MIDWEST GROUP TAX FREE TRUST
STATEMENT OF ADDITIONAL INFORMATION
November 1, 1995
Amended April 16, 1996
Tax-Free Money Fund
Tax-Free Intermediate Term Fund
Ohio Insured Tax-Free Fund
Ohio Tax-Free Money Fund
California Tax-Free Money Fund
This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of the applicable Fund of Midwest
Group Tax Free Trust dated November 1, 1995. A copy of a Fund's Prospectus can
be obtained by writing the Trust at 312 Walnut Street, 21st Floor, Cincinnati,
Ohio 45202-4094, or by calling the Trust nationwide toll-free 800-543-0407, in
Cincinnati 629-2050.
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STATEMENT OF ADDITIONAL INFORMATION
Midwest Group Tax Free Trust
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
TABLE OF CONTENTS PAGE
THE TRUST.................................................................... 3
MUNICIPAL OBLIGATIONS........................................................ 4
QUALITY RATINGS OF MUNICIPAL OBLIGATIONS..................................... 8
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS................................12
INVESTMENT LIMITATIONS.......................................................15
INSURERS OF THE OHIO INSURED TAX-FREE FUND'S PORTFOLIO SECURITIES........... 22
TRUSTEES AND OFFICERS........................................................23
THE INVESTMENT ADVISER AND UNDERWRITER.......................................25
DISTRIBUTION PLANS...........................................................28
SECURITIES TRANSACTIONS......................................................30
PORTFOLIO TURNOVER...........................................................32
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE.........................33
OTHER PURCHASE INFORMATION...................................................36
TAXES........................................................................38
REDEMPTION IN KIND...........................................................40
HISTORICAL PERFORMANCE INFORMATION...........................................40
PRINCIPAL SECURITY HOLDERS...................................................46
CUSTODIAN....................................................................46
AUDITORS.....................................................................47
MGF SERVICE CORP.............................................................47
TAX EQUIVALENT YIELD TABLES..................................................48
ANNUAL REPORT . . . .........................................................51
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THE TRUST
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Midwest Group Tax Free Trust (the "Trust") was organized as a
Massachusetts business trust on April 13, 1981. The Trust currently offers six
series of shares to investors: the Tax-Free Money Fund, the Tax-Free
Intermediate Term Fund, the Ohio Insured Tax-Free Fund, the Ohio Tax-Free Money
Fund, the California Tax- Free Money Fund and the Royal Palm Florida Tax-Free
Money Fund. This Statement of Additional Information provides information
relating to the Tax-Free Money Fund, the Tax-Free Intermediate Term Fund, the
Ohio Insured Tax-Free Fund, the Ohio Tax-Free Money Fund and the California
Tax-Free Money Fund (referred to individually as a "Fund" and collectively as
the "Funds"). Information relating to the Royal Palm Florida Tax-Free Money Fund
is contained in a separate Statement of Additional Information. Each Fund has
its own investment objective(s) and policies.
Each share of a Fund represents an equal proportionate interest in the
assets and liabilities belonging to that Fund with each other share of that Fund
and is entitled to such dividends and distributions out of the income belonging
to the Fund as are declared by the Trustees. The shares do not have cumulative
voting rights or any preemptive or conversion rights, and the Trustees have the
authority from time to time to divide or combine the shares of any Fund into a
greater or lesser number of shares of that Fund so long as the proportionate
beneficial interest in the assets belonging to that Fund and the rights of
shares of any other Fund are in no way affected. In case of any liquidation of a
Fund, the holders of shares of the Fund being liquidated will be entitled to
receive as a class a distribution out of the assets, net of the liabilities,
belonging to that Fund. Expenses attributable to any Fund are borne by that
Fund. Any general expenses of the Trust not readily identifiable as belonging to
a particular Fund are allocated by or under the direction of the Trustees in
such manner as the Trustees determine to be fair and equitable. Generally, the
Trustees allocate such expenses on the basis of relative net assets or number of
shareholders. No shareholder is liable to further calls or to assessment by the
Trust without his express consent.
Both Class A shares and Class C shares of the Tax-Free Intermediate
Term Fund and the Ohio Insured Tax-Free Fund represent an interest in the same
assets of such Fund, have the same rights and are identical in all material
respects except that (i) Class C shares bear the expenses of higher distribution
fees; (ii) certain other class specific expenses will be borne solely by the
class to which such expenses are attributable, including transfer agent fees
attributable to a specific class of shares, printing and postage expenses
related to preparing and distributing materials to current shareholders of a
specific class, registration fees incurred by a specific class of shares, the
expenses of administrative personnel and services required to
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support the shareholders of a specific class, litigation or other legal expenses
relating to a class of shares, Trustees' fees or expenses incurred as a result
of issues relating to a specific class of shares and accounting fees and
expenses relating to a specific class of shares; and (iii) each class has
exclusive voting rights with respect to matters relating to its own distribution
arrangements. The Board of Trustees may classify and reclassify the shares of a
Fund into additional classes of shares at a future date.
Under Massachusetts law, under certain circumstances, shareholders of a
Massachusetts business trust could be deemed to have the same type of personal
liability for the obligations of the Trust as does a partner of a partnership.
However, numerous investment companies registered under the Investment Company
Act of 1940 have been formed as Massachusetts business trusts and the Trust is
not aware of an instance where such result has occurred. In addition, the Trust
Agreement 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 Trust Agreement also provides for the indemnification out of the Trust
property for all losses and expenses of any shareholder held personally liable
for the obligations of the Trust. Moreover, it provides that the Trust will,
upon request, assume the defense of any claim made against any shareholder for
any act or obligation of the Trust and satisfy any judgment thereon. As a
result, and particularly because the Trust assets are readily marketable and
ordinarily substantially exceed liabilities, management believes that the risk
of shareholder liability is slight and limited to circumstances in which the
Trust itself would be unable to meet its obligations. Management believes that,
in view of the above, the risk of personal liability is remote.
MUNICIPAL OBLIGATIONS
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Each Fund invests primarily in Municipal Obligations. Municipal
Obligations are debt obligations issued by a state and its political
subdivisions, agencies, authorities and instrumentalities and other qualifying
issuers which pay interest that is, in the opinion of bond counsel to the
issuer, exempt from federal income tax. Municipal Obligations include tax-exempt
bonds, notes and commercial paper. The Ohio Insured Tax- Free Fund and the Ohio
Tax-Free Money Fund invest primarily in Ohio Obligations, which are Municipal
Obligations issued by the State of Ohio and its political subdivisions,
agencies, authorities and instrumentalities and other qualifying issuers which
pay interest that is, in the opinion of bond counsel to the
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issuer, exempt from both federal income tax and Ohio personal income tax. The
California Tax-Free Money Fund invests primarily in California Obligations,
which are Municipal Obligations issued by the State of California and its
political subdivisions, agencies, authorities and instrumentalities and other
qualifying issuers which pay interest that is, in the opinion of bond counsel to
the issuer, exempt from both federal income tax and California income tax.
TAX-EXEMPT BONDS. Tax-exempt bonds are issued to obtain funds to
construct, repair or improve various facilities such as airports, bridges,
highways, hospitals, housing, schools, streets and water and sewer works, to pay
general operating expenses or to refinance outstanding debts. They also may be
issued to finance various private activities, including the lending of funds to
public or private institutions for construction of housing, educational or
medical facilities or the financing of privately owned or operated facilities.
The two principal classifications of tax-exempt bonds are "general
obligation" and "revenue" bonds. General obligation bonds are backed by the
issuer's full credit and taxing power. Revenue bonds are backed by the revenues
of a specific project, facility or tax. Industrial development revenue bonds are
a specific type of revenue bond backed by the credit of the private user of the
facility.
TAX-EXEMPT NOTES. Tax-exempt notes generally are used to
provide for short-term capital needs and generally have
maturities of one year or less. Tax-exempt notes include:
1. Tax Anticipation Notes. Tax anticipation notes
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.
2. Revenue Anticipation Notes. Revenue anticipation
notes are issued in expectation of receipt of other kinds of
revenue, such as federal revenues available under the
federal revenue sharing programs.
3. Bond Anticipation Notes. Bond anticipation notes
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.
TAX-EXEMPT COMMERCIAL PAPER. Tax-exempt commercial paper typically
represents short-term, unsecured, negotiable promissory notes issued by a state
and its political subdivisions. These notes are issued to finance seasonal
working capital needs of
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municipalities or to provide interim construction financing and
are paid from general revenues of municipalities or are refinanced with
long-term debt. 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.
WHEN-ISSUED OBLIGATIONS. Each Fund may invest in when- issued Municipal
Obligations. In connection with these investments, each Fund will direct the
Custodian to place cash, U.S. Government obligations or other liquid high-grade
debt instruments in a segregated account in an amount sufficient to make payment
for the securities to be purchased. When a segregated account is maintained
because a Fund purchases securities on a when-issued basis, the assets deposited
in the segregated account will be valued daily at market for the purpose of
determining the adequacy of the securities in the account. If the market value
of such securities declines, additional cash or securities will be placed in the
account on a daily basis so that the market value of the account will equal the
amount of the Fund's commitments to purchase securities on a when-issued basis.
To the extent funds are in a segregated account, they will not be available for
new investment or to meet redemptions. Securities purchased on a when-issued
basis and the securities held in a Fund's portfolio are subject to changes in
market value based upon changes in the level of interest rates (which will
generally result in all of those securities changing in value in the same way,
i.e, all those securities experiencing appreciation when interest rates decline
and depreciation when interest rates rise). Therefore, if in order to achieve
higher returns, a Fund remains substantially fully invested at the same time
that it has purchased securities on a when-issued basis, there will be a
possibility that the market value of the Fund's assets will have greater
fluctuation. The purchase of securities on a when-issued basis may involve a
risk of loss if the broker-dealer selling the securities fails to deliver after
the value of the securities has risen.
When the time comes for a Fund to make payment for securities purchased
on a when-issued basis, the Fund will do so by using then-available cash flow,
by sale of the securities held in the segregated account, by sale of other
securities or, although it would not normally expect to do so, by directing the
sale of the securities purchased on a when-issued basis themselves (which may
have a market value greater or less than the Fund's payment obligation).
Although a Fund will only make commitments to purchase securities on a
when-issued basis with the intention of actually acquiring the securities, the
Funds may sell these obligations before the settlement date if it is deemed
advisable by the Adviser as a matter of investment strategy. Sales of securities
for these purposes carry a greater potential for the realization of capital
gains and losses, which are not exempt from federal income taxes.
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PARTICIPATION INTERESTS. Each Fund may invest in participation
interests in Municipal Obligations. A Fund will have the right to sell the
interest back to the bank or other financial institution 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. Each Fund intends to exercise the demand on the letter of
credit only under the following circumstances: (1) 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) to maintain a high quality investment
portfolio. The bank or financial institution will retain a service and letter of
credit fee and a fee for issuing the repurchase commitment in an amount equal to
the excess of the interest paid by the issuer on the Municipal Obligations over
the negotiated yield at which the instruments were purchased by the Fund.
Participation interests will be purchased only if, in the opinion of counsel of
the issuer, interest income on the interests will be tax-exempt when distributed
as dividends to shareholders.
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.
LEASE OBLIGATIONS. The Tax-Free Intermediate Term Fund and the Ohio
Insured Tax-Free Fund may invest in Municipal Obligations that constitute
participation in lease obligations or installment purchase contract obligations
(hereinafter collectively called "lease obligations") of municipal authorities
or entities. Lease obligations provide a premium interest rate, which along with
the regular amortization of the principal, may make them attractive for a
portion of the assets of the Funds. As described in the Prospectus, certain of
these lease obligations contain "non-appropriation" clauses, and the Trust will
seek to minimize the special risks associated with such securities by only
investing in "non-appropriation" lease obligations where (1) the nature of the
leased equipment or property is such that its ownership or use is essential to a
governmental function of the municipality, (2) the lease payments will commence
amortization of principal at an early date resulting in an average life of seven
years or less for the lease obligation, (3) appropriate covenants will be
obtained from the municipal obligor prohibiting the substitution or purchase of
similar equipment if the lease payments are not appropriated, (4)
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the lease obligor has maintained good market acceptability in the past, (5) the
investment is of a size that will be attractive to institutional investors, and
(6) the underlying leased equipment has elements of portability and/or use that
enhance its marketability in the event foreclosure on the underlying equipment
were ever required.
Neither the Tax-Free Intermediate Term Fund nor the Ohio Insured
Tax-Free Fund will invest more than 10% of its net assets in lease obligations
if the Adviser determines that there is no secondary market available for these
obligations and all other illiquid securities. Neither Fund intends to invest
more than an additional 5% of its net assets in municipal lease obligations
determined by the Adviser to be liquid. In determining the liquidity of such
obligations, the Adviser will consider such factors as (1) the frequency of
trades and quotes for the obligation; (2) the number of dealers willing to
purchase or sell the security and the number of other potential buyers; (3) the
willingness of dealers to undertake to make a market in the security; and (4)
the nature of the marketplace trades, including the time needed to dispose of
the security, the method of soliciting offers and the mechanics of transfer.
QUALITY RATINGS OF MUNICIPAL OBLIGATIONS
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The Tax-Free Money Fund, the Ohio Tax-Free Money Fund and the
California Tax-Free Money Fund may invest in Municipal Obligations 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). The NRSROs which may rate
the obligations of the Tax-Free Money Fund, the Ohio Tax-Free Money Fund and the
California Tax-Free Money Fund include Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Ratings Group ("S&P") or Fitch Investors
Services, Inc.
("Fitch").
The Tax-Free Intermediate Term Fund may invest in tax-exempt bonds
rated at the time of purchase within the three highest grades assigned by
Moody's, S&P or Fitch. The Ohio Insured Tax- Free Fund may invest in tax-exempt
bonds rated at the time of purchase within the four highest grades assigned by
Moody's, S&P or Fitch. The Tax-Free Intermediate Term Fund and the Ohio Insured
Tax-Free Fund may also invest in tax-exempt notes and commercial paper
determined by the Adviser to meet the Funds' quality standards. In making this
determination, the Adviser will consider the ratings assigned by the NRSROs for
those obligations.
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Moody's Ratings
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1. Tax-Exempt Bonds. The four highest ratings of Moody's for tax-exempt
bonds are Aaa, Aa, A and Baa. Bonds rated Aaa are judged by Moody's to be of the
best quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge." 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 issuers. Bonds
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. Moody's
says that Aa bonds are rated lower than the best bonds because margins of
protection or other elements make long term risks appear somewhat larger than
Aaa bonds. Moody's describes bonds rated A as possessing many favorable
investment attributes and as upper medium grade obligations. Factors giving
security to principal and interest of A rated bonds are considered adequate, but
elements may be present which suggest a susceptibility to impairment sometime in
the future. Bonds which are rated by Moody's in the fourth highest rating (Baa)
are considered as medium grade obligations, i.e., they are neither highly
protected nor poorly secured. Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or may
be characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well. Those obligations in the A and Baa group which Moody's
believes possess the strongest investment attributes are designated by the
symbol A 1 and Baa 1.
2. Tax-Exempt Notes. Moody's highest rating for tax-exempt notes is
MIG-1. Moody's says that notes rated MIG-1 are of the best quality, enjoying
strong protection from established cash flows of funds for their servicing or
from established and broad-based access to the market for refinancing, or both.
Notes bearing the MIG-2 designation are of high quality, with margins of
protection ample although not so large as in the MIG-1 group. Notes bearing the
designation MIG-3 are of favorable quality, with all security elements accounted
for but lacking the undeniable strength of the preceding grades. Market access
for refinancing, in particular, is likely to be less well established.
3. Tax-Exempt Commercial Paper. The rating Prime-1 is the
highest tax-exempt commercial paper rating assigned by Moody's.
Issuers rated Prime-1 are judged to be of the best quality.
Their short-term debt obligations carry the smallest degree of
investment risk. Margins of support for current indebtedness are
large or stable with cash flow and asset protection well assured.
Current liquidity provides ample coverage of near-term
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liabilities and unused alternative financing arrangements are generally
available. While protective elements may change over the intermediate or long
term, such changes are most unlikely to impair the fundamentally strong position
of short-term obligations. Issuers rated Prime-2 have a strong capacity for
repayment of short-term obligations.
S&P Ratings
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1. Tax-Exempt Bonds. The four highest ratings of S&P for tax-exempt
bonds are AAA, AA, A and BBB. Bonds rated AAA have the highest rating assigned
by S&P to a debt obligation. Capacity to pay interest and repay principal is
extremely strong. Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in a small degree.
Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
Bonds which are rated by S&P in the fourth highest rating (BBB) are regarded as
having an adequate capacity to pay interest and repay principal and are
considered "investment grade." Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal than
for bonds in higher rated categories. The ratings for tax-exempt bonds may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.
2. Tax-Exempt Notes. Tax-exempt note ratings are generally given by S&P
to notes that mature in three years or less. Notes rated SP-1 have very strong
or strong capacity to pay principal and interest. Issues determined to possess
overwhelming safety characteristics will be given a plus designation. Notes
rated SP-2 have satisfactory capacity to pay principal and interest.
3. Tax-Exempt Commercial Paper. The ratings A-1+ and A-1 are the
highest tax-exempt commercial paper ratings assigned by S&P. These designations
indicate the degree of safety regarding timely payment is either overwhelming
(A-1+) or very strong (A- 1). Capacity for timely payment on issues rated A-2 is
strong. However, the relative degree of safety is not as overwhelming as for
issues designated A-1.
Fitch Ratings
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1. Tax-Exempt Bonds. The four highest ratings of Fitch
for tax-exempt bonds are AAA, AA, A and BBB. Bonds rated AAA are
regarded by Fitch as being of the highest quality, with the
obligor having an extraordinary ability to pay interest and repay
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principal which is unlikely to be affected by reasonably foreseeable events.
Bonds rated AA are regarded by Fitch as high quality obligations. The obligor's
ability to pay interest and repay principal, while very strong, is somewhat less
than for AAA rated bonds, and more subject to possible change over the term of
the issue. Bonds rated A are regarded by Fitch as being of good quality. The
obligor's ability to pay interest and repay principal is strong, but may be more
vulnerable to adverse changes in economic conditions and circumstances than
bonds with higher ratings. Bonds rated BBB are regarded by Fitch as being of
satisfactory quality. The obligor's ability to pay interest and repay principal
is considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to weaken this ability than bonds with
higher ratings. Fitch ratings may be modified by the addition of a plus (+) or
minus (-) sign.
2. Tax-Exempt Notes. The ratings F-1+, F-1 and F-2 are the highest
ratings assigned by Fitch for tax-exempt notes. Notes assigned the F-1+ rating
are regarded by Fitch as having the strongest degree of assurance for timely
payment. Notes assigned the F-1 rating reflect an assurance for timely payment
only slightly less than the strongest issues. Notes assigned the F-2 rating have
a degree of assurance for timely payment with a lesser margin of safety than
higher-rated notes.
3. Tax-Exempt Commercial Paper. Commercial paper rated
Fitch-1 is regarded as having the strongest degree of assurance
for timely payment. Issues assigned the Fitch-2 rating reflect
an assurance of timely payment only slightly less in degree than
the strongest issues.
GENERAL. The ratings of Moody's, S&P and Fitch represent their opinions
of the quality of the obligations rated by them. It should be emphasized that
such ratings are general and are not absolute standards of quality.
Consequently, obligations with the same maturity, coupon and rating may have
different yields, while obligations of the same maturity and coupon, but with
different ratings, may have the same yield. It is the responsibility of the
Adviser to appraise independently the fundamental quality of the obligations
held by the Funds. Certain Municipal Obligations may be backed by letters of
credit or similar commitments issued by banks and, in such instances, the
obligation of the bank and other credit factors will be considered in assessing
the quality of the Municipal Obligations.
Any Municipal Obligation which depends on the credit of the U.S.
Government (e.g. project notes) will be considered by the Adviser as having the
equivalent of the highest rating of Moody's, S&P or Fitch. In addition, unrated
Municipal Obligations will be considered as being within the foregoing quality
ratings if other equal or junior Municipal Obligations of the same issuer are
rated and their ratings are within the
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foregoing ratings of Moody's, S&P or Fitch. Each Fund (except the California
Tax-Free Money Fund) may also invest in Municipal Obligations which are not
rated if, in the opinion of the Adviser, subject to the review of the Board of
Trustees, such obligations are of comparable quality to those rated obligations
in which the applicable Fund may invest.
Subsequent to its purchase by a Fund, an obligation may cease to be
rated or its rating may be reduced below the minimum required for purchase by
the Fund. If the rating of an obligation held by a Fund is reduced below its
minimum requirements, the Fund will be required to exercise the demand provision
or sell the obligation as soon as practicable.
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS
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A more detailed discussion of some of the terms used and investment
policies described in the Prospectuses (see "Investment Objectives" and
"Investment Policies") appears below:
BANK DEBT INSTRUMENTS. Bank debt instruments in which the Funds may
invest consist of certificates of deposit, bankers' acceptances and time
deposits issued by national banks and state banks, trust companies and mutual
savings banks, or of banks or institutions the accounts of which are insured by
the Federal Deposit Insurance Corporation or the Federal Savings and Loan
Insurance Corporation. Certificates of deposit are negotiable certificates
evidencing the indebtedness of a commercial bank to repay funds deposited with
it for a definite period of time (usually from fourteen days to one year) at a
stated or variable interest rate. Bankers' acceptances are credit instruments
evidencing the obligation of a bank to pay a draft which has been drawn on it by
a customer, which instruments reflect the obligation both of the bank and of the
drawer to pay the face amount of the instrument upon maturity. The Funds will
only invest in bankers' acceptances of banks having a short-term rating of A-1
by Standard & Poor's Ratings Group or Prime-1 by Moody's Investors Service, Inc.
Time deposits are non-negotiable deposits maintained in a banking institution
for a specified period of time at a stated interest rate. Each Fund will not
invest in time deposits maturing in more than seven days if, as a result
thereof, more than 10% of the value of its net assets would be invested in such
securities and other illiquid securities.
COMMERCIAL PAPER. Commercial paper consists of short-term (usually from
one to two hundred seventy days) unsecured promissory notes issued by
corporations in order to finance their current operations. Each Fund will only
invest in taxable commercial paper provided the paper is rated in one of the two
highest categories by any two NRSROs (or by any one NRSRO if the security is
rated by only that NRSRO). Each Fund other than the
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California Tax-Free Money Fund may also invest in unrated commercial paper of
issuers who have outstanding unsecured debt rated Aa or better by Moody's or AA
or better by Standard & Poor's. Certain notes may have floating or variable
rates. Variable and floating rate notes with a demand notice period exceeding
seven days will be subject to each Fund's restrictions on illiquid investments
(see "Investment Limitations") unless, in the judgment of the Adviser, subject
to the direction of the Board of Trustees, such note is liquid. The Funds do not
presently intend to invest in taxable commercial paper.
The rating of Prime-1 is the highest commercial paper rating assigned
by Moody's Investors Service, Inc. Among the factors considered by Moody's in
assigning ratings are the following: valuation of the management of the issuer;
economic evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; evaluation of the
issuer's products in relation to competition and customer acceptance; liquidity;
amount and quality of long-term debt; trend of earnings over a period of 10
years; financial strength of the parent company and the relationships which
exist with the issuer; and recognition by the management of obligations which
may be present or may arise as a result of public interest questions and
preparations to meet such obligations. These factors are all considered in
determining whether the commercial paper is rated Prime-1 or Prime-2. Commercial
paper rated A (highest quality) by Standard & Poor's Ratings Group has the
following characteristics: liquidity ratios are adequate to meet cash
requirements; long-term senior debt is rated "A" or better, although in some
cases "BBB" credits may be allowed; the issuer has access to at least two
additional channels of borrowing; basic earnings and cash flow have an upward
trend with allowance made for unusual circumstances; typically, the issuer's
industry is well established and the issuer has a strong position within the
industry; and the reliability and quality of management are unquestioned. The
relative strength or weakness of the above factors determines whether the
issuer's commercial paper is rated A-1 or A-2.
REPURCHASE AGREEMENTS. Repurchase agreements are transactions by which
a Fund purchases a security and simultaneously commits to resell that security
to the seller at an agreed upon time and price, thereby determining the yield
during the term of the agreement. In the event of a bankruptcy or other default
of the seller of a repurchase agreement, a Fund could experience both delays in
liquidating the underlying security and losses. To minimize these possibilities,
each Fund intends to enter into repurchase agreements only with its Custodian,
with banks having assets in excess of $10 billion and with broker-dealers who
are recognized as primary dealers in U.S. Government obligations by the Federal
Reserve Bank of New York. Collateral for repurchase agreements is held in
safekeeping in the customer-only account of the Funds' Custodian at the Federal
Reserve Bank. A Fund will not enter into a repurchase agreement
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not terminable within seven days if, as a result thereof, more than 10% of the
value of its net assets would be invested in such securities and other illiquid
securities.
