
shares of one or more tax-exempt money market mutual funds for liquidity
purposes. When a Fund invests in the shares of other mutual funds, investment
advisory and other fees will apply, and the investment's yield will be reduced
accordingly. Under the Investment Company Act of 1940, a Fund may not invest
1
<PAGE>
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
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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
10
<PAGE>
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.
11
<PAGE>
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.
12
<PAGE>
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
13
<PAGE>
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.
14
<PAGE>
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------
Without a vote of a majority of the outstanding shares of a Fund, the Trust
shall not take any of the following actions with respect to such Fund:
(1) Except for the Ohio Funds, invest more than 5% of the value of its total
assets in the securities of any one issuer (this limitation does not apply
to securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities or to repurchase agreements secured by such
obligations).
(2) Purchase more than 10% of the voting securities of any issuer.
(3) Invest 25% or more of the value of its total assets (i) in securities of
companies primarily engaged in any one industry (other than the U.S.
Government, its agencies and instrumentalities), and (ii) with respect to
the Ohio Funds, in municipal obligations of one issuer or which are related
in such a way that, in the opinion of Huntington, an economic, business or
political development other than an Ohio state-wide, national or
international development, affecting one such obligation would also affect
others in a similar manner. Such concentration may occur as a result of
changes in the market value of portfolio securities, but such concentration
may not result from investment.
(4) Loan more than 20% of the Funds' portfolio securities to brokers, dealers
or other financial organizations. All such loans will be collateralized by
cash or U.S. Government obligations that are maintained at all times in an
amount equal to at least 102% of the current value of the loaned
securities.
(5) Except for investments by the Money Market Fund in commercial paper issued
under Section 4(2) of the Securities Act of 1933 and certain other
restricted securities which meet the criteria for liquidity as established
by the Trustees, invest more than 10% of the value of its total assets in
illiquid securities including restricted securities, repurchase agreements
of over seven days' duration and OTC options.
(6) Borrow in excess of 5% of its total assets (borrowings are permitted only
as a temporary measure for extraordinary or emergency purposes) or pledge
(mortgage) its assets as security for an indebtedness.
(7) Invest more than 5% of its total assets in securities of any issuer which,
together with any predecessor, has been in operation for less than three
years.
(8) Purchase or sell real estate or real estate mortgage loans; provided,
however, that the Funds may invest in securities secured by real estate or
interests therein or issued by companies which invest in real estate or
interests therein.
(9) Purchase or sell commodities or commodities contracts, or interests in oil,
gas, or other mineral exploration or development programs provided,
however, that the Funds may invest in futures contracts for bona fide
hedging transactions, as defined in the General Regulations under the
Commodity Exchange Act, or for other transactions permitted to entities
exempt from the definition of the term commodity pool operator, as long as,
immediately after entering a futures contract no more than 5% of the fair
market value of the Funds' assets would be committed to initial margins.
(10) Purchase securities on 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:
<TABLE>
<CAPTION>
FUND 1994 1995
---- ---- ----
<S> <C> <C>
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%
</TABLE>
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 Financial Services, Inc.;
Columbus, Ohio Past President of Ohio Funeral Directors Association
Birthdate: November 27, 1942 (1986-1987); and Past President, Board of Directors of
National Selected Morticians (1992-1993).
- ------------------------------------------------------------------------------------------------------------------------------------
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 Treasuer, 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 Provost,
4250 Dublin Road The Ohio State University (1993-Present); Senior Vice Chancel-
Columbus, Ohio 43210 lor for Academic Affairs, UCLA (1991-1993).
Birthdate: October 16, 1936
- ------------------------------------------------------------------------------------------------------------------------------------
David G. Lee President and Senior Vice President of SEI Administrative and SEI Financial
680 East Swedesford Road Chief Executive Services since 1993. Vice President of SEI Administrative and
Wayne, PA 19087 Officer SEI Financial Services (1991-1993); President, GW Sierra Trust
Birthdate: April 16, 1952 prior to 1991.
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen G. Meyer Treasurer, Vice President and Controller--Fund Resources, a division of
680 East Swedesford Road Controller and SEI Corporation, since March 1995; Director, Internal Audit
Wayne, PA 19087 Chief Financial and Risk Management--SEI Corporation (1992-1995); Senior
Birthdate: July 12, 1965 Officer Associate with Coopers & Lybrand (1990-1992).
