<PAGE>
As filed with the Securities and Exchange Commission on September 5, 1997
Registration Nos. 33-11905, 811-5010
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 23 [X]
and
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 25 [X]
relating solely to:
THE MONITOR MICHIGAN TAX-FREE 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superseded hereby)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)
41 South High Street
Columbus, Ohio 43287
(Address of Principal Executive Office)
1-800-544-8347
(Registrant's Telephone Number)
David G. Lee, Senior Vice President
SEI Fund Resources
One Freedom Valley Road
Oaks, Pennsylvania 19456
(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
(810) 335-3346 (FAX)
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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
[ ] On , 199 , pursuant to Rule 485(a)(1), or
[ ] 75 days after filing pursuant to Rule 485(a)(2), or
[X] On November 20, 1997, pursuant to Rule 485(a)(2).
[ ] Immediately upon filing pursuant to Rule 485(b), or
[ ] On April 30, 1997, pursuant to Rule 485(b)
If appropriate, check this 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, 1996, on February 27,
1997.
<PAGE>
CROSS REFERENCE SHEET
NOTE: References set forth below are to headings in either the Prospectus for
Trust Shares of The Monitor Funds or the Prospectus for Investment Shares of The
Monitor Funds, as indicated by brackets
<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 Buy Trust Shares]; [How to Exchange Investment Shares Among the Monitor
Funds]; [How to Exchange Trust Shares Among the Monitor Funds]; Management of the
Trust--Distribution of Shares; Management of the Trust--Distribution Plan [Investment
Shares only]
Item 8. Redemption or Repurchase........... [How to Redeem Investment Shares] [How to Redeem Trust Shares];
Systematic Withdrawal Program; Accounts with Low Balances [Investment Shares only]
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 ........... Investment Adviser; Administrator; Distributor; Custodian; Transfer
Other Services..................... Agent and Dividend Disbursing Agent; Independent Auditors
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 Plan [Investment Shares only]; Determination of Net Asset
Value; Additional Purchase Information--Payment in Kind
Item 20. Tax Status......................... Taxes
Item 21. Underwriters....................... Not Applicable
Item 22. Calculation of Performance Data.... Performance Information
Item 23. Financial Statements............... Incorporated by Reference into the Combined Statement of
Additional Information by reference to the Trust's Combined Annual
Report dated December 31, 1996, and the Trust's Combined Semi-
Annual Report dated June 30, 1997
</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
THE MONITOR MICHIGAN TAX-FREE FUND--INVESTMENT SHARES
The Investment Shares of The Monitor Michigan Tax-Free Fund (the "Fund")
offered by this Prospectus represent interests in a non-diversified portfolio
of securities that is one of a series of ten investment portfolios in The
Monitor Funds, a Massachusetts business trust (the "Trust") which is an open-
end management investment company (a mutual fund). Investment Shares may be
purchased through The Huntington Investment Company, Huntington Personal
Bankers or the Investor Services Department pursuant to agreements between The
Huntington Investment Company or The Huntington National Bank, and SEI
Investments Distribution Co. (the "Distributor"), the Trust's distributor.
The investment objective of the Fund is to provide current income exempt
from both federal and Michigan personal income taxes. The Fund will pursue
this objective by investing primarily in debt obligations with short to
intermediate remaining maturities (less than 15 years) issued by or on behalf
of the State of Michigan and its political subdivisions, agencies and
instrumentalities or by other issuers outside the State of Michigan if such
obligations pay interest that, in the opinion of counsel to the issuer, is
exempt from federal and Michigan personal income tax.
The Fund is offered in two classes of shares, Investment Shares and Trust
Shares. This Prospectus relates only to Investment Shares of the Fund. This
Prospectus sets forth concisely what a shareholder should know before
investing in Investment Shares of the Fund and should be read carefully and
retained for future reference. The Combined Statement of Additional
Information dated April 30, 1997, as supplemented on November 20, 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 INVESTOR SERVICES DEPARTMENT AT: (IN OHIO) 614-480-5580
OR (OUTSIDE THE 614 AREA CODE) 800-253-0412.
THE HUNTINGTON NATIONAL BANK
Investment Adviser
SEI FUND RESOURCES
Administrator
SEI INVESTMENTS DISTRIBUTION CO.
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
ACCURACY 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 NATIONAL BANK,
NOR ARE THEY INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. AN
INVESTMENT IN THE 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.
November 20, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION............................................................1
Risk Factors..................................................................1
FEE TABLE AND EXAMPLE..........................................................2
INVESTMENT OBJECTIVE AND POLICIES..............................................2
ADDITIONAL INFORMATION ON PORTFOLIO INVESTMENTS AND STRATEGIES.................3
Michigan Municipal Obligations................................................3
Non-Diversification...........................................................4
Defensive Investment Strategies...............................................4
U.S. Government Securities....................................................4
Bank and Savings and Loan Obligations.........................................5
Commercial Paper..............................................................5
Repurchase Agreements.........................................................5
Variable and Floating Rate Demand and Master Demand Notes.....................5
When-Issued and Delayed Delivery Transactions.................................6
Lending of Portfolio Securities...............................................6
Options and Futures Contracts.................................................7
INVESTMENT RESTRICTIONS........................................................8
HOW THE FUND VALUES SHARES.....................................................8
HOW TO BUY INVESTMENT SHARES...................................................9
To Place an Order.............................................................9
Minimum Investment Required..................................................10
What Shares Cost.............................................................10
Purchases At Net Asset Value................................................10
Dealer Concession...........................................................10
Reducing the Sales Charge...................................................11
Quantity Discounts and Accumulated Purchases................................11
Letter of Intent............................................................11
PAGE
Reinstatement Privilege.....................................................12
Concurrent Purchases........................................................12
Systematic Investment Program................................................12
HOW TO EXCHANGE INVESTMENT SHARES AMONG THE FUNDS.............................13
By Telephone.................................................................13
By Mail......................................................................14
HOW TO REDEEM INVESTMENT SHARES...............................................14
Redeeming by Telephone.......................................................15
Redeeming by Mail............................................................15
Redeeming by Fax.............................................................16
SYSTEMATIC WITHDRAWAL PROGRAM.................................................16
ACCOUNTS WITH LOW BALANCES....................................................16
MANAGEMENT OF THE TRUST.......................................................17
Distribution of Investment Shares............................................17
Distribution Plan............................................................18
Shareholder Servicing Arrangements..........................................18
Administration of the Fund...................................................19
Custodian, Recordkeeper, Transfer Agent, and Dividend Disbursing Agent.......19
Independent Auditors.........................................................19
DISTRIBUTIONS AND TAXES.......................................................19
Distribution Options.........................................................19
Federal Income Taxes.........................................................19
Michigan Taxes...............................................................21
ORGANIZATION OF THE TRUST.....................................................21
Voting Rights................................................................22
PERFORMANCE DATA AND COMPARISONS..............................................22
SHAREHOLDER INQUIRIES.........................................................23
OTHER CLASSES OF SHARES.......................................................23
<PAGE>
GENERAL INFORMATION
The Trust, a management investment company, was established as a
Massachusetts business trust under a Declaration of Trust dated February 10,
1987. The Declaration of Trust permits the Trust to offer separate series of
shares of beneficial interest representing interests in separate portfolios of
securities (individually, a "fund," or collectively, the "funds"). The shares
in any one portfolio may be offered in separate classes. As of the date of
this Prospectus, the Board of Trustees has established two classes of shares,
known as Trust Shares and Investment Shares, in all of the funds. This
Prospectus relates solely to the Investment Shares of The Monitor Michigan
Tax-Free Fund (the "Fund").
For information on how to purchase Investment Shares of the Fund, please
refer to "How to Buy Investment Shares." A minimum initial investment of
$1,000 is required for the Fund. Subsequent investments in the Fund must be in
amounts of at least $50. Investment Shares of the Fund are sold at net asset
value plus a sales charge, where applicable. Shares of the Fund are redeemed
at net asset value. Information on redeeming shares may be found under "How to
Redeem Investment Shares." The Fund is advised by The Huntington National Bank
("Huntington" or the "Adviser").
RISK FACTORS
Investors should be aware of the following general observations. The market
value of fixed-income securities, which constitute a major part of the
investments of the Fund, may vary inversely in response to changes in
prevailing interest rates ("interest rate risk"). The 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 and
purchasing securities on a when-issued or delayed delivery basis. These
investments and investment techniques may increase the volatility of the
Fund's net asset value. Their risks are described under "Additional
Information on Portfolio Investments and Strategies."
The performance of the Fund is closely tied to conditions within the State
of Michigan. The economy of Michigan is principally dependent on three
sectors--manufacturing (particularly durable goods, automotive products and
office equipment), tourism and agriculture. Michigan encountered financial
difficulties during the late 1980s, largely as a result of poor conditions in
the automotive industry, but recovered from the prolonged downturn in
production levels in this sector in the early 1990s. Structural changes in the
automotive industry have given the Michigan economy greater financial
stability. The state's finances continue to be in excellent condition, and a
Budget Stabilization Fund that exceeds $1 billion should help the state
weather any potential economic recessions. At the end of 1996, after several
years of rapid growth, the Michigan economy was evidencing continued growth
and unemployment levels were lower than they had been for the past several
years. The market value and the marketability of bonds issued by local units
of government in the state may be affected adversely by the same factors that
affect Michigan's economy generally. The ability of the State and its local
units of government to pay the principal of and interest on their bonds may
also be affected by such factors and by certain constitutional, statutory and
charter limitations. For additional information on the risks associated with
the Fund, see "Investment Objectives and Policies of the Trust--Michigan
Municipal Obligations" in the Combined Statement of Additional Information, as
supplemented (the "SAI").
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>
<S> <C>
Maximum sales load imposed on purchases (as a percentage of offering
price).................................................................. 2.00%
</TABLE>
ANNUAL INVESTMENT SHARES OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
TOTAL
INVESTMENT
SHARES
MANAGEMENT 12B-1 OTHER OPERATING
FEES (1) FEES (2) EXPENSES (3) EXPENSES
---------- -------- ------------ ----------
<S> <C> <C> <C> <C>
Michigan Tax-Free Fund.............. 0.50% 0.25% 0.30% 1.05%
</TABLE>
- --------
(1) Fees paid by the Fund for investment advisory services. See "Management of
the Trust."
(2) Fees paid by Investment Shares of the Fund for distribution services
provided with respect to Investment Shares. Total payments of up to 0.25
of 1% of the average daily net assets attributable to Investment Shares
are permitted under the Distribution Plan. The Distributor may waive a
portion of such fee, but can terminate any such voluntary waiver at any
time in its sole discretion. See "Management of the Trust--Distribution
Plan."
(3) Represents all other estimated expenses of the Fund including
administration fees, custodian fees, transfer agent fees and dividend
disbursing agent fees. See "Management of the Trust--Administration of the
Funds."
EXAMPLE:
A shareholder 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 the maximum sales load:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Michigan Tax-Free Fund.......................... $31 $53 $78 $148
</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.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to provide investors with current
income, exempt from both federal and Michigan personal income taxes. The Fund
pursues this objective by investing primarily in debt obligations with short-
to-intermediate remaining maturities (less than 15 years) issued by or on
behalf of the State of Michigan and its political subdivisions, agencies, and
instrumentalities or by other issuers outside the State of Michigan if such
obligations pay interest that, in the opinion of counsel to the issuer, is
exempt from federal and Michigan personal income tax ("Michigan Municipal
Obligations"). The Fund invests primarily in Michigan Municipal Obligations
that present acceptable credit risks in the judgment of the Adviser and that,
at the time of purchase, are rated in one of the top four categories by a
nationally recognized statistical rating organization ("NRSRO") or, if
unrated, are determined by the Adviser to be of comparable quality. See the
Appendix to the SAI for a description
2
<PAGE>
of rating categories. The lowest rated investment-grade securities are deemed
to have speculative characteristics. As a fundamental policy, under normal
market conditions, the Fund will have at least 80% of its net assets invested
in securities the interest on which is exempt from federal income tax and, for
noncorporate shareholders, the federal alternative minimum tax. The remaining
assets of the Fund may be invested in bank obligations, U.S. Government
securities, commercial paper and repurchase agreements. For temporary
defensive purposes, including times when sufficient Michigan Municipal
Obligations may not be available in the marketplace at prices considered by
the Adviser to be acceptable, the Adviser may invest more than 20% of the
Fund's assets in securities that are subject to federal income tax, Michigan
personal income tax or both. There can, of course, be no guarantee that the
Fund will achieve its investment objective.
The Fund's investment objective is fundamental and may be changed only by a
vote of a majority of the outstanding shares. Unless otherwise noted in this
Prospectus or in the Statement of Additional Information, the investment
policies of the Fund are not fundamental and may be changed by the Trust's
Board of Trustees (the "Trustees"). Any percentage limitation on the 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 the NRSROs utilized by The Huntington National
Bank in managing the Fund's investments see the Appendix to the SAI.
ADDITIONAL INFORMATION ON PORTFOLIO INVESTMENTS AND STRATEGIES
MICHIGAN MUNICIPAL OBLIGATIONS
The municipal obligations which the Fund may purchase include fixed and
floating rate and variable rate municipal obligations, participation interests
in municipal bonds, tax-exempt commercial paper, short-term municipal notes,
and stand-by commitments. The Fund's concentration in investments in Michigan
Municipal Obligations will subject the Fund to greater risk with respect to
its portfolio securities than an investment company that is permitted to
invest in a broader range of investments, because changes in the financial
condition or market assessment of issuers of Michigan Municipal Obligations
generally may cause substantial fluctuations in the Fund's yield and price of
Fund shares. Also, political or economic developments that affect one such
security might affect the other securities. See "Investment Objectives and
Policies of the Trust--Michigan Municipal Obligations" in the SAI.
Credit Enhancement. Certain of the portfolio investments of the Fund may
have been credit enhanced by a guaranty, letter of credit or insurance. The
Fund typically evaluates the credit quality and ratings of credit enhanced
securities based upon the financial condition and ratings of the party
providing the credit enhancement (the "credit enhancer"), rather than the
issuer. However, credit enhanced securities will not be treated as having been
issued by the credit enhancer for diversification purposes, unless the Fund
has invested more than 10% of its assets in securities issued, guaranteed or
otherwise credit enhanced by the credit enhancer, in which case the securities
will be treated as having been issued both by the issuer and the credit
enhancer. The bankruptcy, receivership or default of the credit enhancer will
adversely affect the quality and marketability of the underlying security.
3
<PAGE>
NON-DIVERSIFICATION
As a non-diversified fund under the 1940 Act, the Fund may invest its assets
in the obligations of fewer issuers than would be the case if it was
"diversified". The Fund's ability to invest a relatively high percentage of
its assets in the securities of a limited number of issuers involves an
increased risk of loss to the Fund if any one issuer is unable to make
interest or principal payments or if the market value of the issuer's
securities declines. Although non-diversified under the 1940 Act, the Fund
intends to comply with the diversification requirements of Subchapter M of the
Internal Revenue Code. This undertaking requires, among other things, that at
the end of each quarter of the taxable year, with regard to at least 50% of
the Fund's total assets, no more than 5% of its total assets are invested in
the assets of a single issuer; beyond that, no more than 25% of its total
assets are invested in the securities of a single issuer.
DEFENSIVE INVESTMENT STRATEGIES
At times Huntington may judge that conditions in securities markets may make
pursuing the 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 the Fund's assets. In implementing these
temporary "defensive" strategies, the 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. These alternative strategies may give rise to
income which is not exempt from federal or state taxes.
U.S. GOVERNMENT SECURITIES
U.S. Government securities are securities that are either issued or
guaranteed as to payment of principal and interest by the U.S. Government, its
agencies, or instrumentalities. THE CURRENT MARKET PRICES FOR SUCH SECURITIES
ARE NOT GUARANTEED AND WILL FLUCTUATE. Investments in U.S. Government
securities are limited to (a) direct obligations of the U.S. Treasury, such as
U.S. Treasury bills, notes and bonds and (b) notes, bonds, and discount notes
of U.S. Government agencies or instrumentalities, such as the: Farm Credit
System, including the National Bank for Cooperatives and Banks for
Cooperatives; Federal Home Loan Banks; Federal Home Loan Mortgage Corporation;
Federal National Mortgage Association; Government National Mortgage
Association; Export-Import Bank of the United States; Commodity Credit
Corporation; Federal Financing Bank; The Student Loan Marketing Association;
National Credit Union Administration; and Tennessee Valley Authority. Some
obligations issued or guaranteed by agencies or instrumentalities of the U.S.
Government, such as Government National Mortgage Association participation
certificates, are backed by the full faith and credit of the U.S. Treasury. No
assurances can be given that the U.S. Government will provide financial
support to other agencies or instrumentalities, since it is not obligated to
do so. These instruments are supported by (a) the issuer's right to borrow an
amount limited to a specific line of credit from the U.S. Treasury, (b) the
discretionary authority of the U.S. Government to purchase certain obligations
of an agency or instrumentality or (c) the credit of the agency or
instrumentality.
4
<PAGE>
BANK AND SAVINGS AND LOAN OBLIGATIONS
These obligations include negotiable certificates of deposit, fixed time
deposits, bankers' acceptances, and interest bearing demand accounts. The Fund
limits its bank investments to dollar-denominated obligations of U.S.,
Canadian, Asian or European banks which have more than $500 million in total
assets at the time of investment or of United States savings and loan
associations which have more than $1 billion in total assets at the time of
investment and, in the case of U.S. banks, are members of the Federal Reserve
System or are examined by the Comptroller of the Currency or whose deposits
are insured by the FDIC.
COMMERCIAL PAPER
Commercial paper includes short-term unsecured promissory notes, and
variable floating rate demand notes issued by domestic and foreign bank
holding companies, corporations and financial institutions as well as similar
taxable and tax-exempt instruments issued by government agencies and
instrumentalities.
REPURCHASE AGREEMENTS
Certain securities in which the 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 the Fund and agree at the time of
sale to repurchase them at a mutually agreed upon time and price. The 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 the Fund, the
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 the Fund might be delayed
pending court action. The Trustees believe that under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor
of the Fund and allow retention or disposition of such securities. The 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.
VARIABLE AND FLOATING RATE DEMAND AND MASTER DEMAND NOTES
The Fund may, from time to time, buy variable or floating rate demand notes
issued by corporations, bank holding companies and financial institutions and
similar taxable and tax-exempt instruments issued by government agencies and
instrumentalities. These securities typically will have a nominal maturity of
over one year but will give the holder the right to "put" the securities to a
remarketing agent or other entity at designated time intervals and on
specified notice. The obligation of the issuer of the put to repurchase the
securities may be backed by a letter of credit or other obligation issued by a
financial institution. The purchase price is ordinarily par plus accrued and
unpaid interest. Generally, the remarketing agent will adjust the interest
rate every seven days (or at other specified intervals) in order to maintain
the interest rate at the prevailing rate for securities with a seven-day or
other designated maturity.
5
<PAGE>
The Fund also may buy variable rate master demand notes. The terms of these
obligations permit the Fund to invest fluctuating amounts at varying rates of
interest pursuant to direct arrangements between the Fund, as lender, and the
borrower. These instruments permit weekly and, in some instances, daily
changes in the amounts borrowed. The Fund has the right to increase the amount
under the note at any time up to the full amount provided by the note
agreement, or to decrease the amount, and the borrower may repay up to the
full amount of the note without penalty. The notes may or may not be backed by
bank letters of credit. Because the notes are direct lending arrangements
between the Fund and borrower, it is not generally contemplated that they will
be traded, and there is no secondary market for them, although they are
redeemable (and, thus, immediately repayable by the borrower) at principal
amount, plus accrued interest, at any time. In connection with any such
purchase and on an ongoing basis, the Adviser will consider the earning power,
cash flow and other liquidity ratios of the issuer, and its ability to pay
principal and interest on demand, including situations in which all holders of
such notes make demand simultaneously. While master demand notes, as such, are
not typically rated by NRSROs, if not so rated, the Fund may, under its
minimum rating standards, invest in them only if, at the time of an
investment, the issuer meets the criteria set forth in this Prospectus for
commercial paper obligations.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may purchase securities on a when-issued or delayed delivery basis.
