<PAGE>
As filed with the Securities and Exchange Commission on March 1, 1999
Registration Nos. 33-11905, 811-5010
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 28 [X]
and
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 29 [X]
THE HUNTINGTON 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)
Mark Nagle
SEI Fund Resources
One Freedom Valley Road
Oaks, Pennsylvania 19456
(Name and Address of Agent for Service)
Copies to:
Melanie Mayo West, Esq.
Dykema Gossett PLLC
1577 N. Woodward Avenue, Suite 300
Bloomfield Hills, Michigan 48304-2820
Fax: (248) 203-0763
Approximate Date of Proposed Public Offering: Immediately, upon effectiveness.
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It is proposed that this filing will become effective (check appropriate box):
[ ] 60 days after filing pursuant to Rule 485(a)(1), or
[X] On April 30, 1999, pursuant to Rule 485(a)(1), or
[ ] 75 days after filing pursuant to Rule 485(a)(2), or
[ ] On , 199__, pursuant to Rule 485(a)(2).
[ ] Immediately upon filing pursuant to Rule 485(b), or
[ ] On, _______, 199__, pursuant to Rule 485(b)
If appropriate, check 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.
Title of Securities Being Registered: Shares of Beneficial Interest.
<PAGE>
CROSS-REFERENCE SHEET
This Registration Statement relates to the each of the following portfolios of
the Huntington Funds: Money Market Fund; U.S. Treasury Money Market Fund; Ohio
Municipal Money Market Fund; Growth Fund; Income Equity Fund; Mortgage
Securities Fund; Ohio Tax-Free Fund; Michigan Tax-Free Fund; Fixed Income
Securities Fund; Intermediate Government Income Fund; and Short/Intermediate
Fixed Income Securities Fund. Each of these portflios offers two separate
classes of shares, Trust Shares and Investment Shares, except for the
Short/Intermediate Fixed Income Securities Fund, which only offers Trust Shares.
This Cross-Reference Sheet includes information relating to each class of each
Fund to facilitate the cross-reference process.
<TABLE>
<CAPTION>
Form N-1A Part A Item Location in Prospectus
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<S> <C>
Item 1. Front and Back Cover Pages................................. Front and Back Cover Pages
Item 2. Risk/Return Summary: Investments, Risks, and
Performance................................................ Fund Summaries; Risk/Return Information
Item 3. Risk/Return Summary: Fee Table............................ Fees and Expenses
Item 4. Investment Objectives, Principal Strategies, and
Related Risks.............................................. Fund Summaries
Item 5. Management's Discussion of Fund Performance................ Incorporated by reference to the Registrant's Annual
Report dated December 31, 1998 (File No. 811-5010)
Item 6. Management, Organization, and Capital Structure............ Management of the Trust; Organization of the Trust
Item 7. Shareholder Information.................................... About Purchasing Investment/Trust Shares; About
Exchanging Investment/Trust Shares Among the
Funds; About Redeeming Investment/Trust Shares;
Dividends and Distributions; Tax Consequences
Item 8. Distribution Arrangements.................................. Distribution of the Funds
Item 9. Financial Highlights Information........................... Financial Highlights
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Form N-1A Part B Item Location in Statement of Additional
- --------------------- -----------------------------------
Information
-----------
<S> <C>
Item 10. Cover Page and Table of Contents.......................... Cover Page; Table of Contents
Item 11. Fund History.............................................. General Information
Item 12. Description of the Fund and Its Investments and Risks..... Investment Practices and Risks; Investment Restrictions
Item 13. Management of the Fund.................................... Management of the Trust - Trustees and Officers;
-Trustee Compensation
Item 14. Control Persons and Principal Holders of Securities....... Management of the Trust - Principal Holders of Securities
Item 15. Other Services............................................ Management of the Trust - Investment Adviser; -
Administrator; - Sub-Administrator; - Distributor; -
Distribution Plan (12b-1 Fees)
Item 16. Brokerage Allocation and Other Practices.................. Management of the Trust - Portfolio Transactions;
- Brokerage Allocation and Other Practices
Item 17. Capital Stock and Other Securities........................ Shareholder Rights
Item 18. Purchase, Redemption, and Pricing of Shares............... Additional Information on Purchases, Exchanges
and Redemptions; Determination of Net Asset
Value
Item 19. Taxation of the Fund...................................... Taxes
Item 20. Underwriters.............................................. Management of the Trust - Distributor
Item 21. Calculation of Performance Data........................... Performance Information
Item 22. Financial Statements...................................... Incorporated by Reference to the Registrant's
Annual Report dated December 31, 1998 (File No.811-5010)
</TABLE>
Form N-1A Part C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Post-Effective Amendment to the
Registration Statement.
<PAGE>
INVESTMENT SHARES PROSPECTUS
APRIL 30, 1999
Money Market Funds
The Huntington Money Market Fund
The Huntington Ohio Municipal Money Market Fund
The Huntington U.S. Treasury Money Market Fund
Equity Funds
The Huntington Growth Fund
The Huntington Income Equity Fund
Income Funds
The Huntington Mortgage Securities Fund
The Huntington Ohio Tax-Free Fund
The Huntington Michigan Tax-Free Fund
The Huntington Fixed Income Securities Fund
The Huntington Intermediate Government Income Fund
[Artwork]
[Huntington Funds logo]
As with all mutual funds, the Securities and Exchange Commission does not
guarantee that the information contained in this Prospectus is accurate or
complete, nor has it judged any of the Huntington Funds for investment merit. It
is a criminal offense to state otherwise.
Also, like other investments, you could lose money on your investment in a Fund.
Your investment in a Fund is not a bank deposit and it is not insured or
guaranteed by the FDIC or any other government agency.
<PAGE>
In connection with the offering made by this Prospectus, The Huntington Funds
have not authorized any person to give any information or to make any
representations other than those contained in this Prospectus. Consequently, you
may not rely upon any such information given or representations made as having
been authorized by a Fund or the Distributor. This Prospectus does not
constitute an offering by a Fund or by the Distributor in any jurisdiction in
which such offering may not lawfully be made.
<PAGE>
TABLE OF CONTENTS
INTRODUCTION......................................1
FUND SUMMARIES....................................1
The Money Market Funds............................2
Money Market Fund........................2
Ohio Municipal Money Market Fund.........2
U.S. Treasury Money Market Fund..........3
Equity Funds......................................3
Growth Fund..............................3
Income Equity Fund.......................4
Income Funds......................................4
Mortgage Securities Fund.................4
Ohio Tax-Free Fund.......................5
Michigan Tax-Free Fund...................6
Fixed Income Securities Fund.............7
Intermediate Government Income Fund......7
Principal Investments.............................9
RISK/RETURN INFORMATION..........................10
Money Market Fund.......................10
Ohio Municipal Money Market Fund........10
U.S. Treasury Money Market Fund.........11
Growth Fund.............................11
Income Equity Fund......................13
Mortgage Securities Fund................13
Ohio Tax-Free Fund......................14
Michigan Tax-Free Fund..................14
Fixed Income Securities Fund............15
Intermediate Government Income Fund.....15
FEES AND EXPENSES................................16
FINANCIAL HIGHLIGHTS.............................18
ABOUT PURCHASING INVESTMENT SHARES...............26
Systematic Investment Program...........29
ABOUT EXCHANGING INVESTMENT SHARES
AMONG THE FUNDS.........................29
ABOUT REDEEMINGINVESTMENT SHARES.................31
Systematic Withdrawal Program...........33
Redemption of Accounts with Balances
Under $1,000..........................33
MANAGEMENT OF THE TRUST..........................33
Investment Adviser......................33
Portfolio Managers......................33
DISTRIBUTION OF THE FUNDS........................34
Distribution Plan (12b-1 Fees)..........35
DIVIDENDS AND DISTRIBUTIONS......................35
Distribution Options....................35
TAX CONSEQUENCES.................................35
Federal Income Taxes....................35
State Income Taxes......................36
ORGANIZATION OF THE TRUST........................36
<PAGE>
INTRODUCTION
The Huntington Funds, formerly known as The Monitor Funds, are a series
of mutual funds advised by professional portfolio managers at The Huntington
National Bank. For convenience, we may refer to The Huntington Funds as "the
Trust" and to The Huntington National Bank as "Huntington" or "the Adviser."
This Prospectus provides you with important information about investing
in Investment Shares of certain Huntington Funds. The Trust's Annual and
Semi-Annual Reports to Shareholders contain additional information about the
investments of each of the Funds offered by this Prospectus. In particular, the
Annual Report discusses the relevant market conditions and investment strategies
used by Huntington which materially affected the performance of the Huntington
Equity and Income Funds during the most recent fiscal year. You may obtain
either of these reports at no cost by calling (800) 253- 0412.
As with all mutual funds, loss of money is a risk of investing. This is
true even for the Money Market Funds which seek to preserve the value of your
investment at $1.00 per share.
Other important risks of investing in mutual funds include:
- - market risk - market values of securities move up and down, sometimes
rapidly and unpredictably;
- - management risk - the Adviser may not be able to achieve a Fund's desired
investment objective; and
- - liquidity risk - at any particular time, the Adviser may have difficulty
selling a certain security at its expected price.
Investment in any of the Funds offered by this Prospectus is not
insured by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
FUND SUMMARIES
In the pages that follow, we discuss the investment objectives for each
of the Funds offered by this Prospectus. Each Fund's investment objective is
fundamental and may be changed only by a vote of a majority of that Fund's
outstanding shares.
For each Fund offered by this Prospectus, we also summarize the
principal investment strategies used under normal market conditions. The Adviser
may employ other strategies and investment techniques on a less frequent basis.
Unless otherwise noted, the investment policies of these Funds are not
fundamental and the Trust's Board of Trustees may change them without
shareholder approval. Please note that when a limitation on an investment or
strategy is expressed in terms of a percentage of assets, we apply the
restriction at the time of the investment.
Also as part of each Fund summary, we discuss the principal investment
risks (the risks associated with the Fund's investment objective and principal
investment strategies) of each of the Funds offered by this Prospectus. There
are other risks applicable to investing in each of the Funds.
Finally, on page ____, we have provided a table illustrating the
principal investments of each Fund offered by this Prospectus.
1
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The Money Market Funds
Money Market Fund
Investment Objective -- The Money Market Fund seeks to maximize current income
while preserving capital and maintaining liquidity by investing in a portfolio
of high quality money market instruments.
Principal Investment Strategies -- The Adviser invests in commercial paper and
other short-term money market instruments for the Money Market Fund. In managing
the portfolio, the Adviser determines an appropriate maturity range for the Fund
and each individual security held and endeavors to diversify the portfolio
across market sectors. In addition, the Adviser analyzes cash flows, maturities,
settlements, tax payments, yields and credit quality and monitors new issue
calendars for potential purchases. The process of selecting securities is
consistent with the credit quality and diversification requirements of Rule 2a-7
under the Investment Company Act of 1940.
Principal Risks -- As a Fund which invests in short-term fixed income
securities, the Money Market Fund is subject to:
- - interest rate risk - as interest rates change, the value of these
securities moves in the opposite direction; and
- - credit (or default) risk - due to economic or governmental factors, an
issuer may no longer be able to make principal and interest payments.
Although the Money Market Fund seeks to keep a constant share price of $1.00,
you may lose money by investing.
Ohio Municipal Money Market Fund
Investment Objective -- The Ohio Municipal Money Market Fund seeks to provide
income exempt from both federal regular income tax and Ohio personal income
taxes while preserving capital and maintaining liquidity.
Principal Investment Strategies -- The Adviser invests substantially all of the
assets of the Ohio Municipal Money Market Fund in short-term Ohio tax-exempt
securities. In managing the portfolio, the Adviser determines an appropriate
maturity range for the Fund and each individual security held and endeavors to
diversify the portfolio's holdings within Ohio as much as possible. In addition,
the Adviser analyzes cash flows, maturities, settlements, tax payments, yields
and credit quality and monitors new issue calendars for potential purchases. The
process of selecting securities is consistent with the credit quality and
diversification requirements of Rule 2a-7 under the Investment Company Act of
1940.
"Ohio tax-exempt securities" are debt obligations which (i) are issued by or on
behalf of the state of Ohio or its respective authorities, agencies,
instrumentalities and political subdivisions, and (ii) produce interest which,
in the opinion of bond counsel at the time of issuance, is exempt from federal
income tax and Ohio personal income taxes.
Fundamental Policy: at least 65% of total assets invested in Ohio tax-exempt
securities.
Fundamental Policy: at least 80% of annual interest income exempt from federal
regular income tax.
Principal Risks -- As a non-diversified Fund, the Ohio Municipal Money Market
Fund is subject to:
2
<PAGE>
- - concentration risk - performance is strongly dependent on the economy of
the state of Ohio.
As a Fund which invests in short-term fixed income securities, the Ohio
Municipal Money Market Fund is subject to:
- - interest rate risk - as interest rates change, the value of these
securities moves in the opposite direction; and
- - credit (or default) risk - due to economic or governmental factors, an
issuer may no longer be able to make principal and interest payments.
Although the Ohio Municipal Money Market Fund seeks to keep a constant share
price of $1.00, you may lose money by investing.
For temporary defensive or liquidity purposes, the Fund may invest in securities
which generate taxable income.
U.S. Treasury Money Market Fund
Investment Objective -- The U.S. Treasury Money Market Fund seeks to maximize
current income while preserving capital and maintaining liquidity by investing
exclusively in obligations issued by the U.S. Government and backed by its full
faith and credit and in repurchase agreements with respect to such obligations.
Principal Investment Strategies -- The Adviser invests substantially all of the
assets of the U.S. Treasury Money Market Fund in short-term obligations of the
U.S. government. In managing the portfolio, the Adviser determines an
appropriate maturity range for the Fund and each individual security held. In
addition, the Adviser analyzes cash flows, maturities, settlements, tax payments
and yields and monitors new issue calendars for potential purchases. The process
of selecting securities is consistent with the credit quality and
diversification requirements of Rule 2a-7 under the Investment Company Act of
1940.
Fundamental Policy: at least 65% of total assets invested in direct obligations
of the U.S. Treasury and repurchase agreements collateralized by such
obligations.
Principal Risks -- As a Fund which invests in U.S. Treasury securities, the U.S.
Treasury Money Market Fund is subject to:
- - interest rate risk - as interest rates change, the value of these
securities moves in the opposite direction.
Although the U.S. Treasury Money Market Fund seeks to keep a constant share
price of $1.00, you may lose money by investing.
Equity Funds
Growth Fund
Investment Objective -- The Growth Fund seeks to achieve long-term capital
appreciation primarily through investing in equity securities.
Principal Investment Strategies -- The Adviser intends to invest in medium or
large companies which it believes offer opportunities for growth at reasonable
prices. The Adviser frequently invests in established companies which it
believes have temporarily depressed prices. In selecting investments, the
Adviser reviews historical earnings, revenue and cash flow to identify the best
companies in each industry and to evaluate the growth potential of these
companies. On an ongoing basis, the Adviser
3
<PAGE>
also monitors the Fund's existing positions to determine the benefits of
retention.
Fundamental Policy: at least 65% of total assets invested in equity securities.
Principal Risks -- As a Fund which invests in equity securities, the Growth Fund
is subject to:
- - equity risk - stock values can rise and fall quickly and dramatically in
response to changes in earnings or other conditions affecting the issuer's
profitability.
Income Equity Fund
Investment Objective -- The Income Equity Fund seeks to achieve high current
income and moderate appreciation of capital primarily through investment in
income-producing equity securities.
Principal Investment Strategies -- The Adviser focuses primarily on equity
securities which have a history of increasing or paying high dividends. As an
additional income source, the Adviser also invests in investment grade corporate
debt obligations. The Adviser selects securities which it believes will increase
the Fund's current yield while maintaining a price/earnings ratio below the
market.
In evaluating the current yield of a security, the Adviser considers dividend
growth to be most important, followed by capital appreciation. The Adviser
actively monitors market activity which impacts dividend decisions. In general,
the Fund will sell a security only when dividends are no longer expected to
increase.
Fundamental Policy: at least 65% of total assets invested in common stock,
securities convertible into common stock and securities deemed by the Adviser to
have common stock characteristics.
Principal Risks -- As a Fund which invests in equity securities, the Income
Equity Fund is subject to:
- - equity risk - stock values can rise and fall quickly and dramatically in
response to changes in earnings or other conditions affecting the issuer's
profitability.
As a Fund which invests in corporate debt obligations, the Income Equity Fund is
subject to:
- - interest rate risk - as interest rates change, the value of these
securities moves in the opposite direction; and
- - credit (or default) risk - due to economic or governmental factors, an
issuer may no longer be able to make principal and interest payments.
Income Funds
Mortgage Securities Fund
Investment Objective -- The Mortgage Securities Fund seeks to achieve current
income.
Principal Investment Strategies --The Adviser invests substantially all of the
assets of the Mortgage Securities Fund in mortgage-related securities. The
Adviser especially focuses on coupon issues which it expects to have limited
prepayment of principal. The Adviser endeavors to maintain a dollar-weighted
average portfolio life for the Fund of between three and ten years.
In making its investment decisions, the Adviser considers various economic
factors, Federal Reserve policy, interest rate trends and spreads between
different types of fixed
4
<PAGE>
income securities. In managing the portfolio, the Adviser monitors the
Fund's cash flow, maturities and interest payments and utilizes a portfolio
analytics program to track other Fund information.
"Mortgage-related securities" are securities, including derivative securities,
whose income is generated by payments of principal and interest on pools of
mortgage loans.
Fundamental Policy: at least 65% of total assets invested in mortgage-related
securities, including derivative mortgage securities.
Principal Risks -- As a Fund which invests in mortgage-related securities, the
Mortgage Securities Fund is subject to:
- - prepayment risk - as interest rates fall, mortgage-related securities tend
to mature earlier than expected as a result of an increase in mortgage
refinancing or prepayment, sometimes resulting in a loss on the investment;
- - reinvestment risk - as prepayment increases as a result of lower interest
rates, the proceeds from maturing mortgage-related securities will be
reinvested at lower interest rates, thus reducing income; and
- - extension risk - as interest rates rise, mortgage-related securities tend
to mature later, thus effectively converting shorter-term securities into
more volatile long-term securities. This will also affect the Adviser's
ability to manage the average life of the Fund.
The above risks are more pronounced with respect to derivative mortgage
securities and can result in reduced liquidity.
As a Fund which invests in fixed income securities, the Mortgage Securities Fund
is subject to:
- - interest rate risk - as interest rates change, the value of these
securities moves in the opposite direction.
From time to time, the Adviser may, as part of its investment strategy, engage
in active and frequent trading. Higher portfolio turnover necessarily results in
increased transaction costs and may result in the acceleration of capital gains.
Ohio Tax-Free Fund
Investment Objective -- The Ohio Tax-Free Fund seeks to provide current income
exempt from federal income tax and Ohio personal income taxes.
Principal Investment Strategies --The Adviser invests substantially all of the
assets of the Ohio Tax-Free Fund in Ohio tax-exempt securities. The securities
selected by the Adviser are: (i) rated in one of the top four categories by an
NRSRO; or (ii) not rated, but deemed by the Adviser to be of comparable quality.
In addition, these securities will have remaining maturities of no more than 15
years and the Fund's anticipated dollar-weighted average maturity will be
between four and ten years. The Adviser also establishes a desired yield level
for new issues relative to U.S. Treasury securities.
In managing the portfolio, the Adviser attempts to diversify the Fund's holdings
within Ohio as much as possible. In selecting securities, the Adviser monitors
economic activity and interest rate trends, reviews financial information
relating to each issuer and looks for attractively priced issues. To determine
the tax implications of each portfolio transaction, the Adviser evaluates
seasonal cash flows from
5
<PAGE>
coupon payments, maturities, settlements and tax payments.
"Ohio tax-exempt securities" are debt obligations which (i) are issued by or on
behalf of the state of Ohio or its respective authorities, agencies,
instrumentalities and political subdivisions, and (ii) produce interest which,
in the opinion of bond counsel at the time of issuance, is exempt from federal
income tax and Ohio personal income taxes.
Fundamental Policy: at least 80% of total assets invested in Ohio tax-exempt
securities.
Fundamental Policy: no investment in securities which generate income treated as
a preference item for federal alternative minimum tax purposes.
Principal Risks -- As a non-diversified Fund, the Ohio Tax-Free Fund is subject
to:
- - concentration risk - performance is strongly dependent on the economy of
the state of Ohio.
As a Fund which invests in fixed income securities, the Ohio Tax-Free Fund is
subject to:
- - interest rate risk - as interest rates change, the value of these
securities moves in the opposite direction; and
- - credit (or default) risk - due to economic or governmental factors, an
issuer may no longer be able to make principal and interest payments.
For temporary defensive or liquidity purposes, the Fund may invest in securities
which generate taxable income.
Michigan Tax-Free Fund
Investment Objective -- The Michigan Tax- Free Fund seeks to provide investors
with current income exempt from both federal and Michigan personal income taxes.
Principal Investment Strategies --The Adviser invests substantially all of the
assets of the Michigan Tax-Free Fund in Michigan tax-exempt securities. The
securities selected by the Adviser for investment will have remaining maturities
of no more than 15 years. The Adviser also establishes a desired yield level for
new issues relative to U.S. Treasury securities.
In managing the portfolio, the Adviser attempts to diversify the Fund's holdings
within Michigan as much as possible. In selecting securities, the Adviser
monitors economic activity and interest rate trends, reviews financial
information relating to each issuer and looks for attractively priced issues. To
determine the tax implications of each portfolio transaction, the Adviser
evaluates seasonal cash flows from coupon payments, maturities, settlements and
tax payments.
"Michigan tax-exempt securities" are debt obligations which (i) are issued by or
on behalf of the state of Michigan or its respective authorities, agencies,
instrumentalities and political subdivisions, and (ii) produce interest which,
in the opinion of bond counsel at the time of issuance, is exempt from federal
income tax and Michigan personal income taxes.
Fundamental Policy: at least 65% of total assets invested in Michigan tax-exempt
securities.
Fundamental Policy: no more than 20% of net assets invested in securities which
generate income treated as a preference item for federal alternative minimum tax
purposes.
Principal Risks -- As a non-diversified Fund, the Michigan Tax-Free Fund is
subject to:
6
<PAGE>
- - concentration risk - performance is strongly dependent on the economy of
the state of Michigan.
As a Fund which invests in fixed income securities, the Michigan Tax-Free Fund
is subject to:
- - interest rate risk - as interest rates change, the value of these
securities moves in the opposite direction; and
- - credit (or default) risk - due to economic or governmental factors, an
issuer may no longer be able to make principal and interest payments.
For temporary defensive or liquidity purposes, the Fund may invest in securities
which generate taxable income.
Fixed Income Securities Fund
Investment Objective -- The Fixed Income Securities Fund seeks to achieve high
current income through investment in fixed income securities where the average
maturity of the Fund will not exceed 10 years.
Principal Investment Strategies --The Adviser principally invests in a
combination of corporate debt and obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. The selection of corporate debt
obligations is limited to those: (i) rated in one of the top four categories by
a Nationally Recognized Statistical Ratings Organization or (ii) not rated, but
deemed by the Adviser to be of comparable quality. For all types of investments,
the Adviser considers various economic factors, Federal Reserve policy, interest
rate trends, spreads between different types of fixed income securities and the
credit quality of existing holdings.
In managing the portfolio, the Adviser monitors the Fund's cash flow, maturities
and interest payments and utilizes a portfolio analytics program to track other
Fund information. The Adviser also follows closely new issue and secondary
activity in the corporate debt market.
Fundamental Policy: at least 65% of total assets invested in fixed income
securities.
Principal Risks -- As a Fund which invests in fixed income securities, the Fixed
Income Securities Fund is subject to:
- - interest rate risk - as interest rates change, the value of these
securities moves in the opposite direction; and
- - credit (or default) risk - due to economic or governmental factors, an
issuer may no longer be able to make principal and interest payments.
From time to time, the Adviser may, as part of its investment strategy, engage
in active and frequent trading. Higher portfolio turnover necessarily results in
increased transaction costs and may result in the acceleration of capital gains.
Intermediate Government Income Fund
Investment Objective -- The Intermediate Government Income Fund seeks to provide
investors with a high level of current income.
Principal Investment Strategies --The Adviser invests primarily in obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
and mortgage-related securities with dollar-weighted average maturities of not
less than three nor more than ten years. In general, in order to reduce
7
<PAGE>
volatility during periods of interest rate fluctuation, the Adviser invests in
securities with a wide range of intermediate maturities. For all types of
investments, the Adviser considers various economic factors, Federal Reserve
policy, interest rate trends and spreads between different types of fixed income
securities.
In managing the portfolio, the Adviser monitors the Fund's cash flow, maturities
and interest payments and utilizes a portfolio analytics program to track other
Fund information.
"Mortgage-related securities" are securities, including derivative securities,
whose income is generated by payments of principal and interest on pools of
mortgage loans.
Fundamental Policy: at least 65% of total assets in the above securities.
Principal Risks -- As a Fund which invests in fixed income securities, the
Intermediate Government Income Fund is subject to:
- - interest rate risk - as interest rates change, the value of these
securities moves in the opposite direction.
As a Fund which invests in mortgage-related securities, the Intermediate
Government Income Fund is subject to:
- - prepayment risk - as interest rates fall, mortgage-related securities tend
to mature earlier than expected as a result of an increase in mortgage
refinancing or prepayment, sometimes resulting in a loss on the investment;
- - reinvestment risk - as prepayment increases as a result of lower interest
rates, the proceeds from maturing mortgage-related securities will be
reinvested at lower interest rates, thus reducing income; and
- - extension risk - as interest rates rise, mortgage-related securities tend
to mature later, thus effectively converting shorter-term securities into
more volatile long-term securities. This will also affect the Adviser's
ability to manage the average life of the Fund.
The above risks are more pronounced with respect to derivative mortgage
securities and can result in reduced liquidity.
From time to time, the Adviser may, as part of its investment strategy, engage
in active and frequent trading. Higher portfolio turnover necessarily results in
increased transaction costs and may result in the acceleration of capital gains.
8
<PAGE>
Principal Investments
The table below summarizes the principal investments for each of the
Funds offered by this Prospectus. Each of these Funds may also invest up to 100%
of its assets in cash, money market instruments, repurchase agreements and other
short-term securities for temporary defensive or liquidity purposes. In these
situations, a Fund may not achieve its investment objective.
A detailed description of each of the principal investments, as well as
other permissible investments and strategies, is contained in the Statement of
Additional Information.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Ohio U.S.
Municipal Treasury Ohio Michigan Fixed Interm
Money Money Money Income Mortgage Tax- Tax- Income Govt
Market Market Market Growth Equity Securities Free Free Securities Income
Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial Paper X X X
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements X X X X
- -----------------------------------------------------------------------------------------------------------------------------------
Common Stock X X
- -----------------------------------------------------------------------------------------------------------------------------------
Preferred Stock X
- -----------------------------------------------------------------------------------------------------------------------------------
Corporate Debt X X
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Government
Securities X X X X X X
- -----------------------------------------------------------------------------------------------------------------------------------
Mortgage-Related
Securities X X
- -----------------------------------------------------------------------------------------------------------------------------------
Ohio Tax-Exempt
Securities X X
- -----------------------------------------------------------------------------------------------------------------------------------
Michigan Tax-Exempt
Securities X
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
RISK/RETURN INFORMATION
The bar charts and tables below provide some indication of the risks and
volatility of investments in the Funds offered by this Prospectus. The charts
illustrate changes in each Fund's performance from year to year and the tables
show how each Fund's average annual returns compare with those of one or more
broad measures of market performance. The way a Fund has performed in the past
is not necessarily an indication of the way it will perform in the future.
Money Market Fund
- ---------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- ---------------------------------------------
IBC's
Prime
Retail
Fund Average
- ---------------------------------------------
1 Year 5.03% 4.97%
- ---------------------------------------------
5 Years 4.80%
- ---------------------------------------------
1992 3.34%
1993 2.63%
1994 3.76%
1995 5.48%
1996 4.90%
1997 5.07%
1998 5.03%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% ____________%
Ohio Municipal Money Market Fund
- ---------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- ---------------------------------------------
IBC's
Tax-Free
State Specific
Fund Average
- ---------------------------------------------
1 Year 2.97% 2.87%
- ---------------------------------------------
5 Years 2.92%
- ---------------------------------------------
1992 2.51%
1993 1.98%
1994 2.31%
1995 3.47%
1996 3.04%
1997 3.17%
1998 2.97%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% ____________%
10
<PAGE>
U.S. Treasury Money Market Fund
- ---------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- ---------------------------------------------
IBC's
Government
Retail
Fund Average
- ---------------------------------------------
1 Year 4.85% 4.83%
- ---------------------------------------------
5 Years 4.67%
- ---------------------------------------------
1994 3.68%
1995 5.43%
1996 4.87%
1997 4.95%
1998 4.85%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% ____________%
Growth Fund
- ---------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- ---------------------------------------------
Fund S&P 500
- ---------------------------------------------
1 Year 18.25%
- ---------------------------------------------
5 Years 19.87%
- ---------------------------------------------
The reported returns do not include the effect of sales loads. If it were
reflected, returns would be less than those shown.
1992 7.57%
1993 3.25%
1994 2.08%
1995 30.40%
1996 16.43%
1997 35.04%
1998 18.25%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% ____________%
11
<PAGE>
Income Equity Fund*
- ---------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- ---------------------------------------------
Fund S&P 500
- ---------------------------------------------
1 Year 17.56%
- ---------------------------------------------
5 Years
- ---------------------------------------------
The reported returns do not include the effect of sales loads. If the effect of
sales loads were reflected, returns would be less than those shown.
1990 %
1991 %
1992 %
1993 %
1994 %
1995 %
1996 %
1997 %
1998 17.56%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% ____________%
*Returns for 1990-1997 are based on the performance of
Trust Shares, adjusted to reflect expenses of Investment
Shares
Mortgage Securities Fund
- --------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- --------------------------------------------
Lehman
Mortgage-
Backed
Fund Index
- --------------------------------------------
1 Year 6.09%
- --------------------------------------------
5 Years 3.85%
- --------------------------------------------
The reported returns do not include the effect of sales loads. If the effect of
sales loads were reflected, returns would be less than those shown.
1993 11.94%
1994 -24.72%
1995 31.13%
1996 6.25%
1997 8.54%
1998 6.09%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% ____________%
12
<PAGE>
Ohio Tax-Free Fund
- ---------------------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- ---------------------------------------------------------
Lehman Lipper
5-Year Interm.
Gen. Obs. Muni
Fund Index Index
- ---------------------------------------------------------
1 Year 4.90%
- ---------------------------------------------------------
5 Years 4.35%
- ---------------------------------------------------------
The reported returns do not include the effect of sales loads. If the effect of
sales loads were reflected, returns would be less than those shown.
1992 5.76%
1993 7.78%
1994 -2.83%
1995 11.10%
1996 3.20%
1997 5.88%
1998 4.90%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% ____________%
Michigan Tax-Free Fund*
- -------------------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- -------------------------------------------------------
Lehman Lehman
5-Year 7-Year
Muni Muni
Fund Index Index
- -------------------------------------------------------
1 Year 4.91%
- -------------------------------------------------------
5 Years 5.11%
- -------------------------------------------------------
The reported returns do not include the effect of sales loads. If the effect of
sales loads were reflected, returns would be less than those shown.
1993 %
1994 %
1995 %
1996 %
1997 %
1998 4.91%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% ____________%
*Returns for 1993-1998 include the performance of the predecessor FMB Michigan
Tax-Free Bond Fund.
13
<PAGE>
Fixed Income Securities Fund
- ----------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- ----------------------------------------------
Lehman
Govt/Corp
Bond
Fund Index
- ----------------------------------------------
1 Year 8.93%
- ----------------------------------------------
5 Years 6.24%
- ----------------------------------------------
The reported returns do not include the effect of sales loads. If the effect of
sales loads were reflected, returns would be less than those shown.
1992 6.25%
1993 10.07%
1994 -4.88%
1995 17.63%
1996 2.32%
1997 8.54%
1998 8.93%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% ____________%
Intermediate Government Income Fund*
- ---------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- ---------------------------------------------
Lehman
Interm.
Govt/Corp
Fund Index
- ---------------------------------------------
1 Year 7.72%
- ---------------------------------------------
5 Years 5.73%
- ---------------------------------------------
The reported returns do not include the effect of sales loads. If the effect of
sales loads were reflected, returns would be less than those shown.
1993 %
1994 %
1995 %
1996 %
1997 %
1998 7.72%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% ____________%
*Returns for 1993-1998 include the performance of the predecessor FMB
Intermediate Government Income Fund.
14
<PAGE>
FEES AND EXPENSES
This table describes the fees and expenses you may pay if you buy and hold
shares in the Funds offered by this Prospectus.
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<CAPTION>
Fixed Intermediate
Income Mortgage Ohio Michigan Income Government
Growth Equity Securities Tax-Free Tax-Free Securities Income
Fund Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price).. 4.00% 5.50% 2.00% 2.00% 2.00% 2.00% 2.00%
</TABLE>
Annual Investment Shares Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<CAPTION>
Total Annual
Distribution Investment
Management (12b-1) Other Shares Operating
Fees Fees Expenses(1) Expenses
---- ---- ----------- --------
<S> <C> <C> <C> <C>
Money Market Fund(2)*............................ 0.28% 0.25% 0.25% 0.78%
Ohio Municipal Money Market Fund(2)*............. 0.30% 0.25% 0.24% 0.79%
U.S. Treasury Money Market Fund(2)*.............. 0.20% 0.25% 0.22% 0.67%
Growth Fund...................................... 0.60% 0.25% 0.23% 1.08%
Income Equity Fund............................... 0.60% 0.25% 0.23% 1.08%
Mortgage Securities Fund(3)*..................... 0.50% 0.50% 0.39% 1.39%
Ohio Tax-Free Fund............................... 0.50% 0.25% 0.29% 1.04%
Michigan Tax-Free Fund(3)*....................... 0.50% 0.25% 0.30% 1.05%
Fixed Income Securities Fund..................... 0.50% 0.25% 0.25% 1.00%
Intermediate Government Income Fund(3)*.......... 0.50% 0.25% 0.27% 1.02%
</TABLE>
(1) Other expenses have been restated to reflect current fees.
(2) For the fiscal year ended December 31, 1998, the Adviser waived 0.05% in
management fees for the Ohio Municipal Money Market Fund. In addition, the
Distributor waived 0.15% in distribution (12b-1) fees for each of the Money
Market Funds.
(3) For the fiscal year ended December 31, 1998, the Adviser waived 0.20% in
management fees for the Mortgage Securities Fund. For the seven-month period
ended December 31, 1998, the Adviser waived 0.07% in management fees for the
Michigan Tax-Free Fund and 0.05% for the Intermediate Government Income Fund. In
addition, the Distributor waived 0.25% in distribution (12b-1) fees for the
Mortgage Securities Fund.
* The Adviser and/or Distributor can terminate their voluntary waivers at any
time in their sole discretion.
15
<PAGE>
EXAMPLE
This Example is intended to help you compare the cost of investing in a Fund
offered by this Prospectus with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in a Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that a
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Fund ..................... $ 80 $ 249 $ 433 $ 966
Ohio Municipal Money Market Fund ...... $ 81 $ 252 $ 439 $ 978
U.S. Treasury Money Market Fund ....... $ 68 $ 214 $ 373 $ 835
Growth Fund ........................... $ 506 $ 730 $ 972 $1,664
Income Equity Fund .................... $ 654 $ 875 $1,113 $1,795
Mortgage Securities Fund .............. $ 339 $ 631 $ 945 $1,835
Ohio Tax-Free Fund .................... $ 304 $ 524 $ 763 $1,446
Michigan Tax-Free Fund ................ $ 305 $ 527 $ 768 $1,457
Fixed Income Securities Fund .......... $ 300 $ 512 $ 741 $1,400
Intermediate Government Income Fund.... $ 302 $ 518 $ 752 $1,423
</TABLE>
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.
16
<PAGE>
FINANCIAL HIGHLIGHTS -- Money Market Funds
(For a share outstanding throughout each period)
The following financial highlights for the periods or years ended December 31,
1997 and 1998 were audited by the Trust's independent auditors, KPMG LLP. The
financial highlights for the periods or years ended December 31, 1994, 1995 and
1996 were audited by the Trust's former auditors. KPMG LLP's report is included
in the Trust's 1998 Annual Report to Shareholders and is incorporated by
reference into (considered a legal part of) the Combined Statement of Additional
Information.
<TABLE>
<CAPTION>
Net Asset Distributions to Net Asset
Value, Net shareholders Value,
Year Ended beginning investment from net end of Total
December 31, of period income investment income period Return Expenses
- -----------------------------------------------------------------------------------------------------------------------------
INVESTMENT SHARES
Money Market
<S> <C> <C> <C> <C> <C> <C>
1998 $1.00 $0.05 $(0.05) $1.00 5.03% 0.60%
1997 1.00 0.05 (0.05) 1.00 5.07% 0.61%
1996 1.00 0.05 (0.05) 1.00 4.90% 0.63%
1995 1.00 0.05 (0.05) 1.00 5.48% 0.63%
1994 1.00 0.04 (0.04) 1.00 3.76% 0.61%
Ohio Municipal Money Market
1998 $1.00 $0.03 $(0.03) $1.00 2.97% 0.57%
1997 1.00 0.03 (0.03) 1.00 3.17% 0.55%
1996 1.00 0.03 (0.03) 1.00 3.04% 0.52%
1995 1.00 0.03 (0.03) 1.00 3.47% 0.52%
1994 1.00 0.02 (0.02) 1.00 2.31% 0.55%
U.S. Treasury Money Market
1998 $1.00 $0.05 $(0.05) $1.00 4.85% 0.50%
1997 1.00 0.05 (0.05) 1.00 4.95% 0.52%
1996 1.00 0.05 (0.05) 1.00 4.87% 0.52%
1995 1.00 0.05 (0.05) 1.00 5.43% 0.53%
1994 1.00 0.04 (0.04) 1.00 3.68% 0.52%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a)This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
17
<PAGE>
<TABLE>
<CAPTION>
Net Net assets,
investment Expense waiver/ end of period
income reimbursement(a) (000 omitted)
- ------------------------------------------------------------------
<S> <C> <C>
4.89% 0.15% $272,374
4.96% 0.15% 140,385
4.80% -- 97,557
5.30% 0.03% 91,288
3.85% 0.02% 41,629
2.93% 0.20% $133,295
3.13% 0.22% 82,897
3.00% 0.12% 74,102
3.42% 0.20% 55,469
2.30% 0.19% 37,134
4.74% 0.15% $54,522
4.85% 0.15% 57,758
4.77% 0.15% 47,884
5.28% 0.18% 38,973
3.66% 0.17% 20,390
- ------------------------------------------------------------------
18
<PAGE>
FINANCIAL HIGHLIGHTS -- Equity Funds
(For a share outstanding throughout each period)
The following financial highlights for the periods or years ended December 31,
1997 and 1998 were audited by the Trust's independent auditors, KPMG LLP. The
financial highlights for the periods or years ended December 31, 1994, 1995 and
1996 were audited by the Trust's former auditors. KPMG LLP's report is included
in the Trust's 1998 Annual Report to Shareholders and is incorporated by
reference into (considered a legal part of) the Combined Statement of Additional
Information.
</TABLE>
<TABLE>
<CAPTION>
Distributions to
Distributions to shareholders
Net Asset Net realized shareholders from net
Value, Net and unrealized Total from from net realized gain
Year Ended beginning investment gain/(loss) on investment investment on investment
December 31, of period income investments operations income transactions
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT SHARES
Growth
1998 $43.46 $0.19 $7.67 $7.86 $(0.17) $(1.21)
1997 33.96 0.19 11.63 11.82 (0.20) (2.12)
1996 30.81 0.31 4.73 5.04 (0.33) (1.56)
1995 26.31 0.35 7.61 7.96 (0.35) (3.11)
1994 26.16 0.33 0.22 0.55 (0.33) (0.07)
Income Equity
1998 $36.29 $0.98 $5.29 $6.27 $(0.99) $(0.71)
1997* 31.20 0.65 5.72 6.37 (0.63) (0.65)
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from May 1, 1997 (date of initial public
investment) to December 31, 1997.
+ Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Not annualized.
(b) Computed on an annualized basis.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
19
<PAGE>
<TABLE>
<CAPTION>
Net Asset Net assets,
Value, Net end of Portfolio
Total end of Total investment Expense Waiver/ period (000 turnover
distributions period Return+ Expenses income Reimbursement(c) omitted) rate
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$(1.56) $49.76 18.25% 1.04% 0.37% -- 16,501 11%
(2.31) 43.46 35.04% 1.05% 0.48% -- 5,485 12%
(1.89) 33.96 16.43% 1.08% 0.93% -- 4,285 21%
(3.46) 30.81 30.40% 1.11% 1.08% 0.05% 3,777 37%
(0.40) 26.31 2.08% 1.13% 1.27% 0.04% 3,212 42%
$(1.70) $40.86 17.56% 1.06% 2.58% -- $1,885 13%
(1.28) 36.29 16.09%(a) 1.08%(b) 2.76%(b) -- 279 24%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
FINANCIAL HIGHLIGHTS -- Income Funds
(For a share outstanding throughout each period)
The following financial highlights for the periods or years ended December 31,
1997 and 1998 were audited by the Trust's independent auditors, KPMG LLP. The
financial highlights for the periods or years ended December 31, 1994, 1995 and
1996 were audited by the Trust's former auditors. KPMG LLP's report is included
in the Trust's 1998 Annual Report to Shareholders and is incorporated by
reference into (considered a legal part of) the Combined Statement of Additional
Information.
<TABLE>
<CAPTION>
Distributions to
Distributions to shareholders Distributions
Net Asset Net realized shareholders from net in excess
Value, Net and unrealized Total from from net realized gain of net
Year Ended beginning investment gain/(loss) on investment investment on investment investment
December 31, of period income investments operations income transactions income+
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT SHARES
Ohio Tax-Free
<C> <C> <C> <C> <C> <C> <C>
1998 $21.73 $0.93 $0.11 $1.04 $(0.93) $(0.02) --
1997 21.48 0.98 0.25 1.23 (0.97) $(0.01) --
1996 21.77 0.96 (0.29) 0.67 (0.96) -- --
1995 20.50 0.96 1.27 2.23 (0.96) -- --
1994 22.04 0.94 (1.56) (0.62) (0.92) -- --
Fixed Income Securities
1998 $21.41 $1.20 $0.66 $1.86 $(1.21) $(0.28) --
1997 20.95 1.25 0.47 1.72 (1.26) -- --
1996 21.78 1.29 (0.83) 0.46 (1.29) -- --
1995 19.70 1.29 2.09 3.38 (1.30) -- --
1994 22.04 1.23 (2.29) (1.06) (1.28) -- --
Mortgage Securities
1998(b) $8.26 $0.48 $0.01 $0.49 $(0.48) -- --
1997(b) 8.08 0.50 0.17 0.67 (0.49) -- --
1996(b) 8.12 0.53 (0.04) 0.49 (0.53) -- --
1995(b) 6.70 0.55 1.46 2.01 (0.55) -- $(0.04)
1994(b) 9.94 0.87 (3.19) (2.32) (0.91) -- (0.01)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Distributions in excess of net investment income were the result of certain
book and tax timing differences. These distributions do not represent a return
of capital for federal income tax purposes.
++ Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Per share information presented is based upon the monthly number of shares
outstanding due to large fluctuations in the number of shares outstanding during
the period.
21
<PAGE>
<TABLE>
<CAPTION>
Net Assets,
Net Asset Net end of Portfolio
Total Value, end Total Investment Expense Waiver/ period (000 turnover
distributions of period Returns++ Expenses Income Reimbursement(a) omitted) rate
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$(0.95) $21.82 4.90% 0.98% 4.25% -- $1,519 9%
(0.98) 21.73 5.88% 0.97% 4.47% -- 1,468 14%
(0.96) 21.48 3.20% 1.01% 3.24% -- 1,900 6%
(0.96) 21.77 11.10% 1.03% 4.49% 0.08% 2,163 13%
(0.92) 20.50 (2.83%) 1.02% 4.43% 0.04% 2,307 12%
$(1.49) $21.78 8.93% 0.95% 5.53% -- $1,586 47%
(1.26) 21.41 8.54% 0.95% 6.01% -- 1,615 116%
(1.29) 20.95 2.32% 0.99% 6.12% -- 1,851 16%
(1.30) 21.78 17.63% 1.02% 6.17% 0.05% 2,176 20%
(1.28) 19.70 (4.88%) 1.00% 6.01% 0.04% 1,958 23%
$(0.48) $8.27 6.09% 0.88% 5.84% 0.45% $1,068 17%
(0.49) 8.26 8.54% 0.91% 6.16% 0.45% 1,082 63%
(0.53) 8.08 6.25% 0.92% 6.57% 0.53% 1,666 90%
(0.59) 8.12 31.13% 0.76% 7.40% 0.73% 2,008 194%
(0.92) 6.70 (24.72%) 1.13% 10.91% 0.37% 4,259 91%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
FINANCIAL HIGHLIGHTS -- Income Funds (cont'd)
(For a share outstanding throughout each period)
The following financial highlights for the seven-month period ended December
31, 1998 and the six-month period ended May 31, 1998 were audited by the Trust's
independent auditors, KPMG LLP. The financial highlights for the periods or
years ended December 31, 1994, 1995, 1996 and 1997 have been derived from the
financial statements for the Consumer Class of shares of the FMB Michigan
Tax-Free Bond Fund and the FMB Intermediate Government Income Fund (the "FMB
Funds"), the funds which were reorganized to create the Michigan Tax-Free Fund
and the Intermediate Government Income Fund, respectively on April 6, 1998. KPMG
LLP's report is included in the Trust's 1998 Annual Report to Shareholders and
is incorporated by reference into (considered a legal part of) the Combined
Statement of Additional Information.
<TABLE>
<CAPTION>
Distributions to
Distributions to shareholders
Net Asset Net realized shareholders from net
Value, Net and unrealized Total from from net realized gain
beginning investment gain/(loss) on investment investment on investment
Period Ended,(a) of period income investments operations income transactions
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT SHARES
<S> <C> <C> <C> <C> <C> <C>
Michigan Tax-Free
1998(c) $10.97 $0.28 $0.06 $0.34 $(0.30) $(0.02)
1998(d) 10.89 0.24 0.06 0.30 (0.22) --
1997(e) 10.79 0.47 0.10 0.57 (0.47) --
1996(e) 10.79 0.48 -- 0.48 (0.48) --
1995(e) 9.97 0.49 0.82 1.31 (0.49) --
1994(e) 10.61 0.47 (0.63) (0.16) (0.47) (0.01)
Intermediate Government Income
1998(c) $10.24 $0.31 $0.20 $0.51 $(0.33) --
1998(d) 10.16 0.28 0.05 0.33 (0.25) --
1997(e) 10.13 0.57 0.02 0.59 (0.56) --
1996(e) 10.24 0.57 (0.10) 0.47 (0.58) --
1995(e) 9.66 0.61 0.58 1.19 (0.61) --
1994(e) 10.46 0.57 (0.80) (0.23) (0.57) --
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) The fiscal year end of Huntington Michigan Tax-Free Fund and Huntington
Intermediate Government Income Fund was changed from November 30 to May 31, and
subsequently to December 31 to coincide with the other Huntington Funds.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(c) Seven months ended December 31.
(d) Six months ended May 31.
(e) Year ended November 30.
(f) Expense ratios reflect operating expenses in effect during the period prior
to and subsequent to the reorganization with the FMB Funds.
(g) Computed on an annualized basis.
(h) Not annualized.
23
<PAGE>
<TABLE>
<CAPTION>
Net Assets,
Net Asset Net end of Portfolio
Total Value, end Total Investment Expense Waiver/ period (000 turnover
distributions of period Returns+ Expenses Income Reimbursement(b) omitted) rate
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$(0.32) $10.99 3.14%(h) 0.92%(g) 4.32%(g) 0.07%(g) $8,764 7%(h)
(0.22) 10.97 2.75%(h) 1.00%(f)(g) 4.30%(g) 0.21%(g) 9.946 2%(h)
(0.47) 10.89 5.47% 0.98% 4.41% 0.37% 9,426 7%
(0.48) 10.79 4.61% 0.84% 4.55% 0.56% 9,050 16%
(0.49) 10.79 13.21% 0.70% 4.62% 0.48% 12,619 35%
(0.48) 9.97 (1.49%) 0.51% 4.50% 0.68% 12,249 22%
$(0.33) $10.42 5.06%(h) 0.94%(g) 5.13%(g) 0.05%(g) $3,084 7%(h)
(0.25) 10.24 3.31%(h) 1.01%(f)(g) 5.42%(g) 0.09%(g) 3,217 14%(h)
(0.56) 10.16 5.99% 1.04% 5.66% 0.10% 3,518 28%
(0.58) 10.13 4.80% 0.95% 5.73% 0.19% 5,230 16%
(0.61) 10.24 12.64% 0.78% 6.09% -- 7,610 27%
(0.57) 9.66 (2.23%) 0.83% 6.45% 0.02% 9,718 20%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
ABOUT PURCHASING
INVESTMENT SHARES
You may purchase Investment Shares of the Funds offered by this Prospectus
on any business day when both the Federal Reserve Banks and the New York Stock
Exchange are open. In connection with the sale of a Fund's Investment Shares,
the Distributor may from time to time offer certain items of nominal value to
any shareholder.