Although the securities subject to a repurchase agreement might bear
maturities exceeding one year, settlement for the repurchase would never be more
than one year after the Fund's acquisition of the securities and normally would
be within a shorter period of time. The resale price will be in excess of the
purchase price, reflecting an agreed upon market rate effective for the period
of time the Fund's money will be invested in the securities, and will not be
related to the coupon rate of the purchased security. At the time a Fund enters
into a repurchase agreement, the value of the underlying security, including
accrued interest, will equal or exceed the value of the repurchase agreement,
and, in the case of a repurchase agreement exceeding one day, the seller will
agree that the value of the underlying security, including accrued interest,
will at all times equal or exceed the value of the repurchase agreement. The
collateral securing the seller's obligation must be of a credit quality at least
equal to a Fund's investment criteria for portfolio securities and will be held
by the Custodian or in the Federal Reserve Book Entry System.
For purposes of the Investment Company Act of 1940, a repurchase
agreement is deemed to be a loan from a Fund to the seller subject to the
repurchase agreement and is therefore subject to that Fund's investment
restriction applicable to loans. It is not clear whether a court would consider
the securities purchased by a Fund subject to a repurchase agreement as being
owned by that Fund or as being collateral for a loan by the Fund to the seller.
In the event of the commencement of bankruptcy or insolvency proceedings with
respect to the seller of the securities before repurchase of the security under
a repurchase agreement, a Fund may encounter delay and incur costs before being
able to sell the security. Delays may involve loss of interest or decline in
price of the security. If a court characterized the transaction as a loan and a
Fund has not perfected a security interest in the security, that Fund may be
required to return the security to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, a Fund would be at
the risk of losing some or all of the principal and income involved in the
transaction. As with any unsecured debt obligation purchased for a Fund, the
Adviser seeks to minimize the risk of loss through repurchase agreements by
analyzing the creditworthiness of the obligor, in this case, the seller. Apart
from the risk of bankruptcy or insolvency proceedings, there is also the risk
that the seller may fail to repurchase the security, in which case a Fund may
incur a loss if the proceeds to that Fund of the sale of the security to a third
party are less than the repurchase price. However, if the market value of the
securities subject to the repurchase agreement
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<PAGE>
becomes less than the repurchase price (including interest), the Fund involved
will direct the seller of the security to deliver additional securities so that
the market value of all securities subject to the repurchase agreement will
equal or exceed the repurchase price. It is possible that a Fund will be
unsuccessful in seeking to enforce the seller's contractual obligation to
deliver additional securities.
LOANS OF PORTFOLIO SECURITIES. Each Fund may lend its portfolio
securities subject to the restrictions stated in its Prospectus. Under
applicable regulatory requirements (which are subject to change), the loan
collateral must, on each business day, at least equal the value of the loaned
securities. To be acceptable as collateral, letters of credit must obligate a
bank to pay amounts demanded by a Fund if the demand meets the terms of the
letter. Such terms and the issuing bank must be satisfactory to the Fund. The
Funds receive amounts equal to the interest on loaned securities and also
receive one or more of (a) negotiated loan fees, (b) interest on securities used
as collateral, or (c) interest on short-term debt securities purchased with such
collateral; either type of interest may be shared with the borrower. The Funds
may also pay fees to placing brokers as well as custodian and administrative
fees in connection with loans. Fees may only be paid to a placing broker
provided that the Trustees determine that the fee paid to the placing broker is
reasonable and based solely upon services rendered, that the Trustees separately
consider the propriety of any fee shared by the placing broker with the
borrower, and that the fees are not used to compensate the Adviser or any
affiliated person of the Trust or an affiliated person of the Adviser or other
affiliated person. The terms of the Funds' loans must meet applicable tests
under the Internal Revenue Code and permit the Funds to reacquire loaned
securities on five days' notice or in time to vote on any important matter.
MAJORITY. As used in the Prospectuses and this Statement of Additional
Information, the term "majority" of the outstanding shares of the Trust (or of
any Fund) means the lesser of (1) 67% or more of the outstanding shares of the
Trust (or the applicable Fund) present at a meeting, if the holders of more than
50% of the outstanding shares of the Trust (or the applicable Fund) are present
or represented at such meeting or (2) more than 50% of the outstanding shares of
the Trust (or the applicable Fund).
INVESTMENT LIMITATIONS
- ----------------------
The Trust has adopted certain fundamental investment limitations
designed to reduce the risk of an investment in the Funds. These limitations may
not be changed with respect to any Fund without the affirmative vote of a
majority of the outstanding shares of that Fund. For the purpose of these
investment limitations, the identification of the "issuer" of
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<PAGE>
Municipal Obligations which are not general obligation bonds is made by the
Adviser on the basis of the characteristics of the obligation, the most
significant of which is the source of funds for the payment of principal of and
interest on such obligations.
THE LIMITATIONS APPLICABLE TO THE TAX-FREE MONEY FUND, THE
TAX-FREE INTERMEDIATE TERM FUND AND THE OHIO INSURED TAX-FREE
FUND ARE:
1. BORROWING MONEY. Each Fund will not borrow money or pledge, mortgage
or hypothecate its assets, except as a temporary measure for extraordinary or
emergency purposes and then only in amounts not in excess of 10% of the value of
its total assets. A Fund will not make any additional purchases of portfolio
securities while borrowings are outstanding.
2. UNDERWRITING. Each Fund will not act as underwriter of securities
issued by other persons, either directly or through a majority owned subsidiary.
This limitation is not applicable to the extent that, in connection with the
disposition of its portfolio securities (including restricted securities), a
Fund may be deemed an underwriter under certain federal securities laws.
3. ILLIQUID INVESTMENTS. Each Fund will not purchase securities for
which there are legal or contractual restrictions on resale or enter into a
repurchase agreement maturing in more than seven days if, as a result thereof,
more than 10% of the value of the total assets of the Fund would be invested in
such securities.
4. REAL ESTATE. Each Fund will not purchase, hold or deal
in real estate, but this shall not prevent investments in
Municipal Obligations which are secured by or represent interests
in real estate.
5. COMMODITIES. Each Fund will not purchase, hold or deal
in commodities or commodities futures contracts, or invest in
oil, gas or other mineral explorative or development programs.
6. LOANS. Each Fund will not make loans to other persons,
except (a) by the purchase of a portion of an issue of debt
securities in accordance with its investment objective, policies
and limitations, (b) by loaning portfolio securities, or (c) by
engaging in repurchase transactions.
7. CERTAIN COMPANIES. Each Fund will not purchase securities of a
company, if such purchase at the time thereof, would cause more than 5% of the
Fund's total assets to be invested in securities of companies, which, including
predecessors, have a record of less than three years' continuous operation.
- 17 -
<PAGE>
8. OBLIGATIONS OF ONE ISSUER. Each Fund will not purchase more than 10%
of the outstanding publicly issued debt obligations of any issuer. With respect
to the Ohio Insured Tax-Free Fund, this limitation does not apply to securities
issued or guaranteed by the State of Ohio and its political subdivisions and
duly constituted authorities and corporations. This limitation is not applicable
to privately issued Municipal Obligations.
9. INVESTING FOR CONTROL. Each Fund will not invest in
companies for the purpose of exercising control.
10. OTHER INVESTMENT COMPANIES. Each Fund will not invest more than 10%
of its total assets in the securities of other investment companies and then
only for temporary purposes in companies whose dividends are tax-exempt or
invest more than 5% of its total assets in the securities of any investment
company. Each Fund will not purchase more than 3% of the outstanding voting
stock of any investment company.
11. MARGIN PURCHASES. Each Fund will not purchase
securities or evidences of interest thereon on "margin." This
limitation is not applicable to short-term credit obtained by a
Fund for the clearance of purchases and sales or redemption of
securities.
12. COMMON STOCKS. Each Fund will not invest in common
stocks.
13. SECURITIES OWNED BY AFFILIATES. Each Fund will not purchase or
retain the securities of any issuer if, to the Trust's knowledge, those Trustees
and officers of the Trust or of the Adviser, who individually own beneficially
more than 0.5% of the outstanding securities of such issuer, together own
beneficially more than 5% of such securities.
14. SHORT SALES AND OPTIONS. Each Fund will not sell any securities
short or write call options. This limitation is not applicable to the extent
that sales by a Fund of Municipal Obligations with puts attached or sales by a
Fund of other securities in which the Fund may otherwise invest would be
considered to be sales of options.
As diversified series of the Trust, the Tax-Free Money Fund and the
Tax-Free Intermediate Term Fund have adopted the following additional investment
limitation, which may not be changed with respect to either Fund without the
affirmative vote of a majority of the outstanding shares of the applicable Fund.
Neither Fund will purchase the securities of any issuer if such purchase at the
time thereof would cause less than 75% of the value of the total assets of the
Fund to be invested in cash and cash items (including receivables), securities
issued by the U.S. Government, its agencies or instrumentalities, securities of
other investment companies, and other securities for the purposes of this
calculation limited in respect of any one issuer to an
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<PAGE>
amount not greater in value than 5% of the value of the total assets of a Fund
and to not more than 10% of the outstanding voting securities of such issuer.
THE LIMITATIONS APPLICABLE TO THE OHIO TAX-FREE MONEY FUND ARE:
1. BORROWING MONEY. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is asset coverage of
300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that, when made, such temporary borrowings are
in an amount not exceeding 5% of the Fund's total assets. The Fund also will not
make any borrowing which would cause outstanding borrowings to exceed one-third
of the value of its total assets. The Fund will not make any additional
purchases of portfolio securities if outstanding borrowings exceed 5% of the
value of its total assets.
2. PLEDGING. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any security owned or held by it
except as may be necessary in connection with borrowings described in limitation
(1) above. The Fund will not mortgage, pledge or hypothecate more than one-third
of its assets in connection with borrowings.
3. UNDERWRITING. The Fund will not act as underwriter of
securities issued by other persons. This limitation is not
applicable to the extent that, in connection with the disposition
of its portfolio securities (including restricted securities),
the Fund may be deemed an underwriter under certain federal
securities laws.
4. ILLIQUID INVESTMENTS. The Fund will not invest more
than 10% of its net assets in securities for which there are
legal or contractual restrictions on resale, repurchase
agreements maturing in more than seven days and other illiquid
securities.
5. REAL ESTATE. The Fund will not purchase, hold or deal
in real estate. This limitation is not applicable to investments
in securities which are secured by or represent interests in real
estate.
6. COMMODITIES. The Fund will not purchase, hold or deal in
commodities or commodities futures contracts, or invest in oil, gas or
other mineral explorative or development programs. This limitation is not
applicable to the extent that the tax-exempt obligations, U.S. Government
obligations and other securities in which the Fund may otherwise invest
would be considered to be such commodities, contracts or investments.
- 19 -
<PAGE>
7. LOANS. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, or (b) by engaging in repurchase agreements. For
purposes of this limitation, the term "loans" shall not include the purchase of
a portion of an issue of tax-exempt obligations or publicly distributed bonds,
debentures or other securities.
8. MARGIN PURCHASES. The Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not applicable
to short-term credit obtained by the Fund for the clearance of purchases and
sales or redemption of securities.
9. SHORT SALES AND OPTIONS. The Fund will not sell any securities short
or sell put and call options. This limitation is not applicable to the extent
that sales by the Fund of tax-exempt obligations with puts attached or sales by
the Fund of other securities in which the Fund may otherwise invest would be
considered to be sales of options.
10. OTHER INVESTMENT COMPANIES. The Fund will not invest
more than 5% of its total assets in the securities of any
investment company and will not invest more than 10% of its total
assets in securities of other investment companies.
11. CONCENTRATION. The Fund will not invest more than 25% of its total
assets in a particular industry; this limitation is not applicable to
investments in tax-exempt obligations issued by the U.S. Government, its
territories and possessions, the District of Columbia and their respective
agencies and instrumentalities or any state and its political subdivisions,
agencies, authorities and instrumentalities. The Fund may invest more than 25%
of its total assets in tax-exempt obligations in a particular segment of the
bond market.
THE LIMITATIONS APPLICABLE TO THE CALIFORNIA TAX-FREE MONEY
FUND ARE:
1. BORROWING MONEY. The Fund will not borrow money, except from a bank
for temporary purposes only, provided that, when made, such temporary borrowings
are in an amount not exceeding 10% of its total assets. The Fund will not make
any additional purchases of portfolio securities if outstanding borrowings
exceed 5% of the value of its total assets.
2. PLEDGING. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any security owned or held by the
Fund except as may be necessary in connection with borrowings described in
limitation (1) above. The Fund will not mortgage, pledge or hypothecate more
than 10% of the value of its total assets in connection with borrowings.
- 20 -
<PAGE>
3. UNDERWRITING. The Fund will not act as underwriter of
securities issued by other persons. This limitation is not
applicable to the extent that, in connection with the disposition
of its portfolio securities (including restricted securities),
the Fund may be deemed an underwriter under certain federal
securities laws.
4. ILLIQUID INVESTMENTS. The Fund will not invest more
than 10% of its net assets in securities for which there are
legal or contractual restrictions on resale, repurchase
agreements maturing in more than seven days and other illiquid
securities.
5. REAL ESTATE. The Fund will not purchase, hold or deal
in real estate. This limitation is not applicable to investments
in securities which are secured by or represent interests in real
estate.
6. COMMODITIES. The Fund will not purchase, hold or deal in
commodities or commodities futures contracts, or invest in oil, gas or
other mineral explorative or development programs. This limitation is not
applicable to the extent that the tax-exempt obligations, U.S. Government
obligations and other securities in which the Fund may otherwise invest
would be considered to be such commodities, contracts or investments.
7. LOANS. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, or (b) by engaging in repurchase agreements. For
purposes of this limitation, the term "loans" shall not include the purchase of
a portion of an issue of tax-exempt obligations or publicly distributed bonds,
debentures or other securities.
8. MARGIN PURCHASES. The Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not applicable
to short-term credit obtained by the Fund for the clearance of purchases and
sales or redemption of securities.
9. SHORT SALES AND OPTIONS. The Fund will not sell any securities short
or sell put and call options. This limitation is not applicable to the extent
that sales by the Fund of tax-exempt obligations with puts attached or sales by
the Fund of other securities in which the Fund may otherwise invest would be
considered to be sales of options.
10. OTHER INVESTMENT COMPANIES. The Fund will not invest more than
5% of its total assets in the securities of any investment company and will
investment company and will not invest more than 10% of its total assets in
securities of other investment companies.
- 21 -
<PAGE>
11. CONCENTRATION. The Fund will not invest more than 25% of its
total assets in a particular industry; this limitation is not applicable to
investments in tax-exempt obligations issued by governments or political
subdivisions of governments.
12. SENIOR SECURITIES. The Fund will not issue or sell any
class of senior security as defined by the Investment Company Act
of 1940 except to the extent that notes evidencing temporary
borrowings or the purchase of securities on a when-issued basis
might be deemed as such.
With respect to the percentages adopted by the Trust as maximum
limitations on the Funds' investment policies and restrictions, an excess above
the fixed percentage (except for the percentage limitations relative to the
borrowing of money) will not be a violation of the policy or restriction unless
the excess results immediately and directly from the acquisition of any security
or the action taken.
The Trust has never pledged, mortgaged or hypothecated the assets of
any Fund, and the Trust presently intends to continue this policy. The Trust has
never acquired, nor does it presently intend to acquire, securities issued by
any other investment company or investment trust. As long as the rules
promulgated under the California Corporate Securities Law prohibit a Fund from
acquiring or retaining securities of any open-end investment company, the Funds
will not acquire or retain such securities, unless the acquisition is part of a
merger or acquisition of assets or other reorganization. The Funds will not
purchase securities for which there are legal or contractual restrictions on
resale or enter into a repurchase agreement maturing in more than seven days if,
as a result thereof, more than 10% of the value of a Fund's net assets would be
invested in such securities. The statements of intention in this paragraph
reflect nonfundamental policies which may be changed by the Board of Trustees
without shareholder approval.
State Investment Limitations
----------------------------
The following investment limitations are imposed by the State of Ohio:
The Funds will not purchase or retain the securities of any issuer if the
officers, directors or trustees of the Trust or the Adviser owning more than
0.5% of the securities of each issuer together own beneficially more than 5% of
such securities. No Fund will purchase the securities of any issuer if such
purchase at the time thereof would cause more than 10% of the voting securities
of any issuer to be held by the Fund. (Municipal Obligations generally are not
voting securities.) No Fund will invest more than 10% of its total assets in the
securities of issuers which together with any predecessors have a record of less
than three years continuous operation or securities of issuers which are
restricted as to disposition.
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<PAGE>
INSURERS OF THE OHIO INSURED TAX-FREE FUND'S PORTFOLIO SECURITIES
- -----------------------------------------------------------------
In connection with its investments in insured long-term Ohio
Obligations, the Ohio Insured Tax-Free Fund purchases insurance from, or
obligations insured by, one of the following recognized insurers of municipal
obligations: Municipal Bond Investors Assurance Corporation ("MBIA"), AMBAC
Indemnity Corp. ("AMBAC"), Financial Guaranty Insurance Company ("FGIC"),
Capital Guaranty Insurance Company ("CG") or Financial Security Assurance Inc.
("FSA"). Each insurer is rated Aaa by Moody's and AAA by S&P and each insurer
maintains a statutory capital claims ratio well below the exposure limits set by
the Insurance Commissioner of New York (300:1 insurance risk exposure to every
dollar of statutory capital). While such insurance reduces the risk that
principal or interest will not be paid when due, it is not a protection against
market risks arising from other factors, such as changes in prevailing interest
rates. If the issuer defaults on payments of interest or principal, the trustee
and/or payment agent of the issuer will notify the insurer who will make payment
to the bondholders. There is no assurance that any insurance company will meet
its obligations.
MBIA has been the leader in the bond insurance market for the past
thirteen years and had a 45% share of the market in 1994. The company, as did
all insurers, struggled to maintain its market share in 1994 when the volume of
bond insurance decreased significantly. Several statistics from S&P and Moody's
suggest that in 1994 the quality of MBIA's business decreased, presumably in
order for the company to maintain its market share. MBIA's losses jumped to
$16.2 million in 1994, from a net recovery of $7.4 million in 1993. Net income
in 1994 was $225 million and return on average equity was 15.8%. MBIA is 90.9%
publicly owned, with its remaining shares owned by Aetna Life & Casualty
Company.
AMBAC is the oldest and second largest bond insurer with a 22.4% market
share in 1994. AMBAC's bottom line suffered in 1994 along with the bond
insurance industry as a whole, as net income fell to $116 million from $166
million in 1993. On the positive side, however, AMBAC's insured business
remained high quality and the company suffered the lowest claim losses of the
big three insurance companies at $4.2 million. AMBAC is entirely owned by public
shareholders.
FGIC is 99% owned by General Electric Capital Corporation and 1% owned
by Sumitomo Marine & Fire Insurance Company. Although the company's market share
decreased in 1994, its return on average equity held firm at 15.2%. Net income
fell slightly in 1994 to $179 million from $185 million. FGIC's margin of safety
continues to improve, as well as the quality of its insured portfolio.
- 23 -
<PAGE>
CG, the smallest of the insurers, is in its eighth year of operations
as a primary municipal bond insurer. While 82% of the company's shares are
publicly traded on the New York Stock Exchange, the remaining stock is held by
Constellation Investments Inc. (an affiliate of Baltimore Gas & Electric Co.),
SAFECO Corp. and The Sibag Finance Corp. (an affiliate of Siemens AG). CG's
insured portfolio has not had a payment default since the company began insuring
municipal bonds. In 1994, net income dropped to $13 million from $20 million but
its credit quality and market share improved. In August 1995, FSA announced that
it had agreed to purchase Capital Guaranty (pending shareholder approval) and
expects the purchase to be completed in December 1995.
FSA, the fourth largest bond insurer, holds a 6% share of the market.
While FSA has been historically plagued with losses, a restructuring which
occurred in December 1993 has resulted in much improved financial results for
1994. Net income climbed to $27 million from $14 million in 1993 on a statutory
basis. On a GAAP basis, FSA lost $125 million in 1993 while earning $60 million
in 1994. In terms of losses, FSA still experienced one of the highest loss
ratios in the industry at 28%, stemming from $17 million of claim payments in
1994. FSA is 24% publicly owned and 61% owned by U.S. West Capital Corp. The
company's remaining shares are held by Fund American and Tokio Marine and Fire
Insurance Co., Ltd.
TRUSTEES AND OFFICERS
- ---------------------
The following is a list of the Trustees and executive officers of the
Trust and their aggregate compensation from the Trust and the Midwest complex
(consisting of the Trust, Midwest Trust and Midwest Strategic Trust) for the
fiscal year ended June 30, 1995. Each Trustee who is an "interested person" of
the Trust, as defined by the Investment Company Act of 1940, is indicated by an
asterisk. Each of the Trustees is also a Trustee of Midwest Trust and Midwest
Strategic Trust.
<TABLE>
<C> <C> <C> <C> <C>
COMPENSATION COMPENSATION FROM
NAME AGE POSITION HELD FROM TRUST MIDWEST COMPLEX
- ---- --- ------------- ---------- ---------------
*Robert H. Leshner 56 President/Trustee $ 0 $ 0
+Dale P. Brown 48 Trustee 0 1,200
Gary W. Heldman 48 Trustee 2,200 4,400
+H. Jerome Lerner 57 Trustee 2,200 6,800
+Richard A. Lipsey 56 Trustee 0 2,400
Donald J. Rahilly 50 Trustee 0 1,800
Fred A. Rappoport 49 Trustee 0 2,400
Oscar P. Robertson 57 Trustee 1,950 3,900
Robert B. Sumerel 54 Trustee 0 600
John F. Splain 39 Secretary 0 0
Mark J. Seger 34 Treasurer 0 0
- 24 -
<PAGE>
* Mr. Leshner, as an affiliated person of Midwest Group Financial
Services, Inc., the Trust's principal underwriter and investment
adviser, is an "interested person" of the Trust within the meaning of
Section 2(a)(19) of the Investment Company Act of 1940.
+ Member of Audit Committee.
</TABLE>
The principal occupations of the Trustees and executive officers of the
Trust during the past five years are set forth below:
ROBERT H. LESHNER, 312 Walnut Street, Cincinnati, Ohio is
Chairman of the Board of Midwest Group Financial Services, Inc.
(the investment adviser and principal underwriter of the Trust),
MGF Service Corp. (a registered transfer agent) and Leshner
Financial, Inc. (a financial services company and parent of
Midwest Group Financial Services, Inc. and MGF Service Corp.).
He is President and a Trustee of Midwest Trust and Midwest
Strategic Trust, registered investment companies.
DALE P. BROWN, 36 East Seventh Street, Cincinnati, Ohio is
President and Chief Executive Officer of Sive/Young & Rubicam, an
advertising agency. She is also a director of The Ohio National
Life Insurance Company.
GARY W. HELDMAN, 183 Congress Run Road, Cincinnati, Ohio is
the former President of The Fechheimer Brothers Company, a
manufacturer of uniforms.
H. JEROME LERNER, 7149 Knoll Road, Cincinnati, Ohio is a principal of
HJL Enterprises and is Chairman of Crane Electronics, Inc., a manufacturer of
electronic connectors.
RICHARD A. LIPSEY, 11478 Rue Concord, Baton Rouge, Louisiana
is President and Chief Executive Officer of Lipsey's, Inc., a
national sporting goods distributor. He is also a Regional
Director of Premier Bank, N.A.
DONALD J. RAHILLY, 9933 Alliance Road, Cincinnati, Ohio is
Chairman of S. Rosenthal & Co., Inc., a printing company.
FRED A. RAPPOPORT, 830 Birchwood Drive, Los Angeles, California is
President and Chairman of The Fred Rappoport Company, a broadcasting and
entertainment production company.
OSCAR P. ROBERTSON, 4293 Muhlhauser Road, Fairfield, Ohio is President
of Orchem, Corp., a chemical specialties distributor, and Orpack Stone
Corporation, a corrugated box manufacturer.
ROBERT B. SUMEREL, 8675 Bridgewater Lane, Cincinnati, Ohio
is Chief Executive Officer of Bob Sumerel Tire Inc., a tire sales
and service company.