These transactions are arrangements in which the Fund purchases securities
with payment and delivery scheduled for a future time. The seller's failure to
complete these transactions may cause the 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, the Fund may pay
more or less than the market value of the securities on the settlement date.
The 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, the Fund may lend its portfolio
securities on a short-term basis to brokers, dealers or other financial
institutions. The Fund will only enter into loan arrangements with brokers,
dealers or other financial institutions which Huntington has determined are
creditworthy under guidelines established by the Trustees and must receive
collateral equal to at least 102% of the current market value of the
securities loaned. The collateral received when the Fund lends portfolio
securities must be valued daily and, should the market value of the loaned
securities increase, the borrower must furnish additional collateral to the
Fund. As a matter of fundamental policy, the aggregate value of all securities
loaned by the 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 the 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.
6
<PAGE>
OPTIONS AND FUTURES CONTRACTS
The 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. The Fund receives a premium from writing a
call or put option, which increases the Fund's return if the option expires
unexercised or is closed out at a net profit. The Fund may also buy and sell
put and call options on its securities for hedging purposes. When the 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, the 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. The 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.
The 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. The 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 the Fund owns or expects to purchase. The
Fund may also purchase and sell put and call options on index futures or
directly on the underlying indices for hedging purposes. In addition, the Fund
may purchase and sell futures contracts and related options on individual debt
securities which the Fund owns or expects to purchase, if and when such
futures contracts and options become available.
In connection with its futures transactions, the Fund will be required to
deposit as "initial margin" an amount of cash and/or securities. Thereafter,
subsequent payments (referred to as "variation margin") are made to and from
the broker to reflect changes in the value of the futures contract. The 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 the Fund's existing futures contracts and options written by the Fund plus
premiums paid for outstanding options on futures contracts purchased by the
Fund, would exceed 5% of a Fund's net assets.
Options and futures transactions involve various risks, including the risk
that the 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 the Fund is dependent upon,
among other things, the Fund's ability to terminate options and futures
positions at times when Huntington deems it desirable to do so. Although the
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 the Fund will be able to effect
closing transactions at a particular time or at an acceptable price.
The Fund generally expects that their options and futures transactions will
be conducted on recognized exchanges. In certain instances, however, the Fund
may purchase and sell options in the over-the-counter ("OTC") markets. The
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 the Fund. The Fund will,
7
<PAGE>
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 SAI.
INVESTMENT RESTRICTIONS
The Fund is a non-diversified fund, which means that it may invest more than
5% of its total assets in the securities of any one issuer. The 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 the Fund only by a
vote of a majority of the outstanding shares of the Fund.
The Fund will not:
(1) Invest 25% or more of the value of its total assets in securities of
which are issued by or for the benefit of companies primarily engaged
in any one industry (other than the U.S. Government, its agencies and
instrumentalities and Michigan Municipal Obligations).
(2) 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
(3) Borrow money or pledge or mortgage its assets, except that the Fund may
borrow from banks up to 10% of the current value of its total net
assets for temporary or emergency purposes and those borrowings may be
secured by the pledge of not more than 15% of the current value of its
total net assets (but investments may not be purchased by the Fund
while any such borrowings are outstanding).
(4) Make loans, except loans of portfolio securities and except that the
Fund may enter into repurchase agreements with respect to its portfolio
securities and may purchase the types of debt instruments described in
this Prospectus. To increase current income, the Fund may lend
portfolio securities comprising up to 5% of total assets to brokers,
dealers and financial institutions, provided certain conditions are
met, including the condition that each loan is secured continuously by
collateral maintained on a daily market-to-market basis in an amount at
least equal to the current market value of the securities loaned.
HOW THE FUND VALUES SHARES
The net asset value for Investment Shares of the Fund is determined by
adding the interest of the Investment Shares in the market value of all
securities and other assets of the Fund, subtracting the interest of the
Investment Shares in the liabilities of the Fund and those attributable to
Investment
8
<PAGE>
Shares, and dividing the remainder by the total number of Investment Shares
outstanding. The net asset value of the Fund's Investment Shares will differ
from that of Trust Shares due to the expense of the Rule 12b-1 fee applicable
to the Fund's Investment Shares.
Securities for which market quotations are readily available are stated at
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 Fund calculates net asset value per Investment Share as of the close of
the New York Stock Exchange (currently 4:00 p.m. Eastern Time) on each
Business Day. As used herein, a "Business Day" constitutes Monday through
Friday except (i) days on which there are not sufficient changes in the value
of the 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; (iii) the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day; and (iv)
other civil holidays when the Federal Reserve Banks or the financial markets
are closed, such as Veterans' Day and Martin Luther King Day.
HOW TO BUY INVESTMENT SHARES
Investment Shares of the Fund may be purchased through The Huntington
Investment Company, Huntington Personal Bankers or the Investor Services
Department (collectively, the "Huntington Group") pursuant to agreements
between The Huntington Investment Company or The Huntington National Bank and
the Distributor. Investors may purchase Investment Shares of the Fund on all
Business Days. In connection with the sale of the 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 the Fund or either class of its shares. During the period of any such
suspension and depending on the reasons for the suspension, persons who are
already shareholders of the 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 Fund will issue certificates representing
Investment Shares only upon request.
TO PLACE AN ORDER
To purchase Investment Shares of the Fund, 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 Investor Services
Department 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 Fund, designating
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<PAGE>
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 Fund's transfer agent, SEI Investments 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 the 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 the Fund is $1,000.
Subsequent investments must be in amounts of at least $50.
WHAT SHARES COST
Investment Shares of the Fund 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 the Fund 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 Investor Services Department (1-800-253-0412) for
further information.
Dealer Concession. For sales of Investment Shares of the Fund, 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 offer to pay cash, or
10
<PAGE>
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 Fund, 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 Fund that are sold by the dealer.
The sales charge for Investment Shares sold other than through registered
broker/dealers will be retained by the Distributor. The Distributor may pay
fees to banks out of the sales charge in exchange for sales and/or
administrative services performed on behalf of the banks' customers in
connection with the initiation of customer accounts and purchases of
Investment Shares of the Fund.
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 an investor, the investor's spouse, and the
investor's 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 one of the funds which
imposes a sales charge is made, the Distributor will aggregate such additional
purchases with previous purchases of Investment Shares of all other funds
imposing a sales charge, provided that the prior purchases are still invested
in one or more of 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 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 $500,000 of
Investment Shares in the Fund, 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 $750,000 in Investment Shares of the Fund at the time of signing the
Letter of Intent, purchases $500,000 of Investment Shares of the Fund. The
investor would pay an initial sales charge of 1.50% (the sales
11
<PAGE>
charge applicable to purchases of $500,000), and 0.75% of the investment
(representing the difference between the 1.50% sales charge applicable to
purchases of $500,000 and the 0.75% in sales charges already paid) would be
held in escrow until the investor has purchased the remaining $250,000 or more
of Investment Shares under the Letter of Intent.
The amount held in escrow will be applied to the investor's account at the
end of the 13-month period unless the amount specified in the Letter of Intent
is not purchased. In order to qualify for a Letter of Intent, the investor
will be required to make a minimum initial investment of at least $25,000.
A Letter of Intent will not obligate the investor to purchase Investment
Shares, but if the investor 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 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 Investment Shares 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 series of the Trust, the public offering
price of which includes a sales charge. 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 the Fund
may add to their investment on a regular basis in minimum amounts of at least
$50. Under this program, monies will be automatically withdrawn periodically
from the shareholder's banking account and invested in Investment Shares of
the 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.
If the shareholder's automatic investment program payment does not clear,
the purchase will be cancelled and the shareholder may be charged a fee and
will be liable for any losses incurred. Any subsequent such occurrences may
result in the cancellation of the automatic investment program feature of the
shareholder's account.
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<PAGE>
HOW TO EXCHANGE INVESTMENT SHARES AMONG THE FUNDS
Shareholders may exchange Investment Shares in any fund for Investment
Shares in any other fund offering Investment Shares at the respective net
asset values per Investment Share next determined after receipt of the request
in good order, plus the applicable sales charge (if any) as described below.
This privilege is available to shareholders resident in any state in which the
Fund shares being acquired may be sold.
No sales charge applies when Investment Shares are exchanged from a fund
that imposes such a charge to a fund with no sales charge. If, however, a
shareholder seeks to exchange shares of a fund that does not have a sales
charge for shares of a fund that imposes such a charge, the shareholder will
be required to pay the applicable sales charge of the fund into which the
shares are exchanged. In all cases, shareholders will be required to pay a
sales charge only once. Thus, for example, no sales charge applies when shares
are exchanged among funds that impose a sales charge. Similarly, no sales
charge applies where a shareholder exchanges shares of a fund with a sales
charge for shares of a fund that does not impose such a charge and
subsequently exchanges those shares back into a fund with a sales charge.
In order to make an exchange, shareholders will be required to maintain the
applicable minimum account balance in each fund in which shares are owned and
must satisfy the minimum initial and subsequent purchase amounts of the fund
into which shares are exchanged.
If the exchanging shareholder does not have an account in the fund whose
Investment Shares are being acquired, a new account will be established with
the same registration and reinvestment options for dividends and capital gains
distributions as the account of the fund from which the Investment Shares are
exchanged, unless otherwise specified in writing by the shareholder. In the
event the new account registration is not identical to that of the existing
account, a signature guarantee will be required. (See "Redeeming By Mail"
below.)
An exchange is treated as a sale for federal income tax purposes and,
depending on the circumstances, a 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 Investor Services Department at (in Ohio) 614-480-5580 or
(outside the 614 Area Code) 800-253-0412. Investors may request the
13
<PAGE>
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 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 Fund, it
may be liable for losses due to unauthorized or fraudulent telephone
instructions.
BY MAIL
Shareholders may provide instructions for exchanges between the Monitor
Funds by making a written request to the appropriate member of the Huntington
Group at Huntington Center, 41 South High Street, Columbus, Ohio 43287.
To exchange by letter or by telephone, a shareholder must state (1) the name
of the fund from which the exchange is to be made (and designating that
Investment Shares are involved), (2) the name(s) and address on the
shareholder account, (3) the account number, (4) the dollar amount or number
of Investment Shares to be exchanged, and (5) the fund into which the
Investment Shares are to be exchanged. Written exchange requests must be
signed by the shareholder, and it may be necessary to have the shareholder's
signature guaranteed by a member firm of a national securities exchange or by
a commercial bank, savings and loan association or trust company. Further
documentation may be required, and a signature guarantee is generally required
from corporations, executors, administrators, trustees and guardians.
HOW TO REDEEM INVESTMENT SHARES
Shareholders may redeem all or any portion of the Investment Shares in their
account on any Business Day at the appropriate net asset value per share next
determined after a redemption request in proper form is received by the
Transfer Agent. If an investor purchases Investment Shares by check and wishes
to redeem those Investment Shares before the check clears, the Trust may delay
payment of any redemption proceeds until the check clears. Under unusual
circumstances, the Fund may suspend redemptions or postpone payment for more
than seven days, as permitted by federal securities law.
14
<PAGE>
REDEEMING BY TELEPHONE
A shareholder may redeem Investment Shares by calling The Huntington
Investment Company at 800-322-4600, their Personal Banker directly or the
Investor Services Department at (in Ohio) 614-480-5580 or (outside the 614
Area Code) 800-253-0412. Requests for redemptions 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
the 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 Fund, they may be
liable for losses due to unauthorized or fraudulent telephone instructions.
REDEEMING BY MAIL
Shareholders may redeem Investment Shares by sending a written request to
the appropriate member of the Huntington Group. The written request should
include the shareholder's name, the Fund name (designating Investment Shares),
the account number, and the Investment Share or dollar amount requested.
Shareholders requesting a redemption of $50,000 or more, a redemption of any
amount to be sent to an address other than that on record with the Transfer
Agent, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:
--a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the FDIC;
--a member of the New York, American, Midwest, or Pacific Stock Exchanges;
--a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is
administered by the FDIC; or
-- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
15
<PAGE>
The Fund and the Transfer Agent have adopted standards for accepting
signature guarantees from the above institutions. The Fund may elect in the
future to limit eligible signature guarantors to institutions that are members
of a signature guarantee program. The Fund 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 (Investor
Services Department). 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 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. For this reason, payments under this program
should not be considered as yield or income on the shareholder's investment in
Investment Shares. 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, the 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
the 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.
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<PAGE>
MANAGEMENT OF THE TRUST
The Trustees of the Trust are responsible for generally overseeing the
conduct of the Fund's business. Huntington serves as investment adviser to the
Fund 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 Fund, including investment research and management
with respect to all securities, instruments, cash and cash equivalents in the
Fund. The Trust pays Huntington management fees, computed daily and payable
monthly, for the Fund at the annual rate of 0.50% of the Fund's average daily
net assets. Huntington may periodically waive all or a portion of its
management fee with respect to the 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 $21 billion in assets as of
June 30, 1997, 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 $19 billion of assets, and has investment discretion over approximately
$5 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 Fund 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.
William G. Doughty and Duane C. Carpenter will be the co-managers of the
Fund's portfolio. Mr. Doughty has more than 25 years of experience in the
investment management business. Mr. Carpenter has more than nine years of
investment management experience.
DISTRIBUTION OF INVESTMENT SHARES
SEI Investments Distribution Co., One Freedom Valley Road, Oaks,
Pennsylvania 19456, is the principal distributor for shares of the Fund. It is
a Delaware corporation, and is the principal distributor for a number of
investment companies.
17
<PAGE>
DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan in connection with its offering of
Investment Shares, 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 Fund's 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 Fund. 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 Fund.
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 the 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 the 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 the 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 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
18
<PAGE>
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 Fund.
ADMINISTRATION OF THE FUNDS
SEI Fund Resources, an affiliate of the Distributor, provides certain
administrative personnel and services necessary to operate the Fund. For these
services, the Fund pays a fee, computed daily and payable monthly to SEI Fund
Resources at an annual rate of 0.11% of its average daily net assets. SEI Fund
Resources has entered into a sub-administration agreement with Huntington
pursuant to which Huntington provides certain administrative services to the
Fund. The fees paid to Huntington under this agreement are paid by SEI Fund
Resources and not by the Fund.
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 the Fund. SEI Investments Management Corporation, serves as
the Trust's transfer agent and dividend disbursing agent. SEI Investments
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 Fund. The fees paid under this
agreement are paid by SEI Investments Management Corporation and not by the
Fund.
INDEPENDENT AUDITORS
Effective in 1997, the independent auditors for the Trust are KPMG Peat
Marwick LLP, Columbus, Ohio.
DISTRIBUTIONS AND TAXES
Dividends, if any, from the investment income of the Fund are declared and
paid monthly to both classes of shares. Distributions resulting from any net
realized capital gains of the Fund will be paid at least annually.
DISTRIBUTION OPTIONS
Shareholders of the 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.
FEDERAL INCOME TAXES
The 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, the
19
<PAGE>
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. In addition, in order for the Fund's distributions to qualify as
"exempt interest dividends", at least 50% of the Fund's assets must consist of
obligations described in Section 103(a) of the Internal Revenue Code at the
end of each quarter.
Shareholders should note that in certain cases (i) the Fund will be required
to withhold 31% of dividends or sale proceeds otherwise due to a shareholder
and (ii) in addition to federal taxes, state and local taxes may apply to
transactions in shares. The exemption of interest on municipal bonds for
federal income tax purposes does not necessarily result in exemption under the
income, corporate or personal property tax laws of any state or city.
Generally, shareholders are afforded tax-exempt treatment at the state and
local levels for distributions derived from interest on municipal securities
of the shareholder's state of residency.
For federal income tax purposes, distributions (other than exempt-interest
dividends) will be taxable as ordinary income to the extent derived from the
Fund's investment income and net short-term gains. Pursuant to the Taxpayer
Relief Act of 1997, two different tax rates apply to distributions of net
capital gains. One rate (generally 28%) applies to net gains on capital assets
held for more than one year but not more than 18 months ("mid-term gains") and
a second, preferred rate (generally 20%) applies to the balance of such net
capital gains ("adjusted net capital gains"). Distributions of net capital
gains will be treated in the hands of shareholders as mid-term gains to the
extent designated by the Fund as deriving from net gains from assets held for
more than one year but not more than 18 months, and the balance will be
treated as adjusted net capital gains. Distributions of mid-term gains and
adjusted net capital gains will be taxable as such, regardless of how long
shares have been held. Distributions will be taxable as described above
whether received in cash or in shares through the reinvestment of
distributions.
Fund distributions designated as exempt-interest dividends are not generally
subject to federal income tax. However, if a shareholder receives social
security or railroad retirement benefits, the shareholder should consult a tax
adviser to determine what effect, if any, an investment in the Fund may have
on the taxation of such benefits. In addition, an investment in the Fund may
result in liability for federal alternative minimum tax, for both individual
and corporate shareholders.
Early in each year the Fund will notify shareholders of the amount and the
federal income tax status of the distributions paid or deemed paid 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.
In addition, any loss (not already disallowed as provided in the preceding
paragraph) realized upon a taxable disposition of shares held for six months
or less will be treated as long-term, rather than short-term, to the extent of
any long-term capital gain distributions received by the shareholder with
respect to the shares.
20
<PAGE>
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.
MICHIGAN TAXES
Individual shareholders of the Fund residing in Michigan will not be subject
to Michigan personal income tax or personal income taxes imposed by cities in
Michigan, and corporate shareholders will not be subject to the Michigan single
business tax, on distributions received from the Fund to the extent such
distributions are attributable to interest on tax-exempt obligations of the
State of Michigan or any municipality, political subdivision or governmental
agency or instrumentality thereof or on obligations issued by the Governments
of Puerto Rico, the Virgin Islands and Guam, provided that the Fund complies
with the requirement of the Internal Revenue Code that at least 50% of the
value of its assets at the close of each quarter of its taxable year is
invested in state, municipal or other obligations the interest on which is
exempt from federal income tax under Section 103(a) of the Internal Revenue
Code.
Other distributions from the Fund, including those related to long-term and
short-term capital gains, will generally not be exempt from the Michigan
personal income tax or single business tax.
Income from the Fund, to the extent attributable to interest on obligations
issued by Michigan or its political subdivisions, will be excluded for purposes
of determining yield under the Michigan intangibles tax.
The Michigan Department of Treasury has issued rulings which confirm these
state tax consequences for Michigan resident individuals and corporations.
Shareholders of the Fund should consult their tax advisers about other state
and local tax consequences of their investments in the Fund.
Additional information regarding federal and Michigan income taxes is
contained in the SAI. 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. The treatment of dividends and distributions paid by the
Fund under Michigan law described herein is based on current statutes,
regulations and current policies, all of which are subject to change.
Shareholders should consult their own tax adviser to determine the precise
effect of an investment in the Fund on their particular tax situation.
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
21
<PAGE>
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 and the Michigan
Tax-Free 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 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 the 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 the fund or such class present at a meeting at which the holders
of more than 50% of the outstanding shares of the Trust or the 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 Fund. Yield for both classes of
shares of the Fund is calculated by dividing the Fund's annualized net
investment income per share during a recent 30-day period by the maximum
22
<PAGE>
public offering price per share on the last day of that period. The tax-
equivalent yield of each class of shares shows the effect on performance of
the tax-exempt status of distributions received from the Fund. Tax-equivalent
yield reflects the approximate yield that a taxable investment must earn for
shareholders at stated income levels to produce an after-tax yield equal to
the Fund's tax-exempt yield. Total return for the one-year period and for the
life of the 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 Fund also contributes to a lower total
return for 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 the 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 the
Fund's portfolio, and the operating expenses of the 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 the Fund's investment results to those of other
mutual funds and other investment vehicles.
From time to time, advertisements for the Fund may refer to ratings,
rankings, and other information in certain financial publications and/or
compare the Fund's performance to certain indices.