What Shares Cost
The offering price of an Investment Share is its net asset value
(determined after the order is considered received), plus any applicable sales
charge. The Trust calculates the net asset value per share for each Fund offered
by this Prospectus as of the close of business of the New York Stock Exchange
(generally 4:00 p.m. Eastern Time).
The Trust attempts to stabilize the net asset value per share for each of
the Money Market Funds at $1.00 per share by valuing its portfolio securities
using the amortized cost method, as described more fully in the Statement of
Additional Information. The Trust calculates net asset value for each of the
other Funds offered by this Prospectus by valuing securities held based on
market value.
<TABLE>
<CAPTION>
Sales Charges and Quantity Discounts
Growth Fund Income Equity Fund
Sales Charge Sales Charge Sales Charge Sales Charge
as a as a as a as a
Percentage of Percentage of Percentage of Percentage of
Public Net Amount Public Net Amount
Amount of Transaction Offering Price Invested Amount of Transaction Offering Price Invested
- --------------------- -------------- -------- --------------------- -------------- --------
<S> <C> <C> <C> <C> <C>
Under $100,000 4.00% 4.17% Under $50,000 5.50% 5.82%
$100,000-$249,999 3.50% 3.63% $50,000-$99,999 4.50% 4.71%
$250,000-$499,999 2.50% 2.56% $100,000-$249.999 3.50% 3.63%
$500,000-$749,999 1.50% 1.52% $250,000-$499,999 2.75% 2.83%
$750,000-$1,000,000 0.75% 0.76% $500,000-$1,000,000 2.00% 2.04%
Over $1,000,000 0.25% 0.25% Over $1,000,000 0.00% 0.00%
Mortgage Securities Fund, Ohio Tax-Free Fund, Money Market Funds
Michigan Tax-Free Fund, Fixed Income
Securities Fund and Intermediate Government No Sales Charges Apply
Income Fund
<CAPTION>
Sales Charge Sales Charge
as a as a
Percentage of Percentage of
Public Net Amount
Amount of Transaction Offering Price Invested
- --------------------- -------------- --------
<S> <C> <C> <C>
Under $500,000 2.00% 2.04%
$500,000-$749,999 1.50% 1.52%
$750,000-$999.999 0.75% 0.76%
Over $1,000,000 0.00% 0.00%
</TABLE>
25
<PAGE>
Quantity discounts and other reductions may also apply in certain special
situations described below. If you think you qualify, please call The Huntington
Funds at (800) 253-0412. The Distributor will reduce or eliminate the sales
charge, as applicable, once it confirms your qualification.
No sales charges will apply to purchases made:
- - Through the automatic reinvestment of dividends and capital gains
distributions
- - By current Trustees and officers of the Trust, their spouses and immediate
family members
- - By current officers, directors and employees of Huntington Bancshares
Incorporated (HBI) or its subsidiaries, their spouses and immediate family
members
- - By retired officers and employees of HBI or its subsidiaries and their
spouses
- - By participants in certain financial services programs offered by HBI
banking subsidiaries
- - By members of certain affinity groups which have entered into arrangements
with the Adviser or the Distributor
- - By investors who have sold shares of an Equity or Income Fund within the
last 30 days (not available more than once)
Reduced sales charges (based on the quantity discounts noted above) will apply
to purchases made:
- - By investors whose multiple investments over time in the same Fund total an
amount subject to a quantity discount
- - By investors whose investment in a Fund, plus investments by their spouse
and children under 21 made at the same time, totals an amount subject to a
quantity discount
- - By investors who sign a letter of intent to invest at least $100,000 total
in the Equity Funds within a 13-month period
- - By investors who sign a letter of intent to invest at least $500,000 total
in the Income Funds within a 13-month period
- - By investors whose investments in multiple Funds at the same time total an
amount subject to a quantity discount
- - By trustees or fiduciaries whose investments on behalf of a single trust
estate or fiduciary account total an amount subject to a quantity discount
More information about these reductions is provided in the Statement of
Additional Information.
Notes About Purchases
In order to purchase Investment Shares on a particular day, the Trust must
receive payment before 4:00 p.m. (Eastern Time) that day. You will begin earning
dividends on the day of your investment in the Money Market Fund or the U.S.
Treasury Money Market Fund if the Trust receives payment before 1:00 p.m.
(Eastern Time). The applicable cut-off time for the Ohio Municipal Money Market
Fund is 10:30 a.m. (Eastern Time).
The Trust reserves the right to suspend the sale of shares of any of the
Funds temporarily and the right to refuse any order to purchase shares of any of
the Funds.
If the Trust receives insufficient payment for a purchase, it will cancel the
purchase and may charge you a fee. In addition, you will be liable for any
losses incurred by the Trust in connection with the transaction.
26
<PAGE>
HOW TO BUY INVESTMENT SHARES
1. Minimum investment requirements:
- $1,000 for initial investments outside the Systematic Investment Program
- $50 for initial investments within the Systematic Investment Program
- $50 for subsequent investments
2. Call
- The Huntington Funds at (800) 253-0412
- The Huntington Investment Company at (800) 322-4600
- Your Huntington Personal Banker
3. Make payment
- By check payable to the applicable Huntington Fund-Investment Shares to:
The Huntington Funds
c/o The Huntington National Bank
41 South High Street
Columbus, Ohio 43287
OR
(The Trust will treat your order as having been received once payment is
converted to federal funds by the Trust's transfer agent)
- By federal funds wire to:
The Huntington National Bank
ABA 044000024
Trust Department
Account Number 01891160404
Huntington Retail
Attention: Shareholder Services
(The Trust will treat your order as having been received immediately upon
receipt by the Trust's transfer agent)
OR
- Through the Systematic Investment Program
(Once you become a participant in the Program, your investments will be made
automatically at your requested intervals)
Other methods of acceptable payment are discussed in the Statement of
Additional Information.
27
<PAGE>
Systematic Investment Program
You may invest on a regular basis in Investment Shares of one or more Funds
offered by this Prospectus through the Systematic Investment Program. To
participate, you must open an account with the Trust and invest at least $50 at
periodic intervals.
Once you have signed up for the Program, the Trust will automatically
withdraw money from your bank account and invest it in Investment Shares of the
Fund or Funds you specify. Your participation in the Program may be canceled if
you do not maintain sufficient funds in your bank account to pay for your
investment.
ABOUT EXCHANGING INVESTMENT
SHARES AMONG THE FUNDS
On any business day when both the Federal Reserve Banks and the New York
Stock Exchange are open, you may exchange Investment Shares of any Huntington
Fund for Investment Shares of any other Huntington Fund offering such shares.
The Trust makes these exchanges at net asset value (determined after the order
is considered received), plus any applicable sales charges.
Exchange Out Of Exchange Into Sales Charge
- --------------- ------------- ------------
Any Money Market Any Money
Fund Market Fund NO
Any Money Market Any Equity or YES - See
Fund Income Fund "What Shares
Cost"
Any Income or Any Money
Equity Fund Market, Equity NO
or Income
Fund
Notes About Exchanges
In order to exchange Investment Shares on a particular day, the Trust must
receive your request before 3:00 p.m. (Eastern Time) that day.
The Trust may terminate or modify the exchange privilege at any time. In
the case of termination or material changes other than the elimination of
applicable sales charges, you will be given 60 days' prior notice.
An exchange is treated as a sale for federal income tax purposes and,
depending on the circumstances, you may realized a short or long-term capital
gain or loss. In addition, you exchanges shares of a Fund that imposes a sales
charge into another Fund that imposes such a charge, there may be special tax
consequences.
28
<PAGE>
HOW TO EXCHANGE INVESTMENT SHARES
1. Satisfy the minimum account balance requirements
- You must maintain the required minimum account balance in the Fund out of
which you are exchanging shares.
2. Call (You must have completed the appropriate section on your account
application)
- The Huntington Funds at (800) 253-0412
- The Huntington Investment Company at (800) 322-4600
- Your Huntington Personal Banker
OR
Write
- The Huntington Funds
c/o The Huntington National Bank
41 South High Street
Columbus, Ohio 43287
3. Provide the required information
- Name of the Fund from which you wish to make the exchange (exchange OUT of)
- Specify the Investment Shares class
- Your account number
- The name and address on your account
- The dollar amount or number of shares to be exchanged
- Name of the Fund into which you wish to make the exchange (exchange INTO)
- Your signature (for written requests)
(For corporations, executors, administrators, trustees and guardians, and in
certain other special circumstances, telephone exchanges will not be
available and you will need a signature guarantee in order to make an
exchange)
29
<PAGE>
ABOUT REDEEMING
INVESTMENT SHARES
You may redeem Investment Shares of the Funds offered by this Prospectus on
any business day when both the Federal Reserve Banks and the New York Stock
Exchange are open. The price at which the Trust will redeem an Investment Share
will be its net asset value (determined after the order is considered received).
The Trust calculates the net asset value per share for each Fund offered by this
Prospectus as of the close of business of the New York Stock Exchange (generally
4:00 p.m. Eastern Time).
Notes About Redemptions
In order to redeem Investment Shares of the Money Market Fund or the U.S.
Treasury Money Market Fund on a particular day, the Trust must receive your
request before 1:00 p.m. (Eastern Time) that day. The applicable cut-off time is
10:30 a.m. (Eastern Time) for the Ohio Municipal Money Market Fund and 3:00 p.m.
(Eastern Time) for each of the Equity and Income Funds.
For shareholders who request redemptions prior to the applicable cut-off
time for the Fund being redeemed, usually the proceeds will be wired or a check
will be mailed on the same day; for redemption requests received after the
applicable cut-off time, usually proceeds will be wired or a check will be
mailed the following business day. Redemption requests made through The
Huntington Investment Company or a Huntington Personal Banker will be promptly
submitted to the Trust. Proceeds are wired to an account designated in writing
by the shareholder at any domestic commercial bank which is a member of the
Federal Reserve System. Proceeds to be paid by check are sent to the
shareholder's address of record.
To the extent permitted by federal securities laws, the Trust reserves the
right to suspend the redemption of shares of any of the Funds temporarily or
postpone payment for more than seven days.
The Trust may terminate or modify the methods of redemption at any time. In
such case, you will be promptly notified.
30
<PAGE>
HOW TO REDEEM INVESTMENT SHARES
1. Call (You must have completed the appropriate section on your account
application)
- The Huntington Funds at (800) 253-0412;
- The Huntington Investment Company at (800) 322-4600; or
- your Huntington Personal Banker.
OR
Write
- The Huntington Funds
c/o The Huntington National Bank
41 South High Street
Columbus, Ohio 43287
OR
Fax (and confirm by telephone)
o The Huntington Funds at (614) 480-5516
o The Huntington Investment Company at (614) 480-4682
OR
Write a check (Money Market Fund shares only)
- In an amount of at least $250 from your Money Market Fund checking account
(You may not use a check to close an account)
2. Provide the required information
- The name of the Fund from which you wish to redeem shares
- Specify the Investment Shares class
- Your account number
- The name and address on your account
- The dollar amount or number of shares you wish to redeem
- Your signature (for written requests)
(If you request a redemption of over $50,000, request any redemption to be
sent to an address other than the address on record with the Trust or request
any redemption to be paid to a person or persons other than the
shareholder(s) of record, you will need a signature guarantee in order to
redeem)
31
<PAGE>
Systematic Withdrawal Program
You may choose to receive periodic payments from redemptions of Investment
Shares of one or more Funds you hold through the Systematic Withdrawal Program.
To participate, you must have an account balance with the Trust of at least
$10,000. Once you have signed up for the Program by calling the Trust, The
Huntington Investment Company or your Personal Banker, the Trust will
automatically redeem shares from your account and electronically send the
proceeds to the bank account you specify.
Redemption of Accounts with Balances Under $1,000
Due to the high cost of maintaining accounts with low balances, if your
Investment Shares account balance in any one Fund falls below $1,000, the Trust
may choose to redeem those shares and close that account without your consent.
The Trust will not close any account which is held through a retirement plan or
any account whose value falls below $1,000 as a result of changes in a Fund's
net asset value. If the Trust plans to close your account, it will notify you
and provide you with 30 days to add to your account balance.
MANAGEMENT OF THE TRUST
The Trustees of the Trust are responsible for generally overseeing the
conduct of each Fund's business. Huntington, whose address is Huntington Center,
41 South High Street, Columbus, Ohio 43287, serves as investment adviser to the
Funds pursuant to investment advisory agreements with the Trust.
Investment Adviser
Subject to the supervision of the Trustees, Huntington provides a
continuous investment program for the Funds, including investment research and
management with respect to all securities, instruments, cash and cash
equivalents in the Funds. During the fiscal year ended December 31, 1998, the
Trust paid Huntington management fees as a percentage of average net assets as
follows:
Money Market Fund 0.28%
Ohio Municipal Money Market Fund 0.25%
U.S. Treasury Money Market Fund 0.20%
Growth Fund 0.60%
Income Equity Fund 0.60%
Mortgage Securities Fund 0.30%
Ohio Tax-Free Fund 0.50%
Michigan Tax-Free Fund 0.43%
Fixed Income Securities Fund 0.50%
Intermediate Government Income Fund 0.45%
Huntington is an indirect, wholly-owned subsidiary of Huntington Bancshares
Incorporated ("HBI"), a registered bank holding company with executive offices
located at Huntington Center, 41 South High Street, Columbus, Ohio 43287. With
$27 billion in assets as of December 31, 1998, HBI is a major Midwest regional
bank holding company. 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 $_____ billion of assets, and has investment
discretion over approximately $____ billion of that amount.
Huntington has served as investment adviser to mutual funds since 1987 and
has over 75 years of experience providing investment advisory services to
fiduciary accounts.
As part of its regular banking operations, Huntington may make loans to
public companies. Thus, it may be possible, from time to time, for the Funds to
hold or acquire the securities of issuers which are also lending clients of
Huntington. The lending relationship will not be a factor in the selection of
securities for the Funds.
Portfolio Managers
32
<PAGE>
James M. Buskirk, Chief Investment Officer of Huntington, has been the
portfolio manager of the Income Equity Fund since 1990. As Chief Investment
Officer of Huntington, Mr. Buskirk has ultimate responsibility for all
investment management activities. He brings more than 20 years of investment
experience to Huntington. His background includes extensive experience in
managing both personal and employee benefit balanced portfolios for a major
investment advisory company and bank holding company. Mr. Buskirk is a Chartered
Financial Analyst. He received his undergraduate degree in Finance from the Ohio
State University and his MBA from the University of Oregon.
Duane J. Carpenter, an Assistant Vice President of Huntington, has been a
portfolio manager of the Intermediate Government Income Fund, previously FMB
Intermediate Government Income Fund, since December, 1991; and the Michigan
Tax-Free Fund, previously FMB Michigan Tax-Free Bond Fund, since July, 1997. Mr.
Carpenter began co-managing the Mortgage Securities Fund in April 1998. Mr.
Carpenter has more than 14 years of investment management experience, and has
been employed by Huntington or First Michigan Bank since 1984. Mr. Carpenter is
a graduate of Hope College, Holland, Michigan.
William G. Doughty, a Vice President of Huntington, has been the portfolio
manager of the Ohio Tax-Free Fund since its inception in 1988. Mr. Doughty has
more than 25 years of experience in the investment field. He is responsible for
fixed income portfolio management and heads the fixed income trading operation
at Huntington. Mr. Doughty is a graduate of Franklin University with a degree in
Business Administration and has an MBA from the University of Dayton.
Philip H. Farrington, a Vice President of Huntington, has been a
co-portfolio manager of the Growth Fund since April of 1994. Mr. Farrington has
more than 30 years of investment management experience. He has held the
positions of Chief Investment Officer, Portfolio Manager, and Director of
Research for major banks and asset management companies. He is a member of the
equity management team at Huntington. Mr. Farrington is a graduate of Harvard
University.
Stephen M. Geis, a Vice President of Huntington, has been the portfolio
manager of the Short/Intermediate Fixed Income Securities Fund and the Fixed
Income Securities Fund since October 1989. Mr. Geis began co-managing the
Mortgage Securities Fund in April 1998. Mr. Geis, a Chartered Financial Analyst,
serves as Huntington's senior fixed income manager. Prior to joining Huntington
in 1988, he spent nearly ten years as a fixed income manager for a major
insurance company and treasurer of a regional bank. Mr. Geis received his
undergraduate degree from the College of Wooster, his MBA from the University of
Dayton, and his Juris Doctor from Capital University.
James Gibboney, Jr., a Vice President of Huntington, has been a
co-portfolio manager of the Growth Fund since November of 1993. Mr. Gibboney, a
Chartered Financial Analyst, serves as one of Huntington's balanced portfolio
managers. Prior to joining Huntington in 1989, he gained more than 12 years of
investment management experience as portfolio manager for a major investment
firm, a trust company, and a state government agency. He received his
undergraduate degree in Finance from the Ohio State University and an MBA from
Xavier University.
DISTRIBUTION OF THE FUNDS
SEI Investments Distribution Co., whose address is One Freedom Valley Road,
Oaks, Pennsylvania 19456, serves as the Distributor of the Funds offered by this
Prospectus.
In connection with the sale of Investment Shares, the Distributor collects
the applicable sales charge and, if the sale is made through a registered
broker-dealer, generally pays the selling broker-dealer up to 90% of that
33
<PAGE>
amount. The Distributor retains any portion not paid to a broker-dealer.
From time to time, the Distributor may use the sales charges it retains or
other funds available to it to pay cash or provide promotional incentives (such
as trips to sales seminars at luxury resorts, tickets and other items) to all
broker-dealers selling a target amount of Investment Shares of the Funds. The
Distributor may also use these funds to pay banks for providing sales and/or
administrative services on behalf of its customers who purchase Investment
Shares.
Distribution Plan (12b-1 Fees)
Consistent with Rule 12b-1 under the Investment Company Act of 1940, the
Trust has adopted a Distribution Plan which permits the Trust pay to brokers,
dealers and other financial institutions distribution and/or administrative
services fees (so-called 12b-1 fees) in connection with the sale and
distribution of Investment Shares and the provision of shareholder services.
Because these fees are paid out of a Fund's assets on an on-going basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges.
For the Mortgage Securities Fund, the maximum 12b-1 fee is 0.50% of the
Fund's Investment Shares average daily net assets. For each of the other Funds
offered by this Prospectus, the maximum 12b-1 fee is 0.25% of the applicable
Fund's Investment Shares average daily net assets. In each case, fees are
accrued daily, payable quarterly and calculated on an annual basis.
DIVIDENDS AND DISTRIBUTIONS
The Money Market Funds declare dividends on investment income daily and pay
them monthly. These Funds also make distributions of net capital gains, if any,
at least annually.
Each of the other Funds offered by this Prospectus declares and pays
dividends on investment income monthly. These Funds also make distributions of
net capital gains, if any, at least annually.
Distribution Options
All dividends and distributions payable to a holder of Investment Shares
will be automatically reinvested in additional Investment Shares of the
income-producing Fund, unless the shareholder makes an alternative election.
Shareholders of any of the Funds offered by this Prospectus may choose to
receive all distributions in cash. Shareholders of any of the Equity or Income
Funds offered by this Prospectus may choose to receive reinvest capital gains
distributions, but receive all other distributions in cash.
TAX CONSEQUENCES
There are many important tax consequences associated with investment in the
Funds offered by this Prospectus. Please read the summary below and consult your
tax advisor regarding the specific federal, state and local tax consequences
applicable to your investment.
Federal Income Taxes
Each of the Funds offered by this Prospectus intends to make distributions
of substantially all of its income and capital gains. The income distributed by
the Ohio Municipal Money Market Fund, the Ohio Tax- Free Fund and the Michigan
Tax-Free Fund is generally intended to be tax-exempt. For any portion of these
Funds not invested in tax-exempt securities, and for all other Funds offered by
this Prospectus, distributions of income, whether or not they are reinvested,
may be taxed as ordinary income. For all of the Funds offered by this
Prospectus, capital gains distributions may be subject to federal taxation. The
rate at which you may be taxed can vary depending on the length of time a Fund
holds a security.
34
<PAGE>
If you choose to sell shares of a Fund, or exchange shares of one Fund for
another, any gain on the transaction may be subject to federal income tax.
State Income Taxes
In addition to the exemption from federal income taxes, the income
distributed by the Ohio Municipal Money Market Fund and the Ohio Tax-Free Fund
is generally intended to be exempt from Ohio personal income taxes.
Similarly, the income distributed by the Michigan Tax-Free Fund is
generally intended to be exempt from Michigan city and state personal income
taxes and the Michigan single business tax.
ORGANIZATION OF THE TRUST
The Trust is organized as a Massachusetts business trust which offers
several Funds for investment. As of April 30, 1999, each of the Funds offered by
this Prospectus offers two classes of shares: Investment Shares and Trust
Shares. Trust Shares carry no sales charges and are not subject to 12b-1 fees.
Trust Shares are only offered through fiduciary, advisory, agency and other
similar accounts of The Huntington National Bank, its affiliates or
correspondent banks. By contrast, Investment Shares, which are offered to all
types of investors, carry a front-end sales charge, except with respect to the
Money Market Funds, and are subject to 12b-1 fees.
Both classes of shares offered by the Trust are fully transferable. Holders
of Investment Shares are entitled to dividends from Investment Shares assets and
holders of Trust Shares are entitled to dividends from Trust Shares assets.
Similarly, if the Trust were liquidated, the shareholders of each class would
receive the net assets of the Fund attributable to each respective class.
As a shareholder of any of the Huntington Funds, you are subject to
Massachusetts law and there is a possibility that you may be held personally
liable for the acts or obligations of the Trust on behalf of a Fund. In this
unlikely event, the Trust will use the property of the applicable Fund to
protect or compensate you. A shareholder will only incur personal financial loss
if the amount of the liability exceeds the value of the assets of the Fund.
35
<PAGE>
For copies of Annual or SemiAnnual Reports, the Statement of Additional
Information, other information or for any other inquiries:
Call (800) 253-0412
Write
The Huntington Funds
41 South High Street
Columbus, OH 43287
Log on to the Internet
The Huntington National Bank maintains a website, http://www.huntington.com,
with information relating to The Huntington Funds. The SEC's website,
http://www.sec.gov, contains text-only versions of The Huntington Funds
documents.
Contact the SEC
Call (800) SEC-0330 about visiting the SEC's Public Reference Room in Washington
D.C. to review and copy information about the Funds.
Alternatively, you may send your request and a duplicating fee to the SEC's
Public Reference Section, Washington, D.C. 20549-6009.
The Huntington Funds
More information about the Funds is available free upon request, including the
following:
Annual and Semi-Annual Reports
The Semi-Annual Report includes unaudited information about the performance of
the Funds, portfolio holdings and other financial information. The Annual Report
includes similar audited information as well as a letter from the Huntington
Funds portfolio managers discussing recent market conditions, economic trends
and investment strategies that significantly affected performance during the
last fiscal year.
Statement of Additional Information
Provides more detailed information about the Funds and its policies. A current
Statement of Additional Information is on file with the Securities and Exchange
Commission and is incorporated by reference into (considered a legal part of)
this Prospectus.
[Huntington logo]
THE HUNTINGTON NATIONAL BANK, a subsidiary of Huntington Bancshares,
Incorporated, is the Investment Adviser, Administrator, Custodian and
Recordkeeper of Huntington Funds.
SEI INVESTMENTS DISTRIBUTION CO. is the Distributor and is not affiliated with
The Huntington National Bank.
SEC File No. 811-5010
<PAGE>
TRUST SHARES PROSPECTUS
APRIL 30, 1999
Money Market Funds
The Huntington Money Market Fund
The Huntington Ohio Municipal Money Market Fund
The Huntington U.S. Treasury Money Market Fund
Equity Funds
The Huntington Growth Fund
The Huntington Income Equity Fund
Income Funds
The Huntington Mortgage Securities Fund
The Huntington Ohio Tax-Free Fund
The Huntington Michigan Tax-Free Fund
The Huntington Fixed Income Securities Fund
The Huntington Intermediate Government Income Fund
The Huntington Short/Intermediate Fixed Income Securities Fund
[Artwork]
[Huntington Funds logo]
As with all mutual funds, the Securities and Exchange Commission does not
guarantee that the information contained in this Prospectus is accurate or
complete, nor has it judged any of the Huntington Funds for investment merit. It
is a criminal offense to state otherwise.
Also, like other investments, you could lose money on your investment in a Fund.
Your investment in a Fund is not a bank deposit and it is not insured or
guaranteed by the FDIC or any other government agency.
<PAGE>
In connection with the offering made by this Prospectus, The Huntington Funds
have not authorized any person to give any information or to make any
representations other than those contained in this Prospectus. Consequently, you
may not rely upon any such information given or representations made as having
been authorized by a Fund or the Distributor. This Prospectus does not
constitute an offering by a Fund or by the Distributor in any jurisdiction in
which such offering may not lawfully be made.
<PAGE>
TABLE OF CONTENTS
INTRODUCTION......................................1
FUND SUMMARIES....................................1
The Money Market Funds............................2
Money Market Fund........................2
Ohio Municipal Money Market Fund.........2
U.S. Treasury Money Market Fund..........3
Equity Funds......................................3
Growth Fund..............................3
Income Equity Fund.......................4
Income Funds......................................4
Mortgage Securities Fund.................4
Ohio Tax-Free Fund.......................5
Michigan Tax-Free Fund...................6
Fixed Income Securities Fund.............7
Intermediate Government Income Fund .....7
Short/Intermediate Fixed Income
Securities Fund .......................8
Principal Investments............................10
RISK/RETURN INFORMATION..........................11
Money Market Fund.......................11
Ohio Municipal Money Market Fund........11
U.S. Treasury Money Market Fund.........12
Growth Fund.............................12
Income Equity Fund.....................13
Mortgage Securities Fund................13
Ohio Tax-Free Fund......................14
Michigan Tax-Free Fund..................14
Fixed Income Securities Fund...........15
Intermediate Government Income Fund ....15
Short/Intermediate Fixed Income
Securities Fund .......................16
FEES AND EXPENSES................................17
FINANCIAL HIGHLIGHTS.............................19
ABOUT PURCHASINGTRUST SHARES.....................27
Systematic Investment Program...........29
ABOUT EXCHANGING TRUST SHARES AMONG THE FUNDS....29
ABOUT REDEEMINGTRUST SHARES......................31
Redemption of Accounts with
Balances Under $1,000 ...............33
MANAGEMENT OF THE TRUST..........................33
Investment Adviser......................33
Portfolio Managers......................34
DISTRIBUTION OF THE FUNDS........................34
DIVIDENDS AND DISTRIBUTIONS......................35
Distribution Options....................35
TAX CONSEQUENCES.................................35
Federal Income Taxes....................35
State Income Taxes......................35
ORGANIZATION OF THE TRUST........................35
<PAGE>
INTRODUCTION
The Huntington Funds, formerly known as The Monitor Funds, are a series
of mutual funds advised by professional portfolio managers at The Huntington
National Bank. For convenience, we may refer to The Huntington Funds as "the
Trust" and to The Huntington National Bank as "Huntington" or "the Adviser."
This Prospectus provides you with important information about investing
in Trust Shares of certain Huntington Funds. You may only purchase Trust Shares
if you have a fiduciary, advisory, agency or other similar account with
Huntington or its affiliates or correspondent banks.
The Trust's Annual and Semi-Annual Reports to Shareholders contain
additional information about the investments of each of the Funds offered by
this Prospectus. In particular, the Annual Report discusses the relevant market
conditions and investment strategies used by Huntington which materially
affected the performance of the Huntington Equity and Income Funds during the
most recent fiscal year. You may obtain either of these reports at no cost by
calling (800) 253- 0412.
As with all mutual funds, loss of money is a risk of investing. This is
true even for the Money Market Funds which seek to preserve the value of your
investment at $1.00 per share.
Other important risks of investing in mutual funds include:
- - market risk - market values of securities move up and down, sometimes
rapidly and unpredictably;
- - management risk - the Adviser may not be able to achieve a Fund's desired
investment objective; and
- - liquidity risk - at any particular time, the Adviser may have difficulty
selling a certain security at its expected price.
Investment in any of the Funds offered by this Prospectus is not
insured by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
FUND SUMMARIES
In the pages that follow, we discuss the investment objectives for each
of the Funds offered by this Prospectus. Each Fund's investment objective is
fundamental and may be changed only by a vote of a majority of that Fund's
outstanding shares.
For each Fund offered by this Prospectus, we also summarize the
principal investment strategies used under normal market conditions. The Adviser
may employ other strategies and investment techniques on a less frequent basis.
Unless otherwise noted, the investment policies of these Funds are not
fundamental and the Trust's Board of Trustees may change them without
shareholder approval. Please note that when a limitation on an investment or
strategy is expressed in terms of a percentage of assets, we apply the
restriction at the time of the investment.
Also as part of each Fund summary, we discuss the principal investment
risks (the risks associated with the Fund's investment objective and principal
investment strategies) of each of the Funds offered by this Prospectus. There
are other risks applicable to investing in each of the Funds.
Finally, on page ____, we have provided a table illustrating the
principal
1
<PAGE>
investments of each Fund offered by this Prospectus.
The Money Market Funds
Money Market Fund
Investment Objective -- The Money Market Fund seeks to maximize current income
while preserving capital and maintaining liquidity by investing in a portfolio
of high quality money market instruments.
Principal Investment Strategies -- The Adviser invests in commercial paper and
other short-term money market instruments for the Money Market Fund. In managing
the portfolio, the Adviser determines an appropriate maturity range for the Fund
and each individual security held and endeavors to diversify the portfolio
across market sectors. In addition, the Adviser analyzes cash flows, maturities,
settlements, tax payments, yields and credit quality and monitors new issue
calendars for potential purchases. The process of selecting securities is
consistent with the credit quality and diversification requirements of Rule 2a-7
under the Investment Company Act of 1940.
Principal Risks -- As a Fund which invests in short-term fixed income
securities, the Money Market Fund is subject to:
- - interest rate risk - as interest rates change, the value of these
securities moves in the opposite direction; and
- - credit (or default) risk - due to economic or governmental factors, an
issuer may no longer be able to make principal and interest payments.
Although the Money Market Fund seeks to keep a constant share price of $1.00,
you may lose money by investing.
Ohio Municipal Money Market Fund
Investment Objective -- The Ohio Municipal Money Market Fund seeks to provide
income exempt from both federal regular income tax and Ohio personal income
taxes while preserving capital and maintaining liquidity.
Principal Investment Strategies -- The Adviser invests substantially all of the
assets of the Ohio Municipal Money Market Fund in short-term Ohio tax-exempt
securities. In managing the portfolio, the Adviser determines an appropriate
maturity range for the Fund and each individual security held and endeavors to
diversify the portfolio's holdings within Ohio as much as possible. In addition,
the Adviser analyzes cash flows, maturities, settlements, tax payments, yields
and credit quality and monitors new issue calendars for potential purchases. The
process of selecting securities is consistent with the credit quality and
diversification requirements of Rule 2a-7 under the Investment Company Act of
1940.
"Ohio tax-exempt securities" are debt obligations which (i) are issued by or on
behalf of the state of Ohio or its respective authorities, agencies,
instrumentalities and political subdivisions, and (ii) produce interest which,
in the opinion of bond counsel at the time of issuance, is exempt from federal
income tax and Ohio personal income taxes.
Fundamental Policy: at least 65% of total assets invested in Ohio tax-exempt
securities.
Fundamental Policy: at least 80% of annual interest income exempt from federal
regular income tax.
Principal Risks -- As a non-diversified Fund, the Ohio Municipal Money Market
Fund is subject to:
2
<PAGE>
- - concentration risk - performance is strongly dependent on the economy of
the state of Ohio.
As a Fund which invests in short-term fixed income securities, the Ohio
Municipal Money Market Fund is subject to:
- - interest rate risk - as interest rates change, the value of these
securities moves in the opposite direction; and
- - credit (or default) risk - due to economic or governmental factors, an
issuer may no longer be able to make principal and interest payments.
Although the Ohio Municipal Money Market Fund seeks to keep a constant share
price of $1.00, you may lose money by investing.
For temporary defensive or liquidity purposes, the Fund may invest in securities
which generate taxable income.
U.S. Treasury Money Market Fund
Investment Objective -- The U.S. Treasury Money Market Fund seeks to maximize
current income while preserving capital and maintaining liquidity by investing
exclusively in obligations issued by the U.S. Government and backed by its full
faith and credit and in repurchase agreements with respect to such obligations.
Principal Investment Strategies -- The Adviser invests substantially all of the
assets of the U.S. Treasury Money Market Fund in short-term obligations of the
U.S. government. In managing the portfolio, the Adviser determines an
appropriate maturity range for the Fund and each individual security held. In
addition, the Adviser analyzes cash flows, maturities, settlements, tax payments
and yields and monitors new issue calendars for potential purchases. The process
of selecting securities is consistent with the credit quality and
diversification requirements of Rule 2a-7 under the Investment Company Act of
1940.
Fundamental Policy: at least 65% of total assets invested in direct obligations
of the U.S. Treasury and repurchase agreements collateralized by such
obligations.
Principal Risks -- As a Fund which invests in U.S. Treasury securities, the U.S.
Treasury Money Market Fund is subject to:
- - interest rate risk - as interest rates change, the value of these
securities moves in the opposite direction.
Although the U.S. Treasury Money Market Fund seeks to keep a constant share
price of $1.00, you may lose money by investing.
Equity Funds
Growth Fund
Investment Objective -- The Growth Fund seeks to achieve long-term capital
appreciation primarily through investing in equity securities.
Principal Investment Strategies -- The Adviser intends to invest in medium or
large companies which it believes offer opportunities for growth at reasonable
prices. The Adviser frequently invests in established companies which it
believes have temporarily depressed prices. In selecting investments, the
Adviser reviews historical earnings, revenue and cash flow to identify the best
companies in each industry and to evaluate the growth potential of these
companies. On an ongoing basis, the Adviser also monitors the Fund's existing
positions to determine the benefits of retention.
3
<PAGE>
Fundamental Policy: at least 65% of total assets invested in equity securities.
Principal Risks -- As a Fund which invests in equity securities, the Growth Fund
is subject to:
- - equity risk - stock values can rise and fall quickly and dramatically in
response to changes in earnings or other conditions affecting the issuer's
profitability.
Income Equity Fund
Investment Objective -- The Income Equity Fund seeks to achieve high current
income and moderate appreciation of capital primarily through investment in
income-producing equity securities.
Principal Investment Strategies -- The Adviser focuses primarily on equity
securities which have a history of increasing or paying high dividends. As an
additional income source, the Adviser also invests in investment grade corporate
debt obligations.
Fundamental Policy: at least 65% of total assets invested in common stock,
securities convertible into common stock and securities deemed by the Adviser to
have common stock characteristics.
Principal Risks -- As a Fund which invests in equity securities, the Income
Equity Fund is subject to:
- - equity risk - stock values can rise and fall quickly and dramatically in
response to changes in earnings or other conditions affecting the issuer's
profitability.
As a Fund which invests in corporate debt obligations, the Income Equity Fund is
subject to:
- - interest rate risk - as interest rates change, the value of these
securities moves in the opposite direction; and
- - credit (or default) risk - due to economic or governmental factors, an
issuer may no longer be able to make principal and interest payments.
Income Funds
Mortgage Securities Fund
Investment Objective -- The Mortgage Securities Fund seeks to achieve current
income.
Principal Investment Strategies --The Adviser invests substantially all of the
assets of the Mortgage Securities Fund in mortgage-related securities. The
Adviser especially focuses on coupon issues which it expects to have limited
prepayment of principal. The Adviser endeavors to maintain a dollar-weighted
average portfolio life for the Fund of between three and ten years.
In making its investment decisions, the Adviser considers various economic
factors, Federal Reserve policy, interest rate trends and spreads between
different types of fixed income securities. In managing the portfolio, the
Adviser monitors the Fund's cash flow, maturities and interest payments and
utilizes a portfolio analytics program to track other Fund information.
"Mortgage-related securities" are securities, including derivative securities,
whose income is generated by payments of principal and interest on pools of
mortgage loans.
Fundamental Policy: at least 65% of total assets invested in mortgage-related
securities, including derivative mortgage securities.
4
<PAGE>
Principal Risks -- As a Fund which invests in mortgage-related securities, the
Mortgage Securities Fund is subject to:
- - prepayment risk - as interest rates fall, mortgage-related securities tend
to mature earlier than expected as a result of an increase in mortgage
refinancing or prepayment, sometimes resulting in a loss on the investment;
- - reinvestment risk - as prepayment increases as a result of lower interest
rates, the proceeds from maturing mortgage-related securities will be
reinvested at lower interest rates, thus reducing income; and
- - extension risk - as interest rates rise, mortgage-related securities tend
to mature later, thus effectively converting shorter-term securities into
more volatile long-term securities. This will also affect the Adviser's
ability to manage the average life of the Fund.
The above risks are more pronounced with respect to derivative mortgage
securities and can result in reduced liquidity.
As a Fund which invests in fixed income securities, the Mortgage Securities Fund
is subject to:
- - interest rate risk - as interest rates change, the value of these
securities moves in the opposite direction.
From time to time, the Adviser may, as part of its investment strategy, engage
in active and frequent trading. Higher portfolio turnover necessarily results in
increased transaction costs and may result in the acceleration of capital gains.
Ohio Tax-Free Fund
Investment Objective -- The Ohio Tax-Free Fund seeks to provide current income
exempt from federal income tax and Ohio personal income taxes.
Principal Investment Strategies --The Adviser invests substantially all of the
assets of the Ohio Tax-Free Fund in Ohio tax-exempt securities. The securities
selected by the Adviser are: (i) rated in one of the top four categories by an
NRSRO; or (ii) not rated, but deemed by the Adviser to be of comparable quality.
In addition, these securities will have remaining maturities of no more than 15
years and the Fund's anticipated dollar-weighted average maturity will be
between four and ten years. The Adviser also establishes a desired yield level
for new issues relative to U.S.
Treasury securities.
In managing the portfolio, the Adviser attempts to diversify the Fund's holdings
within Ohio as much as possible. In selecting securities, the Adviser monitors
economic activity and interest rate trends, reviews financial information
relating to each issuer and looks for attractively priced issues. To determine
the tax implications of each portfolio transaction, the Adviser evaluates
seasonal cash flows from coupon payments, maturities, settlements and tax
payments.
"Ohio tax-exempt securities" are debt obligations which (i) are issued by or on
behalf of the state of Ohio or its respective authorities, agencies,
instrumentalities and political subdivisions, and (ii) produce interest which,
in the opinion of bond counsel at the time of issuance, is exempt from federal
income tax and Ohio personal income taxes.
Fundamental Policy: at least 80% of total assets invested in Ohio tax-exempt
securities.
5
<PAGE>
Fundamental Policy: no investment in securities which generate income treated as
a preference item for federal alternative minimum tax purposes.
Principal Risks -- As a non-diversified Fund, the Ohio Tax-Free Fund is subject
to:
- - concentration risk - performance is strongly dependent on the economy of
the state of Ohio.
As a Fund which invests in fixed income securities, the Ohio Tax-Free Fund is
subject to:
- - interest rate risk - as interest rates change, the value of these
securities moves in the opposite direction; and
- - credit (or default) risk - due to economic or governmental factors, an
issuer may no longer be able to make principal and interest payments.
For temporary defensive or liquidity purposes, the Fund may invest in securities
which generate taxable income.
Michigan Tax-Free Fund
Investment Objective -- The Michigan Tax- Free Fund seeks to provide investors
with current income exempt from both federal and Michigan personal income taxes.
Principal Investment Strategies --The Adviser invests substantially all of the
assets of the Michigan Tax-Free Fund in Michigan tax-exempt securities. The
securities selected by the Adviser for investment will have remaining maturities
of no more than 15 years. The Adviser also establishes a desired yield level for
new issues relative to U.S. Treasury securities.
In managing the portfolio, the Adviser attempts to diversify the Fund's holdings
within Michigan as much as possible. In selecting securities, the Adviser
monitors economic activity and interest rate trends, reviews financial
information relating to each issuer and looks for attractively priced issues. To
determine the tax implications of each portfolio transaction, the Adviser
evaluates seasonal cash flows from coupon payments, maturities, settlements and
tax payments.
"Michigan tax-exempt securities" are debt obligations which (i) are issued by or
on behalf of the state of Michigan or its respective authorities, agencies,
instrumentalities and political subdivisions, and (ii) produce interest which,
in the opinion of bond counsel at the time of issuance, is exempt from federal
income tax and Michigan personal income taxes.
Fundamental Policy: at least 65% of total assets invested in Michigan tax-exempt
securities.
Fundamental Policy: no more than 20% of net assets invested in securities which
generate income treated as a preference item for federal alternative minimum tax
purposes.
Principal Risks -- As a non-diversified Fund, the Michigan Tax-Free Fund is
subject to:
- - concentration risk - performance is strongly dependent on the economy of
the state of Michigan.
As a Fund which invests in fixed income securities, the Michigan Tax-Free Fund
is subject to:
- - interest rate risk - as interest rates change, the value of these
securities moves in the opposite direction; and
- - credit (or default) risk - due to economic or governmental factors, an
issuer may no
6
<PAGE>
longer be able to make principal and interest payments.
For temporary defensive or liquidity purposes, the Fund may invest in securities
which generate taxable income.
Fixed Income Securities Fund
Investment Objective -- The Fixed Income Securities Fund seeks to achieve high
current income through investment in fixed income securities where the average
maturity of the Fund will not exceed 10 years.
Principal Investment Strategies --The Adviser principally invests in a
combination of corporate debt and obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. The selection of corporate debt
obligations is limited to those: (i) rated in one of the top four categories by
a Nationally Recognized Statistical Ratings Organization or (ii) not rated, but
deemed by the Adviser to be of comparable quality. For all types of investments,
the Adviser considers various economic factors, Federal Reserve policy, interest
rate trends, spreads between different types of fixed income securities and the
credit quality of existing holdings.
In managing the portfolio, the Adviser monitors the Fund's cash flow, maturities
and interest payments and utilizes a portfolio analytics program to track other
Fund information. The Adviser also follows closely new issue and secondary
activity in the corporate debt market.
Fundamental Policy: at least 65% of total assets invested in fixed income
securities.
Principal Risks -- As a Fund which invests in fixed income securities, the Fixed
Income Securities Fund is subject to:
- - interest rate risk - as interest rates change, the value of these
securities moves in the opposite direction; and
- - credit (or default) risk - due to economic or governmental factors, an
issuer may no longer be able to make principal and interest payments.
From time to time, the Adviser may, as part of its investment strategy, engage
in active and frequent trading. Higher portfolio turnover necessarily results in
increased transaction costs and may result in the acceleration of capital gains.
Intermediate Government Income Fund
Investment Objective -- The Intermediate Government Income Fund seeks to provide
investors with a high level of current income.
Principal Investment Strategies --The Adviser invests primarily in obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
and mortgage-related securities with dollar-weighted average maturities of not
less than three nor more than ten years. In general, in order to reduce
volatility during periods of interest rate fluctuation, the Adviser invests in
securities with a wide range of intermediate maturities. For all types of
investments, the Adviser considers various economic factors, Federal Reserve
policy, interest rate trends and spreads between different types of fixed income
securities.
In managing the portfolio, the Adviser monitors the Fund's cash flow, maturities
and interest
7
<PAGE>
payments and utilizes a portfolio analytics program to track other Fund
information.
"Mortgage-related securities" are securities, including derivative securities,
whose income is generated by payments of principal and interest on pools of
mortgage loans.
Fundamental Policy: at least 65% of total assets in the above securities.
Principal Risks -- As a Fund which invests in fixed income securities, the
Intermediate Government Income Fund is subject to:
- - interest rate risk - as interest rates change, the value of these
securities moves in the opposite direction.
As a Fund which invests in mortgage-related securities, the Intermediate
Government Income Fund is subject to:
- - prepayment risk - as interest rates fall, mortgage-related securities tend
to mature earlier than expected as a result of an increase in mortgage
refinancing or prepayment, sometimes resulting in a loss on the investment;
- - reinvestment risk - as prepayment increases as a result of lower interest
rates, the proceeds from maturing mortgage-related securities will be
reinvested at lower interest rates, thus reducing income; and
- - extension risk - as interest rates rise, mortgage-related securities tend
to mature later, thus effectively converting shorter-term securities into
more volatile long-term securities. This will also affect the Adviser's
ability to manage the average life of the Fund.
The above risks are more pronounced with respect to derivative mortgage
securities and can result in reduced liquidity.
From time to time, the Adviser may, as part of its investment strategy, engage
in active and frequent trading. Higher portfolio turnover necessarily results in
increased transaction costs and may result in the acceleration of capital gains.
Short/Intermediate Fixed Income Securities Fund
Investment Objective -- The Short/Intermediate Fixed Income Securities Fund
seeks to achieve current income through investment in fixed income securities
with a maximum maturity or average life for individual issues of 5 years or less
at the time of purchase and a dollar-weighted average portfolio maturity of more
than 2 but less than 5 years.
Principal Investment Strategies -- The Adviser invests primarily in corporate
debt and U.S. Government securities. The selection of corporate debt obligations
is limited to those: (i) rated in one of the top four categories by a Nationally
Recognized Statistical Ratings Organization or (ii) not rated, but deemed by the
Adviser to be of comparable quality. For all types of investments, the Adviser
considers various economic factors, Federal Reserve policy, interest rate
trends, spreads between different types of fixed income securities and the
credit quality of existing holdings.
In managing the portfolio, the Adviser monitors the Fund's cash flow, maturities
and interest payments and utilizes a portfolio analytics program to track other
Fund information. The Adviser also follows closely new issue and secondary
activity in the corporate debt market.
8
<PAGE>
Fundamental Policy: at least 65% of total assets in fixed income securities.
Principal Risks -- As a Fund which invests in fixed income securities, the
Short/Intermediate Fixed Income Securities Fund is subject to:
- - interest rate risk - as interest rates change, the value of these
securities moves in the opposite direction.
From time to time, the Adviser may, as part of its investment strategy, engage
in active and frequent trading. Higher portfolio turnover necessarily results in
increased transaction costs and may result in the acceleration of capital gains.
9
<PAGE>
Principal Investments
The table below summarizes the principal investments for each of the Funds
offered by this Prospectus. Each of these Funds may also invest up to 100% of
its assets in cash, money market instruments, repurchase agreements and other
short-term securities for temporary defensive or liquidity purposes. In these
situations, a Fund may not achieve its investment objective.
A detailed description of each of the principal investments, as well as other
permissible investments and strategies, is contained in the Statement of
Additional Information.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Short/
Ohio U.S. Interm
Municipal Treasury Ohio Michigan Fixed Interm Fixed
Money Money Money Income Mortgage Tax- Tax- Income Govt Income
Market Market Market Growth Equity Securities Free Free Securities Income Securities
Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial Paper X X X
- ------------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock X X
- ------------------------------------------------------------------------------------------------------------------------------------
Preferred Stock X
- ------------------------------------------------------------------------------------------------------------------------------------
Corporate Debt X X
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Government
Securities X X X X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
Mortgage-Related
Securities X X X
- ------------------------------------------------------------------------------------------------------------------------------------
Ohio Tax-Exempt
Securities X X
- ------------------------------------------------------------------------------------------------------------------------------------
Michigan Tax-Exempt
Securities X
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
RISK/RETURN INFORMATION
The bar charts and tables below provide some indication of the risks and
volatility of investments in the Funds offered by this Prospectus. The charts
illustrate changes in each Fund's performance from year to year and the tables
show how each Fund's average annual returns compare with those of one or more
broad measures of market performance. The way a Fund has performed in the past
is not necessarily an indication of the way it will perform in the future.