- 25 -
<PAGE>
JOHN F. SPLAIN, 312 Walnut Street, Cincinnati, Ohio is Secretary and
General Counsel of Leshner Financial, Inc., Midwest Group Financial Services,
Inc. and MGF Service Corp. He is also Secretary of Midwest Trust, Midwest
Strategic Trust, Brundage, Story and Rose Investment Trust, Leeb Personal
FinanceTM Investment Trust, Williamsburg Investment Trust, Markman MultiFund
Trust, The Tuscarora Investment Trust and PRAGMA Investment Trust and Assistant
Secretary of Schwartz Investment Trust and Fremont Mutual Funds, Inc., all of
which are registered investment companies.
MARK J. SEGER, C.P.A., 312 Walnut Street, Cincinnati, Ohio is Vice
President of Leshner Financial, Inc. and MGF Service Corp. He is also Treasurer
of Midwest Trust, Midwest Strategic Trust, Brundage, Story and Rose Investment
Trust, Leeb Personal FinanceTM Investment Trust, Williamsburg Investment Trust,
Markman MultiFund Trust and PRAGMA Investment Trust, Assistant Treasurer of
Schwartz Investment Trust and The Tuscarora Investment Trust and Assistant
Secretary of Fremont Mutual Funds, Inc.
THE INVESTMENT ADVISER AND UNDERWRITER
- --------------------------------------
Midwest Group Financial Services, Inc. (the "Adviser") is the Funds'
investment manager. The Adviser is a subsidiary of Leshner Financial, Inc.,
of which Robert H. Leshner is the controlling shareholder. Mr. Leshner
may be deemed to be an affiliate of the Adviser by reason of his indirect
ownership of its shares and his position as the prinicpal executive officer
of the Adviser. Mr. Leshner, by reason of such affiliation, may directly or
indirectly receive benefits from the advisory fees paid to the Adviser.
Under the terms of the investment advisory agreements between the Trust
and the Adviser, the Adviser manages the Funds' investments. Each Fund pays the
Adviser a fee computed and accrued daily and paid monthly at an annual rate of
.5% of its average daily net assets up to $100,000,000, .45% of such assets from
$100,000,000 to $200,000,000, .4% of such assets from $200,000,000 to
$300,000,000 and .375% of such assets in excess of $300,000,000. The total fees
paid by a Fund during the first and second halves of each fiscal year of the
Trust may not exceed the semiannual total of the daily fee accruals requested by
the Adviser during the applicable six month period.
For the fiscal years ended June 30, 1995, 1994 and 1993, the Tax-Free
Money Fund paid advisory fees of $144,305, $162,772 and $211,785, respectively.
For the fiscal years ended June 30, 1995, 1994 and 1993, the Tax-Free
Intermediate Term Fund accrued advisory fees of $472,968, $532,184 and $286,375,
respectively; however, the Adviser voluntarily waived $2,768 of such fees for
the fiscal year ended June 30, 1994 in order to reduce the
- 26 -
<PAGE>
operating expenses of the Fund. For the fiscal years ended June 30, 1995, 1994
and 1993, the Ohio Insured Tax-Free Fund accrued advisory fees of $394,825,
$419,429 and $313,742, respectively; however, the Adviser voluntarily waived
$14,000 of such fees and reimbursed the Fund for $5,077 of Class A expenses for
the fiscal year ended June 30, 1995 and voluntarily waived $427 of such fees for
the fiscal year ended June 30, 1994 in order to reduce the operating expenses of
the Fund. For the fiscal years ended June 30, 1995, 1994 and 1993, the Ohio
Tax-Free Money Fund paid advisory fees of $1,026,778, $1,016,929 and $1,071,311,
respectively. For the fiscal years ended June 30, 1995, 1994 and 1993, the
California Tax-Free Money Fund accrued advisory fees of $113,878, $126,852 and
$138,479, respectively; however, the Adviser voluntarily waived $34,500, $66,715
and $82,535 of such fees for the fiscal years ended June 30, 1995, 1994 and
1993, respectively, in order to reduce the operating expenses of the Fund.
The Funds are responsible for the payment of all expenses incurred in
connection with the organization, registration of shares and operations of the
Funds, including such extraordinary or non-recurring expenses as may arise, such
as litigation to which the Trust may be a party. The Funds may have an
obligation to indemnify the Trust's officers and Trustees with respect to such
litigation, except in instances of willful misfeasance, bad faith, gross
negligence or reckless disregard by such officers and Trustees in the
performance of their duties. The Adviser bears promotional expenses in
connection with the distribution of the Funds' shares to the extent that such
expenses are not assumed by the Funds under their plans of distribution (see
below). The compensation and expenses of any officer, Trustee or employee of the
Trust who is an officer, director, employee or stockholder of the Adviser are
paid by the Adviser, except that the compensation and expenses of the Chief
Financial Officer of the Trust are paid by the Trust regardless of the Chief
Financial Officer's relationship with the Adviser.
By their terms, the Funds' investment advisory agreements will remain
in force until January 30, 1997 and from year to year thereafter, subject to
annual approval by (a) the Board of Trustees or (b) a vote of the majority of a
Fund's outstanding voting securities; provided that in either event continuance
is also approved by a majority of the Trustees who are not interested persons of
the Trust, by a vote cast in person at a meeting called for the purpose of
voting such approval. The Funds' investment advisory agreements may be
terminated at any time, on sixty days' written notice, without the payment of
any penalty, by the Board of Trustees, by a vote of the majority of a Fund's
outstanding voting securities, or by the Adviser. The investment advisory
agreements automatically terminate in the event of their assignment, as defined
by the Investment Company Act of 1940 and the rules thereunder.
- 27 -
<PAGE>
The Adviser will reimburse the Funds to the extent that the expenses of
a Fund for any fiscal year exceed the applicable expense limitations imposed by
state securities administrators, as such limitations may be lowered or raised
from time to time. The most restrictive limitation is presently 2.5% of the
first $30 million of average daily net assets, 2% of the next $70 million of
average daily net assets and 1.5% of average daily net assets in excess of $100
million. If any such reimbursement is required, the payment of the advisory fee
at the end of any month will be reduced or postponed or, if necessary, a refund
will be made to the Funds at the end of such month. Certain expenses such as
brokerage commissions, if any, taxes, interest, extraordinary items and other
expenses subject to approval of state securities administrators are excluded
from such limitations. If the expenses of a Fund approach the applicable
limitation in any state, the Trust will consider the various actions that are
available to it, including suspension of sales to residents of that state.
The Adviser may use the name "Midwest," "Midwest Group" or any
derivation thereof in connection with any registered investment company or other
business enterprise with which it is or may become associated.
The Adviser is also the principal underwriter of the Funds and, as
such, the exclusive agent for distribution of shares of the Funds. The Adviser
is obligated to sell the shares on a best efforts basis only against purchase
orders for the shares. Shares of each Fund are offered to the public on a
continuous basis.
The Adviser currently allows concessions to dealers who sell shares of
the Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund. The
Adviser retains the entire sales load on all direct initial investments in the
Funds and on all investments in accounts with no designated dealer of record.
For the fiscal year ended June 30, 1995, the aggregate underwriting commissions
on sales of the Funds' shares were $305,296 of which the Adviser paid $274,170
to unaffiliated dealers in the selling network, earned (along with affiliates)
$13,410 as a broker-dealer in the selling network and retained $17,716 in
underwriting commissions. For the fiscal year ended June 30, 1994, the aggregate
underwriting commissions on sales of the Funds' shares were $758,606 of which
the Adviser paid $689,144 to unaffiliated dealers in the selling network, earned
(along with affiliates) $33,328 as a broker-dealer in the selling network and
retained $36,134 in underwriting commissions. For the fiscal year ended June 30,
1993, the aggregate underwriting commissions on sales of the Funds' shares were
$1,036,201 of which the Adviser paid $963,754 to unaffiliated dealers in the
selling network, earned (along with affiliates) $35,397 as a broker-dealer in
the selling network and retained $37,050 in underwriting commissions.
- 28 -
<PAGE>
The Funds may compensate dealers, including the Adviser and its
affiliates, based on the average balance of all accounts in the Funds for which
the dealer is designated as the party responsible for the account. See
"Distribution Plans" below.
DISTRIBUTION PLANS
- ------------------
CLASS A SHARES -- As stated in the Prospectus, the Funds have adopted a
plan of distribution (the "Class A Plan") pursuant to Rule 12b-1 under the
Investment Company Act of 1940 which permits each Fund to pay for expenses
incurred in the distribution and promotion of the Funds' shares, including but
not limited to, the printing of prospectuses, statements of additional
information and reports used for sales purposes, advertisements, expenses of
preparation and printing of sales literature, promotion, marketing and sales
expenses, and other distribution-related expenses, including any distribution
fees paid to securities dealers or other firms who have executed a distribution
or service agreement with the Adviser. The Class A Plan expressly limits payment
of the distribution expenses listed above in any fiscal year to a maximum of
.25% of the average daily net assets of the Tax-Free Money Fund, the Ohio
Tax-Free Money Fund and the California Tax-Free Money Fund and .25% of the
average daily net assets of the Class A shares of the Tax-Free Intermediate Term
Fund and the Ohio Insured Tax-Free Fund. Unreimbursed expenses will not be
carried over from year to year.
For the fiscal year ended June 30, 1995, the aggregate
distribution-related expenditures of the Tax-Free Money Fund ("MF"), the
Tax-Free Intermediate Term Fund ("ITF"), the Ohio Insured Tax-Free Fund ("OIF"),
the Ohio Tax-Free Money Fund ("OMF") and the California Tax-Free Money Fund
("CMF") under the Class A Plan were $24,169, $153,050, $9,476, $363,420 and
$1,749, respectively. Amounts were spent as follows:
<TABLE>
<C> <C> <C> <C> <C> <C>
MF ITF OIF OMF CMF
Printing and mailing
of prospectuses and
reports to prospective
shareholders. . . . . . . $ 2,169 $ 6,907 $9,476 $3,684 $1,749
Payments to broker-
dealers and others
for the sale or
retention of assets. . . . 22,000 146,143 --- 357,000 ---
Other promotional
expenses. . . . . . . . . --- --- --- 2,736 ---
------ -------- ------- -------- ------
$24,169 $153,050 $9,476 $363,420 $1,749
======= ======== ====== ======== ======
</TABLE>
CLASS C SHARES (TAX-FREE INTERMEDIATE TERM FUND AND OHIO INSURED TAX-FREE
FUND) -- The Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund
have also adopted a plan of
- 29 -
<PAGE>
distribution (the "Class C Plan") with respect to the Class C shares of such
Funds. The Class C Plan provides for two categories of payments. First, the
Class C Plan provides for the payment to the Adviser of an account maintenance
fee, in an amount equal to an annual rate of .25% of the average daily net
assets of the Class C shares, which may be paid to other dealers based on the
average value of Class C shares owned by clients of such dealers. In addition, a
Fund may pay up to an additional .75% per annum of the daily net assets of the
Class C shares for expenses incurred in the distribution and promotion of the
shares, including prospectus costs for prospective shareholders, costs of
responding to prospective shareholder inquiries, payments to brokers and dealers
for selling and assisting in the distribution of Class C shares, costs of
advertising and promotion and any other expenses related to the distribution of
the Class C shares. Unreimbursed expenditures will not be carried over from year
to year. The Funds may make payments to dealers and other persons in an amount
up to .75% per annum of the average value of Class C shares owned by their
clients, in addition to the .25% account maintenance fee described above.
For the fiscal year ended June 30, 1995, the aggregate distribution-related
expenditures of the Tax-Free Intermediate Term Fund ("ITF") and the Ohio Insured
Tax-Free Fund ("OIF") under the Class C Plan were $18,070 and $5,296,
respectively. Amounts were spent as follows:
ITF OIF
Printing and mailing of prospectuses
and reports to prospective shareholders $ 213 $ 219
Payments to broker-dealers and others
for the sale or retention of assets 17,857 5,077
------- ------
$18,070 $5,296
======= =======
GENERAL INFORMATION -- Agreements implementing the Plans (the
"Implementation Agreements"), including agreements with dealers wherein such
dealers agree for a fee to act as agents for the sale of the Funds' shares, are
in writing and have been approved by the Board of Trustees. All payments made
pursuant to the Plans are made in accordance with written agreements.
The continuance of the Plans and the Implementation Agreements must be
specifically approved at least annually by a vote of the Trust's Board of
Trustees and by a vote of the Trustees who are not interested persons of the
Trust and have no direct or indirect financial interest in the Plans or any
Implementation Agreement (the "Independent Trustees") at a meeting called for
the purpose of voting on such continuance. A Plan may be terminated at any time
by a vote of a majority of the Independent Trustees or by a vote of the holders
of a majority of the outstanding shares of a Fund or the applicable class of a
Fund. In the event a Plan is terminated in accordance with its
- 30 -
<PAGE>
terms, the affected Fund (or class) will not be required to make any payments
for expenses incurred by the Adviser after the termination date. Each
Implementation Agreement terminates automatically in the event of its assignment
and may be terminated at any time by a vote of a majority of the Independent
Trustees or by a vote of the holders of a majority of the outstanding shares of
a Fund (or the applicable class) on not more than 60 days' written notice to any
other party to the Implementation Agreement. The Plans may not be amended to
increase materially the amount to be spent for distribution without shareholder
approval. All material amendments to the Plans must be approved by a vote of the
Trust's Board of Trustees and by a vote of the Independent Trustees.
In approving the Plans, the Trustees determined, in the exercise of
their business judgment and in light of their fiduciary duties as Trustees, that
there is a reasonable likelihood that the Plans will benefit the Funds and their
shareholders. The Board of Trustees believes that expenditure of the Funds'
assets for distribution expenses under the Plans should assist in the growth of
the Funds which will benefit the Funds and their shareholders through increased
economies of scale, greater investment flexibility, greater portfolio
diversification and less chance of disruption of planned investment strategies.
The Plans will be renewed only if the Trustees make a similar determination for
each subsequent year of the Plans. There can be no assurance that the benefits
anticipated from the expenditure of the Funds' assets for distribution will be
realized. While the Plans are in effect, all amounts spent by the Funds pursuant
to the Plans and the purposes for which such expenditures were made must be
reported quarterly to the Board of Trustees for its review. Distribution
expenses attributable to the sale of more than one class of shares of a Fund
will be allocated at least annually to each class of shares based upon the ratio
in which the sales of each class of shares bears to the sales of all the shares
of such Fund. In addition, the selection and nomination of those Trustees who
are not interested persons of the Trust are committed to the discretion of the
Independent Trustees during such period.
By reason of his indirect ownership of shares of the Adviser, Robert H.
Leshner may be deemed to have a financial interest in the operation of the Plans
and the Implementation Agreements.
SECURITIES TRANSACTIONS
- -----------------------
Decisions to buy and sell securities for the Funds and the placing of
the Funds' securities transactions and negotiation of commission rates where
applicable are made by the Adviser and are subject to review by the Board of
Trustees of the Trust. In the
- 31 -
<PAGE>
purchase and sale of portfolio securities, the Adviser seeks best execution for
the Funds, taking into account such factors as price (including the applicable
brokerage commission or dealer spread), the execution capability, financial
responsibility and responsiveness of the broker or dealer and the brokerage and
research services provided by the broker or dealer. The Adviser generally seeks
favorable prices and commission rates that are reasonable in relation to the
benefits received.
Generally, the Funds attempt to deal directly with the dealers who make
a market in the securities involved unless better prices and execution are
available elsewhere. Such dealers usually act as principals for their own
account. On occasion, portfolio securities for the Funds may be purchased
directly from the issuer. Because the portfolio securities of the Funds are
generally traded on a net basis and transactions in such securities do not
normally involve brokerage commissions, the cost of portfolio securities
transactions of the Funds will consist primarily of dealer or underwriter
spreads. No brokerage commissions have been paid by the Funds during the last
three fiscal years.
The Adviser is specifically authorized to select brokers who also
provide brokerage and research services to the Funds and/or other accounts over
which the Adviser exercises investment discretion and to pay such brokers a
commission in excess of the commission another broker would charge if the
Adviser determines in good faith that the commission is reasonable in relation
to the value of the brokerage and research services provided. The determination
may be viewed in terms of a particular transaction or the Adviser's overall
responsibilities with respect to the Funds and to accounts over which it
exercises investment discretion.
Research services include securities and economic analyses, reports on
issuers' financial conditions and future business prospects, newsletters and
opinions relating to interest trends, general advice on the relative merits of
possible investment securities for the Funds and statistical services and
information with respect to the availability of securities or purchasers or
sellers of securities. Although this information is useful to the Funds and the
Adviser, it is not possible to place a dollar value on it. Research services
furnished by brokers through whom the Funds effect securities transactions may
be used by the Adviser in servicing all of its accounts and not all such
services may be used by the Adviser in connection with the Funds.
The Funds have no obligation to deal with any broker or dealer in the
execution of securities transactions. However, the Adviser and other affiliates
of the Trust or the Adviser may effect securities transactions which are
executed on a national securities exchange or transactions in the
over-the-counter
- 32 -
<PAGE>
market conducted on an agency basis. No Fund will effect any brokerage
transactions in its portfolio securities with the Adviser if such transactions
would be unfair or unreasonable to its shareholders. Over-the-counter
transactions will be placed either directly with principal market makers or with
broker-dealers. Although the Funds do not anticipate any ongoing arrangements
with other brokerage firms, brokerage business may be transacted from time to
time with other firms. Neither the Adviser nor affiliates of the Trust or the
Adviser will receive reciprocal brokerage business as a result of the brokerage
business transacted by the Funds with other brokers.
CODE OF ETHICS. The Trust and the Adviser have each adopted a Code of Ethics
under Rule 17j-1 of the Investment Company Act of 1940. The Code significantly
restricts the personal investing activities of all employees of the Adviser and,
as described below, imposes additional, more onerous, restrictions on investment
personnel of the Adviser. The Code requires that all employees of the Adviser
preclear any personal securities investment (with limited exceptions, such as
U.S. Government obligations). The preclearance requirement and associated
procedures are designed to identify any substantive prohibition or limitation
applicable to the proposed investment. In addition, no employee may purchase or
sell any security which at the time is being purchased or sold (as the case may
be), or to the knowledge of the employee is being considered for purchase or
sale, by any Fund. The substantive restrictions applicable to investment
personnel of the Adviser include a ban on acquiring any securities in an initial
public offering and a prohibition from profiting on short-term trading in
securities. Furthermore, the Code provides for trading "blackout periods" which
prohibit trading by investment personnel of the Adviser within periods of
trading by the Funds in the same (or equivalent) security.
PORTFOLIO TURNOVER
- ------------------
The Adviser intends to hold the portfolio securities of the Tax-Free
Money Fund, the Ohio Tax-Free Money Fund and the California Tax-Free Money Fund
to maturity and to limit portfolio turnover to the extent possible.
Nevertheless, changes in a Fund's portfolio will be made promptly when
determined to be advisable by reason of developments not foreseen at the time of
the original investment decision, and usually without reference to the length of
time a security has been held.
The Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund
do not intend to purchase securities for short term trading; however, a security
may be sold in anticipation of a market decline, or purchased in anticipation of
a market rise and later sold. Securities will be purchased and sold in response
to the Adviser's evaluation of an issuer's ability to meet its debt obligations
in the future. A security may be sold and another purchased when, in the opinion
of the Adviser, a favorable yield spread exists between specific issues or
different market sectors.
- 33 -
<PAGE>
A Fund's portfolio turnover rate is calculated by dividing the lesser
of purchases or sales of portfolio securities for the fiscal year by the monthly
average of the value of the portfolio securities owned by the Fund during the
fiscal year. High portfolio turnover involves correspondingly greater brokerage
commissions and other transaction costs, which will be borne directly by the
Funds. The Adviser anticipates that the portfolio turnover rate for each Fund
normally will not exceed 100%. A 100% turnover rate would occur if all of a
Fund's portfolio securities were replaced once within a one year period.
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE
- ----------------------------------------------------
The share price (net asset value) of the shares of the Tax- Free Money
Fund, the Ohio Tax-Free Money Fund and the California Tax-Free Money Fund is
determined as of 12:00 noon and 4:00 p.m., Eastern time, on each day the Trust
is open for business. The share price (net asset value) and the public offering
price (net asset value plus applicable sales load) of the shares of the Tax-
Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund are determined as
of the close of the regular session of trading on the New York Stock Exchange
(currently 4:00 p.m., Eastern time), on each day the Trust is open for business.
The Trust is open for business on every day except Saturdays, Sundays and the
following holidays: New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. The Trust may also be
open for business on other days in which there is sufficient trading in a Fund's
portfolio securities that its net asset value might be materially affected. For
a description of the methods used to determine the share price and the public
offering price, see "Calculation of Share Price and Public Offering Price" in
the Prospectus.
Pursuant to Rule 2a-7 promulgated under the Investment Company Act of
1940, the Tax-Free Money Fund, the Ohio Tax-Free Money Fund and the California
Tax-Free Money Fund each value their portfolio securities on an amortized cost
basis. The use of the amortized cost method of valuation involves valuing an
instrument at its cost 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. Under the amortized cost
method of valuation, neither the amount of daily income nor the net asset value
of the Tax-Free Money Fund, the Ohio Tax-Free Money Fund or the California
Tax-Free Money Fund is affected by any unrealized appreciation or depreciation
of the portfolio. The Board of Trustees has determined in good faith that
utilization of amortized cost is appropriate and represents the fair value of
the portfolio securities of the Tax-Free Money Fund, the Ohio Tax-Free Money
Fund and the California Tax-Free Money Fund.
- 34 -
<PAGE>
Pursuant to Rule 2a-7, the Tax-Free Money Fund, the Ohio Tax-Free Money
Fund and the California Tax-Free Money Fund each maintain a dollar-weighted
average portfolio maturity of 90 days or less, purchase only securities having
remaining maturities of thirteen months or less and invest only in United States
dollar-denominated securities determined by the Board of Trustees to be of high
quality and to present minimal credit risks. If a security ceases to be an
eligible security, or if the Board of Trustees believes such security no longer
presents minimal credit risks, the Trustees will cause the Fund to dispose of
the security as soon as possible.
The maturity of a floating or variable rate instrument subject to a
demand feature held by the Tax-Free Money Fund, the Ohio Tax-Free Money Fund or
the California Tax-Free Money Fund will be determined as follows, provided that
the conditions set forth below are met. The maturity of a floating rate
instrument with a demand feature (or a participation interest in such a floating
rate instrument) will be deemed to be the period of time remaining until the
principal amount owed can be recovered through demand. The maturity of a
variable rate instrument with a demand feature (or a participation interest in
such a variable rate instrument) will be deemed to be the longer of the period
remaining until the next readjustment of the interest rate or the period
remaining until the principal amount owed can be recovered through demand.
The demand feature of each such instrument must entitle a Fund to
receive the principal amount of the instrument plus accrued interest, if any, at
the time of exercise and must be exercisable either (1) at any time upon no more
than thirty days' notice or (2) at specified intervals not exceeding thirteen
months and upon no more than thirty days' notice. Furthermore, the maturity of
any such instrument may only be determined as set forth above as long as the
instrument continues to receive a short-term rating in one of the two highest
categories from any two nationally recognized statistical rating organizations
("NRSROs") (or from any one NRSRO if the security is rated by only that NRSRO)
or, if not rated, is determined to be of comparable quality by the Adviser,
under the direction of the Board of Trustees. However, an instrument having a
demand feature other than an "unconditional" demand feature must have both a
short-term and a long-term rating in one of the two highest categories from any
two NRSROs (or from any one NRSRO if the security is rated by only that NRSRO)
or, if not rated, to have been determined to be of comparable quality by the
Adviser, under the direction of the Board of Trustees. An "unconditional" demand
feature is one that by its terms would be readily exercisable in the event of a
default on the underlying instrument.
- 35 -
<PAGE>
The Board of Trustees has established procedures designed to stabilize,
to the extent reasonably possible, the price per share of the Tax-Free Money
Fund, the Ohio Tax-Free Money Fund and the California Tax-Free Money Fund as
computed for the purpose of sales and redemptions at $1 per share. The
procedures include review of each Fund's portfolio holdings by the Board of
Trustees to determine whether a Fund's net asset value calculated by using
available market quotations deviates more than one-half of one percent from $1
per share and, if so, whether such deviation may result in material dilution or
is otherwise unfair to existing shareholders. In the event the Board of Trustees
determines that such a deviation exists, it will take corrective action as it
regards necessary and appropriate, including the sale of portfolio securities
prior to maturity to realize capital gains or losses or to shorten average
portfolio maturities; withholding dividends; redemptions of shares in kind; or
establishing a net asset value per share by using available market quotations.