SHAREHOLDER INQUIRIES
Shareholder inquiries regarding the Monitor Michigan Tax-Free Fund should be
directed to The Huntington National Bank, Huntington Center, 41 South High
Street, Columbus, Ohio 43287.
OTHER CLASSES OF SHARES
The Fund also offers 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
National Bank 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 the 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 the Fund's Investment Shares.
Expense differences between the 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.
23
<PAGE>
Investment Adviser
- --------------------------------------------------------------------------------
The Huntington National Bank
Huntington Center
Columbus, OH 43287
1-800-253-0412
Administrator
- --------------------------------------------------------------------------------
SEI Fund Resources
One Freedom Valley Road
Oaks, PA 19456
Distributor
- --------------------------------------------------------------------------------
SEI Investments Distribution Co.
One Freedom Valley Road
Oaks, PA 19456
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 the Fund or the Distributor. This
Prospectus does not constitute an offering
by the Fund or by the Distributor in any jurisdiction in which such offering
may not lawfully be made.
LOGO
M logo FPO
The Monitor Funds
MARBLE SCREEN F.P.O.
Investment Shares
The Monitor Michigan Tax-Free Fund
November 20, 1997
ART
<PAGE>
THE MONITOR MICHIGAN TAX-FREE FUND--TRUST SHARES
PROSPECTUS
The Trust Shares of The Monitor Michigan Tax-Free Fund (the "Fund") offered
by this Prospectus represent interests in a non-diversified portfolio of
securities that is one of a series of ten investment portfolios in The Monitor
Funds, a Massachusetts business trust (the "Trust") which is an open-end
management investment company (a mutual fund). Trust Shares may be purchased
through procedures established by SEI Investments Distribution Co. (the
"Distributor"), the Trust's distributor in connection with the requirements of
fiduciary, advisory, agency and other similar accounts maintained by or on
behalf of customers by The Huntington National Bank or its affiliates or
correspondent banks.
The investment objective of the Fund is to provide current income exempt
from both federal and Michigan personal income taxes. The Fund will pursue
this objective by investing primarily in debt obligations with short to
intermediate remaining maturities (less than 15 years) issued by or on behalf
of the State of Michigan and its political subdivisions, agencies and
instrumentalities or by other issuers outside the State of Michigan if such
obligations pay interest that, in the opinion of counsel to the issuer, is
exempt from federal and Michigan personal income tax.
The Fund is offered in two classes of shares, Investment Shares and Trust
Shares. This Prospectus relates only to Trust Shares of the Fund. This
Prospectus sets forth concisely what a shareholder should know before
investing in Trust Shares of the Fund and should be read carefully and
retained for future reference. The Combined Statement of Additional
Information dated April 30, 1997, as supplemented on November 20, 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 INVESTOR SERVICES DEPARTMENT AT: (IN OHIO) 614-480-5580
OR (OUTSIDE THE 614 AREA CODE) 800-253-0412.
THE HUNTINGTON NATIONAL BANK
Investment Adviser
SEI FUND RESOURCES
Administrator
SEI INVESTMENTS DISTRIBUTION CO.
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
ACCURACY 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 NATIONAL BANK,
NOR ARE THEY INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. AN
INVESTMENT IN THE 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.
November 20, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION........................................................... 1
Risk Factors................................................................. 1
FEE TABLE AND EXAMPLE......................................................... 2
INVESTMENT OBJECTIVE AND POLICIES............................................. 2
ADDITIONAL INFORMATION ON PORTFOLIO INVESTMENTS AND STRATEGIES................ 3
Michigan Municipal Obligations............................................... 3
Non-Diversification.......................................................... 3
Defensive Investment Strategies.............................................. 4
U.S. Government Securities................................................... 4
Bank and Savings and Loan Obligations........................................ 4
Commercial Paper............................................................. 5
Repurchase Agreements........................................................ 5
Variable and Floating Rate Demand and Master Demand Notes.................... 5
When-Issued and Delayed Delivery Transactions................................ 6
Lending of Portfolio Securities.............................................. 6
Options and Futures Contracts................................................ 6
INVESTMENT RESTRICTIONS....................................................... 8
HOW THE FUND VALUES SHARES.................................................... 8
HOW TO BUY TRUST SHARES....................................................... 9
Minimum Investment Required................................................. 10
Systematic Investment Program............................................... 10
PAGE
HOW TO EXCHANGE TRUST SHARES AMONG THE FUNDS................................. 10
By Telephone................................................................ 10
By Mail..................................................................... 10
HOW TO REDEEM TRUST SHARES................................................... 11
Redeeming by Telephone...................................................... 11
Redeeming by Mail........................................................... 12
MANAGEMENT OF THE TRUST...................................................... 13
Distribution of Trust Shares................................................ 14
Administration of the Fund.................................................. 14
Custodian, Recordkeeper, Transfer Agent, and Dividend Disbursing Agent...... 14
Independent Auditors.........................................................14
DISTRIBUTIONS AND TAXES.......................................................14
Distribution Options........................................................ 15
Federal Income Taxes........................................................ 15
Michigan Taxes.............................................................. 16
ORGANIZATION OF THE TRUST.................................................... 17
Voting Rights............................................................... 17
PERFORMANCE DATA AND COMPARISONS............................................. 18
SHAREHOLDER INQUIRIES........................................................ 18
OTHER CLASSES OF SHARES...................................................... 19
<PAGE>
GENERAL INFORMATION
The Trust, a management investment company, was established as a
Massachusetts business trust under a Declaration of Trust dated February 10,
1987. The Declaration of Trust permits the Trust to offer separate series of
shares of beneficial interest representing interests in separate portfolios of
securities (individually, a "fund," or collectively, the "funds"). The shares
in any one portfolio may be offered in separate classes. As of the date of
this Prospectus, the Board of Trustees has established two classes of shares,
known as Trust Shares and Investment Shares, in all of the funds. This
Prospectus relates solely to the Trust Shares of The Monitor Michigan Tax-Free
Fund (the "Fund").
For information on how to purchase Trust Shares of the Fund, please refer to
"How to Buy Trust Shares." A minimum initial investment of $1,000 is required
for the Fund. Subsequent investments in the Fund must be in amounts of at
least $500. Trust Shares of the Fund are sold and redeemed at net asset value.
Information on redeeming shares may be found under "How to Redeem Trust
Shares." The Fund is advised by The Huntington National Bank ("Huntington" or
the "Adviser").
RISK FACTORS
Investors should be aware of the following general observations. The market
value of fixed-income securities, which constitute a major part of the
investments of the Fund, may vary inversely in response to changes in
prevailing interest rates ("interest rate risk"). The 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 and
purchasing securities on a when-issued or delayed delivery basis. These
investments and investment techniques may increase the volatility of the
Fund's net asset value. Their risks are described under "Additional
Information on Portfolio Investments and Strategies."
The performance of the Fund is closely tied to conditions within the State
of Michigan. The economy of Michigan is principally dependent on three
sectors--manufacturing (particularly durable goods, automotive products and
office equipment), tourism and agriculture. Michigan encountered financial
difficulties during the late 1980s, largely as a result of poor conditions in
the automotive industry, but recovered from the prolonged downturn in
production levels in this sector in the early 1990s. Structural changes in the
automotive industry have given the Michigan economy greater financial
stability. The state's finances continue to be in excellent condition, and a
Budget Stabilization Fund that exceeds $1 billion should help the state
weather any potential economic recessions. At the end of 1996, after several
years of rapid growth, the Michigan economy was evidencing continued growth
and unemployment levels were lower than they had been for the past several
years. The market value and the marketability of bonds issued by local units
of government in the state may be affected adversely by the same factors that
affect Michigan's economy generally. The ability of the State and its local
units of government to pay the principal of and interest on their bonds may
also be affected by such factors and by certain constitutional, statutory and
charter limitations. For additional information on the risks associated with
the Fund, see "Investment Objectives and Policies of the Trust--Michigan
Municipal Obligations" in the Combined Statement of Additional Information, as
supplemented (the "SAI").
1
<PAGE>
FEE TABLE AND EXAMPLE
The following Fee Table and Example summarize the various costs and expenses
that a shareholder of Trust Shares will bear, either directly or indirectly.
ANNUAL TRUST SHARES OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
TOTAL
TRUST
12B- SHARES
MANAGEMENT 1 OTHER OPERATING
FEES (1) FEES EXPENSES (2) EXPENSES
---------- ---- ------------ ---------
<S> <C> <C> <C> <C>
Michigan Tax-Free Fund................... 0.50% None 0.30% 0.80%
</TABLE>
- --------
(1) Fees paid by the Fund for investment advisory services. See "Management of
the Trust."
(2) Represents all other estimated expenses of the Fund including
administration fees, custodian fees, transfer agent fees and dividend
disbursing agent fees. See "Management of the Trust--Administration of the
Funds."
EXAMPLE:
A shareholder would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Michigan Tax-Free Fund.......................... $8 $25 $43 $95
</TABLE>
The purpose of the foregoing example is to assist an investor in
understanding the various costs and expenses that a shareholder of Trust Shares
will bear directly or indirectly. The example should not be considered a
representation of past or future expenses. Actual expenses may be greater or
less than those shown. 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.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to provide investors with current
income, exempt from both federal and Michigan personal income taxes. The Fund
pursues this objective by investing primarily in debt obligations with short-
to-intermediate remaining maturities (less than 15 years) issued by or on
behalf of the State of Michigan and its political subdivisions, agencies, and
instrumentalities or by other issuers outside the State of Michigan if such
obligations pay interest that, in the opinion of counsel to the issuer, is
exempt from federal and Michigan personal income tax ("Michigan Municipal
Obligations"). The Fund invests primarily in Michigan Municipal Obligations
that present acceptable credit risks in the judgment of the Adviser and that,
at the time of purchase, are rated in one of the top four categories by a
nationally recognized statistical rating organization ("NRSRO") or, if unrated,
are determined by the Adviser to be of comparable quality. See the Appendix to
the SAI for a description of rating categories. The lowest rated investment-
grade securities are deemed to have speculative characteristics. As a
fundamental policy, under normal market conditions, the Fund will have at least
80% of its net assets invested in securities the interest on which is exempt
from federal income tax and, for noncorporate shareholders, the federal
alternative minimum tax. The remaining assets of the
2
<PAGE>
Fund may be invested in bank obligations, U.S. Government securities,
commercial paper and repurchase agreements. For temporary defensive purposes,
including times when sufficient Michigan Municipal Obligations may not be
available in the marketplace at prices considered by the Adviser to be
acceptable, the Adviser may invest more than 20% of the Fund's assets in
securities that are subject to federal income tax, Michigan personal income
tax or both. There can, of course, be no guarantee that the Fund will achieve
its investment objective.
The Fund's investment objective is fundamental and may be changed only by a
vote of a majority of the outstanding shares. Unless otherwise noted in this
Prospectus or in the Statement of Additional Information, the investment
policies of the Fund are not fundamental and may be changed by the Trust's
Board of Trustees (the "Trustees"). Any percentage limitation on the 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 the NRSROs utilized by Huntington in managing
the Fund's investments, see the Appendix to the SAI.
ADDITIONAL INFORMATION ON PORTFOLIO INVESTMENTS AND STRATEGIES
MICHIGAN MUNICIPAL OBLIGATIONS
The municipal obligations which the Fund may purchase include fixed and
floating rate and variable rate municipal obligations, participation interests
in municipal bonds, tax-exempt commercial paper, short-term municipal notes,
and stand-by commitments. The Fund's concentration in investments in Michigan
Municipal Obligations will subject the Fund to greater risk with respect to
its portfolio securities than an investment company that is permitted to
invest in a broader range of investments, because changes in the financial
condition or market assessment of issuers of Michigan Municipal Obligations
generally may cause substantial fluctuations in the Fund's yield and price of
Fund shares. Also, political or economic developments that affect one such
security might affect the other securities. See "Investment Objectives and
Policies of the Trust--Michigan Municipal Obligations" in the SAI.
Credit Enhancement. Certain of the portfolio investments of the Fund may
have been credit enhanced by a guaranty, letter of credit or insurance. The
Fund typically evaluates the credit quality and ratings of credit enhanced
securities based upon the financial condition and ratings of the party
providing the credit enhancement (the "credit enhancer"), rather than the
issuer. However, credit enhanced securities will not be treated as having been
issued by the credit enhancer for diversification purposes, unless the Fund
has invested more than 10% of its assets in securities issued, guaranteed or
otherwise credit enhanced by the credit enhancer, in which case the securities
will be treated as having been issued both by the issuer and the credit
enhancer. The bankruptcy, receivership or default of the credit enhancer will
adversely affect the quality and marketability of the underlying security.
NON-DIVERSIFICATION
As a non-diversified fund under the 1940 Act, the Fund may invest its assets
in the obligations of fewer issuers than would be the case if it was
"diversified". The Fund's ability to invest a relatively high
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percentage of its assets in the securities of a limited number of issuers
involves an increased risk of loss to the Fund if any one issuer is unable to
make interest or principal payments or if the market value of the issuer's
securities declines. Although non-diversified under the 1940 Act, the Fund
intends to comply with the diversification requirements of Subchapter M of the
Internal Revenue Code. This undertaking requires, among other things, that at
the end of each quarter of the taxable year, with regard to at least 50% of
the Fund's total assets, no more than 5% of its total assets are invested in
the assets of a single issuer; beyond that, no more than 25% of its total
assets are invested in the securities of a single issuer.
DEFENSIVE INVESTMENT STRATEGIES
At times Huntington may judge that conditions in securities markets may make
pursuing the 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 the Fund's assets. In implementing these
temporary "defensive" strategies, the 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. These alternative strategies may give rise to
income which is not exempt from federal or state taxes.
U.S. GOVERNMENT SECURITIES
U.S. Government securities are securities that are either issued or
guaranteed as to payment of principal and interest by the U.S. Government, its
agencies, or instrumentalities. THE CURRENT MARKET PRICES FOR SUCH SECURITIES
ARE NOT GUARANTEED AND WILL FLUCTUATE. Investments in U.S. Government
securities are limited to (a) direct obligations of the U.S. Treasury, such as
U.S. Treasury bills, notes and bonds and (b) notes, bonds, and discount notes
of U.S. Government agencies or instrumentalities, such as the: Farm Credit
System, including the National Bank for Cooperatives and Banks for
Cooperatives; Federal Home Loan Banks; Federal Home Loan Mortgage Corporation;
Federal National Mortgage Association; Government National Mortgage
Association; Export-Import Bank of the United States; Commodity Credit
Corporation; Federal Financing Bank; The Student Loan Marketing Association;
National Credit Union Administration; and Tennessee Valley Authority. Some
obligations issued or guaranteed by agencies or instrumentalities of the U.S.
Government, such as Government National Mortgage Association participation
certificates, are backed by the full faith and credit of the U.S. Treasury. No
assurances can be given that the U.S. Government will provide financial
support to other agencies or instrumentalities, since it is not obligated to
do so. These instruments are supported by (a) the issuer's right to borrow an
amount limited to a specific line of credit from the U.S. Treasury, (b) the
discretionary authority of the U.S. Government to purchase certain obligations
of an agency or instrumentality or (c) the credit of the agency or
instrumentality.
BANK AND SAVINGS AND LOAN OBLIGATIONS
These obligations include negotiable certificates of deposit, fixed time
deposits, bankers' acceptances, and interest bearing demand accounts. The Fund
limits its bank investments to dollar-denominated obligations of U.S.,
Canadian, Asian or European banks which have more than $500 million in total
assets at the time of investment or of United States savings and loan
associations which
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have more than $1 billion in total assets at the time of investment and, in
the case of U.S. banks, are members of the Federal Reserve System or are
examined by the Comptroller of the Currency or whose deposits are insured by
the FDIC.
COMMERCIAL PAPER
Commercial paper includes short-term unsecured promissory notes, and
variable floating rate demand notes issued by domestic and foreign bank
holding companies, corporations and financial institutions as well as similar
taxable and tax-exempt instruments issued by government agencies and
instrumentalities.
REPURCHASE AGREEMENTS
Certain securities in which the 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 the Fund and agree at the time of
sale to repurchase them at a mutually agreed upon time and price. The 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 the Fund, the
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 the Fund might be delayed
pending court action. The Trustees believe that under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor
of the Fund and allow retention or disposition of such securities. The 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.
VARIABLE AND FLOATING RATE DEMAND AND MASTER DEMAND NOTES
The Fund may, from time to time, buy variable or floating rate demand notes
issued by corporations, bank holding companies and financial institutions and
similar taxable and tax-exempt instruments issued by government agencies and
instrumentalities. These securities typically will have a nominal maturity of
over one year but will give the holder the right to "put" the securities to a
remarketing agent or other entity at designated time intervals and on
specified notice. The obligation of the issuer of the put to repurchase the
securities may be backed by a letter of credit or other obligation issued by a
financial institution. The purchase price is ordinarily par plus accrued and
unpaid interest. Generally, the remarketing agent will adjust the interest
rate every seven days (or at other specified intervals) in order to maintain
the interest rate at the prevailing rate for securities with a seven-day or
other designated maturity.
The Fund also may buy variable rate master demand notes. The terms of these
obligations permit the Fund to invest fluctuating amounts at varying rates of
interest pursuant to direct arrangements between the Fund, as lender, and the
borrower. These instruments permit weekly and, in some instances, daily
changes in the amounts borrowed. The Fund has the right to increase the amount
under the note at any time up to the full amount provided by the note
agreement, or to decrease the amount, and the borrower may repay up to the
full amount of the note without penalty. The notes may
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or may not be backed by bank letters of credit. Because the notes are direct
lending arrangements between the Fund and borrower, it is not generally
contemplated that they will be traded, and there is no secondary market for
them, although they are redeemable (and, thus, immediately repayable by the
borrower) at principal amount, plus accrued interest, at any time. In
connection with any such purchase and on an ongoing basis, the Adviser will
consider the earning power, cash flow and other liquidity ratios of the issuer,
and its ability to pay principal and interest on demand, including situations
in which all holders of such notes make demand simultaneously. While master
demand notes, as such, are not typically rated by NRSROs, if not so rated, the
Fund may, under its minimum rating standards, invest in them only if, at the
time of an investment, the issuer meets the criteria set forth in this
Prospectus for commercial paper obligations.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
The Fund may purchase securities on a when-issued or delayed basis. These
transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The seller's failure to
complete these transactions may cause the 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, the Fund may pay more
or less than the market value of the securities on the settlement date. The
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, the Fund may lend its portfolio
securities on a short-term basis to brokers, dealers or other financial
institutions. The 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 Trustee and must receive
collateral equal to at least 102% of the current market value of the securities
loaned. The collateral received when the Fund lends portfolio securities must
be valued daily and, should the market value of the loaned securities increase,
the borrower must furnish additional collateral to the Fund. As a matter of
fundamental policy, the aggregate value of all securities loaned by the 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 the Fund on a timely basis and the 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.
OPTIONS AND FUTURES CONTRACTS
The 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. The Fund receives a premium from writing a call or put
option, which increases the Fund's return if the option expires unexercised or
is closed out at a net profit. The Fund may also buy and sell put and call
options on its securities for hedging purposes. When the 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, the Fund takes the risk that it will be required
to purchase a security
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from the option holder at a price above the current market price of the
security. The 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.
The 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. The 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 the Fund owns or expects to purchase. The Fund may also
purchase and sell put and call options on index futures or directly on the
underlying indices for hedging purposes. In addition, the Fund may purchase and
sell futures contracts and related options on individual debt securities which
the Fund owns or expects to purchase, if and when such futures contracts and
options become available.
In connection with its futures transactions, the Fund will be required to
deposit as "initial margin" an amount of cash and/or securities. Thereafter,
subsequent payments (referred to as "variation margin") are made to and from
the broker to reflect changes in the value of the futures contract. The 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 the Fund's existing futures contracts and options written by the Fund plus
premiums paid for outstanding options on futures contracts purchased by the
Fund, would exceed 5% of the Fund's net assets.