Money Market Fund
- -----------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- -----------------------------------------------
IBC's
Prime
Institutional
Fund Average
- -----------------------------------------------
1 Year 5.13% 5.33%
- -----------------------------------------------
5 Years 5.16%
- -----------------------------------------------
10 Years N/A
- -----------------------------------------------
1989 9.13%
1990 8.10%
1991 5.85%
1992 3.44%
1993 2.74%
1994 3.86%
1995 5.58%
1996 5.01%
1997 5.17%
1998 5.13%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
__________% _________%
Ohio Municipal Money Market Fund
- -----------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- -----------------------------------------------
IBC's
Tax-Free
State Specific
Fund Average
- -----------------------------------------------
1 Year 3.07% 2.87%
- -----------------------------------------------
5 Years 2.92%
- -----------------------------------------------
10 Years N/A
- -----------------------------------------------
1989 6.01%
1990 5.43%
1991 4.07%
1992 2.61%
1993 2.08%
1994 2.41%
1995 3.57%
1996 3.14%
1997 3.27%
1998 3.07%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% __________%
11
<PAGE>
U.S. Treasury Money Market Fund
- -----------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- -----------------------------------------------
IBC's
Government
Institutional
Fund Index
- -----------------------------------------------
1 Year 4.95% 5.11%
- -----------------------------------------------
5 Years 4.99%
- -----------------------------------------------
1990 7.97%
1991 5.66%
1992 3.43%
1993 2.77%
1994 3.79%
1995 5.53%
1996 4.98%
1997 5.06%
1998 4.95%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% ____________%
Growth Fund
- -----------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- -----------------------------------------------
Fund S&P 500
- -----------------------------------------------
1 Year 18.55%
- -----------------------------------------------
5 Years 20.16%
- -----------------------------------------------
1990 0.16%
1991 26.47%
1992 7.88%
1993 3.53%
1994 2.28%
1995 30.75%
1996 16.72%
1997 35.37%
1998 18.55%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% ____________%
12
<PAGE>
Income Equity Fund
- -----------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- -----------------------------------------------
Fund S&P 500
- -----------------------------------------------
1 Year 17.79%
- -----------------------------------------------
5 Years 17.09%
- -----------------------------------------------
1990 -8.86%
1991 23.20%
1992 7.49%
1993 10.85%
1994 -1.82%
1995 29.26%
1996 16.88%
1997 25.99%
1998 17.79%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% ____________%
Mortgage Securities Fund
- -----------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- -----------------------------------------------
Lehman
Mortgage-
Backed
Fund Index
- -----------------------------------------------
1 Year 6.41%
- -----------------------------------------------
5 Years 4.05%
- -----------------------------------------------
1993 12.10%
1994 -24.59%
1995 31.10%
1996 6.56%
1997 8.77%
1998 6.41%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% ____________%
13
<PAGE>
Ohio Tax-Free Fund
- ---------------------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- ---------------------------------------------------------
Lehman Lipper
5-Year Interm.
Gen. Obs. Muni
Fund Index Index
- ---------------------------------------------------------
1 Year 5.16%
- ---------------------------------------------------------
5 Years 4.61%
- ---------------------------------------------------------
10 Years 5.97%
- ---------------------------------------------------------
1989 7.37%
1990 6.28%
1991 9.06%
1992 6.04%
1993 8.08%
1994 -2.57%
1995 11.35%
1996 3.48%
1997 6.11%
1998 5.16%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% ____________%
Michigan Tax-Free Fund*
- ---------------------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- ---------------------------------------------------------
Lehman Lehman
5-Year 7-Year
Muni Muni
Fund Index Index
- ---------------------------------------------------------
1 Year 5.18%
- ---------------------------------------------------------
5 Years 5.26%
- ---------------------------------------------------------
1993 %
1994 %
1995 %
1996 %
1997 %
1998 5.18%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% ____________%
*Returns from 1993-1998 include the performance of the predecessor FMB Michigan
Tax-Free Fund.
14
<PAGE>
Fixed Income Securities Fund
- ---------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- ---------------------------------------------
Lehman
Govt/Corp
Bond
Fund Index
- ---------------------------------------------
1 Year 9.18%
- ---------------------------------------------
5 Years 6.51%
- ---------------------------------------------
1990 7.49%
1991 16.13%
1992 6.54%
1993 10.32%
1994 -4.62%
1995 17.95%
1996 2.56%
1997 8.83%
1998 9.18%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% ____________%
Intermediate Government Income Fund*
- ---------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- ---------------------------------------------
Lehman
Interm.
Govt/Corp
Fund Index
- ---------------------------------------------
1 Year 8.00%
- ---------------------------------------------
5 Years 5.88%
- ---------------------------------------------
1993 %
1994 %
1995 %
1996 %
1997 %
1998 8.00%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% ____________%
*Returns for 1993-1998 include performance of the predecesssor FMB Intermediate
Government Income Fund.
15
<PAGE>
Short/Intermediate Fixed Income Securities Fund
- -------------------------------------------------------
Average Annual Total Returns
(on a calendar year basis)
- -------------------------------------------------------
Merrill
Lynch Lehman
1-5Year Interm.
Govt/Corp Govt/Corp
Fund Index Index
- -------------------------------------------------------
1 Year 7.13%
- -------------------------------------------------------
5 Years 5.82%
- -------------------------------------------------------
1990 8.34%
1991 13.62%
1992 6.25%
1993 7.43%
1994 -0.98%
1995 12.81%
1996 4.08%
1997 6.56%
1998 7.13%
Best Quarter (__/__/__) Worst Quarter (__/__/__)
___________% ____________%
16
<PAGE>
FEES AND EXPENSES
This table describes the fees and expenses you may pay if you buy and
hold shares in the Funds offered by this Prospectus.
Annual Trust Shares Operating Expenses (expenses that are deducted from Fund
assets)
<TABLE>
<CAPTION>
Total Annual
Distribution Investment
Management (12b-1) Other Shares Operating
Fees Fees Expenses(1) Expenses
---- ---- ----------- --------
<S> <C> <C> <C>
Money Market Fund................................ 0.28% None 0.25% 0.53%
Ohio Municipal Money Market Fund(2)*............. 0.30% None 0.24% 0.54%
U.S. Treasury Money Market Fund.................. 0.20% None 0.22% 0.42%
Growth Fund...................................... 0.60% None 0.23% 0.83%
Income Equity Fund............................... 0.60% None 0.23% 0.83%
Mortgage Securities Fund(3)*..................... 0.50% None 0.39% 0.89%
Ohio Tax-Free Fund............................... 0.50% None 0.29% 0.79%
Michigan Tax-Free Fund........................... 0.50% None 0.30% 0.80%
Fixed Income Securities Fund..................... 0.50% None 0.25% 0.75%
Intermediate Government Income Fund.............. 0.50% None 0.27% 0.77%
Short/Intermediate Fixed Income Securities Fund.. 0.50% None 0.23% 0.73%
</TABLE>
(1) Other expenses have been restated to reflect current fees.
(2) For the fiscal year ended December 31, 1998, the Adviser waived 0.05% in
management fees for the Ohio Municipal Money Market Fund.
(3) For the fiscal year ended December 31, 1998, the Adviser waived 0.20% in
management fees for the Mortgage Securities Fund. For the seven-month period
ended December 31, 1998, the Adviser waived 0.07% in management fees for the
Michigan Tax-Free Fund and 0.05% for the Intermediate Government Income Fund.
* The Adviser can terminate its voluntary waiver at any time in its sole
discretion.
17
<PAGE>
EXAMPLE
This Example is intended to help you compare the cost of investing in a Fund
offered by this Prospectus with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in a Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that a
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Fund..................................... $54 $170 $296 $665
Ohio Municipal Money Market Fund...................... $55 $173 $302 $677
U.S. Treasury Money Market Fund....................... $43 $135 $235 $530
Growth Fund........................................... $85 $265 $460 $1,025
Income Equity Fund.................................... $85 $265 $460 $1,096
Mortgage Securities Fund.............................. $91 $284 $493 $1,096
Ohio Tax-Free Fund.................................... $81 $252 $439 $978
Michigan Tax-Free Fund................................ $82 $255 $444 $990
Fixed Income Securities Fund.......................... $77 $240 $417 $930
Intermediate Government Income Fund................... $79 $246 $428 $954
Short/Intermediate Fixed Income Securities Fund....... $75 $233 $406 $906
</TABLE>
18
<PAGE>
FINANCIAL HIGHLIGHTS -- Money Market Funds
(For a share outstanding throughout each period)
The following financial highlights for the periods or years ended
December 31, 1997 and 1998 were audited by the Trust's independent auditors,
KPMG LLP. The financial highlights for the periods or years ended December 31,
1994, 1995 and 1996 were audited by the Trust's former auditors. KPMG LLP's
report is included in the Trust's 1998 Annual Report to Shareholders and is
incorporated by reference into (considered a legal part of) the Combined
Statement of Additional Information.
<TABLE>
<CAPTION>
Net Asset Distributions to Net Asset
Value, Net shareholders Value,
Year Ended beginning investment from net end of Total
December 31, of period income investment income period Return Expenses
- ----------------------------------------------------------------------------------------------------------------------------------
TRUST SHARES
Money Market
<C> <C> <C> <C> <C> <C> <C>
1998 $1.00 $0.05 $(0.05) $1.00 5.13% 0.50%
1997 1.00 0.05 (0.05) 1.00 5.17% 0.51%
1996 1.00 0.05 (0.05) 1.00 5.01% 0.53%
1995 1.00 0.05 (0.05) 1.00 5.58% 0.53%
1994 1.00 0.04 (0.04) 1.00 3.86% 0.51%
Ohio Municipal Money Market
1998 $1.00 $0.03 $(0.03) $1.00 3.07% 0.47%
1997 1.00 0.03 (0.03) 1.00 3.27% 0.45%
1996 1.00 0.03 (0.03) 1.00 3.14% 0.42%
1995 1.00 0.04 (0.04) 1.00 3.57% 0.42%
1994 1.00 0.02 (0.02) 1.00 2.41% 0.45%
U.S. Treasury Money Market
1998 $1.00 $0.05 $(0.05) $1.00 4.95% 0.40%
1997 1.00 0.05 (0.05) 1.00 5.06% 0.42%
1996 1.00 0.05 (0.05) 1.00 4.98% 0.42%
1995 1.00 0.05 (0.05) 1.00 5.53% 0.43%
1994 1.00 0.04 (0.04) 1.00 3.79% 0.42%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
19
<PAGE>
Net Net assets,
investment Expense waiver/ end of period
income reimbursement(a) (000 omitted)
- ----------------------------------------------------------------
4.99% -- $700,540
5.06% -- 424,050
4.90% -- 337,962
5.44% 0.01% 296,764
3.75% 0.02% 287,805
3.03% 0.05% $102,606
3.23% 0.07% 72,667
3.10% 0.12% 56,654
3.52% 0.20% 56,551
2.40% 0.19% 39,624
4.84% -- $447,305
4.95% -- 483,548
4.87% -- 474,593
5.40% 0.03% 277,142
3.76% 0.02% 256,538
- ----------------------------------------------------------------
20
<PAGE>
FINANCIAL HIGHLIGHTS -- Equity Funds
(For a share outstanding throughout each period)
The following financial highlights for the periods or years ended
December 31, 1997 and 1998 were audited by the Trust's independent auditors,
KPMG LLP. The financial highlights for the periods or years ended December 31,
1994, 1995 and 1996 were audited by the Trust's former auditors. KPMG LLP's
report is included in the Trust's 1998 Annual Report to Shareholders and is
incorporated by reference into (considered a legal part of) the Combined
Statement of Additional Information.
<TABLE>
<CAPTION>
Distributions to Distributions to
Net realized Distributions to shareholders shareholders in
Net Asset and shareholders from net excess of net
Value, Net unrealized Total from from net realized gain realized gain on
Year Ended beginning investment gain/(loss) on investment investment on investment investment
December 31, of period income investments operations income transactions transactions
- ------------------------------------------------------------------------------------------------------------------------------------
TRUST SHARES
Growth
<S> <C> <C> <C> <C> <C> <C> <C>
1998 $43.48 $0.29 $7.69 $7.98 $(0.29) $(1.21) $(0.18)
1997 33.97 0.29 11.63 11.92 (0.29) (2.12) --
1996 30.81 0.40 4.72 5.12 (0.40) (1.56) --
1995 26.30 0.43 7.62 8.05 (0.43) (3.11) --
1994 26.17 0.39 0.21 0.60 (0.40) (0.07) --
Income Equity
1998 $36.30 $1.09 $5.26 $6.35 $(1.09) $(0.71) --
1997 30.26 1.03 6.70 7.73 (1.04) (0.65) --
1996 27.25 1.00 3.51 4.51 (1.00) (0.50) --
1995 21.93 0.94 5.34 6.28 (0.96) -- --
1994 23.21 0.88 (1.29) (0.41) (0.87) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
21
<PAGE>
<TABLE>
<CAPTION>
Net Asset Net assets,
Value, Net end of Portfolio
Total end of Total investment Expense Waiver/ period (000 turnover
distributions period Return Expenses income Reimbursement(b) omitted) rate
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$(1.68) $49.78 18.55% 0.79% 0.62% -- $322,564 11%
(2.40) 43.48 35.37% 0.80% 0.73% -- 228,138 12%
(1.96) 33.97 16.72% 0.83% 1.20% -- 175,764 21%
(3.54) 30.81 30.75% 0.86% 1.34% 0.05% 143,421 37%
(0.47) 26.30 2.28% 0.88% 1.52% 0.04% 103,463 42%
$(1.80) $40.85 17.79% 0.81% 2.83% -- $249,051 13%
(1.69) 36.30 25.99% 0.81% 3.08% -- 214,625 24%
(1.50) 30.26 16.88% 0.82% 3.50% -- 172,767 25%
(0.96) 27.25 29.26% 0.82% 3.85% -- 141,892 17%
(0.87) 21.93 (1.82%) 0.84% 3.91% -- 115,399 50%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
FINANCIAL HIGHLIGHTS -- Income Funds
(For a share outstanding throughout each period)
The following financial highlights for the periods or years ended
December 31, 1997 and 1998 were audited by the Trust's independent auditors,
KPMG LLP. The financial highlights for the periods or years ended December 31,
1994, 1995 and 1996 were audited by the Trust's former auditors. KPMG LLP's
report is included in the Trust's 1998 Annual Report to Shareholders and is
incorporated by reference into (considered a legal part of) the Combined
Statement of Additional Information.
<TABLE>
<CAPTION>
Distributions to
Distributions to shareholders Distributions
Net Asset Net realized shareholders from net in excess
Value, Net and unrealized Total from from net realized gain of net
Year Ended beginning investment gain/(loss) on investment investment on investment investment
December 31, of period income investments operations income transactions income+
- ------------------------------------------------------------------------------------------------------------------------------------
TRUST SHARES
Ohio Tax-Free
<C> <C> <C> <C> <C> <C> <C> <C>
1998 $21.74 $0.98 $0.11 $1.09 $(0.98) $(0.02) $--
1997 21.49 1.01 0.27 1.28 (1.02) (0.01) --
1996 21.77 1.01 (0.28) 0.73 (1.01) -- --
1995 20.50 1.01 1.27 2.28 (1.01) -- --
1994 22.04 0.99 (1.55) (0.56) (0.98) -- --
Fixed Income
Securities
1998 $21.41 $1.26 $0.65 $1.91 $(1.26) $(0.28) $--
1997 20.94 1.31 0.47 1.78 (1.31) -- --
1996 21.78 1.34 (0.83) 0.51 (1.35) -- --
1995 19.69 1.34 2.09 3.43 (1.34) -- --
1994 22.03 1.28 (2.28) (1.00) (1.34) -- --
Mortgage Securities
1998(b) $8.24 $0.50 $0.01 $0.51 $(0.50) $-- $--
1997(b) 8.06 0.52 0.16 0.68 (0.50) -- --
1996(b) 8.09 0.55 (0.04) 0.51 (0.54) -- --
1995(b) 6.69 0.55 1.46 2.01 (0.55) -- (0.06)
1994(b) 9.93 0.89 (3.19) (2.30) (0.93) -- (0.01)
Short/Intermediate Fixed Income
Securities
1998 $20.04 $1.15 $0.24 $1.39 $(1.15) $(0.15) $--
1997 19.96 1.19 0.08 1.27 (1.19) -- --
1996 20.35 1.17 (0.37) 0.80 (1.19) -- --
1995 19.14 1.18 1.21 2.39 (1.18) -- --
1994 20.57 1.13 (1.33) (0.20) (1.23) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Distributions in excess of net investment income were the result of certain
book and tax timing differences. These distributions do not represent a return
of capital for federal income tax purposes.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(b) Per share information presented is based upon the monthly number of shares
outstanding due to large fluctuations in the number of shares outstanding during
the period.
23
<PAGE>
<TABLE>
<CAPTION>
Net Assets,
Net Asset Net end of Portfolio
Total Value, end Total Investment Expense Waiver/ period (000 turnover
distributions of period Return Expenses Income Reimbursement(a) omitted) rate
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$(1.00) $21.83 5.16% 0.73% 4.50% -- $63,148 9%
(1.03) 21.74 6.11% 0.72% 4.72% -- 64,325 14%
(1.01) 21.49 3.48% 0.76% 3.48% -- 64,799 6%
(1.01) 21.77 11.35% 0.78% 4.74% 0.08% 59,869 13%
(0.98) 20.50 (2.57%) 0.77% 4.68% 0.04% 56,469 12%
$(1.54) $21.78 9.18% 0.70% 5.78% -- $168,453 47%
(1.31) 21.41 8.83% 0.70% 6.26% -- 153,374 116%
(1.35) 20.94 2.56% 0.74% 6.39% -- 144,038 16%
(1.34) 21.78 17.95% 0.77% 6.41% 0.05% 141,423 20%
(1.34) 19.69 (4.62%) 0.75% 6.26% 0.04% 119,117 23%
$(0.50) $8.25 6.41% 0.63% 6.09% 0.20% $34,991 17%
(0.50) 8.24 8.77% 0.66% 6.39% 0.20% 37,057 63%
(0.54) 8.06 6.56% 0.67% 6.86% 0.29% 39,566 90%
(0.61) 8.09 31.10% 0.49% 7.29% 0.63% 52,667 194%
(0.94) 6.69 (24.59%) 0.88% 11.16% 0.12% 54,164 91%
$(1.30) $20.13 7.13% 0.71% 5.68% -- $127,715 61%
(1.19) 20.04 6.56% 0.71% 5.94% -- 126,845 160%
(1.19) 19.96 4.08% 0.72% 5.83% -- 125,514 39%
(1.18) 20.35 12.81% 0.74% 5.93% -- 133,951 40%
(1.23) 19.14 (0.98%) 0.72% 5.76% -- 125,112 38%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
FINANCIAL HIGHLIGHTS -- Income Funds (cont'd)
(For a share outstanding throughout each period)
The following financial highlights for the seven-month period ended
December 31, 1998 and the six-month period ended May 31, 1998 were audited by
the Trust's independent auditors, KPMG LLP. The financial highlights for the
periods or years ended December 31, 1994, 1995, 1996 and 1997 have been derived
from the financial statements for the Consumer Class of shares of the FMB
Michigan Tax- Free Bond Fund and the FMB Intermediate Government Income Fund
(the "FMB Funds"), the funds which were reorganized to create the Michigan
Tax-Free Fund and the Intermediate Government Income Fund, respectively on April
6, 1998. KPMG LLP's report is included in the Trust's 1998 Annual Report to
Shareholders and is incorporated by reference into (considered a legal part of)
the Combined Statement of Additional Information.
<TABLE>
<CAPTION>
Distributions to
Distributions to shareholders
Net Asset Net realized shareholders from net
Value, Net and unrealized Total from from net realized gain
beginning investment gain/(loss) on investment investment on investment
Period Ended,(a) of period income investments operations income transactions
- --------------------------------------------------------------------------------------------------------------------------------
<S>
TRUST SHARES
Michigan Tax-Free
<C> <C> <C> <C> <C> <C>
1998(c) $10.97 $0.29 $0.06 $0.35 $(0.31) $(0.02)
1998(d) 10.89 0.25 0.06 0.31 (0.23) --
1997(e) 10.79 0.50 0.10 0.60 (0.50) --
1996(e) 10.79 0.50 -- 0.50 (0.50) --
1995(e) 9.97 0.49 0.82 1.31 (0.49) --
1994(e) 10.61 0.47 (0.63) (0.16) (0.47) (0.01)
Intermediate Government Income
1998(c) $10.23 $0.33 $0.21 $0.54 $(0.35) --
1998(d) 10.16 0.29 0.04 0.33 (0.26) --
1997(e) 10.13 0.59 0.02 0.61 (0.58) --
1996(e) 10.24 0.59 (0.10) 0.49 (0.60) --
1995(e) 9.66 0.61 0.58 1.19 (0.61) --
1994(e) 10.46 0.57 (0.80) (0.23) (0.57) --
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The fiscal year end of Huntington Michigan Tax-Free Fund and Huntington
Intermediate Government Income Fund was changed from November 30 to May 31, and
subsequently to December 31 to coincide with the other Huntington Funds.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(c) Seven months ended December 31.
(d) Six months ended May 31.
(e) Year ended November 30.
(f) Expense ratios reflect the operating expenses in effect during the period
prior to and subsequent to the reorganization with the FMB Funds.
(g) Computed on an annualized basis.
(h) Not annualized.
25
<PAGE>
<TABLE>
<CAPTION>
Net Assets,
Net Asset Net end of Portfolio
Total Value, end Total Investment Expense Waiver/ period (000 turnover
distributions of period Return Expenses Income Reimbursement(b) omitted) rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$(0.33) $10.99 3.31%(h) 0.67%(g) 4.57%(g) 0.07%(g) $23,995 7%(h)
(0.23) 10.97 2.86%(h) 0.75%(f)(g) 4.55%(g) 0.14%(g) 27,440 2%(h)
(0.50) 10.89 5.73% 0.73% 4.66% 0.27% 24,954 7%
(0.50) 10.79 4.78% 0.68% 4.72% 0.37% 23,082 16%
(0.49) 10.79 13.21% 0.70% 4.62% 0.48% 20,700 35%
(0.48) 9.97 (1.49%) 0.51% 4.50% 0.68% 15,495 22%
$(0.35) $10.42 5.34%(h) 0.69%(g) 5.38%(g) 0.05%(g) $109,261 7%(h)
(0.26) 10.23 3.33%(h) 0.76%(f)(g) 5.67%(g) 0.02%(g) 116,317 14%(h)
(0.58) 10.16 6.27% 0.79% 5.91% -- 115,064 28%
(0.60) 10.13 4.97% 0.79% 5.89% -- 108,047 16%
(0.61) 10.24 12.64% 0.78% 6.09% -- 114,646 27%
(0.57) 9.66 (2.23%) 0.83% 6.45% 0.02% 115,449 20%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
ABOUT PURCHASING
TRUST SHARES
You may purchase Trust Shares of the Funds offered by this Prospectus on
any business day when both the Federal Reserve Banks and the New York Stock
Exchange are
open.
What Shares Cost
The offering price of a Trust Share is its net asset value (determined
after the order is considered received). The Trust calculates the net asset
value per share for each Fund offered by this Prospectus as of the close of
business of the New York Stock Exchange (generally 4:00 p.m. Eastern Time).
There are no sales charges imposed on the purchase of Trust Shares.
The Trust attempts to stabilize the net asset value per share for each
of the Money Market Funds at $1.00 per share by valuing its portfolio securities
using the amortized cost method, as described more fully in the Statement of
Additional Information. The Trust calculates net asset value for each of the
other Funds offered by this Prospectus by valuing securities held based on
market value.
Notes About Purchases
In order to purchase Trust Shares on a particular day, the Trust must
receive payment before 4:00 p.m. (Eastern Time) that day. You will begin earning
dividends on the day of your investment in the Money Market Fund or the U.S.
Treasury Money Market Fund if the Trust receives payment before 1:00 p.m.
(Eastern Time). The applicable cut-off time for the Ohio Municipal Money Market
Fund is 10:30 a.m. (Eastern Time).
The Trust reserves the right to suspend the sale of shares of any of the
Funds temporarily and the right to refuse any order to purchase shares of any of
the Funds.
If the Trust receives insufficient payment for a purchase, it will
cancel the purchase and may charge you a fee. In addition, you will be liable
for any losses incurred by the Trust in connection with the transaction.
27
<PAGE>
HOW TO BUY TRUST SHARES
1. Minimum investment requirements:
- $1,000 for initial investments outside the Systematic Investment
Program
- $500 for subsequent investments
- $50 for initial and subsequent investments within the Systematic
Investment Program
2. Call
- Your Huntington Account Administrator
3. Make payment
- By check payable to the applicable Huntington Fund-Trust Shares to:
The Huntington Funds
c/o The Huntington National Bank
41 South High Street
Columbus, Ohio 43287
OR
(The Trust will treat your order as having been received once payment is
converted to federal funds by the Trust's transfer agent)
- By federal funds wire to:
The Huntington National Bank
ABA 044000024
Trust Department
Account Number 01891160404
Huntington Retail
Attention: Shareholder Services
(The Trust will treat your order as having been received immediately upon
receipt by the Trust's transfer agent)
OR
- Through the Systematic Investment Program
(Once you become a participant in the Program, your investments will be made
automatically at your requested intervals)
Other methods of acceptable payment are discussed in the Statement of
Additional Information.
28
<PAGE>
Systematic Investment Program
You may invest on a regular basis in Trust Shares of one or more Funds
offered by this Prospectus through the Systematic Investment Program. To
participate, you must open an account with the Trust and invest at least $50 at
periodic intervals.
Once you have signed up for the Program, the Trust will automatically
withdraw money from your bank account and invest it in Trust Shares of the Fund
or Funds you specify. Your participation in the Program may be canceled if you
do not maintain sufficient funds in your bank account to pay for your
investment.
ABOUT EXCHANGING TRUST SHARES
AMONG THE FUNDS
On any business day when both the Federal Reserve Banks and the New York
Stock Exchange are open, you may exchange Trust Shares of any Huntington Fund
for Trust Shares of any other Huntington Fund offering such shares. The Trust
makes these exchanges at net asset value (determined after the order is
considered received).
Notes About Exchanges
In order to exchange Trust Shares on a particular day, the Trust must receive
your request before 4:00 p.m. (Eastern Time) that day.
The Trust may terminate or modify the exchange privilege at any time. In the
case of termination or material changes other than the elimination of applicable
sales charges, you will be given 60 days' prior notice.
An exchange is treated as a sale for federal income tax purposes and,
depending on the circumstances, you may realized a short or long-term capital
gain or loss. In addition, you exchanges shares of a Fund that imposes a sales
charge into another Fund that imposes such a charge, there may be special tax
consequences.
29
<PAGE>
HOW TO EXCHANGE TRUST SHARES
1. Satisfy the minimum account balance requirements
- You must maintain the required minimum account balance in the Fund out of
which you are exchanging shares.
2. Call
- Your Huntington Account Administrator
OR
Write
- The Huntington Funds
c/o The Huntington National Bank
41 South High Street
Columbus, Ohio 43287
3. Provide the required information
- Name of the Fund from which you wish to make the exchange
(exchange OUT of)
- Specify the Trust Shares class o Your account number
- The name and address on your account
- The dollar amount or number of shares to be exchanged
- Name of the Fund into which you wish to make the exchange (exchange INTO)
- Your signature (for written requests)
(For corporations, executors, administrators, trustees and guardians, and in
certain other special circumstances, telephone exchanges will not be
available and you will need a signature guarantee in order to make an
exchange)
30
<PAGE>
ABOUT REDEEMING
TRUST SHARES
You may redeem Trust Shares of the Funds offered by this Prospectus on any
business day when both the Federal Reserve Banks and the New York Stock Exchange
are open. The price at which the Trust will redeem a Trust Share will be its net
asset value (determined after the order is considered received). The Trust
calculates the net asset value per share for each Fund offered by this
Prospectus as of the close of business of the New York Stock Exchange (generally
4:00 p.m. Eastern Time).
Notes About Redemptions
In order to redeem Trust Shares of the Money Market Fund or the U.S. Treasury
Money Market Fund on a particular day, the Trust must receive your request
before 1:00 p.m. (Eastern Time) that day. The applicable cut-off time is 10:30
a.m. (Eastern Time) for the Ohio Municipal Money Market Fund and 4:00 p.m.
(Eastern Time) for each of the Equity and Income Funds. [compare time with
Investment Shares]
For shareholders who request redemptions prior to the applicable cut-off time
for the Fund being redeemed, usually the proceeds will be wired or a check will
be mailed on the same day; for redemption requests received after the applicable
cut-off time, usually proceeds will be wired or a check will be mailed the
following business day. Proceeds are wired to an account designated in writing
by the shareholder at any domestic commercial bank which is a member of the
Federal Reserve System. Proceeds to be paid by check are sent to the
shareholder's address of record.
To the extent permitted by federal securities laws, the Trust reserves the
right to suspend the redemption of shares of any of the Funds temporarily or
postpone payment for more than seven days.
The Trust may terminate or modify the methods of redemption at any time. In
such case, you will be promptly notified.
31
<PAGE>
HOW TO REDEEM TRUST SHARES
1. Call
- Your Account Administrator
OR
Write
- The Huntington Funds
c/o The Huntington National Bank
41 South High Street
Columbus, Ohio 43287
2. Provide the required information
- The name of the Fund from which you wish to redeem shares
- Specify the Trust Shares class
- Your account number
- The name and address on your account
- The dollar amount or number of shares you wish to redeem
- Your signature (for written requests)
(If you request a redemption of over $50,000, request any redemption to be
sent to an address other than the address on record with the Trust or request
any redemption to be paid to a person or persons other than the
shareholder(s) of record, you will need a signature guarantee in order to
redeem)
32
<PAGE>
Redemption of Accounts with Balances
Under $1,000
Due to the high cost of maintaining accounts with low balances, if your Trust
Shares account balance in any one Fund falls below $1,000, the Trust may choose
to redeem those shares and close that account without your consent. The Trust
will not close any account which is held through a retirement plan or any
account whose value falls below $1,000 as a result of changes in a Fund's net
asset value. If the Trust plans to close your account, it will notify you and
provide you with 30 days to add to your account balance.
MANAGEMENT OF THE TRUST
The Trustees of the Trust are responsible for generally overseeing the
conduct of each Fund's business. Huntington, whose address is Huntington Center,
41 South High Street, Columbus, Ohio 43287, serves as investment adviser to the
Funds pursuant to investment advisory agreements with the Trust.
Investment Adviser
Subject to the supervision of the Trustees, Huntington provides a continuous
investment program for the Funds, including investment research and management
with respect to all securities, instruments, cash and cash equivalents in the
Funds. During the fiscal year ended December 31, 1998, the Trust paid Huntington
management fees as a percentage of average net assets as follows:
Money Market Fund 0.28%
Ohio Municipal Money Market Fund 0.25%
U.S. Treasury Money Market Fund 0.20%
Growth Fund 0.60%
Income Equity Fund 0.60%
Mortgage Securities Fund 0.30%
Ohio Tax-Free Fund 0.50%
Michigan Tax-Free Fund 0.43%
Fixed Income Securities Fund 0.50%
Intermediate Government Income Fund 0.45%
Short/Interm. Fixed Income Securities Fund 0.50%
Huntington is an indirect, wholly-owned subsidiary of Huntington Bancshares
Incorporated ("HBI"), a registered bank holding company with executive offices
located at Huntington Center, 41 South High Street, Columbus, Ohio 43287. With
$27 billion in assets as of December 31, 1998, HBI is a major Midwest regional
bank holding company. 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 $_____ billion of assets, and has investment
discretion over approximately $____ billion of that amount.
Huntington has served as investment adviser to mutual funds since 1987 and
has over 75 years of experience providing investment advisory services to
fiduciary accounts.
As part of its regular banking operations, Huntington may make loans to
public companies. Thus, it may be possible, from time to time, for the Funds to
hold or acquire the securities of issuers which are also lending clients of
Huntington. The lending relationship will not be a factor in the selection of
securities for the Funds.
33
<PAGE>
Portfolio Managers
James M. Buskirk, Chief Investment Officer of Huntington, has been the
portfolio manager of the Income Equity Fund since 1990. As Chief Investment
Officer of Huntington, Mr. Buskirk has ultimate responsibility for all
investment management activities. He brings more than 20 years of investment
experience to Huntington. His background includes extensive experience in
managing both personal and employee benefit balanced portfolios for a major
investment advisory company and bank holding company. Mr. Buskirk is a Chartered
Financial Analyst. He received his undergraduate degree in Finance from the Ohio
State University and his MBA from the University of Oregon.
Duane J. Carpenter, an Assistant Vice President of Huntington, has been a
portfolio manager of the Intermediate Government Income Fund, previously FMB
Intermediate Government Income Fund, since December, 1991; and the Michigan
Tax-Free Fund, previously FMB Michigan Tax-Free Bond Fund, since July, 1997. Mr.
Carpenter began co-managing the Mortgage Securities Fund in April 1998. Mr.
Carpenter has more than 14 years of investment management experience, and has
been employed by Huntington or First Michigan Bank since 1984. Mr. Carpenter is
a graduate of Hope College, Holland, Michigan.
William G. Doughty, a Vice President of Huntington, has been the portfolio
manager of the Ohio Tax-Free Fund since its inception in 1988. Mr. Doughty has
more than 25 years of experience in the investment field. He is responsible for
fixed income portfolio management and heads the fixed income trading operation
at Huntington. Mr. Doughty is a graduate of Franklin University with a degree in
Business Administration and has an MBA from the University of Dayton.
Philip H. Farrington, a Vice President of Huntington, has been a co-portfolio
manager of the Growth Fund since April of 1994. Mr. Farrington has more than 30
years of investment management experience. He has held the positions of Chief
Investment Officer, Portfolio Manager, and Director of Research for major banks
and asset management companies. He is a member of the equity management team at
Huntington. Mr. Farrington is a graduate of Harvard University.
Stephen M. Geis, a Vice President of Huntington, has been the portfolio
manager of the Short/Intermediate Fixed Income Securities Fund and the Fixed
Income Securities Fund since October 1989. Mr. Geis began co-managing the
Mortgage Securities Fund in April 1998. Mr. Geis, a Chartered Financial Analyst,
serves as Huntington's senior fixed income manager. Prior to joining Huntington
in 1988, he spent nearly ten years as a fixed income manager for a major
insurance company and treasurer of a regional bank. Mr. Geis received his
undergraduate degree from the College of Wooster, his MBA from the University of
Dayton, and his Juris Doctor from Capital University.
James Gibboney, Jr., a Vice President of Huntington, has been a co-portfolio
manager of the Growth Fund since November of 1993. Mr. Gibboney, a Chartered
Financial Analyst, serves as one of Huntington's balanced portfolio managers.
Prior to joining Huntington in 1989, he gained more than 12 years of investment
management experience as portfolio manager for a major investment firm, a trust
company, and a state government agency. He received his undergraduate degree in
Finance from the Ohio State University and an MBA from Xavier University.
DISTRIBUTION OF THE FUNDS
SEI Investments Distribution Co., whose address is One Freedom Valley Road,
Oaks, Pennsylvania 19456, serves as the Distributor of the Funds offered by this
Prospectus.
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DIVIDENDS AND DISTRIBUTIONS
The Money Market Funds declare dividends on investment income daily and pay
them monthly. These Funds also make distributions of net capital gains, if any,
at least annually.
Each of the other Funds offered by this Prospectus declares and pays
dividends on investment income monthly. These Funds also make distributions of
net capital gains, if
any, at least annually.
Distribution Options
All dividends and distributions payable to a holder of Trust Shares will be
automatically reinvested in additional Trust Shares of the income-producing
Fund, unless the shareholder makes an alternative election. Shareholders of any
of the Funds offered by this Prospectus may choose to receive all distributions
in cash. Shareholders of any of the Equity or Income Funds offered by this
Prospectus may choose to receive reinvest capital gains distributions, but
receive all other distributions in cash.
TAX CONSEQUENCES
There are many important tax consequences associated with investment in the
Funds offered by this Prospectus. Please read the summary below and consult your
tax advisor regarding the specific federal, state and local tax consequences
applicable to your investment.
Federal Income Taxes
Each of the Funds offered by this Prospectus intends to make distributions of
substantially all of its income and capital gains. The income distributed by the
Ohio Municipal Money Market Fund, the Ohio Tax- Free Fund and the Michigan
Tax-Free Fund is generally intended to be tax-exempt. For any portion of these
Funds not invested in tax-exempt securities, and for all other Funds offered by
this Prospectus, distributions of income, whether or not they are reinvested,
may be taxed as ordinary income. For all of the Funds offered by this
Prospectus, capital gains distributions may be subject to federal taxation. The
rate at which you may be taxed can vary depending on the length of time a Fund
holds a security.
If you choose to sell shares of a Fund, or exchange shares of one Fund for
another, any gain on the transaction may be subject to federal income tax.
State Income Taxes
In addition to the exemption from federal income taxes, the income
distributed by the Ohio Municipal Money Market Fund and the Ohio Tax-Free Fund
is generally intended to be exempt from Ohio personal income taxes.
Similarly, the income distributed by the Michigan Tax-Free Fund is generally
intended to be exempt from Michigan city and state personal income taxes and the
Michigan single business tax.
ORGANIZATION OF THE TRUST
The Trust is organized as a Massachusetts business trust which offers several
Funds for investment. As of April 30, 1999, each of the Funds offered by this
Prospectus offers two classes of shares: Investment Shares and Trust Shares.
Trust Shares carry no sales charges and are not subject to 12b-1 fees. Trust
Shares are only offered through fiduciary, advisory, agency and other similar
accounts of The Huntington National Bank, its affiliates or correspondent banks.
By contrast, Investment Shares, which are offered to all types of investors,
carry a front-end sales charge, except with respect to the Money Market Funds,
and are subject to 12b-1 fees.
Both classes of shares offered by the Trust are fully transferable. Holders
of Investment Shares are entitled to dividends from
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Investment Shares assets and holders of Trust Shares are entitled to dividends
from Trust Shares assets. Similarly, if the Trust were liquidated, the
shareholders of each class would receive the net assets of the Fund attributable
to each respective class.
As a shareholder of any of the Huntington Funds, you are subject to
Massachusetts law and there is a possibility that you may be held personally
liable for the acts or obligations of the Trust on behalf of a Fund. In this
unlikely event, the Trust will use the property of the applicable Fund to
protect or compensate you. A shareholder will only incur personal financial loss
if the amount of the liability exceeds the value of the assets of the Fund.
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For copies of Annual or SemiAnnual Reports, the Statement of Additional
Information, other information or for any other inquiries:
Call (800) 253-0412
Write
The Huntington Funds
41 South High Street
Columbus, OH 43287
Log on to the Internet
The Huntington National Bank maintains a website, http://www.huntington.com,
with information relating to The Huntington Funds. The SEC's website,
http://www.sec.gov, contains text-only versions of The Huntington Funds
documents.
Contact the SEC
Call (800) SEC-0330 about visiting the SEC's Public Reference Room in Washington
D.C. to review and copy information about the Funds.
Alternatively, you may send your request and a duplicating fee to the SEC's
Public Reference Section, Washington, D.C. 20549-6009.
The Huntington Funds
More information about the Funds is available free upon request, including the
following:
Annual and Semi-Annual Reports
The Semi-Annual Report includes unaudited information about the performance of
the Funds, portfolio holdings and other financial information. The Annual Report
includes similar audited information as well as a letter from the Huntington
Funds portfolio managers discussing recent market conditions, economic trends
and investment strategies that significantly affected performance during the
last fiscal year.
Statement of Additional Information
Provides more detailed information about the Funds and its policies. A current
Statement of Additional Information is on file with the Securities and Exchange
Commission and is incorporated by reference into (considered a legal part of)
this Prospectus.
[Huntington logo]
THE HUNTINGTON NATIONAL BANK, a subsidiary of Huntington Bancshares,
Incorporated, is the Investment Adviser, Administrator, Custodian and
Recordkeeper of Huntington Funds.
SEI INVESTMENTS DISTRIBUTION CO. is the Distributor and is not affiliated with
The Huntington National Bank.
SEC File No. 811-5010
<PAGE>
The Huntington Funds
(Formerly known as The MONITOR Funds)
Investment Shares and Trust Shares
OF
The Huntington Money Market Fund
The Huntington Ohio Municipal Money Market Fund
The Huntington Florida Tax-Free MONEY Fund
The Huntington U.S. Treasury Money Market Fund
The Huntington Growth Fund
The Huntington Income Equity Fund
The Huntington Mortgage Securities Fund
The Huntington Ohio Tax-Free Fund
The Huntington Michigan Tax-Free Fund
The Huntington Fixed Income Securities Fund
The Huntington Intermediate Government Income Fund
The Huntington Short/Intermediate Fixed Income Securities Fund
Statement of Additional Information
This Statement of Additional Information contains information which may be of
interest to investors in The Huntington Funds (the "Trust") but which is not
included in the applicable Prospectuses for Trust Shares or Investment Shares.
This Statement is not a prospectus and is only authorized for distribution when
accompanied or preceded by the applicable Prospectus for Trust Shares or
Investment Shares of the Huntington Florida Tax-Free Money Fund dated December
10, 1998, as supplemented, or the applicable Prospectus dated April 30, 1999, as
supplemented, for Trust Shares or Investment Shares of the other Funds of the
Trust. This Statement should be read together with the applicable Prospectus.
Investors may obtain a free copy of a Prospectus by calling The Huntington Funds
at 800-253-0412.
April 30, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DEFINITIONS.......................................1 Zero-Coupon Securities.........................24
INVESTMENT PRACTICES AND RISKS....................1 Special Risk Factors Applicable to the Ohio
Common Stock....................................2 Tax-Exempt Funds...............................25
Convertible Securities..........................2 Special Risk Factors Applicable to the
Concentration Risk..............................2 Michigan Tax-Free Fund.........................27
Corporate Debt..................................2 Special Risk Factors Applicable to the
Credit (or Default) Risk........................2 Florida Tax-Free Money Fund....................28
Credit-Enhanced Securities......................3 INVESTMENT RESTRICTIONS..........................29
Defensive Investments...........................3 Portfolio Turnover.............................32
Dollar Roll Transactions........................3 MANAGEMENT OF THE TRUST..........................32
Equity Risk.....................................4 Trustees and Officers..........................32
Equity Securities...............................4 Trustee Compensation...........................34
Extension Risk..................................4 Investment Adviser.............................35
Fixed Income Securities.........................4 Sub-Adviser....................................36
Foreign Currency Options........................4 Glass-Steagall Act.............................37
Foreign Currency Transactions...................5 Portfolio Transactions.........................37
Forward Foreign Currency and Foreign Brokerage Allocation and Other Practices.......38
Currency Futures Contracts......................6 Administrator..................................39
Foreign Securities..............................7 Sub-Administrator..............................40
Futures Contracts and Options on Futures Distributor....................................40
Contracts.......................................7 Distribution Plan (12b-1 Fees).................41
Index Futures Contracts and Options on Custodian and Record Keeper....................42
Index Futures Contracts........................10 Transfer Agent and Dividend Disbursing Agent...42
Interest Rate Risk.............................11 Independent Auditors...........................42
Lending Portfolio Securities...................11 Principal Holders of Securities................43
Liquidity Risk.................................12 SHAREHOLDER RIGHTS...............................43
Market Risk....................................12 ADDITIONAL INFORMATION ON PURCHASES,
Money Market Instruments.......................12 EXCHANGES AND REDEMPTIONS........................44
Commercial Paper....................12 Other Purchase Information.....................45
Bank Obligations....................12 Payment in Kind..........................45
Variable Rate Demand Notes..........13 Sales Charge Reductions
Money Market Mutual Funds......................13 (Investment Shares)......................45
Mortgage-Related Securities....................13 Other Exchange Information.....................46
Mortgage Pass-Through Other Redemption Information...................46
Securities..................14 DETERMINATION OF NET ASSET VALUE.................47
Adjustable Rate Mortgage TAXES............................................50
Securities..................14 Federal Income Taxation........................50
Derivative Mortgage Securities......15 State Taxation.................................52
Options........................................16 DIVIDENDS AND DISTRIBUTIONS......................54
Preferred Stock................................19 Money Market Funds.............................54
Prepayment Risk................................19 Other Funds....................................54
Repurchase Agreements..........................19 PERFORMANCE INFORMATION..........................54
Restricted and Illiquid Securities.............20 Money Market Funds.............................55
Tax-Exempt Securities..........................20 Other Funds....................................56
U.S. Government Securities.....................22 Tax-Equivalency Tables.........................59
U.S. Treasury Security Futures Contracts FINANCIAL STATEMENTS.............................62
and Options....................................23 APPENDIX--DESCRIPTION OF BOND RATINGS............63
When-Issued and Delayed Delivery
Transactions...................................23
Year 2000 Risk.................................24
</TABLE>
<PAGE>
DEFINITIONS
For convenience, we will use the following terms throughout this Statement of
Additional Information.
<TABLE>
<CAPTION>
<S> <C> <C>
"1940 Act" -- The Investment Company Act of 1940, as amended.
"Funds" -- Each of the separate investment portfolios of the Trust.
"Tax-Exempt Funds" -- Ohio Municipal Money Market Fund, Ohio Tax-Free Fund,
Michigan Tax-Free Fund and Florida Tax-Free Money Fund.
"Money Market Funds" -- Money Market Fund, Ohio Municipal Money Market Fund, U.S.
Treasury Money Market Fund and Florida Tax-Free Money Fund.
"Trust" -- The Huntington Funds.
"Huntington" -- The Huntington National Bank, the Trust's investment adviser
and administrator.
"Independent Trustees" -- Trustees who are not "interested persons" of the Trust, as
defined in the 1940 Act.
"NRSRO" -- Nationally Recognized Statistical Ratings Organization such as
Moody's Investor Service or Standard and Poor's Ratings Group.
"SEI Administrative" -- SEI Fund Resources, the Trust's sub-administrator.
"Prospectus" -- Each of the separate Prospectuses for the Trust Shares and the
Investment Shares of the Funds.
"SAI" -- Statement of Additional Information.
"SEI Investments" -- SEI Investments Distribution Co., the Trust's distributor.
</TABLE>
The Trust was organized as a Massachusetts business trust on February 10,
1987. Originally known as The Monitor Funds, the Trust's name was changed to
The Huntington Funds on January 1, 1999.
The Trust is an open-end, management investment company consisting of twelve
separate Funds with separate investment objectives and policies. Each of these
Funds, except the Tax-Exempt Funds, is diversified. All of the Funds offer two
classes of shares known as Investment Shares and Trust Shares. This SAI relates
to both Trust Shares and Investment Shares.
INVESTMENT PRACTICES AND RISKS
The Prospectuses discuss the principal investment strategies and risks of
investing in each of the Funds. Below you will find more detail about the types
of investments and investment practices permitted by each Fund, including those
which are not part of a Fund's principal investment strategy. In addition, we
have included discussions relating to the special risks associated with
investment in each of the Tax-Exempt Funds.
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Common Stock
Common stock is a type of equity security which represents an ownership
interest in a corporation and the right to a portion of the assets of the
corporation in the event of liquidation. This right, however, is subordinate to
that of preferred stockholders and any creditors, including holders of debt
issued by the corporation. Owners of common stock are generally entitled to
vote on important matters. A corporation may pay dividends on common stock.
Each of the Equity Funds may invest in common stock.
Convertible Securities
Convertible securities include fixed income securities that may be exchanged
or converted into a predetermined number of shares of the issuer's underlying
common stock at the option of the holder during a specified period. Convertible
securities may take the form of convertible preferred stock, convertible bonds
or debentures, units consisting of "usable" bonds and warrants or a combination
of the features of several of these securities. The investment characteristics
of each convertible security vary widely, which allows convertible securities to
be employed for a variety of investment strategies. A Fund will exchange or
convert the convertible securities held in its portfolio into shares of the
underlying common stock when, in its investment adviser's opinion, the
investment characteristics of the underlying common shares will assist the Fund
in achieving its investment objective. Otherwise the Fund may hold or trade
convertible securities.
Each of the Equity Funds may invest in convertible securities.
Concentration Risk
When a Fund invests more than 25% of its net assets in securities of issuers
within a particular geographic region, it is subject to increased risk. As is
the case with respect to each of the Single State Funds, performance will
generally depend on the region's performance, which may differ in direction and
degree from that of the overall stock market. In addition, financial, economic,
business and political developments affecting the region may have a greater
effect on these Funds.
Corporate Debt (Including Bonds, Notes and Debentures)
Corporate debt includes any obligation of a corporation to repay a borrowed
amount at maturity and usually to pay the holder interest at specific intervals.