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
<TABLE>
<S> <C> <C>
Kathryn L. Stanton Vice President Vice President and Assistant Secretary of SEI Corporation since
680 East Swedesford Road and Secretary 1994; Associate attorney with Morgan, Lewis and Bockius
Wayne, PA 19087 (1989-1994).
Birthdate: November 19, 1958
- ------------------------------------------------------------------------------------------------------------------------------------
Sandra K. Orlow Vice President Vice President and Assistant Secretary of SEI Corporation
680 East Swedesford Road and Assistant since 1983.
Wayne, PA 19087 Secretary
Birthdate: October 18, 1953
- ------------------------------------------------------------------------------------------------------------------------------------
Barbara A. Nugent Vice President Vice President and Assistant Secretary of SEI Corporation
680 East Swedesford Road and Assistant since April 1996. Associate attorney with Drinker, Biddle &
Wayne, PA 19087 Secretary Reath (1994-1996); Assistant Vice President/Administration
Birhdate: June 18, 1956 of Delaware Service Company, Inc. (1992-1993); Assistant
Vice President-Operations of Delaware Service Company, Inc.
(1988-1992).
- ------------------------------------------------------------------------------------------------------------------------------------
Kevin P. Robins Vice President Senior Vice President, General Counsel and Secretary of SEI
680 East Swedesford Road and Assistant Corporation since 1994. Vice President and Assistant Secretary
Wayne, PA 19087 Secretary (1992-1994); Associate attorney with Morgan, Lewis &
Birthdate: April 15, 1961 Bockius (1988-1992).
- ------------------------------------------------------------------------------------------------------------------------------------
Todd Cipperman Vice President Vice President and Assistant Secretary of SEI Corporation since
680 East Swedesford Road and Assistant 1995; Associate attorney with Dewey Ballantine (1994-1995);
Wayne, PA 19087 Secretary Associate attorney with Winston & Strawn (1991-1994).
Birthdate: February 14, 1966
- ------------------------------------------------------------------------------------------------------------------------------------
Joseph M. Lydon Vice President Director of Business Administration--Fund Resources, a division
680 East Swedesford Road and Assistant of SEI Corporation since 1995; Vice President of Fund Group,
Wayne, PA 19087 Secretary Vice President of the Advisor--Dreman Value
Birthdate: September 27, 1959 Management, 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
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
NAME AND POSITION WITH TRUST FROM TRUST*
----------------------------- ------------
<S> <C>
David S. Schoedinger, Trustee $12,500
John M. Shary, Trustee $14,500
William R. Wise, Trustee $12,500
Richard Sisson, Trustee $ 0
</TABLE>
- ---------------------
* 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. As of February 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:
<TABLE>
<CAPTION>
FUND 1993 1994 1995
---- ------- -------- -------
<S> <C> <C> <C>
Growth Fund......... $89,776 $121,407 $88,688
Income Equity Fund.. $64,330 $121,749 $53,998
</TABLE>
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, respectively. 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, respectively.
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 Prospectuses 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, 1922, 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 Plan 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:
<TABLE>
<CAPTION>
FUND-TRUST SHARES YIELD EFFECTIVE YIELD
----------------- ------ ---------------
<S> <C> <C>
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%
</TABLE>
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:
<TABLE>
<CAPTION>
FUND-INVESTMENT SHARES YIELD EFFECTIVE YIELD
---------------------- ------ ----------------
<S> <C> <C>
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%
</TABLE>
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:
<TABLE>
<CAPTION>
FUND-TRUST SHARES YIELD
----------------- -----
<S> <C>
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%
</TABLE>
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:
<TABLE>
<CAPTION>
FUND-INVESTMENT SHARES YIELD
---------------------- -----
<S> <C>
Growth Fund................................................ 1.03%
Ohio Tax-Free Fund......................................... 3.38%
Fixed Income Securities Fund............................... 4.90%
Mortgage Securities Fund................................... 6.95%
</TABLE>
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
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
FEDERAL TAX BRACKET:
<S> <C> <C> <C> <C> <C>
15.00% 28.00% 31.00% 36.00% 39.60%
</TABLE>
<TABLE>
<CAPTION>
COMBINED FEDERAL AND STATE TAX BRACKET:
<S> <C> <C> <C> <C> <C>
19.457% 33.201% 37.900% 43.500% 47.100%
- ------------------------------------------------------------------------------------
$ 1- $24,001- $ 58,151- $121,301- OVER
Single Return: $24,000 $58,150 $121,300 $263,750 $263,750
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
TAX-EXEMPT
YIELD TAXABLE YIELD EQUIVALENT
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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%
</TABLE>
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>
<TABLE>
<CAPTION>
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%
- --------------------------------------------------------------------------------
$1- $40,101- $96,901- $147,701- OVER
Joint Return: $40,100 $96,900 $147,700 $263,750 $263,750
- --------------------------------------------------------------------------------
TAX-EXEMPT YIELD TAXABLE YIELD EQUIVALENT
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1.50% 1.88% 2.27% 2.42% 2.65% 2.84%
2.00% 2.5A% 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.