Options and futures transactions involve various risks, including the risk
that the 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 the Fund is dependent upon,
among other things, the Fund's ability to terminate options and futures
positions at times when Huntington deems it desirable to do so. Although the
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 the Fund will be able to effect closing
transactions at a particular time or at an acceptable price.
The Fund generally expects that options and futures transactions will be
conducted on recognized exchanges. In certain instances, however, the Fund may
purchase and sell options in the over-the-counter ("OTC") markets. The 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
the Fund. The 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
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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 SAI.
INVESTMENT RESTRICTIONS
The Fund is a non-diversified fund, which means that it may invest more than
5% of its total assets in the securities of any one issuer. The 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 the Fund only by a vote
of a majority of the outstanding shares of the Fund.
The Fund will not:
(1) Invest 25% or more of the value of its total assets in securities of
which are issued by or for the benefit of companies primarily engaged in
any one industry (other than the U.S. Government, its agencies and
instrumentalities and Michigan Municipal Obligations).
(2) 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
(3) Borrow money or pledge or mortgage its assets, except that the Fund may
borrow from banks up to 10% of the current value of its total net assets
for temporary or emergency purposes and those borrowings may be secured
by the pledge of not more than 15% of the current value of its total net
assets (but investments may not be purchased by the Fund while any such
borrowings are outstanding).
(4) Make loans, except loans of portfolio securities and except that the
Fund may enter into repurchase agreements with respect to its portfolio
securities and may purchase the types of debt instruments described in
this Prospectus. To increase current income, the Fund may lend portfolio
securities comprising up to 5% of total assets to brokers, dealers and
financial institutions, provided certain conditions are met, including
the condition that each loan is secured continuously by collateral
maintained on a daily market-to-market basis in an amount at least equal
to the current market value of the securities loaned.
HOW THE FUND VALUES SHARES
The net asset value for Trust Shares of the Fund is determined by adding the
interest of the Trust Shares in the market value of all securities and other
assets of the Fund, subtracting the interest of the Trust Shares in the
liabilities of the Fund and those attributable to Trust Shares, and dividing
the remainder by the total number of Trust Shares outstanding. The net asset
value of the Fund's Trust Shares will differ from that of Investment Shares due
to the expense of the Rule 12b-1 fee applicable to the Fund's Investment
Shares.
Securities for which market quotations are readily available are stated at
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
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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 Fund calculates net asset value per Trust Share as of the close of the
New York Stock Exchange (currently 4:00 p.m. Eastern Time) on each Business
Day. As used herein, a "Business Day" constitutes Monday through Friday except
(i) days on which there are not sufficient changes in the value of the 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; (iii) the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day; and (iv) other civil holidays when the
Federal Reserve Banks or the financial markets are closed, such as Veterans'
Day and Martin Luther King Day.
HOW TO BUY TRUST SHARES
Investors may purchase Trust Shares in the Fund through procedures
established by the Distributor in connection with the requirements of
fiduciary, advisory, agency and other similar accounts maintained by or on
behalf of customers of Huntington or its affiliates or correspondent banks
(collectively, the "Banks"). State securities laws may require banks and
financial institutions purchasing shares for their customers to register as
brokers pursuant to such laws. Trust Shares of the Fund are purchased at the
appropriate net asset value per Trust Share next determined after the order is
transmitted to the Funds' transfer agent, SEI Investments Management
Corporation (the "Transfer Agent").
Trust Shares will normally be held in the name of the Bank effecting the
purchase on the shareholder's behalf, and it is the Bank's responsibility to
transmit purchase or redemption orders to the Transfer Agent. Shareholders will
receive a confirmation of each transaction in their account, which will show
the total number of Trust Shares of the Fund owned. The Fund will not issue
certificates representing Trust Shares.
If a shareholder pays for Trust Shares by check and the check does not clear,
the purchase will be cancelled, and such shareholder may be charged a fee and
will be liable for any losses incurred. Neither initial nor subsequent
investments will be made by third party check. If a shareholder pays for Trust
Shares with a check drawn from a bank outside the United States, the check will
be sent to the bank for collection prior to placing the trade in the
shareholder's account, and approximately four to five weeks will be required
before the trade will be processed. For more information or assistance
regarding the purchase of Trust Shares of the Fund, call the Investor Services
Department at (in Ohio) 614-480-5580, or (outside the 614 Area Code) 800-253-
0412.
From time to time, the Trust may temporarily suspend the offering of shares
of the Fund or either class of its shares. During the period of any such
suspension and depending on the reasons for the suspension, persons who are
already shareholders of the 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.
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MINIMUM INVESTMENT REQUIRED
The minimum initial investment in Trust Shares of the Fund is $1,000.
Subsequent investments must be in amounts of at least $500.
SYSTEMATIC INVESTMENT PROGRAM
Once an account has been opened, holders of Trust Shares of the Fund may add
to their investment on a regular basis in minimum amounts of at least $50.
Under this program, monies will be automatically withdrawn periodically from
the shareholder's banking account and invested in Trust Shares of the Fund at
the applicable public offering price per share next determined after an order
is received by the Transfer Agent. Shareholders may apply for participation in
this program by contacting the Investor Services Department at (in Ohio) 614-
480-5580 or (outside the 614 Area Code) 800-253-0412.
If the shareholder's automatic investment program payment does not clear,
the purchase will be cancelled and the shareholder may be charged a fee and
will be liable for any losses incurred. Any subsequent such occurrences may
result in the cancellation of the automatic investment program feature of the
shareholder's account.
HOW TO EXCHANGE TRUST SHARES AMONG THE FUNDS
Shareholders may exchange Trust Shares in the Fund for Trust Shares in any
other fund at the respective net asset values per Trust Share next determined
after receipt of the request in good order. This privilege is available to
shareholders resident in any state in which the fund shares being acquired may
be sold. Exchange requests received prior to 4:00 p.m. (Eastern Time) will be
effected at the next determined net asset value per Trust Share as of that
Business Day. Exchange requests received after 4:00 p.m. (Eastern Time) will
be effected at the next determined net asset value per Trust Share on the
following Business Day. Holders of Trust Shares automatically receive the
Trust's telephone exchange service unless they have instructed their Bank to
the contrary. Exchange instructions given by telephone may be electronically
recorded and will be binding upon the shareholder. Because telephone exchange
requests will be honored from anyone who provides the correct information
(described below), this service involves a possible risk of loss if someone
uses the service without the shareholder's permission.
1. By Phone: Investor Services Department (in Ohio) 614-480-5580 (outside
the 614 Area Code) 800-253-0412
2. By Mail: The Huntington National Bank 41 South High Street (HC 1116)
Columbus, OH 43287 Attn: Investor Services Department
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.
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To exchange by letter or by telephone, a shareholder must state (1) the name
of the fund from which the exchange is to be made (and designating that Trust
Shares are involved), (2) the name(s) and address on the shareholder account,
(3) the account number, (4) the dollar amount or number of Trust Shares to be
exchanged, and (5) the fund into which the Trust Shares are to be exchanged.
Written exchange requests must be endorsed by the shareholder, and it may be
necessary to have the shareholder's signature guaranteed by a member firm of a
national securities exchange or by a commercial bank, savings and loan
association or trust company. Further documentation may be required, and a
signature guarantee is generally required from corporations, executors,
administrators, trustees and guardians. (See "Redeeming By Mail" below.)
An exchange is treated as a sale for federal income tax purposes and,
depending on the circumstances, a capital gain or loss may be realized.
The Trust's exchange privileges may be terminated or modified. Except as
indicated below, shareholders will be given 60 days' prior notice of any such
termination or any material amendment of existing exchange privileges. No
notice will be given when the only material effect of an amendment is to reduce
or eliminate any charges payable at the time of an exchange or under certain
extraordinary circumstances, such as in connection with the suspension of the
sale or redemption of Fund shares.
HOW TO REDEEM TRUST SHARES
Shareholders may redeem all or any portion of the Trust Shares in their
account on any Business Day at the appropriate net asset value per Trust Share
next determined after a redemption request in proper form is received by the
Transfer Agent. As described below, shareholders may redeem Trust Shares by
telephone or in writing, and may receive proceeds by wire. If an investor
purchases Trust Shares by check and wishes to redeem those Trust Shares before
the check has cleared, the Trust may delay payment of any redemption proceeds
until the check clears. Under unusual circumstances, the Fund may suspend
redemptions or postpone payment for more than seven days, as permitted by
federal securities law.
REDEEMING BY TELEPHONE
Telephone requests for redemption may be made by calling the Investor
Services Department at (in Ohio) 614-480-5580 or (outside the 614 Area Code)
800-253-0412. Telephone requests for redemptions of Trust Shares in the Fund
must be received prior to 4:00 p.m. (Eastern Time) to receive that day's net
asset value and the redemption proceeds will be paid in federal funds, normally
on the next Business Day.
Holders of Trust Shares automatically receive the Trust's telephone
redemption service unless they have instructed their Bank to the contrary.
Because telephone redemption requests will be honored from anyone who provides
the correct information (described below), this service involves a possible
risk of loss if someone uses the service without the shareholder's permission.
Anyone making a telephone redemption request must furnish (1) the name and
address of record of the registered owner(s), (2) the account number, (3) the
amount to be withdrawn, and (4) the name of the person making the request.
Checks for telephone redemptions will be issued only to the registered
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shareholder(s) and mailed to the last address of record. If at any time the
Trust shall determine it necessary to terminate or modify this method of
redemption, shareholders will be promptly notified. Telephone redemption
instructions may be recorded.
In the event of extreme economic or market conditions, a shareholder may
experience difficulty in redeeming by telephone. If such a case should occur,
another method of redemption, such as through written request, should be
considered. If reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.
REDEEMING BY MAIL
Redemption requests may be made by writing The Huntington National Bank, 41
South High Street (HC 1116), Columbus, Ohio 43287, Attention: Investor Services
Department. Written redemption requests must be signed by the shareholder, and
it may be necessary to have the shareholder's signature guaranteed. Further
documentation may be required, and a signature guarantee is generally required
from corporations, executors, administrators, trustees, and guardians.
Signatures on written redemption requests must be guaranteed by:
--a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund ("BIF"), which is administered by the FDIC;
--a member of the New York, American, Midwest, or Pacific Stock Exchanges;
--a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or
-- any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and the Transfer Agent have adopted standards for accepting
signature guarantees from the above institutions. The Fund may elect in the
future to limit eligible signature guarantors to institutions that are members
of a signature guarantee program. The Fund and the Transfer Agent reserve the
right to amend these standards at any time without notice.
Shares will be redeemed at the net asset value determined as of the end of
the Business Day on which the written redemption request is received by the
Transfer Agent.
Redemptions with a value of up to $100,000 will be wired at a shareholder's
request, and a separate charge for this service may apply. Redemption proceeds
may be wired to any bank account specified by the shareholder in writing. If a
shareholder requests a wire transfer by telephone, redemption proceeds may be
wired only to the bank previously designated by the shareholder or otherwise
designated by the shareholder in writing as described below. If a shareholder
has authorized expedited wire redemption, Trust Shares will be redeemed at the
appropriate net asset value per Trust Share next determined after receipt of
the request, and the proceeds normally will be sent to the designated bank
account the following Business Day. In other circumstances, redemption proceeds
will normally be wired within seven days. The proceeds from the redemption of
Shares purchased by
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check are not available, and the shares may not be exchanged, until the check
has cleared. To change the name of the bank account to which redemption
proceeds will be wired, a shareholder should send a written request (and, if
necessary with the shareholder's signature guaranteed) to The Huntington
National Bank, 41 South High Street (HC 1131), Columbus, Ohio 43287, Attention:
Investor Services Department.
If a shareholder owns fewer shares of a Fund than the minimum amount set by
the Trustees due to shareholder redemptions (presently, shares with a value of
$1,000 or less), the Trust may redeem those shares and forward the redemption
proceeds to the shareholder. A shareholder will receive at least 30 days'
written notice before the Trust redeems shares, and an additional purchase of
shares of the appropriate Fund can be made to avoid redemption. This
requirement does not apply because of changes to the Fund's net asset value.
MANAGEMENT OF THE TRUST
The Trustees of the Trust are responsible for generally overseeing the
conduct of the Fund's business. Huntington serves as investment adviser to the
Fund 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 Fund, including investment research and management
with respect to all securities, instruments, cash and cash equivalents in the
Fund. The Trust pays Huntington management fees, computed daily and payable
monthly, for the Fund at the annual rate of 0.50% of the Fund's average daily
net assets. Huntington may periodically waive all or a portion of its
management fee with respect to the 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 $21 billion in assets as of
June 30, 1997, 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 $19 billion of assets, and has investment discretion over approximately $5
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 Fund 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.
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William G. Doughty and Duane C. Carpenter will be co-managers of the Fund.
Mr. Doughty has more than 25 years of experience in the investment management
business. Mr. Carpenter has more than nine years of investment management
experience.
DISTRIBUTION OF TRUST SHARES
SEI Investments Distribution Co., One Freedom Valley Road, Oaks,
Pennsylvania 19456, is the principal distributor for shares of the Fund. It is
a Delaware corporation, and is the principal distributor for a number of
investment companies.
ADMINISTRATION OF THE FUNDS
SEI Fund Resources, an affiliate of the Distributor, provides certain
administrative personnel and services necessary to operate the Fund. For these
services, the Fund pays a fee, computed daily and payable monthly to SEI Fund
Resources at an annual rate of 0.11% of its average daily net assets. SEI Fund
Resources has entered into a sub-administration agreement with Huntington
pursuant to which Huntington provides certain administrative services to the
Fund. The fees paid to Huntington under this agreement are paid by SEI Fund
Resources and not by the Fund.
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 the Fund. SEI Investments Management Corporation, serves
as the Trust's transfer agent and dividend disbursing agent. SEI Investments
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 Fund. The fees paid
under this agreement are paid by SEI Investments Management Corporation and
not by the Fund.
INDEPENDENT AUDITORS
Effective in 1997, the independent auditors for the Trust are KPMG Peat
Marwick LLP, Columbus, Ohio.
DISTRIBUTIONS AND TAXES
Dividends, if any, from the investment income of the Fund are declared and
paid monthly to both classes of shares. Distributions resulting from any net
realized capital gains of the Fund will be paid at least annually.
DISTRIBUTION OPTIONS
Shareholders of the Fund may choose to receive all distributions in cash, to
reinvest all distributions in additional Trust Shares, or to reinvest all
capital gains distributions in additional Trust Shares and to receive all
other distributions in cash. Shareholders may choose a distribution option by
notifying the Investor Services Department of their selection. If a
shareholder fails to choose a distribution option, all distributions will be
reinvested in additional Trust Shares of the Fund.
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FEDERAL INCOME TAXES
The 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, the
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. In addition, in order for the Fund's distribution to qualify as
"exempt interest dividends", at least 50% of the Fund's assets must consist of
obligations described in Section 103(a) of the Internal Revenue Code at the end
of each quarter.
Shareholders should note that in certain cases (i) the Fund will be required
to withhold 31% of dividends or sale proceeds otherwise due to a shareholder
and (ii) in addition to federal taxes, state and local taxes may apply to
transactions in shares. The exemption of interest on municipal bonds for
federal income tax purposes does not necessarily result in exemption under the
income, corporate or personal property tax laws of any state or city.
Generally, shareholders are afforded tax-exempt treatment at the state and
local levels for distributions derived from interest on municipal securities of
the shareholder's state of residency.
For federal income tax purposes, distributions (other than exempt-interest
dividends) will be taxable as ordinary income to the extent derived from the
Fund's investment income and net short-term gains. Pursuant to the Taxpayer
Relief Act of 1997, two different tax rates apply to distributions of net
capital gains. One rate (generally 28%) applies to net gains on capital assets
held for more than one year but not more than 18 months ("mid-term gains") and
a second, preferred rate (generally 20%) applies to the balance of such net
capital gains ("adjusted net capital gains"). Distributions of net capital
gains will be treated in the hands of shareholders as mid-term gains to the
extent designated by the Fund as deriving from net gains from assets held for
more than one year but not more than 18 months, and the balance will be treated
as adjusted net capital gains. Distributions of mid-term gains and adjusted net
capital gains will be taxable as such, regardless of how long shares have been
held. Distributions will be taxable as described above whether received in cash
or in shares through the reinvestment of distributions.
Fund distributions designated as exempt-interest dividends are not generally
subject to federal income tax. However, if a shareholder receives social
security or railroad retirement benefits, the shareholder should consult a tax
adviser to determine what effect, if any, an investment in the Fund may have on
the taxation of such benefits. In addition, an investment in the Fund may
result in liability for federal alternative minimum tax, for both individual
and corporate shareholders.
Early in each year the Fund will notify shareholders of the amount and the
federal income tax status of the distributions paid or deemed paid 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.
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In addition, any loss (not already disallowed as provided in the preceding
paragraph) realized upon a taxable disposition of shares held for six months or
less will be treated as long-term, rather than short-term, to the extent of any
long-term capital gain distributions received by the shareholder with respect
to the shares.
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.
MICHIGAN TAXES
Individual shareholders of the Fund residing in Michigan will not be subject
to Michigan personal income tax or personal income taxes imposed by cities in
Michigan, and corporate shareholders will not be subject to the Michigan single
business tax, on distributions received from the Fund to the extent such
distributions are attributable to interest on tax-exempt obligations of the
State of Michigan or any municipality, political subdivision or governmental
agency or instrumentality thereof or on obligations issued by the Governments
of Puerto Rico, the Virgin Islands and Guam, provided that the Fund complies
with the requirement of the Internal Revenue Code that at least 50% of the
value of its assets at the close of each quarter of its taxable year is
invested in state, municipal or other obligations the interest on which is
exempt from federal income tax under Section 103(a) of the Internal Revenue
Code.
Other distributions from the Fund, including those related to long-term and
short-term capital gains, will generally not be exempt from the Michigan
personal income tax or single business tax.
Income from the Fund, to the extent attributable to interest on obligations
issued by Michigan or its political subdivisions, will be excluded for purposes
of determining yield under the Michigan intangibles tax.
The Michigan Department of Treasury has issued rulings which confirm these
state tax consequences for Michigan resident individuals and corporations.
Shareholders of the Fund should consult their tax advisers about other state
and local tax consequences of their investments in the Fund.
Additional information regarding federal income taxes is contained in the
SAI. 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.
The treatment of dividends and distributions paid by the Fund under Michigan
law described herein is based on current statutes, regulations and current
policies, all of which are subject to change. Shareholders should consult their
own tax adviser to determine the precise effect of an investment in the Fund on
their particular tax situation.
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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 and the Michigan Tax-Free 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 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.
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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 the 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 the fund or such class present at a meeting at which the holders
of more than 50% of the outstanding shares of the Trust or the 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 Fund. Yield for both classes of
shares of the Fund 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. The tax-equivalent yield of each class of shares shows the effect on
performance of the tax-exempt status of distributions received from the Fund.
Tax-equivalent yield reflects the approximate yield that a taxable investment
must earn for shareholders at stated income levels to produce an after-tax
yield equal to the Fund's tax-exempt yield. Total return for the one-year
period and for the life of the 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 Fund also contributes to a lower total
return for 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 the 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 the
Fund's portfolio, and the operating expenses of the 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 the Fund's investment results to those of other mutual funds and
other investment vehicles.
From time to time, advertisements for the Fund may refer to ratings,
rankings, and other information in certain financial publications and/or
compare the Fund's performance to certain indices.
SHAREHOLDER INQUIRIES
Shareholder inquiries regarding the Monitor Michigan Tax-Free Fund should be
directed to The Huntington National Bank, Huntington Center, 41 South High
Street, Columbus, Ohio 43287, Attention: Investor Services Department.
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OTHER CLASSES OF SHARES
The Fund also offers another class of shares called Investment Shares.
Investment Shares are sold primarily through The Huntington Investment Company,
Huntington Personal Bankers or the Mutual Fund Services Center pursuant to
respective agreements between such organizations and the Distributor.
Investment Shares of the Fund are sold net asset value plus an applicable sales
charge. Purchases of Investment Shares are subject to a minimum initial
investment of $1,000.