The Board of Trustees has also established procedures designed to ensure that
each Fund complies with the quality requirements of Rule 2a-7.
While the amortized cost method provides certainty in valuation, it may
result in periods during which the value of an instrument, as determined by
amortized cost, is higher or lower than the price the Tax-Free Money Fund, the
Ohio Tax-Free Money Fund or the California Tax-Free Money Fund would receive if
it sold the instrument. During periods of declining interest rates, the daily
yield on shares of each Fund may tend to be higher than a like computation made
by a fund with identical investments utilizing a method of valuation based upon
market prices and estimates of market prices for all of its portfolio
securities. Thus, if the use of amortized cost by a Fund resulted in a lower
aggregate portfolio value on a particular day, a prospective investor in the
Fund would be able to obtain a somewhat higher yield than would result from
investment in a fund utilizing solely market values and existing investors would
receive less investment income. The converse would apply in a period of rising
interest rates.
Tax-exempt portfolio securities are valued for the Tax-Free
Intermediate Term Fund and the Ohio Insured Tax-Free Fund by an outside
independent pricing service approved by the Board of Trustees. The service
generally utilizes a computerized grid matrix of tax-exempt securities and
evaluations by its staff to determine what it believes is the fair value of the
portfolio securities. The Board of Trustees believes that timely and reliable
market quotations are generally not readily available to the Funds for purposes
of valuing tax-exempt securities and that valuations supplied by the pricing
service are more likely to approximate the fair value of the tax-exempt
securities.
- 36 -
<PAGE>
If, in the Adviser's opinion, the valuation provided by the pricing
service ignores certain market conditions affecting the value of a security, the
Adviser will use (consistent with procedures established by the Board of
Trustees) such other valuation as it considers to represent fair value.
Valuations, market quotations and market equivalents provided to the Tax-Free
Intermediate Term Fund and the Ohio Insured Tax-Free Fund by pricing services
will only be used when such use and the methods employed have been approved by
the Board of Trustees. Valuations provided by pricing services or the Adviser
may be determined without exclusive reliance on matrixes and may take into
consideration appropriate factors such as bid prices, quoted prices,
institution-size trading in similar groups of securities, yield, quality, coupon
rates, maturity, type of issue, trading characteristics and other market data.
Since it is difficult to evaluate the likelihood of exercise or the
potential benefit of a put attached to an obligation, it is expected that such
puts will be determined to have a value of zero, regardless of whether any
direct or indirect consideration was paid.
The Board of Trustees has adopted the policy for the Tax- Free
Intermediate Term Fund and the Ohio Insured Tax-Free Fund, which may be changed
without shareholder approval, that the maturity of fixed rate or floating and
variable rate instruments with demand features will be determined as follows.
The maturity of each such fixed rate or floating rate instrument will be deemed
to be the period of time remaining until the principal amount owed can be
recovered through demand. The maturity of each such variable rate instrument
will be deemed to be the longer of the period remaining until the next
readjustment of the interest rate or the period remaining until the principal
amount owed can be recovered through demand.
Taxable securities, if any, held by the Tax-Free Intermediate Term Fund
and the Ohio Insured Tax-Free Fund for which market quotations are readily
available are valued at their most recent bid prices as obtained from one or
more of the major market makers for such securities. Securities (and other
assets) for which market quotations are not readily available are valued at
their fair value as determined in good faith in accordance with consistently
applied procedures established by and under the general supervision of the Board
of Trustees.
OTHER PURCHASE INFORMATION
- --------------------------
The Prospectus describes generally how to purchase shares of the Funds.
Additional information with respect to certain types of purchases of Class A
shares of the Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund
is set forth below.
- 37 -
<PAGE>
RIGHT OF ACCUMULATION. A "purchaser" (as defined in the Prospectus) of
Class A shares of the Tax-Free Intermediate Term Fund or the Ohio Insured
Tax-Free Fund has the right to combine the cost or current net asset value
(whichever is higher) of his existing shares of the load funds distributed by
the Adviser with the amount of his current purchases in order to take advantage
of the reduced sales loads set forth in the tables in the Prospectus. The
purchaser or his dealer must notify MGF Service Corp. that an investment
qualifies for a reduced sales load. The reduced load will be granted upon
confirmation of the purchaser's holdings by MGF Service Corp.
LETTER OF INTENT. The reduced sales loads set forth in the tables in
the Prospectus may also be available to any "purchaser" (as defined in the
Prospectus) of Class A shares of the Tax-Free Intermediate Term Fund or the Ohio
Insured Tax-Free Fund who submits a Letter of Intent to MGF Service Corp. The
Letter must state an intention to invest within a thirteen month period in any
load fund distributed by the Adviser a specified amount which, if made at one
time, would qualify for a reduced sales load. A Letter of Intent may be
submitted with a purchase at the beginning of the thirteen month period or
within ninety days of the first purchase under the Letter of Intent. Upon
acceptance of this Letter, the purchaser becomes eligible for the reduced sales
load applicable to the level of investment covered by such Letter of Intent as
if the entire amount were invested in a single transaction.
The Letter of Intent is not a binding obligation on the purchaser to
purchase, or the Trust to sell, the full amount indicated. During the term of a
Letter of Intent, shares representing 5% of the intended purchase will be held
in escrow. These shares will be released upon the completion of the intended
investment. If the Letter of Intent is not completed during the thirteen month
period, the applicable sales load will be adjusted by the redemption of
sufficient shares held in escrow, depending upon the amount actually purchased
during the period. The minimum initial investment under a Letter of Intent is
$10,000.
The purchaser or his dealer must notify MGF Service Corp. that an
investment is being made pursuant to an executed Letter of Intent.
OTHER INFORMATION. The Trust does not impose a front-end sales load or
imposes a reduced sales load in connection with purchases of Class A shares of
the Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund made
under the reinvestment privilege or the purchases described in the "Reduced
Sales Load," "Purchases at Net Asset Value" or "Exchange Privilege" sections in
the Prospectus because such purchases require minimal sales effort by the
Adviser. Purchases described in the "Purchases at Net Asset Value" section may
be made for investment only, and the shares may not be resold except through
redemption by or on behalf of the Trust.
- 38 -
<PAGE>
TAXES
- -----
The Prospectus describes generally the tax treatment of distributions
by the Funds. This section of the Statement of Additional Information includes
additional information concerning federal and state taxes.
Each Fund has qualified and intends to qualify annually for the special
tax treatment afforded a "regulated investment company" under Subchapter M of
the Internal Revenue Code so that it does not pay federal taxes on income and
capital gains distributed to shareholders. To so qualify a Fund must, among
other things, (i) derive at least 90% of its gross income in each taxable year
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock, securities or foreign currency, or
certain other income (including but not limited to gains from options, futures
and forward contracts) derived with respect to its business of investing in
stock, securities or currencies; (ii) derive less than 30% of its gross income
in each taxable year from the sale or other disposition of the following assets
held for less than three months: (a) stock or securities, (b) options, futures
or forward contracts not directly related to its principal business of investing
in stock or securities; and (iii) diversify its holdings so that at the end of
each quarter of its taxable year the following two conditions are met: (a) at
least 50% of the value of the Fund's total assets is represented by cash, U.S.
Government securities, securities of other regulated investment companies and
other securities (for this purpose such other securities will qualify only if
the Fund's investment is limited in respect to any issuer to an amount not
greater than 5% of the Fund's assets and 10% of the outstanding voting
securities of such issuer) and (b) not more than 25% of the value of the Fund's
assets is invested in securities of any one issuer (other than U.S. Government
securities or securities of other regulated investment companies).
Each Fund intends to invest in sufficient obligations so that it will
qualify to pay, for federal income tax purposes, "exempt-interest dividends" (as
defined in the Internal Revenue Code) to shareholders. A Fund's dividends
payable from net tax-exempt interest earned from tax-exempt obligations will
qualify as exempt-interest dividends for federal income tax purposes if, at the
close of each quarter of the taxable year of the Fund, at least 50% of the value
of its total assets consists of tax-exempt obligations. The percentage of income
that is exempt from federal income taxes is applied uniformly to all
distributions made during each calendar year. This percentage may differ from
the actual tax-exempt percentage during any particular month.
Each Fund intends to invest primarily in obligations with interest
income exempt from federal income taxes. To the extent
- 39 -
<PAGE>
possible, the Ohio Insured Tax-Free Fund and the Ohio Tax-Free Money Fund intend
to invest primarily in obligations the income from which is exempt from Ohio
personal income tax and the California Tax-Free Money Fund intends to invest
primarily in obligations the income from which is exempt from California income
tax. Distributions from net investment income and net realized capital gains,
including exempt-interest dividends, may be subject to state taxes in other
states.
Under the Internal Revenue Code, interest on indebtedness incurred or
continued to purchase or carry shares of investment companies paying
exempt-interest dividends, such as the Funds, will not be deductible by the
investor for federal income tax purposes. Shareholders should consult their tax
advisors as to the application of these provisions.
Shareholders receiving Social Security benefits may be subject to
federal income tax (and perhaps state personal income tax) on a portion of those
benefits as a result of receiving tax-exempt income (including exempt-interest
dividends distributed by the Funds). In general, the tax will apply to such
benefits only in cases where the recipient's provisional income, consisting of
adjusted gross income, tax-exempt interest income and 50% of any Social Security
benefits, exceeds a base amount ($25,000 for single individuals and $32,000 for
individuals filing a joint return). In such cases, the tax will be imposed on
the lesser of 50% of the recipient's Social Security benefits or the excess of
provisional income over the base amount. A second tier of inclusion rules for
high-income social security recipients has been added for tax years beginning
after 1993. These new rules apply to taxpayers who have provisional income over
$44,000 (married filing jointly) or $34,000 (single). For these taxpayers, the
amount of benefit subject to tax is the lesser of (1) 85% of the social security
benefit received or (2) 85% of the excess of the taxpayer's provisional income
over $44,000 (married filing jointly) or $34,000 (single) plus the smaller of
(a) $6,000 (married filing jointly) or $4,500 (single) or (b) the amount taxable
under the 50% inclusion rules described above. Shareholders receiving Social
Security benefits may wish to consult their tax advisors.
All or a portion of the sales load incurred in purchasing Class A
shares of the Tax-Free Intermediate Term Fund or shares of the Ohio Insured
Tax-Free Fund will not be included in the federal tax basis of any of such
shares sold within 90 days of their purchase (for the purpose of determining
gain or loss upon the sale of such shares) if the sales proceeds are reinvested
in any other fund of the Midwest Group of Funds and a sales load that would
otherwise apply to the reinvestment is reduced or eliminated because the sales
proceeds were reinvested within the Midwest Group of Funds. The portion of the
sales load so excluded from the tax basis of the shares sold will equal the
- 40 -
<PAGE>
amount by which the sales load that would otherwise be applicable upon the
reinvestment is reduced. Any portion of such sales load excluded from the tax
basis of the shares sold will be added to the tax basis of the shares acquired
in the reinvestment.
A Fund's net realized capital gains from securities transactions will
be distributed only after reducing such gains by the amount of any available
capital loss carryforwards. Capital losses may be carried forward to offset any
capital gains for eight years, after which any undeducted capital loss remaining
is lost as a deduction. As of July 1, 1995, the Tax- Free Money Fund, the
Tax-Free Intermediate Term Fund, the Ohio Insured Tax-Free Fund and the
California Tax-Free Money Fund had capital loss carryforwards for federal income
tax purposes of $774, $2,039,355, $638,357 and $1,696, respectively, none of
which expire until at least June 30, 1999.
A federal excise tax at the rate of 4% will be imposed on the excess,
if any, of a Fund's "required distribution" over actual distributions in any
calendar year. Generally, the "required distribution" is 98% of a Fund's
ordinary income for the calendar year plus 98% of its net capital gains
recognized during the one year period ending on October 31 of the calendar year
plus undistributed amounts from prior years. The Funds intend to make
distributions sufficient to avoid imposition of the excise tax.
The Trust is required to withhold and remit to the U.S. Treasury a
portion (31%) of dividend income on any account unless the shareholder provides
a taxpayer identification number and certifies that such number is correct and
that the shareholder is not subject to backup withholding.
REDEMPTION IN KIND
- ------------------
Under unusual circumstances, when the Board of Trustees deems it in the
best interests of a Fund's shareholders, the Fund may make payment for shares
repurchased or redeemed in whole or in part in securities of the Fund taken at
current value. If any such redemption in kind is to be made, each Fund intends
to make an election pursuant to Rule 18f-1 under the Investment Company Act of
1940. This election will require the Funds to redeem shares solely in cash up to
the lesser of $250,000 or 1% of the net asset value of each Fund during any 90
day period for any one shareholder. Should payment be made in securities, the
redeeming shareholder will generally incur brokerage costs in converting such
securities to cash. Portfolio securities which are issued in an in-kind
redemption will be readily marketable.
HISTORICAL PERFORMANCE INFORMATION
- ----------------------------------
Yield quotations on investments in the Tax-Free Money Fund,
the Ohio Tax-Free Money Fund and the California Tax-Free Money
- 41 -
<PAGE>
Fund are provided on both a current and an effective (compounded) basis. Current
yields are calculated by determining the net change in the value of a
hypothetical account for a seven calendar day period (base period) with a
beginning balance of one share, dividing by the value of the account at the
beginning of the base period to obtain the base period return, multiplying the
result by (365/7) and carrying the resulting yield figure to the nearest
hundredth of one percent. Effective yields reflect daily compounding and are
calculated as follows: Effective yield = (base period return + 1)365/7 - 1. For
purposes of these calculations, no effect is given to realized or unrealized
gains or losses (the Tax-Free Money Fund, the Ohio Tax-Free Money Fund and the
California Tax-Free Money Fund do not normally recognize unrealized gains and
losses under the amortized cost valuation method). The Tax-Free Money Fund's
current and effective yields for the seven days ended June 30, 1995 were 3.72%
and 3.79%, respectively. The Ohio Tax-Free Money Fund's current and effective
yields for the seven days ended June 30, 1995 were 3.52% and 3.58%,
respectively. The California Tax-Free Money Fund's current and effective yields
for the seven days ended June 30, 1995 were 3.32% and 3.37%, respectively. The
Tax-Free Money Fund, the Ohio Tax-Free Money Fund and the California Tax-Free
Money Fund may also quote a tax-equivalent current or effective yield, computed
by dividing that portion of a Fund's current or effective yield which is
tax-exempt by one minus a stated income tax rate and adding the product to that
portion, if any, of the yield that is not tax-exempt. Based on the highest
marginal federal income tax rate for individuals (39.6%), the Tax-Free Money
Fund's tax-equivalent current and effective yields for the seven days ended June
30, 1995 were 6.16% and 6.27%, respectively. Based on the highest combined
marginal federal and Ohio income tax rate for individuals (44.13%), the Ohio
Tax-Free Money Fund's tax-equivalent current and effective yields for the seven
days ended June 30, 1995 were 6.30% and 6.41%, respectively. Based on the
highest combined marginal federal and California income tax rate for individuals
(46.24%), the California Tax-Free Money Fund's tax-equivalent current and
effective yields for the seven days ended June 30, 1995 were 6.18% and 6.27%,
respectively.
From time to time, the Tax-Free Intermediate Term Fund and the Ohio
Insured Tax-Free Fund may advertise average annual total return. Average annual
total return quotations will be computed by finding the average annual
compounded rates of return over 1, 5 and 10 year periods that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
- 42 -
<PAGE>
P (1 + T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5 and 10 year periods
at the end of the 1, 5 or 10 year periods (or fractional
portion thereof)
The calculation of average annual total return assumes the reinvestment of all
dividends and distributions and the deduction of the current maximum sales load
from the initial $1,000 payment. If a Fund has been in existence less than one,
five or ten years, the time period since the date of the initial public offering
of shares will be substituted for the periods stated. The average annual total
returns of the Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free
Fund for the periods ended June 30, 1995 are as follows:
Tax-Free Intermediate Term Fund (Class A)
- -----------------------------------------
1 year 4.23%
5 years 6.52%
10 years 6.00%
Tax-Free Intermediate Term Fund (Class C)
- -----------------------------------------
1 year 5.82%
Since inception (February 1, 1994) 1.57%
Ohio Insured Tax-Free Fund (Class A)
- ------------------------------------
1 year 3.44%
5 years 6.85%
10 years 7.79%
Ohio Insured Tax-Free Fund (Class C)
- ------------------------------------
1 year 7.31%
Since inception (November 1, 1993) 1.79%
The Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund
may also advertise total return (a "nonstandardized quotation") which is
calculated differently from average annual total return. A nonstandardized
quotation of total return may be a cumulative return which measures the
percentage change in the value of an account between the beginning and end of a
period, assuming no activity in the account other than reinvestment of dividends
and capital gains distributions. This computation does not include the effect of
the applicable sales load which, if included, would reduce total return. The
total returns of the Tax-Free Intermediate Term Fund and the Ohio Insured
Tax-Free Fund as calculated in this manner for each of the last ten fiscal years
(or since inception) are as follows:
- 43 -
<PAGE>
Ohio Ohio
Tax-Free Tax-Free Insured Insured
Intermediate Intermediate Tax-Free Tax-Free
Term Fund Term Fund Fund Fund
Class A Class C Class A Class C
---------- ---------- --------- ---------
Period Ended
June 30, 1986 6.25% 15.12%
June 30, 1987 5.24% 6.73%
June 30, 1988 3.88% 6.80%
June 30, 1989 5.76% 9.75%
June 30, 1990 6.35% 5.53%
June 30, 1991 7.38% 7.98%
June 30, 1992 8.78% 11.55%
June 30, 1993 10.75% 12.24%
June 30, 1994 1.70% -3.40%(1) -0.41% -4.01%(2)
June 30, 1995 6.36% 5.82% 7.75% 7.31%
(1) From date of initial public offering on February 1, 1994.
(2) From date of initial public offering on November 1, 1993.
A nonstandardized quotation may also indicate average annual compounded rates of
return without including the effect of the applicable sales load or over periods
other than those specified for average annual total return. The average annual
compounded rates of return for the Tax-Free Intermediate Term Fund and the Ohio
Insured Tax-Free Fund (excluding sales loads) for the periods ended June 30,
1995 are as follows:
Tax-Free Intermediate Term Fund (Class A)
- -----------------------------------------
1 Year 6.36%
3 Years 6.20%
5 Years 6.95%
10 Years 6.22%
Since inception (September 10, 1981) 6.63%
Tax-Free Intermediate Term Fund (Class C)
- -----------------------------------------
1 Year 5.82%
Since inception (February 1, 1994) 1.57%
Ohio Insured Tax-Free Fund (Class A)
- ------------------------------------
1 Year 7.75%
3 Years 6.39%
5 Years 7.72%
10 Years 8.23%
Since inception (April 1, 1985) 8.46%
Ohio Insured Tax-Free Fund (Class C)
- ------------------------------------
1 Year 7.31%
Since inception (November 1, 1993) 1.79%
A nonstandardized quotation of total return will always be accompanied by the
Fund's average annual total return as described above.
- 44 -
<PAGE>
From time to time, the Tax-Free Intermediate Term Fund and the Ohio
Insured Tax-Free Fund may advertise their yield and tax- equivalent yield. A
yield quotation is based on a 30-day (or one month) period and 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/cd + 1)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
d = the maximum offering price per share on the last day of the
period
Generally, interest earned (for the purpose of "a" above) on debt obligations is
computed by reference to the yield to maturity of each obligation held based on
the market value of the obligation (including actual accrued interest) at the
close of business on the last business day prior to the start of the 30-day (or
one month) period for which yield is being calculated, or, with respect to
obligations purchased during the month, the purchase price (plus actual accrued
interest). The yields of Class A and Class C shares of the Tax-Free Intermediate
Term Fund for June 1995 were 4.51% and 4.10%, respectively. The yields of Class
A and Class C shares of the Ohio Insured Tax-Free Fund for June 1995 were 5.10%
and 4.80%, respectively. Tax-equivalent yield is computed by dividing that
portion of a Fund's yield which is tax-exempt by one minus a stated income tax
rate and adding the product to that portion, if any, of the Fund's yield that is
not tax-exempt. Based on the highest marginal federal income tax rate for
individuals (39.6%), the tax-equivalent yields of Class A and Class C shares of
the Tax-Free Intermediate Term Fund for June 1995 were 7.47% and 6.79%,
respectively. Based on the highest combined marginal federal and Ohio income tax
rate for individuals (44.13%), the tax-equivalent yields of Class A and Class C
shares of the Ohio Insured Tax-Free Fund for June 1995 were 9.13% and 8.59%,
respectively.
The performance quotations described above are based on historical
earnings and are not intended to indicate future performance. Average annual
total return and yield are computed separately for Class A and Class C shares of
the Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund. The
yield of Class A shares is expected to be higher than the yield of Class C
shares due to the higher distribution fees imposed on Class C shares.
To help investors better evaluate how an investment in a Fund might
satisfy their investment objective, advertisements regarding each Fund may
discuss various measures of Fund
- 45 -
<PAGE>
performance, including current performance ratings and/or rankings appearing in
financial magazines, newspapers and publications which track mutual fund
performance. Advertisements may also compare performance (using the calculation
methods set forth in the Prospectus) to performance as reported by other
investments, indices and averages. When advertising current ratings or rankings,
the Funds may use the following publications or indices to discuss or compare
Fund performance:
Donoghue's Money Fund Report provides a comparative analysis of
performance for various categories of money market funds. The Tax-Free Money
Fund may compare performance rankings with money market funds appearing in the
Tax Free Stockbroker & General Purpose Funds category. In addition, the Ohio
Tax-Free Money Fund and the California Tax-Free Money Fund may compare
performance rankings with money market funds appearing in the Tax Free State
Specific Stockbroker & General Purpose Funds categories. Donoghue's Bond Fund
Report provides a comparative analysis of performance for various categories of
bond funds. The Tax-Free Intermediate Term Fund may compare performance rankings
with bond funds appearing in the Municipal Intermediate Term Funds category. The
Ohio Insured Tax-Free Fund may compare performance rankings with bond funds
appearing in the Ohio Long- Term Municipal Funds category.
Lipper Fixed Income Fund Performance Analysis measures total return and
average current yield for the mutual fund industry and ranks individual mutual
fund performance over specified time periods assuming reinvestment of all
distributions, exclusive of sales loads. The Tax-Free Money Fund may provide
comparative performance information appearing in the Tax-Exempt Money Market
Funds category, the Ohio Tax-Free Money Fund may provide comparative performance
information appearing in the Ohio Tax- Exempt Money Market Funds category and
the California Tax-Free Money Fund may provide comparative performance
information appearing in the California Tax-Exempt Money Market Funds category.
The Tax-Free Intermediate Term Fund may provide comparative performance
information appearing in the Intermediate (5-10 year) Municipal Debt Funds
category and the Ohio Insured Tax-Free Fund may provide comparative performance
information appearing in the Ohio Municipal Debt Funds category.
In assessing such comparisons of performance an investor should keep in
mind that the composition of the investments in the reported indices and
averages is not identical to the Funds' portfolios, that the averages are
generally unmanaged and that the items included in the calculations of such
averages may not be identical to the formula used by the Funds to calculate
their performance. In addition, there can be no assurance that the Funds will
continue this performance as compared to such other averages.
- 46 -
<PAGE>
PRINCIPAL SECURITY HOLDERS
- --------------------------
As of October 6, 1995, The Fifth Third Bank Trust Department, 38
Fountain Square Plaza, Cincinnati, Ohio owned of record 24.15% of the Trust's
outstanding shares, including 33.91% of the outstanding shares of the Ohio
Tax-Free Money Fund and 7.78% of the outstanding shares of the Ohio Tax-Free
Fund. The Fifth Third Bank may be deemed to control the Ohio Tax-Free Money Fund
by virtue of the fact that it owned of record more than 25% of the Fund's shares
as of October 6, 1995. For purposes of voting on matters submitted to
shareholders, any person who owns more than 50% of the outstanding shares of a
Fund generally would be able to cast the deciding vote on such matters.