</TABLE>
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: (1) 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 years ended December 31, 1995
and 1994
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
Report of Price Waterhouse LLP, Independent Accountants
(2) The following unaudited financial statements have been incorporated
into the Combined Statement of Additional Information by reference to the
Trust's Combined Semi-Annual Report to Shareholders, dated June 30, 1996:
Statements of Operations for the six months ended June 30, 1996
Statements of Assets and Liabilities as of June 30, 1996
Statements of Changes in Net Assets for the six months ended June 30, 1996
Statements of Cash Flows for the six months ended June 30, 1996
Portfolios of Investments as of June 30, 1996
Financial Highlights for the six months ended June 30, 1996
Combined Notes to Financial Statements
(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 (previously filed as Exhibit 6 to
Post-Effective Amendment No. 20 and incorporated herein by reference)
(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)
C-1
<PAGE>
(9) (i) Transfer Agency and Service Agreement, dated January 11, 1996,
between the Registrant and SEI Financial Management Corporation (previously
filed as Exhibit 9(i) to Post-Effective Amendment No. 20 and incorporated
herein by reference)
(ii) Sub-Transfer Agency and Service Agreement, dated February 10, 1996,
between SEI Financial Management Corporation and State Street Bank and
Trust Company (previously filed as Exhibit 9(ii) to Post-Effective
Amendment No. 20 and incorporated herein by reference)
(iii) Administration Agreement, dated January 11, 1996, between the
Registrant and SEI Financial Management Corporation (previously filed as
Exhibit 9(iii) to Post-Effective Amendment No. 20 and incorporated herein
by reference)
(iv) Sub-Administration Agreement, dated January 11, 1996, between SEI
Financial Management Corporation and The Huntington Trust Company, N.A.
(previously filed as Exhibit 9(iv) to Post-Effective Amendment No. 20 and
incorporated herein by reference)
(10) Opinion of Counsel as to legality of shares being registered
(previously filed with the Registrant's Rule 24f-2 Notice filed on
February 20, 1996, and incorporated herein by reference)
(11) Consent of Independent Accountants (filed herewith)
(12) Not applicable
(13) Initial Capital Understanding (previously filed as Exhibit 13 to Post-
Effective Amendment No. 20 and incorporated herein by reference)
(14) Not applicable
(15) Distribution and Shareholder Services Plan adopted on November 8, 1995
(filed herewith)
(16) Not applicable
(17) Financial Data Schedules (EDGAR filing only) (filed herewith)
(18) Multiple Class Plan (filed herewith)
(24) Powers of Attorney (filed herewith)
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
C-2
<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class as of October 31, 1996
- -------------- ------------------------
<S> <C>
Shares of Beneficial Interest of:
The Monitor Money Market Fund
Trust Shares................................. 73
Investment Shares............................ 1,581
The Monitor Ohio Municipal Money Market Fund
Trust Shares................................. 9
Investment Shares............................ 248
The Monitor U.S. Treasury Money Market Fund
Trust Shares................................. 9
Investment Shares............................ 835
The Monitor Growth Fund
Trust Shares................................. 94
Investment Shares............................ 747
The Monitor Income Equity Fund
Trust Shares................................. 71
The Monitor Mortgage Securities Fund
Trust Shares................................. 47
Investment Shares............................ 244
The Monitor Ohio Tax-Free Fund
Trust Shares................................. 21
Investment Shares............................ 158
The Monitor Fixed Income Securities Fund
Trust Shares................................. 56
Investment Shares............................ 278
The Monitor Short/Intermediate Fixed
Income Securities Fund
Trust Shares................................. 66
</TABLE>
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.
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
C-3
<PAGE>
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.