Investment Shares and Trust Shares of the 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 the Fund's Investment Shares.
Expense differences between the Fund's Investment Shares and Trust Shares may
affect the performance of each class.
Investors may obtain information about Investment Shares by contacting The
Huntington National Bank, Huntington Personal Bankers or the Investor Services
Department at 614-480-5580 (in Ohio) or 800-253-0412 (outside the 614 Area
Code).
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Investment Adviser
- --------------------------------------------------------------------------------
The Huntington National Bank
Huntington Center
Columbus, OH 43287
1-800-253-0412
Administrator
- --------------------------------------------------------------------------------
SEI Fund Resources
One Freedom Valley Road
Oaks, PA 19456
Distributor
- --------------------------------------------------------------------------------
SEI Investments Distribution Co.
One Freedom Valley Road
Oaks, PA 19456
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 the Fund or the Distributor. This
Prospectus does not constitute an offering
by the Fund or by the Distributor in any jurisdiction in which such offering
may not lawfully be made.
LOGO
M logo FPO
The Monitor Funds
MARBLE SCREEN F.P.O.
Trust Shares
The Monitor Michigan Tax-Free Fund
November 20, 1997
ART
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PART B. STATEMENT OF ADDITIONAL INFORMATION
THE MONITOR FUNDS
INVESTMENT SHARES AND TRUST SHARES
- --------------------------------------------------------------------------------
Supplement, dated November 20, 1997, to the Combined Statement of Additional
Information, dated April 30, 1997 ("SAI"):
1. The Cover page of the SAI is amended to add to the list of funds "The
Monitor Michigan Tax-Free Fund", and the second sentence in the paragraph at
the bottom of the Cover page is amended to read as follows: "This Statement
is not a prospectus and is only authorized for distribution when accompanied
or preceded by the respective Prospectuses for Trust Shares or Investment
Shares of the Trust, dated April 30, 1997, or the Prospectuses for Trust
Shares or Investment Shares of the Monitor Michigan Tax-Free Fund, dated
November 20, 1997."
2. The definition of "Funds" on page 1 of the SAI is amended to read as
follows:
"Each of the ten separate investment portfolios of the Trust."
3. The first sentence of the paragraph under "Definitions" on page 1 of the
SAI is amended to read: "The Trust consists of ten separate investment
portfolios (the "Funds") with separate investment objectives and policies."
4. The following information is added to the SAI immediately prior to the
caption "Mortgage Related Securities" on page 4 of the SAI:
"Michigan Municipal Obligations
"The Michigan Tax-Free Fund may invest in municipal bonds. Municipal
bonds are principally classified as "general obligation" bonds, which
are secured by the pledge of the municipality's faith, credit and
taxing power for the payment of principal and interest, or as
"revenue" bonds, which are payable only from the revenues derived from
a particular project or facility and are generally dependent solely on
a specific revenue source. Municipal bonds are debt obligations issued
to obtain funds for various public purposes, including the
construction of a wide range of public facilities such as bridges,
highways, housing, hospitals, mass transportation, schools, streets
and water and sewer works. Other purposes for which municipal bonds
may be issued include the refunding of outstanding obligations and
obtaining funds for general operating expenses or to loan to other
public institutions and facilities. Private activity bonds are a
specific type of revenue bond backed by the credit and security of a
private user. Certain types of private activity bonds are issued by or
on behalf of public authorities to obtain funds to provide privately-
operated housing facilities, sports facilities, convention or trade
show facilities, airport, mass transit, port or parking facilities,
air or water pollution control facilities and certain local facilities
for water supply, gas, electricity, or sewage or solid waste disposal.
Assessment bonds, wherein a specially created district or project area
reviews a tax (generally on its taxable property) to pay for an
improvement or project may be considered a variant of either category
of municipal bonds. There are, of course, other variations in the
types of municipal bonds, both within a particular classification and
between classifications, depending on numerous factors.
"Because the Michigan Tax-Free Fund will invest primarily in Michigan
Municipal Obligations, its investment performance is especially
dependent on Michigan's prevailing economic conditions. To provide
somewhat greater investment flexibility, the Michigan Tax-Free Fund is
a "non-diversified" fund and, as such, is not required to meet any
diversification requirements under the 1940 Act. This
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fund may use its ability as a non-diversified fund to concentrate its
assets in the securities of a smaller number of issuers which the
Adviser deems to be attractive investments, rather than invest in a
larger number of securities merely to satisfy non-tax diversification
requirements. While the Adviser believes that the ability to
concentrate its investments in particular issuers is an advantage when
investing in Michigan Municipal Obligations, such concentration also
involves a risk of loss should the issuer be unable to make interest
or principal payments or should the market value of such securities
decline. Investment in a non-diversified fund could therefore entail
greater risks than investment in a "diversified" fund, including a
risk of greater fluctuations in yield and share price. The Michigan
Tax-Free Fund must nevertheless meet certain diversification tests to
qualify as a "regulated investment company" under the Code.
"Michigan Municipal Obligations may become subject to laws
enacted in the future by Congress or the Michigan Legislature, or by
referenda, extending the time for payment of principal and/or
interest, or imposing other constraints upon enforcement of such
obligations or upon municipalities to levy taxes. The information set
forth below is derived from official statements prepared in connection
with the issuance of Michigan Municipal Obligations and other sources
that are generally available to investors, and is provided as general
background to give a recent historical description and not to indicate
future or continuing trends in the financial or other positions of the
State of Michigan. This information has not been independently
verified.
"The budget of the State of Michigan is a complete financial plan
and encompasses the revenues and expenditures, both operating and
capital outlay, of the State's General Fund and its special revenue
funds. The budget is prepared on a basis consistent with generally
accepted accounting principles. The State's fiscal year begins on
October 1 and ends on September 30 of each year. Under Michigan law,
the executive budget recommendations for any fund may not exceed the
estimated revenue of the fund, and an itemized statement of estimated
revenues in each operating fund must be contained in an appropriation
bill as passed by the Legislature, the total of which may not be less
than the total of all appropriations made from the fund for that
fiscal year. The Michigan Constitution provides that proposed
expenditures from and revenues of any fund must be in balance and that
any prior year's surplus or deficit in any fund must be included in
the succeeding year's budget for that fund.
"The Michigan Constitution limits the amount of total revenues
that may be raised from taxes and other sources. State revenues
(excluding federal aid and revenues for payment of principal and
interest on general obligation bonds) in any fiscal year are limited
to a fixed percentage of State personal income in the prior calendar
year or an average of the prior three calendar years, whichever is
greater. The State may raise taxes in excess of this limit in
emergency situations. The State finances its operations through the
General Fund and special revenue funds. The General Fund receives
revenues of the State that are not specifically required to be
included in the special revenue fund. The majority of the revenues
from State taxes are from the personal income tax, the single business
tax, the State's use and sales tax. In addition, the State levies
various other taxes.
"The Michigan Constitution limits State general obligation debt
to (i) short-term debt for State operating purposes, (ii) short and
long-term debt for the purpose of making loans to school districts,
and (iii) long-term debt for the purpose of voter-approved purposes.
Short-term debt for operating purposes is limited to an amount not in
excess of 15% of undedicated revenues received during the preceding
fiscal year. Under the Michigan Constitution as implemented by
statutory provisions, such debt must be authorized by the State
Administration Board and issued only to meet obligations incurred
pursuant to appropriation and must be repaid during the fiscal year in
which incurred. Such debt does not require voter approval.
"There are number of state agencies, instrumentalities and
political subdivisions that issue municipal
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obligations, some of which may be conduit obligations payable from
payments from private borrowers. These entities are subject to various
economic risks and uncertainties, and the credit quality of the
securities issued by them may vary considerably from obligations
backed by the full faith and credit of the State.
"The principal sectors of Michigan's economy are manufacturing of
durable goods (including automobiles, vehicle components and office
equipment), tourism and agriculture. The State's economy continues to
be dependent upon manufacturing, particularly the automotive industry.
Layoffs and plant closings in the automotive industry may adversely
affect the State and there can be no assurance that Michigan's overall
trend in recent years of improved fiscal and economic conditions will
continue. The value of revenue or general obligations of local
governments or authorities may be independently affected by economic
matters not directly impacting the State as a whole. The State of
Michigan is a party to various legal proceedings seeking damages or
injunctive or other relief. In addition to routine litigation, certain
proceedings could substantially affect the State's programs or
finances. These lawsuits generally involve programs in the areas of
corrections, highway maintenance, social services, tax collection,
commerce and budgetary reductions to school districts and governmental
units and court funding. The ultimate outcome of these proceedings is
not determinable.
"Municipal Notes. The Michigan Tax-Free Fund may invest in municipal
notes, which include (but are not limited to) tax anticipation notes
("TANs"), bond anticipation notes ("BANs"), revenue anticipation notes
("RANs") and construction loan notes. Notes sold as interim financing
in anticipation of other revenues are usually general obligations of
the governmental issuer."
5. Under the caption "Investment Restrictions" on page 14 of the SAI, the
following restriction is amended to read as follows:
"(1) Except for the Ohio Funds and the Michigan Tax-Free Fund, 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)."
6. The following sentence is added to the text following the caption
"Portfolio Turnover" on page 15 of the SAI:
"The Adviser estimates that the portfolio turnover rate for the
Michigan Tax-Free Fund will not exceed 35% during the first fiscal
year of that fund."
7. On page 18 of the SAI, delete the information under the caption "Fund
Ownership" and replace it with the following:
"Fund Ownership
As of August 15, 1997, the Trustees and officers as a group owned less
than 1% of the shares of the Trust.
As of August 15, 1997, 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 50,405,671 shares (39.6%); Huntington Trust Company,
Columbus, OH, acting in various capacities for numerous accounts,
owned approximately 23,609,611 shares (18.6%); and PSH Master Limited
Partnership, Columbus, OH, owned approximately 12,060,773 shares
(9.48%).
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<PAGE>
As of August 15, 1997, 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 392,456,837
shares (99.9%).
As of August 15, 1997, 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 57,867,132 shares (82.8%).
As of August 15, 1997, 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 66,872,053 shares (99.9%).
As of August 15, 1997, 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 24,647,509 shares (51.6%); Allied Fidelity Insurance
Co., Indianapolis, IN, owned approximately 3,846,816 shares (8.1%).
As of August 15, 1997, 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 512,792,534 shares (99.9%).
As of August 15, 1997, no shareholders of record owned 5% or more of
the outstanding Investment Shares of The Monitor Growth Fund.
As of August 15, 1997, 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 5,062,463 shares
(99.0%).
As of August 15, 1997, the following shareholders of record owned 5%
or more of the outstanding Investor Shares of The Monitor Income
Equity Fund: William R. and Nancy R Wise, Westerville, OH, owned 627
shares (31.1%); Deborah Mills Maximoff, Indianapolis IN, owned 598
shares (29.7%); Lawrence Markworth, New Philadelphia, OH, owned 216
shares (10.7%); Phyllis C. Markworth, New Philadelphia, OH, owned 196
shares (9.7%); and Brenda B. Hernandez, Worth, OH, owned 172 shares
(8.6%).
As of August 15, 1997, 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 5,791,025 shares
(98.7%).
As of August 15, 1997, the following shareholder of record owned 5% or
more of the outstanding Investment Shares of The Monitor Mortgage
Securities Fund: Elmer E. and Mary K. Bernard, Columbus, OH, owned
approximately 9,285 shares (6.4%); and Trust under will of James E.
Dill, Columbus, OH, owned approximately 7,357 shares, (5.1%).
As of August 15, 1997, 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,
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OH, acting in various capacities for numerous accounts, owned
approximately 4,797,509 shares (98.7%).
As of August 15, 1997, the following shareholders of record owned 5%
or more of the outstanding Investment Shares of The Monitor Ohio Tax-
Free Fund: John W. and Arlene J. Warbritton, Westerville, OH, owned
approximately 6,145 shares (7.7% ); Ursula E.M. and William J. Umberg,
Cincinnati, OH, owned approximately 8,919 shares (11.2%); Florence M.,
Ralph E. and Gerald L. Brinkman, Grove City, OH, owned approximately
14,244 shares (17.8%); and Michael M. and Mary Ann Machowsky,
Rossford, OH, owned approximately 4,611 shares (5.8%).
As of August 15, 1997, 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 2,898,851 shares
(98.9%).
As of August 15, 1997, 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 5,443 shares (6.8%); and The Cincinnati Institute for
Fine Arts, Cincinnati, OH, owned approximately 4,619 shares (5.8%).
As of August 15, 1997, 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
7,018,495 shares (99.5%).
As of August 15, 1997, 100% of the outstanding Investment Shares of
The Monitor Short/Intermediate Fixed Income Securities Fund were owned
by Monitor Money Market Fund (Investment Shares Class), Columbus, OH.
As of August 15, 1997, 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 6,187,160 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."
8. The Subcaption on page 29 of the SAI and the accompanying text are amended
to read as follows:
"Ohio and Michigan Income Taxation
"For a summary of the Ohio and Michigan income tax treatment of
dividends paid by the Ohio Funds or the Michigan Tax-Free Fund, see
"Distributions and Taxes" in the Prospectus."
9. On page 32 of the SAI, the first sentence under the caption "Tax-Equivalent
Yield" is hereby amended to read as
B-5
<PAGE>
follows:
"With respect to the Ohio Funds and the Michigan Tax-Free Fund, the
Fund's 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."
10. The following table is added to page 34 of the SAI, under the caption "Tax-
Equivalency Tables":
"Michigan Tax-Free Fund
The Michigan 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 this Fund's portfolio generally remains free from
federal regular income tax and is free from Michigan personal income taxes.
Some portion of this 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.
<TABLE>
<CAPTION>
TAXABLE YIELD EQUIVALENT FOR 1997
STATE OF MICHIGAN
- ------------------------------------------------------------------------------
FEDERAL TAX BRACKET:
<S> <C> <C> <C> <C> <C>
15.00% 28.00% 31.00% 36.00% 39.60%
COMBINED FEDERAL AND STATE TAX BRACKET:
19.4% 32.4% 35.4% 40.4% 44.0%
- ------------------------------------------------------------------------------
$1- $24,651- $59,751- $124,651- OVER
Single Return: $ 24,650 $ 59,750 $124,650 $271,050 $271,050
$1- $41,201- $99,601- $151,751- OVER
Joint Return: $ 41,200 $ 99,600 $151,750 $271,050 $271,050
- ------------------------------------------------------------------------------
TAX-EXEMPT YIELD TAXABLE YIELD EQUIVALENT
- ---------------- --------------------------------------------------
1.50%........ 1.87% 2.22% 2.32% 2.52% 2.68%
2.00%........ 2.49% 2.96% 3.10% 3.36% 3.57%
2.50%........ 3.11% 3.70% 3.87% 4.19% 4.46%
3.00%........ 3.73% 4.44% 4.64% 5.03% 5.36%
3.50%........ 4.35% 5.18% 5.42% 5.87% 6.25%
4.00%........ 4.98% 5.92% 6.19% 6.71% 7.14%
4.50%........ 5.60% 6.66% 6.97% 7.55% 8.04%
5.00%........ 6.22% 7.40% 7.74% 8.39% 8.93%
5.50%........ 6.84% 8.14% 8.51% 9.23% 9.82%
6.00%........ 7.46% 8.88% 9.29% 10.07% 10.71%
</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.
11. 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 auditors, and the
audited financial statements
B-6
<PAGE>
of The Monitor Funds for the year ended December 31, 1996, are
incorporated herein by reference from the Trust's Combined Annual
Report to Shareholders for the year ended December 31, 1996, 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, 1997, are incorporated
herein by reference from the Trust's Combined Semi-Annual Report to
Shareholders for the six months ended June 30,1997, 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."
B-7
<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, 1996:
Statements of Operations for the year ended December 31, 1996
Statements of Assets and Liabilities as of December 31, 1996
Statements of Changes in Net Assets for the years ended December 31, 1996
and 1995
Statements of Cash Flows for the year ended December 31, 1996
Portfolios of Investments as of December 31, 1996
Financial Highlights for the years ended December 31, 1996
Combined Notes to Financial Statements
Report of Price Waterhouse LLP, Independent Auditors
(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, 1997:
Statements of Operations for the six months ended June 30, 1997
Statements of Assets and Liabilities as of June 30, 1997
Statements of Changes in Net Assets for the six months ended June 30, 1997
Statements of Cash Flows for the six months ended June 30, 1997
Portfolios of Investments as of June 30, 1997
Financial Highlights for the six months ended June 30, 1997
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 between the Registrant and The
Huntington National Bank, as successor to Huntington Trust Company,
N.A. (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) (iii) Advisory Contract between the Registrant
and The Huntington National Bank
C-1
<PAGE>
relating to The Monitor Michigan Tax-Free Fund (filed herewith)
(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)
(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, as amended to
date (filed herewith)
(iv) Sub-Administration Agreement, dated March 24, 1996, between SEI
Financial Management Corporation and The Huntington Trust Company,
N.A., as amended to date (filed herewith)
(v) Consent to Assignment and Assumption Agreement for the
Administration and Transfer Agency Agreements, dated January 30, 1997,
between the Registrant and SEI Financial Management Corporation
(previously filed as Exhibit 9(v) to Post-Effective Amendment No. 22
and incorporated herein by reference)
(10) Opinion and Consent of Counsel as to legality of shares being
registered (filed herewith)
(11) (i) Consent of Price Waterhouse LLP, Independent Auditors
(filed herewith)
(ii) Consent of KPMG Peat Marwick LLP, Independent Auditors (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, as amended to date (filed
herewith)
(16) Not applicable
(17) Not applicable
(18) Multiple Class Plan, as amended to date (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 August 15, 1997
- -------------- ------------------------
<S> <C>
Shares of Beneficial Interest of:
The Monitor Money Market Fund
Trust Shares.......................................... 68
Investment Shares..................................... 1,794
The Monitor Ohio Municipal Money Market Fund
Trust Shares.......................................... 6
Investment Shares..................................... 219
The Monitor U.S. Treasury Money Market Fund
Trust Shares.......................................... 9
Investment Shares..................................... 317
The Monitor Growth Fund
Trust Shares.......................................... 91
Investment Shares..................................... 788
The Monitor Income Equity Fund
Trust Shares.......................................... 70
Investment Shares..................................... 21
The Monitor Mortgage Securities Fund
Trust Shares.......................................... 43
Investment Shares..................................... 186
The Monitor Ohio Tax-Free Fund
Trust Shares.......................................... 19
Investment Shares..................................... 129
The Monitor Fixed Income Securities Fund
Trust Shares.......................................... 54
Investment Shares..................................... 236
The Monitor Short/Intermediate Fixed Income Securities Fund
Trust Shares.......................................... 60
Investment Shares..................................... 4
The Monitor Michigan Tax-Free Fund
Trust Shares.......................................... 0
Investment Shares..................................... 0
</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.
C-3
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
The Adviser. The Huntington National Bank, the successor to Huntington
Trust Company, N.A. ("Huntington") serves as investment adviser to the
Registrant. Huntington is wholly-owned subsidiary of Huntington Bancshares
Incorporated ("Bancshares"). Huntington conducts a variety of trust activities.
To the knowledge of Registrant, none of the directors or executive officers of
Huntington, except those set forth below, is or has been at any time during the
past two fiscal years engaged in any other business, profession, vocation or
employment of a substantial nature, except that certain directors and executive
officers also hold various positions with and engage in business for Bancshares.
Set forth below are the names and principal businesses of the directors and
executive officers of Huntington who are or during the past two fiscal years
have been engaged in any other business, profession, vocation or employment of a
substantial nature for their own account or in the capacity of director,
officer, employee, partner or trustee.
Executive Officers and Principal Other Business(es) During
Directors of Huntington at Least the Last Two Fiscal Years
- ----------------------- ----------------------------------
Friedrich K.M. Bohm, Director....Managing Partner, NBBJ East Limited Partnership
Douglas G. Borror, Director......President, Dominion Corporation
William E. Conway, Director......Chairman, Fairmount Minerals, Ltd.