As of October 6, 1995, Merrill Lynch/FDS, Mutual Fund Operations, 4800
Deer Lake Drive East, Jacksonville, Florida owned of record 5.89% of the
outstanding Class A shares of the Tax-Free Intermediate Term Fund; Thomas
Earl/Jane B. Petty, Trustees of the Petty Living Trust UA, c/o Gudvi Chapnick &
Co., 15250 Ventura Boulevard, Sherman Oaks, California owned of record 7.17% of
the outstanding Class C shares of the Tax-Free Intermediate Term Fund; NFSC FEBO
#A74-131253, Nancy Sallee, 9288 Bodford Drive, West Chester, Ohio owned of
record 13.32% of the outstanding Class C shares of the Ohio Insured Tax-Free
Fund; BHC Securities Inc., 2005 Market Street, Philadelphia, Pennsylvania owned
of record 13.22% of the outstanding shares of the Ohio Tax- Free Money Fund;
Fiduciary Trust Co. International Customer's Account, 2 World Trade Center, New
York, New York owned of record 13.29% of the outstanding shares of the
California Tax-Free Money Fund; Bear, Stearns & Co. Inc. FBO #7204366012, One
Metrotech Center North, Brooklyn, New York owned of record 9.21% of the
outstanding shares of the California Tax-Free Money Fund; and Bear, Stearns &
Co. Inc. FBO #7270012219, One Metrotech Center North, Brooklyn, New York owned
of record 5.77% of the outstanding shares of the California Tax-Free Money Fund;
and Bear, Stearns & Co. Inc. FBO #5205547218, One Metrotech Center North,
Brooklyn, New York owned of record 5.43% of the outstanding shares of the
California Tax-Free Money Fund.
As of October 6, 1995, the Trustees and officers of the Trust as a
group owned of record and beneficially less than 1% of the outstanding shares of
the Trust and of each Fund (or Class thereof).
CUSTODIAN
- ---------
The Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio, has
been retained to act as Custodian for each Fund's investments. The Fifth Third
Bank acts as each Fund's depository, safekeeps its portfolio securities,
collects all income and other payments with respect thereto, disburses funds as
instructed and maintains records in connection with its duties. As compensation,
The Fifth Third Bank receives from each
- 47 -
<PAGE>
Fund a base fee at the annual rate of .005% of average net assets (subject to a
minimum annual fee of $1,500 per Fund and a maximum fee of $5,000 per Fund) plus
transaction charges for each security transaction of the Funds.
AUDITORS
- --------
The firm of Arthur Andersen LLP has been selected as independent
auditors for the Trust for the fiscal year ending June 30, 1996. Arthur Andersen
LLP, 425 Walnut Street, Cincinnati, Ohio, performs an annual audit of the
Trust's financial statements and advises the Funds as to certain accounting
matters.
MGF SERVICE CORP.
- ----------------
The Trust's transfer agent, MGF Service Corp. ("MGF"), maintains the
records of each shareholder's account, answers shareholders' inquiries
concerning their accounts, processes purchases and redemptions of the Funds'
shares, acts as dividend and distribution disbursing agent and performs other
shareholder service functions. MGF is an affiliate of the Adviser by reason of
common ownership. MGF receives for its services as transfer agent a fee payable
monthly at an annual rate of $25 per account from each of the Tax-Free Money
Fund, the Ohio Tax-Free Money Fund and the California Tax-Free Money Fund and
$21 per account from each of the Tax-Free Intermediate Term Fund and the Ohio
Insured Tax-Free Fund, provided, however, that the minimum fee is $1,000 per
month for each class of shares of a Fund. In addition, the Funds pay
out-of-pocket expenses, including but not limited to, postage, envelopes,
checks, drafts, forms, reports, record storage and communication lines.
MGF also provides accounting and pricing services to the Trust. For
calculating daily net asset value per share and maintaining such books and
records as are necessary to enable MGF to perform its duties, the Tax-Free Money
Fund, the Ohio Tax-Free Money Fund and the California Tax-Free Money Fund each
pay MGF a fee in accordance with the following schedule:
Asset Size of Fund Monthly Fee
------------------ -----------
$ 0 - $100,000,000 $3,250
$100,000,000 - $250,000,000 $3,750
$250,000,000 - $400,000,000 $4,250
Over $400,000,000 $4,750
The Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund each pay
MGF a fee in accordance with the following schedule:
Asset Size of Fund Monthly Fee
--------------------------- -----------
$ 0 - $ 50,000,000 $4,250
$ 50,000,000 - $100,000,000 $4,750
$100,000,000 - $250,000,000 $5,250
Over $250,000,000 $5,750
- 48 -
<PAGE>
In addition, each Fund pays all costs of external pricing services.
MGF is retained by the Adviser to assist the Adviser in providing
administrative services to the Funds. In this capacity, MGF supplies
non-investment related statistical and research data, internal regulatory
compliance services and executive and administrative services. MGF supervises
the preparation of tax returns, reports to shareholders of the Funds, reports to
and filings with the Securities and Exchange Commission and state securities
commissions, and materials for meetings of the Board of Trustees. For the
performance of these administrative services, MGF receives a fee from the
Adviser equal to one-fourth of the fee payable from the Trust to the Adviser
pursuant to the Funds' investment advisory agreements with the Adviser. The
Adviser is solely responsible for the payment of these administrative fees to
MGF, and MGF has agreed to seek payment of such fees solely from the Adviser.
TAX EQUIVALENT YIELD TABLES
- ---------------------------
The tax equivalent yield tables illustrate approximately the yield an
individual investor would have to earn on taxable investments to equal a
tax-exempt yield in various income tax brackets.
Tax-Free Money Fund and Tax-Free Intermediate Term Fund Table. The
table on the following page shows the approximate taxable yields for individuals
that are equivalent to tax-exempt yields under marginal federal 1996 income tax
rates. No adjustments have been made for state or local taxes.
Ohio Insured Tax-Free Fund and Ohio Tax-Free Money Fund Table. The
table on the following page shows the approximate taxable yields for individuals
that are equivalent to tax-exempt yields under combined marginal federal and
Ohio 1996 income tax rates. Where more than one state bracket falls within a
federal bracket, the highest state tax bracket has been combined with the
federal bracket. The combined marginal state and federal tax brackets shown
reflect the fact that state income tax payments are currently deductible for
federal tax purposes.
California Tax-Free Money Fund Table. The table on the following page
shows the approximate taxable yields for individuals that are equivalent to
tax-exempt yields under combined marginal federal and California 1996 income tax
rates. Where more than one state bracket falls within a federal bracket, the
highest state tax bracket has been combined with the federal bracket. The
combined marginal state and federal tax brackets shown reflect the fact that
state income tax payments are currently deductible for federal tax purposes.
- 49 -
<PAGE>
For federal income tax purposes, the total amount otherwise allowable
as a deduction for personal exemptions in computing taxable income is reduced by
2% for each $2,500 (or fraction of that amount) by which the taxpayer's adjusted
gross income exceeds $117,950 (single return) or $176,950 (joint return). In
addition, the total amount otherwise allowable as itemized deductions in
computing taxable income is reduced by 3% of the amount by which the taxpayer's
adjusted gross income exceeds $117,950. The tax equivalent yield tables have not
been adjusted to reflect the impact of these adjustments to taxable income.
- 50 -
<PAGE>
<TABLE>
TAX-FREE MONEY FUND
TAX-FREE INTERMEDIATE TERM FUND
- --------------------------------------
<C> <C> <C> <C> <C> <C> <C>
Tax-Exempt Yield
--------------------------------------------
2.5% 3.0% 3.5% 4.0% 4.5% 5.0%
Federal
Tax Bracket* Tax Equivalent Yield
- ----------- ---------------------------------------------
15% 2.94% 3.53% 4.12% 4.71% 5.29% 5.88%
28% 3.47 4.17 4.86 5.56 6.25 6.94
31% 3.62 4.35 5.07 5.80 6.52 7.25
36% 3.91 4.69 5.47 6.25 7.03 7.81
39.6% 4.14 4.97 5.79 6.62 7.45 8.28
OHIO INSURED TAX-FREE FUND
OHIO TAX-FREE MONEY FUND
- --------------------------
Tax-Exempt Yield
Combined --------------------------------------------
Ohio and 2.5% 3.0% 3.5% 4.0% 4.5% 5.0%
Federal
Tax Bracket* Tax Equivalent Yield
- ----------- ---------------------------------------------
18.788% 3.08% 3.69% 4.31% 4.93% 5.54% 6.16%
31.745% 3.66 4.40 5.13 5.86 6.59 7.33
35.761% 3.89 4.67 5.45 6.23 7.01 7.78
40.800% 4.22 5.07 5.91 6.76 7.60 8.45
44.130% 4.47 5.37 6.26 7.16 8.05 8.95
CALIFORNIA TAX-FREE MONEY FUND
- ------------------------------
Tax-Exempt Yield
Combined --------------------------------------------
California and 2.5% 3.0% 3.5% 4.0% 4.5% 5.0%
Federal
Tax Bracket* Tax Equivalent Yield
- ----------- ---------------------------------------------
20.100% 3.13% 3.75% 4.38% 5.01% 5.63% 6.26%
34.696% 3.83 4.59 5.36 6.13 6.89 7.66
37.900% 4.03 4.83 5.64 6.44 7.25 8.05
43.040% 4.39 5.27 6.14 7.02 7.90 8.78
46.244% 4.65 5.58 6.51 7.44 8.37 9.30
*Tax Brackets Combined Combined
- ------------- Ohio and California and
Federal Federal Federal
Single Joint Tax Tax Tax
Return Return Bracket Bracket Bracket
- -----------------------------------------------------------------------------------------------
Not over $24,000 Not Over $40,100 15% 18.788% 20.100%
$24,000-$58,150 $40,100-$96,900 28% 31.745% 34.696%
$58,150-$121,300 $96,900-$147,700 31% 35.761% 37.900%
$121,300-$263,750 $147,700-$263,750 36% 40.800% 43.040%
Over $263,750 Over $263,750 39.6% 44.130% 46.244%
</TABLE>
<PAGE>
ANNUAL REPORT
The Funds' financial statements as of June 30, 1995 appear in the Trust's
annual report which is attached to this Statement of Additional Information.
MANAGEMENT DISCUSSION AND ANALYSIS
The Tax-Free Intermediate Term Fund seeks high current income exempt from
federal income tax, consistent with protection of capital, by investing
primarily in high-grade municipal obligations maturing within twenty years or
less with a dollar-weighted average portfolio maturity under normal conditions
of between three and ten years. To the extent consistent with the Fund's primary
objective, capital appreciation is a secondary objective. For the fiscal year
ended June 30, 1995, the Fund's total returns (excluding the impact of
applicable sales loads) were 6.36% and 5.82% for Class A shares and Class C
shares, respectively.
The Ohio Insured Tax-Free Fund seeks the highest level of interest income exempt
from federal income tax and Ohio personal income tax, consistent with protection
of capital. The Fund invests primarily in high and medium-quality long-term Ohio
municipal obligations which are protected by insurance guaranteeing the payment
of principal and interest in the event of a default. For the fiscal year ended
June 30, 1995, the Fund's total returns (excluding the impact of applicable
sales loads) were 7.75% and 7.31% for Class A shares and Class C shares,
respectively.
Bond market performance over the past twelve months can be divided into two
distinct periods. During the first half of the fiscal year, a robust economy
pushed interest rates higher as investors feared an increase in the level of
inflation. In an effort to slow the pace of the economy and calm inflationary
fears, the Federal Reserve increased the Federal Funds rate three times from
4.25% to 6.00%. Short and intermediate-term Treasuries of five years and under
bore the brunt of the rate increases. Early in 1995, however, it became clear
that the pace of economic activity could not be maintained. With expectations of
slower growth, the bond market rallied and interest rates declined as quickly as
they had risen almost a year earlier.
For the most part, the performance of the municipal bond market mirrored that of
the Treasury bond market until the last quarter of the fiscal year. At that time
the issues of tax reform and the default of Orange County in California took
center stage causing municipal bonds to underperform. For the twelve months
ended June 30, 1995, the Lehman Brothers 5-year Municipal G.O. Bond Index
returned 7.23% while the Lehman Brothers 15-year Municipal G.O. Bond Index
returned 9.34%.
The comparative performance of the Tax-Free Intermediate Term Fund was
influenced by average maturity and credit quality management. During the first
five months of the fiscal year, the average maturity was lowered from 7.3 years
to 6.5 years to lessen the negative impact of rising interest rates on security
valuations. During the last half of the fiscal year, we worked to improve the
credit quality and performance characteristics of portfolio securities by
increasing our position in issues that are either prerefunded or escrowed to
maturity. These issues are some of the safest in the municipal market as they
are backed by government securities. This strategy should continue to enhance
performance during this ongoing period of tax reform debate.
Similar considerations contributed to the comparative performance of the Ohio
Insured Tax-Free Fund. Throughout the fiscal year, the average maturity of the
Fund was maintained slightly in excess of fifteen years, the minimum average
maturity permitted by the prospectus. This lower average maturity aided
performance during the first half of the fiscal year when interest rates were
rising, but hindered performance in the second half as the bond market rallied
and interest rates moved lower. We also began improving the performance
characteristics of individual bonds in the portfolio by increasing their call
protection (i.e. increasing the number of years to the first call date). Bonds
with call protection are generally more marketable because long-term investors
prefer this feature.
Looking ahead, the question is not whether economic activity has slowed, but to
what extent. As a result of such uncertainty, we believe that interest rates
will trade in the 6.50% to 7.00% range using the 30-year Treasury bond as a
benchmark. In addition, tax reform is certainly an issue which will be closely
followed by the municipal market. While some tax reform is likely, reform as
drastic as a flat tax appears less so. The supply and demand variables of the
municipal market remain favorable as new issue supply is running about 40% less
than 1994. While this should be a positive for the municipal market in the short
term, the long run will depend on the outcome of the debate on tax reform.
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1995
TAX-FREE MONEY MARKET FUNDS
__________________________________________________________
ROYAL PALM
OHIO CALIFORNIA FLORIDA
TAX-FREE TAX-FREE TAX-FREE TAX-FREE
MONEY FUND MONEY FUND MONEY FUND MONEY FUND
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities:
At acquisition cost......................... $228,393,860 $ 27,514,175 $ 19,234,156 $ 23,873,899
============ ============= ============= ============
At amortized cost........................... $228,219,069 $ 27,461,370 $ 19,136,828 $ 23,767,487
============ ============= ============= ============
At value (Note 1)........................... $228,219,069 $ 27,461,370 $ 19,136,828 $ 23,767,487
Cash .......................................... 834,590 72,514 114,882 91,591
Interest receivable ........................... 2,082,497 299,224 282,628 275,017
Other assets .................................. 52,911 6,640 4,432 5,812
------------ ------------- ------------- ------------
TOTAL ASSETS.............................. 231,189,067 27,839,748 19,538,770 24,139,907
------------ ------------- ------------- ------------
LIABILITIES
Dividends payable.............................. 226,345 2,876 2,146 6,565
Payable for securities purchased............... 4,245,168 1,124,504 -- --
Payable to affiliates (Note 3) ................ 97,638 16,465 8,858 11,459
Other accrued expenses and liabilities ........ 13,561 3,686 3,010 3,311
------------ ------------- ------------- ------------
TOTAL LIABILITIES......................... 4,582,712 1,147,531 14,014 21,335
------------ ------------- ------------- ------------
NET ASSETS ................................... $226,606,355 $ 26,692,217 $ 19,524,756 $ 24,118,572
============ ============= ============= ============
Net assets consist of:
Capital shares ................................ $226,592,741 $ 26,690,002 $ 19,526,452 $ 24,119,770
Undistributed net investment income............ -- 2,701 -- --
Accumulated net realized gains (losses) from
security transactions....................... 13,614 ( 486) ( 1,696) ( 1,198)
------------ ------------- ------------- ------------
Net assets..................................... $226,606,355 $ 26,692,217 $ 19,524,756 $ 24,118,572
============ ============= ============= ============
Shares of beneficial interest outstanding
(unlimited number of shares authorized,
no par value) ........................... 226,592,739 26,700,445 19,526,452 24,119,770
============ ============= ============= ============
Net asset value, offering price and redemption
price per share (Note 1) ................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
============ ============= ============= ============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
For the Year Ended June 30, 1995
TAX-FREE MONEY MARKET FUNDS
__________________________________________________________
ROYAL PALM
OHIO CALIFORNIA FLORIDA
TAX-FREE TAX-FREE TAX-FREE TAX-FREE
MONEY FUND MONEY FUND MONEY FUND MONEY FUND
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest income............................. $ 8,379,074 $ 1,151,369 $ 803,427 $ 994,950
------------ ------------- ------------- ------------
EXPENSES
Investment advisory fees (Note 3)........... 1,026,778 144,305 113,878 131,885
Distribution expenses (Note 3).............. 363,420 24,169 1,749 1,797
Accounting services fees (Note 3)........... 48,000 42,000 42,000 42,000
Shareholder services and transfer
agent fees (Note 3) ........................ 66,960 23,881 13,302 12,000
Postage and supplies........................ 30,080 12,461 3,524 3,618
Insurance expense........................... 27,213 4,126 3,129 3,387
Professional fees........................... 18,288 5,387 4,888 5,288
Registration fees........................... 8,045 16,410 3,590 3,266
Pricing expenses............................ 5,406 1,913 3,147 2,426
Reports to shareholders .................... 5,382 2,995 720 332
Custodian fees (Note 3)..................... 2,042 4,029 476 1,470
Trustees' fees and expenses ................ 1,984 1,984 1,984 1,984
Other expenses ............................. 13,204 2,059 1,587 1,694
------------ ------------- ------------- ------------
TOTAL EXPENSES................................. 1,616,802 285,719 193,974 211,147
Fees waived by the Adviser (Note 3) ........ -- -- (34,500) (38,141)
------------ ------------- ------------- ------------
NET EXPENSES................................... 1,616,802 285,719 159,474 173,006
------------ ------------- ------------- ------------
NET INVESTMENT INCOME ......................... 6,762,272 865,650 643,953 821,944
------------ ------------- ------------- ------------
NET REALIZED GAINS (LOSSES) FROM
SECURITY TRANSACTIONS ...................... 8,226 (774) 234 2
------------ ------------- ------------- ------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS ............................ $ 6,770,498 $ 864,876 $ 644,187 $ 821,946
============ ============= ============= ============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended June 30, 1995 and 1994
TAX-FREE MONEY MARKET FUNDS
OHIO TAX-FREE TAX-FREE
MONEY FUND MONEY FUND
______________________________________________________
Year Year Year Year
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ............................................... $ 6,762,272 $ 4,278,633 $ 865,650 $ 681,252
Net realized gains (losses) from security transactions .............. 8,226 -- (774) 2,204
------------ ------------ ----------- -----------
Net increase in net assets from operations.............................. 6,770,498 4,278,633 864,876 683,456
------------ ------------ ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME ............... (6,764,671) (4,276,234) (862,949) (681,252)
------------ ------------ ----------- -----------
FROM CAPITAL SHARE TRANSACTIONS (Note 4):
Proceeds from shares sold ........................................... 532,441,705 546,916,284 51,748,931 54,880,538
Net asset value of shares issued in reinvestment of
distributions to shareholders ..................................... 4,449,982 2,891,227 814,800 640,626
Payments for shares redeemed......................................... (523,292,513) (558,583,425) (57,041,748) (59,141,953)
------------ ------------ ----------- -----------
Net increase (decrease) in net assets from
capital share transactions .......................................... 13,599,174 (8,775,914) (4,478,017) (3,620,789)
------------ ------------ ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS ............................... 13,605,001 (8,773,515) (4,476,090) (3,618,585)
NET ASSETS:
Beginning of year.................................................... 213,001,354 221,774,869 31,168,307 34,786,892
------------ ------------ ----------- -----------
End of year.......................................................... $226,606,355 $213,001,354 $26,692,217 $31,168,307
============ ============ =========== ===========
UNDISTRIBUTED NET INVESTMENT INCOME .................................... $ -- $ 2,399 $ 2,701 $ --
============ ============ =========== ===========
ROYAL PALM
CALIFORNIA FLORIDA
TAX-FREE TAX-FREE
MONEY FUND MONEY FUND
_______________________________________________________
Year Year Year Year
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ............................................... $ 643,953 $ 480,898 $ 821,944 $ 592,588
Net realized gains (losses) from security transactions .............. 234 (1,022) 2 (1,200)
----------- ----------- ----------- -----------
Net increase in net assets from operations.............................. 644,187 479,876 821,946 591,388
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME ............... (644,370) (480,481) (822,616) (591,916)
----------- ----------- ----------- -----------
FROM CAPITAL SHARE TRANSACTIONS (Note 4):
Proceeds from shares sold ........................................... 84,546,054 106,173,458 44,740,157 80,250,968
Net asset value of shares issued in reinvestment of
distributions to shareholders ..................................... 572,727 411,397 747,824 504,94
Payments for shares redeemed......................................... (90,102,140) (116,562,528) (47,644,429) (76,386,404)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets from
capital share transactions .......................................... (4,983,359) (9,977,673) (2,156,448) 4,369,511
----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS ............................... (4,983,542) (9,978,278) (2,157,118) 4,368,983
NET ASSETS:
Beginning of year.................................................... 24,508,298 34,486,576 26,275,690 21,906,707
----------- ----------- ----------- -----------
End of year.......................................................... $19,524,756 $24,508,298 $24,118,572 $26,275,690
=========== =========== =========== ===========
UNDISTRIBUTED NET INVESTMENT INCOME .................................... $ -- $ 417 $ -- $ 672
=========== =========== =========== ===========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1995
TAX-FREE BOND FUNDS
TAX-FREE OHIO INSURED
INTERMEDIATE TAX-FREE
TERM FUND FUND
--------------- ---------------
<S> <C> <C>
ASSETS
Investments in securities:
At acquisition cost.................................................... $ 85,911,101 $ 71,102,999
=============== ===============
At amortized cost...................................................... $ 85,335,134 $ 71,072,336
=============== ===============
At value (Note 1) ..................................................... $ 87,134,195 $ 74,765,269
Cash ..................................................................... -- 57,284
Receivable for capital shares sold........................................ 139,788 41,339
Interest receivable ...................................................... 1,465,884 930,148
Other assets ............................................................. 34,354 27,252
--------------- ---------------
TOTAL ASSETS........................................................... 88,774,221 75,821,292
--------------- ---------------
LIABILITIES
Bank overdraft............................................................ 39,107 --
Payable for capital shares redeemed ...................................... 1,023,853 121,800
Dividends payable......................................................... 70,068 95,059
Payable for securities purchased.......................................... 1,630,729 --
Payable to affiliates (Note 3) ........................................... 48,710 38,496
Other accrued expenses and liabilities.................................... 7,793 7,682
--------------- ---------------
TOTAL LIABILITIES ................................................... 2,820,260 263,037
--------------- ---------------
NET ASSETS .............................................................. $ 85,953,961 $ 75,558,255
=============== ===============
Net assets consist of:
Capital shares ........................................................... $ 86,194,255 $ 72,503,679
Accumulated net realized losses from security transactions ............... (2,039,355) (638,357)
Net unrealized appreciation on investments................................ 1,799,061 3,692,933
--------------- ---------------
Net assets................................................................ $ 85,953,961 $ 75,558,255
=============== ===============
PRICING OF CLASS A SHARES
Net assets applicable to Class A shares................................... $ 81,139,685 $ 71,392,898
=============== ===============
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) (Note 4)..................................... 7,470,758 5,951,947
=============== ===============
Net asset value and redemption price per share (Note 1) .................. $ 10.86 $ 11.99
=============== ===============
Maximum offering price per share (Note 1) ................................ $ 11.08 $ 12.49
=============== ===============
PRICING OF CLASS C SHARES
Net assets applicable to Class C shares................................... $ 4,814,276 $ 4,165,357
=============== ===============
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) (Note 4) .................................... 443,255 347,217
=============== ===============
Net asset value and redemption price per share (Note 1) .................. $ 10.86 $ 12.00
=============== ===============
Maximum offering price per share (Note 1)................................. $ 10.86 $ 12.00
=============== ===============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
For the Year Ended June 30, 1995
TAX-FREE BOND FUNDS
TAX-FREE OHIO INSURED
INTERMEDIATE TAX-FREE
TERM FUND FUND
--------------- ---------------
<S> <C> <C>
INVESTMENT INCOME
Interest income........................................................ $ 5,284,856 $ 4,813,451
--------------- ---------------
EXPENSES
Investment advisory fees (Note 3)...................................... 472,968 394,825
Distribution expenses, Class A (Note 3)................................ 153,050 9,476
Distribution expenses, Class C (Note 3) ............................... 18,070 5,296
Accounting services fees (Note 3) ..................................... 75,000 72,000
Shareholder services and transfer agent fees, Class A (Note 3)......... 78,065 40,945
Shareholder services and transfer agent fees, Class C (Note 3)......... 12,000 12,000
Postage and supplies................................................... 48,842 23,834
Pricing expenses....................................................... 25,619 19,605
Registration fees, Common.............................................. 16,082 4,518
Registration fees, Class A............................................. 4,586 3,210
Registration fees, Class C............................................. 4,941 2,000
Insurance expense...................................................... 13,676 10,711
Reports to shareholders ............................................... 12,477 5,798
Professional fees ..................................................... 9,288 8,888
Custodian fees......................................................... 8,272 8,299
Trustees' fees and expenses ........................................... 1,984 1,984
Other expenses ........................................................ 6,030 4,855
--------------- ---------------
TOTAL EXPENSES ........................................................... 960,950 628,244
Fees waived by the Adviser (Note 3).................................... -- (14,000)
Class A expenses reimbursed by the Adviser (Note 3).................... -- (5,077)
--------------- ---------------
NET EXPENSES.............................................................. 960,950 609,167
--------------- ---------------
NET INVESTMENT INCOME .................................................... 4,323,906 4,204,284
--------------- ---------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized losses from security transactions ...................... (1,487,447) (553,505)
Net change in unrealized appreciation/depreciation on investments ... 2,397,778 2,078,922
--------------- ---------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS ........................ 910,331 1,525,417
--------------- ---------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ............................... $ 5,234,237 $ 5,729,701
=============== ===============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended June 30, 1995 and 1994
TAX-FREE BOND FUNDS
TAX-FREE
INTERMEDIATE OHIO INSURED
TERM FUND TAX-FREE FUND
___________________________________________________________
Year Year Year Year
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ...................... $ 4,323,906 $ 4,672,574 $ 4,204,284 $ 4,131,255
Net realized gains (losses) from
security transactions .................... (1,487,447) (46,296) (553,505) 256,296
Net change in unrealized appreciation/
depreciation on investments............... 2,397,778 (3,941,206) 2,078,922 (4,633,136)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
from operations ............................ 5,234,237 685,072 5,729,701 (245,585)
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income, Class A ........ (4,158,531) (4,621,632) (4,060,262) (4,077,931)
From net investment income, Class C......... (182,065) (34,252) (165,164) (32,182)
From net realized gains from security
transactions, Class A .................... -- -- -- (176,296)
From net realized gains from security
transactions, Class C .................... -- -- -- (443)
------------ ------------ ------------ ------------
Decrease in net assets from distributions
to shareholders ............................ (4,340,596) (4,655,884) (4,225,426) (4,286,852)
------------ ------------ ------------ ------------
FROM CAPITAL SHARES TRANSACTIONS (Note 4):
CLASS A
Proceeds from shares sold .................. 27,134,058 114,026,590 135,489,969 163,625,583
Net asset value of shares issued in
reinvestment of distributions
to shareholders ........................ 3,413,920 3,849,926 3,071,603 3,347,910
Payments for shares redeemed ............... (56,693,107) (89,674,117) (148,483,241) (163,755,568)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
from Class A share transactions............. (26,145,129) 28,202,399 (9,921,669) 3,217,925
------------ ------------ ------------ ------------
CLASS C
Proceeds from shares sold .................. 7,031,053 4,010,491 1,936,052 3,032,598
Net asset value of shares issued in
reinvestment of distributions
to shareholders ........................ 174,884 33,735 141,387 26,100
Payments for shares redeemed ............... (5,556,496) (887,900) (650,441) (296,756)
------------ ------------ ------------ ------------
Net increase in net assets from Class C
share transactions ......................... 1,649,441 3,156,326 1,426,998 2,761,942
------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ...... (23,602,047) 27,387,913 (6,990,396) 1,447,430
NET ASSETS:
Beginning of year........................... 109,556,008 82,168,095 82,548,651 81,101,221
------------ ------------ ------------ ------------
End of year................................. $ 85,953,961 $109,556,008 $ 75,558,255 $ 82,548,651
============ ============ ============ ============
UNDISTRIBUTED NET INVESTMENT INCOME .......... $ -- $ 16,690 $ -- $ 21,142
============ ============ ============ ============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OHIO TAX-FREE MONEY FUND
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Year
Year Ended June 30,
____________________________________________________________
1995 1994 1993 1992 1991
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year............ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- ---------- ---------- ----------
Net investment income........................... 0.031 0.020 0.022 0.034 0.048
---------- ---------- ---------- ---------- ----------
Distributions from net investment income ....... (0.031) (0.020) (0.022) (0.034) (0.048)
---------- ---------- ---------- ---------- ----------
Net asset value at end of year.................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ==========
Total return.................................... 3.12% 1.99% 2.19% 3.52% 4.99%
========== ========== ========== ========== ==========
Net assets at end of year (000's) .............. $226,606 $213,001 $221,775 $218,503 $204,034
========== ========== ========== ========== ==========
Ratio of expenses to average net assets ........ 0.74% 0.73% 0.74% 0.75% 0.77%
Ratio of net investment income to
average net assets .......................... 3.08% 1.97% 2.16% 3.43% 4.80%
</TABLE>
<TABLE>
<CAPTION>
TAX-FREE MONEY FUND
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Year
Year Ended June 30,
____________________________________________________________
1995 1994 1993 1992 1991
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year............ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- ---------- ---------- ----------
Net investment income........................... 0.030 0.021 0.024 0.036 0.050
---------- ---------- ---------- ---------- ----------
Distributions from net investment income........ (0.030) (0.021) (0.024) (0.036) (0.050)
---------- ---------- ---------- ---------- ----------
Net asset value at end of year.................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ==========
Total return ................................... 3.07% 2.12% 2.40% 3.63% 5.09%
========== ========== ========== ========== ==========
Net assets at end of year (000's) .............. $26,692 $ 31,168 $ 34,787 $ 50,000 $ 45,210
========== ========== ========== ========== ==========
Ratio of expenses to average net assets......... 0.99% 0.99% 0.99% 0.99% 0.99%
Ratio of net investment income to
average net assets .......................... 3.00% 2.09% 2.39% 3.55% 4.98%
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE MONEY FUND
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Year
Year Ended June 30,
____________________________________________________________
1995 1994 1993 1992 1991
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year............ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- ---------- ---------- ---------- ----------
Net investment income........................... 0.029 0.019 0.022 0.035 0.046
---------- ---------- ---------- ---------- ----------
Distributions from net investment income........ (0.029) (0.019) (0.022) (0.035) (0.046)
---------- ---------- ---------- ---------- ----------
Net asset value at end of year.................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ==========
Total return ................................... 2.95% 1.93% 2.26% 3.71% 4.70%
========== ========== ========== ========== ==========
Net assets at end of year (000's) .............. $19,525 $ 24,508 $ 34,487 $ 21,246 $ 13,524
========== ========== ========== ========== ==========
Ratio of expenses to average net assets(A) .... 0.70% 0.60% 0.56% 0.34% 0.40%
Ratio of net investment income to
average net assets .......................... 2.83% 1.90% 2.22% 3.49% 4.56%
<FN>
(A)Ratio of expenses to average net assets assuming no waiver of fees or
reimbursement of expenses by the Adviser was 0.85%, 0.86%, 0.85%, 0.89% and
1.01% for the years ended June 30, 1995, 1994, 1993, 1992 and 1991,
respectively (Note 3).