OFFICERS AND DIRECTORS OF HUNTINGTON
Principal Other Business(es) During
Name at Least the Last Two Fiscal Years
- ---- -----------------------------------
Elaine H. Hairston............... Chancellor, Ohio Board of Regents
W. Lee Hoskins................... 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 Inc., a publicly held corporation engaged
through its subsidiaries in various aspects of the financial services industry.
The officers and directors of Piper Capital Management Incorporated are as
follows:
William H. Ellis Director and President
Charles N. Hayssen Director
Bruce C. Huber Director
David E. Rosedahl Director
Momchilo Vucenich Director
Paul A. Dow Senior Vice President and Chief Investment Officer
Susan S. Miley Senior Vice President, General Counsel and Secretary
Worth Bruntjen Senior Vice President
Richard Daly 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
Mark R. Grotte Senior Vice President
Jerry F. Gudmundson Senior Vice President
Robert C. Hannah Senior Vice President
Lynne Harrington Senior Vice President
Russell J. Kappenman Senior Vice President
C-4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Kimberly F. Kaul Senior Vice President
Lisa A. Kenyon 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
Robert H. Nelson 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
Eric L. Siedband Senior Vice President
Jill A. Thompson 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
Molly J. Destro Vice President
Julie Deutz Vice President
Rochelle B. Gonzo Vice President
Joyce A. Halbe Vice President
Joan L. Harrod Vice President
Mary M. Hoyme Vice President
Amy K. Johnson Vice President
John Kightlinger Vice President
Wan-Chong Kung Vice President
Jane C. Longueville Vice President
Brent D. Mellum Vice President
Steven C. Meyer Vice President
Thomas Moore Vice President
Chris Neuharth Vice President
Paul D. Pearson Vice President
Catherine M. Stienstra Vice President
Shaista Tajamal Vice President
Jane K. Welter Vice President
Marcy K. Winson Vice President
Fong P. Woo Vice President
Jeffrey J. Ebert Assistant Vice President
Patrice S. Horner Assistant Vice President
Brooks L. Lillehei Assistant Vice President
James G. Madson Assistant Vice President
Yedda S. Marks Assistant Vice President
Troy C. Paulson Assistant Vice President
</TABLE>
C-5
<PAGE>
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, First
American Funds, Inc., First American Investment Funds, Inc., The Arbor
Fund, 1784 Funds (R), The PBHG Funds, Inc., Marquis Funds (R), Morgan
Grenfell Investment Trust, The Achievement Funds Trust, Bishop Street
Funds, CrestFunds, Inc., STI Classic Variable Trust, ARK Funds, FMB Funds,
Inc., SEI Asset Allocation Trust, Turner Funds, SEI Institutional
Investments Trust and Firs American Strategy Funds, Inc.
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
("Funds Evaluation") and automated execution, clearing and settlement of
securities transactions ("MarketLink").
(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 Pres., Treasurer None
Gilbert L. Beebower Executive Vice President None
Richard B. Lieb Executive Vice President None
Leo J. Dolan, Jr. Senior Vice President None
Carl A. Guarino Senior Vice President None
Jerome Hickey Senior Vice President None
Larry Hutchison 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
Barbara Moore Senior Vice President None
James V. Morris Senior Vice President None
Steven Onofrio Senior Vice President None
</TABLE>
C-6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Kevin P. Robins Senior Vice President, General Counsel, Vice President and Assistant Secretary
Secretary
Robert Wagner Senior Vice President None
Patrick K. Walsh Senior Vice President None
Kenneth Zimmer Senior Vice President None
Robert Aller Vice President None
Mark H. Cahn Vice President and Assistant Secretary None
Gordon W. Carpenter Vice President None
Todd Cipperman Vice President and Assistant Secretary Vice President and Assistant Secretary
Robert Crudup Vice President and Managing Director None
Ed Daly Vice President None
Jeff Drennen Vice President None
Mick Duncan Vice President and Team Leader None
Vic Galef Vice President and Managing Director None
Kathy Heilig Vice President None
Michael Kantor Vice President None
Samuel King Vice President None
Kim Kirk Vice President and Managing Director None
Donald H. Korytowski Vice President None
John Krzeminski Vice President and Managing Director None
Robert S. Ludwig Vice President and Team Leader None
Vicki Malloy Vice President and Team Leader None
Carolyn McLaurin Vice President and Managing Director 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
Donald Pepin Vice President and Managing Director None
Larry Pokora Vice President None
Kim Rainey Vice President None
Paul Sachs Vice President None
Mark Samuels Vice President and Managing Director None
Steve Smith Vice President None
Daniel Spaventa Vice President None
Kathryn L. Stanton Vice President and Assistant Secretary Vice President and Secretary
Wayne M. Withrow Vice President and Managing Director None
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 31a-3 promulgated
thereunder are maintained at
C-7
<PAGE>
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 and semi-annual reports
to shareholders, upon request and without charge.