Maurice A. Cox, Jr., Director....Chief Executive Officer, The Ohio Partners, LLC
Peter H. Edwards, Director.......Chairman, Edwards Companies
Douglas E. Fairbanks, Director...Private investor
John B. Gerlach, Jr..............Chairman, President and Chief Executive
Officer, Lancaster Colony Corporation
Elaine H. Hairston, Director.....Chancellor, Ohio Board of Regents
Edgar W. Ingram III, Director....Chairman and Chief Executive Officer of
White Castle Systems, Inc.
Pete A. Klisares, Director.......Executive Vice President, Worthington
Industries, Inc.
William M. Osborne, Jr.,.........Private investor
Director
Robert W. Rahal, Director........President, Team Rahal, Inc.
John B. Schultz, Director........Chairman, President and Chief Executive
Officers, The Lamson & Sessions Co.
J. Richard Sisson, Director......Senior Vice President and Provost, The Ohio
State University
Rodney Wasserstrom, Director.....President and Chief Executive Officer,
The Wasserstrom Company
William J. Williams, Director....Private investor
William S. Williams, Director....Vice Chairman, Chief Executive and Chief
Financial Officer, The W.W. Williams Co., Inc.
Helen K. Wright, Director........Private investor
The Subadviser. Piper Capital Management Incorporated ("Piper Capital
Management ") is the subadviser for The Monitor Mortgage Securities Fund. Piper
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 are as follows:
C-4
<PAGE>
Name Title
- ---- -----
William H. Ellis Director and President
Bruce C. Huber Director
David E. Rosedahl Director
Charles N. Hayssen Director
Momchilo Vucenich Director
Worth Bruntjen Senior Vice President
Richard Daly Senior Vice President
Michael C. Derck Senior Vice President
Paul Dow 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
Kim Jenson Senior Vice President
Russ Kappenman Senior Vice President
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
Susan S. Miley Senior Vice President and General Counsel
Robert H. Nelson Senior Vice President
Gary Norstrem Senior Vice President
Nancy S. Olsen Senior Vice President
Ronald R. Reuss Senior Vice President
Bruce D. Salvog Senior Vice President
Sandra K. Shrewsbury Senior Vice President
Eric L. Siedband Senior Vice President
David M. Steele Senior Vice President
Jill 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 Gonzo Vice President
Joyce Halbe Vice President
C-5
<PAGE>
Joan L. Harrod Vice President
Mary Hoyme Vice President
Amy K. Johnson Vice President
John Kightlinger Vice President
Wan-Chong Kung Vice President
Jane Longueville Vice President
Brent Mellum Vice President
Stephen C. Meyer Vice President
Thomas Moore Vice President
Chris Neuharth Vice President
Paul D. Pearson Vice President
Scott Richter Vice President
Catherine M. Stienstra Vice President
Shaista Tajamal Vice President
Jane K. Welter Vice President
Fong P. Woo Vice President.
Item 29. Principal Underwriters
(a) Furnish the name of each investment company (other than the Registrant) for
which each principal underwriter currently distributing securities of the
Registrant also acts as a principal underwriter, distributor or investment
adviser:
SEI Investments Distribution Co. ("SEI Distribution") is the Distributor of
the Registrant's shares. SEI Distribution 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
The Advisors' Inner Circle Fund
The Pillar Funds
CUFUND
STI Classic Funds
CoreFunds, Inc.
First American Funds, Inc.
First American Investment Funds, Inc.
The Arbor Fund
Boston 1784 Funds(R)
The PBHG Funds, Inc.
PBHG Insurances Series Fund, Inc.
C-6
<PAGE>
Boston 1784 Funds(R)
The PBHG Funds, Inc.
PBHG Insurances Series Fund, 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
TIP Funds
SEI Institutional Investments Trust
First American Strategy Funds, Inc.
HighMark Funds
Armada Funds
Expedition Funds
SEI Distribution provides numerous financial services to investment managers,
pension plan sponsors and bank trust departments. These services include
portfolio evaluation, performance measurement and consulting services and
automated execution, clearing and settlement of securities transactions.
(b) Furnish the information required by the following table with respect to each
director, officer or partner of each principal underwriter named in the
answer to Item 21 of Part B. Unless otherwise noted, the business address of
each director or officer is One Freedom Valley Road, Oaks, Pennsylvania
19456:
<TABLE>
<CAPTION>
Position and Office Position and Office
Name with Underwriter with Registrant
- ---- ------------------- -------------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman and CEO None
Henry H. Greer Director, President and COO None
Carmen V. Romeo Director, Executive Vice President and
President-Investment Advisory Group None
Gilbert L. Beebower Executive Vice President None
Richard B. Lieb Executive Vice President and President-Investment
Services Division None
Dennis J. McGonigle Executive Vice President None
Leo J. Dolan, Jr. Senior Vice President None
Carl A. Guarino Senior Vice President None
Larry Hutchison Senior Vice President None
David G. Lee Senior Vice President President and CEO
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Jack May Senior Vice President None
A. Keith McDowell Senior Vice President None
Hartland J. McKeown Senior Vice President None
Barbara J. Moore Senior Vice President None
Kevin P. Robins Senior Vice President, General Counsel and Vice President and
Secretary Assistant Secretary
Robert Wagner Senior Vice President None
Patrick K. Walsh Senior Vice President None
Robert Aller Vice President None
Marc H. Cahn Vice President and Assistant Secretary Vice President and
Assistant Secretary
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
Barbara Doyne Vice President None
Jeff Drennen Vice President None
Vic Galef Vice President and Managing Director None
Kathy Heilig Vice President and Treasurer 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
Carolyn McLaurin Vice President and Managing Director None
W. Kelso Morrill Vice President None
Joanne Nelson Vice President None
Barbara A. Nugent Vice President and Assistant Secretary Vice President and
Assistant Secretary
Sandra K. Orlow Vice President and Assistant Secretary None
Donald Pepin Vice President and Managing Director None
Kim Rainey 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
Assistant Secretary
Wayne M. Withrow Vice President and Managing Director None
James Dougherty Director of Brokerage Services None
</TABLE>
C-8
<PAGE>
Item 30. Location of Accounts and Records
All accounts and records required to be maintained by Section 31(a) of
the Investment Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:
SEI Fund Resources One Freedom Valley Road
(Administrator, Transfer Agent and Oaks, PA 19456
Dividend Disbursing Agent)
The Huntington National Bank 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) With respect to The Monitor Michigan Tax-Free Fund, Registrant hereby
undertakes to file a post-effective amendment, using financial statements which
need not be certified, within four to six months after the effective date of
this Post-Effective Amendment to its Registration Statement on Form N-1A.
(c) Registrant undertakes to call a meeting of shareholders for the purposes
of voting upon the question of removal of a trustee or trustees if requested to
do so by the holders of at least 10% of Registrant's total outstanding shares of
beneficial interest of all series of the Registrant. 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-9
<PAGE>
(d) Registrant hereby undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report to
shareholders for The Monitor Michigan Tax-Free Fund, upon request and without
charge.
C-10
<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
Oaks, Commonwealth of Pennsylvania, on the 5th day of September, 1997.
THE MONITOR FUNDS
By: /S/ DAVID G. LEE
--------------------------------------
David G. Lee, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registrant's Registration Statement has been signed
below by the following persons in the capacities indicated on September 5, 1997:
NAME TITLE
/S/ DAVID G. LEE President and Chief Executive Officer
- ----------------------------
David G. Lee
/S/ ROBERT DELLACROCE Controller, Treasurer and Chief Financial Officer
- ---------------------
Robert DellaCroce
* Trustee
- ----------------------------
David S. Schoedinger
* Trustee
- ----------------------------
William R. Wise
* Trustee
- ----------------------------
John M. Shary
*Executed on behalf of the indicated person by the undersigned, pursuant to
power of attorney filed herewith.
By: /S/ DAVID G. LEE
--------------------------------
David G. Lee, Attorney-in-fact
C-11
<PAGE>
EXHIBIT INDEX
(5)(iii) Advisory Contract between the Registrant and The Huntington National
Bank relating to The Monitor Michigan Tax-Free Fund
(9)(iii) Administration Agreement, dated January 11, 1996, between the
Registrant and SEI Financial Management Corporation, as amended to date
(9)(iv) Sub-Administration Agreement, dated March 24, 1996, between SEI
Financial Management Corporation and The Huntington National Bank, as
amended to date
(10) Opinion and Consent of Counsel as to legality of shares being
registered
(11) (i) Consent of Price Waterhouse LLP, Independent Auditors
(ii) Consent of KPMG Peat Marwick LLP, Independent Auditors
(15) Distribution and Shareholder Services Plan, as amended to date
(18) Multiple Class Plan, as amended to date
(24) Powers of Attorney
<PAGE>
Exhibit 5(iii)
THE MONITOR FUNDS
INVESTMENT ADVISORY AGREEMENT
Monitor Michigan Tax Free Fund
This Agreement is made as of the 5th day of September, 1997, by and between
The Monitor Funds, a business trust organized under the laws of the Commonwealth
of Massachusetts (herein called the "Trust") and The Huntington National Bank, a
national bank (herein called the "Adviser").
WHEREAS, the Trust is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended; and
WHEREAS, the Trust has retained the Adviser to render investment advisory
and other management services for its Money Market Fund, Ohio Municipal Money
Market Fund, and Ohio Tax Free Fund portfolios pursuant to a separate Investment
Advisory Agreement dated September 15, 1988; and for its U.S. Treasury Money
Market Fund, Growth Fund, Income Equity Fund, Fixed Income Securities Fund and
Short/Intermediate Fixed Income Securities Fund portfolios pursuant to a
separate Investment Advisory Agreement dated April 25, 1989; and for its
Mortgage Securities Fund pursuant to a separate Investment Advisory Agreement
dated April 24, 1992; and
WHEREAS, the Trust desires to retain the Adviser to render investment
advisory and other management services for The Monitor Michigan Tax Free Fund
(the "Fund") on the terms and conditions set forth;
NOW THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, the parties agree as follows:
1. Employment of the Adviser. The Trust, being duly authorized, hereby
appoints the Adviser to act as investment adviser to the Trust for the Fund for
the period and on the terms set forth in this Agreement. The Adviser accepts
such employment and agrees to render the services herein set forth for the
compensation herein provided.
2. Management. Subject to the supervision and direction of the Board of
Trustees of the Trust (the "Trustees"), the Adviser will provide a continuous
program for the Fund, including, but not limited to, investment research and
management with respect to all securities, investments, cash and cash
equivalents in the Fund. The Adviser will determine, from time to time, what
securities and other instruments will be purchased, retained or sold by the
Trust for the Fund. The Adviser will provide the services rendered by it in
accordance with the Fund's investment objectives and policies as stated in the
Prospectus which is a part of the Trust's effective Registration Statement as
amended from time to time. The Adviser agrees that it:
(a) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission (herein called the "Rules") and with the
Securities Act of 1933, the Securities Exchange
<PAGE>
Act of 1934, the Investment Company Act of 1940 and the Investment Advisers Act
of 1940, all as amended, and will conduct its activities under this Agreement in
accordance with all applicable Rules and Regulations of the Comptroller of the
Currency pertaining to the investment advisory activities of national banks;
(b) will place orders pursuant to its investment determinations for the
Fund, either directly with the issuer of the instrument to be purchased or with
any broker or dealer selected by it. In placing orders with brokers and dealers,
the Adviser will use its best reasonable efforts to obtain the best net price
and execution of its orders, after taking into account all factors it deems
relevant, including the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. However, this responsibility shall not be
deemed to obligate the Adviser to solicit competitive bids for each transaction.
Consistent with this obligation, the Adviser may, to the extent permitted by
law, purchase and sell portfolio securities to and from brokers and dealers who
provide brokerage and research services (as those terms were defined in Section
28(e) of the Securities Exchange Act of 1934) statistical quotations,
specifically, the quotations necessary to determine the Fund's net asset value,
and other information provided to the Fund or to the Adviser or its affiliates
to or for the benefit of the Fund and/or other accounts over which the Adviser
or any of its affiliates exercises investment discretion. Subject to the review
of the Trustees from time to time with respect to the extent and continuation of
the policy, the Adviser is authorized to pay to a broker or dealer who provides
such brokerage and research services a commission for effecting a securities
transaction for the Fund which is in excess of the amount of commission another
broker or dealer would have charged for effecting the transaction if the Adviser
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the overall
responsibilities of the Adviser with respect to the accounts as to which it or
its affiliates exercise investment discretion; and
(c) will maintain books and records with respect to the securities
transactions of the Fund and will render to the Trustees such periodic and
special reports as the Trustees may reasonably request.
3. Services Not Exclusive. The investment management services rendered by
the Adviser under this Agreement are not to be deemed exclusive, and the Adviser
shall be free to render similar services to others as its services under this
Agreement are not impaired thereby. The Adviser shall provide fair and equitable
treatment to the Fund in the selection of portfolio instruments and the
allocation of investment opportunities; the Adviser is not required to give the
Fund preferential treatment.
4. Books and Records. In compliance with the requirements of Rule 31a(3)
promulgated under the Investment Company Act of 1940, as amended, the Adviser
hereby agrees that all records which it maintains for the Fund are the property
of the Trust and further agrees to surrender promptly to the Trust any of such
records upon the Trust's request. The Adviser further agrees to preserve for the
periods proscribed by Rule 31a(2) the records required to be maintained by Rule
31a(1) and to comply in full with the requirements of Rule 204(2) under the
Investment Advisers Act of 1940,
<PAGE>
pertaining to the maintenance of books and records.
5. Expenses. During the term of this Agreement, the Adviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities (including brokerage commissions and taxes, if
any) or other investment instruments purchased for the Funds. In addition, if
the expenses borne by the Fund (including fees paid pursuant to this Agreement
and the Administration Agreement but excluding interest, taxes, brokerage and,
if permitted by the relevant state securities commissions, extraordinary
expenses) in any fiscal year of the Fund exceed the applicable expense
limitations imposed by the securities regulations of any state in which the
shares of the Fund are registered or qualified for sale to the public, the
Investment Adviser shall reimburse the Fund monthly for a portion of any such
excess in an amount equal to the proportion that the fees otherwise payable to
the Adviser bear to the total amount of investment advisory and administration
fees other payable to the Adviser during such fiscal year pursuant to paragraph
6 herein.
6. Compensation. For the services provided and the expenses assumed,
pursuant to this Agreement, the Trust will pay the Adviser, and the Adviser will
accept as full compensation, a fee, computed daily and payable monthly at the
annual rate of 0.50 of one percent of the average daily net assets ("net
assets") of the Fund.
7. Limitation of Liability of the Adviser; Indemnification.
--------------------------------------------------------
(a) The Adviser will not be liable for any error of judgment or mistake of
law or for any loss suffered by the Trust in connection with the matters to
which this Agreement relates, except a loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services or a loss
resulting from willful malfeasance, bad faith or gross negligence on the part of
the Investment Adviser in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
(b) Subject to the limitations contained in Section 7(c) below:
(i) the Trust shall indemnify and hold harmless the Adviser, its
directors, officers, employees and each person who controls the Adviser
(hereinafter referred to as "Covered Persons") to the fullest extent permitted
by law, against any and all claims, demands and liabilities (and all reasonable
expenses in connection therewith) to which the Adviser or any of its directors,
officers, employees or controlling persons may become subject by virtue of the
Adviser being or having been the Adviser of the Trust;
(ii) the words "claims", "actions", "suits", or "proceedings" shall
apply to all claims, actions, suit or proceedings (civil, criminal or other,
including appeals), actual or threatened while in office or thereafter, and the
words "liabilities" and "expenses" shall include, without limitation, attorneys'
fees and expenses, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
(c) No indemnification shall be provided hereunder to a Covered Person:
<PAGE>
(i) who shall have been adjudicated by a court or body before which
the proceedings was brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of its office or (B) not to have acted in
good faith in the reasonable relief that its action was in the best interest of
the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Covered Person did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office,
(A) by the court of other body approving the settlement; or
(B) by at least a majority of those Trustees who are neither
Interested persons of the Trust (as defined in the Investment Company Act of
1940, as amended) nor are parties to the matter, based upon a review of readily
available facts (as opposed to a full trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon
a review of readily available facts (as opposed to a full trial-type inquiry).
(d) The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not be exclusive
of or affect any other rights to which any Covered Person may now or hereafter
be entitled, shall continue as to a person who has ceased to be a Covered Person
and shall inure to the benefit of the personal representatives, successors and
assigns of each such person. Nothing contained herein shall affect any rights to
indemnification to which Trust personnel and any other persons, other than a
Covered Person, may be entitled by contract or otherwise by law.
(e) Expenses in connection with the investigation, preparation and
presentation of a defense to any claim, suit or proceeding of the character
described in subsection (b) of this Section 7 shall be paid by the Trust or by
the Fund, from time to time, prior to final disposition thereof, upon receipt of
an undertaking by or on behalf of such Covered Person that such amount will be
paid over by him to the Trust or the Fund if it is ultimately determined that he
is not entitled to indemnification under this Section 7; provided, however, that
either (i) such Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust shall be insured against losses arising out of any
such advance payments, or (iii) either a majority of the Trustees who are
neither Interested Persons of the Trust nor parties to the matter, or
independent legal counsel in a written opinion, shall have determined, based
upon a review of readily available facts (as opposed to a trial-type inquiry),
that there is reason to believe that such Covered Person will be entitled to
indemnification under this Section 7.
8. Duration and Termination. This Agreement shall be effective as of the
date on which the Fund is declared effective and, unless sooner terminated as
provided herein, shall continue until September 8, 1998. Thereafter, if not
terminated, this Agreement shall continue in effect as to the Fund for
successive periods of 12 months each, provided such continuance is specifically
approved
<PAGE>
at least annually (a) by the vote of a majority of those Trustees who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the Trustees or, with respect to the Fund, by the vote of a majority of the
outstanding voting securities of the Fund; provided, however, that this
Agreement may be terminated by the Trust as to the Funds at any time, without
the payment of any penalty, by the Trustees, or, with respect to the Fund, by
vote of a majority of the outstanding voting securities of the Fund on 60 days'
written notice to the Adviser, or by the Adviser as to the Fund at any time,
without payment of any penalty, on 90 days' written notice to the Trust. This
Agreement will immediately terminate in the event of its assignment by either
party hereto or by operation of law. (As used in this Agreement, the terms
"majority of the outstanding voting securities", "interested person" and
"assignment" shall have the same meanings as such terms have in the Investment
Company Act of 1940, as amended.)
9. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective with respect to the Fund until approved by vote of a majority of the
Fund's outstanding voting securities.
10. (A) Representations and Warranties. The Adviser hereby represents
and warrants as follows:
(1) The Adviser is exempt from registration under the Investment Adviser's
Act of 1940, as amended;
(2) The Adviser has all requisite authority to enter into, execute,
deliver and perform its obligations under this Agreement;
(3) This Agreement is the legal, valid and binding obligation of the
Adviser, and is enforceable in accordance with its terms; and
(4) The performance of the Adviser of its obligations under this Agreement
does not conflict with any law or regulation to which it is subject.
(B) Covenants. The Adviser covenants and agrees that, so long as this
Agreement shall remain in effect, (1) The Adviser shall remain exempt from
registration or shall become registered under the Investment Advisers Act of
1940; and (2) the performance by the Adviser of its obligations under this
Agreement shall not conflict with any law to which it is then subject.
(C) The Trust hereby covenants and agrees that, so long as this Agreement
shall remain in effect, it shall furnish the Adviser from time to time with
copies of the following documents, if and when effective, pertaining to the
Trust or the Fund and all amendments and supplements thereto: Declaration of
Trust, By-laws, Registration Statement (including prospectus and Statement of
Additional Information), Custodial Agreement, Transfer Agency Agreement,
Administration Agreement, Distribution Agreement, Rule 12b-1 Service Plan, Proxy
Statement and any other
<PAGE>
documents filed with the Securities and Exchange Commission, State securities
law administrators or other governmental agencies, and any other documents the
Adviser may reasonably request.