Corporate debt can have a long or short maturity and is often rated by one or
more nationally recognized statistical rating organizations. See the Appendix
to this SAI for a description of these ratings.
Each of the Funds, except the U.S. Treasury Money Market Fund and the Growth
Fund, may invest in corporate bonds.
Credit (or Default) Risk
To the extent that a Fund invests in corporate debt, U.S. Government
securities, mortgage-related securities or other fixed income securities, it is
subject to the risk that an issuer of those securities may default on its
obligation to pay interest and repay principal. Also, changes in the financial
strength of an issuer or changes in the credit rating of a security may affect
its value. Credit risk includes "counterparty risk," -- the risk that the other
party to a transaction will not fulfill its contractual obligation. This risk
applies, for example, to repurchase agreements into which a Fund may enter.
Securities rated below investment grade are particularly subject to credit risk.
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<PAGE>
Credit-Enhanced Securities
Credit-enhanced securities are securities whose credit rating has been
enhanced, typically by the existence of a guarantee, letter of credit, insurance
or unconditional demand feature. In most cases, Huntington 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, except where prohibited by Rule 2a-
7 under the 1940 Act, 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. A
default on the underlying security or other event that terminates a demand
feature prior to its exercise will adversely affect the liquidity of the
underlying security.
All of the Funds may invest in credit-enhanced securities. The Money Market
Funds are subject to the diversification requirements relating to credit-
enhanced securities imposed by Rule 2a-7 of the 1940 Act. The Ohio Municipal
Money Market Fund may not invest, with respect to 75% of its total assets, more
than 10% of its total assets in the credit-enhanced securities of one credit
enhancer.
Defensive Investments
At times Huntington may determine that conditions in securities
markets may make pursuing a Fund's principal investment strategies inconsistent
with the best interests of the Fund's shareholders. At such times, Huntington
may temporarily use alternative strategies, primarily designed to reduce
fluctuations in the value of a Fund's assets. In implementing these temporary
"defensive" strategies, a Fund may temporarily place all or a portion of its
assets in cash, U.S. Government securities, debt securities which Huntington
considers to be of comparable quality to the acceptable investments of the Fund
and other investments which Huntington considers consistent with such
strategies. In the case of the Single State Funds, a Fund's alternative
strategies may give rise to income which is not exempt from federal or state
taxes.
Dollar Roll Transactions
A dollar roll transaction is a transactions through which a Fund sells certain
of its securities to financial institutions such as banks and broker-dealers,
and agrees to repurchase substantially similar securities at a mutually agreed
upon date and price. At the time a Fund enters into a dollar roll agreement, it
will place in a segregated custodial account assets such as U.S. Government
securities or other liquid high grade debt securities consistent with its
investment restrictions having a value equal to the repurchase price (including
accrued interest), and will subsequently continually monitor the account to
insure that such equivalent value is maintained at all times. Dollar roll
agreements involve the risk that the market value of securities sold by a Fund
may decline below the price at which it is obligated to repurchase the
securities. Dollar roll agreements are considered to be borrowings by an
investment company under the 1940 Act and, therefore, a form of leverage. A
Fund may experience a negative impact on its net asset value if interest rates
rise during the term of a dollar roll agreement. A Fund generally will invest
the proceeds of such borrowings only when such borrowings will enhance a Fund's
liquidity or when the Fund reasonably expects that the interest income to be
earned from the investment of the proceeds is greater than the interest expense
of the transaction.
Only the Mortgage Securities Fund engages in dollar roll transactions with
respect to its mortgage-related securities.
3
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Equity Risk
Equity risk is the risk that stock prices will fall quickly and dramatically
over short or extended periods of time. Stock markets tend to move in cycles,
with periods of rising prices and period of falling prices. Often, dramatic
movements in prices occur in response to reports of a company's earnings,
economic statistics or other factors which affect an issuer's profitability.
To the extent that a Fund invests in smaller capitalization stocks, it may be
subject to greater risks than those associated with investment in larger, more
established companies. Small companies tend to have limited product lines,
markets or financial resources, and may be dependent on a small management
group. Small company stocks may be subject to more abrupt or erratic price
movements, for reasons such as lower trading volumes, greater sensitivity to
changing conditions and less certain growth prospects. Additionally, there are
fewer market makers for these stocks and wider spreads between quoted bid and
asked prices in the over-the-counter market for these stocks. Small cap stocks
also tend to be subject to greater liquidity risk, particularly during periods
of market disruption, and there is often less publicly available information
concerning these securities.
Equity Securities
Equity securities include both foreign and domestic common stocks, preferred
stocks, securities convertible or exchangeable into common or preferred stocks,
and other securities which the Adviser believes have common stock
characteristics, such as rights and warrants.
Extension Risk
Extension risk is the possibility that rising interest rates may cause
prepayments to occur at a slower than expected rate. This particular risk may
effectively change a security which was considered short- or intermediate-term
at the time of purchase into a long-term security. Long-term securities
generally fluctuate more widely in response to changes in interest rates than
short- or intermediate-term securities.
Fixed Income Securities
Fixed income securities include corporate debt securities, U.S. Government
securities, mortgage-related securities, tax-exempt securities and any other
securities which provide a stream of fixed payments to the holder.
Foreign Currency Options (Also see "Options")
Options on foreign currencies operate similarly to options on securities, and
are traded primarily in the over-the-counter market (so-called "OTC options"),
although options on foreign currencies have recently been listed on several
exchanges. Options will be purchased or written only when Huntington believes
that a liquid secondary market exists for such options. There can be no
assurance that a liquid secondary market will exist for a particular option at
any specific time. Options on foreign currencies are affected by all of those
factors which influence exchange rates and investments generally.
Purchases and sales of options may be used to increase current return. They
are also used in connection with hedging transactions. See "Foreign Currency
Transactions."
Writing covered call options on currencies may offset some of the costs of
hedging against fluctuations in currency exchange rates. For transaction
hedging purposes a Fund may also purchase exchange-listed and OTC put and call
options on foreign currency futures contracts and on foreign currencies. A put
option on a futures contract gives a Fund the right to assume a short position
in the futures contract until expiration of the option. A call option on a
futures contract gives a Fund the right to assume a long position in the futures
contract until the expiration of the option.
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The value of a foreign currency option is dependent upon the value of the
foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign security. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, investors
maybe disadvantaged by having to deal in an odd lot market (generally consisting
of transactions of less than $1 million) for the underlying foreign currencies
at prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
transactions in the interbank market and thus may not reflect relatively smaller
transactions (less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that the U.S. options markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the U.S. options
markets.
Each of the Growth Fund, Income Equity Fund, Fixed Income
Securities Fund and Short/Intermediate Fixed Income Securities Fund may invest
in foreign currency options.
Foreign Currency Transactions
Foreign currency transactions include purchasing and selling foreign
currencies, entering into forward or futures contracts to purchase or sell
foreign currencies (see "Forward Foreign Currency and Foreign Currency Futures
Contracts"), and purchasing and selling options on foreign currencies (see
"Foreign Currency Options"). Foreign currency transactions may be used to hedge
against uncertainty in the level of future foreign currency exchange rates and
to increase current return.
Purchases and sales of foreign currencies on a spot basis are used to increase
current return. They are also used in connection with both "transaction
hedging" and "position hedging."
Transaction hedging involves entering into foreign currency transactions with
respect to specific receivables or payables generally arising in connection with
the purchase or sale of portfolio securities. Transaction hedging is used to
"lock in" the U.S. dollar price of a security to be purchased or sold, or the
U.S. dollar equivalent of a dividend or interest payment in a foreign currency.
The goal is to protect against a possible loss resulting from an adverse change
in the relationship between the U.S. dollar and the applicable foreign currency
during the period between the date on which the security is purchased or sold or
on which the dividend or interest payment is declared, and the date on which
such payments are made or received.
Position hedging involves entering into foreign currency transactions either
to protect against: (i) a decline in the value of a foreign currency in which a
security held or to be sold is denominated; or (ii) an increase in the value of
a foreign currency in which a security to be purchased is denominated. In
connection with position hedging, a Fund may purchase put or call options on
foreign currency and foreign currency futures contracts and buy or sell forward
contracts and foreign currency futures contracts.
Neither transaction nor position hedging eliminates fluctuations in the
underlying prices of the securities which a Fund owns or intends to purchase or
sell. They simply establish a rate of exchange which can be achieved at some
future point in time. Additionally, although these techniques tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they also
tend to limit any potential gain which might result from the increase in the
value of such currency
Hedging transactions are subject to correlation risk due to the fact that the
amounts of foreign currency exchange transactions and the value of the portfolio
securities involved will not generally be perfectly matched. This is because
the future value of such securities in foreign currencies will change as
5
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a consequence of market movements in the values of those securities between
the dates the currency exchange transactions are entered into and the dates they
mature.
Each of the Growth Fund, Income Equity Fund, Fixed Income Securities Fund and
Short/Intermediate Fixed Income Securities Fund may use foreign currency
transactions.
Forward Foreign Currency and Foreign Currency Futures Contracts
A forward foreign currency contract involves an obligation to purchase or sell
a specific currency at a future date, which may be any fixed number of days from
the date of the contract as agreed by the parties, at a price set at the time of
the contract. In the case of a cancelable forward contract, the holder has the
unilateral right to cancel the contract at maturity by paying a specified fee.
The contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A
forward contract generally has no deposit requirement, and no commissions are
charged at any stage for trades.
A foreign currency futures contract is a standardized contract for the future
delivery of a specified amount of a foreign currency at a future date at a price
set at the time of the contract. Foreign currency futures contracts traded in
the United States are designed by and traded on exchanges regulated by the
Commodity Futures Trading Commission (the "CFTC"), such as the New York
Mercantile Exchange.
Forward foreign currency contracts differ from foreign currency futures
contracts in certain respects. For example, the maturity date of a forward
contract may be any fixed number of days from the date of the contract agreed
upon by the parties, rather than a predetermined date in a given month. Forward
contracts may be in any amounts agreed upon by the parties rather than
predetermined amounts. Also, forward foreign currency contracts are traded
directly between currency traders so that no intermediary is required. A
forward contract generally requires no margin or other deposit.
At the maturity of a forward or futures contract, a Fund may either accept or
make delivery of the currency specified in the contract, or at or prior to
maturity enter into a closing transaction involving the purchase or sale of an
offsetting contract. Closing transactions with respect to forward contracts are
usually effected with the currency trader who is a party to the original forward
contract. Closing transactions with respect to futures contracts are effected
on a commodities exchange; a clearing corporation associated with the exchange
assumes responsibility for closing out such contracts.
Forward foreign currency contracts and foreign currency futures
contracts can be used to increase current return. They are also used in
connection with both "transaction hedging" and "position hedging." See "Foreign
Currency Transactions."
Among the risks of using foreign currency futures contracts is the fact that
positions in these contracts (and any related options) may be closed out only on
an exchange or board of trade which provides a secondary market. Although it is
intended that any Fund using foreign currency futures contracts and related
options will only purchase or sell them on exchanges or boards of trade where
there appears to be an active secondary market, there is no assurance that a
secondary market on an exchange or board of trade will exist for any particular
contract or option or at any particular time. In such event, it may not be
possible to close a futures or related option position and, in the event of
adverse price movements, a Fund would continue to be required to make daily cash
payments of variation margin on its futures positions.
In addition, it is impossible to forecast with precision the market value of a
security at the expiration or maturity of a forward or futures contract.
Accordingly, it may be necessary to purchase additional foreign currency on the
spot market (and bear the expense of such purchase) if the market value of the
security being hedged is less than the amount of foreign currency a Fund is
obligated to deliver and if a decision is made to sell the security and make
delivery of the foreign currency. Conversely, it may be necessary to sell on
the spot market some of the foreign currency received upon the sale of the
hedged portfolio
6
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security if the market value of such security exceeds the
amount of foreign currency a Fund is obligated to deliver.
Each of the Growth Fund, Income Equity Fund, Fixed Income Securities Fund and
Short/Intermediate Fixed Income Securities Fund may invest in forward foreign
currency and foreign currency futures contracts.
Foreign Securities
Foreign securities are those securities which are issued by companies located
outside the United States and principally traded in foreign markets. This
includes equity and debt securities of foreign entities and obligations of
foreign branches of U.S. and foreign banks. Investment in foreign securities is
subject to a number of special risks.
Since foreign securities are normally denominated and traded in foreign
currencies, the value of a Fund's assets invested in such securities may be
affected favorably or unfavorably by currency exchange rates and exchange
control regulation. Exchange rates with respect to certain currencies may be
particularly volatile. Additionally, although foreign exchange dealers do not
charge a fee for currency conversion, they do realize a profit based on the
difference (the "spread") between prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to a Fund at
one rate, while offering a lesser rate of exchange should a Fund desire to
resell that currency to the dealer.
There may be less information publicly available about a foreign company than
about a U.S. company, and foreign companies are not generally subject to
accounting, auditing, and financial reporting standards and practices comparable
to those in the United States. The securities of some foreign companies are
less liquid and at times more volatile than securities of comparable U.S.
companies. Foreign brokerage commissions and other fees are also generally
higher than in the United States. Foreign settlement procedures and trade
regulations may involve certain risks (such as delays in payment or delivery of
securities or in the recovery of a Fund's assets held abroad) and expenses not
present in the settlement of domestic investments.
In addition, with respect to certain foreign countries, there is a possibility
of nationalization or expropriation of assets, confiscatory taxation, political
or financial instability and diplomatic developments which could affect the
value of investments in those countries. In certain countries, legal remedies
available to investors may be more limited than those available with respect to
investments in the United States or other countries. The laws of some foreign
countries may limit a Fund's ability to invest in securities of certain issuers
located in those countries. Special tax considerations apply to foreign
securities.
Each of the Growth Fund, Income Equity Fund, Fixed Income Securities Fund and
Short/Intermediate Fixed Income Securities Fund may invest in foreign
securities. Each of the Fixed Income Securities Fund and Short/Intermediate
Fixed Income Securities Fund, however, may only invest up to 10% of its net
assets in non-U.S. dollar-denominated bonds.
Futures Contracts and Options on Futures Contracts
A futures contract is a binding contractual commitment which, if held to
maturity, will result in an obligation to make or accept delivery of a security
at a specified future time and price. By purchasing futures (assuming a "long"
position) a Fund will legally obligate itself to accept the future delivery of
the underlying security and pay the agreed price. By selling futures (assuming
a "short" position) it will legally obligate itself to make the future delivery
of the security against payment of the agreed price. Open futures positions on
debt securities will be valued at the most recent settlement price, unless that
price does not in the judgment of the Trustees reflect the fair value of the
contract, in which case the positions will be valued by or under the direction
of the Trustees. Positions taken in the futures markets are not
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normally held to maturity, but are instead liquidated through offsetting
transactions which may result in a profit or a loss. While futures positions
taken by a Fund will usually be liquidated in this manner, a Fund may instead
make or take delivery of the underlying securities whenever it appears
economically advantageous to the Fund to do so. A clearing corporation
associated with the exchange on which futures are traded assumes responsibility
for such closing transactions and guarantees that the Fund's sale and purchase
obligations under closed-out positions will be performed at the termination of
the contract.
Hedging by use of futures on debt securities seeks to establish more certainly
than would otherwise be possible the effective rate of return on portfolio
securities. A Fund may, for example, take a "short" position in the futures
market by selling contracts for the future delivery of debt securities held by
the Fund (or securities having characteristics similar to those held by the
Fund) in order to hedge against an anticipated rise in interest rates that would
adversely affect the value of the Fund's portfolio securities. When hedging of
this character is successful, any depreciation in the value of portfolio
securities may be offset by appreciation in the value of the futures position.
On other occasions, a Fund may take a "long" position by purchasing futures on
debt securities. This would be done, for example, when Huntington expects to
purchase for a Fund particular securities when it has the necessary cash, but
expects the rate of return available in the securities markets at that time to
be less favorable than rates currently available in the futures markets. If the
anticipated rise in the price of the securities should occur (with its
concomitant reduction in yield), the increased cost to the Fund of purchasing
the securities may be offset by the rise in the value of the futures position
taken in anticipation of the subsequent securities purchase.
Successful use by a Fund of futures contracts on debt securities is subject to
Huntington's ability to predict correctly movements in the direction of interest
rates and other factors affecting markets for debt securities. For example, if
a Fund has hedged against the possibility of an increase in interest rates which
would adversely affect the market prices of debt securities held by it and the
prices of such securities increase instead, the Fund will lose part or all of
the benefit of the increased value of its securities which it has hedged because
it will have offsetting losses in its futures positions. In addition, in such
situations, if the Fund has insufficient cash, it may have to sell securities to
meet daily margin maintenance requirements. A Fund may have to sell securities
at a time when it may be disadvantageous to do so.
A Fund may purchase and write put and call options on debt futures contracts,
as they become available. Such options are similar to options on securities
except that options on futures contracts give the purchaser the right, in return
for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. As with
options on securities, the holder or writer of an option may terminate its
position by selling or purchasing an option of the same series. There is no
guarantee that such closing transactions can be effected. A Fund will be
required to deposit initial margin and variation margin with respect to put and
call options on futures contracts written by it pursuant to brokers'
requirements, and, in addition, net option premiums received will be included as
initial margin deposits. See "Margin Payments" below. Compared to the purchase
or sale of futures contracts, the purchase of call or put options on futures
contracts involves less potential risk to a Fund because the maximum amount at
risk is the premium paid for the options plus transactions costs. However,
there may be circumstances when the purchases of call or put options on a
futures contract would result in a loss to a Fund when the purchase or sale of
the futures contracts would not, such as when there is no movement in the prices
of debt securities. The writing of a put or call option on a futures contract
involves risks similar to those risks relating to the purchase or sale of
futures contracts.
Margin payments. When a Fund purchases or sells a futures contract, it is
required to deposit with its custodian an amount of cash, U.S. Treasury bills,
or other permissible collateral equal to a small percentage of the amount of the
futures contract. This amount is known as "initial margin". The nature of
initial margin is different from that of in security transactions in that it
does not involve borrowing money to finance transactions. Rather, initial
margin is similar to a performance bond or good faith deposit that is
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returned to the Fund upon termination of the contract, assuming the Fund
satisfies its contractual obligations. Subsequent payments to and from the
broker occur on a daily basis in a process known as "marking to market". These
payments are called "variation margin" and are made as the value of the
underlying futures contract fluctuates. For example, when a Fund sells a futures
contract and the price of the underlying debt security rises above the delivery
price, the Fund's position declines in value. The Fund then pays the broker a
variation margin payment equal to the difference between the delivery price of
the futures contract and the market price of the securities underlying the
futures contract. Conversely, if the price of the underlying security falls
below the delivery price of the contract, the Fund's futures position increases
in value. The broker then must make a variation margin payment equal to the
difference between the delivery price of the futures contract and the market
price of the securities underlying the futures contract.
When a Fund terminates a position in a futures contract, a final determination
of variation margin is made, additional cash is paid by or to the Fund, and the
Fund realizes a loss or a gain. Such closing transactions involve additional
commission costs.
Liquidity risks. Positions in futures contracts may be closed out only on an
exchange or board of trade which provides a secondary market for such futures.
Although the Trust intends to purchase or sell futures only on exchanges or
boards of trade where there appears to be an active secondary market, there is
no assurance that a liquid secondary market on an exchange or board of trade
will exist for any particular contract or at any particular time. If there is
not a liquid secondary market at a particular time, it may not be possible to
close a futures position at such time and, in the event of adverse price
movements, a Fund would continue to be required to make daily cash payments of
variation margin. However, in the event financial futures are used to hedge
portfolio securities, such securities will not generally be sold until the
financial futures can be terminated. In such circumstances, an increase in the
price of the portfolio securities, if any, may partially or completely offset
losses on the financial futures.
In addition to the risks that apply to all options transactions, there are
several special risks relating to options on futures contracts. The ability to
establish and close out positions in such options will be subject to the
development and maintenance of a liquid secondary market. It is not certain
that such a market will develop. Although a Fund generally will purchase only
those options for which there appears to be an active secondary market, there is
no assurance that a liquid secondary market on an exchange will exist for any
particular option or at any particular time. In the event no such market exists
for particular options, it might not be possible to effect closing transactions
in such options, with the result that the Fund would have to exercise the
options in order to realize any profit.
Hedging risks. There are several risks in connection with the use by a Fund
of futures contracts and related options as a hedging device. One risk arises
because of the imperfect correlation between movements in the prices of the
futures contracts and options and movements in the prices of securities which
are the subject of the hedge. Huntington will, however, attempt to reduce this
risk by purchasing and selling, to the extent possible, futures contracts and
related options on securities and indexes the movements of which will, in its
judgment, correlate closely with movements in the prices of the portfolio
securities sought to be hedged.
Successful use of futures contracts and options by a Fund for hedging purposes
is also subject to Huntington's ability to predict correctly movements in the
direction of the market. It is possible that, where a Fund has purchased puts
on futures contracts to hedge its portfolio against a decline in the market, the
securities or index on which the puts are purchased may increase in value and
the value of securities held in the portfolio may decline. If this occurred,
the Fund would lose money on the puts and also experience a decline in value in
its portfolio securities. In addition, the prices of futures, for a number of
reasons, may not correlate perfectly with movements in the underlying securities
or index due to certain market distortions. First, all participants in the
futures market are subject to margin deposit requirements. Such requirements
may cause investors to close futures contracts through offsetting transactions
which could distort the normal relationship between the underlying security or
index and futures markets. Second, the
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margin requirements in the futures markets are less onerous than margin
requirements in the securities markets in general, and as a result the futures
markets may attract more speculators than the securities markets do. Increased
participation by speculators in the futures markets may also cause temporary
price distortions. Due to the possibility of price distortion, even a correct
forecast of general market trends by Huntington may still not result in a
successful hedging transaction over a very short time period.
Other risks. Funds will incur brokerage fees in connection with their futures
and options transactions. In addition, while futures contracts and options on
futures will be purchased and sold to reduce certain risks, those transactions
themselves entail certain other risks. Thus, while a Fund may benefit from the
use of futures and related options, unanticipated changes in interest rates or
stock price movements may result in a poorer overall performance for the Fund
than if it had not entered into any futures contracts or options transactions.
Moreover, in the event of an imperfect correlation between the futures position
and the portfolio position which is intended to be protected, the desired
protection may not be obtained and the Fund may be exposed to risk of loss.
Index Futures Contracts and Options on Index Futures Contracts
A debt index futures contract is a contract to buy or sell units of a
specified debt index at a specified future date at a price agreed upon when the
contract is made. A unit is the current value of the index. A stock index
futures contract is a contract to buy or sell units of a stock index at a
specified future date at a price agreed upon when the contract is made. A unit
is the current value of the stock index.
The following example illustrates generally the manner in which index futures
contracts operate. The Standard & Poor's 100 Stock Index is composed of 100
selected common stocks, most of which are listed on the New York Stock Exchange.
The S&P 100 Index assigns relative weightings to the common stocks included in
the Index, and the Index fluctuates with changes in the market values of those
common stocks. In the case of the S&P 100 Index, contracts are to buy or sell
100 units. Thus, if the value of the S&P 100 Index were $180, one contract
would be worth $18,000 (100 units X $180). The stock index futures contract
specifies that no delivery of the actual stocks making up the index will take
place. Instead, settlement in cash must occur upon the termination of the
contract, with the settlement being the difference between the contract price
and the actual level of the stock index at the expiration of the contract. For
example, if a Fund enters into a futures contract to buy 100 units of the S&P
100 Index at a specified future date at a contract price of $180 and the S&P 100
Index is at $184 on that future date, the Fund will gain $400 (100 units X gain
of $4). If the Fund enters into a futures contract to sell 100 units of the
stock index at a specified future date at a contract price of $180 and the S&P
100 Index is at $182 on that future date, the Fund will lose $200 (100 units X
loss of $2). A Fund may purchase or sell futures contracts with respect to any
stock index. Positions in index futures may be closed out only on an exchange
or board of trade which provides a secondary market for such futures.
Purchases and sales of index futures may be used to hedge an investment. To
hedge an investment successfully, however, a Fund must invest in futures
contracts with respect to indices or sub-indices the movements of which will
have a significant correlation with movements in the prices of the Fund's
securities.
Options on index futures contracts are similar to options on securities except
that options on index futures contracts give the purchaser the right, in return
for the premium paid, to assume a position in an index futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the holder assumes the underlying futures position and
receives a variation margin payment of cash or securities approximating the
increase in the value of the holder's option position. If an option is
exercised on the last trading day prior to the expiration date of the option,
the settlement is made entirely in cash based on the difference between the
exercise price of the option and the closing level of the index on which the
futures contract is based on the expiration date. Purchasers of options who
fail to exercise their options prior to the exercise date suffer a loss of the
premium paid.
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As an alternative to purchasing call and put options on index futures
contracts, a Fund may purchase put and call options on the underlying indices
themselves to the extent that such options are traded on national securities
exchanges. Index options are similar to options on individual securities in
that the purchaser of an index option acquires the right to buy, and the writer
undertakes the obligation to sell, an index at a stated exercise price during
the term of the option. Instead of giving the right to take or make actual
delivery of securities, the holder of an index option has the right to receive a
cash "exercise settlement amount." This amount is equal to the amount by which
the fixed exercise price of the option exceeds (in the case of a put) or is less
than (in the case of a call) the closing value of the underlying index on the
date of the exercise, multiplied by a fixed "index multiplier."
All of the Funds may utilize index futures or options on index futures.
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates may cause a
decline in the market value of an investment. With bonds and other fixed income
securities, a rise in interest rates typically causes a fall in bond values,
while a fall in interest rates typically causes a rise in bond values. Fixed
income securities with longer maturities are more susceptible to changes in
value due to interest rate changes than are those with shorter maturities.
Recent market experience has shown that certain derivative mortgage securities
have a higher degree of interest rate risk and, as a result, the prices of such
securities may be highly volatile. In addition, recent market experience has
shown that during periods of rising interest rates, the market for certain
derivative mortgage securities may become more unstable and such securities may
become more difficult to sell as market makers either choose not to repurchase
such securities or offer prices which are unacceptable to the Adviser based on
market conditions.
Lending Portfolio Securities
In order to generate additional income, each of the Funds may lend its
portfolio securities on a short-term basis to brokers, dealers or other
financial institutions which Huntington has determined are creditworthy under
guidelines established by the Trustees. Consistent with guidelines established
by the SEC requirements, any loans made will be continuously secured by
collateral in cash or U.S. Government obligations at least equal at all times to
102% of the value of the securities on loan. As a matter of fundamental policy,
the aggregate value of all securities loaned by a Fund may not exceed 20% of the
Fund's total assets.
While portfolio securities are on loan, the borrower will pay to the lending
Fund any dividends or interest received on the securities. In addition, the
Fund retains all or a portion of the interest received on investment of the
collateral or receives a fee from the borrower. Although voting rights, or
rights to consent, with respect to the loaned securities pass to the borrower,
the lending Fund retains the right to call the loans at any time on reasonable
notice, and it will do so to enable a Fund to exercise voting rights on any
matters materially affecting the investment. A Fund may also call such loans in
order to sell the securities.
One of the risks in lending portfolio securities, as with other extensions of
credit, is the possible delay in recovery of the securities or possible loss of
rights in the collateral should the borrower fail financially. There is also the
risk that, when lending portfolio securities, the securities may not be
available to a Fund on a timely basis and a Fund may, therefore, lose the
opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
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Liquidity Risk
Certain securities may be difficult or impossible to sell at the time and
price that a Fund would like. A Fund may have to accept a lower price, sell
other securities or forego an investment opportunity, and this could have a
negative effect on performance. This risk applies to restricted securities,
Rule 144A Securities certain over-the-counter options, securities not traded in
the U.S. markets and other securities that may trade in U.S. markets but are not
registered under the federal securities laws.
Market Risk
Market risk is the risk that the value of a security will move up or down,
sometimes rapidly and unpredictably. These fluctuations, which are often
referred to as "volatility," may cause a security to be worth less than it was
worth at an earlier time. Market risk may affect a single issuer, industry or
sector of the economy or the market as a whole. Market risk is common to most
investments, including stocks and bonds, and the mutual funds that invest in
them. Bonds and other fixed income securities generally involve less market
risk than stocks. The risks of investing in bonds, however, can vary
significantly depending upon factors such as issuer and maturity. The bonds of
some companies may be riskier than the stocks of others.
Money Market Instruments
Except where otherwise noted, all of the Funds may, for temporary defensive or
liquidity purposes, invest up to 100% of their assets in money market
instruments.
Commercial Paper
Commercial paper represents an unsecured promissory note issued by a
corporation. Generally, issues of commercial paper have maturities of less
than nine months and rates of return which are fixed.
The commercial paper in which any of the Money Market Funds may invest
is subject to the issuer diversification and quality restrictions imposed by
Rule 2a-7 under the 1940 Act. The commercial paper in which the Mortgage
Securities Fund may invest must be: (i) rated A-1 or better by Standard &
Poor's Ratings Group ("S&P") or P-1 or better by Moody's Investors Service,
Inc. ("Moody's"); or (ii) unrated, but issued by companies with outstanding
debt issues rated AAA by S&P or Aaa by Moody's.
Bank Obligations
Bank obligations are short-term obligations issued by U.S. and foreign
banks, including bankers' acceptances, certificates of deposit, time deposits
and similar securities.
The Money Market Fund, Ohio Municipal Money Market Fund and Florida
Tax-Free Money Fundmay only invest in bank obligations issued by domestic
banks and U.S. branches of foreign banks subject to U.S. banking regulation.
In addition, at the time of the investment, the issuing bank must have
capital, surplus and undivided profits in excess of $100 million. Issuing
banks of obligations in which the Mortgage Securities Fund invests must have
capital, surplus and undivided profits in excess of $1 billion.
The Michigan Tax-Free Fund is limited to investing only in dollar-
denominated obligations of: (i) U.S., Canadian, Asian or European banks with
at least $500 million in total assets; or (ii) U.S. savings and loan
associations with at least $1 billion in total assets.
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Variable Rate Demand Notes
Variable rate demand notes ("VRDNs") are unsecured, direct lending
arrangements between a Fund, as the lender, and a corporation, financial
institution, government agency, municipality or other entity.
VRDNs have interest rates which float or which are adjusted at regular
intervals ranging from daily to annually. Although the VRDNs are not
generally traded, a Fund may demand payment of principal and accrued interest
according to its arrangement with the borrower (usually upon no more than
seven days' notice). VRDNs are, therefore, treated as maturing on the later
of the next interest adjustment or the date on which a Fund may next demand
payment. Some VRDNs are backed by bank letters of credit.
Each of the Funds may only invest in VRDNs which satisfy its credit
requirements for commercial paper.
Money Market Mutual Funds
Under the 1940 Act, a Fund may not invest more than 10% of its total assets at
any one time in the shares of other funds, 5% of its total assets in the shares
of any one mutual fund, or more than 3% of the shares of any one fund. When a
Fund invests in the shares of other mutual funds, investment advisory and other
fees will apply, and the investment's yield will be reduced accordingly.
Each of the Growth Fund, the Income Equity Fund, the Mortgage Securities Fund,
the Ohio Tax-Free Fund, the Michigan Tax-Free Fund, the Fixed Income Securities
Fund, and the Short/Intermediate Fixed Income Securities Fund may invest up to
5% of its total assets in the shares of money market mutual funds (other than
the Trust's Money Market Funds) for liquidity purposes. The Ohio Tax-Free Fund
may not, however, invest in shares of a money market mutual fund which generates
income treated as a preference item for federal alternative minimum tax
purposes.
The Ohio Municipal Money Market Fund may invest up to 5% of its total assets
in the shares of one or more tax-exempt money market mutual funds for liquidity
purposes.
Mortgage-Related Securities
Mortgage-related securities are securities that, directly or indirectly,
represent participations in, or are secured by and payable from, loans secured
by real property. Mortgage-related securities include mortgage pass-through
securities, adjustable rate mortgage securities and derivative securities such
as collateralized mortgage obligations and stripped mortgage-backed securities.
Mortgage-related securities fall into three categories: (a) those issued or
guaranteed by the U.S. Government or one of its agencies or instrumentalities,
such as Government National Mortgage Association ("GNMA"), Federal National
Mortgage Association ("FNMA") and Federal Home Loan Mortgage Corporation
("FHLMC"); (b) those issued by non-governmental issuers that represent interests
in, or are collateralized by, mortgage-related securities issued or guaranteed
by the U.S. Government or one of its agencies or instrumentalities; and (c)
those issued by non-governmental issuers that represent an interest in, or are
collateralized by, whole mortgage loans or mortgage-related securities without a
government guarantee but usually with over-collateralization or some other form
of private credit enhancement. Non-governmental issuers include originators of
investors in mortgage loans, including savings and loan associations, mortgage
bankers, commercial banks, investment banks and special purpose subsidiaries of
the foregoing.
There are a number of important differences both among the agencies and
instrumentalities of the U.S. Government that issue mortgage-related securities
and among the securities themselves. Ginnie Maes are Mortgage Pass-Through
Certificates issued by GNMA, which is a wholly-owned U.S. Government corporation
within the Department of Housing and Urban Development. Ginnie Maes are
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guaranteed as to the timely payment of principal and interest by GNMA and GNMA's
guarantee is backed by the full faith and credit of the U.S. Treasury. In
addition, Ginnie Maes are supported by the authority of GNMA to borrow funds
from the U.S. Treasury to make payments under GNMA's guarantee. Mortgage-related
securities issued by the Federal National Mortgage Association ("FNMA") include
FNMA Guaranteed Mortgage Pass-Through Certificates (also known as "Fannie Maes")
which are solely the obligations of the FNMA. The FNMA is a government-
sponsored organization owned entirely by private stockholders. Fannie Maes are
guaranteed as to timely payment of principal and interest by FNMA but are not
backed by or entitled to the full faith and credit of the U.S. Treasury.
Mortgage-related securities issued by the Federal Home Loan Mortgage Corporation
("FHLMC") include FHLMC Mortgage Participation Certificates (also known as
"Freddie Macs" or "PCS"). The FHLMC is a corporate instrumentality of the U.S.
Government, created pursuant to an Act of Congress, which is owned entirely by
Federal Home Loan Banks. Freddie Macs are not guaranteed by the U.S. Treasury
or by any Federal Home Loan Bank and do not constitute a debt or obligation of
the U.S. Government or of any Federal Home Loan Bank. Freddie Macs entitle the
holder to timely payment of interest, which is guaranteed by the FHLMC. The
FHLMC guarantees either ultimate collection or timely payment of all principal
payments on the underlying mortgage loans. When the FHLMC does not guarantee
timely payment of principal, FHLMC may remit the amount due on account of its
guarantee of ultimate payment of principal at any time after default on an
underlying mortgage, but in no event later than one year after it becomes
payable.
Although certain mortgage-related securities are guaranteed by a third party
or otherwise similarly secured, the market value of the security, which may
fluctuate, is not so secured. If a Fund purchases a mortgage-related security
at a premium, that portion may be lost if there is a decline in the market value
of the security whether resulting from changes in interest rates or prepayments
in the underlying mortgage collateral. As with other interest-bearing
securities, the prices of mortgage-related securities are inversely affected by
changes in interest rates. However, though the value of a mortgage-related
security may decline when interest rates rise, the converse is not necessarily
true, since in periods of declining interest rates the mortgages underlying the
security are prone to prepayment. For this and other reasons, a mortgage-
related security's effective maturity may be shortened by unscheduled
prepayments on the underlying mortgages and, therefore, it is not possible to
predict accurately the security's return to the Fund. In addition, regular
payments received in respect of mortgage-related securities include both
interest and principal. No assurance can be given as to the return a Fund will
receive when these amounts are reinvested.
The Mortgage Securities Fund, Fixed Income Securities Fund, Intermediate
Government Income Fund and Short/Intermediate Fixed Income Securities Fund may
invest in mortgage-related securities issued by the U.S. government, its
agencies or instrumentalities, and the derivative mortgage securities described
above. In addition, the Mortgage Securities Fund may invest in mortgage-related
securities issued by private entities.
Mortgage Pass-Through Securities
Mortgage pass-through securities provide for the pass-through to
investors of their pro-rata share of monthly payments (including any
prepayments) made by the individual borrowers on the pooled mortgage loans,
net of any fees paid to the guarantor of such securities and the servicer of
the underlying mortgage loans.
Adjustable Rate Mortgage Securities
Adjustable rate mortgage securities ("ARMS") are pass-through mortgage
securities collateralized by mortgages with interest rates that are adjusted
from time to time. The adjustments usually are determined in accordance with
a predetermined interest rate index and may be subject to certain limits.
While the values of ARMS, like other debt securities, generally vary inversely
with changes in market interest rates (increasing in value during periods of
declining interest rates and decreasing in value during periods of increasing
interest rates), the values of ARMS should generally
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be more resistant to price swings than other debt securities because the
interest rates of ARMS move with market interest rates. The adjustable rate
feature of ARMS will not, however, eliminate fluctuations in the prices of
ARMS, particularly during periods of extreme fluctuations in interest rates.
Also, since many adjustable rate mortgages only reset on an annual basis, it
can be expected that the prices of ARMS will fluctuate to the extent that
changes in prevailing interest rates are not immediately reflected in the
interest rates payable on the underlying adjustable rate mortgages.
ARMS typically have caps which limit the maximum amount by which the
interest rate may be increased or decreased at periodic intervals or over the
life of the loan. To the extent that interest rates increase in excess of the
caps, ARMS can be expected to behave more like traditional debt securities and
to decline in value to a greater extent than would be the case in the absence
of such caps. Also, since many adjustable rate mortgages only reset on an
annual basis, it can be expected that the prices of ARMS will fluctuate to the
extent that changes in prevailing interest rates are not immediately reflected
in the interest rates payable on the underlying adjustable rate mortgages.
The extent to which the prices of ARMS fluctuate with changes in interest
rates will also be affected by the indices underlying the ARMS. Some indices,
such s the one-year constant maturity Treasury note rate, closely mirror
changes in market interest rate levels. Others, such as the 11th District
Federal Reserve Cost of Funds Index (often related to ARMS issued by FNMA),
tend to lag changes in market levels and tend to be somewhat less volatile.
Derivative Mortgage Securities
Collateralized mortgage obligations are derivative mortgage securities
and are debt instruments issued by special purpose entities which are secured
by pools of mortgage loans or other mortgage-related securities. Multi-class
pass-through securities are equity interests in a trust composed of mortgage
loans or other mortgage-related securities. Both are considered derivative
mortgage securities and are collectively referred to as "CMOs." Payments of
principal and interest on underlying collateral provide the funds to pay debt
service on the collateralized mortgage obligation or make scheduled
distributions on the multi-class pass-through security.
In a CMO, a series of bonds or certificates is issued in multiple
classes. Each class of CMO, often referred to as a "tranche," is issued at a
specific coupon rate and has a stated maturity or final distribution date.
Principal prepayments on collateral underlying a CMO may cause it to be
retired substantially earlier than the stated maturities or final distribution
dates.
The principal and interest on the underlying mortgages may be
allocated among the several tranches of a CMO in many ways. For example,
certain tranches may have variable or floating interest rates and others may
provide only the principal or interest feature of the underlying security.
Generally, the purpose of the allocation of the cash flow of a CMO to the
various tranches is to obtain a more predictable cash flow to certain of the
individual tranches than exists with the underlying collateral of the CMO. As
a general rule, the more predictable the cash flow is on a CMO tranche, the
lower the anticipated yield will be on that tranche at the time of issuance
relative to prevailing market yields on mortgage-related securities. As part
of the process of creating more predictable cash flows on most of the tranches
of a CMO, one or more tranches generally must be created that absorb most of
the volatility in the cash flows on the underlying mortgage loans. The yields
on these tranches, which may include inverse floaters, stripped mortgage-
backed securities, and Z tranches, discussed below, are generally higher than
prevailing market yields on mortgage-related securities with similar
maturities. As a result of the uncertainty of the cash flows of these
tranches, the market prices of and yield on these tranches generally are more
volatile.
An inverse floater is a CMO tranche with a coupon rate that moves
inversely to a designated index, such as LIBOR (London Inter-Bank Offered
Rate) or COFI (Cost of Funds Index). Like most other fixed income securities,
the value of inverse floaters will decrease as interest rates increase.
Inverse floaters, however, exhibit greater price volatility than the majority
of mortgage pass-
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through securities or CMOs. Coupon rates on inverse floaters typically change
at a multiple of the change in the relevant index rate. Thus, any rise in the
index rate (as a consequence of an increase in interest rates) causes a
correspondingly greater drop in the coupon rate of an inverse floater while
any drop in the index rate causes a correspondingly greater increase in the
coupon of an inverse floater. Some inverse floaters also exhibit extreme
sensitivity to changes in prepayments. Inverse floaters would be purchased by
a Fund in an attempt to protect against a reduction in the income earned on
the Fund's investments due to a decline in interest rates.
Z tranches of CMOs defer interest and principal payments until one or
more other classes of the CMO have been paid in full. Interest accretes on
the Z tranche, being added to principal, and is compounded through the
accretion period. After the other classes have been paid in full, interest
payments begin and continue through maturity. Z tranches have characteristics
similar to zero coupon bonds. Like a zero coupon bond, during its accretion
period a Z tranche has the advantage of eliminating the risk of reinvesting
interest payments at lower rates during a period of declining market interest
rates. At the same time, however, and also like a zero coupon bond, the
market value of a Z tranche can be expected to fluctuate more widely with
changes in market interest rates than would the market value of a tranche
which pays interest currently. In addition, changes in prepayment rates on
the underlying mortgage loans will affect the accretion period of a Z tranche,
and therefore also will influence its market value.
The Mortgage Securities Fund will invest only in CMOs which are issued
by agencies or instrumentalities of the U.S. government or CMOs issued by
private organizations which are rated AAA by an NRSRO.
Stripped mortgage-backed securities ("SMBSs") may represent an
interest solely in the principal repayments or solely in the interest payments
on mortgage-backed securities). SMBSs are derivative multi-class securities.
SMBSs are usually structured with two classes and receive different
proportions of the interest and principal distributions on the pool of
underlying mortgage-backed securities. Due to the possibility of prepayments
on the underlying mortgages, SMBSs may be more interest-rate sensitive than
other securities purchased. If prevailing interest rates fall below the level
at which SMBSs were issued, there may be substantial prepayments on the
underlying mortgages, leading to the relatively early prepayments of
principal-only SMBSs (the principal-only or "PO" class) and a reduction in the
amount of payments made to holders of interest-only SMBSs (the interest-only
or "IO" class). Therefore, interest-only SMBSs generally increase in value as
interest rates rise and decrease in value as interest rates fall, counter to
changes in value experienced by most fixed income securities. If the
underlying mortgages experience slower than anticipated prepayments of
principal, the yield on a PO class will be affected more severely than would
be the case with a traditional mortgage-related security. Because the yield
to maturity of an IO class is extremely sensitive to the rate of principal
payments (including prepayments) on the related underlying mortgage-backed
securities, it is possible that a Fund might not recover its original
investment on interest-only SMBSs if there are substantial prepayments on the
underlying mortgages. A Fund's inability to fully recoup its investment in
these securities as a result of a rapid rate of principal prepayments may
occur even if the securities are rated AAA by an NRSRO. In view of these
considerations, Huntington intends to use these characteristics of interest-
only SMBSs to reduce the effects of interest rate changes on the value of a
Fund's portfolio, while continuing to pursue current income.
Options
A call option gives the purchaser of the option the right to buy a security at
a stated price from the writer (seller) of the option. A put option gives the
purchaser of the option the right to sell a security at a stated price to the
writer of the option. In a covered call option, during the option period the
writer owns the security (or a comparable security sufficient to satisfy
securities exchange requirements) which may be sold pursuant to the option. In
a covered put option, the writer holds cash and/or short-term debt instruments
sufficient in an amount equal to the exercise price of the option. In addition,
a put or call
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option will be considered covered if and to the extent that some
or all of the risk of the option has been offset by another option. A Fund may
write combinations of covered puts and calls on the same underlying security.
In general, a Fund may write options in an attempt to increase returns or
purchase options for hedging purposes.
The premium received from writing a put or call option, increases a Fund's
return on the underlying security in the event that the option expires
unexercised or is closed out at a profit. The amount of the premium reflects,
among other things, the relationship between the exercise price and the current
market value of the underlying security, the volatility of the underlying
security, the amount of time remaining until expiration, current interest rates,
and the effect of supply and demand in the options market and in the market for
the underlying security. A put option locks in the price at which a Fund may
sell a security it holds, thus hedging against market declines and a call option
locks in the price at which a Fund may purchase a security, thus hedging against
inflation. Such protection is provided during the life of the put option since
the Fund, as holder of the option, is able to sell the underlying security at
the option's exercise price regardless of any decline in the underlying
security's market price.
By writing a call option, a Fund limits its opportunity to profit from any
increase in the market value of the underlying security above the exercise price
of the option but continues to bear the risk of a decline in the value of the
underlying security. By writing a put option, a Fund assumes the risk that it
may be required to purchase the underlying security for an exercise price higher
than its then current market value, resulting in a potential capital loss unless
the security substantially appreciates in value.
A Fund may terminate an option that it has written prior to its expiration by
entering into a closing purchase transaction, in which it purchases an
offsetting option. A Fund realizes a profit or loss from a closing transaction
if the cost of the transaction (option premium plus transaction costs) is less
or more than the premium received from writing the option. Because increases in
the market price of a call option generally reflect increases in the market
price of the security underlying the option, any loss resulting from a closing
purchase transaction may be offset in whole or in part by unrealized
appreciation of the underlying security owned by a Fund.
In order for a put option to be profitable, the market price of the underlying
security must decline sufficiently below the exercise price to cover the premium
and transaction costs. By using put options in this manner a Fund will reduce
any profit it might otherwise have realized from appreciation of the underlying
security by the premium paid for the put option and by transaction costs.
In order for a call option to be profitable, the market price of the
underlying security must rise sufficiently above the exercise price to cover the
premium and transaction costs.
Each of the Equity and Income Funds may write or purchase put and call
options. All call options written must be covered.
The successful use of options depends on the ability of Huntington to forecast
interest rate and market movements. For example, if a Fund were to write a call
option based on Huntington's expectation that the price of the underlying
security will fall, but the price rises instead, the Fund could be required to
sell the security upon exercise at a price below the current market price.
Similarly, if a Fund were to write a put option based on Huntington's
expectations that the price of the underlying security will rise, but the price
falls instead, the Fund could be required to purchase the security upon exercise
at a price higher than the current market price.
When a Fund purchases an option, it runs the risk that it will lose its entire
investment in the option in a relatively short period of time, unless the Fund
exercises the option or enters into a closing sale transaction with respect to
the option during the life of the option. If the price of the underlying
security
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does not rise (in the case of a call) or fall (in the case of a put) to
an extent sufficient to cover the option premium and transaction costs, a Fund
will lose part or all of its investment in the option. This contrasts with an
investment by a Fund in the underlying security, since the Fund will not lose
any of its investment in such security if the price does not change.
The use of options also involves the risk of imperfect correlation between
movements in option prices and movements in the value of the underlying
securities.
The effective use of options also depends on the Fund's ability to terminate
option positions at times when Huntington deems it desirable to do so. Although
a Fund will take an option position only if Huntington believes there is a
liquid secondary market for the option, there is no assurance that the Fund will
be able to effect closing transaction at any particular time or at an acceptable
price.
The Funds generally expect that their options transactions will be conducted
on recognized exchanges. In certain instances, however, a Fund may purchase and
sell options in the over-the-counter ("OTC") markets. A Fund's ability to
terminate options in the OTC market may be more limited than for exchange-traded
options and may also involve the risk that securities dealers participating in
such transactions would be unable to meet their obligations to a Fund. A Fund
will, however, engage in OTC market transactions only when appropriate exchange-
traded transactions are unavailable and when, in the opinion of Huntington, the
pricing mechanism and liquidity of the OTC market is satisfactory and the
participants are responsible parties likely to meet their contractual
obligations.
If a secondary trading market in options were to become unavailable, a Fund
could no longer engage in closing transactions. Lack of investor interest might
adversely affect the liquidity of the market for particular options or series of
options. A market may discontinue trading of a particular option or options
generally. In addition, a market could become temporarily unavailable if
unusual events--such as volume in excess of trading or clearing capability--were
to interrupt its normal operations.