C-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended
(the "Securities Act") and the Investment Company Act of 1940, as amended, the
Registrant 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
Wayne, Commonwealth of Pennsylvania, on the 27th day of November, 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 (Principal Executive November 27, 1996
- ----------------------- Officer)
David G. Lee
/s/ STEPHEN G. MEYER
- ----------------------- Controller (Principal Financial November 27, 1996
Stephen G. Meyer Officer)
* Trustee November 27, 1996
- -----------------------
David S. Schoedinger
* Trustee November 27, 1996
- -----------------------
William R. Wise
* Trustee November 27, 1996
- -----------------------
John M. Shary
* Trustee November 27, 1996
- -----------------------
Richard Sisson
*Executed on behalf of the indicated person by the undersigned, pursuant to
power of attorney previously filed and incorporated herein by reference.
By: /s/ STEPHEN G. MEYER
----------------------------------
Stephen G. Meyer, Attorney-in-fact
C-9
<PAGE>
EXHIBIT INDEX
(11) Consent of Independent Accountants
(15) Distribution and Shareholder Services Plan adopted on November 8, 1995
(18) Multiple Class Plan
(24) Power of Attorney
(27) Financial Data Schedules (EDGAR filing only)
<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. 21 to the Registration Statement on Form N-1A (File No. 33-11905)
(the "Registration Statement") of our report dated February 20, 1996, relating
to the financial statements and financial highlights appearing in the 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 heading "Independent Accountants" in the Prospectus and under
the headings "Independent Accountants" and "Financial Statements" in the
Statement of Additional Information.
/S/ PRICE WATERHOUSE LLP
Columbus, Ohio
November 22, 1996
<PAGE>
THE MONITOR FUNDS
DISTRIBUTION AND SHAREHOLDER SERVICES PLAN
This Plan constitutes the Distribution and Shareholder Services Plan
("Plan") of THE MONITOR FUNDS (the "Trust"), a Massachusetts business trust,
with respect to certain classes of shares ("Classes") of the portfolios of the
Trust (the "Funds") set forth in exhibits hereto. This Plan, re-executed by the
Board of Trustees of the Trust on November 8, 1995, amends (i) the Plan adopted
by the Board of Trustees on April 24, 1992, and (h) the Plan adopted by the
Board of Trustees on May 1, 1991.
1. This Plan is adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940 ("Act"), to allow the Trust to make payments as contemplated
herein, in conjunction with the distribution of Classes of the Funds ("Shares").
2. This Plan is designed to finance activities of SEI Financial Services
Company ("SEY") principally intended to result in the sale of Shares, to
include: (a) providing incentive to broker/dealers ("Brokers") to sell Shares
and to provide administrative support services to the Funds and their
shareholders; (b) compensating other participating financial institutions and
other persons ("Administrators") for providing administrative support services
to the Funds and their shareholders; (c) paying for the costs incurred in
conjunction with advertising and marketing of Shares, to include expenses of
preparing, printing and distributing prospectuses and sales literature to
prospective shareholders, Brokers or Administrators; and (d) other costs
incurred in the implementation and operation of the Plan. In compensation for
services provided pursuant to this plan SEI will be paid a fee with respect to
the following Classes set forth in the applicable exhibit.
3. Any payment to SEI in accordance with this Plan will be made pursuant
to the "Distributor's Contract" entered into by the Trust and SE Any payments
made by SEI to Brokers and Administrators with Funds received as compensation
under this Plan will be made pursuant to a "Rule l2b-1 Agreement" entered into
by SEI and the Broker or Administrator.
4. SEI has the right (i) to select, in its sole discretion, the Brokers
and Administrators to participate in the Plan and (ii) to terminate without
cause and in its sole discretion any Rule 12b-1 Agreement.
5. Quarterly in each year that this Plan remains in effect, SEI shall
prepare and furnish to the Board of Trustees of the Trust, and the Board of
Trustees shall review, a written report of the amounts expended under the Plan
and the purpose for which such expenditures were made.