</FN>
</TABLE>
<TABLE>
<CAPTION>
ROYAL PALM FLORIDA TAX-FREE MONEY FUND
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
From Date of
Public Offering
Year Year (Nov. 13, 1992)
Ended Ended through
June 30, 1995 June 30, 1994 June 30, 1993(A)
--------------- --------------- ---------------
<S> <C> <C> <C>
Net asset value at beginning of period ................... $ 1.000 $ 1.000 $ 1.000
--------------- --------------- ---------------
Net investment income..................................... 0.031 0.021 0.016
--------------- --------------- ---------------
Distributions from net investment income ................. (0.031) (0.021) (0.016)
--------------- --------------- ---------------
Net asset value at end of period ......................... $ 1.000 $ 1.000 $ 1.000
=============== =============== ===============
Total return ............................................. 3.17% 2.11% 2.49%(C)
=============== =============== ===============
Net assets at end of period (000's) ...................... $ 24,119 $ 26,276 $ 21,907
=============== =============== ===============
Ratio of expenses to average net assets(B) .............. 0.66% 0.58% 0.34%(C)
Ratio of net investment income to average net assets...... 3.12% 2.10% 2.41%(C)
<FN>
(A)No income was earned or expenses incurred from the start of business through
the date of public offering.
(B)Ratio of expenses to average net assets assuming no waiver of fees or
reimbursement of expenses by the Adviser was 0.80%, 0.81% and 0.94%(C) for
the periods ended June 30, 1995, 1994 and 1993, respectively (Note 3).
(C)Annualized.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE TERM FUND - CLASS A
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Year
Year Ended June 30,
____________________________________________________________
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year............ $ 10.69 $ 10.98 $ 10.42 $ 10.15 $ 10.05
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income ....................... 0.49 0.48 0.53 0.59 0.62
Net realized and unrealized gains (losses)
on investments............................. 0.17 (0.29) 0.56 0.27 0.10
---------- ---------- ---------- ---------- ----------
Total from investment operations ............... 0.66 0.19 1.09 0.86 0.72
---------- ---------- ---------- ---------- ----------
Distributions from net investment income ....... (0.49) (0.48) (0.53) (0.59) (0.62)
---------- ---------- ---------- ---------- ----------
Net asset value at end of year.................. $ 10.86 $ 10.69 $ 10.98 $ 10.42 $ 10.15
========== ========== ========== ========== ==========
Total return(A) ................................ 6.36% 1.70% 10.75% 8.78% 7.38%
========== ========== ========== ========== ==========
Net assets at end of year (000's) .............. $81,140 $106,472 $ 82,168 $ 26,720 $ 15,638
========== ========== ========== ========== ==========
Ratio of expenses to average net assets ........ 0.99% 0.99% 0.99% 1.07% 1.13%
Ratio of net investment income to
average net assets ........................... 4.59% 4.35% 4.90% 5.75% 6.15%
Portfolio turnover rate......................... 32% 46% 28% 12% 48%
<FN>
(A)The total returns shown do not include the effect of applicable sales loads.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE TERM FUND - CLASS C
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
From Date of
Public Offering
Year (Feb. 1, 1994)
Ended through
June 30, 1995 June 30, 1994
--------------- ---------------
<S> <C> <C>
Net asset value at beginning of period.................................... $ 10.69 $ 11.27
--------------- ---------------
Income from investment operations:
Net investment income.................................................. 0.44 0.20
Net realized and unrealized gains (losses) on investments.............. 0.17 (0.58)
--------------- ---------------
Total from investment operations.......................................... 0.61 (0.38)
--------------- ---------------
Distributions from net investment income.................................. (0.44) (0.20)
--------------- ---------------
Net asset value at end of period.......................................... $ 10.86 $ 10.69
=============== ===============
Total return(A) .......................................................... 5.82% (8.28%)(C)
=============== ===============
Net assets at end of period (000's)....................................... $ 4,814 $ 3,084
=============== ===============
Ratio of expenses to average net assets(B) ............................... 1.49% 1.45%(C)
Ratio of net investment income to average net assets...................... 4.08% 3.79%(C)
Portfolio turnover rate................................................... 32% 46%(C)
<FN>
(A)The total returns shown do not include the effect of applicable sales loads.
(B)Ratio of expenses to average net assets assuming no waiver of fees or
reimbursement of expenses by the Adviser was 1.75%(C) for the period ended
June 30, 1994 (Note 3).
(C)Annualized.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OHIO INSURED TAX-FREE FUND - CLASS A
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Year
Year Ended June 30,
____________________________________________________________
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year............ $ 11.74 $ 12.41 $ 11.67 $ 11.13 $ 10.96
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income ....................... 0.63 0.61 0.65 0.70 0.68
Net realized and unrealized gains (losses)
on investments............................. 0.25 (0.64) 0.74 0.54 0.17
---------- ---------- ---------- ---------- ----------
Total from investment operations ............... 0.88 (0.03) 1.39 1.24 0.85
---------- ---------- ---------- ---------- ----------
Less distributions:
Distributions from net investment income .... (0.63) (0.61) (0.65) (0.70) (0.68)
Distributions from net realized gains........ -- (0.03) -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions ............................ (0.63) (0.64) (0.65) (0.70) (0.68)
---------- ---------- ---------- ---------- ----------
Net asset value at end of year.................. $ 11.99 $ 11.74 $ 12.41 $ 11.67 $ 11.13
========== ========== ========== ========== ==========
Total return(A) ............................... 7.75% (0.41%) 12.24% 11.55% 7.98%
========== ========== ========== ========== ==========
Net assets at end of year (000's) .............. $71,393 $ 79,889 $ 81,101 $ 49,288 $ 20,791
========== ========== ========== ========== ==========
Ratio of expenses to average net assets(B) .... 0.75% 0.75% 0.75% 0.60% 1.07%
Ratio of net investment income to
average net assets .......................... 5.35% 4.94% 5.35% 6.10% 6.14%
Portfolio turnover rate......................... 29% 45% 15% 3% 86%
<FN>
(A)The total returns shown do not include the effect of applicable sales loads.
(B)Ratio of expenses to average net assets assuming no waiver of fees or
reimbursement of expenses by the Adviser was 0.77% and 0.77% for the years
ended June 30, 1995 and 1992, respectively (Note 3).
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OHIO INSURED TAX-FREE FUND - CLASS C
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
From Date of
Public Offering
Year (Nov. 1, 1993)
Ended through
June 30, 1995 June 30, 1994
--------------- ---------------
<S> <C> <C>
Net asset value at beginning of period.................................... $ 11.74 $ 12.62
--------------- ---------------
Income from investment operations:
Net investment income.................................................. 0.57 0.36
Net realized and unrealized gains (losses) on investments.............. 0.26 (0.85)
--------------- ---------------
Total from investment operations.......................................... 0.83 (0.49)
--------------- --------------
Less distributions:
Distributions from net investment income............................... (0.57) (0.36)
Distributions from net realized gains.................................. -- (0.03)
--------------- ---------------
Total distributions....................................................... (0.57) (0.39)
--------------- --------------
Net asset value at end of period.......................................... $ 12.00 $ 11.74
=============== ===============
Total return(A) .......................................................... 7.31% (6.05%)(C)
=============== ===============
Net assets at end of period (000's)....................................... $ 4,165 $ 2,659
=============== ===============
Ratio of expenses to average net assets(B) ............................... 1.25% 1.22%(C)
Ratio of net investment income to average net assets...................... 4.84% 4.09%(C)
Portfolio turnover rate................................................... 29% 45%(C)
<FN>
(A)The total returns shown do not include the effect of applicable sales loads.
(B)Ratio of expenses to average net assets assuming no waiver of fees or
reimbursement of expenses by the Adviser was 1.27% and 1.28%(C) for the
periods ended June 30, 1995 and 1994, respectively (Note 3).
(C)Annualized.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
1. Significant Accounting Policies
Midwest Group Tax Free Trust (the Trust) is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end management
investment company. The Trust was established as a Massachusetts business trust
under the Declaration of Trust dated April 13, 1981. The Declaration of Trust,
as amended, permits the Trustees to issue an unlimited number of shares of six
funds: the Ohio Tax-Free Money Fund, the Tax-Free Money Fund, the California
Tax-Free Money Fund, the Royal Palm Florida Tax-Free Money Fund, the Tax-Free
Intermediate Term Fund and the Ohio Insured Tax-Free Fund (individually a Fund
and collectively the Funds).
The Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund each
offer two classes of shares: Class A shares (sold subject to a maximum front-end
sales load of 2% for the Tax-Free Intermediate Term Fund and 4% for the Ohio
Insured Tax-Free Fund and a distribution fee of up to .25% of average daily net
assets for each Fund) and Class C shares (sold subject to a maximum contingent
deferred sales load of 1% if redeemed within a one-year period from purchase and
a distribution fee of up to 1% of average daily net assets). Each Class A and
Class C share of a Fund represents identical interests in the investment
portfolio of such Fund and has the same rights, except that (i) Class C shares
bear the expenses of higher distribution fees, which will cause Class C shares
to have a higher expense ratio and to pay lower dividends than Class A shares;
(ii) certain other class specific expenses will be borne solely by the class to
which such expenses are attributable; and (iii) each class has exclusive voting
rights with respect to matters relating to its own distribution arrangements.
The following is a summary of the Trust's significant accounting policies:
Security valuation -- Ohio Tax-Free Money Fund, Tax-Free Money Fund, California
Tax-Free Money Fund and Royal Palm Florida Tax-Free Money Fund securities are
valued on the amortized cost basis, which approximates market. This involves
initially valuing a security at its original cost and thereafter assuming a
constant amortization to maturity of any discount or premium. This method of
valuation is expected to enable these Funds to maintain a constant net asset
value per share. The Tax-Free Intermediate Term Fund and the Ohio Insured
Tax-Free Fund use an independent pricing service which generally utilizes a
computerized grid matrix of tax-exempt securities and evaluations by its staff
to determine what it believes is the fair value of the securities. On limited
occasions, if the valuation provided by the pricing service ignores certain
market conditions affecting the value of a security or the pricing service
cannot provide a valuation, the fair value of the security will be determined in
good faith consistent with procedures established by the Board of Trustees.
Share valuation -- The net asset value per share of the Ohio Tax-Free Money
Fund, the Tax-Free Money Fund, the California Tax-Free Money Fund, and the Royal
Palm Florida Tax-Free Money Fund is calculated daily. Net asset value per share
is calculated for each of these Funds by dividing the total value of a Fund's
assets, less liabilities, by the number of shares outstanding. The offering
price and redemption price per share is equal to the net asset value per share.
The net asset value per share of the Tax-Free Intermediate Term Fund and the
Ohio Insured Tax-Free Fund is also calculated daily. Net asset value per share
is calculated for each class of a Fund by dividing the total value of a Fund's
assets applicable to that class, less liabilities applicable to that class, by
the number of shares of that class outstanding. The maximum offering price of
Class A shares of the Tax-Free Intermediate Term Fund is equal to net asset
value per share plus a sales load equal to 2.04% of the net asset value (or 2%
of the offering price). The maximum offering price of Class A Shares of the Ohio
Insured Tax-Free Fund is equal to net asset value per share plus a sales load
equal to 4.17% of the net asset value (or 4% of the offering price). The
offering price of Class C shares of each Fund is equal to the net asset value
per share.
The redemption price per share of Class A shares and Class C shares of the
Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund is equal to
the net asset value per share. Effective February 1, 1995, Class C shares of the
Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund are each
subject to a contingent deferred sales load of 1% of the original purchase price
if redeemed within a one-year period from the date of purchase.
<PAGE>
Investment income and distributions to shareholders -- Interest income is
accrued as earned. Discounts and premiums on securities purchased are amortized
in accordance with income tax regulations which approximate generally accepted
accounting principles. Distributions from net investment income are declared
daily and paid on the last business day of each month. Net realized short-term
capital gains, if any, may be distributed throughout the year and net realized
long-term capital gains, if any, are distributed at least once each year. Income
distributions and capital gain distributions are determined in accordance with
income tax regulations.
Security transactions -- Security transactions are accounted for on the trade
date. Securities sold are valued on a specific identification basis.
Allocations between classes -- Investment income earned by the Tax-Free
Intermediate Term Fund and the Ohio Insured Tax-Free Fund is allocated daily to
each class of shares based on the percentage of the net asset value of settled
shares of such class to the total of the net asset value of settled shares of
both classes of shares. Realized capital gains and losses and unrealized
appreciation and depreciation is allocated daily to each class of shares based
upon its proportionate share of total net assets of the Fund. Class specific
expenses are charged directly to the class incurring the expense. Joint expenses
which are not attributable to a specific class are allocated daily to each class
of shares based upon its proportionate share of total net assets of the Fund.
Federal income tax -- It is each Fund's policy to comply with the special
provisions of the Internal Revenue Code available to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund will be
relieved of federal income tax on the income distributed. Accordingly, no
provision for income taxes has been made. In addition, each Fund intends to
satisfy conditions which enable it to designate distributions from the interest
income generated by its investment in municipal securities, which is exempt from
federal income tax when received by the Fund, as exempt-interest dividends to
shareholders.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Fund's intention to declare as dividends
in each calendar year at least 98% of its net investment income (earned during
the calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
The following information is based upon the federal income tax cost of portfolio
investments as of June 30, 1995:
<TABLE>
Tax-Free
Intermediate Ohio Insured
Term Fund Tax-Free Fund
--------------- ---------------
<S> <C> <C>
Gross unrealized appreciation....... $ 2,057,046 $ 3,898,026
Gross unrealized depreciation....... (257,985) (205,093)
--------------- ---------------
Net unrealized appreciation......... $ 1,799,061 $ 3,692,933
=============== ===============
</TABLE>
The tax basis of investments for each Fund is equal to the amortized cost as
shown on the Statements of Assets and Liabilities.
As of June 30, 1995, the Tax-Free Money Fund, the California Tax-Free Money
Fund, the Royal Palm Florida Tax-Free Money Fund, the Tax-Free Intermediate Term
Fund and the Ohio Insured Tax-Free Fund had capital loss carryforwards for
federal income tax purposes of $774, $1,696, $1,198, $2,039,355, and $638,357,
respectively, none of which expire prior to June 30, 1999. These capital loss
carryforwards may be utilized in the current or future years to offset net
realized capital gains prior to distributing such gains to shareholders.
2. Investment Transactions
For the year ended June 30, 1995, purchases and proceeds from sales and
maturities of investment securities, excluding short-term investments, amounted
to $28,391,712 and $53,294,417, respectively, for the Tax-Free Intermediate Term
Fund, and $21,806,732 and $26,408,778, respectively, for the Ohio Insured
Tax-Free Fund.
3. Transactions with Affiliates
The President of the Trust is the Chairman of the Board and the controlling
shareholder of Leshner Financial, Inc., whose subsidiaries include Midwest Group
Financial Services, Inc. (the Adviser), the investment adviser and principal
underwriter of the Trust's shares, and MGF Service Corp. (MGF), the shareholder
servicing and transfer agent and accounting and pricing agent for the Trust.
<PAGE>
MANAGEMENT AGREEMENT
The Funds' investments are managed by the Adviser pursuant to the terms of a
Management Agreement. Under the Management Agreement, each Fund pays the Adviser
a fee, computed and accrued daily and paid monthly, at an annual rate of 0.5% of
its respective average daily net assets up to $100,000,000, 0.45% of such assets
from $100,000,000 to $200,000,000, 0.4% of such assets from $200,000,000 to
$300,000,000 and 0.375% of such assets in excess of $300,000,000.
States in which shares of the Trust are offered may impose an expense limitation
based upon net assets. The Adviser has agreed to reimburse each Fund for
expenses which exceed the most restrictive applicable expense limitation of any
state. No reimbursement was required from the Adviser with respect to any Fund
for the year ended June 30, 1995. However, in order to reduce operating
expenses, the Adviser voluntarily waived $34,500, $38,141 and $14,000 of its
advisory fees from the California Tax-Free Money Fund, the Royal Palm Florida
Tax-Free Money Fund and the Ohio Insured Tax-Free Fund, respectively, during the
year ended June 30, 1995. In addition, in order to reduce the operating expenses
of Class A shares of the Ohio Insured Tax-Free Fund, the Adviser voluntarily
reimbursed the Fund for $5,077 of Class A expenses.
TRANSFER AGENT AND SHAREHOLDER SERVICE AGREEMENT
Under the terms of the Transfer Agent and Shareholder Service Agreement, MGF
maintains the records of each shareholder's account, answers shareholders'
inquiries concerning their accounts, processes purchases and redemptions of each
Fund's shares, acts as dividend and distribution disbursing agent and performs
other shareholder service functions. Under the terms of the Agreement, MGF
receives for its services a fee payable monthly at an annual rate of $25.00 per
shareholder account from each of the Ohio Tax-Free Money Fund, the Tax-Free
Money Fund, the California Tax-Free Money Fund, and the Royal Palm Florida
Tax-Free Money Fund and $21.00 per shareholder account from each of the Tax-Free
Intermediate Term Fund and the Ohio Insured Tax-Free Fund, subject to a $1,000
minimum monthly fee for each Fund or for each class of shares of a Fund. In
addition, each Fund pays out-of-pocket expenses, including but not limited to,
postage and supplies.
ACCOUNTING SERVICES AGREEMENT
Under the terms of the Accounting Services Agreement between the Trust and MGF,
MGF calculates the daily net asset value per share and maintains the financial
books and records of each Fund. Effective July 1, 1995, MGF receives a monthly
fee, based on current asset levels, of $3,250 per month from each of the
Tax-Free Money Fund, the California Tax-Free Money Fund and the Royal Palm
Florida Tax-Free Money Fund, $3,750 per month from the Ohio Tax-Free Money Fund
and $4,750 per month from each of the Tax-Free Intermediate Term Fund and the
Ohio Insured Tax-Free Fund. In addition, each Fund pays certain out-of-pocket
expenses incurred by MGF in obtaining valuations of such Fund's portfolio
securities.