A market may at times find it necessary to impose restrictions on particular
types of options transactions, such as opening transactions. For example, if an
underlying security ceases to meet qualifications imposed by the market or the
Options Clearing Corporation, new series of options on that security will no
longer be opened to replace expiring series, and opening transactions in
existing series may be prohibited. If an options market were to become
unavailable, a Fund as a holder of an option would be able to realize profits or
limit losses only by exercising the option, and the Fund, as option writer,
would remain obligated under the option until expiration.
Disruptions in the markets for the securities underlying options purchased or
sold by a Fund could result in losses on the options. If trading is interrupted
in an underlying security, the trading of options on that security is normally
halted as well. As a result, a Fund as purchaser or writer of an option will be
unable to close out its positions until options trading resumes, and it may be
faced with considerable losses if trading in the security reopens at a
substantially different price. In addition, the Options Clearing Corporation or
other options markets may impose exercise restrictions. If a prohibition on
exercise is imposed at the time when trading in the option has also been halted,
a Fund as a purchaser or writer of an option will be locked into its position
until one of the two restrictions has been lifted. If the Options Clearing
Corporation were to determine that the available supply of an underlying
security appears insufficient to permit delivery by the writers of all
outstanding calls in the event of exercise, it may prohibit indefinitely the
exercise of put options by holders who would be unable to deliver the underlying
interest. A Fund, as holder of such a put option, could lose its entire
investment if the prohibition remained in effect until the put option's
expiration and the Fund was unable either to acquire the underlying security or
to sell the put option in the market.
Special risks are presented by internationally-traded options. Because of
time differences between the United States and various foreign countries, and
because different holidays are observed in different countries, foreign options
markets may be open for trading during hours or on days when U.S. markets
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are closed. As a result, option premium may not reflect the current prices of
the underlying interest in the United States.
An exchange-listed option may be closed out only on an exchange which provides
a secondary market for an option of the same series. There is no assurance that
a liquid secondary market on an exchange will exist for any particular option or
at any particular time. If no secondary market were to exist, it would be
impossible to enter into a closing transaction to close out an option position.
As a result, a Fund may be forced to continue to hold, or to purchase at a fixed
price, a security on which it has sold an option at a time when Huntington
believes it is inadvisable to do so.
Higher than anticipated trading activity or order flow or other unforeseen
events might cause the Options Clearing Corporation or an exchange to institute
special trading procedures or restrictions that might restrict a Fund's use of
options. The exchanges have established limitations on the maximum number of
calls and puts of each class that may be held or written by an investor or group
of investors acting in concert. It is possible that the Trust and other clients
of Huntington may be considered such a group. These position limits may
restrict the Trust's ability to purchase or sell options on particular
securities. Options which are not traded on national securities exchanges may
be closed out only with the other party to the option transaction. For that
reason, it may be more difficult to close out unlisted options than listed
options. Furthermore, unlisted options are not subject to the protection
afforded purchasers of listed options by the Options Clearing Corporation.
Preferred Stock
Preferred stock is a type of equity security which represents an ownership
interest in a corporation and the right to a portion of the assets of the
corporation in the event of a liquidation. This right, however, is subordinate
to that of any creditors, including holders of debt issued by the corporation.
Owners of preferred stock ordinarily do not have voting rights, but are entitled
to dividends at a specified rate.
Each of the Equity Funds may invest in preferred stock.
Prepayment Risk
Prepayment risk results because, as interest rates fall, homeowners are more
likely to refinance their home mortgages. When home mortgages are refinanced,
the principal on mortgage-related securities held is "prepaid" earlier than
expected. A Fund which holds mortgage-related securities which are prepaid must
reinvest the unanticipated principal payments, just at a time when interest
rates on new mortgage investments are falling. Prepayment risk has two
important effects on a Fund: (1) when interest rates fall and additional
mortgage prepayments must be reinvested at lower interest rates, income will be
reduced; and (2) when interest rates fall, prices on mortgage-backed securities
may not rise as much as comparable Treasury bonds because bond market investors
may anticipate an increase in mortgage prepayments and a likely decline in
income.
Recent market experience has shown that certain derivative mortgage securities
have a higher degree of prepayment risk and, as a result, the prices of such
securities may be highly volatile.
Repurchase Agreements
Repurchase agreements are agreements through which banks, broker-dealers and
other financial institutions approved by the Trustees sell securities (usually
U.S. Government securities) to a Fund and agree to repurchase those securities
at a specified price and time (usually not more than seven days from the
original sale). The seller's obligation to pay the repurchase price is secured
by the securities to be repurchased. These securities are required to be held
by the Fund, its custodian or a third-party custodian. In order to protect the
Fund's interest, collateral securities must have a value of at least 100% of the
resale price at all times. (The seller must provide additional collateral in
the event that this condition
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is not met). In general, the Adviser will require collateral securities to have
a value of at least 102% of the resale price at the time the repurchase
agreement is made. The collateral is marked to market on a daily basis, thus
enabling the Adviser to determine when to request additional collateral from the
seller.
If a seller defaults on its repurchase obligation, a Fund could realize a loss
on the sale of the underlying securities to the extent that the proceeds of the
sale (including accrued interest) are less than the resale price. In addition,
even though the U.S. Bankruptcy Code provides protection to a Fund if the seller
becomes bankrupt or insolvent, the Fund may suffer losses in such event.
Restricted and Illiquid Securities
Restricted securities are any securities which are subject to restriction on
resale under federal securities law, including commercial paper issued in
reliance on the exemption from registration afforded by Section 4(2) of the
Securities Act of 1933. Illiquid securities are any securities for which there
is a limited trading market and may, therefore, be difficult to sell at market
value. Because restricted and illiquid securities may be difficult to sell at
an acceptable price, they may be subject to greater volatility and may result in
a loss to a Fund.
Section 4(2) commercial paper is generally sold to institutional investors,
such as mutual funds, who agree that they are purchasing the paper for
investment purposes and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Section 4(2) commercial paper
is normally resold to other institutional investors through or with the
assistance of the issuer or investment dealers who make a market in Section 4(2)
commercial paper, thus providing liquidity. The Trust believes that Section
4(2) commercial paper and possibly certain other restricted securities which
meet the criteria for liquidity established by the Trustees are quite liquid.
The Trust intends, therefore, with respect to the Money Market Fund's
investments, to treat these securities as liquid and not subject to the
investment limitation applicable to illiquid securities. In addition, because
Section 4(2) commercial paper is liquid, the Trust intends not to subject such
paper to any limitation applicable to restricted securities.
Each of the Funds may invest in illiquid securities (including restricted
securities, repurchase agreements providing for settlement on more than seven
days' notice and OTC options). Except for the Florida Tax-Free Money Fund and
the Intermediate Government Income Fund, none of the Fund will invest more than
10% of its total assets in such securities. The Florida Tax-Free Money Fund is
limited to 10% of its net assets, while the Intermediate Government Income Fund
may invest up to 15% of its total assets in illiquid securities.
Tax-Exempt Securities
Tax-exempt securities are debt obligations the interest on which is, in the
opinion of bond counsel for the issuing governmental entity or agency, excluded
from gross income for federal income tax purposes. Examples of tax-exempt
securities include fixed and floating or variable rate municipal obligations,
tax-exempt notes, participation, trust and partnership interests in municipal
obligations, tax-exempt commercial paper, stand-by commitments and private
activity bonds.
Tax-exempt securities are issued to obtain monies for various public purposes,
including the construction of a wide range of public facilities such as bridges,
highways, roads, schools, water and sewer works, and other utilities. Other
public purposes for which tax-exempt securities may be issued include refunding
outstanding obligations, obtaining monies for general operating expenses and to
lend to other public institutions and facilities. The two principal
classifications of tax-exempt securities are general obligation and limited
obligation (or revenue) securities. General obligation securities are
obligations involving the credit of an issuer possessing taxing power and are
payable from the issuer's general unrestricted revenues and not from any
particular fund or source. The characteristics and methods of enforcement of
general obligation securities vary according to the law applicable to the
particular issuer.
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Limited obligation securities are payable only from the revenues
derived from a particular facility or class or facilities or, in some cases,
from the proceeds of a special excise or other specific revenue source, and
generally are not payable from the unrestricted revenues of the issuer. Private
activity bonds generally are limited obligation securities, the credit and
quality of which are usually directly related to the credit of the private user
of the facilities. Payment of principal of and interest on these bonds is the
responsibility of the private user (and any guarantor).
Tax-exempt notes and tax-exempt commercial paper are generally used to provide
for short-term capital needs, seasonal working capital needs of municipalities
or to provide interim construction financing, and generally have maturities of
one year or less. Tax-exempt notes include tax anticipation notes ("TANs"),
revenue anticipation notes ("RANs") and bond anticipation notes ("BANs"). TANs
are issued to finance working capital needs of municipalities. Generally, they
are issued in anticipation of various seasonal tax revenues, such as income,
sales, use and business taxes, and are payable from these specific future taxes.
RANs are issued in expectation of receipt of other kinds of revenue, such as
federal revenues available under the federal revenue sharing programs. BANs are
issued to provide interim financing until long-term financing can be arranged.
In most cases, the long-term bonds then provide the money for the repayment of
the notes. In most cases, tax-exempt commercial paper is backed by letters of
credit, lending agreements, note repurchase agreements or other credit facility
agreements offered by banks or other institutions and is actively traded.
Private activity bonds (sometimes called "industrial development bonds") may
be issued by or on behalf of public authorities to obtain funds to provide
certain privately owned or operated facilities. Because dividends attributable
to interest on such bonds may not be tax exempt, it may not be desirable for an
investor to purchase shares of a Fund which invests in private activity bonds,
if such investor is a "substantial user" of facilities which are financed by
private activity bonds or industrial development bonds or a "related person" of
such a substantial user.
Tax-exempt securities may be purchased through the acquisition of certificates
of accrual or similar instruments evidencing direct ownership of interest
payments or principal payments, or both, on tax-exempt securities. In such
arrangements, any discount accruing on a certificate or instrument that is
purchased at a yield not greater than the coupon rate of interest on the related
tax-exempt securities must be exempt from federal income tax and applicable
state income taxes to the same extent as interest on such tax-exempt securities,
in the opinion of counsel to the initial seller of each such certificate or
instrument.
Tax-exempt securities may also be acquired by purchasing from banks
participation interests in all or part of specific holdings of tax-exempt
securities. Such participations may be backed in whole or in part by an
irrevocable letter of credit or guarantee of the selling bank. A Fund will have
the right to sell the interest back to the bank or other financial institutions
and draw on the letter of credit on demand, generally on seven days' notice, for
all or any part of the Fund's participation interest in the par value of the
municipal obligation plus accrued interest. Huntington will generally exercise
the demand on a letter of credit only under the following circumstances: (1)
upon default of any of the terms of the documents of the municipal obligation,
(2) as needed to provide liquidity in order to meet redemptions, or (3) in order
to maintain a high quality investment portfolio. The selling bank may receive a
fee in connection with the arrangement. Banks and financial institutions are
subject to extensive governmental regulations which may limit the amounts and
types of loans and other financial commitments that may be made and interest
rates and fees which may be charged. The profitability of banks and financial
institutions is largely dependent upon the availability and cost of capital
funds to finance lending operations under prevailing money market conditions.
General economic conditions also play an important part in the operations of
these entities and exposure to credit losses arising from possible financial
difficulties of borrowers may affect the ability of a bank or financial
institution to meet its obligations with respect to a participation interest. A
Fund which purchases a participation interest must receive an opinion of counsel
or a ruling of the Internal Revenue Service stating that interest earned by it
on the tax-exempt securities in which it
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holds such participation interest is excluded from gross income for federal
regular income tax purposes and applicable state income taxes.
Prices and yields on tax-exempt securities are dependent on a variety of
factors, including general money market conditions, the financial condition of
the issuer, general conditions in the market for tax-exempt obligations, the
size of a particular offering, the maturity of the obligation and ratings of
particular issues, and are subject to change from time to time. Information
about the financial condition of an issuer of tax-exempt bonds or notes may not
be as extensive as that which is made available by corporations whose securities
are publicly traded.
Congress or state legislatures may seek to extend the time for payment of
principal or interest, or both, or to impose other constraints upon enforcement
of tax-exempt securities. There is also the possibility that, as a result of
litigation or other conditions, the power or ability of issuers to meet their
obligations to pay interest on and principal of their tax-exempt securities may
be materially impaired or their obligations may be found to be invalid or
unenforceable. Such litigation or conditions may from time to time have the
effect of introducing uncertainties in the market for tax exempt obligations or
certain segments thereof, or may materially affect the credit risk with respect
to particular bonds or notes. Adverse economic, business, legal or political
developments might affect all or a substantial portion of tax-exempt securities
in the same manner. Obligations of issuers of tax-exempt securities are subject
to the provisions of bankruptcy, insolvency and other laws, such as the Federal
Bankruptcy Code, affecting the rights and remedies of creditors.
The Internal Revenue Code of 1986, as amended (the "Code"), imposes certain
continuing requirements on issuers of tax-exempt securities regarding the use,
expenditure and investment of bond proceeds and the payment of rebates to the
United States of America. Failure by the issuer to comply subsequent to the
issuance of tax-exempt bonds with certain of these requirements could cause
interest on the bonds to become includable in gross income retroactive to the
date of issuance.
Each of the Income Funds, the Ohio Municipal Money Market Fund and the Florida
Tax-Free Money Fund may invest in tax-exempt securities. The Ohio Tax-Free Fund
may not invest in private activity bonds if the interest is treated as a
preference item for purposes of the federal alternative minimum tax.
Shareholders should consult their own tax adviser regarding the potential effect
on them (if any) of any investment in the Tax-Exempt Funds.
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. U.S. Government securities are limited to: direct
obligations of the U.S. Treasury, such as U.S. Treasury bills, notes, and bonds
and notes, bonds, and discount notes of U.S. Government agencies or
instrumentalities, including certain mortgage securities.
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.
Other such obligations are only supported by: the issuer's right to borrow an
amount limited to a specific line of credit from the U.S. Treasury; the
discretionary authority of the U.S. Government to purchase certain obligations
of an agency or instrumentality; or the credit of the agency or instrumentality.
All of the Funds may invest in U.S. Government securities and may use them for
defensive purposes.
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U.S. Treasury Security Futures Contracts and Options
U.S. Treasury security futures contracts require the seller to deliver, or the
purchaser to take delivery of, the type of U.S. Treasury security called for in
the contract at a specified date and price. Options on U.S. Treasury securities
futures contracts give the purchaser the right in return for the premium paid to
assume a position in a U.S. Treasury security futures contract at the specified
option exercise price at any time during the period of the option. U.S.
Treasury security futures contracts and options on such contracts are used to
hedge against movements in the value of tax-exempt securities.
Successful use of U.S. Treasury security futures contracts depends on the
ability to predict the direction of interest rate movements and the effects of
other factors on the value of debt securities. For example, the sale of U.S.
Treasury security futures contracts is used to hedge against the possibility of
an increase in interest rates which would adversely affect the value of tax-
exempt securities held in a Fund's portfolio. If, unexpectedly, the prices of
the tax-exempt securities increase following a decline in interest rates, the
Fund will lose part or all of the benefit of the increased value of its
securities which it has hedged because it will have offsetting losses in its
futures positions. In addition, in such situations, if the Fund has
insufficient cash, it may have to sell securities to meet daily maintenance
margin requirements at a time when it may be disadvantageous to do so.
There is also a risk that price movements in U.S. Treasury security futures
contracts and related options will not correlate closely with price movements in
markets for tax-exempt securities. For example, if a Fund has hedged against a
decline in the values of tax-exempt securities held by it by selling U.S.
Treasury securities futures and the value of U.S. Treasury securities
subsequently increases while the value of its tax-exempt securities decreases,
the Fund will incur losses on both its U.S. Treasury security futures contracts
and its tax-exempt securities. Huntington will seek to reduce this risk by
monitoring movements in markets for U.S. Treasury security futures and options
and for tax-exempt securities closely.
Each of the Tax-Exempt Funds may purchase and sell futures contracts and
related options on U.S. Treasury securities when, in the opinion of Huntington,
price movements in U.S. Treasury security futures and related options will
correlate closely with price movements in the tax-exempt securities which are
the subject of the hedge.
Warrants
Warrants are basically options to purchase common stock at a specific price
(usually at a premium above the market value of the optioned common stock at
issuance) valid for a specific period of time. Warrants may have a life ranging
from less than a year to twenty years or may be perpetual. However, most
warrants have expiration dates after which they are worthless. In addition, if
the market price of the common stock does not exceed the warrant's exercise
price during the life of the warrant, the warrant will expire as worthless.
Warrants have no voting rights, pay no dividends, and have no rights with
respect to the assets of the corporation issuing them. The percentage increase
or decrease in the market price of the warrant may tend to be greater than the
percentage increase or decrease in the market price of the optioned common
stock.
Each of the Equity Funds may invest in warrants.
When-Issued and Delayed Delivery Transactions
When-issued and delayed delivery transactions are arrangements through which a
Fund purchases securities with payment and delivery scheduled for a future time.
No fees or other expenses, other than normal transaction costs, are incurred.
However, liquid assets of the purchasing Fund sufficient to make payment for the
securities are segregated on the Fund's records at the trade date. These assets
are then marked to market daily and maintained until the transaction has been
settled. A seller's failure to complete a
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transaction may cause a Fund to miss a desired price or yield. In addition,
because of delayed settlement, a Fund may pay more than market value on the
settlement date. The Adviser may choose to dispose of a commitment prior to
settlement.
With the exception of the Mortgage Securities Fund, which may invest up to 35%
of its total assets in securities purchased on a when-issued or delayed delivery
basis, none of the Funds intend to engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of more than 20% of
the total value of its assets.
All of the Funds may engage in when-issued and delayed delivery transactions.
Year 2000 Risk
Year 2000 Risk is the risk that a Fund could be adversely affected if the
computer systems used by its investment adviser or other service providers do
not properly process and calculate date-related information and data beginning
on January 1, 2000. Year 2000 Risk exists because most computer systems were
designed only to recognize a two-digit year, not a four-digit year. When the
year 2000 begins, these computers may interpret "00" as the year 1900 and either
stop processing date-related computations or process them incorrectly. These
failures could have a negative impact on the handling of securities trades,
pricing and account services. Huntington is taking steps designed to address
Year 2000 Rsik with respect to the computer systems that it uses and to obtain
satisfactory assurances that comparable steps are being taken by each of the
Trust's other service providers.
As of the date of this SAI, it is not anticipated that Year 2000 Risk relating
to the investment adviser or the Trust's other major service providers will
result in shareholders experiencing negative effects on their investment, or on
the services provided in connection therewith. There can be no assurances,
however, that the steps taken by Huntington and the Trust's other service
providers will be sufficient to avoid any adverse impact on the Funds. Year
2000 Risk also affects the companies in which the Funds invest, communications
and public utility companies, governmental entities, financial processors and
other companies upon which all investment companies rely.
Zero-Coupon Securities
Zero-coupon securities are debt obligations which are generally issued at a
discount and payable in full at maturity, and which do not provide for current
payments of interest prior to maturity. Zero-coupon securities usually trade at
a deep discount from their face or par value and are subject to greater market
value fluctuations from changing interest rates than debt obligations of
comparable maturities which make current distributions of interest. As a
result, the net asset value of shares of a Fund investing in zero-coupon
securities may fluctuate over a greater range than shares of other Funds and
other mutual funds investing in securities making current distributions of
interest and having similar maturities.
Zero-coupon securities may include U.S. Treasury bills issued directly by the
U.S. Treasury or other short-term debt obligations, and longer-term bonds or
notes and their unmatured interest coupons which have been separated by their
holder, typically a custodian bank or investment brokerage firm. A number of
securities firms and banks have stripped the interest coupons from the
underlying principal (the "corpus") of U.S. Treasury securities and resold them
in custodial receipt programs with a number of different names, including
Treasury Income Growth Receipts ("TIGRS") and Certificates of Accrual on
Treasuries ("CATS"). The underlying U.S. Treasury bonds and notes themselves
are held in book-entry form at the Federal Reserve Bank or, in the case of
bearer securities (i.e., unregistered securities which are owned ostensibly by
the bearer or holder thereof), in trust on behalf of the owners thereof.
In addition, the U.S. Treasury has facilitated transfers of ownership of zero-
coupon securities by accounting separately for the beneficial ownership of
particular interest coupons and corpus payments on U.S. Treasury securities
through the Federal Reserve book-entry record-keeping system. The Federal
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Reserve program, as established by the U.S. Treasury Department, is known as
"STRIPS" or "Separate Trading of Registered Interest and Principal of
Securities." Under the STRIPS program, a Fund will be able to have its
beneficial ownership of U.S. Treasury zero-coupon securities recorded directly
in the book-entry record-keeping system in lieu of having to hold certificates
or other evidence of ownership of the underlying U.S. Treasury securities. When
debt obligations have been stripped of their unmatured interest coupons by the
holder, the stripped coupons are sold separately. The principal or corpus is
sold at a deep discount because the buyer receives only the right to receive a
future fixed payment on the security and does not receive any rights to periodic
cash interest payments. Once stripped or separated, the corpus and coupons
maybe sold separately. Typically, the coupons are sold separately or grouped
with other coupons with like maturity dates and sold in such bundled form.
Purchasers of stripped obligations acquire, in effect, discount obligations that
are economically identical to the zero-coupon securities issued directly by the
obligor.
Each of the Income Funds may invest in zero-coupon securities.
Special Risk Factors Applicable to the Ohio Tax-exempt Funds
"Ohio tax-exempt securities" refer to tax-exempt securities issued by or on
behalf of the State of Ohio or its authorities, agencies, instrumentalities, and
political subdivisions, the interest on which, in the opinion of bond counsel at
the time of issuance, is exempt from both federal income tax and Ohio personal
income taxes. Since the Ohio Tax-Free Fund and the Ohio Municipal Money Market
Fund invest primarily in Ohio tax-exempt securities, the value of these Funds'
shares may be especially affected by factors pertaining to the economy of Ohio
and other factors specifically affecting the ability of issuers of Ohio tax-
exempt securities to meet their obligations. As a result, the value of the
Funds' shares may fluctuate more widely than the value of shares of a fund
investing in securities relating to a number of different states. The Ohio
Municipal Money Market Fund may invest in Ohio tax-exempt securities only if
rated at the time of purchase within the two highest grades assigned by any two
nationally recognized statistical rating organizations ("NRSROs") (or by any one
NRSRO if the obligation is rated by only that NRSRO). In addition, the Ohio
Municipal Money Market Fund may have more than 40% of its total assets invested
in securities that are credit-enhanced by domestic or foreign banks. Changes in
credit quality of these banking institutions could cause losses to this Fund and
affect its share price.
Generally, the creditworthiness of Ohio tax-exempt securities of local issuers
is unrelated to that of obligations of the State of Ohio itself, and the state
has no responsibility to make payments on those local obligations. There may be
specific factors that at particular times apply in connection with investment in
particular Ohio tax-exempt securities or in those obligations of particular Ohio
issuers. It is possible that the investment may be in particular Ohio tax-
exempt securities, or in those of particular issuers, as to which those factors
apply. However, the information below is intended only as a general summary,
and is not intended as a discussion of any specific factors that may affect any
particular obligation or issuer.
While diversifying more into the service and other non-manufacturing areas,
the Ohio economy continues to rely in part on durable goods manufacturing
largely concentrated in motor vehicles and equipment, steel, rubber products and
household appliances. As a result, general economic activity, as in many other
industrially-developed states, tends to be more cyclical than in some other
states and in the nation as a whole. Agriculture is an important segment of the
economy, with over half of the state's area devoted to farming and approximately
16% of total employment in agribusiness.
In prior years, Ohio's overall unemployment rate was commonly somewhat higher
than the national figure. For example, the reported 1990 average monthly rate
for Ohio was 5.7%, compared to the 5.5% national figure. However, for the last
seven years Ohio's rates have been below the national rates (4.6% versus 4.9% in
1997). The unemployment rate and its effects vary among geographic areas of
Ohio.
Ohio operates on the basis of a fiscal biennium for its appropriations and
expenditures, and is precluded by law from ending its July 1 to June 30 fiscal
year or fiscal biennium in a deficit position. Most
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state operations are financed through the General Revenue Fund, for which the
personal income and sales-use taxes are the major sources. Growth and depletion
of General Revenue Fund ending fund balances show a consistent pattern related
to national economic conditions, with the ending fiscal year balance reduced
during less favorable and increased during more favorable economic periods. Ohio
has well-established procedures for, and has timely taken, necessary actions to
ensure resource/expenditure balances during less favorable economic periods.
Those procedures included general and selected reductions in appropriations
spending. The General Revenue Fund appropriations act for the 1998-99 biennium
was passed on June 25, 1997, and promptly signed (after selective vetoes) by the
Governor. All necessary General Revenue Fund appropriations for State debt
service and lease rental payments then projected for the biennium were included
in that act.
The incurrence or assumption of debt by the State of Ohio without a vote of
the people is, with limited exceptions, prohibited by current state
constitutional provisions. The State of Ohio may incur debt, limited in amount
to $750,000, to cover casual deficits or failures in revenues or to meet
expenses not otherwise provided for. The Constitution expressly precludes the
state from assuming the debts of any local government or corporation, with
certain limited exceptions.
By constitutional amendments, Ohio voters have authorized the incurrence of
State of Ohio debt and the pledge of taxes or excises to its payment. At
September 26, 1998, $1.12 billion (excluding certain highway bonds payable
primarily from highway use receipts) of this debt was outstanding. The only
such state debt at that date still authorized to be incurred were portions of
the highway bonds, and the following: (a) up to $100 million of obligations for
coal research and development may be outstanding at any one time ($26.7 million
outstanding); (b) $240 million of obligations previously authorized for local
infrastructure improvements, no more than $120 million of which may be issued in
any calendar year ($1 billion outstanding or awaiting delivery); and (c) up to
$200 million in general obligation bonds for parks, recreation and natural
resource purposes which may be outstanding at any one time ($88.6 million
outstanding, with no more than $50 million to be issued in any one year).
State of Ohio and local agencies issue obligations that are payable from
revenues from or relating to certain facilities (but not from taxes). By
judicial interpretation, these obligations are not "debt" within constitutional
provisions. In general, payment obligations under lease-purchase agreements of
Ohio public agencies (in which certificates of participation may be issued) are
limited in duration to the agency's fiscal period, and are renewable only upon
appropriations being made available for the subsequent fiscal period.
Local school districts in Ohio receive a major portion (state-wide aggregate
approximately 44% in recent years) of their operating moneys from state
subsidies, but are dependent on local property taxes, and in 119 districts (as
of September 17, 1998) from voter-authorized income taxes, for significant
portions of their budgets. Litigation, similar to that in other states, has
been pending questioning the constitutionality of Ohio's system of school
funding. The Ohio Supreme Court has recently concluded that aspects of the
system (including basic operating assistance and the loan program referred to
below) are unconstitutional, and ordered the state to provide for and fund a
system complying with the Ohio Constitution, staying its order for a year (to
March 1998) to permit time for responsive corrective actions. A small number of
the state's 612 local school districts have in any year required special
assistance to avoid year-end deficits. A program has provided for school
district cash need borrowing directly from commercial lenders, with diversion of
state subsidy distributions to repayment if needed. Recent borrowings under
this program totaled $41.1 million for 28 districts in fiscal 1994, $71.1
million for 29 districts in fiscal 1995 (including $29.5 million for one
district), $87.2 million for 20 districts in fiscal 1996 (including $42.1
million for one district), and $113.2 million for 12 districts in fiscal 1997
(including $90 million to one district for restructuring its prior loans), and
$23.4 million for 10 districts in fiscal 1998.
For those few municipalities and school districts that on occasion have faced
significant financial problems, there are statutory procedures for a joint
state/local commission to monitor the fiscal affairs and for development of a
financial plan to eliminate deficits and cure any defaults. Similar procedures
have
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recently been extended to counties and townships. Since inception for
municipalities in 1979, these "fiscal emergency" procedures have been applied to
25 cities and villages; for 18 of them the fiscal situation was resolved and the
procedures terminated (one village and three cities are in preliminary "fiscal
watch" status). As of September 17, 1998, the 1996 school district "fiscal
emergency" provision had been applied to six districts, and ten districts were
on preliminary "fiscal watch" status.
At present the State of Ohio itself does not levy ad valorem taxes on real or
tangible personal property. Those taxes are levied by political subdivisions
and other local taxing districts. The Ohio Constitution has since 1934 limited
to 1% of true value in money the amount of the aggregate levy (including a levy
for unvoted general obligations) of property taxes by all overlapping
subdivisions, without a vote of the electors or a municipal charter provision,
and statutes limit the amount of that aggregate levy to 10 mills per $1 of
assessed valuation (commonly referred to as the "ten-mill limitation"). Voted
general obligations of subdivisions are payable from property taxes that are
unlimited as to amount or rate.
Although the State of Ohio's revenue obligations or its political subdivisions
may be payable from a specific project or source, including lease rentals, there
can be no assurance that economic difficulties and the resulting impact on state
and local governmental finances will not adversely affect the market value of
Ohio tax-exempt securities held in the portfolios of the Ohio Tax-Free Fund or
the Ohio Municipal Money Market Fund, or the ability of the obligors of such
Ohio tax-exempt securities to make required payments on or leases relating to
such obligations.
Special Risk Factors Applicable to the Michigan Tax-Free fund
"Michigan tax-exempt securities" refer to tax-exempt securities issued by or
on behalf of the State of Michigan or its authorities, agencies,
instrumentalities, and political subdivisions, the interest on which, in the
opinion of bond counsel at the time of issuance, is exempt from both federal
income tax and Michigan personal income taxes. Because the Michigan Tax-Free
Fund will invest primarily in Michigan tax-exempt securities, its investment
performance is especially dependent on Michigan's prevailing economic
conditions. As a result, the value of this Fund's shares may fluctuate more
widely than the value of shares of a fund investing in securities relating to a
number of states. In addition, to provide somewhat greater investment
flexibility, the Michigan Tax-Free Fund is also a "non-diversified" fund and, as
such, is not required to meet any diversification requirements under the 1940
Act. The Michigan Tax-Free 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 tax-exempt
securities, 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 is a highly industrialized state with an economy principally
dependent upon three sectors: manufacturing (particularly durable goods,
automotive products and office equipment), tourism and agriculture. According
to the State Department of Management and Budget, the U.S. Bureau of Economic
Analysis and the U.S. Bureau of Census, Michigan's population has grown since
the 1990 Census by 5.2%, to approximately 9,774,000 people, while its civilian
labor force over 16 years of age has grown by 8.3% and personal income of its
residents has grown by over 43% during that time. Legislation in Michigan
requires that the administration prepare two economic forecasts each year, which
are presented each January and May of a given year. The state's economic
forecast for calendar years 1998 and 1999 projects healthy growth in the
national economy, and it assumes moderate inflation accompanied by steady
interest rates. Real gross domestic product is projected to grow 3.1% in
calendar 1998 and 2.0% in calendar 1999. Nationally, car and light truck sales
are expected to total 14.9 million units in both calendar 1998 and 1999.
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The state's forecast for the Michigan economy reflects the national outlook.
Total wage and salary employment is projected to grow 1.7% in 1998 and 0.8% in
1999. This growth reflects the ongoing diversification of the Michigan
economy. The unemployment rate is projected to average 4.1% in 1998 and 4.4% in
1999, continuing the recent trend of Michigan's unemployment rate being below
the national average for six consecutive years.
The principal revenue sources for the state's General Fund are state taxes
from sales, personal income, single business, and excise taxes (approximately
56% of total General Fund revenues) and federal and non-tax revenues
(approximately 44% of total revenues). Under the Michigan Constitution,
expenditures from the General Fund are not permitted to exceed available
revenues. The principal expenditures from the General Fund are directed towards
education, public protection, mental and public health, and social services.
Improvements in the Michigan economy have resulted in increased revenue
collections, which, together with restraint on the expenditure side of the
budget, have produced General Fund surpluses of $81.9 million in fiscal 1995,
$196.5 million in fiscal 1996 and $12.7 million in fiscal 1997. Fiscal year 1998
General Fund revenues are expected to be $8,590.0 million, an increase of 3.2%
over the previous year. Fiscal year 1998 expenditures are projected at $8,601.7
million, an increase over fiscal 1997 of 3.5%, principally due to projected
increases in expenditures for education and public protection.
The Michigan Constitution limits the amount of total state revenues that can
be raised from taxes and certain 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 average of the prior three
calendar years, whichever is greater, and this fixed percentage equals the ratio
of the 1978-79 fiscal year revenues to total calendar 1977 state personal
income. If any fiscal years' revenues exceed the revenue limitation of one
percent or more, the entire amount of the excess must be related in the
following fiscal year's personal income tax or single business tax. Any excess
of less than one percent may be transferred to the state's Budget Stabilization
Fund. The unreserved balance of this Budget Stabilization Fund on September 30,
1997, was estimated to be $646.3 million.
Since 1994, Michigan has financed the principal portion of the costs of local
public school operations as a state budget item, and has shifted the
responsibility for financing such costs away from local school units. To
provide funding for these additional state budget obligations, the Legislature
has enacted a series of taxes and tax increases, and has exempted all property
in Michigan from millages levied for local and intermediate school district
operating purposes, other than millages levied for community colleges. These
additional state revenues are included within the state's constitutional revenue
limitations and may impact the state's ability to raise additional revenues in
the future.
Although revenue obligations of Michigan or its political subdivisions may be
payable from a specific project or source, including lease rentals, there can be
no assurance that further economic difficulties will not adversely affect the
market value of municipal obligations held in the portfolio of the Michigan Tax-
Free Fund or the ability of the respective obligors to make required payments on
such obligations.
Special Risk Factors Applicable to the Florida Tax-Free Money Fund
"Florida tax-exempt securities" refer to tax-exempt securities issued by the
state of Florida and its political subdivisions, agencies, authorities and
instrumentalities and other qualifying issuers, the value of which is exempt
from the Florida intangible personal property tax, and which pay interest that
is, in the opinion of bond counsel to the issuer, excluded from gross income for
federal income tax purposes. Because the Florida Tax-Free Money Fund will invest
primarily in Florida tax-exempt securities, its investment performance is
especially dependent on Florida's prevailing economic conditions. The Florida
Tax-Free Money Fund may invest in Florida tax-exempt securities only if rated at
the time of purchase within the two highest grades assigned by any two NRSROs
(or by any one NRSRO if the obligation is rated by only that NRSRO).
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In 1980, Florida ranked seventh in population among the fifty states, having a
population of 9.7 million people. The state has grown dramatically since 1980
and, as of April 1, 1997, Florida ranked fourth in the nation, with an estimated
population of 14.7 million. The service and trade sectors constitute Florida's
largest employment sectors, with services currently accounting for 34.9% and
trade accounting for 25.6% of the state's of total non-farm employment.
Florida's manufacturing jobs exist in the high-tech and high value-added
sectors, such as electrical and electronic equipment, as well as printing and
publishing. The job creation rate for the state is almost twice that of the
nation's rate as a whole. Since 1995, Florida's unemployment rate has again
been below the nation's average. In 1997, Florida's unemployment rate was 4.8%,
while the nation's was 4.9%.
South Florida, because of its location and involvement with foreign trade,
tourism and investment capital, is particularly susceptible to international
trade and currency imbalances and economic dislocations in Central and South
America. The central and northern portions of the state are affected by
problems in the agricultural sector, particularly in the citrus and sugar
industries. Short-term adverse economic conditions may be experienced by the
central and northern section of Florida, and in the state as a whole, due to
crop failures, severe weather conditions or other agriculture-related problems.
In addition, the state economy has historically been somewhat dependent on the
tourism and construction industries and is therefore sensitive to trends in
those sectors.
The State operates under an annual budget. Under the State Constitution and
applicable statutes, the budget as a whole and each separate fund within the
State budget must be kept in balance from currently available revenues during
each State fiscal year (July 1 through June 30). Moneys are expended pursuant to
appropriations acts. In fiscal year 1996-97, an estimated 67% of total direct
revenues were derived from State taxes and fees. Federal funds and other
special revenues accounted for the remaining revenues. The largest single
source of tax receipts in Florida is the 6% sales and use tax and the second
largest source of tax receipts (including those distributed to local
governments) is the tax on motor fuels. Other tax receipt sources include an
alcoholic beverage tax (an excise tax), a corporate income tax, a documentary
stamp tax, a gross receipts tax, intangible personal property tax and an estate
tax. The Florida lottery produced sales of $2.09 billion, of which $792.3
million was used for education, in fiscal 1996-97. Estimated revenues of
$16,877.6 million for fiscal 1997-98 represent an increase of 7.2% over revenues
for fiscal 1996-97. Estimated revenues for fiscal 1998-99 of $17,627.0 million
represent an increase of 4.4% over fiscal 1997-98.
Pursuant to a constitutional amendment which was ratified by the votes on
November 8, 1994, the rate of growth in state revenues in a given fiscal year is
limited to no more than the average annual growth rate in Florida personal
income over the previous five years. Revenues collected in excess of the
limitation are to be deposited into the Budget Stabilization Fund unless 2/3 of
the members of both houses of the Legislature vote to raise the limit. The
revenue limit is determined by multiplying the average annual growth rate in
Florida personal income over the previous five years by the maximum amount of
revenue permitted under the cap for the previous year. State revenues are
defined as taxes, licenses, fees and charges for services imposed by the
Legislature as well as revenue from the sale of lottery tickets. Included among
the categories of revenues which are exempt from the proposed revenue limitation
are revenues pledged to state bonds.
Many factors, including national, economic, social and environmental policies
and conditions, most of which are not within the control of the state or local
government, could affect or adversely impact on Florida's financial condition.
INVESTMENT RESTRICTIONS
The following investment restrictions are fundamental and may not be changed
without a vote of a majority of the outstanding shares of a Fund. Accordingly,
the Trust will not, on behalf of a Fund:
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(1) Except for the Tax-Exempt Funds, invest more than 5% of the value of
its total assets in the securities of any one issuer (this limitation
does not apply to securities issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities or to
repurchase agreements secured by such obligations).
(2) Purchase more than 10% of the voting securities of any issuer.
(3) Invest 25% or more of the value of its total assets (i) in securities
of companies primarily engaged in any one industry (other than the
U.S. Government, its agencies and instrumentalities), and (ii) with
respect to the Tax-Exempt Funds, in municipal obligations of one
issuer or which are related in such a way that, in the opinion of
Huntington, an economic, business or political development other than
state-wide, national or international development) affecting one such
municipal obligation would also affect others in a similar manner.
Such concentration may occur as a result of changes in the market
value of portfolio securities, but such concentration may not result
from investment.
(4) Loan more than 20% of the Funds' portfolio securities to brokers,
dealers or other financial organizations. All such loans will be
collateralized by cash or U.S. Government obligations that are
maintained at all times in an amount equal to at least 102% of the
current value of the loaned securities.
(5) For all Funds except the Florida Tax-Free Money Fund, invest more
than 10% (15% in the case of the Government Income Fund) of the value
of its total assets in illiquid securities including restricted
securities, repurchase agreements of over seven days' duration and
OTC options. The Florida Tax-Free Money Fund will not invest more
than 10% of the value of its net assets in such illiquid securities.
The Money Market Fund will not include in this limitation commercial
paper issued under Section 4(2) of the Securities Act of 1933 and
certain other restricted securities which meet the criteria for
liquidity as established by the Trustees.
(6) Borrow in excess of 5% of its total assets (borrowings are permitted
only as a temporary measure for extraordinary or emergency purposes)
or pledge (mortgage) its assets as security for an indebtedness,
except that each of the Michigan Tax-Free Fund, Intermediate
Government Income Fund and Florida Tax-Free Money Fund may borrow
from banks up to 10% of the current value of its total net assets for
temporary or defensive purposes and those borrowings may be secured
by the pledge of not more than 15% (10% for the Florida Tax-Free
Money Fund) of the current value of its total net assets (but
investments may not be purchased by these Funds while any such
borrowings are outstanding).
(7) Invest more than 5% of its total assets in securities of any issuer
which, together with any predecessor, has been in operation for less
than three years.
(8) Purchase or sell real estate or real estate mortgage loans; provided,
however, that the Funds may invest in securities secured by real
estate or interests therein or issued by companies which invest in
real estate or interests therein.
(9) Purchase or sell commodities or commodities contracts, or interests
in oil, gas, or other mineral exploration or development programs
provided, however, that the Funds may invest in futures contracts for
bona fide hedging transactions, as defined in the General Regulations
under the Commodity Exchange Act, or for other transactions permitted
to entities exempt from the definition of the term commodity pool
operator, as long as,
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immediately after entering a futures contract no more than 5% of the
fair market value of the Funds' assets would be committed to initial
margins.
(10) Purchase securities on margin or effect short sales (except that the
Funds may obtain such short-term credits as may be necessary for the
clearance of purchases or sales of securities).
(11) Engage in the business of underwriting securities issued by others or
purchase securities, other than time deposits and restricted
securities (i.e., securities which cannot be sold without
registration or an exemption from registration), subject to legal or
contractual restrictions on disposition.
(12) Make loans to any person or firm except as provided below; provided,
however, that the making of a loan shall not be construed to include
(i) the acquisition for investment of bonds, debentures, notes or
other evidences of indebtedness of any corporation or government
which are publicly distributed or of a type customarily purchased by
institutional investors (which are debt securities, generally rated
not less than A by Moody's or S&P, or the equivalent, privately
issued and purchased by such entities as banks, insurance companies
and investment companies), or (ii) the entry into repurchase
agreements. However, each of the Funds may lend its portfolio
securities to brokers, dealers or other institutional investors
deemed by Huntington, the Trust's manager, pursuant to criteria
adopted by the Trustees, to be creditworthy if, as a result thereof,
the aggregate value of all securities loaned does not exceed 20% (5%
in the case of the Michigan Tax-Free Fund) of the value of total
assets and the loan is collateralized by cash or U.S. Government
obligations that are maintained at all times in an amount equal to at
least 102% of the current market value of the loaned securities. Such
transactions will comply with all applicable laws and regulations.
(13) Purchase from or sell portfolio securities to officers, Trustees or
other "interested persons" (as defined in the 1940 Act) of the Funds,
including its investment manager and its affiliates, except as
permitted by the Investment Company Act of 1940 and exemptive Rules
or Orders thereunder.
(14) Issue senior securities.
(15) Purchase or retain the securities of any issuer if, to the Funds'
knowledge, one or more of the officers, directors or Trustees of the
Trust, the investment adviser or the administrator, individually own
beneficially more than one-half of one percent of the securities of
such issuer and together own beneficially more than 5% of such
securities.
(16) Purchase the securities of other investment companies except by
purchase in the open market where no commission or profit to a
sponsor or dealer results from such purchase other than the customary
broker's commission or except when such purchase is part of a plan of
merger, consolidation, reorganization or acquisition and except as
permitted pursuant to Section 12(d)(1) of the Investment Company Act
of 1940.
All percentage limitations on investments will apply at the time of the making
of an investment and should not be considered violated unless an excess or
deficiency occurs or exists immediately after and as a result of such
investment.
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Portfolio Turnover
The portfolio turnover rate of a Fund is defined by the Securities and
Exchange Commission as the ratio of the lesser of annual sales or purchases to
the monthly average value of the portfolio, excluding from both the numerator
and the denominator securities with maturities at the time of acquisition of one
year or less. Under that definition, the Money Market Funds will have no
portfolio turnover. Portfolio turnover generally involves some expense to a
Fund, including brokerage commissions or dealer mark-ups and other transactions
costs on the sale of securities and reinvestment in other securities.
For the fiscal years ended December 31, 1998 and 1997, the portfolio turnover
rates for each of the following Funds were as follows:
Fund 1998 1997
- ---- ---- ----
Growth Fund................................... 11% 12%
Income Equity Fund............................ 13% 24%
Mortgage Securities Fund...................... 17% 63%
Ohio Tax-Free Fund............................ 9% 14%
Michigan Tax-Free Fund*....................... ___% 7%
Fixed Income Securities Fund.................. 47% 116%
Intermediate Government Income Fund*.......... ___% 28%
Short/Intermediate Fixed Income
Securities Fund............................... 60% 160%
*The 1997 portfolio turnover rates for the Michigan Tax-Free Fund and the
Intermediate Government Income Fund are actually those of the predecessor FMB
Funds for the year ended November 30, 1997. The 1998 portfolio turnover rates
for these Funds are for the year ended December 31, 1998 and include predecessor
fund data.
Portfolio turnover for the Income Equity Fund decreased in 1998 as a result of
_____________. Portfolio turnover for each of the Fixed Income Securities Fund
and the Short/Intermediate Fixed Income Securities Fund was lower in 1998 than
in 1997 due to a decision by the Adviser to increase corporate exposure in both
Funds in 1997. Portfolio turnover for the Ohio Tax-Free Fund was reduced in
1998 versus 1997 following increased trading in 1997 in order to extend the
average life of the portfolio. For the Mortgage Securities Fund, decreased
portfolio turnover resulted primarily from continued movement towards management
of the portfolio as a more traditional mortgage fund. Increased portfolio
turnover necessarily results in higher costs, including brokerage commissions,
dealer mark-ups and other transaction costs on the sale of securities and
reinvestment in other securities, and may result in the acceleration of capital
gains.
MANAGEMENT OF THE TRUST
Trustees and Officers
The Trustees of the Trust are responsible for generally overseeing the conduct
of each Fund's business in accordance with the laws of the state of
Massachusetts. Trustees and officers of the Trust and their principal
occupations during the past five years are as set forth below.
32
<PAGE>
<TABLE>
<CAPTION>
Position(s)
Held With Principal Occupation(s)
Name, Age and Address The Trust During Past Five Years
- ---------------------- ---------- -----------------------
<S> <C> <C>
David S. Schoedinger Trustee Chairman of the Board, Schoedinger
229 East State Street Funeral Service; President
Columbus, Ohio Schoedinger Financial Services,
Birth date: November 27, 1942 Inc.; Past President, Board of
Directors of National Selected (1992-
1993).
John M. Shary Trustee and Formerly: Member, Business
3097 Walden Ravine Chairman of the Advisory Board, DPEC-Data
Columbus, Ohio 43321 Board Processing Education Corp. (____-
Birth date: November 30, 1930 1998); Member, Business Advisory
Board, Hublink, Inc. (____-1998);
Member, Business Advisory Board,
Miratel Corporation (_____-1998);
Member, Board of Directors, Applied
Information Technology Research
Center (1988-1992); Member, Board
of Directors, AIT (1987-1992); Chief
Financial Officer of OCLC Online
Computer Library Center, Inc. (1972-
1992).
William R. Wise Trustee Formerly, Corporate Director of
613 Valley Forge Court Financial Services and Treasurer,
Westerville, Ohio Children's Hospital, Columbus, Ohio;
Birth date: October 20, 1959 Associate Executive Director and
Treasurer, Children's Hospital,
Columbus, Ohio (1985-1989).
Mark Nagle President and Chief Vice President, Fund Accounting
One Freedom Valley Road Executive Officer and Administration of SEI Fund
Oaks, Pennsylvania 19456 Resources since 1996; BISYS Fund
Birth date: October 20, 1959 Services from 1995 to 1996; Senior
Vice President, Fidelity Investments
from 1981-1995.
Robert DellaCroce Treasurer, Director, Funds Administration and
One Freedom Valley Road Controller and Chief Accounting of SEI since 1994.
Oaks, Pennsylvania 19456 Financial Officer Senior Audit Manager, Arthur
Birth date: December 17, 1963 Anderson LLP, from 1986 to 1994.
Kathy Heilig Vice President and Treasurer of SEI Investments
One Freedom Valley Road Assistant Secretary Company since 1997; Assistant
Oaks, Pennsylvania 19456 Controller of SEI Investments
Birth date: December 21, 1958 Company since 1995; Vice President
of SEI Investments Company since
1991.
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
Position(s)
Held With Principal Occupations(s)
Name, Age and Address The Trust During past Five Years
- --------------------- --------- -----------------------
<S> <C> <C>
Todd Cipperman Vice President and Vice President and Assistant
One Freedom Valley Road Assistant Secretary Secretary of SEI Corporation since
Oaks, Pennsylvania 19456 1995; Associate attorney with Dewey
Birth date: February 14, 1966 Ballantine (1994-1995); Associate
attorney with Winston &
Strawn (1991-1994).
Joseph M. Lydon Vice President and Director of Business Administration-
One Freedom Valley Road Assistant Secretary Fund Resources, a division of SEI
Oaks, Pennsylvania 19456 Corporation since 1995; Vice
Birth date: September 27, 1959 President of Fund Group, Vice
President of the Advisor-Dremen
Value Management, L.P., and
President of Dremen Financial
Services, Inc. (1993-1997).