6. This Plan shall become effective with respect to each Class (i) after
approval by majority votes of (a) the Trust's Board of Trustees; (b) the
Disinterested Trustees of the Trust, cast in person at a meeting called for the
purpose of voting on the Plan; and (c) the outstanding voting securities of the
particular Class, as defined in Section 2(a)(42) of the Act and (ii) upon
<PAGE>
execution of an exhibit adopting this Plan with respect to such Class.
7. This Plan shall remain in effect with respect to each Class presently
set forth on an exhibit and any subsequent Classes added pursuant to an exhibit
during the initial year of this Plan for a period of one year from the date set
forth above and may be continued thereafter if this Plan is approved with
respect to each Class at least annually by a majority of the Trust's Board of
Trustees and a majority of the Disinterested Trustees, cast in person at a
meeting called for the purpose of voting on such Plan. If this Plan is adopted
with respect to a Class after the first annual approval by the Trustees as
described above, this Plan will be effective as to that Class upon execution of
the applicable exhibit pursuant to the provisions of paragraph 6(h) above and
will continue in effect until the next annual approval of this Plan by the
Trustees and thereafter for successive periods of one year subject to approval
as described above.
8. All material amendments to this Plan must be approved by a vote of the
Board of Trustees of the Trust and of the Disinterested Trustees, cast in person
at a meeting called for the purpose of voting on it.
9. This Plan may not be amended in order to increase materially the costs
which the Classes may bear for distribution pursuant to the Plan without being
approved by a majority vote of the outstanding voting securities of the Classes
as defined in Section 2(a)(42) of the Act.
10. This Plan may be terminated with respect to a particular Class at any
time by: (a) a majority vote of the Disinterested Trustees; or (b) a vote of a
majority of the outstanding voting securities of the particular Class as defined
in Section 2(a)(42) of the Act; or (c) by SEI on 60 days notice to the
particular Class.
11. While this Plan shall be in effect, the selection and nomination of
Disinterested Trustees of the Trust shall be committed to the discretion of the
Disinterested Trustees then in off ice.
12. All agreements with any person relating to the implementation of this
Plan shall be in writing and any agreement related to this Plan shall be subject
to termination, without penalty, pursuant to the provisions of Paragraph 10
herein.
13. The name "The Monitor Funds" and "Trustees of The 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 April 29, 1991 to which reference is hereby made and a copy of which
is on file at the office of the Secretary of the Commonwealth of Massachusetts
and elsewhere as required by law, and to any and all amendments thereto so filed
or hereafter filed. The obligations of "The Monitor Funds" entered into in the
name or on behalf thereof by any of the Trustees, representatives or agents are
made not individually, but in such capacities, and are not binding upon any of
the Trustees, Shareholders or representatives of the Trust personally, but bind
only the assets of the Trust, and all persons dealing with any series and/or
class of Shares of the Trust must look solely to the assets of the Trust
belonging to such series and/or class for the enforcement of any claims against
the Trust.
14. This Plan shall be construed in accordance with and governed by the
laws of the Commonwealth of Massachusetts.
<PAGE>
EXHIBIT A
(as amended on October 23, 1996)
CLASSES OF THE MONITOR FUNDS
1. The following classes of shares,("Classes") of The Monitor Funds (the
"Trust") (as defined under the Plan) shall participate in the Plan effective as
of the dates set forth below:
<TABLE>
<CAPTION>
Compensation (as a percentage
of average daily net asset value of
shares of each Class held during
quarter)
-----------------------------------
<S> <C> <C>
The Monitor Money Market Fund
(Investment Shares) May 1, 1991 0.25
The Monitor Ohio Municipal
Money Market Fund
(Investment Shares) May 1, 1991 0.25
The Monitor U.S. Treasury Money
Market Fund (Investment Shares) May 1, 1991 0.25
The Monitor Growth Fund
(Investment Shares) May 1, 1991 0.25
The Monitor Ohio Tax-Free Fund
(Investment Shares) May 1, 1991 0.25
The Monitor Fixed Income
Securities Fund
(Investment Shares) May 1. 1991 0.25
The Monitor Mortgage Securities
Fund (Investment Shares) April 24, 1992 0.50
The Monitor Income Equity Fund
(Investment Shares) January 30, 1997 0.25
The Monitor Short/Intermediate
Fixed Income Securities Fund
(Investment Shares) January 30, 1997 0.25
</TABLE>
2. SEI shall pay Brokers and Administrators a quarterly fee with respect
to each Class specified above, computed at the annual rate specified above, in
accounts for which such Brokers and Administrators provide services specified in
paragraph 2 of the Plan. Such fee shall be accrued daily and paid quarterly.