11. Notices. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid, (1) to the Adviser at 41 South High Street, Columbus, Ohio 43287, or
(2) to the Trust c/o SEI Fund Resources, One Freedom Valley Road, Oaks,
Pennsylvania 19456.
12. Waiver. With full knowledge of the circumstances and the effect of
its action, the Adviser hereby waives any and all rights which it may acquire in
the future against the property of any shareholder of the Trust, other than
shares of the Trust at their net asset value; which arise out of any action or
inaction of the Trust under this Agreement.
13. Captions. The captions in this Agreement are included for convenience
or reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.
14. Severability. If any provision of this Agreement shall be held or
made invalid or unenforceable by a court decision, statute, rule or otherwise,
the remainder shall not be thereby affected.
15. Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the parties and their respective successors.
16. Governing Law. This Agreement is executed in the state of Ohio, and
shall be governed by the laws of such state, without reference to conflict of
laws principles.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to
be executed on the day and year first above written.
Attest: THE MONITOR FUNDS
____________________ By:________________________
Attest: THE HUNTINGTON NATIONAL BANK
_____________________ By:__________________________
<PAGE>
Exhibit 9(iii)
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 11th day of January, 1996, by and between
The Monitor Funds, a Massachusetts business trust (the "Trust"), and SEI
Financial Management Corporation (the "Administrator"), a Delaware corporation.
WHEREAS, the Trust is an open-end diversified management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares of Common Stock; and
WHEREAS, the Trust desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
such portfolios of the Trust as the Trust and the Administrator may agree on
("Portfolios") and as listed on the schedules attached hereto ("Schedules") and
made a part of this Agreement, on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Administrator hereby agree as follows:
ARTICLE 1. Retention of the Administrator. The Trust hereby retains the
Administrator to act as the administrator of the Portfolios and to furnish the
Portfolios with the management and administrative services as set forth in
Article 2 below. The Administrator hereby accepts such employment to perform the
duties set forth below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust in any way and shall
not be deemed an agent of the Trust.
ARTICLE 2. Administrative and Accounting Services. The Administrator
shall perform or supervise the performance by others of other administrative
services in connection with the operations of the Portfolios, and, on behalf of
the Trust, will investigate, assist in the selection of and conduct relations
with custodians, depositories, accountants, legal counsel, underwriters, brokers
and dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Portfolios' operations. The
Administrator shall provide the Trustees of the Trust with such reports
regarding investment performance and compliance with investment policies and
applicable laws, rules and regulations as they may reasonably request but shall
have no responsibility for supervising the performance by any investment adviser
or sub-adviser of its responsibilities. The Administrator may appoint a sub-
administrator to perform certain of the services to be performed by the
Administrator hereunder.
The Administrator shall provide the Trust with administrative services,
regulatory reporting, fund accounting and related portfolio accounting services,
all necessary office space, equipment, personnel, compensation and facilities
(including facilities for Shareholders' meetings but not Trustees' meetings that
are not held at offices of the Administrator) for handling the affairs of the
<PAGE>
Portfolios and such other services as the Trustees may, from time to time,
reasonably request and the Administrator shall, from time to time, reasonably
determine to be necessary to perform its obligations under this Agreement. In
addition, at the request of the Trust's Board of Trustees (the "Trustees"), the
Administrator shall make reports to the Trustees concerning the performance of
its obligations hereunder.
Without limiting the generality of the foregoing, the Administrator shall:
(a) calculate contractual Trust expenses and control all disbursements for
the Trust, and as appropriate compute the Trust's yields, total return,
expense ratios, portfolio turnover rate and, if required, portfolio average
dollar-weighed maturity;
(b) assist Trust counsel with the preparation of prospectuses, statements
of additional information, registration statements, and proxy materials;
(c) prepare such reports, applications and documents (including reports
regarding the sale and redemption of Shares as may be required in order to
comply with Federal and state securities law) as may be necessary or
desirable to register the Trust's shares with state securities authorities,
monitor sale of Trust shares for compliance with state securities laws, and
file with the appropriate state securities authorities the registration
statements and reports for the Trust and the Trust's shares and all
amendments thereto, as may be necessary or convenient to register and keep
effective the Trust and the Trust's shares with state securities
authorities to enable the Trust to make a continuous offering of its
shares;
(d) develop and prepare communications to shareholders, including the
annual report to shareholders, coordinate mailing prospectuses, notices,
proxy statements, proxies and other reports to Trust shareholders, and
supervise and facilitate the solicitation of proxies solicited by the Trust
for all shareholder meetings, including tabulation process for shareholder
meetings;
(e) coordinate with Trust counsel the preparation and negotiation of, and
administer, contracts on behalf of the Trust with, among others, the
Trust's investment adviser, distributor, custodian, and transfer agent;
(f) maintain the Trust's general ledger and prepare the Trust's financial
statements, including expense accruals and payments, determine the net
asset value of the Trust's assets and of the Trust's shares, and supervise
the Trust's transfer agent with respect to the payment of dividends and
other distributions to shareholders;
(g) calculate performance data of the Trust and its portfolios for
dissemination to information services covering the investment company
industry;
(h) coordinate and supervise the preparation and filing of the Trust's tax
returns;
(i) examine and review the operations and performance of the various
organizations
<PAGE>
providing services to the Trust or any Portfolio of the Trust, including,
without limitation, the Trust's investment adviser, distributor, custodian,
transfer agent, Trust counsel and independent public accountants, and at
the request of the Trustees, report to the Trustees on the performance of
organizations;
(j) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and printing of the
Trust's semi-annual and annual reports to shareholders;
(k) provide internal legal and administrative services as requested by the
Trust from time to time;
(l) assist with the design, development, and operation of the Trust,
including new portfolio and class investment objectives, policies and
structure;
(m) provide individuals acceptable to the Trustees for nomination,
appointment, or election as officers of the Trust, who will be responsible
for the management of certain of the Trust's affairs as determined by the
Trustees;
(n) advise the Trust and its Trustees on matters concerning the Trust and
its affairs;
(o) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Trust in
accordance with the requirements of Rules 17g-1 and 17d-1(7) under the 1940
Act as such bonds and policies are approved by the Trust's Board of
Trustees;
(p) monitor and advise the Trust and its Portfolios on their registered
investment company status under the Internal Revenue Code of 1986, as
amended;
(q) perform all administrative services and functions of the Trust and
each Portfolio to the extent administrative services and functions are not
provided to the Trust or such Portfolio pursuant to the Trust's or such
Portfolio's investment advisory agreement, distribution agreement,
custodian agreement and transfer agent agreement;
(r) furnish advice and recommendations with respect to other aspects of
the business and affairs of the Portfolios as the Trust and the
Administrator shall determine desirable;
(s) prepare and file with the SEC the semi-annual report for the Trust on
Form N-SAR and all required notices pursuant to Rule 24f-2;
(t) review, and file with the National Association of Securities Dealers
where necessary, marketing materials relating to the Trust; and
(u) assist in the training and oversight of third parties used to perform
any of the services described herein.
<PAGE>
The Administrator shall also be available, at its expense, to perform
internal audit examinations no more frequently that once annually at the request
of the Trust. In addition, the Administrator will perform other services for
the Trust as agreed from time to time, including, but not limited to mailing the
annual reports of the Portfolios; preparing an annual list of shareholders; and
mailing notices of shareholders' meetings, proxies and proxy statements, for all
of which the Trust will pay the Administrator's out-of-pocket expenses.
In the performance of its duties hereunder, the Administrator will comply
with the provisions of the Declaration of Trust and the Bylaws of the Trust,
will safeguard and promote the welfare of the Trust, and will comply with the
policies that the Trustees may from time to time reasonably determine; provided
that such policies are not in conflict with this Agreement, the Trust's
governing documents, jor any applicable statutes or regulations.
ARTICLE 3. Allocation of Charges and Expenses.
----------------------------------
(A) The Administrator. The Administrator shall furnish at its own expense
the executive, supervisory and clerical personnel necessary to perform its
obligations under this Agreement. The Administrator shall also provide the items
which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Trust as well as all Trustees of the
Trust who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Trust retained by the Trustees of the Trust
to perform services on behalf of the Trust.
(B) The Trust. The Trust assumes and shall pay or cause to be paid all
other expenses of the Trust not otherwise allocated herein, including, without
limitation, organizational costs, taxes, expenses for legal and auditing
services, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing Shareholders, all expenses
incurred in connection with issuing and redeeming Shares, the costs of custodial
services, the cost of initial and ongoing registration of the Shares under
Federal and state securities laws, fees and out-of-pocket expenses of Trustees
who are not affiliated persons of the Administrator or the investment adviser to
the Trust or any affiliated corporation of the Administrator or the Investment
Adviser, the costs of Trustees' meetings, insurance, interest, brokerage costs,
litigation and other extraordinary or nonrecurring expenses, and all fees and
charges of investment advisers to the Trust.
ARTICLE 4. Compensation of the Administrator.
---------------------------------
(a) Administration Fee. For the services to be rendered, the facilities
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Trust shall pay to the Administrator compensation at an annual
rate specified in the Schedules. Such compensation shall be calculated and
accrued daily, and paid to the Administrator monthly.
If this Agreement becomes effective subsequent to the first day of a month
or terminates before the last day of a month, the Administrator's compensation
for that part of the month in which
<PAGE>
this Agreement is in effect shall be prorated in a manner consistent with the
calculation of the fees as set forth above. Payment of the Administrator's
compensation for the preceding month shall be made promptly.
(b) Compensation from Transactions. The Trust hereby authorizes any
entity or person associated with the Administrator which is a member of a
national securities exchange to effect any transaction on the exchange for the
account of the Trust which is permitted by Section 11 (a) of the Securities
Exchange Act of 1934 and Rule 11a2-2(T) thereunder, and the Trust hereby
consents to the retention of compensation for such transactions in accordance
with Rule 11a2-2(T)(a)(2)(iv).
(c) Survival of Compensation Rates. All rights of compensation under this
Agreement for services performed as of the termination date shall survive the
termination of this Agreement.
ARTICLE 5. Standard of Care of the Administrator; Indemnification. The
duties of the Administrator shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be asserted against the
Administrator hereunder. The Administrator shall not be liable for any error of
judgment or mistake of law or for any loss arising out of any investment or for
any act or omission in carrying out its duties hereunder, except a loss
resulting from willful misfeasance, bad faith or negligence in the performance
of its duties, or by reason of reckless disregard of its obligations and duties
hereunder, except as may otherwise be provided under provisions of applicable
law which cannot be waived or modified hereby. (As used in this Article 7, the
term "Administrator" shall include directors, officers, employees and other
agents of the Administrator as well as that corporation itself.)
So long as the Administrator or its agents act in good faith and with due
diligence and without negligence, the Trust assumes full responsibility and
shall indemnify the Administrator and hold it harmless from and against any and
all actions, suits and claims, whether groundless or otherwise, and from and
against any and all losses, damages, costs, charges, reasonable counsel fees and
disbursements, payments, expenses and liabilities (including reasonable
investigation expenses) arising directly or indirectly out of said
administration, transfer agency, and dividend disbursing relationships to the
Trust or any other service rendered to the Trust hereunder. The indemnity and
defense provisions set forth herein shall indefinitely survive the termination
of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Trust may be asked to indemnify or hold the
Administrator harmless, the Trust shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to identify and
notify the Trust promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Trust, but good faith failure to do so shall not affect the rights
hereunder.
The Trust shall be entitled to participate at its own expense or, if it so
elects, to assume the defense of any suit brought to enforce any claims subject
to this indemnity provision. If the Trust
<PAGE>
elects to assume the defense of any such claim, the defense shall be conducted
by counsel chosen by the Trust and satisfactory to the Administrator, whose
approval shall not be unreasonably withheld. In the event that the Trust elects
to assume the defense of any suit and retain counsel, the Administrator shall
bear the fees and expenses of any additional counsel retained by it. If the
Trust does not elect to assume the defense of a suit, it will reimburse the
Administrator for the reasonable fees and expenses of any counsel retained by
the Administrator.
The Administrator may apply to the Trust at any time for instructions and
may consult counsel or the independent accountants for the Trust with respect to
any matter arising in connection with the Administrator's duties, and the
Administrator shall not be liable or accountable for any action taken or omitted
by it in good faith in accordance with such instruction or with the opinion of
such counsel or accountants.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. Nor shall the Administrator be held to have
notice of any change of authority of any officers, employee or agent of the
Trust until receipt of written notice thereof from the Trust.
ARTICLE 6. Activities of the Administrator. The services of the
Administrator rendered to the Trust are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that Trustees, officers, employees
and Shareholders of the Trust are or may be or become interested in the
Administrator, as directors, officers, employees and shareholders or otherwise
and that directors, officers, employees and shareholders of the Administrator
and its counsel are or may be or become similarly interested in the Trust, and
that the Administrator may be or become interested in the Trust as a Shareholder
or otherwise.
ARTICLE 7. Confidentiality. The Administrator agrees on behalf of itself
and its employees to treat confidentially all records and other information
relative to the Trust and its prior, present or potential Shareholders and
relative to the Adviser and its prior, present or potential customers, except,
after prior notification to and approval in writing by the Trust, which approval
shall not be unreasonably withheld and may not be withheld where the
Administrator may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
ARTICLE 8. Equipment Failures. In the event of equipment failures beyond
the Administrator's control, the Administrator shall, at no additional expense
to the Trust, take reasonable steps to minimize service interruptions but shall
have no liability with respect to such service interruptions if such reasonable
steps are taken. The Administrator shall develop and maintain a plan for
recovery from equipment failures which may include contractual arrangements with
appropriate parties making reasonable provision for emergency use of electronic
data processing equipment to the extent appropriate equipment is available.
ARTICLE 9. Compliance With Governmental Rules and Regulations. The
Administrator undertakes to comply with all applicable requirements of the 1933
Act, the 1934 Act, the 1940 Act
<PAGE>
and any laws, rules and regulations of governmental authorities having
jurisdiction with respect to the duties to be performed by the Administrator
hereunder.
ARTICLE 10. Duration of this Agreement. The Term of this Agreement shall
be as specified in the Schedules.
This Agreement shall not be assignable by either party without the written
consent of the other party. As used in this paragraph, the term "assignment"
shall be construed by reference to the term as defined and interpreted under the
1940 Act.
The Administrator shall be entitled to collect form the Trust, in addition
to any other compensation owing to the Administrator, the amount of all the
Administrator's cash disbursements for services in connection with the
Administrator's activities in effecting such termination, including without
limitation, the delivery to the Trust and/or its designess of the Trust's
property, records, instruments and documents, or any copies thereof. Subsequent
to such termination for a reasonable fee to be paid by the Trust, the
Administrator will provide the Trust with reasonable access to any Trust
documents or records remaining in its possession.
ARTICLE 11. Amendments. This Agreement or any part hereof may be changed
or waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
ARTICLE 12. Certain Records. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and 31a-
2 under the 1940 Act which are prepared or maintained by the Administrator on
behalf of the Trust shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Trust and will be made available
to or surrendered promptly to the Trust on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection.
ARTICLE 13. Definitions of Certain Terms. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 14. Notice. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Trust, at c/o Norman A. Jacobs, President, Trust Division, The
Huntington National Bank, 41 S. High Street, 11th Floor, Columbus, Ohio 43287;
and if to the Administrator at One Freedom Valley Road, Oaks, PA 19456,
Attention: General Counsel.
<PAGE>
ARTICLE 15. Governing Law. This Agreement shall be construed in
accordance with the laws of the Commonwealth of Massachusetts and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the
Commonwealth of Massachusetts, or any of the provisions herein, conflict with
the applicable provisions of the 1940 Act, the latter shall control.
ARTICLE 16. Multiple Originals. This Agreement may be executed in two or
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
ARTICLE 17. Limitation of Liability. The Administrator is hereby
expressly put on notice of the limitation of liability as set forth in Article
IV of the Trust's Declaration of Trust and agrees that the obligations pursuant
to this Agreement of a particular Portfolio and of the Trust with respect to
that Portfolio shall be limited solely to the assets of that Portfolio, and the
Administrator shall not seek satisfaction of any such obligation from any other
Portfolio, the shareholders of any Portfolio, the Trustees, officers, employees
or agents of the Trust, or any of them.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
THE MONITOR FUNDS
By: /S/ KATHRYN. L. STANTON
Kathryn L. Stanton, Vice President
SEI FINANCIAL MANAGEMENT CORPORATION
By: /S/ KEVIN P. ROBINS, SR.
Kevin P. Robins, Sr. Vice President
<PAGE>
REVISED SCHEDULE DATED NOVEMBER 20, 1997
TO THE ADMINISTRATION AGREEMENT
DATED AS OF JANUARY 11, 1996
BETWEEN
THE MONITOR FUNDS
AND
SEI FINANCIAL MANAGEMENT CORPORATION
Portfolios: This Agreement shall apply to all Portfolios of the Trust, either
now in the future created. The following is a listing of the
current portfolios of the Trust: Money Market Fund, Ohio
Municipal Money Market Fund, U.S. Treasury Money Market Fund,
Fixed Income Securities Fund, Growth Fund, Income Equity Fund,
Mortgage Securities Fund, Short/Intermediate Fixed Income
Securities Fund, Ohio Tax Free Fund and Michigan Tax-Free Fund
(collectively, the "Portfolios").
Fees: Pursuant to Article 4, Section A, the Trust shall pay the
Administrator compensation for services rendered to the
Portfolios at an annual rate, which is calculated daily and paid
monthly, at a maximum administrative fee equal to the greater of
0.11% of each Portfolios' average daily net assets.
Term: Pursuant to Article 10, the term of this Agreement shall commence
on January 11, 1996 and shall remain in effect through January
11, 1997 ("Initial Term"). This Agreement shall continue in
effect for successive periods of one year after the Initial Term,
unless terminated by either party, with or without cause, on not
less than 60 days prior written notice to the other party. In the
event of a material breach of this Agreement by either party, the
non-breaching party shall notify the breaching party in writing
of such breach and upon receipt of such notice, the breaching
party shall have 45 days to remedy the breach or the nonbreaching
party may immediately terminate this Agreement.
In addition, the Trust may terminate this Agreement immediately upon:
(i) the issuance of a final judgment by a court of competent
jurisdiction or of a final order by the Securities and Exchange
Commission, which judgment or order holds that the Administrator
has committed a felony or a misdemeanor involving the purchase or
sale of any security, or arising out of its conduct as an
administrator, a distributor, or an affiliate of an investment
company;
(ii) the dissolution or liquidation of the Administrator or other
cessation of its business other than a reorganization or
recapitalization of the Administrator as an ongoing business; or
(iii) (a) the authorization of commencement of a voluntary case
regarding the Administrator under Title 11 of the United States
Code, as from time to time amended, or any other applicable law
of any jurisdiction relating to the liquidation
<PAGE>
or reorganization of debtors or to the modification or alteration
of the rights of creditors; (b) consent to or acquiescence in any
involuntary case under such Title 11 or other such law; or (c)
the commencement of any involuntary case under such Title 11 or
other such law, which case is not dismissed within 30 days after
the filing thereof.
<PAGE>
Exhibit 9(iv)
SUB-ADMINISTRATION AGREEMENT
AGREEMENT made this 24th day of March, 1996, between SEI Financial
Management Corporation ("SEI") a Delaware corporation, and The Huntington
National Bank (the "Sub-Administrator"), a national banking association.