Joseph M. O'Donnell Vice President and Vice President and Assistant
One Freedom Valley Road Assistant Secretary Secretary of SEI since 1998, Vice
Oaks, Pennsylvania 19456 President and General Counsel,
Birth date: November 13, 1951 FPS Service, Inc. (1993-1997).
Kevin P. Robbins Vice President and Senior Vice President, General
One Freedom Valley Road Assistant Secretary Counsel and Secretary of SEI
Oaks, Pennsylvania 19456 Corporation since 1994. Vice
Birth date: April 15, 1961 President and Assistant Secretary
(1992-1994); Associate attorney with
Morgan, Lewis & Bockius (1988-
1992).
[To be determined] Secretary
One Freedom Valley Road
Oaks, Pennsylvania 19456
Birth date:
</TABLE>
Except as stated above, the principal occupations of the officers and
Trustees for the last five years have been with the employers as shown above,
although in some cases they have held different positions with such employers.
Trustee Compensation
During the fiscal year ended December 31, 1998, the Trustees received the
following total compensation from the Trust for their services as Trustees with
respect to all of the Funds:
Name and Position Compensation
----------------- ------------
David S. Schoedinger, Trustee $_______
John M. Shary, Trustee and Chairman $_______
William R. Wise, Trustee $_______
34
<PAGE>
There are no pension or retirement plans or programs in effect for Trustees
of the Trust. No officers of the Trust or of any other Fund receive
compensation from the Trust or the Funds as officers or employees of the Trust
of any such Fund.
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.
Investment Adviser
Huntington National Bank is the investment adviser to each of the Funds of
the Trust. It is an indirect, wholly-owned subsidiary of Huntington Bancshares
Incorporated ("HBI") and is deemed to be controlled by HBI. With over $___
billion in assets as of December 31, 1998, 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.
Under the investment advisory agreements between the Trust and Huntington
(the "Investment Advisory Agreements"), Huntington, at its expense, furnishes a
continuous an investment program for the various Funds and makes investment
decisions on their behalf, all subject to such policies as the Trustees may
determine. Investment decisions are subject to the provisions of the Trust's
Declaration of Trust and By-laws, and of the 1940 Act. In addition, Huntington
makes decisions consistent with a Fund's investment objectives, policies, and
restrictions, and such policies and instructions as the Trustees may, from time
to time, establish.
Each of the Funds pays advisory fees to Huntington based on a percentage of
its average daily net assets as specified in the applicable Investment Advisory
Agreement. During the fiscal years ended December 31, 1998, 1997 and 1996,
Huntington collected the following fees:
Fund 1998 1997 1996
- ---- ---- ---- ----
Money Market Fund..................... $1,438,732 $1,267,812
Ohio Municipal Money Market Fund...... $ 315,663* $ 213,103*
U.S. Treasury Money Market Fund....... $1,103,305 $ 904,683
Growth Fund........................... $1,249,265 $1,028,360
Income Equity Fund.................... $1,175,011 $ 958,682
Mortgage Securities Fund.............. $ 122,798* $ 101,228*
Ohio Tax-Free Fund.................... $ 327,550 $ 313,954
Michigan Tax-Free Fund................ N/A N/A
Fixed Income Securities Fund.......... $ 745,513 $ 697,359
35
<PAGE>
Intermediate Government Income Fund.............. N/A N/A
Short/Intermediate Fixed Income Securities Fund.. $622,863 $627,097
*During the fiscal year ended December 31, 1998, gross advisory fees for the
Ohio Municipal Money Market Fund and the Mortgage Securities Fund were,
respectively, $_______ and $______, of which $______ and $______ were
voluntarily waived. During the fiscal year ended December 31, 1997, gross
advisory fees for the Ohio Municipal Money Market Fund and the Mortgage
Securities Fund were, respectively, $414,395 and $204,663, of which $98,732 and
$81,865 were voluntarily waived. During the fiscal year ended December 31,
1996, gross advisory fees for the Ohio Municipal Money Market Fund and the
Mortgage Securities Fund were, respectively, $355,171 and $236,184, of which
$142,068 and $134,956 were voluntarily waived. During the fiscal years ended
1996 and 1997, Huntington paid $69,922 and $86,734, respectively, to Piper
Capital Management Incorporated ("Piper"), as sub-adviser to the Mortgage
Securities Fund. The Sub-Investment Advisory Agreement between Huntington and
Piper was automatically terminated under the Investment Company Act of 1940 upon
the acquisition of Piper's parent company, Piper Jaffray Companies Inc., by U.S.
Bancorp at the end of 1998.
No information on advisory fees is provided for the Florida Tax-Free Money
Fund, as that Fund had not yet commenced operations as of December 31, 1998.
The Investment Advisory Agreements provide that Huntington shall not be
subject to any liability for any error of judgment or mistake of law or for any
loss suffered by the Trust in connection with the matters to which the
Investment Advisory Agreements relate, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties on the part of Huntington.
The Investment Advisory Agreements may be terminated without penalty with
respect to any Fund at any time by the vote of the Trustees or by the
shareholders of that Fund upon 60 days' written notice, or by Huntington on 90
days' written notice. An Investment Advisory Agreement may be amended only by a
vote of the shareholders of the affected Fund(s). The Agreements also terminate
without payment of any penalty in the event of its assignment. The Investment
Advisory Agreements provide that they will continue in effect from year to year
only so long as such continuance is approved at least annually with respect to
each Fund by the vote of either the Trustees or the shareholders of the Fund,
and, in either case, by a majority of the Trustees who are not "interested
persons" of Huntington.
From time to time, the Adviser may use a portion of its investment advisory
fee to pay for certain administrative services provided by financial
institutions on Investment Shares of the Funds.
Because of the internal controls maintained by Huntington to restrict the
flow of non-public information, the Funds' investments are typically made
without any knowledge of Huntington's or its affiliates' lending relationships
with an issuer.
Sub-adviser
Countrywide Investments, Inc., whose address is 312 Walnut Street,
Cincinnati, Ohio 45202, is the sub-adviser to the Florida Tax-Free Money Fund.
It is an indirect wholly-owned subsidiary of Countrywide Credit Industries,
Inc., the largest mortgage lender in the United States. Countrywide Investments
has been managing mutual funds since its inception in 1974 and currently serves
as the investment adviser to several proprietary investment companies.
Under the Sub-Advisory Agreement between Huntington and Countrywide
Investments, Countrywide furnishes to Huntington such investment advice,
statistical and other factual information as Huntington may reasonably request
from time to time with respect to the Florida Tax-Free Money Fund.
36
<PAGE>
The Sub-Advisory Agreement may be terminated without penalty at any time by
the vote of the Trustees or by the shareholders of the Florida Tax-Free Money
Fund upon 60 days' written notice, or by Huntington or Countrywide on 120 days'
written notice. Any amendment to the Agreement must be approved by both a vote
of the Trustees and the shareholders of the Fund. The Agreement also terminates
without payment of any penalty in the event of its assignment. The Sub-Advisory
Agreement provides that it will continue in effect for two years from its
effectiveness and from year to year thereafter only so long as such continuance
is approved at least annually by the vote of either the Trustees or the
shareholders of the Fund, and, in either case, by a majority of the Trustees who
are not "interested persons" of Huntington.
Glass-Steagall Act
In 1971, the United States Supreme Court held in Investment Company
Institute v. Camp that the federal statute commonly referred to as the Glass-
Steagall Act prohibits a national bank from operating a mutual fund for the
collective investment of managing agency accounts. Subsequently, the Board of
Governors of the Federal Reserve System (the "Board") issued a regulation and
interpretation to the effect that the Glass-Steagall Act and such decision: (a)
forbid a bank holding company registered under the Federal Bank Holding Company
Act of 1956 (the "Holding Company Act") or any non-bank affiliate thereof from
sponsoring, organizing, or controlling a registered, open-end investment company
continuously engaged in the issuance of its shares, but (b) do not prohibit such
a holding company or affiliate from acting as investment adviser, transfer
agent, and custodian to such an investment company. In 1981, the United States
Supreme Court held in Board of Governors of the Federal Reserve System v.
Investment Company Institute that the Board did not exceed its authority under
the Holding Company Act when it adopted its regulation and interpretation
authorizing bank holding companies and their non-bank affiliates to act as
investment advisers to registered closed-end investment companies. In the Board
of Governors case, the Supreme Court also stated that if a national bank
complies with the restrictions imposed by the Board in its regulation and
interpretation authorizing bank holding companies and their non-bank affiliates
to act as investment advisers to investment companies, a national bank
performing investment advisory services for an investment company would not
violate the Glass-Steagall Act.
Huntington believes that it possesses the legal authority to perform the
services for the Trust contemplated by the Investment Advisory Agreements.
Future changes in either federal or state statutes and regulations relating to
the permissible activities of banks or bank holding companies and the
subsidiaries or affiliates of those entities, as well as further judicial or
administrative decisions or interpretations of present and future statutes and
regulations could prevent or restrict Huntington from continuing to perform such
services for the Trust. Depending upon the nature of any changes in the
services which could be provided by Huntington, the Board of Trustees of the
Trust would review the Trust's relationship with Huntington and consider taking
all action necessary in the circumstances.
Should further legislative, judicial, or administrative action prohibit or
restrict the activities of Huntington, its affiliates, and its correspondent
banks in connection with customer purchases of shares of the Trust, such banks
might be required to alter materially or discontinue the services offered by
them to customers. It is not anticipated, however, that any change in the
Funds' method of operations would affect their net asset values per share or
result in financial losses to any customer.
State securities laws governing the ability of depository institutions to
act as underwriters or distributors of securities may differ from
interpretations given to the Glass-Steagall Act and, therefore, banks and
financial institutions maybe required to register as dealers pursuant to state
law.
Portfolio Transactions
Huntington may place portfolio transactions with broker-dealers which
furnish, without cost, certain research, statistical, and quotation services of
value to Huntington and its affiliates in advising the Trust and other clients,
provided that they shall always seek best price and execution with respect to
the transactions. Certain investments may be appropriate for the Trust and for
other clients advised by
37
<PAGE>
Huntington. Investment decisions for the Trust and other clients are made with a
view to achieving their respective investment objectives and after consideration
of such factors as their current holdings, availability of cash for investment,
and the size of their investments generally. Frequently, a particular security
may be bought or sold for only one client or in different amounts and at
different times for more than one but less than all clients. Likewise, a
particular security may be bought for one or more clients when one or more other
clients are selling the security. In addition, purchases or sales of the same
security may be made for two or more clients of an investment adviser on the
same day. In such event, such transactions will be allocated among the clients
in a manner believed by Huntington to be equitable to each. In some cases, this
procedure could have an adverse effect on the price or amount of the securities
purchased or sold by the Trust. Purchase and sale orders for the Trust may be
combined with those of other clients of Huntington in the interest of achieving
the most favorable net results for the Trust.
Brokerage Allocation and Other Practices
Transactions on U.S. stock exchanges and other agency transactions involve
the payment by a Fund of negotiated brokerage commissions. Such commissions
vary among different brokers. Also, a particular broker may charge different
commissions according to such factors as the difficulty and size of the
transaction. Transactions in foreign securities often involve the payment of
fixed brokerage commissions, which are generally higher than those in the United
States. There is generally no stated commission in the case of securities
traded in the over-the-counter markets, but the price paid by a Fund usually
includes an undisclosed dealer commission or mark-up. In underwritten
offerings, the price paid by a Fund includes a disclosed, fixed commission or
discount retained by the underwriter or dealer.
Huntington places all orders for the purchase and sale of portfolio
securities for a Fund and buys and sells securities for a Fund through a
substantial number of brokers and dealers. In so doing, it uses its best
efforts to obtain for a Fund the best price and execution available. In seeking
the best price and execution, Huntington, having in mind a Fund's best
interests, considers all factors it deems relevant, including, by way of
illustration, price, the size of the transaction, the nature of the market for
the security, the amount of the commission, the timing of the transaction taking
into account market prices and trends, the reputation, experience, and financial
stability of the broker-dealer involved, and the quality of service rendered by
the broker-dealer in other transactions.
It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional investors
to receive research, statistical, and quotation services from broker-dealers
that execute portfolio transactions for the clients of such advisers. Consistent
with this practice, Huntington receives research, statistical, and quotation
services from many broker-dealers with which it places a Fund's portfolio
transactions. These services, which in some cases may also be purchased for
cash, include such matters as general economic and security market reviews,
industry and company reviews, evaluations of securities, and recommendations as
to the purchase and sale of securities. Some of these services are of value to
Huntington and its affiliates in advising various of their clients (including
the Trust), although not all of these services are necessarily useful and of
value in managing the Trust. The fee paid by a Fund to Huntington is not
reduced because Huntington and its affiliates receive such services.
As permitted by Section 28(e) of the Securities Exchange Act of 1934, as
amended, and by the Investment Advisory Agreements, Huntington may cause a Fund
to pay a broker-dealer that provides the brokerage and research services
described above an amount of disclosed commission for effecting a securities
transaction for the Fund in excess of the commission which another broker-dealer
may charge for effecting that transaction. Huntington's authority to cause a
Fund to pay any such greater commissions is also subject to such policies as the
Trustees may adopt from time to time.
In the fiscal years ended December 31, 1998, 1997, and 1996, the Funds
named below paid the following brokerage commissions:
38
<PAGE>
Fund 1998 1997 1996
- ----- ---- ---- ----
Growth Fund............... $______ $71,100 $76,783
Income Equity Fund........ $______ $36,858 $107,966
[Disclose Reasons for differences between 97 and 98, if applicable]
As of December 31, 1998, certain Funds held the securities of the Trust's
regular brokers or dealers or of their parents as follows:
Fund Holdings (000)
----- --------------
Money Market Fund $30,000 Goldman, Sachs & Co.
$30,851 Morgan Stanley Dean Witter
U.S. Treasury Money Market Fund $25,000 Lehman Brothers
$15,339 Morgan Stanley Dean Witter
$50,000 Goldman Sachs & Co.
$25,000 Smith Barney
Income Equity $8,848 Chase Manhattan
Fixed Income Securities $1,250 Citicorp
Intermediate Government Income Fund $3,478 Morgan Stanley Dean Witter
Mortgage Securities $2,099 Morgan Stanley Dean Witter
Short/Intermediate Fixed $1,100 Chase Manhattan
Income Securities Fund $1,000 Citicorp
$1,200 Bear Stearns
$1,000 Goldman Sachs
Administrator
Huntington is the Administrator of the Trust. Pursuant to its
Administration Agreement, Huntington provides the Trust with administrative
services, regulatory reporting, fund accounting and related portfolio accounting
services, all necessary office space, equipment, personnel, compensation and
facilities for handling the affairs of the Funds and such other services as the
Trustees may, from time to time, reasonably request and Huntington shall, from
time to time, reasonably determine to be necessary to perform its obligations
under the Administration Agreement. In addition, Huntington coordinates with
other service providers and legal counsel to provide other services to the
Trust. For its services, Huntington receives an annual fee, computed daily and
paid monthly, of 0.11% of each Fund's average daily net assets.
The Administration Agreement became effective on January 12, 1998, and will
continue in effect for a period of two years, and thereafter will continue for
successive one year periods, unless terminated by either party on not less than
60 days' prior written notice. Under certain circumstances, the Administration
Agreement may be terminated on 45 days' prior written notice or immediately by
the Trust without prior notice. The Administration Agreement provides that
Huntington shall not be liable for any error of judgment or mistake of law or
any loss suffered by the Trust in connection with the matters to which the
Administration Agreement relates, except a loss resulting from willful
misfeasance, bad faith, or
39
<PAGE>
negligence in the performance of its duties, or from
the disregard by Huntington of its obligations and duties thereunder.
Prior to January 12, 1998, the Trust had retained SEI Administrative as its
administrator since January 11, 1996.
For the fiscal years ended December 31, 1998, 1997 and 1996, the Funds paid
the following fees pursuant to the applicable administration agreement with
Huntington or SEI Administrative, as the case may be:
Fund 1998 1997 1996
- ---- ---- ---- ----
Money Market Fund.............................. $528,872 $465,136
Ohio Municipal Money Market Fund............... $151,945 $129,904
U.S. Treasury Money Market Fund................ $606,818 $495,079
Growth Fund.................................... $229,032 $188,542
Income Equity Fund............................. $215,419 $175,636
Mortgage Securities Fund....................... $45,016 $52,094
Ohio Tax-Free Fund............................. $72,061 $68,973
Michigan Tax-Free Fund......................... N/A N/A
Fixed Income Securities Fund................... $164,031 $153,157
Intermediate Government Income Fund............ N/A N/A
Short/Intermediate Fixed
Income Securities Fund......................... $137,030 $137,753
No information on administration fees is provided for the Florida Tax-Free
Money Fund, as that Fund had not yet commenced operations as of December 31,
1998.
Sub-Administrator
Huntington has entered into a Sub-Administration Agreement with SEI
Administrative pursuant to which SEI Administrative provides certain
administrative services to the Trust. Under this Agreement, Huntington will pay
to SEI Administrative a periodic fee at an annual rate of 0.05% of the average
daily net assets of all Funds.
Distributor
SEI Investments Distributing Co., whose address is One Freedom Valley Road,
Oaks, Pennsylvania 19456, is the Distributor (principal underwriters) of the
Funds. SEI Distribution is an affiliated person of SEI Administrative, the
Trust's Sub-administrator. Under a Distribution Agreement with SEI Distribution
the Distributor sells and distributes shares of each of the Funds on a
continuous basis, but is not obligated to sell any specific amount of shares of
any Fund. Any front-end sales charges paid by an investor on the sale of
Investment Shares are collected by the Distributor. The Distributor reallows up
to 90% of such sales charges to dealers.
40
<PAGE>
The Distribution Agreement may be terminated at any time as to any Fund on
not more than 60 days' notice by vote of a majority of the Trustees who are not
parties to such agreement or "interested persons" of any such party or by the
vote of a majority of the outstanding voting securities of the Fund.
Distribution Plan (12b-1 Fees)
Consistent with Rule 12b-1 under the 1940 Act, the Trust has adopted a
Distribution Plan pursuant to which it receives fees from the Funds in
connection with the sale and distribution of Investment Shares and the provision
of shareholder services. The Trust expects that the distribution efforts funded
through the use of 12b-1 fees will increase assets and therefore reduce Fund
expenses through economies of scale, and provide greater opportunities for
diversified investments.
In accordance with the Distribution Plan, the Distributor may enter into
agreements with brokers and dealers relating to distribution and/or
administrative services with respect to the Investment Shares of the Funds. The
Distributor may also enter into agreements with administrators (including
financial institutions, fiduciaries, custodians for public funds, and investment
advisers) to provide administrative services with respect to Investment Shares.
Administrative services may include, but are not limited to, the following
functions: providing office space, equipment, telephone facilities, and various
clerical, supervisory, computer, and other personnel as necessary or beneficial
to establish and maintain shareholder accounts and records; processing purchase
and redemption transactions and automatic investments of customer account cash
balances; answering routine customer inquiries regarding Investment Shares;
assisting customers in changing dividend options, account designations, and
addresses; and providing such other services as the Distributor may reasonably
request in connection with investments in Investment Shares. As of the date of
this Prospectus, The Huntington Investment Company and Huntington have entered
into agreements with the Distributor concerning the provision of administrative
services to customers of the Huntington Group who purchase Investment Shares of
the Funds.
Payments to the Distributor under the Distribution Plan are made regardless
of expenses incurred by the Distributor in providing these services.
The Distribution Plan may be terminated with respect to any Fund by a vote
of a majority of the Independent Trustees, or by a vote of a majority of the
outstanding Investment Shares of that Fund. The Distribution Plan may be
amended by vote of the Trustees, including a majority of the Independent
Trustees, cast in person at a meeting called for such purpose, except that any
change in the Distribution Plan that would materially increase the fee payable
thereunder with respect to a Fund requires the approval of the holders of that
Fund's Investment Shares. The Trustees will review on a quarterly and annual
basis written reports of the amounts received and expended under the
Distribution Plan (including amounts expended by the Distributor to brokers,
dealers and administrators pursuant to any agreements entered into under the
Distribution Plan) indicating the purposes for which such expenditures were
made.
The Distribution Plan provides that it will continue in effect with respect
to each Fund for successive one-year periods, provided that each such
continuance is specifically approved (i) by the vote of a majority of the
Independent Trustees and (ii) by the vote of a majority of all the Trustees,
cast in person at a meeting called for such purpose. For so long as the
Distribution Plan remains in effect, the selection and nomination of those
Trustees who are not interested persons of the Trust (as defined in the 1940
Act) shall be committed to the discretion of such independent persons.
For the fiscal years ended December 31, 1998, 1997 and 1996, the Funds
named below paid the following fees pursuant to the Distribution Plan:
41
<PAGE>
FUND 1998 1997 1996
---- ---- ---- ----
Money Market Fund...................... $115,933* $95,463
Ohio Municipal Money Market Fund....... 72,632* 64,977
U.S. Treasury Money Market Fund........ 50,978* 43,791*
Growth Fund............................ 12,150 10,181
Income Equity Fund..................... 206 N/A
Mortgage Securities Fund............... 3,414* 4,596*
Ohio Tax-Free Fund..................... 4,358 5,106
Michigan Tax-Free Fund**............... N/A N/A
Fixed Income Securities Fund........... 4,289 5,032
Intermediate Government Income Fund**.. N/A N/A
- --------------
* For the fiscal year ended December 31, 1998, gross distribution fees for the
Money Market Fund, Ohio Municipal Money Market Fund and Mortgage Securities
Fund, respectively, were $______, $______, $______ and $______, of which
$______, $______, $______ and $______ were voluntarily waived. For the fiscal
year ended December 31, 1997, gross distribution fees for the Money Market Fund,
Ohio Municipal Money Market Fund, U.S. Treasury Money Market Fund and Mortgage
Securities Fund were, respectively, $289,833, $181,580, $125,950 and $6,827, of
which $173,900, $108,948, $74,972 and $3,413 were voluntarily waived. For the
fiscal year ended December 31, 1996, gross distribution fees for the U.S.
Treasury Money Market Fund, and the Mortgage Securities Fund were, respectively,
$109,476 and $9,189, of which $65,686 and $4,593 were voluntarily waived.
** Includes distribution fees paid to SEI as distributor of the FMB Funds prior
to the reorganization with the Huntington Funds.
No information on distribution fees is provided for the Florida Tax-Free
Money Fund, as that Fund had not yet commenced operations as of December 31,
1998.
Custodian and Record Keeper
For each of the Funds, Huntington acts as custodian and record keeper. For
an annual fee of 0.056% of each Fund's average daily net assets, Huntington is
generally responsible as custodian for the safekeeping of Fund assets, including
the acceptance or delivery of cash or securities where appropriate, registration
of securities in the appropriate Fund name or the name of a nominee, maintenance
of bank accounts on behalf of the Funds and coordinating with other service
providers in such matters as shareholder taxation or proxy solicitation and the
calculation of net asset value. In addition, Huntington is responsible as
record keeper for the creation and maintenance of all Fund accounting records
relating to custodian activities required by the 1940 Act.
Transfer Agent and Dividend Disbursing Agent
State Street Bank and Trust Company, whose address is Two Heritage Drive,
Quincy, Massachusetts 02171, serves as the transfer agent and dividend
disbursing agent for the Trust.
Independent Auditors
KPMG LLP, whose address is Two Nationwide Plaza, Columbus, Ohio 43215,
serves as the independent auditors for the Trust.
42
<PAGE>
Principal Holders of Securities [UPDATE NUMBERS]
Information is provided below regarding each person who owns of record or
is known by the Trust to own beneficially 5% or more of any class of shares of
any Fund. By virtue of Huntington's ownership in the Funds it is deemed to have
control of each of the Funds. Huntington, a national banking association, is an
indirect wholly-owned subsidiary of Huntington Bancshares Incorporated, a bank
holding company organized under the laws of Ohio.
As of _____________, 1999, the Trustees and officers as a group owned less
than 1% of the shares of the Trust.
[Insert 5% shareholder information]
SHAREHOLDER RIGHTS
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 SAI, 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 Michigan Tax-Free Fund, the Fixed Income Securities Fund, the
Intermediate Government Income Fund and the Short/Intermediate Fixed Income
Securities Fund. Investment Shares of the Short/Intermediate Fixed Income
Securities Fund are not presently being offered to the public.
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 a Fund) were liquidated, the
shareholders of each class would receive the net assets of the Fund attributable
to each respective class.
All 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, or
(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.
The rights of shareholders cannot be modified without a majority vote.
The Trust is not required to hold annual meetings of shareholders for the
purpose of electing Trustees except that (i) the Trust is required to hold a
shareholders' meeting for the election of Trustees at such time as less than a
majority of the Trustees holding office have been elected by shareholders and
(ii) if, as a result of a vacancy on the Board of Trustees, less than two-thirds
of the Trustees holding office have been elected by the shareholders, that
vacancy may only be filled by a vote of the shareholders. In addition, Trustees
may be removed from office by a written consent signed by the holders of shares
representing two-thirds of the outstanding shares of the Trust at a meeting duly
called for the purpose, which meeting must be held upon written request of not
less than 10% of the outstanding shares of the Trust. Upon written request by
the holders of shares representing 1% of the outstanding shares of the Trust
stating that such shareholders wish to communicate with the other shareholders
for the purpose of obtaining the signatures necessary to demand a meeting to
consider removal of a Trustee, the Trust will provide a list of shareholders or
disseminate appropriate materials (at the expense of the requesting
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shareholders). Except as set forth above, the Trustees may continue to hold
office and may appoint successor Trustees.
Under Massachusetts law, shareholders could, under certain circumstances,
beheld personally liable for the obligations of the Trust. However, the
Declaration of Trust disclaims shareholder liability for acts or obligations of
the Trust and requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by the Trust or
the Trustees. The Declaration of Trust provides for indemnification out of a
Fund's property for all loss and expense of any shareholder held personally
liable for the obligations of a Fund. Thus the risk of a shareholder's
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Fund would be unable to meet its obligations.
Shareholder inquiries regarding Trust Shares should be directed to
Huntington, 41 South High Street, Columbus, Ohio 43215, Attn: Investor Services.
Shareholder inquiries regarding Investment Shares should be directed to The
Huntington Investment Company, 41 South High Street, Columbus, Ohio 43287.
ADDITIONAL INFORMATION ON PURCHASES, EXCHANGES AND REDEMPTIONS
Investment Shares of each of the Funds may be purchased, exchanged or
redeemed by contacting the Trust, The Huntington Investment Company or a
Huntington Personal Banker.
Trust Shares may be purchased only through fiduciary, advisory, agency and
other similar accounts maintained by or on behalf of Huntington or its
affiliates or correspondent banks. Exchanges of Trust Shares, if permitted by
the account agreement, as well as redemptions of Trust Shares, are made by
contacting the Trust.
Telephone purchase, exchange or redemption requests may be recorded and
will be binding upon an investor. Use of the telephone for exchanges or
redemptions involves the possible risk of loss, since anyone providing the
required information may be able to use the service without the shareholder's
permission. If reasonable procedures are not followed by the Trust, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.
In times of extreme economic or market conditions, shareholders may have
difficulty making redemptions or exchanges by telephone. If a shareholder
cannot make contact by telephone, redemption or exchange requests should be made
in writing and sent by overnight mail to the Trust.
In connection with certain redemption or exchange requests, a shareholder
may be required to obtain a signature guarantee for authentication purposes. In
such cases, the signature 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 Trust does not accept signatures guaranteed by a notary public. In the
future, the Trust may elect to limit eligible signature guarantors to
institutions that are members of a signature guarantee program. The Trust
reserves the right to amend these standards at any time without notice.
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Other Purchase Information
Purchases of either class of shares are made at net asset value, plus (for
Investment Shares only) any applicable sales charge. All purchases are subject
to minimum purchase requirements, but these requirements may be waived by the
Distributor. Payment for Investment Shares may not be by third party check, and
any checks drawn from a bank located outside the U.S. will result in a delay in
processing until the check has cleared.
Once a purchase has been made, the Trust will issue certificates
representing Investment Shares, but not for Trust Shares, upon request.
If at any time the right to purchase shares is suspended, although no new
purchases may be made, in some circumstances existing shareholders may be
permitted to purchase additional shares and have dividends reinvested.
Payment in Kind. In addition to payment by check, shares of a Fund may be
purchased by customers of Huntington in exchange for securities held by an
investor which are acceptable to that Fund. Investors interested in exchanging
securities must first telephone Huntington at (800) 253-0412 for instructions
regarding submission of a written description of the securities the investor
wishes to exchange. Within five business days of the receipt of the written
description, Huntington will advise the investor by telephone whether the
securities to be exchanged are acceptable to the Fund whose shares the investor
desires to purchase and will instruct the investor regarding delivery of the
securities. There is no charge for this review.
Securities accepted by a Fund are valued in the manner and on the days
described in the section entitled "Determination of Net Asset Value" as of 4:00
p.m. (Eastern Time). Acceptance may occur on any day during the five-day period
afforded Huntington to review the acceptability of the securities. Securities
which have been accepted by a Fund must be delivered within five days following
acceptance.
The value of the securities to be exchanged and of the shares of the Fund
may be higher or lower on the day Fund shares are offered than on the date of
receipt by Huntington of the written description of the securities to be
exchanged. The basis of the exchange of such securities for shares of the Fund
will depend on the value of the securities and the net asset value of Fund
shares next determined following acceptance on the day Fund shares are offered.
Securities to be exchanged must be accompanied by a transmittal form which is
available from Huntington.
A gain or loss for federal income tax purposes may be realized by the
investor upon the securities exchange depending upon the cost basis of the
securities tendered. All interest, dividends, subscription or other rights with
respect to accepted securities which go "ex" after the time of valuation become
the property of the Fund and must be delivered to the Fund by the investor
forthwith upon receipt from the issuer. Further, the investor must represent
and agree that all securities offered to the Fund are not subject to any
restrictions upon their sale by the Fund under the Securities Act of 1933, or
otherwise.
Sales Charge Reductions (Investment Shares). Sales charges applicable in
purchases of Investment Shares may be reduced for certain investors or groups of
investors who make larger investments. Investors wishing to take advantage of
these reductions should call the Trust.
Accumulated Purchases. If an existing shareholder already owns Investment
Shares on which he or she paid a sales charge, the sales charge or any
additional purchases will be reduced if the total amount of the purchases would
make the investor eligible for a sales charge reduction.
For example, a shareholder who purchased $150,000 worth of Investment
Shares in any of the Equity or Income Funds with a 3.50% sales charge would only
pay a 2.50% sales charge on an additional $150,000 purchase.
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Letter of Intent. An investor who signs a letter of intent to purchase
within a 13-month period at least $100,000 worth of Investment Shares in any
Equity Fund, or at least $500,000 worth of Investment Shares in any Income Fund
will be eligible for the applicable sales charge reduction on each purchase over
the 13-month period. Until the investor reaches the necessary threshold, the
amount of the sales charge discount will be held in escrow by the Trust.
For example, an investor who signs a letter of intent to purchase $100,000
in Investment Shares of an Equity Fund will only pay a 3.50% sales charge on all
purchases made during the period which total at least $100,000 and will deposit
0.50% or 1.00% (depending on the Fund being purchased) in escrow.
The amount held in escrow will be applied to the investor's account at the
end of the 13-month period unless the amount specified in the Letter of Intent
is not purchased. In order to qualify for a Letter of Intent, the investor will
be required to make a minimum initial investment of at least $25,000.
A Letter of Intent will not obligate the investor to purchase Investment
Shares, but if he does, each purchase during the period will be at the sales
charge applicable to the total amount intended to be purchased. The Letter of
Intent may be dated as of a prior date to include any purchases made within the
past 90 days.
Reinstatement Privilege. Every shareholder has a one-time right, within 30
days of redeeming Investment Shares, to reinvest the redemption proceeds at the
next-determined net asset value without any sales charge. The investor must
notify the Trust 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 may combine concurrent purchases of Investment Shares
in two or more Equity or Income Funds. For example, if a shareholder of the
Growth Fund concurrently invests $30,000 in one Fund with a sales charge, and
$70,000 in another Fund with a sales charge, the sales charge will be reduced.
In addition, if a shareholder of the Mortgage Securities Fund, Ohio Tax-Free
Fund, Michigan Tax-Free Fund, Fixed Income Securities Fund or Intermediate
Government Income concurrently invests $50,000 in one Fund with a sales charge,
and $450,000 in another Fund with a sales charge, the sales charges will be
reduced.
To receive this sales charge reduction, the applicable Huntington Group
member must be notified in writing by the shareholder at the time the concurrent
purchases are made.
Other Exchange Information
Exchanges may only be made between Funds having identical shareholder
registrations. For any other exchanges you must obtain a signature guarantee.
Unless otherwise specified in writing, the existing registration and
reinvestment options relating to a Fund being exchanged will be used for any new
Fund accounts required to be opened in the exchange.
Exchanges will not be available for shares purchased by check until the
check has cleared.
Other Redemption Information
If a shareholder wishes to wire redemption proceeds to a bank other than
the one previously designated, redemption may be delayed by as much as seven
days. 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 a
signature guarantee) to the Trust, c/o Huntington National Bank, 41 South High
Street (HC 1116), Columbus Ohio 43287, Attention: Investor Services.
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Proceeds from the redemption of shares purchased by check will not be
available until the check has cleared.
Shareholders of the Money Market Funds who write checks to redeem
Investment Shares may be subject to certain checking account fees. Checks
written on these accounts may be negotiated through the shareholder's local bank
and should not be sent to the issuing bank in order to redeem Investment Shares.
Canceled checks are sent to the shareholder each month.
DETERMINATION OF NET ASSET VALUE
Net asset value is calculated as of the close of the New York Stock
Exchange every Monday through Friday except (i) days on which there are not
sufficient changes in the value of a Fund's portfolio securities that its net
asset value might be materially affected; (ii) days during which no shares are
tendered for redemption and no orders to purchase shares are received; (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, such as Veterans' Day and Martin Luther King Day, when the
Federal Reserve Banks or the financial markets are closed.
For valuing securities in calculating net asset value, the Money Market
Funds have elected to use the amortized cost method of valuation pursuant to
Rule 2a-7 under the 1940 Act. The amortized cost method involves valuing an
instrument at its cost initially and thereafter assuming a constant amortization
to maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. This method may result in
periods during which value, as determined by amortized cost, is higher or lower
than the price a Fund would receive if it sold the instrument. The value of
securities in a Fund can be expected to vary inversely with changes in
prevailing interest rates. Pursuant to Rule 2a-7, each of the Money Market Funds
will maintain a dollar-weighted average portfolio maturity appropriate to
maintaining a stable net asset value per share, provided that no Fund will
purchase any security with a remaining maturity of more than 397 days (except as
described below) nor maintain a dollar-weighted average maturity of greater than
90 days. Repurchase agreements involving the purchase of securities with
remaining maturities of greater than 397 days will be treated as having a
maturity equal to the period remaining until the date on which the repurchase is
scheduled to occur or, where no date is specified and the agreement is subject
to a demand feature, the notice period applicable to the demand to repurchase
those securities. A variable rate instrument, the principal amount of which is
scheduled to be repaid in more than 397 days but which is subject to a demand
feature, shall be deemed to have a maturity equal to the longer of the period
remaining until the next readjustment of the interest rate or the period
remaining until the principal amount may be recovered through exercise of the
demand feature. A floating rate instrument, the principal amount of which is
scheduled to be repaid in more than 397 days but which is subject to a demand
feature, shall be deemed to have a maturity equal to the period remaining until
the principal amount can be recovered through demand.
The Trustees have undertaken to establish procedures reasonably designed,
taking into account current market conditions and each of the Money Market
Funds' investment objective, to stabilize the net asset value per share of each
Money Market Fund for purposes of sales and redemptions at $1.00. These
procedures include a review by the Trustees, at such intervals as they deem
appropriate, to determine the extent, if any, to which the net asset value per
share of each Fund, calculated by using available market quotations, deviates
from $1.00 per share. In the event such deviation exceeds one-half of one
percent, Rule 2a-7 requires that the Trustees promptly consider what action, if
any, should be initiated. If the Trustees believe that the extent of any
deviation from a Fund's $1.00 amortized cost price per share may result in
material dilution or other unfair results to investors, the Trustees will take
such steps as they deem appropriate to eliminate or reduce to the extent
reasonably practicable any such dilution or unfair results. These steps may
include selling portfolio instruments prior to maturity, shortening the Fund's
average portfolio maturity, withholding or reducing dividends, reducing the
number of a Fund's outstanding shares without monetary consideration, or
utilizing a net asset value per share based on available market quotations. In
addition, if Huntington becomes aware that any Second Tier
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Security or Unrated Security held by a Fund has received a rating from any NRSRO
below the NRSRO's two highest rating categories, the procedures adopted by the
Trustees in accordance with Rule 2a-7 require Huntington to dispose of such
security unless (i) the sale would cause the deviation between the Fund's
amortized cost and market-determined values per share to exceed 0.40 of 1% (in
which case the Trustees will meet to determine what action to take) or (ii) the
Trustees reassess the credit quality of the security and determine that it is in
the best interests of shareholders to retain the investment. In the event a Fund
holds a defaulted security, a security that has ceased to be an Eligible
Security, or a security that has been determined to no longer present minimal
credit risks, Rule 2a-7 requires the Fund to dispose of the security unless the
Trustees determine that such action is not in the best interest of shareholders.
The Rule requires each Fund to limit its investments to securities determined to
present minimal credit risks based on factors in addition to ratings assigned a
security by an NRSRO and which are at the time of acquisition Eligible
Securities.
Rule 2a-7, as amended, defines the terms NRSRO, Requisite NRSROs, Eligible
Securities, Rated Securities, Unrated Securities, Demand Features, Guarantees,
Unconditional Demand Features, First Tier Securities and Second Tier Securities
in establishing risk limiting conditions for money market mutual funds.
A summary of those definitions follows:
"NRSRO" is any nationally recognized statistical rating organization as
that term is used in the Securities Exchange Act of 1934, that is not an
affiliated person of the issuer, guarantor or provider of credit support for the
instrument. While the Appendix to the Statement of Additional Information
identifies each NRSRO, examples include Standard & Poor's Ratings Group
("Standard & Poor's"), Moody's Investors Service, Inc. ("Moody's") and Fitch
Investors Service, Inc.
"Requisite NRSROS" means (i) any two NRSROs that have issued a rating with
respect to a security or class of debt obligations of an issuer, or (ii) if only
one NRSRO has issued a rating with respect to such security or class of debt
obligations of an issuer at the time the fund acquired the security, that NRSRO.
"Eligible Securities" are defined as (i) Rated Securities with a remaining
maturity of 397 or less days and which have received rating in one of the two
highest rating categories; (ii) Unrated Securities that are of comparable
equality, provided that an Unrated Security is not an Eligible Security if the
security has received a long-term rating from any NRSRO that is not within the
NRSRO's three highest long-term rating categories, unless the security has
received a long-term rating from an NRSRO in one of the three highest rating
categories, and provided that certain asset backed securities shall not be
Eligible Securities unless they have received a rating from an NRSRO; and (iii)a
security that is subject to a Demand Feature or Guarantee whether the Guarantee
has received a rating from an NRSRO or the Guarantee is issued by a guarantor
that has received a rating from an NRSRO with respect to a class of debt
obligations (or any debt obligation within that class) that is comparable in
priority and security to the Guarantee, or another institution, has undertaken
promptly to notify the holder of the security in the event the Demand Feature or
Guarantee is substituted with another Demand Feature or Guarantee.
"Rated Securities" include (i) securities that have received a short-term
rating from an NRSRO, or have been issued by an issuer that has received a
short-term rating from an NRSRO with respect to a class of debt obligations (or
any debt obligation within that class) that is comparable in priority and
security, or (ii) securities that are subject to a Guarantee that has received a
short-term rating from an NRSRO, or a Guarantee issued by a guarantor that has
received a short-term rating from an NRSRO with respect to a class of debt
obligations (or any debt obligation within that class) that is comparable in
priority and a security with the Guarantee. In either case, a security is not a
Rated Security if it is subject to an external credit support agreement that was
no in effect when the security was assigned its rating, unless the security has
received a short-term rating reflecting the existence of the credit support or
the credit support itself has received a short-term rating.
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"Unrated Securities" are any securities that are not Rated Securities.
"Demand Feature" is (i) a feature permitting the holder of a security to
sell the security at an exercise price equal to the approximate amortized cost
of the security plus accrued interest, if any, at the time of exercise, provided
that such feature must be exercisable either at any time on no more than 30
calendar days' notice or at specified intervals not exceeding 397 calendar days
and upon no more than 30 calendar days' notice; or (ii) a feature permitting the
holder of certain asset backed securities unconditionally to receive principal
and interest within 397 calendar days of making demand.
"Guarantee" is an unconditional obligation of a person other than the
issuer of the security to undertake to pay, upon presentment by the holder of
the Guarantee (if required), the principal amount of the underlying security
plus accrued interest when due or upon default, or, in the case of an
Unconditional Demand Feature, an obligation that entitles the holder to receive
upon exercise the approximate amortized cost of the underlying security or
securities, plus accrued interest, if any. A Guarantee includes a letter of
credit, financial guaranty (bond) insurance, and an Unconditional Demand Feature
(other than an Unconditional Demand Feature provided by the issuer of the
security).
"Unconditional Demand Feature" means a Demand Feature that by its terms
would be readily exercisable in the event of a default in payment of principal
or interest on the underlying security or securities.
"First Tier Security" means any (i) Rated Security which has received the
highest short-term rating by the Requisite NRSROs for debt obligations, (ii) any
Unrated Security that is of comparable quality, (iii) any security issued by a
registered investment company that is a money market fund, or (iv) certain
government securities.
"Second Tier Security" means any Eligible Security that is not a First Tier
Security.
Each of the Equity Funds values its securities in calculating net asset
value as follows. Securities traded on a national securities exchange or quoted
on the NASDAQ National Market System are valued at their last-reported sale
price on the principal exchange or reported by NASDAQ or, if there is no
reported sale, and in the case of over-the-counter securities not included in
the NASDAQ National Market System, at a bid price estimated by a broker or
dealer. For the Income Funds, securities traded on a national securities
exchange or in the over-the-counter market are valued at their last-reported
sale price or, if there is no reported sale, at a bid price estimated by an
independent pricing service approved by the Trustees. For other debt
securities, including zero-coupon securities, and certain foreign securities, a
pricing service will be used. Some foreign securities will be valued by the
Trust's custodian.
U.S. government securities held by the Mortgage Securities Fund are valued
at the mean between the over-the-counter bid and asked prices as furnished by an
independent pricing service. Portfolio securities for which market quotations
are not readily available are valued on the basis of quotations provided by
dealers in such securities.
Short-term investments with remaining maturities of 60 days or less at the
time of purchase are valued at amortized cost. Investments in other open-end
investment companies are valued at net asset value.
If any securities held by a Fund are restricted as to resale, their fair
value is generally determined as the amount which the Fund could reasonably
expect to realize from an orderly disposition of such securities over a
reasonable period of time. The valuation procedures applied in any specific
instance are likely to vary from case to case. However, consideration is
generally given to the financial position of the issuer and other fundamental
analytical data relating to the investment and to the nature of the restrictions
on disposition of the securities (including any registration expenses that might
be borne by the Fund in connection with such disposition). In addition,
specific factors are also generally considered, such as the
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cost of the investment, the market value of any unrestricted securities of the
same class (both at the time of purchase and at the time of valuation), the size
of the holding, the prices of any recent transactions or offers with respect to
such securities, and any available analysts' reports regarding the issuer.
Generally, trading in certain securities (such as foreign securities) is
substantially completed each day at various times prior to the close of the New
York Stock Exchange. The values of these securities used in determining the net
asset value of the Fund's shares are computed as of such times. Also, because
of the amount of time required to collect and process trading information as to
large numbers of securities issues, the values of certain securities (such as
convertible bonds and U.S. Government securities) are determined based on market
quotations collected earlier in the day at the latest practicable time prior to
the close of the Exchange. Occasionally, events affecting the value of such
securities may occur between such times and the close of the Exchange which will
not be reflected in the computation of the Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value, in the manner described
above.
The proceeds received by each Fund for each issue or sale of its shares,
and all income, earnings, profits, and proceeds thereof, subject only to the
rights of creditors, will be specifically allocated to such Fund, and constitute
the underlying assets of that Fund. The underlying assets of each Fund will be
segregated on the Trust's books of account, and will be charged with the
liabilities in respect of such Fund and with a share of the general liabilities
of the Trust. Expenses with respect to any two or more Funds are to be
allocated in proportion to the net asset values of the respective Funds except
where allocations of direct expenses can otherwise be fairly made.
TAXES
Federal Income Taxation
It is intended that each Fund qualifies each year as a regulated investment
company under Subchapter M of the Code. In order to qualify for the special tax
treatment accorded regulated investment companies and their shareholders, a Fund
must, among other things:
(a) derive at least 90% of its gross income from dividends, interest,
payments with respect to certain securities loans, and gains from the
sale or other disposition of stock, securities and foreign currencies,
or other income (including but not limited to gains from options,
futures, or forward contracts) derived with respect to its business of
investing in such stock, securities, or currencies;
(b) distribute with respect to each taxable year at least 90% of its
"investment company taxable income" (as that term is defined in the
Code) and tax-exempt income (less deductions attributable to that
income) for such year; and
(c) diversify its holdings so that, at the end of each fiscal quarter (i)
at least 50% of the market value of the Fund's assets is represented
by cash or cash items (including receivables), U.S. Government
securities, securities of other regulated investment companies, and
other securities limited in respect of any one issuer to a value not
greater than 5% of the value of the Fund's total assets and 10% of
the outstanding voting securities of such issuer, and (ii) not more
than 25% of the value of its assets is invested in the securities
(other than those of the U.S. Government or other regulated
investment companies) of any one issuer or of two or more issuers
which the Fund controls and which are engaged in the same, similar,
or related trades or businesses.
If a Fund qualifies as a regulated investment company that is accorded
special tax treatment, the Fund will not be subject to federal income tax on
income paid to its shareholders in the form of dividends (including capital gain
dividends).
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If a Fund fails to qualify as a regulated investment company accorded
special tax treatment in any taxable year, the Fund would be subject to tax on
its income at corporate rates, and could be required to recognize net unrealized
gains and make distributions of any accumulated earnings and profits before
requalifying as a regulated investment company that is accorded special tax
treatment. In addition, all distributions by the Fund would be taxed as if made
by a regular corporation thus a Fund could not pay exempt-interest or capital
gains dividends.
If a Fund fails to distribute in a calendar year substantially all of its
ordinary income for such year and substantially all of its net capital gains for
the year ending October 31 (or later if the Fund is permitted so to elect and so
elects), plus any retained amount from the prior year, the Fund will be subject
to a 4% excise tax on the undistributed amounts. Each Fund intends generally to
make distributions sufficient to avoid imposition of the 4% excise tax.
Return of capital distributions. If a Fund makes a distribution in excess
of its current and accumulated "earnings and profits" in any taxable year, the
excess distribution will be treated as a non-taxable return of capital to the
extent of a shareholder's tax basis in his shares. If the shareholder's basis
has been reduced to zero, any additional return of capital distributions will be
taxable as capital gain.
Exempt-interest dividends. A Fund will be qualified to pay exempt-interest
dividends to its shareholders only if, at the close of each quarter of the
Fund's taxable year, at least 50% of the total value of the Fund's assets
consists of obligations the interest on which is exempt from federal income tax.
If a Fund intends to pay only exempt-interest dividends, the Fund may be limited
in its ability to engage in such taxable transactions as forward commitments,
repurchase agreements, financial futures, and options contracts on financial
futures, tax-exempt bond indices, and other assets. In general, exempt-interest
dividends, if any, attributable to interest received on certain private activity
bonds and certain industrial development bonds will not be tax-exempt to any
shareholders who are "substantial users" of the facilities financed by such
bonds or who are "related persons" of such substantial users (within the meaning
of Section 147(a) of the Code). Recipients of certain Social Security and
Railroad Retirement benefits may have to take into account exempt-interest
dividends from the Fund in determining the taxability of such benefits.
Shareholders should consult their own tax adviser regarding the potential effect
on them (if any) of any investment in the Fund. A Fund which is qualified to
pay exempt-interest dividends will inform investors within 60 days of the Fund's
fiscal year end of the percentage of its income distributions designated as tax-
exempt. The percentage is applied uniformly to all distributions made during
the year.