UNDERWRITING AGREEMENT
Under the terms of the Underwriting Agreement, the Adviser and affiliates earned
$5,557 and $25,570 from underwriting and broker commissions on the sale of
shares of the Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free
Fund, respectively, during the year ended June 30, 1995.
PLANS OF DISTRIBUTION
The Funds have a Plan of Distribution (Class A Plan) under which shares of each
Fund having one class of shares and Class A shares of each Fund having two
classes of shares may directly incur or reimburse the Adviser for expenses
related to the distribution and promotion of shares. The annual limitation for
payment of such expenses under the Class A Plan is .25% of average daily net
assets.
The Trust has a Plan of Distribution (Class C Plan) under which Class C shares
of the Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund may
directly incur or reimburse the Adviser for expenses related to the distribution
and promotion of shares. The annual limitation for payment of such expenses
under the Class C Plan is 1% of a Fund's average daily net assets applicable to
Class C shares.
CUSTODIAN AGREEMENT
The Fifth Third Bank, which serves as the custodian for each Fund except the
California Tax-Free Money Fund, was a significant shareholder of record of the
Ohio Tax-Free Money Fund as of June 30, 1995. Under the terms of the Custodian
Agreement, The Fifth Third Bank receives from each Fund a base fee at an annual
rate of .005% of its average net assets (subject to a minimum fee of $1,500 and
a maximum fee of $5,000) plus transaction charges for each security transaction
of the Funds.
<PAGE>
4. Capital Share Transactions
Proceeds and payments on capital shares as shown in the Statements of Changes in
Net Assets are the result of the following capital share transactions for the
years ended June 30, 1995 and 1994:
<TABLE>
TAX-FREE INTERMEDIATE OHIO INSURED
TERM FUND TAX-FREE FUND
___________________________________________________________
Year Year Year Year
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold.................................... 2,523,254 10,275,868 11,576,223 13,310,072
Shares issued in reinvestment of
distributions to shareholders............... 320,606 350,367 262,171 271,821
Shares redeemed................................ (5,334,216) (8,147,207) (12,691,802) (13,313,151)
------------ ------------- ------------- ------------
Net increase (decrease) in shares outstanding.. (2,490,356) 2,479,028 (853,408) 268,742
Shares outstanding, beginning of year.......... 9,961,114 7,482,086 6,805,355 6,536,613
------------ ------------- ------------- ------------
Shares outstanding, end of year................ 7,470,758 9,961,114 5,951,947 6,805,355
============ ============= ============= ============
CLASS C
Shares sold.................................... 661,291 368,101 164,356 248,640
Shares issued in reinvestment of
distributions to shareholders............... 16,430 3,142 12,037 2,197
Shares redeemed................................ (522,939) (82,770) (55,643) (24,370)
------------ ------------- ------------- ------------
Net increase in shares outstanding............. 154,782 288,473 120,750 226,467
Shares outstanding, beginning of year.......... 288,473 -- 226,467 --
------------ ------------- ------------- ------------
Shares outstanding, end of year................ 443,255 288,473 347,217 226,467
============ ============= ============= ============
</TABLE>
Capital share transactions for the Ohio Tax-Free Money Fund, the Tax-Free Money
Fund, the California Tax-Free Money Fund and the Royal Palm Florida Tax-Free
Money Fund are identical to the dollar value of those transactions as shown in
the Statements of Changes in Net Assets.
5. Portfolio Composition
As of June 30, 1995, the Ohio Tax-Free Money Fund and the Ohio Insured Tax-Free
Fund were invested exclusively in debt obligations issued by the State of Ohio
and its political subdivisions, agencies, authorities, and instrumentalities and
other issuers the interest from which is exempt from Ohio income tax. The
California Tax-Free Money Fund was invested exclusively in debt obligations
issued by the State of California and its political subdivisions, agencies,
authorities, and instrumentalities and other issuers the interest from which is
exempt from California income tax. As of June 30, 1995, 84.7% of the Royal Palm
Florida Tax-Free Money Fund's portfolio securities were invested in debt
obligations issued by the State of Florida and its political subdivisions,
agencies, authorities, and instrumentalities and other issuers the value of
which is exempt from the Florida intangible personal property tax. As of June
30, 1995, 19.8% of the portfolio securities of the Tax-Free Money Fund were
concentrated in the State of Ohio, 10.8% in the State of Kentucky and 10.4% in
the State of Minnesota. For information regarding portfolio composition by state
for the Tax-Free Intermediate Term Fund as of June 30, 1995, see the Fund's
Portfolio of Investments.
As diversified Funds registered under the 1940 Act, it is the policy of the
Tax-Free Money Fund and the Tax-Free Intermediate Term Fund that not more than
25% of the total assets of each such Fund may be invested in securities of
issuers which individually comprise more than 5% of its total assets.
<PAGE>
The Ohio Tax-Free Money Fund, the California Tax-Free Money Fund, the Royal Palm
Florida Tax-Free Money Fund and the Ohio Insured Tax-Free Fund are each
non-diversified Funds under the 1940 Act. Thus, investments may be concentrated
in fewer issuers than those of a diversified fund. However, as of June 30, 1995,
each of the Ohio Tax-Free Money Fund, the California Tax-Free Money Fund and the
Ohio Insured Tax-Free Fund had no concentrations of investments (10% or greater)
in any one issuer. The Royal Palm Florida Tax-Free Money Fund had 12.3% of its
investments concentrated in one issuer.
The Ohio Tax-Free Money Fund, the Tax-Free Money Fund, the California Tax-Free
Money Fund and the Royal Palm Florida Tax-Free Money Fund each invest in
municipal securities maturing in 13 months or less and having a short-term
rating in one of the top two ratings categories by at least two nationally
recognized statistical rating agencies (or by one such agency if a security is
rated by only that agency) or, if unrated, are determined by the Adviser, under
the supervision of the Board of Trustees, to be of comparable quality.
As of June 30, 1995, 44.2% of the Tax-Free Intermediate Term Fund's portfolio
securities were rated AAA/Aaa [using the higher of Standard & Poor's Corporation
(S&P) or Moody's Investors Services, Inc. (Moody's) ratings], 29.8% were rated
AA/Aa, 17.7% were rated A/A and 8.3% were not rated.
As of June 30, 1995, 97.8% of the Ohio Insured Tax-Free Fund's long-term
portfolio securities were either (1) insured by an insurance policy obtained
from a recognized insurer which carries a rating of AAA by S&P or Aaa by
Moody's, (2) guaranteed as to the payment of interest and principal by an agency
or instrumentality of the U.S. Government, or (3) secured as to the payment of
interest and principal by an escrow account consisting of obligations of the
U.S. Government. Three private insurers individually insure more than 10% of the
Ohio Insured Tax-Free Fund's portfolio securities and collectively insure 82.5%
of its portfolio securities.
The concentration of investments for each Fund as of June 30, 1995, classified
by revenue source, was as follows:
<TABLE>
Royal Palm
Ohio California Florida Tax-Free Ohio
Tax-Free Tax-Free Tax-Free Tax-Free Intermediate Insured
Money Money Money Money Term Tax-Free
Fund Fund Fund Fund Fund Fund
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
General Obligations................. 26.5% 13.6% 6.2% 10.9% 30.9% 29.4%
Revenue Bonds:
Industrial Development............ 36.4% 36.0% 27.2% 8.1% 6.4% 7.0%
Hospital/Health Care.............. 16.8% 8.6% 7.6% 22.7% 13.6% 22.6%
Utilities......................... 2.9% 13.1% 27.8% 17.5% 9.9% 23.4%
Housing/Mortgage.................. 4.5% 15.7% 4.6% 24.3% 11.3% 7.1%
Education......................... 5.3% 2.8% 3.3% 4.0% 10.3% 7.2%
Public Facilities................. -- 2.0% 7.3% 4.2% 5.8% 1.5%
Special Tax....................... -- 0.4% 10.2% 2.6% 2.5% 1.8%
Transportation.................... -- 2.1% 5.8% 4.7% 3.8% --
Economic Development.............. 5.8% 3.6% -- -- 2.0% --
Miscellaneous..................... 1.8% 2.1% -- 1.0% 3.5% --
----------- ----------- ----------- ----------- ----------- -----------
Total .............................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
=========== =========== =========== =========== =========== ===========
</TABLE>
See each Fund's Portfolio of Investments for additional information on portfolio
composition.
<PAGE>
Footnotes to Portfolios of Investments:
Variable and adjustable rate put bonds earn interest at a coupon rate which
fluctuates at specified intervals, usually daily, monthly, or semiannually. The
rates shown in the Portfolio of Investments are the coupon rates in effect at
June 30, 1995.
Put bonds may be redeemed at the discretion of the holder on specified dates
prior to maturity. Mandatory put bonds are automatically redeemed at a specified
put date unless action is taken by the holder to prevent redemption.
Bonds denoted as prerefunded are anticipated to be redeemed prior to their
scheduled maturity. The dates indicated in the Portfolios of Investments are the
stipulated prerefunded dates.
<TABLE>
<CAPTION>
Portfolio Abbreviations:
<S> <C>
ARPB - Adjustable Rate Put Bonds ISD - Independent School District
BANS - Bond Anticipation Notes LSD - Local School District
COP - Certificates of Participation MFH - Multi-Family Housing
CSD - City School District MFM - Multi-Family Mortgage
EDR - Economic Development Revenue PCR - Pollution Control Revenue
GO - General Obligation RANS - Revenue Anticipation Notes
HCR - Housing Corporation Revenue SFM - Single Family Mortgage
HFA - Housing Finance Authority/Agency TANS - Tax Anticipation Notes
HFC - Housing Finance Corporation TRANS - Tax Revenue Anticipation Notes
IDA - Industrial Development Authority/Agency USD - Unified School District
IDR - Industrial Development Revenue VRDN - Variable Rate Demand Notes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OHIO TAX-FREE MONEY FUND
PORTFOLIO OF INVESTMENTS
June 30, 1995
Principal Coupon Maturity
Amount Fixed Rate Revenue & General Obligation Bonds-- 29.2% Rate Date Value
- ------------ ----------------------------------------------------- -------- ---------- ---------
<C> <S> <C> <C> <C>
$ 1,130,000 Youngstown, OH, CSD RANS....................................... 5.300% 07/01/1995 $1,130,000
1,200,000 Alliance, OH, Street Impt. GO BANS............................. 4.500 07/06/1995 1,200,043
2,000,000 Stark Co., OH, Various Purpose GO BANS......................... 4.310 07/12/1995 2,000,121
3,000,000 Greene Co., OH, Various Purpose GO BANS........................ 4.320 07/19/1995 3,000,314
3,000,000 North Olmsted, OH, Various Purpose GO BANS, Ser. 1994E......... 4.550 07/20/1995 3,000,531
2,220,500 West Clermont, OH, LSD School Impt. GO BANS.................... 5.250 08/09/1995 2,221,782
2,500,000 Univ. of Cincinnati Gen. Receipts BANS, Ser. T................. 4.750 08/30/1995 2,502,769
3,000,000 Ohio St. GO, Escrowed to Maturity.............................. 6.650 09/01/1995 3,009,570
1,000,000 University Heights, OH, Park Impt. GO BANS..................... 4.200 09/08/1995 1,000,181
3,000,000 Richland Co., OH, GO BANS (Madison-Marlow Sewer Impt.)......... 4.850 09/14/1995 3,003,548
300,000 Columbus, OH, Waterworks Enlargement Rev., No. 42EU,
Escrowed to Maturity......................................... 8.200 09/15/1995 302,051
350,000 Cuyahoga Co., OH, Hosp. Rev. (Deaconess Hosp. Cleveland),
Prerefunded @ 102............................................ 9.250 10/01/1995 360,976
1,000,000 Berea, OH, GO BANS............................................. 4.500 10/25/1995 1,003,463
1,950,000 Blue Ash, OH, GO BANS (Cornell Rd. Impt.)...................... 5.000 10/30/1995 1,955,362
1,065,000 Lorain, OH, Hosp. Impt. Rev. (Lakeland Comm. Hosp.),
Prerefunded @ 102............................................ 9.500 11/01/1995 1,102,876
650,000 Cleveland, OH, GO, Prerefunded @ 102.50........................ 9.875 11/01/1995 677,378
825,000 Butler Co., OH, GO BANS (Road Proj.)........................... 4.730 11/29/1995 826,419
2,200,000 Jackson, OH, Elec. Sys. Impt. GO BANS.......................... 5.060 11/29/1995 2,202,334
2,300,000 Belmont Co., OH, Sani. Sewer GO BANS........................... 5.170 11/30/1995 2,302,459
1,780,000 Lucas Co., OH, Various Purpose Impt., GO BANS.................. 5.750 11/30/1995 1,785,285
100,000 Cincinnati, OH, CSD GO TANS, Escrowed to Maturity.............. 6.700 12/01/1995 100,747
3,000,000 Toledo, OH, City Serv. Special Assessment Notes, GO BANS....... 4.520 12/01/1995 3,002,398
1,400,000 Anthony Wayne, OH, LSD GO BANS................................. 4.000 12/14/1995 1,401,867
1,100,000 Marysville, OH, GO BANS........................................ 5.090 12/15/1995 1,100,671
1,000,000 Hamilton, OH, CSD GO TANS...................................... 3.820 12/19/1995 1,001,463
1,500,000 Marysville, OH, Exempted Village Schools GO BANS............... 4.270 12/20/1995 1,502,898
375,000 Ohio St. Coal Dev. GO.......................................... 6.450 02/01/1996 378,553
900,000 Union Co., OH, Courthouse Renovation GO BANS................... 5.070 03/01/1996 901,544
1,850,000 Salem, OH, CSD School Impt. GO BANS............................ 4.290 03/07/1996 1,850,474
1,200,000 Centerville, OH, CSD BANS...................................... 4.400 03/14/1996 1,204,507
2,100,000 Univ. of Cincinnati Gen. Receipts BANS, Ser. K-1............... 5.000 03/21/1996 2,105,057
895,000 Marysville, OH, GO BANS........................................ 4.770 03/29/1996 896,719
1,500,000 Stark Co., OH, Sewer Dist. Impt. GO BANS....................... 5.000 04/03/1996 1,504,338
1,800,000 Talawanda, OH, CSD Bd. of Educ. School Impt. GO BANS........... 5.370 04/04/1996 1,812,043
1,750,000 Trumbull Co., OH, Correctional Fac. GO BANS.................... 4.830 04/11/1996 1,751,686
870,000 Middleburg Heights, OH, Various Purpose GO BANS................ 4.500 05/30/1996 871,908
295,000 Ohio St. Water Dev. Auth PCR................................... 4.250 06/01/1996 295,000
3,000,000 Cleveland, OH, CSD RANS........................................ 4.500 06/01/1996 3,024,885
645,000 Valley View, OH, LSD School Energy Conservation GO BANS........ 4.700 06/06/1996 647,591
1,000,000 North Olmsted, OH, Various Purpose Impt. GO BANS............... 4.670 06/20/1996 1,003,901
990,000 Loveland, OH, Various Purpose Impt. GO BANS.................... 4.210 06/27/1996 991,968
2,570,000 Cuyahoga Falls, OH, CSD GO BANS................................ 4.300 06/28/1996 2,577,787
1,665,000 Euclid City, OH, Various Impt. GO BANS......................... 4.250 07/12/1996 1,667,381
- ------------- ------------
$65,975,500 TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS
- ------------- (Amortized Cost $66,182,848)............................... $66,182,848
------------
</TABLE>
<PAGE>
<TABLE>
Principal Coupon Maturity
Amount Floating and Variable Rate Demand Notes-- 55.4% Rate Date Value
- ------------ ----------------------------------------------- -------- ---------- ---------
<C> <S> <C> <C> <C>
$ 1,900,000 Cincinnati-Hamilton Co., OH, Port. Auth. EDR
(Kenwood Office Assoc. Proj.) ............................... 4.200% 07/03/1995 $1,900,000
2,200,000 Columbus, OH, Elec. Sys. Rev................................... 3.650 07/03/1995 2,200,000
2,100,000 Cuyahoga Co., OH, Hosp. Impt. Rev. (University Hosp. Cleveland) 4.200 07/03/1995 2,100,000
2,495,000 Cuyahoga Co., OH, IDR (S & R Playhouse Realty)................. 4.100 07/03/1995 2,495,000
1,600,000 Delaware Co., OH, IDR (Radiation Sterilizers, Inc.)............ 3.850 07/03/1995 1,600,000
400,000 Franklin Co., OH, Health Sys. Rev. (St. Anthony Medical Ctr.).. 4.200% 07/03/1995 $ 400,000
250,000 Franklin Co., OH, IDR (Boa Ltd. Proj.)......................... 4.650 07/03/1995 250,000
700,000 Franklin Co., OH, IDR (Capitol South).......................... 4.600 07/03/1995 700,000
1,300,000 Franklin Co., OH, IDR (Jacobson's Stores)...................... 4.600 07/03/1995 1,300,000
3,500,000 Hamilton Co., OH, Health Sys. Rev. (Franciscan Sisters)........ 4.200 07/03/1995 3,500,000
2,300,000 Muskingum Co., OH, IDR (Elder-Beerman)......................... 3.900 07/03/1995 2,300,000
700,000 Ohio Air Quality Dev. Auth. Environ. Impt. Rev. (Mead Corp.)... 4.250 07/03/1995 700,000
1,100,000 Ohio Higher Educ. Fac. Rev. (John Carroll Univ.)............... 4.500 07/03/1995 1,100,000
500,000 Ohio St. Environ. Impt. Rev. (U.S. Steel Corp.)................ 3.900 07/03/1995 500,000
400,000 Ohio Water Dev. Auth. Environ. Impt. Rev.,
Ser. 1986B (Mead Corp.)...................................... 4.250 07/03/1995 400,000
245,000 Akron, OH, Sani. Sewer Sys. Rev., Ser. 1994.................... 4.150 07/05/1995 245,000
1,000,000 Butler Co., OH, IDR (Phillip Morris Co.)....................... 4.150 07/05/1995 1,000,000
1,250,000 Centerville, OH, Healthcare Rev. (Bethany-Lutheran)............ 4.050 07/05/1995 1,250,000
1,000,000 Centerville, OH, Healthcare Rev. (Bethany-Lutheran)............ 4.050 07/05/1995 1,000,000
300,000 Centerville, OH, Healthcare Rev. (Bethany-Lutheran)............ 4.050 07/05/1995 300,000
4,250,000 Cincinnati-Hamilton Co., OH, Port. Auth. Rev.
(Kaiser Agric. Chemical Co.)................................. 4.000 07/05/1995 4,250,000
2,340,000 Cincinnati, OH, Student Loan Funding Corp. Rev................. 4.250 07/05/1995 2,340,000
1,800,000 Cleveland-Cuyahoga Co., OH, Port. Auth. Rev.
(Rock & Roll Hall of Fame)................................... 4.150 07/05/1995 1,800,000
1,180,000 Cuyahoga Co., OH, Healthcare Fac. Rev., Ser. 1993A
(Hospice of the Western Reserve) ............................ 4.200 07/05/1995 1,180,000
1,750,000 Cuyahoga Co., OH, Healthcare Fac. Rev., Ser. 1993B
(Hospice of the Western Reserve) ............................ 4.200 07/05/1995 1,750,000
280,000 Cuyahoga Co., OH, IDR (Schottenstein Stores)................... 4.100 07/05/1995 280,000
2,000,000 Cuyahoga Co., OH, IDR, Ser. 1989 (Motch Corp. Proj.)........... 4.550 07/05/1995 2,000,000
900,000 Delaware Co., OH, Indust. Rev., Ser. 1985 (MRG Limited, LP).... 4.250 07/05/1995 900,000
2,000,000 Franklin Co., OH, IDR (Alco Standard Corp.).................... 4.250 07/05/1995 2,000,000
635,000 Franklin Co., OH, IDR (Columbus Dist.)......................... 4.150 07/05/1995 635,000
1,720,000 Greene Co., OH, Healthcare Fac. Rev. (Green Oaks Proj.)........ 4.200 07/05/1995 1,720,000
950,000 Hardin Co., OH, Hosp. Impt. Rev., Ser. A (Hardin Memorial Hosp.) 4.150 07/05/1995 950,000
1,410,000 Huron Co., OH, Ref. Rev. (Norfolk Furniture Corp.)............. 4.200 07/05/1995 1,410,000
494,000 Lorain Co., OH, IDR, Ser. C (Kindercare)....................... 4.350 07/05/1995 494,000
1,200,000 Lucas Co., OH, EDR (Glendale Meadows).......................... 4.200 07/05/1995 1,200,000
200,000 Medina, OH, IDR (Kindercare)................................... 4.350 07/05/1995 200,000
1,100,000 Meigs Co., OH, Indust. Rev., Ser. 1985 (MGR Limited, LP)....... 4.250 07/05/1995 1,100,000
1,050,000 Montgomery Co., OH, Healthcare Rev., Ser. A
(Dayton Area MRI Consortium)................................. 4.200 07/05/1995 1,050,000
2,100,000 Montgomery Co., OH, Hosp. Rev. (Sisters of Charity)............ 4.200 07/05/1995 2,100,000
1,000,000 Morrow Co., OH, IDR (Field Container Corp.).................... 4.250 07/05/1995 1,000,000
600,000 Ohio Air Quality Dev. Auth. Rev. (Honda of America)............ 4.250 07/05/1995 600,000
5,000,000 Ohio Higher Educ. Fac. Rev. (Oberlin College).................. 4.000 07/05/1995 5,000,000
1,900,000 Ohio St. Environ. Impt. Rev. (Honda of America)................ 4.250 07/05/1995 1,900,000
200,000 Ohio Water Dev. Auth. Rev. (Timken Co. Proj.).................. 4.000 07/05/1995 200,000
900,000 Orrville, OH, Hosp. Fac. Rev., Ser. 1990 (Orrville Hosp.)...... 4.100 07/05/1995 900,000
200,000 Stark Co., OH, IDR, Ser. D (Kindercare)........................ 4.350 07/05/1995 200,000
2,875,000 Summit Co., OH, IDR (Bowery Assoc.)............................ 4.200 07/05/1995 2,875,000
275,000 Wadsworth, OH, IDR (Kindercare)................................ 4.350 07/05/1995 275,000
1,200,000 Wyandot Co., OH, Indust. Rev., Ser. 1985 (MRG Limited, LP)..... 4.250 07/05/1995 1,200,000
1,860,000 Ashland, OH, IDR (Landover Properties)......................... 4.150 07/06/1995 1,860,000
2,000,000 Clinton Co., OH, Hosp. Rev. (Clinton Memorial)................. 4.200 07/06/1995 2,000,000
3,200,000 Columbus, OH, Sewer Ref. Rev................................... 3.900 07/06/1995 3,200,000
1,000,000 Cuyahoga Co., OH, IDR (Edgecomb Metals)........................ 4.125 07/06/1995 1,000,000
1,265,000 Franklin Co., OH, IDR (Ohio Girl Scouts)...................... 4.200 07/06/1995 1,265,000
7,000,000 Franklin Co., OH, IDR (Berwick Steel).......................... 4.250 07/06/1995 7,000,000
400,000 Franklin Co., OH, IDR (Columbus College)....................... 4.200 07/06/1995 400,000
1,200,000 Franklin Co., OH, Port. Auth. Rev. (Rickenbacker Holdings, Inc.) 4.200 07/06/1995 1,200,000
1,750,000 Hamilton Co., OH, EDR, Ser. 1995
(Cincinnati Assoc. Performing Arts).......................... 4.100 07/06/1995 1,750,000
2,000,000 Lucas Co., OH, IDR (Ohio Citizens Bank Proj.).................. 4.250 07/06/1995 2,000,000
450,000 Lucas Co., OH, Rev. (Sunshine Children's Home)................. 4.250 07/06/1995 450,000
2,090,000 Mahoning Co., OH, Healthcare Fac. Rev. (Copeland Oaks)......... 4.200 07/06/1995 2,090,000
1,870,000 Mahoning Co., OH, Healthcare Fac. Rev. (Ohio Heart Institute).. 4.200 07/06/1995 1,870,000
1,090,000 Marion Co., OH, Hosp. Impt. Rev. (Pooled Lease Proj.).......... 4.200 07/06/1995 1,090,000
4,800,000 Ohio EDR, Ser. 1983 (Court St. Ctr. Assoc. Ltd. Proj.)......... 4.350% 07/06/1995 4,800,000
5,140,000 Ohio St. Infrastructure Indust. Rev., Ser. PA-53............... 4.100 07/06/1995 5,140,000
1,500,000 Pike Co., OH, EDR (Pleasant Hill).............................. 4.200 07/06/1995 1,500,000
3,610,000 Sharonville, OH, IDR (Edgecomb Metals)......................... 4.125 07/06/1995 3,610,000
705,000 Summit Co., OH, IDR (Go-Jo Indust.)............................ 4.200 07/06/1995 705,000
2,725,000 Toledo-Lucas Co., OH, Port. Auth. IDR Ref., Ser. 1994.......... 4.200 07/06/1995 2,725,000
4,650,000 Trumbull Co., OH, Hosp. Rev. (Shepherd Valley Lutheran)........ 4.250 07/06/1995 4,650,000
1,600,000 Warren Co., OH, IDR (Liquid Container)......................... 4.250 07/06/1995 1,600,000
3,050,000 Westlake, OH, IDR (Nordson Co.)................................ 4.150 07/06/1995 3,050,000
205,000 Wood Co., OH, IDR (North American Science)..................... 4.200 07/06/1995 205,000
2,200,000 Ashland Co., OH, Hosp. Fac. Rev., Ser. 1989 (Good Shepherd).... 4.500 07/07/1995 2,200,000
1,400,000 Hamilton Co., OH, IDR (ADP System)............................. 3.600 07/15/1995 1,400,000
- ------------- ------------
$125,509,000 TOTAL FLOATING AND VARIABLE RATE DEMAND NOTES
- ------------- (Amortized Cost $125,509,000)................................ $125,509,000
------------
</TABLE>
<PAGE>
<TABLE>
Principal Coupon Maturity
Amount Adjustable Rate Put Bonds-- 16.1% Rate Date Value
- ------------ --------------------------------- -------- ---------- ---------
<C> <S> <C> <C> <C>
$ 935,000 Franklin Co., OH, EDR (JAL Realty)............................. 5.100% 07/15/1995 $ 935,000
1,605,000 Hamilton, OH, First Mtg. Rev.