<PAGE>
THE MONITOR FUNDS
MULTIPLE CLASS PLAN
This Multiple Class Plan ("Plan") is adopted by THE MONITOR FUNDS (the "Trust"),
a Massachusetts business trust, with respect to the classes of shares
("Classes") of the portfolios of the Trust (the "Funds") set forth in exhibits
hereto.
Purpose
1. This Plan is adopted pursuant to Rule 18f-3 under the Investment Company Act
of 1940, as amended (the "Rule"), so as to allow the Trust to issue more than
one class of shares of any or all of the Funds ("Covered Classes") in reliance
on the Rule and to make payments as contemplated herein.
2. Separate Arrangements/Class Differences
a. Designation of Classes: The Funds set forth on Exhibit A offer two
classes of shares: Investment Shares and Trust Shares.
b. Sales Load and Expenses: Purchases of Investment Shares are subject to
a sales load as described in the Investment Shares Prospectus. The only
expenses allocated to Investment Shares as a class are the expenses incurred
under the applicable distribution plan adopted pursuant to Rule 12b-1.
c. Distribution of Shares: Investment Shares may be purchased through The
Huntington Investment Company, Huntington Personal Bankers or the Mutual Fund
Services Center as well as from the Distributor. Quantity discounts,
accumulated purchases, concurrent purchases, purchases in conjunction with a
letter of intent, reinstatement privileges, systematic withdrawal and purchases
at net asset value as they relate to Investment Shares, are as described in the
applicable prospectus. Trust Shares may be purchased through procedures
established by the Distributor in connection with the requirements of fiduciary,
advisory, agency and other similar accounts maintained by or on behalf of
customers of Huntington Bank or its affiliates or correspondent banks.
d. Minimum Investment Amounts: The minimum investments in the Covered
Classes is $1,000.00 with minimum subsequent investments set at $50,00 for
Investment Shares and $500.00 for Trust Shares.
e. Voting Rights: Shareholders of each class are entitled to one vote for
each share held on the record date for any action requiring a vote by the
shareholders and a proportionate fractional vote for each fractional share held.
Shareholders of the Trust will vote in the aggregate and not by Fund or class,
except (i) as otherwise expressly required by law or when the Trustees determine
that the matter to be voted upon affects only the interests of shareholders of a
particular Fund or class, and (ii) only holders of Investment Shares will be
<PAGE>
entitled to vote on matters submitted to shareholder vote with respect to the
Rule 12b-1 Plan applicable to that class.
3. Expense Allocations
The expenses incurred pursuant to the Rule 12b-1 Plan will be borne solely
by the Investment Shares class of the applicable Fund, and constitute the only
expenses allocated to one class and not the other.
4. Exchange Features
Shareholders may exchange Trust Shares in any Fund for Trust Shares in any
other Fund at the respective net asset values next determined after receipt of
the request in good order. Shareholders may exchange Investment Shares in any
Fund for Investment Shares in any other Fund offering Investment Shares at the
respective net asset value next determined after receipt of the request in good
order, plus any applicable sales charge. No sales charge applies when Investment
Shares are exchanged from a Fund that imposes a sales charge to a Fund with no
sales charge. If a shareholder seeks to exchange Investment Shares of a Fund
that does not impose a sales charge for Investment Shares of a Fund that imposes
a sales charge, the shareholder will be required to pay the applicable sales
charge of the Fund into which the Investment Shares are exchanged. In all cases,
shareholders will be required to a sales charge only once.
5. Effectiveness
This Plan shall become effective with respect to each class, (i) to the
extent required by the Rule, after approval by a majority vote of: (a) the
Trust's Board of Trustees; (b) the members of the Board of the Trust who are not
interested persons of the Trust and have no direct or indirect financial
interest in the operation of the Trust's Plan, and/or (ii) upon execution of an
exhibit adopting this Plan with respect to such class.
<PAGE>
EXHIBIT A
to the
Multiple Class Plan
THE MONITOR FUNDS
Investment Shares
Trust Shares
The Monitor Money Market Fund
The Monitor Ohio Municipal Money Market Fund
The Monitor U.S. Treasury Money Market Fund
The Monitor Growth Fund
The Monitor Mortgage Securities Fund
The Monitor Ohio Tax-Free Fund
The Monitor Fixed Income Securities Fund
This Multiple Class Plan is adopted by The Monitor Funds with respect to the
Class(es) of Shares of the portfolio(s) of The Monitor Funds set forth above.