Hedging transactions. Certain investment and hedging activities of a Fund,
including transactions in options, futures contracts, straddles, forward
contracts, foreign currencies, foreign securities, or other similar
transactions, will be subject to special tax rules. In a given case, these
rules may accelerate income to the Fund, defer losses to the Fund, cause
adjustments in the holding periods of the Fund's assets, or convert short-term
capital losses into long-term capital losses. These rules could therefore
affect the amount, timing, and character of the Fund's income and distributions
to shareholders. Income earned as a result of these transactions would, in
general, not be eligible for the dividends received deduction or for treatment
as exempt-interest dividends when distributed to shareholders. Each Fund will
endeavor to make any available elections pertaining to such transactions in a
manner believed to be in the best interests of the Fund. Under the 30% of gross
income test described above (see "Federal Income Taxation"), a Fund will be
restricted in selling assets held or considered under Code rules to have been
held for less than three months, and in engaging in certain hedging transactions
(including hedging transactions in options and futures) that could cause certain
Fund assets to be treated as held for less than three months.
Foreign currency-denominated securities and related hedging transactions.
A Fund's transactions in foreign currency-denominated debt securities, certain
foreign currency options, futures contracts, and forward contracts may give rise
to ordinary income or loss to the extent such income or loss results from
fluctuations in the value of the foreign currency concerned.
51
<PAGE>
Foreign Tax Credit. If more than 50% of a Fund's assets at year end
consists of the stock or securities in foreign corporations, that Fund intends
to qualify for and make the election permitted under Section 853 of the Code so
that shareholders will be able to claim a credit or deduction on their income
tax returns for, and will be required to treat as part of the amount distributed
to them, their pro rata portion of qualified taxes paid by the Fund to foreign
countries (which taxes relate primarily to investment income). Shareholders who
do not itemize on their federal income tax returns may claim a credit (but no
deduction) for such foreign taxes. A shareholder's ability to claim such a
foreign tax credit will be subject to certain limitations imposed by the Code,
as a result of which shareholders may not get a full credit or deduction for the
amount of foreign taxes so paid by the Fund. A Fund's investments in foreign
securities may be subject to withholding taxes at the source on dividends or
interest payments.
Backup Withholding. In general, a Fund is required to withhold 31% of the
taxable dividends and other distributions paid to any shareholder who fails to
furnish the Fund with a correct taxpayer identification number, who has under
reported dividends or interest income, or who fails to certify to the Fund that
he or she is not subject to such withholding.
The foregoing is only a summary of some of the important federal income tax
considerations generally affecting purchases of shares of a Fund. No attempt is
made to present a detailed explanation of the federal income tax treatment of
each Fund or its shareholders, and this discussion is not intended as a
substitute for careful tax planning. Accordingly, investors are urged to
consult their tax advisers with specific reference to their own tax situation.
State Taxation
Florida. Florida does not impose an income tax on individuals. Thus,
individual shareholders of the Florida Tax-Free Money Fund will not be subject
to any Florida state or local income taxes on distributions received from the
Florida Tax-Free Money Fund.
Florida does impose a state income tax on the income of corporations,
limited liability companies (that are subject to federal income taxation) and
certain trusts (excluding probate and testamentary trusts), and this tax is
allocated or apportioned to Florida. For those types of shareholders, in
determining income subject to Florida corporate income tax, Florida generally
"piggy-backs" federal taxable income concepts, subject to adjustments that are
applicable to all corporations and some adjustments that are applicable to
certain classes of corporations. In regard to the Florida Tax-Free Money Fund,
the most significant adjustment is for interest income from state and local
bonds that is exempt from tax under Section 103 of the Code. Provided that the
Florida Tax-Free Money Fund qualifies as a regulated investment company under
the Code and complies with the requirement that at least 50% of the value of its
assets at the close of each quarter of its taxable year be invested in state,
municipal or other obligations the interest on which is exempt from tax under
Section 103 of the Code, corporate shareholders of the Florida Tax-Free Money
Fund may receive Section 103 interest income from Florida Tax-Free Money Fund
distributions. While Section 103 interest income is generally excluded from
taxable income for federal income tax purposes, it is added back to taxable
income for Florida corporate income tax purposes (only 40% of such income is
added back for corporate taxpayers subject to Florida alternative minimum tax).
Consequently, the portion of the Section 103 interest income (or 40% of that
amount for corporate taxpayers subject to the Florida alternative minimum tax)
allocated or apportioned to Florida of a corporate Florida Tax-Free Money Fund
shareholder arising from Florida Tax-Free Money Fund distributions is subject to
Florida corporate income taxes. Other distributions from the Florida Tax-Free
Money Fund to corporate shareholders, to the extent allocated or apportioned to
Florida, may also be subject to Florida income tax.
Provided that on January 1 of a given year the portfolio of assets of the
Florida Tax-Free Money Fund is comprised exclusively of notes, bonds, and other
obligations issued by the State of Florida or its municipalities, counties and
other taxing districts, the U.S. Government and its agencies, Puerto Rico, Guam
and the Virgin Islands, and other investments exempt from Florida intangible
personal property tax,
52
<PAGE>
shares of the Florida Tax-Free Money Fund will not be subject to Florida
intangible personal property taxes for that year. If the Florida Tax-Free Money
Fund holds any other type of asset on that date, then the entire value of the
Florida Tax-Free Money Fund shares (except for that portion of the value
attributable to U.S. government obligations) will be subject to the Florida
intangible personal property tax.
Shareholders of the Florida Tax-Free Money Fund should consult their tax
advisers about other state and local tax consequences of their investments in
the Florida Tax-Free Money Fund.
Michigan. Provided that the Michigan Tax-Free Fund qualifies as a
regulated investment company under the Code and complies with the requirement
that at least 50% of the value of its assets at the close of each quarter of its
taxable year be invested in state, municipal or other obligations the interest
on which is exempt from tax under Section 103 of the Code, individual
shareholders of the Michigan Tax-Free 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 Michigan Tax-
Free 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. Other
distributions from the Michigan Tax-Free 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. The Michigan Department of
Treasury has issued rulings which confirm these state tax consequences for
Michigan resident individuals and corporations. Shareholders of the Michigan
Tax-Free Fund should consult their tax advisers about other state and local tax
consequences of their investments in the Michigan Tax-Free Fund.
Ohio. Distributions with respect to shares of the Ohio Municipal Money
Market Fund and the Ohio Tax-Free Fund that are property attributable to
interest on, or profit made on the sale, exchange, or other disposition of,
obligations issued by or on behalf of the State of Ohio, its agencies,
instrumentalities and political subdivisions, are exempt from the Ohio personal
income tax and municipal and school district income taxes in Ohio, provided that
the Ohio Municipal Money Market Fund or the Ohio Tax-Free Fund, as the case may
be, continues to qualify as a regulated investment company for federal income
tax purposes and complies with the requirement that at least 50% of the value of
its assets at the close of each quarter of its taxable year be invested in
state, municipal or other obligations the interest on which is exempt from tax
under Section 103 of the Code and (ii) it is assumed that the regulated
investment company and 50% requirements described above are satisfied.
Distributions are excluded from the net income base of the Ohio corporation
franchise tax to the extent that such Distributions are either excluded from
gross income for federal income tax purposes or are properly attributable to
interest on, or profit made on the sale, exchange or other disposition of, Ohio
tax-exempt securities. However, shares of the Ohio Municipal Money Market Fund
and the Ohio Tax-Free Fund will be includable in the computation of net worth
for purposes of such tax.
Distributions that are properly attributable to interest on obligations of
the U.S. or its territories or possessions or of any authority, commission or
instrumentality of the U.S. the interest on which is exempt from state income
taxes under the laws of the U.S. (including the obligations of the Governments
of Puerto Rico, the Virgin Islands and Guam) are exempt from the Ohio personal
income tax and municipal and school district income taxes in Ohio, and,
provided, in the case of such territorial obligations such interest is excluded
from gross income for federal income tax purposes, are excluded from the net
income base of the Ohio corporation franchise tax.
Other Distributions will generally not be exempt from Ohio income tax.
Shareholders of the Ohio Municipal Money Market Fund and the Ohio Tax-Free
Fund should consult their tax advisers about other state and local tax
consequences of their investments in the Ohio Municipal Money Market Fund and
the Ohio Tax-Free Fund.
53
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
Money Market Funds
The net investment income of each class of shares of each Money Market Fund
is determined as of 4:00 p.m. (Eastern Time) each Business Day. All of the net
investment income so determined normally will be declared as a dividend daily to
shareholders of record of each class as of the close of business and prior to
the determination of net asset value. Unless the Business Day before a weekend
or holiday is the last day of an accounting period, the dividend declared on
that day will include an amount in respect of the Fund's income for the
subsequent non-business day or days. No daily dividend will include any amount
of net income in respect of a subsequent semiannual accounting period.
Dividends declared during any month will be invested as of the close of business
on the last calendar day of that month (or the next Business Day after the last
calendar day of the month if the last calendar day of the month is a non-
business day) in additional shares of the same class of the Fund at the net
asset value per share, normally $1.00, determined as of the close of business on
that day, unless payment of the dividend in cash has been requested.
Net income of a class of shares of a Money Market Fund consists of all
interest income accrued on portfolio assets less all expenses of the Fund and
the class and amortized market premium. Amortized market discount is included in
interest income. None of the Money Market Funds anticipates that it will
normally realize any long-term capital gains with respect to its portfolio
securities.
Normally each class of shares of the Money Market Funds will have a
positive net income at the time of each determination thereof. Net income may
be negative if an unexpected liability must be accrued or a loss realized. If
the net income of a class or classes of shares of a Money Market Fund determined
at any time is a negative amount, the net asset value per share of such class or
classes will be reduced below $1.00 unless one or more of the following steps,
for which the Trustees have authority, are taken: (1) reduce the number of
shares in each shareholder's account of the applicable class or classes, (2)
offset each shareholder's pro rata portion of negative net income against the
shareholder's accrued dividend account or against future dividends with regard
to the applicable class or classes, or (3) combine these methods in order to
seek to obtain the net asset value per share of the applicable class or classes
at $1.00. The Trustees may endeavor to restore a Fund's net asset value per
share to $1.00 by not declaring dividends from net income on subsequent days
until restoration, with the result that the net asset value per share will
increase to the extent of positive net income which is not declared as a
dividend.
Should a Money Market Fund incur or anticipate, with respect to its
portfolio, any unusual or unexpected significant expense or loss which would
affect disproportionately the Fund's income for a particular period, the
Trustees would at that time consider whether to adhere to the dividend policy
described above or to revise it in light of the then prevailing circumstances in
order to ameliorate, to the extent possible, the disproportionate effect of such
expense or loss on then existing shareholders. Such expenses or losses may
nevertheless result in a shareholder's receiving no dividends for the period
during which the shares are held and receiving upon redemption a price per share
lower than that which was paid.
Other Funds
Each of the Funds other than the Money Market Funds will declare and
distribute dividends from net investment income of each class of shares, if any,
and will distribute its net realized capital gains, with respect to each class
of shares, if any, at least annually.
PERFORMANCE INFORMATION
From time to time the Trust may advertise the performance of one or more of
the Funds. All data is based on past performance and is not intended to
indicate future results. Performance of Trust Shares,
54
<PAGE>
as compared to Investment Shares, will normally be higher because Investment
Shares are subject to distribution (12b-1) fees.
Money Market Funds
Generally, the Money Market Funds will advertise seven-day yields and
seven-day effective yields. In addition, the Ohio Municipal Money Market Fund
and the Florida Tax-Free Money Fund may also advertise tax-equivalent yields.
The yield for each class of shares of a Money Market Fund is computed by
determining the percentage net change, excluding capital changes and any income
other than investment income, in the value of a hypothetical pre-existing
account having a balance of one share at the beginning of the period,
subtracting a charge reflecting any deductions from shareholder accounts, and
dividing the difference by the value of the account at the beginning of the base
period to obtain the base period return, and then multiplying the base period
return by 365/7 (or approximately 52 weeks).
The effective yield for each class of shares of a Fund represents a
compounding of the base period return by adding 1, raising the sum to a power
equal to 365/7, and subtracting 1 from the result, according to the following
formula:
365
---
7
Effective Yield = [(BasePeriodReturn+1) ] - 1
Tax-equivalent yield is computed by dividing the portion of a Fund's yield
that is tax-exempt by 1 minus a stated income tax rate and adding the quotient
to that portion, if any, of the Fund's yield that is not tax-exempt.
Based on the seven-day period ended December 31, 1998 (the "base period"),
the yield and effective yield of the Trust Shares of each of the Money Market
Funds were as follows:
Fund-Trust Shares Yield Effective Yield
----------------- ------ ---------------
Money Market Fund................. ___% ___%
Ohio Municipal Money Market Fund.. ___% ___%
U.S. Treasury Money Market Fund... ___% ___%
Based on the seven-day period ended December 31, 1998 (the "base period"),
the yield and effective yield of the Investment Shares of the Money Market Funds
listed below were as follows:
Fund-Investment Shares Yield Effective Yield
---------------------- ------ ----------------
Money Market Fund................. ___% ___%
Ohio Municipal Money Market Fund.. ___% ___%
U.S. Treasury Money Market Fund... ___% ___%
The tax-equivalent yield for Trust Shares of the Ohio Municipal Money
Market Fund for the seven-day period ended December 31, 1998, was ____%
(assuming a 39.6% federal income tax bracket and a 7.5% Ohio income tax
bracket).
The tax-equivalent yield for Investment Shares of the Ohio Municipal Money
Market Fund for the seven-day period ended December 31, 1998, was ____%
(assuming a 39.6% federal income tax bracket and a 7.5% Ohio income tax
bracket).
55
<PAGE>
Other Funds
Generally, the Equity and Income Funds will advertise average annual total
returns and thirty-day yields. In addition, the Ohio Tax-Free Fund and the
Michigan Tax-Free Fund may advertise thirty-day tax-equivalent yields.
In accordance with SEC guidelines, the average annual total return for each
class of shares is calculated according to the following formula:
AverageAnnualReturn=(ERV over P) sup {1 over n} - 1
where p = a hypothetical initial of $1,000; n = number of years; and ERV =
ending redeemable value of the hypothetical $1,000 investment after the
investment period.
In accordance with SEC guidelines, the yield for each class of shares of an
Equity or Income Fund is computed by dividing the net investment income per
share earned during the period by the maximum offering price per share on the
last day of the period, according to the following formula:
Yield =2[( {a-b} over cd}+1) sup {6} +1]
where a = dividends and interest earned during the period; b = expenses accrued
for the period (net of reimbursements); c = the average daily number of shares
outstanding during the period that were entitled to receive dividends; and d =
the maximum offering price per share on the last day of the period.
In accordance with SEC guidelines, the tax-equivalent yield for each class
of the Equity and Income Funds is computed by dividing the portion of the yield
that is tax-exempt by 1 minus a stated income tax rate and adding the quotient
to that portion, if any, of the yield that is not tax-exempt.
The average annual total returns for Investment Shares of each of the
following Funds for the one-year and five-year periods and for the life of the
respective Fund through December 31, 1998, were as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended Five Years Ended Inception Through
Fund-Investment Shares December 31, 1998 December 31, 1998 December 31, 1998
- ---------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Growth Fund.....................
Income Equity Fund..............
Ohio Tax-Free Fund..............
Michigan Tax-Free Fund*.........
Fixed Income Securities Fund....
Mortgage Securities Fund........
</TABLE>
56
<PAGE>
Intermediate Government
Income Fund*.................
__________
* Performance shown includes the applicable predecessor FMB Fund.
The average annual total returns for Trust Shares of each of the following
Funds for the one-year and five-year periods and for the life of the respective
Fund through December 31, 1998, were as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended Five YEARS ended Inception Through
Fund-Investment Shares December 31, 1998 December 31, 1998 December 31, 1998
- ---------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Growth Fund......................
Income Equity Fund...............
Ohio Tax-Free Fund...............
Michigan Tax-Free Fund*..........
Fixed Income Securities Fund.....
Mortgage Securities Fund.........
Intermediate Government..........
Income Fund*.....................
Short/Intermediate...............
Fixed Income Securities Fund.....
</TABLE>
__________
* Performance shown includes the applicable predecessor FMB Fund.
Based on the thirty-day period ended December 31, 1998, the yields of
Investment Shares of each of the Equity and Income Funds were as follows:
Fund-Investment Shares Yield
---------------------- -----
Growth Fund..............................____%
Income Equity Fund.......................____%
Mortgage Securities Fund.................____%
Ohio Tax-Free Fund.......................____%
Michigan Tax-Free Fund...................____%
Fixed Income Securities Fund.............____%
Intermediate Government Income Fund......____%
Based on the thirty-day period ended December 31, 1998, the yield of the
Trust Shares of each of the Equity and Income Funds were as follows:
Fund-Trust Shares Yield
----------------- -----
Growth Fund.............................____%
Income Equity Fund......................____%
Mortgage Securities Fund................____%
Ohio Tax-Free Fund......................____%
Michigan Tax-Free Fund..................____%
Fixed Income Securities Fund............____%
Intermediate Government Income Fund.....____%
Short/Intermediate Fixed Income
Securities Fund.........................____%
57
<PAGE>
The tax-equivalent yield for the Investment Shares of the Ohio Tax-Free
Fund for the thirty-day period ended December 31, 1998, was ____% (assuming a
39.6% federal income tax bracket and a 7.5% Ohio income tax bracket).
The tax-equivalent yield for Investment Shares of the Michigan Tax-Free
Fund for the thirty-day period ended December 31, 1998, was ____% (assuming a
39.6% federal income tax bracket and a 4.4% Michigan income tax bracket).
The tax-equivalent yield for the Trust Shares of the Ohio Tax-Free Fund for
the thirty-day period ended December 31, 1998, was ____% (assuming a 39.6%
federal income tax bracket and a 7.5% Ohio income tax bracket).
The tax-equivalent yield for the Trust Shares of the Michigan Tax-Free Fund
for the thirty-day period ended December 31, 1998, was ____% (assuming a 39.6%
federal income tax bracket and a 4.4% Michigan income tax bracket).
58
<PAGE>
Tax-Equivalency Tables
The Ohio Municipal Money Market Fund and the Ohio Tax-Free Fund, with
respect to both classes of shares, may use a tax equivalency table in
advertising and sales literature. The interest earned on tax-exempt securities
in either Fund's portfolio generally remains free from federal regular income
tax and is free from Ohio personal income taxes. The tables below provide tax-
equivalent yields for selected tax-exempt yields. Some portion of either Fund's
income may result in liability under the federal alternative minimum tax and may
be subject to state and local taxes.
TAXABLE YIELD EQUIVALENT FOR 1998
COMBINED FEDERAL AND STATE OF OHIO INCOME TAXES
<TABLE>
<CAPTION>
SINGLE RETURN
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Federal Tax rate: 15.00% 28.00% 28.00% 31.00% 31.00% 31.00% 36.00% 36.0% 39.60%
Combined Federal and
State Tax Rate: 18.43% 30.91% 31.40% 34.25% 34.72% 35.32% 40.00% 40.35% 43.71%
Taxable Income
Brackets: $1- $25,351- $40,001- $61,401- $80,001- $100,000- $128,101- $200,001- Over
$25,350 $40,000 $61,400 $80,000 $100,000 $128,100 $200,000 $278,450 $278,450
TAX-EXEMPT YIELD TAXABLE YIELD EQUIVALENT
1.00% 1.84% 2.17% 2.19% 2.28% 2.30% 2.32% 2.50% 2.52% 2.67%
2.00% 2.45% 2.89% 2.91% 3.04% 3.06% 3.10% 3.33% 3.35% 3.55%
2.50% 3.06% 3.62% 3.64% 3.80% 3.83% 3.87% 4.17% 4.19% 4.44%
3.00% 3.68% 4.34% 4.37% 4.56% 4.60% 4.64% 5.00% 5.03% 5.33%
3.50% 4.29% 5.07% 5.10% 5.32% 5.36% 5.41% 5.83% 5.87% 6.22%
4.00% 4.90% 5.79% 5.83% 6.08% 6.13% 6.18% 6.67% 6.71% 7.11%
4.50% 5.52% 6.51% 6.56% 6.84% 6.89% 6.96% 7.50% 7.54% 7.99%
5.00% 6.13% 7.24% 7.29% 7.60% 7.66% 7.73% 8.33% 8.38% 8.88%
5.50% 6.74% 7.96% 8.02% 8.37% 8.42% 8.50% 9.17% 9.22% 10.06%
6.00% 7.36% 8.68% 8.75% 9.13% 9.19% 9.28% 10.00% 10.06% 10.66%
</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. The chart above is for illustrative purposes only. It is not an
indicator of past or future performance.
59
<PAGE>
TAXABLE YIELD EQUIVALENT FOR 1998
COMBINED FEDERAL AND STATE OF OHIO INCOME TAXES (continued)
<TABLE>
<CAPTION>
JOINT RETURN
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Federal Tax Rate:
15.00% 15.00% 28.00% 28.00% 28.00% 31.00% 36.00% 36.0% 39.60%
Combined Federal and State
Tax Rate:
18.43% 19.01% 31.40% 31.88% 32.50% 35.32% 40.00% 40.35% 43.71%
Taxable Income
Brackets: $1- $40,001- $42,351- $80,001- $100,001- $102,301- $155,951- $200,001- Over
$40,000 $42,350 $80,000 $100,000 $102,300 $155,950 $200,000 $278,450 $278,450
Tax-Exempt Yield Taxable Yield Equivalent
1.50% 1.84% 1.85% 2.19% 2.20% 2.22% 2.32% 2.50% 2.52% 2.67%
2.00% 2.45% 2.47% 2.91% 2.94% 2.96% 3.10% 3.33% 3.35% 3.55%
2.50% 3.06% 3.09% 3.64% 3.67% 3.70% 3.87% 4.17% 4.19% 4.44%
3.00% 3.68% 3.70% 4.37% 4.40% 4.44% 4.64% 5.00% 5.03% 5.33%
3.50% 4.29% 4.32% 5.10% 5.14% 5.18% 5.41% 5.83% 5.87% 6.22%
4.00% 4.90% 4.94% 5.83% 5.87% 5.93% 6.18% 6.67% 6.71% 7.11%
4.50% 5.52% 5.56% 6.56% 6.61% 6.67% 6.96% 7.50% 7.54% 7.99%
5.00% 6.13% 6.17% 7.29% 7.34% 7.41% 7.73% 8.33% 8.38% 8.88%
5.50% 6.74% 6.79% 8.02% 8.07% 8.15% 8.50% 9.17% 9.22% 9.78%
6.00% 7.36% 7.41% 8.75% 8.81% 8.89% 9.28% 10.00% 10.06% 10.66%
</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. The chart above is for illustrative purposes only. It is not an
indicator of past or future performance.
60
<PAGE>
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.
TAXABLE YIELD EQUIVALENT FOR 1998
COMBINED FEDERAL AND STATE OF MICHIGAN INCOME TAXES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Federal Tax Rate:
15.0% 28.0% 31.0% 36.0% 39.6%
Combined Federal and State Tax Rate:
19.4% 32.4% 35.4% 40.4% 44.0%
Taxable Income
Brackets--
Single Return: $1- $25,351- $61,401- $128,101- Over
$25,350 $61,400 $128,100 $278,450 $278,450
Joint Return: $1- $42,351- $102,301- $155,951- Over
$42,350 $102,300 $155,950 $278,450 $278,450
TAX-EXEMPT YIELD TAXABLE YIELD EQUIVALENT
1.50%........... 1.86% 2.22% 2.32% 2.52% 2.68%
2.00%........... 2.48% 2.96% 3.10% 3.36% 3.57%
2.50%........... 3.10% 3.70% 3.87% 4.19% 4.46%
3.00%........... 3.72% 4.44% 4.64% 5.03% 5.36%
3.50%........... 4.34% 5.18% 5.42% 5.87% 6.25%
4.00%........... 4.96% 5.92% 6.19% 6.71% 7.14%
4.50%........... 5.58% 6.66% 6.97% 7.55% 8.04%
5.00%........... 6.20% 7.40% 7.74% 8.39% 8.93%
5.50%........... 6.82% 8.14% 8.51% 9.23% 9.82%
6.00%........... 7.44% 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. Additional state and local taxes paid on
comparable taxable investments were not used to increase federal deductions.
Furthermore, no adjustment was made to reflect available state tax deductions on
federal returns.
61
<PAGE>
Florida Tax-Free Money Fund
The Florida Tax-Free Money 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. Some portion of this Fund's
income may result in liability under the federal alternative minimum tax. The
table below provides tax-equivalent yields for selected tax-exempt yields.
TAXABLE YIELD EQUIVALENT FOR 1998
STATE OF FLORIDA--FEDERAL INCOME TAXES ONLY
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Federal Tax Rates:
15.0% 28.0% 31.0% 36.0% 39.6%
Taxable Income Brackets--
Single Return: $1- $25,351- $61,401- $128,101- Over
$25,350 $61,400 $128,100 $278,450 $278,450
Joint Return: $1- $42,351- $102,301- $155,951- Over
$42,350 $102,300 $155,950 $278,450 $278,450
TAX-EXEMPT YIELD TAXABLE YIELD EQUIVALENT
1.50%........... 1.76% 2.08% 2.17% 2.34% 2.48%
2.00%........... 2.35% 2.78% 3.90% 3.13% 3.31%
2.50%........... 2.94% 3.47% 3.62% 3.91% 4.14%
3.00%........... 3.53% 4.17% 4.35% 4.69% 4.97%
3.50%........... 4.12% 4.86% 5.07% 5.47% 5.79%
4.00%........... 4.71% 5.56% 5.80% 6.25% 6.62%
4.50%........... 5.29% 6.25% 6.52% 7.03% 7.45%
5.00%........... 5.88% 6.94% 7.25% 7.81% 8.28%
5.50%........... 6.47% 7.64% 7.97% 8.59% 9.11%
6.00%........... 7.06% 8.33% 8.70% 9.38% 9.93%
</TABLE>
Note: The maximum marginal tax rate for each bracket was used in calculating
the taxable yield equivalent.
FINANCIAL STATEMENTS
The audited financial statements of the Funds for the year ended December
31, 1998, and the report of KPMG LLP, independent auditors, are incorporated
herein by reference from the Trust's Annual Report to Shareholders for the year
ended December 31, 1998, which has been previously sent to shareholders of each
Fund pursuant to Section 30(d) of the 1940 Act and previously filed with the
Securities and Exchange Commission. A copy of the Annual Report to Shareholders
may be obtained without charge by contacting the Trust.
62
<PAGE>
APPENDIX--DESCRIPTION OF BOND RATINGS
Standard & Poor's Ratings Group Corporate and Municipal Bond Rating Definitions
AAA - Debt rated "AAA" has the highest rating assigned by Standard & Poor's
Ratings Group. Capacity to pay interest and repay principal is extremely
strong.
AA - Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A - Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effect of changes in
circumstances and economic conditions than debt in higher rated categories.
S&P may apply a plus (+) or minus (-) to the above rating classifications to
show relative standing within the classifications.
Moody's Investors Service, Inc. Corporate and Municipal Bond Rating Definitions
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Duff & Phelps, Inc. Corporate Bond Rating Definitions
AAA - Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+, AA, AA- - High credit quality protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic conditions.
A+, A, A- - Protection factors are average but adequate. However, risk factors
are more variable and greater in periods of economic stress.
Fitch Investors Service, Inc. Corporate Bond Rating Definitions
AAA - Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
63
<PAGE>
AA - Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong
although not quite as strong as bonds rated "AAA". Because bonds rated in the
"AAA" and "AA" categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issues is generally rated 'F-I+.'
A - Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
IBCA Long-Term Rating Definitions
AAA - Obligations for which there is the lowest expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial, such
that adverse changes in business, economic or financial conditions are unlikely
to increase investment risk significantly.
AA - Obligations for which there is a very low expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial. Adverse
changes in business, economic or financial conditions may increase investment
risk albeit not very significantly.
A - Obligations for which there is a low expectation of investment risk.
Capacity for timely repayment of principal and interest is strong, although
adverse changes in business, economic or financial conditions may lead to
increased investment risk.
Standard & Poor's Ratings Group Short-Term Municipal Obligation Rating
Definitions
SP-1 - Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.
SP-2 - Satisfactory capacity to pay principal and interest.
Moody's Investors Service, Inc. Short-Term Municipal Obligation Rating
Definitions
MIG1/VMIG1 - This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support, or
demonstrated broad-based access to the market for refinancing.
MIG2/VMIG2 - This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
IBCA Short-term Rating Definitions
A1+ - Obligations supported by the highest capacity for timely repayment.
A1 - Obligations supported by a very strong capacity for timely repayment.
A2 - Obligations supported by a strong capacity for timely repayment, although
such capacity may be susceptible to adverse changes in business, economic or
financial conditions.
Standard and Poor's Ratings Group Commercial Paper Rating Definitions
A-1 - This designation indicates that the degree of safety regarding timely
payment strong. Those issues determined to have extremely strong safety
characteristics are denoted with a plus (+) sign.
A-2 - Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".
64
<PAGE>
Moody's Investors Service, Inc. Commercial Paper Rating Definitions
P-1 - Issuers (or supporting institutions) rated Prime-1 (P-1) have a superior
capacity for repayment of senior short-term promissory obligations. P-1
repayment capacity will normally be evidenced by many of the following
characteristics:
. Leading market positions in well-established industries.
. High rates of return on funds employed.
. Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
. Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
. Well-established access to a range of financial markets and assured
sources of alternate liquidity.
P-2 - Issuers (or supporting institutions) rated Prime-2 (P-2) have a strong
capacity for repayment of senior short-term debt obligations. P-2 will normally
be evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
NR indicates the bonds are not currently rated by Moody's or S&P. However,
management considers them to be of good quality.
Duff & Phelps, Inc. Commercial Paper Rating Definitions
Duff 1+ - Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of funds, is
outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations.
Duff 1 - Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are minor.
Duff 1-High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.
Duff 2-Good certainty of timely payment Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
Fitch Investors Service, Inc. Commercial Paper Rating Definitions
Plus or minus signs are used with a rating symbol to indicate the relative
portion of the credit within the rating category:
F-1+ - Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1 - Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F1+.
F-2 - Good Credit Quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is riot as
great as for issues assigned F-1 + or F-1 ratings.
65
<PAGE>
PART C. OTHER INFORMATION
Item 23. Exhibits
All Exhibits incorporated by reference relate to File Nos. 33-11905 and 811-5010
except as otherwise noted):
(a) Amended and Restated Declaration of Trust of the Registrant, including
Amendments No. 1 and 2 thereto (previously filed as Exhibit 1 to
Post-Effective Amendment No. 19 and incorporated herein by reference)
(i) Amendment No. 3 to Amended and Restated Declaration of Trust
(b) By-Laws of the Registrant (previously filed as Exhibit 2 to
Post-Effective Amendment No. 19 and incorporated herein by reference)
(c) See Declaration of Trust and By-Laws
(d) (i) Investment Advisory Agreement, dated September 15, 1998, between
the Registrant and The Huntington National Bank, as successor to The
Huntington Trust Company, N.A., relating to the Money Market Fund, Ohio
Municipal Money Market Fund (formerly Tax-Free Money Market Fund) and
Ohio Tax-Free Fund (previously filed as Exhibit 5(i) to Post-Effective
Amendment No. 26 and incorporated by reference herein) (ii) Investment
Advisory Agreement, dated April 25, 1989, between the Registrant and
The Huntington National Bank, as successor to The Huntington Trust
Company, N.A., relating to the U.S. Treasury Money Market Fund, Growth
Fund, Income Equity Fund, Fixed Income Securities Fund and
Short/Intermediate Fixed Income Securities Fund (previously filed as
Exhibit 5(ii) to Post-Effective Amendment No. 26 and incorporated by
reference herein) (iii) Investment Advisory Agreement, dated April 24,
1992, between the Registrant and The Huntington National Bank, as
successor to The Huntington Trust Company, N.A., relating to the
Mortgage Securities Fund (previously filed as Exhibit 5(i) to
Post-Effective Amendment No. 19 and incorporated herein by reference)
(iv) Investment Advisory Agreement, dated September 5, 1997, between
the Registrant and The Huntington National Bank relating to the
Michigan Tax-Free Fund (previously filed as Exhibit 5(iii) to
Post-Effective Amendment No. 23 and incorporated herein by reference)
(v) Investment Advisory Agreement, dated November 21, 1997, between the
Registrant and The Huntington National Bank relating to the
Intermediate Government Income Fund (previously filed as Exhibit 5(iv)
to Post-Effective Amendment No. 24 and incorporated herein by
reference) (vi) Investment Advisory Agreement, dated December 1, 1998,
between the Registrant and The Huntington National Bank relating to the
Florida Tax-Free Money Fund
(1) Sub-Advisory Agreement, dated December 1, 1998, between
The Huntington National Bank and Countrywide Investments, Inc.
relating to the Florida Tax-Free Money Fund
(e) Distribution Agreement, dated January 11, 1996, between the Registrant
and SEI Investments Distribution Co. (formerly SEI Financial Services
Company) (previously filed as Exhibit 6 to Post-Effective Amendment No.
20 and incorporated herein by reference)
(f) Not applicable
C-1
<PAGE>
(g) Custodian Contract, dated January 27, 1993, between the Registrant and
The Huntington National Bank, as successor to The Huntington Trust
Company, N.A. (previously filed as Exhibit 8 to Post-Effective
Amendment No. 19 and incorporated herein by reference)
(h) (i) Transfer Agency and Service Agreement, dated January 1, 1998,
between the Registrant and State Street Bank and Trust Company
(previously filed as Exhibit 9(i) to the Registration Statement on Form
N-14, File No. 333-44511, and incorporated herein by reference)
(1) Amendment to Schedule A of Transfer Agency and Service
Agreement (ii) Administration Agreement, dated January 12, 1998,
between the Registrant and Huntington National Bank (previously filed
as Exhibit 9(ii) to the Registration Statement on Form N-14, File No.
333-44511 and incorporated herein by reference) (iii)
Sub-Administration Agreement, dated January 12, 1998, between SEI Fund
Resources and Huntington National Bank (previously filed as Exhibit
9(iii) to the Registration Statement on Form N-14, File No. 333-44511
and incorporated herein by reference)
(1) Amendment to Schedules A and B of Sub-Administration
Agreement
(i) Opinion and Consent of Counsel as to legality of shares being
registered (previously filed as Exhibit 10 to Post-Effective Amendment
No. 22 and incorporated herein by reference)
(j) Not applicable
(k) Not applicable
(l) Initial Capital Understanding (previously filed as Exhibit 13 to
Post-Effective Amendment No. 20 and incorporated herein by reference)
(m) Distribution and Shareholder Services Plan, adopted on November 8, 1995
(previously filed as Exhibit 15 to Post-Effective Amendment No. 21 and
incorporated herein by reference) (i) Amendment to Exhibit A of the
Distribution and Shareholder Services Plan
(n) Financial Data Schedules
(o) Multiple Class Plan (previously filed as Exhibit 18 to Post-Effective
Amendment No. 24 and incorporated herein by reference) (i) Exhibit E to
the Multiple Class Plan (z)
(i) Power of Attorney for David S. Schoedinger
(ii) Power of Attorney for John M. Shary
(iii) Power of Attorney for William R. Wise
Item 24. Persons Controlled by or Under Common Control with Registrant
None.
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<PAGE>
Item 25. Number of Holders of Securities
Number of
Record Holders
as of February
Title of Class 24, 1999
Shares of Beneficial Interest of:
The Huntington Money Market Fund
Trust Shares......................................... 38
Investment Shares.................................... 3,548
The Huntington Ohio Municipal Money Market Fund
Trust Shares......................................... 6
Investment Shares.................................... 217
The Huntington U.S. Treasury Money Market Fund
Trust Shares......................................... 8
Investment Shares.................................... 193
The Huntington Florida Tax-Free Money Fund
Trust Shares......................................... 4
Investment Shares.................................... 4
The Huntington Growth Fund
Trust Shares......................................... 85
Investment Shares.................................... 1,586
The Huntington Income Equity Fund
Trust Shares......................................... 80
Investment Shares.................................... 193
The Huntington Mortgage Securities Fund
Trust Shares......................................... 37
Investment Shares.................................... 119
The Huntington Ohio Tax-Free Fund
Trust Shares......................................... 14
Investment Shares.................................... 97
The Huntington Michigan Tax-Free Fund
Trust Shares......................................... 6
Investment Shares.................................... 271
The Huntington Fixed Income Securities Fund
Trust Shares......................................... 41
Investment Shares.................................... 142
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<PAGE>
The Huntington Intermediate Government Income Fund
Trust Shares................................................ 5
Investment Shares........................................... 213
The Huntington Short/Intermediate Fixed Income Securities Fund
Trust Shares................................................ 50
Item 26. Indemnification
The response to this Item is incorporated by reference to Registrant's
Post-Effective Amendment No. 25 on Form N-1A filed February 3, 1998.
Item 27. Business and Other Connections of the Investment Adviser
The Adviser. Huntington National Bank ("Huntington") serves as
investment adviser to the Registrant. Huntington is a wholly-owned subsidiary of
Huntington Bancshares Incorporated ("Bancshares"). Huntington conducts a variety
of trust activities. To the knowledge of Registrant, none of the directors or
executive officers of Huntington, except those set forth below, is or has been
at any time during the past two fiscal years engaged in any other business,
profession, vocation or employment of a substantial nature, except that certain
directors and executive officers also hold various positions with and engage in
business for Bancshares. Set forth below are the names and principal businesses
of the directors and executive officers of Huntington.
<TABLE>
<CAPTION>
Name of Principal Business(es) During
Officers and Directors of Huntington at Least the Last Two Fiscal Years
- ------------------------------------ ----------------------------------
<S> <C>
Friedrich K.M. Bohm................. Managing Partner and Chief Executive Officer,
NBBJ East Limited Partnership
Douglas G. Borror................... President and Chief Executive Officer, Dominion
Corporation
Richard A. Cheap.................... Executive Vice President, General Counsel,
Secretary and Cashier, Huntington
Maurice A. Cox, Jr.................. Chief Executive Officer, The Ohio Partners, LLC
Peter H. Edwards.................... Chairman, Edwards Companies
Douglas E. Fairbanks................ Retired Vice President, Ameritech
Judith D. Fisher.................... Executive Vice President, Huntington
Ralph K. Frasier.................... Retired
Peter E. Geier...................... President and Chief Operating Officer, Huntington
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
Name of Principal Business(es) During
Officers and Directors of Huntington at Least the Last Two Fiscal Years
- ------------------------------------ ----------------------------------
<S> <C>
John B. Gerlach, Jr................................. Chairman, President and Chief Executive Officer,
Lancaster Colony Corporation
Elaine H. Hairston.................................. Chancellor, Ohio Board of Regents
Edgar W. Ingram III................................. Chairman, President and Chief Executive Officer,
White Castle Systems, Inc.
Pete A. Klisares.................................... President and Chief Operating Officer,
Karrington, Inc.; Executive Vice President,
Worthington Industries, Inc.
William M. Osborne, Jr.............................. Secretary, Riley Gear Corp.
Robert W. Rahal..................................... President and Chief Executive Officer, Team
Rahal, Inc.
John B. Schultze.................................... Chairman, President and Chief Executive Officer,
The Lamson & Sessions Co.
Ronald J. Seiffert.................................. Director and Vice Chairman, Huntington
J. Richard Sisson................................... Senior Vice President and Provost, The Ohio State
University
Rodney Wasserstrom.................................. President and Chief Executive Officer, The
Wasserstrom Company
William J. Williams................................. Retired Chairman, Huntington
William S. Williams................................. Vice Chairman and Chief Executive Officer, The
W.W. Williams Co., Inc.
Frank Wobst......................................... Chairman, President and Chief Executive Officer,
Bancshares
Helen K. Wright..................................... Investor
</TABLE>
The Subadviser. Countrywide Investments, Inc. ("Countrywide"), a
registered investment adviser, serves as subadviser to the Florida Tax-Free
Money Fund. Countrywide is an indirect wholly-owned subsidiary of Countrywide
Credit Industries, Inc., the nation's largest mortgage lender ("Countrywide
Credit"). Countrywide also acts as the investment adviser to six series of
Countrywide Investment Trust and four series of Countrywide Strategic Trust,
both of which are registered investment companies. Countrywide provides
investment advisory services to individual and institutional accounts and is a
registered broker-dealer.
The following list sets forth the business and other connections of the
directors and executive
C-5
<PAGE>
business officers of Countrywide. Unless otherwise noted with an asterisk (*),
the address of the corporations listed below is 312 Walnut Street, Cincinnati,
Ohio 45202.
* The address of each corporation is 4500 Park Granada Road, Calabasas,
California 91302.
(1) Angelo R. Mozilo - Chairman and Director
(a) Chairman and a Trustee of Countrywide Strategic Trust,
Countrywide Investment Trust and Countrywide Tax-Free Trust,
registered investment companies.
(b) Chairman and a Director of Countrywide Financial Services,
Inc., a financial services company, Countrywide Fund Services,
Inc., a registered transfer agent, CW Fund Distributors, Inc.,
a registered broker-dealer, Countrywide Servicing Exchange,* a
loan servicing broker, Countrywide Capital Markets, Inc.,* a
holding company and Countrywide Securities Corporation*, a
registered broker-dealer.
(c) Vice Chairman, Director and Chief Executive Office of
Countrywide Credit Industries, Inc.,* a holding company which
provides residential mortgages and ancillary financial
products and services.
(d) A Director of Countrywide Home Loans, Inc.,* a residential
mortgage lender, CTC Foreclosure Services Corporation,* a
foreclosure trustee, CCM Municipal Services, Inc.,* a tax lien
purchaser and Countrywide's Field Services Corporation*, a
foreclosure property maintenance provider.
(e) A Director of LandSafe, Inc.* and Chairman and a director of
various Landsafe subsidiaries which provide residential
mortgage title and closing services.
(2) Robert H. Leshner - President and Director
(a) President and a Trustee of Countrywide Strategic Trust,
Countrywide Investment Trust and Countrywide Tax-Free Trust.
(b) President and a Director of Countrywide Financial Services,
Inc.
(c) Vice Chairman and a Director of Countrywide Fund Services,
Inc. and CW Fund Distributors, Inc.
(3) Andrew S. Bielanski - Director
(a) A Director of Countrywide Financial Services, Inc.,
Countrywide Fund Services, Inc., CW Fund Distributors, Inc.,
Countrywide Agency, Inc.* and Countrywide Insurance Services,
Inc.,* insurance agencies.
C-6
<PAGE>
(b) Managing Director - Marketing of Countrywide Credit
Industries, Inc.* and Countrywide Home Loans, Inc.*
(4) Thomas H. Boone - Director
(a) A Director of Countrywide Financial Services, Inc.,
Countrywide Fund Services, Inc., CW Fund Distributors, Inc.,
Countrywide Agency, Inc.,* Countrywide Tax Services
Corporation,* a residential mortgage tax service provider,
Countrywide Lending Corporation,* a lending institution,
Countrywide Insurance Agency of Massachusetts*, and
Countrywide Insurance Services, Inc.*
(b) Managing Director - Portfolio Services of Countrywide Credit
Industries, Inc.* and Managing Director - Chief Loan
Administration Officer of Countrywide Home Loans, Inc.*
(c) A Director and Executive Vice President of CWABS, Inc.,* an
asset-backed securities issuer and CWMBS, Inc.,* a
mortgage-backed securities issuer.
(d) CEO and a Director of CTC Foreclosure Services Corporation*.
(e) Chairman and Chief Executive Officer of Countrywide Field
Services Corporation*.
(f) Chairman and a Director of Countrywide Realty Partners, Inc.,*
a real estate marketing firm.
(5) Marshall M. Gates - Director
(a) A Director of Countrywide Financial Services, Inc.,
Countrywide Fund Services, Inc., CW Fund Distributors, Inc.,
Countrywide Agency, Inc.* and Countrywide Insurance Services,
Inc.*
(b) Managing Director - Developing Markets of Countrywide Credit
Industries, Inc.* and Countrywide Home Loans, Inc.*
(c) President and a Director of Second Charter Reinsurance
Corporation,* a mortgage, property and casualty reinsurance
agency and Charter Reinsurance Corporation,* a mortgage
reinsurance agency.
(d) Chief Operating Officer and Director of Landsafe, Inc.* and
various LandSafe subsidiaries.
(6) William E. Hortz - Executive Vice President and Director of Sales.
(a) Executive Vice President and Director of Sales of Countrywide
Financial Services,
C-7
<PAGE>
Inc.
(b) Vice President of Countrywide Investment Trust, Countrywide
Tax-Free Trust and Countrywide Strategic Trust.
(c) President of Peregrine Asset Management (USA), (4 Embarcadero
Center, San Francisco, California, 94111), an investment
adviser, until 1998.
(7) Maryellen Peretzky - Senior Vice President and Chief Operating Officer.
(a) Senior Vice President-Administration of Countrywide Financial
Services, Inc., Countrywide Fund Services, Inc. and CW Fund
Distributors, Inc.
(b) Vice President of Countrywide Strategic Trust, Countrywide
Investment Trust and Countrywide Tax-Free Trust; Assistant
Secretary of The Gannett Welsh & Kotler Funds, Firsthand Funds
and the Dean Family of Funds.
(8) John J. Goetz - First Vice President and Chief Investment Officer -
Tax-Free Fixed Income.
(a) Vice President of Countrywide Financial Services, Inc. until
February 1997.
(9) Susan F. Flischel - First Vice President and Chief Investment Officer
- Equity.
(10) Margaret D. Weinblatt - First Vice President and Chief Investment
Officer - Taxable Fixed Income and Pension.
(11) Sharon L. Karp - First Vice President - Marketing.
(a) Vice President of Countrywide Financial Services, Inc. until
February 1997.
(12) John F. Splain - First Vice President, Secretary and General Counsel
(a) First Vice President, Secretary and General Counsel of
Countrywide Fund Services, Inc., CW Fund Distributors, Inc.
and Countrywide Financial Services, Inc.
(b) Secretary of Countrywide Tax-Free Trust, Countrywide
Investment Trust, Countrywide Strategic Trust, Brundage, Story
and Rose Investment Trust, Williamsburg Investment Trust,
Markman MultiFund Trust, The Tuscarora Investment Trust,
Maplewood Investment Trust, The Thermo Opportunity Fund, Inc.,
the Wells Family of Real Estate Funds, the Boyar Value Fund
and Profit Funds Investment Trust, registered investment
companies.
(c) Assistant Secretary of Schwartz Investment Trust, The Gannett
Welsh & Kotler
C-8
<PAGE>
Funds, Firsthand Funds, Dean Family of Funds, The New York
State Opportunity Funds, The Westport Funds, Lake Shore Family
of Funds, Bowes Investment Trust, Albermarle Investment Trust,
Atlanta/Sosnoff Investment Trust, The James Advantage Funds
and UC Investment Trust, registered investment companies.
(d) Secretary of PRAGMA Investment Trust, a registered investment
company, until January 1998.
(e) Assistant Secretary of Fremont Mutual Funds, Inc. and Capitol
Square Funds, registered investment companies, until September
1997.
(13) Robert G. Dorset - First Vice President and Treasurer.
(a) President and Treasurer of Countrywide Fund Services, Inc. and
CW Fund Distributors, Inc.
(b) First Vice President-Finance Treasurer of Countrywide
Financial Services, Inc.
(c) Vice President of Countrywide Tax-Free Trust, Countrywide
Investment Trust, Countrywide Strategic Trust, Brundage, Story
and Rose Investment Trust, Markman MultiFund Trust, Maplewood
Investment Trust, The Thermo Opportunity Fund, Inc., Dean
Family of Funds, The New York State Opportunity Funds, Wells
Family of Real Estate Funds, Lake Shore Family of Funds, Boyar
Value Fund, Profit Funds Investment Trust, Bowes Investment
Trust, Atlanta/Sosnoff Investment Trust and UC Investment
Trust.
(d) Assistant Vice President of Williamsburg Investment Trust,
Schwartz Investment Trust, The Gannett Welsh & Kotler Funds,
The Tuscarora Investment Trust, Firsthand Funds, The Westport
Funds, Albermarle Investment Trust and The James Advantage
Funds.
(e) Vice President of PRGMA Investment Trust until January 1998.
(f) Vice President of Capitol Square Funds and Assistant Vice
President of Fremont Mutual Funds, Inc. until September 1997.
(14) Terrie A. Wiendheft - First Vice President and Chief Financial Officer.
(a) First Vice President and Chief Financial Officer of
Countrywide Financial Services, Inc., Countrywide Fund
Services, Inc.
(15) Scott Weston - Assistant Vice President-Investments.
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<PAGE>
(16) Michele M. Hawkins - Assistant Vice President - Compliance.
(17) Timothy M. Roesch - Assistant Vice President - Systems.