WHEREAS, SEI has entered into an Administration Agreement, dated as of
January 11, 1996 (the "Administration Agreement") with The Monitor Funds (the
"Trust"), a Massachusetts business trust, concerning the provision of management
and administrative services for the investment portfolios of the Trust
identified on Schedule A hereto, as such Schedule shall be amended from time to
time (individually referred to herein as the "Fund" and collectively as the
"Funds"); and
WHEREAS, SEI desires to retain the Sub-Administrator to assist it in
performing administrative services with respect to each Fund and the Sub-
Administrator is willing to perform such services on the terms and conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Sub-Administrator. (i) Effective upon the effective date of
this Agreement, the Sub-Administrator shall perform all of following services
for each portfolio of the Trust other than the Mortgage Securities Portfolio:
(a) calculate contractual Trust expenses, and as appropriate compute the
Trust's yields, total return, expense ratios, portfolio turnover rate and,
if required, portfolio average dollar-weighted maturity;
(b) maintain the Trust's general ledger, including expense accruals and
payments, determine the net asset value of the Trust's assets and of the
Trust's shares, and supervise the Trust's transfer agent with respect to
the payment of dividends and other distributions to shareholders;
(c) monitor and advise the Trust and its Portfolios on their registered
investment company status under the Internal Revenue Code of 1986, as
amended;
(d) file with the SEC the semi-annual report for the Trust on Form N-SAR
required notices pursuant to Rule 24f-2; and
(e) coordinate the audits by the independent accountants for the Trust.
(ii) The Sub-Administrator will assist the SEI with the following activities for
the Trust:
(a) development and preparation of the semi-annual and annual reports to
shareholders;
<PAGE>
and
(b) prepare financial statements.
(iii) In the future as mutually agreed to by the parties, the Sub-Administrator
will perform the following additional activities for the Trust:
(a) assistance with the layout and printing of publicly disseminated
prospectuses and assistance with, and coordination of, the layout and
printing of the Trust's semi-annual and annual reports to shareholders;
(b) filing with the SEC of the semi-annual report for the Trust on Form
N-SAR and all required notices pursuant to Rule 24f-2;
(c) development and preparation of semi-annual and annual reports to
shareholders;
(d) calculation of total return performance;
(e) preparation, analysis, and periodic review of expense accruals' for
the Trust's fiscal budget;
(f) monitoring compliance with guidelines set forth for the Trust pursuant
to the prospectus and Investment Company Act of 1940;
(g) preparation of materials required for the quarterly meeting of the
Board of Trustees; and
(h) assisting in the preparation of SEC regulatory filings.
The Sub-Administrator will keep and maintain all books and records relating
to its services in accordance with Rule 31a-1 under the 1940 Act.
In the performance of its duties hereunder, the Sub-Administrator will
comply with the provisions of the Declaration of Trust and the Bylaws of the
Trust, will safeguard and promote the welfare of the Trust, and will comply with
the policies that the Trustees may from time to time reasonably determine;
provided that such policies are not in conflict with this Agreement, the Trust's
governing documents, or any applicable statutes or regulations.
2. Training of the Sub-Administrator. At the Sub-Administrator's
reasonable request the Administrator will provide training to the Sub-
Administrator with regard to the provision of certain administrative services,
including, but not limited to, training regarding: compliance monitoring,
preparation and monitoring of the Trust's fiscal budgets, the preparation of
financial statements, calculating dividend and capital gains distributions,
distribution requirements as mandated by the Internal Revenue Service,
regulatory filings required by the Securities and Exchange Commission, and the
analysis of the Trust's expense accruals.
<PAGE>
3. Compensation* Reimbursement of Expenses. SEI shall pay the
SubAdministrator for the services to be provided by the Sub-Administrator under
this Agreement in accordance with, and in the manner set forth in, Schedule B
hereto. In addition, SEI agrees to reimburse the Sub-Administrator for the Sub-
Administrator's reasonable out-of-pocket expenses in providing services
hereunder.
4. Effective Date. This Agreement shall become effective with respect to
a Fund as of the date first written above (or, if a particular Fund is not in
existence on that date, on the date specified in the amendment to Schedule A to
this Agreement relating to such Fund or, if no date is specified, the date on
which such amendment is executed) (the "Effective Date").
5. Term. This Agreement shall continue in effect with respect to a Fund,
unless earlier term-limted by either party hereto as provided hereunder, until
January 11, 1998; and thereafter shall be renewed automatically for successive
one-year terms unless written notice not to renew is given by the non-renewing
party to the other party at least 60 days prior to the expiration of the then-
current term; provided, however, that after such termination for so long as the
Sub-Administrator, with the written consent of SEI, in fact continues to perform
any one or more of the services contemplated by this Agreement or any schedule
or exhibit hereto, the provisions of this Agreement, including without
limitation the provisions dealing with indemnification, shall continue in full
force and effect. Notwithstanding anything to the contrary herein, this
Agreement shall terminate automatically upon termination of the Administration
Agreement. Either party to this Agreement may terminate such Agreement prior to
the expiration of the initial term set forth above by providing the other party
with written notice of such termination at least 60 days prior to the date upon
which such termination shall become effective. Compensation due the Sub-
Administrator and unpaid by SO upon such termination shall be immediately due
and payable upon and notwithstanding such termination. The Sub-Administrator
shall be entitled to collect from SEI, in addition to the compensation described
under paragraph 2 hereof, the amount of all the SubAdministrator's cash
disbursements for services in connection with the Sub-Administrator's activities
in effecting such termination, including without limitation, the delivery to
SEI, the Trust, and/or their respective designees of the Trust's property,
records, instruments and documents, or any copies thereof. Subsequent to such
termination for a reasonable fee to be paid by SEI, the Sub-Administrator will
provide SEI and/or the Trust with reasonable access to any Trust documents or
records remaining in its possession.
6. Standard of Care of the Sub-Administrator; Indemnification. The
duties of the Sub-Administrator shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be asserted against the Sub-
Administrator hereunder. The SubAdministrator shall not be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission in carrying out its duties hereunder, except a loss
resulting from willful misfeasance, bad faith or negligence in the performance
of its duties, or by reason of reckless disregard of its obligations and duties
hereunder, except as may otherwise be provided under provisions of applicable
law which cannot be waived or modified hereby. (As used in this Article 5, the
term "Sub-Administrator" shall include directors, officers, employees and other
agents of the Sub-Administrator as well as that corporation itself.)
<PAGE>
So long as the Sub-Administrator or its agents act in good faith and with
due diligence and without negligence, the Trust assumes full responsibility and
shall indemnify the SubAdministrator and hold it harmless from and against any
and all actions, suits and claims, whether groundless or otherwise, and from and
against any and all losses, damages, costs, charges, reasonable counsel fees and
disbursements, payments, expenses and liabilities (including reasonable
investigation expenses) arising directly or indirectly out of said
subadministration relationship to the Trust or any other service rendered to the
Trust hereunder. The indemnify and defense provisions set forth herein shall
indefinitely survive the termination of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Trust may be asked to indemnify or hold the
Sub-Administrator harmless, the Trust shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Sub-Administrator will use all reasonable care to identify
and notify the Trust promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Trust, but good faith failure to do shall not affect the rights hereunder.
The Trust shall be entitled to participate at its own expense or, if it so
elects, to assume the defense of any suit brought to enforce any claims subject
to this indemnity provision. If the Trust elects to assume the defense of any
such claim, the defense shall be conducted by counsel chosen by the Trust and
satisfactory to the Sub-Administrator, whose approval shall not be unreasonably
withheld. In the event that the Trust elects to assume the defense of any suit
and retain counsel, the Sub-Administrator shall bear the fees and expenses of
any additional counsel retained by it. If the Trust does not elect to assume
the defense of a suit, it will reimburse the Sub-Administrator for the
reasonable fees and expenses of any counsel retained by the Sub-Administrator.
The Sub-Administrator may apply to the Trust at any time for instructions
and may consult counsel or the independent accountants for the Trust with
respect to any matter arising in connection with the Sub-Administrator's duties,
and the Sub-Administrator shall not be liable or accountable for any action
taken or omitted by it in good faith in accordance with such instruction or with
the opinion of such counsel or accountants.
Also, the Sub-Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. Nor shall the Sub-Administrator be held to
have notice of any change of authority of any officers, employee or agent of the
Trust until receipt of written notice thereof from the Trust.
So long as SEI acts in good faith and with due diligence and without
negligence, the Sub Administrator shall assume full responsibility and shall
indemnify and hold SEI and hold it harmless from and against any and all
actions, claims, costs and expenses arising directly or indirectly out of the
services that the Sub-Administrator has agreed to undertake pursuant to the
terms of this Agreement. The indemnify and defense provisions set forth herein
shall indefinitely survive the termination of this Agreement.
<PAGE>
7. Record Retention and Confidentiality. The Sub-Administrator shall
keep and maintain on behalf of the Trust all books and records which the Trust
and the Sub-Administrator are, or may be, required to keep and maintain in
connection with the services to be provided hereunder pursuant to any applicable
statutes, rules and regulations, including without limitation Rules 31a-1 and
31a-2 under the 1940 Act. The Sub-Administrator further agrees that all such
books and records shall be the property of the Trust and to make such books and
records available for inspection by the Trust, by SEI, or by the Securities and
Exchange Commission at reasonable times and otherwise to keep confidential all
books and records and other information relative to the Trust and its
shareholders; except when requested to divulge such information by duly-
constituted authorities or court process.
8. Uncontrollable Events. The Sub-Administrator assumes no
responsibility hereunder, and shall not be liable, for any damage, loss of data,
delay or any other loss whatsoever caused by events beyond its reasonable
control.
9. Rights of Ownership. All computer programs and procedures developed
to perform the services to be provided by the Sub-Administrator under this
Agreement are the property of the Sub-Administrator. All records and other data
except such computer programs and procedures are the exclusive property of the
Trust and all such other records and data will be furnished to SEI and/or the
Trust in appropriate form as soon as practicable after termination of this
Agreement for any reason.
10. Return of Records. The Sub-Administrator may at its option at any
time, and shall promptly upon the demand of SEI and/or the Trust, turn over to
SEI and/or the Trust and cease to retain the Sub-Administrator's files, records
and documents created and maintained by the Sub-Administrator pursuant to this
Agreement which are no longer needed by the SubAdministrator in the performance
of its services or for its legal protection. If not so turned over to SEI
and/or the Trust, such documents and records will be retained by the
Sub-Administrator for six years from the year of creation. At the end of such
six-year period, such records and documents will be turned over to SEI and/or
the Trust unless the Trust authorizes in writing the destruction of such records
and documents.
11. Representations of SEI. SEI certifies to the Sub-Administrator that
this Agreement has been duly authorized by SEI and, when executed and delivered
by SEI, will constitute a legal, valid and binding obligation of SEI,
enforceable against SEI in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured par-ties.
12. Representations of the Sub-Administrator. The Sub-Administrator
represents and warrants that: (1) the various procedures and systems which the
Sub-Administrator has implemented with regard to safeguarding from loss or
damage attributable to fire, theft, or any other cause of the records and other
data of the Trust and the Sub-Administrator's records, data, equipment
facilities and other property used in the performance of its obligations
hereunder are adequate and that it will make such changes therein from time to
time as are required for the secure performance of it obligations hereunder, and
(2) this Agreement has been duly authorized by the Sub-Administrator
<PAGE>
and, when executed and delivered by the Sub-Administrator, will constitute a
legal, valid and binding obligation of the Sub-Administrator, enforceable
against the Sub-Administrator in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
13. Insurance. The Sub-Administrator shall notify SEI should any of its
insurance coverage be cancelled or reduced. Such notification shall include the
date of change and the reasons therefor. The Sub-Administrator shall notify SEI
of any material claims against it with respect to services performed under this
Agreement, whether or not they may be covered by insurance, and shall notify SEI
from time to time as may be appropriate of the total outstanding claims made by
the Sub-Administrator under its insurance coverage.
14. Notices. Any notice provided hereunder shall be sufficiently given
when sent by registered or certified mail to SEI at the following address: One
Freedom Valley Road, Oaks, PA 19456, Attn: Legal Department, and to the Sub-
Administrator at the following address: 41 S. High Street, 11th Floor, Columbus,
Ohio 43287 or at such other address as either party may from time to time
specify in writing to the other party pursuant to this Section.
15. Headings. Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
16. Assignment. This Agreement and the rights and duties hereunder shall
not be assignable with respect to a Fund by either of the parties hereto except
by the specific written consent of the other party and with the specific written
consent of the Trust.
17. Governing Law. This Agreement shall be governed by and provisions
shall be construed in accordance with the laws of The Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
[SEAL] SEI FINANCIAL MANAGEMENT CORPORATION
By:
Title:
THE HUNTINGTON NATIONAL BANK
By:
Title:
Dated: March 24, 1996
<PAGE>
REVISED SCHEDULE A DATED NOVEMBER 20, 1997
TO THE SUB-ADMINISTRATION AGREEMENT
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
THE HUNTINGTON NATIONAL BANK
NAME OF FUND
- ------------
The Monitor Money Market Fund
The Monitor U.S. Treasury Money Market Fund
The Monitor Ohio Municipal Money Market Fund
The Monitor Growth Fund
The Monitor Income Fund
The Monitor Mortgage Securities Fund
The Monitor Ohio Tax-Free Fund
The Monitor Fixed Income Securities Fund
The Monitor Short/Intermediate Fixed Income Securities Fund
The Monitor Michigan Tax-Free Fund
SEI FINANCIAL MANAGEMENT CORPORATION
By:
Title:
THE HUNTINGTON NATIONAL BANK
By:
Title:
<PAGE>
REVISED SCHEDULE B DATED NOVEMBER 20, 1997
TO THE SUB-ADMINISTRATION AGREEMENT
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
THE HUNTINGTON NATIONAL BANK
<TABLE>
<CAPTION>
Name of Fund Compensation*
- ------------ ------------
<S> <C>
The Monitor Money Market Fund Annual Rate of four one-hundredths of
The Monitor U.S. Treasury Money Market Fund one percent (.04%) of each such Fund's
The Monitor Ohio Municipal Money Market Fund average daily net assets; provided that
The Monitor Growth Fund at such time as the parties agree that
The Monitor Income Fund Huntington is performing a substantial
The Monitor Mortgage Securities Fund portion of all of the activities described in
The Monitor Ohio Tax-Free Fund Section 1(iii)(a)-h), the compensation to be paid
The Monitor Fixed Income Securities Fund hereunder shall be at the annual rate of five one-
The Monitor Short/Intermediate Fixed Income hundredths of one percent (.05 %) of each
Securities Fund such Fund's average daily net assets.
The Monitor Michigan Tax-Free Fund
</TABLE>
SEI FINANCIAL MANAGEMENT CORPORATION
By: ______________________________
Title: _____________________________
THE HUNTINGTON NATIONAL BANK
By: _____________________________
Title: ____________________________
*All fees are computed daily and paid periodically
<PAGE>
Exhibit 10
ROPES & GRAY
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, D.C. 20005-3333
September 5, 1997
The Monitor Funds
The Huntington Trust Company, N.A.
41 South High Street
Columbus, Ohio 43215
Gentlemen:
You have registered under the Securities Act of 1933, as amended (the "1933
Act") an indefinite number of shares of beneficial interest ("Shares") of the
Monitor Funds ("Trust"), as permitted by Rule 24f-2 under the Investment Company
Act of 1940, as amended (the "1940 Act"). You propose to file a post-effective
amendment on Form N-1A (the "Post-Effective Amendment") to your Registration
Statement as required by Section 10(a)(3) in order to register under the 1933
Act Investment and Trust Shares of The Monitor Michigan Tax-Free Fund, a series
of the Trust (the "Series").
We have examined your Agreement and Declaration of Trust on file in the
office of the Secretary of The Commonwealth of Massachusetts and the Clerk of
the City of Boston. We have also examined a copy of your Bylaws and such other
documents, receipts and records as we have deemed necessary for the purpose of
this opinion.
Based upon the foregoing, we are of the opinion that the issue and sale of
the authorized but unissued Investment and Trust Shares of the Series have been
duly authorized under Massachusetts law. Upon the original issue and sale of
your authorized but unissued Investment and Trust Shares of the Series and upon
receipt of the authorized consideration therefor in an amount not less than the
net asset value of the Investment and Trust Shares established and in force at
the time of their sale, the Investment and Trust Shares of the Series issued
will be validly issued, fully paid and non-assessable.
The Monitor Funds is an entity of the type commonly known as a
"Massachusetts business trust." Under Massachusetts law, shareholders could,
under certain circumstances, be held personally liable for the obligations of
the Trust. However, the Agreement and Declaration of Trust provides for
indemnification out of the property of a particular series of Shares for all
loss and expenses of any shareholder of that series held personally liable
solely by reason of his being or having been a shareholder. Thus, the risk of
shareholder liability is limited to circumstances in which that series of Shares
itself would be unable to meet its obligations.
<PAGE>
We understand that this opinion is to be used in connection with the filing
of the Post-Effective Amendment. We consent to the filing of this opinion with
and as part of your Post-Effective Amendment.
Sincerely,
/S/ ROPES & GRAY
Ropes & Gray
<PAGE>
Exhibit 11(i)
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Prospectuses and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 23 to the Registration Statement on Form N-1A (File No. 33-11905)
(the "Registration Statement") of our report dated February 14, 1997, relating
to the financial statements and financial highlights appearing in the 1996
Annual Report to Shareholders of The Monitor Funds, which is also incorporated
by reference into the Registration Statement. We also consent to the references
to us under the heading "Financial Statements" in the Statement of Additional
Information.
/S/ PRICE WATERHOUSE LLP
Columbus, Ohio
September 5, 1997
<PAGE>
Exhibit 11(ii)
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the references to us in the Prospectuses, under the heading
"Management of the Trust--Independent Auditors", and in the Statement of
Additional Information, under the heading "Independent Auditors", each of
which constitutes part of this Post-Effective Amendment No. 23 to the
Registration Statement on Form N-1A (File No. 33-11905) of The Monitor Funds.
/S/ KPMG PEAT MARWICK LLP
Columbus, Ohio
September 5, 1997
<PAGE>
Exhibit 15
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 (ii) 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 (the "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 Investments
Distribution Co. Company ("SEI") 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 SEI. Any payments
made by SEI to Brokers and Administrators with monies 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
execution of an exhibit adopting this Plan with respect to such Class.
<PAGE>
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 office.
12. All agreements with any person relating to the implementation of this
Plan shall be in writing and any agreement related to this Plan shall be subject
to termination, without penalty, pursuant to the provisions of Paragraph 10
herein.
13. 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.
2
<PAGE>
14. This Plan shall be construed in accordance with and governed by the
laws of the Commonwealth of Massachusetts.
3
<PAGE>
EXHIBIT A
(as amended through September 5, 1997)
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
Name of Series Effective Date 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%
The Monitor Michigan Tax-Free Fund
(Investment Shares)........................ November 20, 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.
Pursuant to Section 6 of the Plan, the undersigned has executed this
Exhibit A as of September 5, 1997, evidencing the effectiveness of the Plan to
the Class of Investment Shares of all series of The Monitor Funds listed above.
/S/ DAVID G. LEE
David G. Lee, President of The Monitor Funds
4
<PAGE>
Exhibit 18
THE MONITOR FUNDS
MULTIPLE CLASS PLAN
This Multiple Class Plan (the "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.
1. Purpose
-------
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 throughout
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 National Bank or its affiliates or correspondent banks.
d. Minimum Investment Amounts: The minimum investments in the Covered
Classes is $1,000, 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
1
<PAGE>
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 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
-----------------
Shareholdes 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 pay 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.
2
<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
Classes of Shares of the portfolios of The Monitor Funds set forth above.
Witness the due execution hereof this April 8, 1995
THE MONITOR FUNDS
/S/ EDWARD C. GONZALES
President
3
<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
Classes of Shares of the portfolios of The Monitor Funds set forth above,
effective on January 30, 1997.
Witness the due execution hereof this October 23, 1996
THE MONITOR FUNDS
/S/ DAVID G. LEE
President
4
<PAGE>
EXHIBIT C
to the
Multiple Class Plan
THE MONITOR FUNDS
Investment Shares
Trust Shares
The Monitor Michigan Tax-Free Fund
This Multiple Class Plan is adopted by The Monitor Funds with respect to the
Classes of Shares of the portfolio of The Monitor Fund set forth above,
effective on November 20, 1997.
Witness the due execution hereof this September 5, 1997
THE MONITOR FUNDS
/S/ DAVID G. LEE
President
5
<PAGE>
Exhibit 24
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/ 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