Witness the due execution hereof this April 18, 1995.
The Monitor Funds
By: /S/ EDWARD C. GONZALES
Title: President
Date: April 18, 1995
<PAGE>
EXHIBIT B
to the
Multiple Class Plan
THE MONITOR FUNDS
Investment Shares
Trust Shares
The Monitor Income Growth Fund
The Monitor Short/Intermediate Fixed Income Securities Fund
This Multiple Class Plan is adopted by The Monitor Funds with respect to
the Class(es) of Shares of the portfolio(s) of The Monitor Funds set forth
above, effective on January 30, 1997.
Witness the due execution hereof this October 23, 1995.
The Monitor Funds
By: /S/ DAVID G. LEE
Title: President
<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
<SERIES>
<NUMBER> 010
<NAME> MONEY MARKET TRUST CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 451128
<INVESTMENTS-AT-VALUE> 451128
<RECEIVABLES> 138
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 451266
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 1945
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 449321
<SHARES-COMMON-STOCK> 353683
<SHARES-COMMON-PRIOR> 296764
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 449321
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11365
<OTHER-INCOME> 0
<EXPENSES-NET> 1165
<NET-INVESTMENT-INCOME> 10200
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 10200
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7976
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 498282
<NUMBER-OF-SHARES-REDEEMED> 441380
<SHARES-REINVESTED> 17
<NET-CHANGE-IN-ASSETS> 61269
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 630
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1165
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .02
<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
<SERIES>
<NUMBER> 011
<NAME> MONEY MARKET INVESTMENT CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 451128
<INVESTMENTS-AT-VALUE> 451128
<RECEIVABLES> 138
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 451266
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 1945
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 449321
<SHARES-COMMON-STOCK> 95638
<SHARES-COMMON-PRIOR> 91288
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 449321
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11365
<OTHER-INCOME> 0
<EXPENSES-NET> 1165
<NET-INVESTMENT-INCOME> 10200
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 10200
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2224
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 66441
<NUMBER-OF-SHARES-REDEEMED> 63893
<SHARES-REINVESTED> 1802
<NET-CHANGE-IN-ASSETS> 61269
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 630
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1165
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .02
<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
<SERIES>
<NUMBER> 020
<NAME> OHIO MUNICIPAL MONEY MARKET TRUST CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 114605
<INVESTMENTS-AT-VALUE> 114605
<RECEIVABLES> 781
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 115387
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 342
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 115057
<SHARES-COMMON-STOCK> 53961
<SHARES-COMMON-PRIOR> 56551
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (12)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 115045
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1947
<OTHER-INCOME> 0
<EXPENSES-NET> 261
<NET-INVESTMENT-INCOME> 1686
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1686
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 800
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 46569
<NUMBER-OF-SHARES-REDEEMED> 49160
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 3037
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 166
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 327
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .02
<PER-SHARE-DISTRIBUTIONS> 0
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<PAGE>
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<NAME> OHIO MUNICIPAL MONEY MARKET INVESTMENT CLASS
<MULTIPLIER> 1,000
<S> <C>
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 030
<NAME> U.S. TREASURY MONEY MARKET TRUST CLASS
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<S> <C>
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 031
<NAME> U.S. TREASURY MONEY MARKET INVESTMENT CLASS
<MULTIPLIER> 1,000
<S> <C>
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 050
<NAME> GROWTH TRUST CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 051
<NAME> GROWTH INVESTMENT CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 060
<NAME> INCOME EQUITY TRUST CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 070
<NAME> OHIO TAX FREE TRUST CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 071
<NAME> OHIO TAX FREE INVESTMENT CLASS
<MULTIPLIER> 1,000
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1996
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 080
<NAME> FIXED INCOME TRUST CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 081
<NAME> FIXED INCOME INVESTMENT CLASS
<MULTIPLIER> 1,000
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1996
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<PAGE>
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<NAME> SHORT/INTERMEDIATE FIXED INCOME TRUST CLASS
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<S> <C>
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<PAGE>
<ARTICLE> 6
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<NAME> MORTGAGE SECURITIES TRUST CLASS
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<S> <C>
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<PAGE>
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<NAME> MORTGAGE SECURITIES INVESTMENT CLASS
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