Item 28. 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") is the Distributor of the
Registrant's shares. SEI also acts as distributor for the following other
investment companies:
The Achievement Funds Trust
The Advisors' Inner Circle Fund
Alpha Select Funds
The Arbor Fund
ARK Funds
Armada Funds
Bishop Street Funds
Boston 1784 Funds(R)
CrestFunds, Inc.
CUFUND
The Expedition Funds
First American Funds, Inc.
First American Investment Funds, Inc.
First American Strategy Funds, Inc.
HighMark Funds
Morgan Grenfell Investment Trust
The Nevis Fund, Inc.
Oak Associates Funds
The Parkstone Group of Funds
The PBHG Funds, Inc.
PBHG Insurance Series Fund, Inc.
The Pillar Funds
SEI Asset Allocation Trust
SEI Daily Income Trust
SEI Index Funds
SEI Institutional Investments Trust
SEI Institutional Managed Trust
SEI Institutional International Trust
SEI Liquid Asset Trust
SEI Tax Exempt Trust
STI Classic Funds
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<PAGE>
STI Classic Variable Trust
TIP Funds
SEI 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) 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 and Chairman of the None
Board of Directors
Henry H. Greer Director None
Carmen V. Romeo Director None
Mark J. Held President and COO None
Gilert L. Beebower Executive Vice President None
Richard B. Lieb Executive Vice President None
Dennis J. McGonigle Executive Vice President None
Robert M. Silvestri CFO and Treasurer None
Leo J. Dolan, Jr. Senior Vice President None
Carl A. Guarino Senior Vice President None
Larry Hutchison Senior Vice President None
Jack May Senior Vice President None
Hartland J. McKeown Senior Vice President None
Barbara J. Moore Senior Vice President None
Kevin P. Robins Senior Vice President and Vice President and
General Counsel Assistant Secretary
Patrick K. Walsh Senior Vice President None
Robert Aller Vice President None
Gordon W. Carpenter Vice President None
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Position and Office Position and Office
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
Todd Cipperman Vice President and Vice President and
Assistant Secretary Assistant Secretary
Courtney E. Collier Vice President and None
Assistant Secretary
Robert Crudup Vice President and None
Managing Director
Robert DellaCroce Vice President Treasurer, Controller and
Chief Financial Officer
Barbara Doyne Vice President None
Jeff Drennen Vice President None
Vic Galef Vice President and None
Managing Director
Lydia A. Gavalis Vice President and None
Assistant Secretary
Greg Gettinger Vice President and None
Assistant Secretary
Kathy Heilig Vice President Vice President and
Assistant Secretary
Jeff Jacobs Vice President None
Samuel King Vice President None
Kim Kirk Vice President and None
Managing Director
John Krzeminski Vice President and None
Managing Director
Carolyn McLaurin Vice President and None
Managing Director
W. Kelso Morrill Vice President None
Mark Nagle Vice President President and Chief
Executive Officer
Joanne Nelson Vice President None
Joseph O'Donnell Vice President and None
Assistant Secretary
</TABLE>
C-12
<PAGE>
<TABLE>
<CAPTION>
Position and Office Position and Office
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
Sandra K. Orlow Vice President and Vice President and
Secretary Assistant Secretary
Cynthia M. Parish Vice President and Assistant None
Secretary
Kim Rainey Vice President None
Rob Redican Vice President None
Maria Rinehart Vice President None
Mark Samuels Vice President and None
Managing Director
Steve Smith Vice President None
Daniel Spaventa Vice President None
Kathryn L. Stanton Vice President and None
Assistant Secretary
Lynda J. Striegel Vice President and None
Assistant Secretary
Lori L. White Vice President and None
Assistant Secretary
Wayne M. Withrow Vice President and None
Managing Director
</TABLE>
(c) Not applicable.
Item 29. 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 Investments Distribution Co. One Freedom Valley Road
(Distributor and Sub-Administrator) Oaks, PA 19456
Huntington National Bank Huntington Center
(Adviser, Administrator, Custodian and 41 South High Street
Portfolio Recordkeeper) Columbus, OH 43287
C-13
<PAGE>
Countrywide Investments, Inc. 312 Walnut Street
(Sub-Adviser) Cincinnati, OH 45202
State Street Bank and Trust Two Heritage Drive
Company (Transfer Agent and Quincy, MA 02171
Dividend Disbursing Agent)
American Data Services, Inc. 755 New York Avenue
(Portfolio Recordkeeper) Huntington, NY 11743
Item 30. Management Services
Not applicable.
Item 31. Undertakings
Not applicable.
C-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended
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 1st day of March, 1999.
THE HUNTINGTON FUNDS
By: /s/ MARK NAGLE
---------------------------
Mark Nagle, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by the following
person in the capacity and on the date indicated:
NAME TITLE DATE
/s/ Mark Nagle President and Chief March 1, 1999
- -----------------------------
Mark Nagle Executive Officer
/s/ Robert DellaCroce Controller, Treasurer and March 1, 1999
- -----------------------------
Robert DellaCroce Chief Financial Officer
* Trustee March 1, 1999
- -----------------------------
David S. Schoedinger
* Trustee March 1, 1999
- -----------------------------
William R. Wise
* Trustee March 1, 1999
- -----------------------------
John M. Shary
*Executed on behalf of the indicated person by the undersigned, pursuant to
power of attorney previously filed and incorporated herein by reference.
By: /s/ Mark Nagle
--------------------------
Attorney-In-Fact
<PAGE>
EXHIBIT INDEX
(d) (vi) Investment Advisory Agreement, dated December 1, 1998, between the
Registrant and The Huntington National Bank relating to the Florida
Tax-Free Money Fund
(d) (vi)(1) Sub-Advisory Agreement, dated December 1, 1998, between The
Huntington National Bank and Countrywide Investments, Inc. relating to
the Florida Tax-Free Money Fund
(h) (i)(1) Amendment to Schedule A of Transfer Agency and Service Agreement
(h) (iii)(1) Amendment to Schedules A and B of Sub-Administration Agreement
(m) (i) Amendment to Exhibit A of the Distribution and Shareholder Services
Plan
(n) Financial Data Schedules
(o) (i) Exhibit E to the Multiple Class Plan
(z) (i) Power of Attorney for David S. Schoedinger
(ii) Power of Attorney for John M. Shary
(iii) Power of Attorney for William R. Wise
<PAGE>
Exhibit (d)(vi)
THE MONITOR FUNDS
INVESTMENT ADVISORY AGREEMENT
Monitor Florida Tax-Free Money Fund
This Agreement is made as of the 1st day of December, 1998, 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 for its Michigan Tax-Free Fund pursuant to a
separate Investment Advisory Agreement dated September 5, 1997; and for its
Intermediate Government Income Fund pursuant to a separate Investment Advisory
Agreement dated November 21, 1997; and
WHEREAS, the Trust desires to retain the Adviser to render investment
advisory and other management services for The Monitor Florida Tax-Free Money
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
<PAGE>
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 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) 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.
<PAGE>
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 requirements of Rule 204(2) under the
Investment Advisers Act of 1940, pertaining to the maintenance of books and
records.
5. Expenses. During the term of this Agreement, the 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 Fund.
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 an
annual rate of: 0.50 of one percent of the average daily net assets ("Net
Assets") of the Fund up to $100 million, 0.45 of one percent of Net Assets from
$100 million to $200 million, 0.40 of one percent of Net Assets from $200
million to $300 million, and 0.375 of one percent of Net Assets in excess of
$300 million.
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 or other body approving the settlement; or
B. by at least a majority of those Trustees who are neither Interested
persons of the Trust (as defined in the Investment Company Act of 1940, as
amended) nor are parties to the matter, based upon a review of readily
available facts (as opposed to a full trial-type inquiry); or
C. by written opinion of independent legal counsel based upon a review
of readily available facts (as opposed to a full trial-type inquiry).
(d) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may
now or hereafter be entitled, shall continue as to a person who has
ceased to be a Covered Person and shall inure to the benefit of the
personal representatives, successors and assigns of each such person.
Nothing contained herein shall affect any rights to indemnification to
which Trust personnel and any other persons, other than a Covered
Person, may be entitled by contract or otherwise 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 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 Registration Statement on Form N-1a filed with the
Securities and Exchange Commission becomes effective and, unless sooner
terminated as provided herein, shall continue until two years after
such date. Thereafter, if not terminated, this Agreement shall continue
in effect as to the Fund for successive periods of 12 months each,
provided such continuance is specifically approved at least annually
(a) by the vote of a majority of those Trustees who
<PAGE>
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 without
the payment of any penalty, by the Trustees, or, by vote of majority of
the outstanding voting securities of the Fund on 60 days' written
notice to the Adviser, or by the Adviser at any time, 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. Representations and Warranties. The Adviser hereby represents and
warrants as follows:
1. The Adviser is exempt from registration under the Investment Advisers
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.
A. 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.
B. 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
<PAGE>
other 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 as of the day and year first above written.
Attest: THE MONITOR FUNDS
_____________________________ By: ________________________________
Attest: THE HUNTINGTON NATIONAL BANK
_____________________________ By: ________________________________
<PAGE>
Exhibit (d)(vi)(1)
THE MONITOR FUNDS
SUB-ADVISORY AGREEMENT
Monitor Florida Tax-Free Money Fund
THIS AGREEMENT is made between The Huntington National Bank, a national
banking association (hereinafter referred to as "Adviser") and Countrywide
Investments, Inc. a registered investment adviser located in Cincinnati, Ohio
(hereinafter referred to as the "Sub-Adviser").
WITNESSETH:
That the parties hereto, intending to be legally bound hereby agree as
follows:
1. Sub-Adviser hereby agrees to furnish to Adviser in its capacity as
investment adviser to The Monitor Florida Tax-Free Money Fund (the "Fund"), a
portfolio of The Monitor Funds ("Trust"), such investment advice, statistical
and other factual information, as may from time to time be reasonably requested
by Adviser for the Fund which may be offered in one or more classes of shares.
2. For its services under this Agreement, Sub-Adviser shall receive
from Adviser a monthly fee, as set forth in Exhibit A hereto.
3. This agreement shall be effective as of the date on which the Fund's
registration statement on Form N-1A filed with the Securities and Exchange
Commission becomes effective.
This Agreement shall remain in effect for the Fund for two years from the date
of its effectiveness and from year to year thereafter, subject to the provisions
for termination and all of the other terms and conditions hereof if: (a) such
continuation shall be specifically approved at least annually by the vote of a
majority of the Trustees of the Trust, including a majority of the Trustees who
are not parties to this Agreement or interested persons of any such party (other
than as Trustees of the Trust) cast in person at a meeting called for that
purpose; and (b) Adviser shall not have notified the Trust in writing at least
sixty (60) days prior to the anniversary date of this Agreement in any year
thereafter that it does not desire such continuation with respect to the Fund.
4. Notwithstanding any provision in this Agreement, it may be
terminated at any time without the payment of any penalty: (a) by the Trustees
of the Trust or by a vote of a majority of the outstanding voting securities (as
defined in Section 2(a) (42) of the Act) of the Fund on sixty (60) days written
notice to the Adviser; or (b) by Sub-Adviser or Adviser upon 120 days written
notice to the other party to the Agreement.
5. This Agreement shall automatically terminate: (a) in the event of
its assignment (as defined in the Investment Company Act of 1940); or (b) in the
event of termination of the Investment Advisory Agreement between the Trust and
the Adviser as to the Fund (the "Investment Advisory Agreement") for any reason
whatsoever.
<PAGE>
6. So long as both Adviser and Sub-Adviser shall be legally qualified
to act as an investment adviser to the Fund, neither Adviser nor Sub-Adviser
shall act as an investment adviser (as such term is defined in the Investment
Company Act of 1940) to the Fund except as provided herein and in the Investment
Advisory Agreement or in such other manner as may be expressly agreed between
Adviser and Sub-Adviser.
Provided, however, that if the Adviser or Sub-Adviser shall resign
prior to the end of any term of this Agreement or for any reason be unable or
unwilling to serve for a successive term which has been approved by the Trustees
of the Trust pursuant to the provisions of Paragraph 3 of this Agreement or
pursuant to the Investment Advisory Agreement, the remaining party, Sub-Adviser
or Adviser as the case may be, shall not be prohibited from serving as an
investment adviser to such Fund by reason of the provisions of this Paragraph 6.
7. This Agreement may be amended from time to time by agreement of the
parties hereto provided that such amendment shall be approved both by the vote
of a majority of Trustees of the Trust, including a majority of Trustees who are
not parties to this Agreement or interested persons, as defined in Section
2(a)(19) of the Investment Company Act of 1940, of any such party at a meeting
called for that purpose, and by the holders of a majority of the outstanding
voting securities (as defined in Section 2(a)(42) of the Investment Company Act
of 1940) of the Fund.
IN WITNESS WEREOF, the parties hereto have caused this Agreement to be
executed on their behalf by their duly authorized officers, as of this 1st day
of December, 1998.
ATTEST: The Huntington National Bank
_____________________________ By: ________________________________
Richard W. Stenberg, Sr. Vice President
Countrywide Investments, Inc.
_____________________________ By: ________________________________
Robert H. Leshner
<PAGE>
Exhibit A
THE MONITOR FUNDS
The Monitor Florida Tax-Free Money Market Fund
Sub-Advisory Contract
For all services rendered by Sub-Adviser hereunder, Adviser shall pay
Sub-Adviser at the end of each month a Sub-Advisory Fee equal to the annual rate
of 0.20 of one percent of the average daily net assets ("Net Assets") of the
Fund during such month.
This Exhibit duly incorporates by reference the Sub-Advisory Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on their behalf by their duly authorized officers, as of this 1st day
of December 1, 1998.
ATTEST: The Huntington National Bank
______________________________ By: ________________________________
Richard W. Stenberg, Sr. Vice President
Countrywide Investments, Inc.
______________________________ By: ________________________________
Robert H. Leshner
<PAGE>
Exhibit (h)(i)(1)
SCHEDULE A
Transfer Agency and Service Agreement
State Street Bank
Money Market Fund
U. S. Treasury Money Market Fund
Ohio Municipal Money Market Fund
Florida Tax-Free Money Fund
Ohio Tax-Free Fund
Michigan Tax-Free Fund
Short/Intermediate Fixed Income Securities Fund
Fixed Income Securities Fund
Mortgage Securities Fund
Intermediate Government Income Fund
Growth Fund
Income Equity Fund
MONITOR FUNDS
By:
ATTEST:
STATE STREET BANK AND TRUST COMPANY
By:
ATTEST:
<PAGE>
Exhibit (h)(iii)(1)
SCHEDULE A
TO THE SUB-ADMINISTRATION AGREEMENT
DATED AS OF JANUARY 12, 1998 BETWEEN
SEI FUND RESOURCES
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 Florida Tax-Free Money Fund
The Monitor Growth Fund
The Monitor Income Equity Fund
The Monitor Short/Intermediate Fixed Income Securities Fund
The Monitor Fixed Income Securities Fund
The Monitor Mortgage Securities Fund
The Monitor Intermediate Government Income Fund
The Monitor Ohio Tax-Free Fund
The Monitor Michigan Tax-Free Fund
THE HUNTINGTON NATIONAL BANK
By:
Title:
SEI FUND RESOURCES
By:
Title:
<PAGE>
SCHEDULE B
TO THE SUB-ADMINISTRATION AGREEMENT
DATED AS OF JANUARY 12, 1998 BETWEEN
SEI FUND RESOURCES
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 Florida Tax-Free Money Fund
The Monitor Growth Fund
The Monitor Income Equity Fund
The Monitor Short/Intermediate Fixed Income Securities Fund
The Monitor Fixed Income Securities Fund
The Monitor Mortgage Securities Fund
The Monitor Intermediate Government Income Fund
The Monitor Ohio Tax-Free Fund
The Monitor Michigan Tax-Free Fund
Compensation*
- -------------
Annual Rate of five one-hundredths of one percent (0.05%) of each such Fund's
average daily net assets for the period January 12, 1998 through January 11,
1999 and the annual rate of four and a half one-hundredths of one percent
(0.045%) of each such Fund's average daily net assets for the period January 12,
1999 through January 11, 2000.
THE HUNTINGTON NATIONAL BANK
By:
Title:
SEI FUND RESOURCES
By:
Title:
<PAGE>
Exhibit (m)(i)
EXHIBIT A
CLASSES OF 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:
Name of Series (Investment shares only) Effective Date Compensation
- --------------------------------------- -------------- ------------
The Monitor Money Market Fund 05/01/91 0.25%
The Monitor Ohio Municipal Money 05/01/91 0.25%
Market Fund
The Monitor U.S. Treasury Money Market Fund 05/01/91 0.25%
The Monitor Growth Fund 05/01/91 0.25%
The Monitor Ohio Tax-Free Fund 05/01/91 0.25%
The Monitor Fixed Income Securities Fund 05/01/91 0.25%
The Monitor Mortgage Securities Fund 04/24/92 0.50%
The Monitor Income Equity Fund 01/30/97 0.25%
The Monitor Short/Intermediate Fixed Income 01/30/97 0.25%
Securities Fund
The Monitor Michigan Tax-Free Fund 11/20/97 0.25%
The Monitor Intermediate Government 02/06/98 0.25%
Income Fund
The Monitor Florida Tax-Free Fund 12/10/98 0.25%
2. SEI shall pay Brokers and Administrators a 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 monthly.
Pursuant to Section 6 of the Distribution and Shareholder Services Plan
(the "Plan"), the undersigned officer of The Monitor Funds has executed
this Exhibit "A" on October 21, 1998, evidencing the effectiveness of
the Plan to the Class of Investment shares of each series of The
Monitor Funds listed above.
------------------------------------
The Monitor Funds
<PAGE>
Exhibit N
Financial Data Schedules
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 010
[NAME] MONEY MARKET FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 976785
[INVESTMENTS-AT-VALUE] 978785
[RECEIVABLES] 93
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 976878
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 3964
[TOTAL-LIABILITIES] 3964
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 700572
[SHARES-COMMON-STOCK] 700572
[SHARES-COMMON-PRIOR] 424050
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (89)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 972914
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 41734
[OTHER-INCOME] 0
[EXPENSES-NET] 4013
[NET-INVESTMENT-INCOME] 37721
[REALIZED-GAINS-CURRENT] (89)
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 37632
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 26860
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 979439
[NUMBER-OF-SHARES-REDEEMED] 703021
[SHARES-REINVESTED] 21
[NET-CHANGE-IN-ASSETS] 276439
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2150
[INTEREST-EXPENSE] 4013
[GROSS-EXPENSE] 4346
[AVERAGE-NET-ASSETS] 760094
[PER-SHARE-NAV-BEGIN] 1.00
[PER-SHARE-NII] .05
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] .05
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 1.00
[EXPENSE-RATIO] .50
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 011
[NAME] MONEY MARKET FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 976785
[INVESTMENTS-AT-VALUE] 976785
[RECEIVABLES] 93
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 976878
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 3964
[TOTAL-LIABILITIES] 3964
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 272431
[SHARES-COMMON-STOCK] 272431
[SHARES-COMMON-PRIOR] 140385
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (89)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 972914
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 41734
[OTHER-INCOME] 0
[EXPENSES-NET] 4013
[NET-INVESTMENT-INCOME] 37721
[REALIZED-GAINS-CURRENT] (89)
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 37632
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 10861
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 448017
[NUMBER-OF-SHARES-REDEEMED] 322423
[SHARES-REINVESTED] 6446
[NET-CHANGE-IN-ASSETS] 132040
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2150
[INTEREST-EXPENSE] 4013
[GROSS-EXPENSE] 4346
[AVERAGE-NET-ASSETS] 760094
[PER-SHARE-NAV-BEGIN] 1.00
[PER-SHARE-NII] .05
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] .05
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 1.00
[EXPENSE-RATIO] .60
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 020
[NAME] OHIO MUNICIPAL MONEY MARKET FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 239146
[INVESTMENTS-AT-VALUE] 239146
[RECEIVABLES] 1434
[ASSETS-OTHER] 9
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 240589
[PAYABLE-FOR-SECURITIES] 4009
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 679
[TOTAL-LIABILITIES] 4688
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 102613
[SHARES-COMMON-STOCK] 102613
[SHARES-COMMON-PRIOR] 72675
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (12)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 235901
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 6922
[OTHER-INCOME] 0
[EXPENSES-NET] 1041
[NET-INVESTMENT-INCOME] 5881
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 5881
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 2560
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 134841
[NUMBER-OF-SHARES-REDEEMED] 104903
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 29938
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 595
[INTEREST-EXPENSE] 1041
[GROSS-EXPENSE] 1311
[AVERAGE-NET-ASSETS] 198405
[PER-SHARE-NAV-BEGIN] 1.00
[PER-SHARE-NII] 0.03
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] .03
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 1.00
[EXPENSE-RATIO] .47
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 021
[NAME] OHIO MUNICIPAL MONEY MARKET FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 239146
[INVESTMENTS-AT-VALUE] 239146
[RECEIVABLES] 1434
[ASSETS-OTHER] 9
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 240589
[PAYABLE-FOR-SECURITIES] 4009
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 679
[TOTAL-LIABILITIES] 4688
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 133300
[SHARES-COMMON-STOCK] 133300
[SHARES-COMMON-PRIOR] 82901
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (12)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 235901
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 6922
[OTHER-INCOME] 0
[EXPENSES-NET] 1041
[NET-INVESTMENT-INCOME] 5881
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 5881
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 3321
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 252320
[NUMBER-OF-SHARES-REDEEMED] 202297
[SHARES-REINVESTED] 376
[NET-CHANGE-IN-ASSETS] 50399
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 595
[INTEREST-EXPENSE] 1041
[GROSS-EXPENSE] 1311
[AVERAGE-NET-ASSETS] 198405
[PER-SHARE-NAV-BEGIN] 1.00
[PER-SHARE-NII] .03
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] .03
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 1.00
[EXPENSE-RATIO] .57
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 030
[NAME] U.S. TREASURY MONEY MARKET FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 533607
[INVESTMENTS-AT-VALUE] 533607
[RECEIVABLES] 317
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 533924
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 2097
[TOTAL-LIABILITIES] 2097
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 477251
[SHARES-COMMON-STOCK] 477251
[SHARES-COMMON-PRIOR] 483550
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 531827
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 28575
[OTHER-INCOME] 0
[EXPENSES-NET] 2249
[NET-INVESTMENT-INCOME] 26326
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 26326
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 23572
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 950040
[NUMBER-OF-SHARES-REDEEMED] 956412
[SHARES-REINVESTED] 73
[NET-CHANGE-IN-ASSETS] (6299)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1090
[INTEREST-EXPENSE] 2249
[GROSS-EXPENSE] 2336
[AVERAGE-NET-ASSETS] 544837
[PER-SHARE-NAV-BEGIN] 1.00
[PER-SHARE-NII] .05
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] .05
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 1.00
[EXPENSE-RATIO] .40
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNGTINGTON FUNDS
[SERIES]
[NUMBER] 031
[NAME] U.S. TREASURY MONEY MARKET FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 533607
[INVESTMENTS-AT-VALUE] 533607
[RECEIVABLES] 317
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 533924
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 2097
[TOTAL-LIABILITIES] 2097
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 54576
[SHARES-COMMON-STOCK] 54579
[SHARES-COMMON-PRIOR] 57759
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 531827
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 28575
[OTHER-INCOME] 0
[EXPENSES-NET] 2249
[NET-INVESTMENT-INCOME] 26326
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 26326
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 2754
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 209121
[NUMBER-OF-SHARES-REDEEMED] 213148
[SHARES-REINVESTED] 847
[NET-CHANGE-IN-ASSETS] 3180
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1090
[INTEREST-EXPENSE] 2249
[GROSS-EXPENSE] 2336
[AVERAGE-NET-ASSETS] 544837
[PER-SHARE-NAV-BEGIN] 1.00
[PER-SHARE-NII] .05
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] .05
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 1.00
[EXPENSE-RATIO] .50
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 050
[NAME] GROWTH FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 167347
[INVESTMENTS-AT-VALUE] 342376
[RECEIVABLES] 515
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 342891
[PAYABLE-FOR-SECURITIES] 3573
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 253
[TOTAL-LIABILITIES] 3826
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 155938
[SHARES-COMMON-STOCK] 6479
[SHARES-COMMON-PRIOR] 5247
[ACCUMULATED-NII-CURRENT] 26
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (1212)
[ACCUM-APPREC-OR-DEPREC] 175029
[NET-ASSETS] 339065
[DIVIDEND-INCOME] 3255
[INTEREST-INCOME] 1099
[OTHER-INCOME] 0
[EXPENSES-NET] 2473
[NET-INVESTMENT-INCOME] 1881
[REALIZED-GAINS-CURRENT] 8243
[APPREC-INCREASE-CURRENT] 73595
[NET-CHANGE-FROM-OPS] 83719
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1815
[DISTRIBUTIONS-OF-GAINS] 7850
[DISTRIBUTIONS-OTHER] 1154
[NUMBER-OF-SHARES-SOLD] 56244
[NUMBER-OF-SHARES-REDEEMED] 33300
[SHARES-REINVESTED] 3916
[NET-CHANGE-IN-ASSETS] 26860
[ACCUMULATED-NII-PRIOR] 7
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1850
[INTEREST-EXPENSE] 2473
[GROSS-EXPENSE] 2473
[AVERAGE-NET-ASSETS] 308238
[PER-SHARE-NAV-BEGIN] 43.48
[PER-SHARE-NII] .29
[PER-SHARE-GAIN-APPREC] 7.69
[PER-SHARE-DIVIDEND] .29
[PER-SHARE-DISTRIBUTIONS] 1.21
[RETURNS-OF-CAPITAL] .18
[PER-SHARE-NAV-END] 49.78
[EXPENSE-RATIO] .79
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 051
[NAME] GROWTH FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 167347
[INVESTMENTS-AT-VALUE] 342376
[RECEIVABLES] 515
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 342891
[PAYABLE-FOR-SECURITIES] 3573
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 253
[TOTAL-LIABILITIES] 3826
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 9284
[SHARES-COMMON-STOCK] 332
[SHARES-COMMON-PRIOR] 126
[ACCUMULATED-NII-CURRENT] 26
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (1212)
[ACCUM-APPREC-OR-DEPREC] 175029
[NET-ASSETS] 339065
[DIVIDEND-INCOME] 3255
[INTEREST-INCOME] 1099
[OTHER-INCOME] 0
[EXPENSES-NET] 2473
[NET-INVESTMENT-INCOME] 1881
[REALIZED-GAINS-CURRENT] 8243
[APPREC-INCREASE-CURRENT] 73595
[NET-CHANGE-FROM-OPS] 83719
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 47
[DISTRIBUTIONS-OF-GAINS] 393
[DISTRIBUTIONS-OTHER] 58
[NUMBER-OF-SHARES-SOLD] 7580
[NUMBER-OF-SHARES-REDEEMED] 1893
[SHARES-REINVESTED] 493
[NET-CHANGE-IN-ASSETS] 6180
[ACCUMULATED-NII-PRIOR] 7
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1850
[INTEREST-EXPENSE] 2473
[GROSS-EXPENSE] 2473
[AVERAGE-NET-ASSETS] 308238
[PER-SHARE-NAV-BEGIN] 43.46
[PER-SHARE-NII] .19
[PER-SHARE-GAIN-APPREC] 7.67
[PER-SHARE-DIVIDEND] .17
[PER-SHARE-DISTRIBUTIONS] 1.21
[RETURNS-OF-CAPITAL] .18
[PER-SHARE-NAV-END] 49.76
[EXPENSE-RATIO] 1.04
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 60
[NAME] INCOME EQUITY FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 134099
[INVESTMENTS-AT-VALUE] 249952
[RECEIVABLES] 1143
[ASSETS-OTHER] 2
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 251097
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 161
[TOTAL-LIABILITIES] 161
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 133393
[SHARES-COMMON-STOCK] 6098
[SHARES-COMMON-PRIOR] 5913
[ACCUMULATED-NII-CURRENT] 88
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 1
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 115853
[NET-ASSETS] 250936
[DIVIDEND-INCOME] 5952
[INTEREST-INCOME] 2509
[OTHER-INCOME] 0
[EXPENSES-NET] 1888
[NET-INVESTMENT-INCOME] 6573
[REALIZED-GAINS-CURRENT] 4307
[APPREC-INCREASE-CURRENT] 27275
[NET-CHANGE-FROM-OPS] 38155
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 6527
[DISTRIBUTIONS-OF-GAINS] 4275
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 21506
[NUMBER-OF-SHARES-REDEEMED] 17765
[SHARES-REINVESTED] 3497
[NET-CHANGE-IN-ASSETS] 7238
[ACCUMULATED-NII-PRIOR] 40
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1396
[INTEREST-EXPENSE] 1888
[GROSS-EXPENSE] 1888
[AVERAGE-NET-ASSETS] 232686
[PER-SHARE-NAV-BEGIN] 36.30
[PER-SHARE-NII] 1.09
[PER-SHARE-GAIN-APPREC] 5.26
[PER-SHARE-DIVIDEND] 1.09
[PER-SHARE-DISTRIBUTIONS] .71
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 40.85
[EXPENSE-RATIO] .81
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 061
[NAME] INCOME EQUITY FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 134099
[INVESTMENTS-AT-VALUE] 249952
[RECEIVABLES] 1143
[ASSETS-OTHER] 2
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 251097
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 161
[TOTAL-LIABILITIES] 161
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1601
[SHARES-COMMON-STOCK] 46
[SHARES-COMMON-PRIOR] 8
[ACCUMULATED-NII-CURRENT] 88
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 1
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 115853
[NET-ASSETS] 250936
[DIVIDEND-INCOME] 5952
[INTEREST-INCOME] 2509
[OTHER-INCOME] 0
[EXPENSES-NET] 1888
[NET-INVESTMENT-INCOME] 6573
[REALIZED-GAINS-CURRENT] 4307
[APPREC-INCREASE-CURRENT] 27275
[NET-CHANGE-FROM-OPS] 38155
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 20
[DISTRIBUTIONS-OF-GAINS] 31
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 1508
[NUMBER-OF-SHARES-REDEEMED] 65
[SHARES-REINVESTED] 49
[NET-CHANGE-IN-ASSETS] 1492
[ACCUMULATED-NII-PRIOR] 40
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1396
[INTEREST-EXPENSE] 1888
[GROSS-EXPENSE] 1888
[AVERAGE-NET-ASSETS] 232686
[PER-SHARE-NAV-BEGIN] 36.29
[PER-SHARE-NII] .98
[PER-SHARE-GAIN-APPREC] 5.29
[PER-SHARE-DIVIDEND] .99
[PER-SHARE-DISTRIBUTIONS] .71
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 40.86
[EXPENSE-RATIO] 1.06
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 070
[NAME] OHIO TAX FREE FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 60455
[INVESTMENTS-AT-VALUE] 64166
[RECEIVABLES] 504
[ASSETS-OTHER] 34
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 64704
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 37
[TOTAL-LIABILITIES] 37
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 59446
[SHARES-COMMON-STOCK] 2893
[SHARES-COMMON-PRIOR] 2959
[ACCUMULATED-NII-CURRENT] 2
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 3711
[NET-ASSETS] 64667
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 3490
[OTHER-INCOME] 0
[EXPENSES-NET] 493
[NET-INVESTMENT-INCOME] 2997
[REALIZED-GAINS-CURRENT] 68
[APPREC-INCREASE-CURRENT] 315
[NET-CHANGE-FROM-OPS] 3380
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 2943
[DISTRIBUTIONS-OF-GAINS] 66
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 8440
[NUMBER-OF-SHARES-REDEEMED] 10084
[SHARES-REINVESTED] 169
[NET-CHANGE-IN-ASSETS] (1475)
[ACCUMULATED-NII-PRIOR] 13
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 333
[INTEREST-EXPENSE] 493
[GROSS-EXPENSE] 493
[AVERAGE-NET-ASSETS] 66698
[PER-SHARE-NAV-BEGIN] 21.74
[PER-SHARE-NII] .98
[PER-SHARE-GAIN-APPREC] .11
[PER-SHARE-DIVIDEND] .98
[PER-SHARE-DISTRIBUTIONS] .02
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 21.83
[EXPENSE-RATIO] .73
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 071
[NAME] OHIO TAX FREE FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 60455
[INVESTMENTS-AT-VALUE] 64166
[RECEIVABLES] 504
[ASSETS-OTHER] 34
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 64704
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 37
[TOTAL-LIABILITIES] 37
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1508
[SHARES-COMMON-STOCK] 70
[SHARES-COMMON-PRIOR] 68
[ACCUMULATED-NII-CURRENT] 2
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 3711
[NET-ASSETS] 64667
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 3490
[OTHER-INCOME] 0
[EXPENSES-NET] 493
[NET-INVESTMENT-INCOME] 2997
[REALIZED-GAINS-CURRENT] 68
[APPREC-INCREASE-CURRENT] 315
[NET-CHANGE-FROM-OPS] 3380
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 65
[DISTRIBUTIONS-OF-GAINS] 2
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 352
[NUMBER-OF-SHARES-REDEEMED] 355
[SHARES-REINVESTED] 48
[NET-CHANGE-IN-ASSETS] 45
[ACCUMULATED-NII-PRIOR] 13
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 333
[INTEREST-EXPENSE] 493
[GROSS-EXPENSE] 493
[AVERAGE-NET-ASSETS] 66698
[PER-SHARE-NAV-BEGIN] 21.73
[PER-SHARE-NII] .93
[PER-SHARE-GAIN-APPREC] .11
[PER-SHARE-DIVIDEND] .93
[PER-SHARE-DISTRIBUTIONS] .02
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 21.82
[EXPENSE-RATIO] .98
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 080
[NAME] FIXED INCOME SECURITIES FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 158417
[INVESTMENTS-AT-VALUE] 167288
[RECEIVABLES] 2961
[ASSETS-OTHER] 9
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 170258
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 219
[TOTAL-LIABILITIES] 219
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 159516
[SHARES-COMMON-STOCK] 7734
[SHARES-COMMON-PRIOR] 7165
[ACCUMULATED-NII-CURRENT] 1
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 881
[NET-ASSETS] 170039
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 10588
[OTHER-INCOME] 0
[EXPENSES-NET] 1153
[NET-INVESTMENT-INCOME] 9435
[REALIZED-GAINS-CURRENT] 2181
[APPREC-INCREASE-CURRENT] 2837
[NET-CHANGE-FROM-OPS] 14453
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 9390
[DISTRIBUTIONS-OF-GAINS] 2141
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 21544
[NUMBER-OF-SHARES-REDEEMED] 14012
[SHARES-REINVESTED] 4761
[NET-CHANGE-IN-ASSETS] 12293
[ACCUMULATED-NII-PRIOR] 44
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 817
[INTEREST-EXPENSE] 1153
[GROSS-EXPENSE] 1153
[AVERAGE-NET-ASSETS] 163441
[PER-SHARE-NAV-BEGIN] 21.41
[PER-SHARE-NII] 1.26
[PER-SHARE-GAIN-APPREC] .65
[PER-SHARE-DIVIDEND] 1.26
[PER-SHARE-DISTRIBUTIONS] .28
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 21.78
[EXPENSE-RATIO] .70
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 081
[NAME] FIXED INCOME SECURITIES FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 158417
[INVESTMENTS-AT-VALUE] 167288
[RECEIVABLES] 2961
[ASSETS-OTHER] 9
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 170258
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 219
[TOTAL-LIABILITIES] 219
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1651
[SHARES-COMMON-STOCK] 73
[SHARES-COMMON-PRIOR] 75
[ACCUMULATED-NII-CURRENT] 1
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 8871
[NET-ASSETS] 170039
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 10588
[OTHER-INCOME] 0
[EXPENSES-NET] 1153
[NET-INVESTMENT-INCOME] 9435
[REALIZED-GAINS-CURRENT] 2181
[APPREC-INCREASE-CURRENT] 2837
[NET-CHANGE-FROM-OPS] 14453
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 89
[DISTRIBUTIONS-OF-GAINS] 20
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 265
[NUMBER-OF-SHARES-REDEEMED] 405
[SHARES-REINVESTED] 84
[NET-CHANGE-IN-ASSETS] (56)
[ACCUMULATED-NII-PRIOR] 44
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 817
[INTEREST-EXPENSE] 1153
[GROSS-EXPENSE] 1153
[AVERAGE-NET-ASSETS] 163441
[PER-SHARE-NAV-BEGIN] 21.41
[PER-SHARE-NII] 1.21
[PER-SHARE-GAIN-APPREC] .66
[PER-SHARE-DIVIDEND] 1.21
[PER-SHARE-DISTRIBUTIONS] .28
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 21.78
[EXPENSE-RATIO] .95
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 090
[NAME] SHORT INTERMEDIATE FIXED INCOME FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 123034
[INVESTMENTS-AT-VALUE] 125356
[RECEIVABLES] 2429
[ASSETS-OTHER] 3
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 127788
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 73
[TOTAL-LIABILITIES] 73
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 125393
[SHARES-COMMON-STOCK] 6344
[SHARES-COMMON-PRIOR] 6329
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 2322
[NET-ASSETS] 127715
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 8252
[OTHER-INCOME] 0
[EXPENSES-NET] 914
[NET-INVESTMENT-INCOME] 7338
[REALIZED-GAINS-CURRENT] 1670
[APPREC-INCREASE-CURRENT] (88)
[NET-CHANGE-FROM-OPS] 8920
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 7352
[DISTRIBUTIONS-OF-GAINS] 956
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 9438
[NUMBER-OF-SHARES-REDEEMED] 12994
[SHARES-REINVESTED] 3814
[NET-CHANGE-IN-ASSETS] 258
[ACCUMULATED-NII-PRIOR] (14)
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 646
[INTEREST-EXPENSE] 914
[GROSS-EXPENSE] 914
[AVERAGE-NET-ASSETS] 129111
[PER-SHARE-NAV-BEGIN] 20.04
[PER-SHARE-NII] 1.15
[PER-SHARE-GAIN-APPREC] .24
[PER-SHARE-DIVIDEND] 1.15
[PER-SHARE-DISTRIBUTIONS] .15
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 20.13
[EXPENSE-RATIO] .71
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 100
[NAME] MORTGAGE SECURITIES FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 34960
[INVESTMENTS-AT-VALUE] 35847
[RECEIVABLES] 261
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 9
[TOTAL-ASSETS] 36117
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 58
[TOTAL-LIABILITIES] 58
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 55122
[SHARES-COMMON-STOCK] 4241
[SHARES-COMMON-PRIOR] 4498
[ACCUMULATED-NII-CURRENT] 21
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (23673)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 887
[NET-ASSETS] 36059
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 2567
[OTHER-INCOME] 0
[EXPENSES-NET] 243
[NET-INVESTMENT-INCOME] 2324
[REALIZED-GAINS-CURRENT] 19
[APPREC-INCREASE-CURRENT] 35
[NET-CHANGE-FROM-OPS] 2378
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 2266
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 2881
[NUMBER-OF-SHARES-REDEEMED] 5175
[SHARES-REINVESTED] 180
[NET-CHANGE-IN-ASSETS] (2114)
[ACCUMULATED-NII-PRIOR] 75
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 191
[INTEREST-EXPENSE] 243
[GROSS-EXPENSE] 322
[AVERAGE-NET-ASSETS] 38082
[PER-SHARE-NAV-BEGIN] 8.24
[PER-SHARE-NII] .50
[PER-SHARE-GAIN-APPREC] .01
[PER-SHARE-DIVIDEND] .50
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 8.25
[EXPENSE-RATIO] .63
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 101
[NAME] MORTGAGE SECURITIES FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 34960
[INVESTMENTS-AT-VALUE] 35847
[RECEIVABLES] 261
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 9
[TOTAL-ASSETS] 36117
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 58
[TOTAL-LIABILITIES] 58
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 3702
[SHARES-COMMON-STOCK] 129
[SHARES-COMMON-PRIOR] 131
[ACCUMULATED-NII-CURRENT] 21
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (23673)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 887
[NET-ASSETS] 36059
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 2567
[OTHER-INCOME] 0
[EXPENSES-NET] 243
[NET-INVESTMENT-INCOME] 2324
[REALIZED-GAINS-CURRENT] 19
[APPREC-INCREASE-CURRENT] 35
[NET-CHANGE-FROM-OPS] 2378
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 63
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 53
[NUMBER-OF-SHARES-REDEEMED] 113
[SHARES-REINVESTED] 45
[NET-CHANGE-IN-ASSETS] (15)
[ACCUMULATED-NII-PRIOR] 75
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 191
[INTEREST-EXPENSE] 243
[GROSS-EXPENSE] 322
[AVERAGE-NET-ASSETS] 38082
[PER-SHARE-NAV-BEGIN] 8.26
[PER-SHARE-NII] .48
[PER-SHARE-GAIN-APPREC] .01
[PER-SHARE-DIVIDEND] .48
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 8.27
[EXPENSE-RATIO] .88
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 110
[NAME] INTERMEDIATE GOVERNMENT INCOME FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JUN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 107926
[INVESTMENTS-AT-VALUE] 112533
[RECEIVABLES] 1517
[ASSETS-OTHER] 20
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 114070
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1725
[TOTAL-LIABILITIES] 1725
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 106246
[SHARES-COMMON-STOCK] 10486
[SHARES-COMMON-PRIOR] 11367
[ACCUMULATED-NII-CURRENT] 30
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (1719)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 4607
[NET-ASSETS] 112345
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 4195
[OTHER-INCOME] 0
[EXPENSES-NET] 482
[NET-INVESTMENT-INCOME] 3713
[REALIZED-GAINS-CURRENT] (7)
[APPREC-INCREASE-CURRENT] 2433
[NET-CHANGE-FROM-OPS] 6139
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 3854
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 12297
[NUMBER-OF-SHARES-REDEEMED] 22036
[SHARES-REINVESTED] 558
[NET-CHANGE-IN-ASSETS] (9181)
[ACCUMULATED-NII-PRIOR] 273
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 345
[INTEREST-EXPENSE] 482
[GROSS-EXPENSE] 517
[AVERAGE-NET-ASSETS] 117776
[PER-SHARE-NAV-BEGIN] 10.23
[PER-SHARE-NII] .33
[PER-SHARE-GAIN-APPREC] .21
[PER-SHARE-DIVIDEND] .35
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.42
[EXPENSE-RATIO] .69
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 111
[NAME] INTERMEDIATE GOVERNMENT INCOME FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JUN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 107926
[INVESTMENTS-AT-VALUE] 112533
[RECEIVABLES] 1517
[ASSETS-OTHER] 20
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 114070
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1725
[TOTAL-LIABILITIES] 1725
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 3182
[SHARES-COMMON-STOCK] 296
[SHARES-COMMON-PRIOR] 314
[ACCUMULATED-NII-CURRENT] 30
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (1719)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 4607
[NET-ASSETS] 112345
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 4195
[OTHER-INCOME] 0
[EXPENSES-NET] 482
[NET-INVESTMENT-INCOME] 3713
[REALIZED-GAINS-CURRENT] (7)
[APPREC-INCREASE-CURRENT] 2433
[NET-CHANGE-FROM-OPS] 6139
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 102
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 11
[NUMBER-OF-SHARES-REDEEMED] 284
[SHARES-REINVESTED] 82
[NET-CHANGE-IN-ASSETS] (191)
[ACCUMULATED-NII-PRIOR] 273
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 345
[INTEREST-EXPENSE] 482
[GROSS-EXPENSE] 517
[AVERAGE-NET-ASSETS] 117776
[PER-SHARE-NAV-BEGIN] 10.24
[PER-SHARE-NII] .31
[PER-SHARE-GAIN-APPREC] .20
[PER-SHARE-DIVIDEND] .33
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.42
[EXPENSE-RATIO] .94
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 120
[NAME] MICHIGAN TAX FREE FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JUN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 30541
[INVESTMENTS-AT-VALUE] 32409
[RECEIVABLES] 426
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 32835
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 76
[TOTAL-LIABILITIES] 76
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 22677
[SHARES-COMMON-STOCK] 2183
[SHARES-COMMON-PRIOR] 2502
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 1868
[NET-ASSETS] 32759
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 1071
[OTHER-INCOME] 0
[EXPENSES-NET] 151
[NET-INVESTMENT-INCOME] 920
[REALIZED-GAINS-CURRENT] 145
[APPREC-INCREASE-CURRENT] 75
[NET-CHANGE-FROM-OPS] 1140
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 731
[DISTRIBUTIONS-OF-GAINS] 54
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 1206
[NUMBER-OF-SHARES-REDEEMED] 4740
[SHARES-REINVESTED] 32
[NET-CHANGE-IN-ASSETS] (3502)
[ACCUMULATED-NII-PRIOR] 64
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 102
[INTEREST-EXPENSE] 151
[GROSS-EXPENSE] 165
[AVERAGE-NET-ASSETS] 34870
[PER-SHARE-NAV-BEGIN] 10.97
[PER-SHARE-NII] .29
[PER-SHARE-GAIN-APPREC] .06
[PER-SHARE-DIVIDEND] .31
[PER-SHARE-DISTRIBUTIONS] .02
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.99
[EXPENSE-RATIO] .67
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
[ARTICLE] 6
[CIK] 0000810695
[NAME] THE HUNTINGTON FUNDS
[SERIES]
[NUMBER] 121
[NAME] MICHIGAN TAX FREE FUND
[MULTIPLIER] 1000
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JUN-01-1998
[PERIOD-END] DEC-31-1998
[INVESTMENTS-AT-COST] 30541
[INVESTMENTS-AT-VALUE] 32409
[RECEIVABLES] 426
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 32835
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 76
[TOTAL-LIABILITIES] 76
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 8214
[SHARES-COMMON-STOCK] 797
[SHARES-COMMON-PRIOR] 907
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 1868
[NET-ASSETS] 32759
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 1071
[OTHER-INCOME] 0
[EXPENSES-NET] 151
[NET-INVESTMENT-INCOME] 920
[REALIZED-GAINS-CURRENT] 145
[APPREC-INCREASE-CURRENT] 75
[NET-CHANGE-FROM-OPS] 1140
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 253
[DISTRIBUTIONS-OF-GAINS] 20
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 114
[NUMBER-OF-SHARES-REDEEMED] 1538
[SHARES-REINVESTED] 217
[NET-CHANGE-IN-ASSETS] (1207)
[ACCUMULATED-NII-PRIOR] 64
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 102
[INTEREST-EXPENSE] 151
[GROSS-EXPENSE] 165
[AVERAGE-NET-ASSETS] 34870
[PER-SHARE-NAV-BEGIN] 10.97
[PER-SHARE-NII] .28
[PER-SHARE-GAIN-APPREC] .06
[PER-SHARE-DIVIDEND] .30
[PER-SHARE-DISTRIBUTIONS] .02
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.99
[EXPENSE-RATIO] .92
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
Exhibit (o)(i)
EXHIBIT E
to the
Multiple Class Plan
THE MONITOR FUNDS
Investment Shares
Trust Shares
of
The Monitor Florida Tax-Free Money Fund
This Multiple Class Plan is adopted by The Monitor Funds with respect
to the Classes of shares of the portfolio(s) of The Monitor Funds set forth
above, effective on December 10, 1998.
Witness the due execution hereof this October 21, 1998.
THE MONITOR FUNDS
------------------------------------
President
<PAGE>
Exhibit (z)(i)
HUNTINGTON FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee of The
Huntington Funds (the "Trust"), a business trust organized under the laws of the
Commonwealth of Massachusetts, hereby constitutes and appoints the President and
the Secretary of the Trust, and each of them singly, his true and lawful
attorneys-in-fact and agents 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 as of the
date set forth below.
/s/ David S. Schoedinger Date: 2-17-99
- ----------------------------------- --------------------------
David S. Schoedinger
<PAGE>
Exhibit (z)(ii)
HUNTINGTON FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee of The
Huntington Funds (the "Trust"), a business trust organized under the laws of the
Commonwealth of Massachusetts, hereby constitutes and appoints the President and
the Secretary of the Trust, and each of them singly, his true and lawful
attorneys-in-fact and agents 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 as of the
date set forth below.
/s/ John M. Shary Date: 2-17/99
- ---------------------------- -------------------------
John M. Shary
<PAGE>
Exhibit (z)(iii)
HUNTINGTON FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee of The
Huntington Funds (the "Trust"), a business trust organized under the laws of the
Commonwealth of Massachusetts, hereby constitutes and appoints the President and
the Secretary of the Trust, and each of them singly, his true and lawful
attorneys-in-fact and agents 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 as of the
date set forth below.
/s/ William R. Wise Date: 2/18/99
- -------------------------- -------------------------
William R. Wise