(Continental Commercial Properties).......................... 4.700 08/01/1995 1,605,000
660,000 Middletown, OH, First Mtg. Rev.
(Continental Commercial Properties).......................... 4.700 08/01/1995 660,000
1,010,000 Citizens Federal Tax-Exempt Mtg. Bond Trust.................... 5.050 09/01/1995 1,010,000
975,000 M & M Tax-Exempt Mtg. Bond Trust.............................. 4.550 09/01/1995 975,000
695,000 Riverside, OH, EDR (Riverside Assoc. Ltd. Proj.)............... 5.100 09/01/1995 695,000
730,000 Summit Co., OH, IDR (Arlington Plaza).......................... 4.500 09/01/1995 729,860
4,565,000 Cuyahoga Co., OH, IDR (Halle Office Bldg.)..................... 4.752 10/01/1995 4,568,158
180,000 Franklin Co., OH, IDR (Pan Western Life)....................... 4.550 10/01/1995 180,000
1,000,000 Marion Co., OH, Hosp. Impt. Rev., Ser. 1992 (Pooled Lease Proj.) 4.250 10/01/1995 1,000,000
1,300,000 Miami Valley Tax-Exempt Mtg. Bond Trust........................ 4.880 10/15/1995 1,300,000
735,000 Franklin Co., OH, IDR (GSW Proj.).............................. 4.300 11/01/1995 735,000
1,445,000 Marion Co., OH, Hosp. Impt. Rev. (Pooled Lease Proj.).......... 4.250 11/01/1995 1,445,000
170,000 Ohio Company Tax-Exempt Mtg. Bond Trust, Ser. 1................ 4.540 11/01/1995 170,000
3,380,000 Ohio HFA MFH (Lincoln Park).................................... 4.400 11/01/1995 3,380,000
185,000 Summit Co., OH, IDR (SGS Tool Co. II).......................... 4.350 11/01/1995 185,000
3,955,000 Richland Co., OH, IDR (Mansfield Sq. Proj.).................... 4.450 11/15/1995 3,955,000
2,500,000 Ohio St. Air Quality Dev. Auth. Rev., Ser. A (Duquesne Light).. 4.800 11/30/1995 2,500,000
930,000 Cuyahoga Co., OH, Healthcare Rev............................... 4.300 12/01/1995 930,000
545,000 Cuyahoga Co., OH, IDR (Southwest Partners Ltd.)................ 4.700 12/01/1995 545,000
725,000 Cuyahoga Co., OH, IDR (Welded Ring)............................ 4.200 12/01/1995 725,000
2,470,000 Franklin Co., OH, IDR (Leveque & Assoc. Proj.)................. 4.200 12/01/1995 2,470,000
360,000 Lucas Co., OH, EDR (Cross County Inns, Inc.)................... 4.400 12/01/1995 360,000
985,000 Scioto Co., OH, Healthcare Rev. (Hillview Retirement).......... 4.200 12/01/1995 985,000
1,165,000 Gallia Co., OH, IDR (Jackson Pike Assoc.)...................... 3.850 12/15/1995 1,165,000
3,320,000 Ohio Company Tax-Exempt Mtg. Bond Trust, Ser. 2................ 4.430 12/15/1995 3,319,203
- ------------- ------------
$36,525,000 TOTAL ADJUSTABLE RATE PUT BONDS
- ------------- (Amortized Cost $36,527,221)................................ $36,527,221
------------
$228,009,500 TOTAL INVESTMENTS AT VALUE -- 100.7%
============= (Amortized Cost $228,219,069)............................... $228,219,069
OTHER ASSETS AND LIABILITIES, NET-- (0.7)% .................... (1,612,714)
-------------
NET ASSETS-- 100.0% ........................................... $226,606,355
=============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY FUND
PORTFOLIO OF INVESTMENTS
June 30, 1995
Principal Coupon Maturity
Amount Fixed Rate Revenue & General Obligation Bonds-- 31.3% Rate Date Value
- ------------ ----------------------------------------------------- -------- ---------- ---------
<C> <S> <C> <C> <C>
$ 100,000 Metro. Atlanta Rapid Transit Auth. Sales Tax Rev.,
Prerefunded @ 102 ........................................... 8.750% 07/01/1995 $ 102,000
150,000 Ft. Wayne, IN, Hosp. Auth., Ser. B (Ancilla Sys.),
Prerefunded @ 102 ........................................... 9.500 07/01/1995 153,000
200,000 Intermountain Power Agy., UT, Power Supply Rev., Ser. J,
Prerefunded @ 102 ........................................... 8.200 07/01/1995 204,000
585,000 Mobile, AL, Water & Sewer Rev., Ser. A, Escrowed to Maturity... 7.700 07/01/1995 585,000
250,000 Seattle, WA, Museum Auth. Rev., Prerefunded @ 100.............. 8.600 07/01/1995 250,000
325,000 Ft. Wayne, IN, Sewer Works Impt. Rev........................... 5.200 08/01/1995 325,107
200,000 Minnesota St. Various Purpose GO............................... 6.600 08/01/1995 200,399
240,000 South Carolina, GO, Prerefunded @ 102.......................... 6.200 08/01/1995 245,083
285,000 Texas Pub. Bldg. Auth. Pub. Impt. Rev., Ser. A,
Prerefunded @ 102 ........................................... 9.375 08/01/1995 291,884
550,000 Washington, MD, Suburban Sani. Dist., Prerefunded @ 102........ 8.500 08/01/1995 562,943
110,000 Austin, TX, GO, Prerefunded @ 100.............................. 9.000 09/01/1995 110,739
320,000 Kansas City, KS, Util. Sys. Rev., Escrowed to Maturity......... 4.700 09/01/1995 320,035
300,000 Austin, TX, Elec. Util. COP.................................... 5.900 09/15/1995 301,137
250,000 Salt Lake Co., UT, Water Conservancy Dist. Ref. Rev............ 5.700 10/01/1995 250,495
110,000 Pulaski Co., AK, Health Facs. Rev.
(Sisters of Charity Nazareth), Prerefunded @ 102 ............ 9.500 11/01/1995 114,144
140,000 Austin, TX, Util. Sys. Rev., Prerefunded @ 102................. 10.250 11/15/1995 145,711
125,000 Mesa Co., CO, Sales Tax Rev., Ser. A, Prerefunded @ 102........ 8.000 12/01/1995 129,629
145,000 Milwaukee, WI, GO, Ser. BV-2................................... 6.300 12/01/1995 146,152
190,000 Texas St. GO................................................... 8.800 12/01/1995 193,326
125,000 Jefferson Co., CO, School Dist. No. R-001 GO, Ser. C,
Escrowed to Maturity ........................................ 7.800 12/15/1995 126,818
500,000 Lawrence Twp., IN, Metro. School Dist. Tax
Anticipation Warrants, Ser. 1995 ............................ 5.500 12/29/1995 500,593
110,000 Indiana Muni. Power Supply Rev., Ser. A, Prerefunded @ 103..... 9.200 01/01/1996 115,507
105,000 Michigan Pub. Power Agy. Rev. (Belle River Proj.),
Prerefunded @ 101 ........................................... 7.000 01/01/1996 107,096
525,000 Piedmont, SC, Muni. Power Agy. Elec. Rev., Prerefunded @ 103... 9.700 01/01/1996 554,083
130,000 Barnwell Co., SC, GO........................................... 6.750 02/01/1996 131,996
250,000 Cobb Co., GA, School Dist. GO.................................. 6.125 02/01/1996 252,793
560,000 Ross Co., OH, GO BANS.......................................... 5.040 04/26/1996 561,269
250,000 Florida St. Board of Educ. GO, Ser. A, Prerefunded @ 102....... 7.500 06/01/1996 262,610
995,000 Covington, KY, GO TRANS........................................ 5.500 06/28/1996 999,676
110,000 Washington St. Pub. Power Supply Sys. Rev., Ser. 1990
(Nuclear Proj. #1), Prerefunded @ 103........................ 15.000 07/01/1996 124,736
- ------------- -----------
$ 8,235,000 TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS
- ------------- (Amortized Cost $8,367,961)................................. $8,367,961
------------
</TABLE>
<PAGE>
<TABLE>
Principal Coupon Maturity
Amount Floating and Variable Rate Demand Notes-- 44.8% Rate Date Value
- ------------ ----------------------------------------------- -------- ---------- ---------
<C> <S> <C> <C> <C>
$ 220,000 Muskogee, OK, IDR (Brockway, Inc.)............................. 4.500% 07/03/1995 $ 220,000
790,000 Washington Co., PA, IDA (Dynamet, Inc. Proj.).................. 4.140 07/03/1995 790,000
2,100,000 Cuyahoga Co., OH, Hosp. Impt. Rev. (University Hosp. Cleveland) 4.200 07/03/1995 2,100,000
480,000 NCNB Pooled Tax-Exempt Trust, Ser. 1990A....................... 4.500 07/03/1995 480,000
1,000,000 New Jersey EDA & EDR (Union Avenue Assoc.)..................... 4.050 07/03/1995 1,000,000
900,000 Eddyville, IA, IDR (Heartland Lysine, Inc.).................... 4.450 07/05/1995 900,000
1,000,000 Illinois Dev. Fin. Auth. MFH Rev. (Cobbler Square Proj.)....... 4.350 07/05/1995 1,000,000
1,000,000 Stark Co., OH, IDR (Wilkof-Morris Proj.)....................... 4.350 07/05/1995 1,000,000
890,000 Brooklyn Park, MN, IDR (Schmidt Proj.)......................... 4.400 07/06/1995 890,000
600,000 Larimer Co., CO, IDR, Ser. 1995B (Ultimate Support Sys.)....... 4.550 07/06/1995 600,000
1,205,000 Michigan Strategic Fund IDR (Rochester Gear, Inc.)............. 4.800 07/06/1995 1,205,000
1,300,000 Redwood Falls, MN, IDR (Zytec Corp. Proj.)..................... 4.800 07/06/1995 1,300,000
460,000 St. Cloud, MN, Hsg. & Redev. Auth. (Coborn Realty Co.)......... 4.400 07/06/1995 460,000
- ------------- ------------
$11,945,000 TOTAL FLOATING AND VARIABLE RATE DEMAND NOTES
- ------------- (Amortized Cost $11,945,000)................................ $11,945,000
------------
</TABLE>
<PAGE>
<TABLE>
Principal Coupon Maturity
Amount Adjustable Rate Put Bonds-- 26.8% Rate Date Value
- ------------ --------------------------------- -------- ---------- ---------
<C> <S> <C> <C> <C>
$ 760,000 Lexington-Fayette Co., KY, Urban Gov't. Rev.
(Providence Montessori) ..................................... 4.750% 07/01/1995 $ 760,000
1,190,000 Buckeye Tax-Exempt Mtg. Bond Trust............................. 5.200 08/01/1995 1,188,481
350,000 Lansing, MI, EDR (LGH Office Bldg. Proj.)...................... 4.950 08/15/1995 350,000
1,500,000 Charleston, SC, Center Tax-Exempt Mtg. Bond Trust.............. 4.550 09/01/1995 1,500,000
160,000 Citizens Federal Tax-Exempt Mtg. Bond Trust.................... 5.050 09/01/1995 160,000
1,200,000 Owensboro, KY, IDR, Ser. 1985 (Dart Container)................. 4.100 09/01/1995 1,200,000
170,000 Cuyahoga Co., OH, IDR (Halle Office Bldg.)..................... 4.752 10/01/1995 170,000
570,000 Romulus, MI, Econ. Dev. Corp. (Airport Realty Proj.)........... 4.700 10/01/1995 570,000
250,000 Medina Co., OH, IDR (Nationwide One Proj.)..................... 4.500 11/01/1995 249,928
1,000,000 Westmoreland Co., PA, IDR (White Cons Indust.)................. 4.620 12/01/1995 1,000,000
- ------------- ------------
$ 7,150,000 TOTAL ADJUSTABLE RATE PUT BONDS
- ------------- (Amortized Cost $7,148,409)................................. $7,148,409
------------
$27,330,000 TOTAL INVESTMENTS AT VALUE -- 102.9%
============= (Amortized Cost $27,461,370)................................ $27,461,370
OTHER ASSETS AND LIABILITIES, NET-- (2.9%) .................... (769,153)
-----------
NET ASSETS-- 100.0% ........................................... $26,692,217
============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE MONEY FUND
PORTFOLIO OF INVESTMENTS
June 30, 1995
Principal Coupon Maturity
Amount Fixed Rate Revenue & General Obligation Bonds--39.2% Rate Date Value
- ------------ ---------------------------------------------------- -------- ---------- ---------
<C> <S> <C> <C> <C>
$ 10,000 Northern California Power Agy. Rev. (Geothermal Proj.),
Prerefunded @ 103 ........................................... 11.500% 07/01/1995 $ 10,000
500,000 Northern California Power Agy. Rev. (Geothermal Proj.),
Prerefunded @ 102 ........................................... 9.750 07/01/1995 510,000
200,000 Northern California Power Agy. Rev. (Geothermal Proj.),
Prerefunded @ 102 ........................................... 9.500 07/01/1995 204,000
100,000 Puerto Rico Elec. Power Auth. Rev., Ser. M..................... 6.700 07/01/1995 100,000
275,000 San Francisco Bay, CA, Rapid Transit Dist.
Sales Tax Rev., Prerefunded @ 103 ........................... 8.750 07/01/1995 283,250
100,000 Southern California Public Power Auth.
Rev. (Palo Verde Project), Prerefunded @ 102.50 ............. 9.375 07/01/1995 102,500
100,000 Southern California Rapid Transit COP (Workers' Comp.)......... 5.200 07/01/1995 100,000
280,000 Fremont, CA, USD TRANS......................................... 4.500 07/06/1995 280,017
500,000 Los Angeles, CA, USD TRANS..................................... 4.500 07/10/1995 499,945
255,000 Compton, CA, COP (Convention Center Proj.), Prerefunded @ 102.. 11.125 08/01/1995 261,363
150,000 Oakland, CA, Redev. Agy. COP, Prerefunded @ 102................ 9.000 08/01/1995 153,581
750,000 San Francisco, CA, City & Co. Sewer Rev., Prerefunded @ 102.... 7.125 08/01/1995 766,673
230,000 Los Angeles, CA, Convention & Exhibition Center Auth. COP...... 6.300 08/15/1995 230,425
100,000 California Health Fac. Fin. Auth. Rev.
(Centinela Hosp. Medical Center - A), Prerefunded @ 102...... 9.375 09/01/1995 102,747
195,000 East Bay, CA, Regional Park Dist. Rev......................... 9.250 09/01/1995 196,570
100,000 Los Angeles Co., CA COP (Correctional Fac. Proj.).............. 5.200 09/01/1995 100,120
165,000 Ontario, CA, Redev. Agy. Tax Rev.
(Ontario Redev. Proj. #1), Prerefunded @ 102.50 ............. 8.750 09/01/1995 170,207
120,000 Redding, CA, Redev. Agy. Tax Rev.
(Canby, Hilltop & Cypress Redev. Proj.), Prerefunded @ 102... 8.000 09/01/1995 123,043
140,000 California Educ. Fac. Auth. Rev., 1st Series
(Univ. of Southern California), Prerefunded @ 102............ 9.200 10/01/1995 144,256
100,000 Los Angeles Co., CA, COP (Los Angeles Co. Public Property),
Prerefunded @ 101.50......................................... 10.500 10/01/1995 103,032
100,000 Modesto, CA, Irrigation Dist. COP (Geysters Geothermal),
Prerefunded @ 102............................................ 8.875 10/01/1995 103,124
500,000 San Jose & Santa Clara, CA, Clean Water Fin.
Auth. Rev., Ser. A .......................................... 6.400 10/01/1995 502,658
100,000 Brea, CA, Redev. Agy. Tax Allocation (Redev. Proj. AB),
Prerefunded @ 102.50 ........................................ 8.300 11/01/1995 103,705
170,000 California Health Fac. Fin. Auth. Rev., Ser. A
(St. Francis Memorial Hosp.), Prerefunded @ 102.............. 9.000 11/01/1995 176,011
250,000 Rancho, CA, Water Dist. COP, Prerefunded @ 102................. 9.250 11/01/1995 259,048
300,000 La Mirada, CA, Redev. Agy. Tax Allocation, Prerefunded @ 102.50 8.900 11/15/1995 312,939
400,000 California St. Dept. of Water Resources Rev., Ser. A
(Central Valley Proj.), Prerefunded @ 101.50................. 7.500 12/01/1995 412,607
100,000 Elk Grove, CA, USD Special Tax Rev............................. 8.300 12/01/1995 101,782
100,000 Glendale, CA, Redev. Agy. Rev. (Central Glendale Redev Proj.).. 6.100 12/01/1995 100,688
665,000 Tri City, CA, Hosp. Dist. COP (Imperial Muni.
Services Group, Inc.), Prerefunded @ 100..................... 9.875 02/01/1996 687,691
190,000 Tri City, CA, Hosp. Dist. COP (Imperial Muni.
Services Group, Inc.), Prerefunded @ 100..................... 9.875 02/01/1996 196,449
150,000 East Bay, CA, Muni. Util. Dist. Rev., Ser. D,
Prerefunded @ 102.50 ........................................ 7.000 04/01/1996 156,683
100,000 California St. Revenue Anticipation Warrants, Ser. C........... 5.750 04/25/1996 101,714
- ------------- ------------
$ 7,495,000 TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS
- ------------- (Amortized Cost $7,656,828)................................. $ 7,656,828
------------
</TABLE>
<TABLE>
Principal Coupon Maturity
Amount Floating and Variable Rate Demand Notes-- 46.0% Rate Date Value
- ------------ ----------------------------------------------- -------- ---------- ---------
<C> <S> <C> <C> <C>
$ 300,000 California Health Fac. Fin. Auth. Rev. (Sutter Health)......... 4.050% 07/03/95 $ 300,000
600,000 Irvine Ranch, CA, Water Dist. Rev.............................. 4.300 07/03/95 600,000
700,000 Irvine Ranch, CA, Water Dist. Rev. (1986 Cap. Impt. Proj.)..... 4.150 07/03/95 700,000
400,000 Irvine Ranch, CA, Water Dist. Rev.............................. 4.350 07/03/95 400,000
700,000 Irvine Ranch, CA, Water Dist. Rev., Ser. 1993.................. 4.350 07/03/95 $ 700,000
100,000 California PCR Fin. Auth. Rev. (Del Marva Power & Light)....... 4.350 07/03/95 100,000
200,000 California PCR Fin. Auth. Rev. (Del Marva Power & Light
- Burney Forest Proj.) ...................................... 4.350 07/03/95 200,000
400,000 California PCR Fin. Auth. Rev. (Honeylake Power)............... 4.250 07/03/95 400,000
300,000 California PCR Rev., Ser. A (Ultrapower-Rocklin)............... 4.300 07/03/95 300,000
600,000 Los Angeles Co., CA, IDA IDR (Kransco)......................... 4.150 07/05/95 600,000
880,000 California HFA Home Mtg. Rev., Ser. 1993B...................... 4.250 07/06/95 880,000
1,000,000 Corona, CA, IDA (Syroco of CA, Inc.)........................... 4.350 07/06/95 1,000,000
1,000,000 Los Angeles Co., CA, Metro Transit Auth. Rev.,
Ser. 95A (Union St. Gateway Proj.) .......................... 4.250 07/06/95 1,000,000
1,000,000 San Bernardino, CA, IDR (LaQuinta Motor Inns).................. 4.250 07/06/95 1,000,000
800,000 San Francisco Parking Auth. Rev................................ 4.400 07/06/95 800,000
- ------------- ------------
$ 8,980,000 TOTAL FLOATING AND VARIABLE RATE DEMAND NOTES
- ------------- (Amortized Cost $8,980,000)................................. $ 8,980,000
------------
</TABLE>
<TABLE>
Principal Coupon Maturity
Amount Adjustable Rate Put Bonds-- 2.6% Rate Date Value
- ------------ -------------------------------- -------- ---------- ---------
<C> <S> <C> <C> <C>
$ 500,000 California Higher Educ. Student Loan Auth. Rev., Ser. 1995E.... 4.250% 12/01/1995 $ 500,000
- ------------- ------------
$ 500,000 TOTAL ADJUSTABLE RATE PUT BONDS
- ------------- (Amortized Cost $500,000)................................... $ 500,000
------------
</TABLE>
<TABLE>
Principal Coupon Maturity
Amount Commercial Paper-- 10.2% Rate Date Value
- ------------ ------------------------ -------- ---------- ---------
<C> <S> <C> <C> <C>
$ 1,000,000 San Diego, CA, IDR, Ser. 1995 (San Diego G & E)................ 3.400% 07/12/1995 $ 1,000,000
1,000,000 California PCR Fin. Auth. Rev. (Pacific G & E)................. 4.150 09/07/1995 1,000,000
- ------------- ------------
$ 2,000,000 TOTAL COMMERCIAL PAPER
- ------------- (Amortized Cost $2,000,000)................................. $ 2,000,000
------------
$18,975,000 TOTAL INVESTMENTS AT VALUE -- 98.0%
=============
(Amortized Cost $19,136,828)................................. $19,136,828
OTHER ASSETS AND LIABILITIES, NET-- 2.0% ...................... 387,928
------------
NET ASSETS-- 100.0% ........................................... $19,524,756
============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ROYAL PALM FLORIDA TAX-FREE MONEY FUND
PORTFOLIO OF INVESTMENTS
June 30, 1995
Coupon Maturity Principal
Amount Fixed Rate Revenue & General Obligation Bonds-- 37.6% Rate Date Value
- ------------ ------------------------------------------------------ -------- ---------- ---------
<C> <S> <C> <C> <C>
$ 115,000 Collier Co., FL, Cap. Impt. Rev., Prerefunded @ 102............ 6.875% 07/01/1995 $ 117,300
100,000 Collier Co., FL, Water & Sewer Dist. Rev., Prerefunded @ 102... 8.750 07/01/1995 102,000
100,000 Florida St. GO (Broward Co. Highway Impt.), Escrowed to Maturity 9.750 07/01/1995 100,000
500,000 Florida St. GO, Ser. A (Broward Co.
Expressway Auth.), Prerefunded @ 102 ........................ 9.200 07/01/1995 510,000
500,000 Florida St. GO (Broward Co. Expressway Auth.), Prerefunded @ 102 9.800 07/01/1995 510,000
150,000 Florida St. Division of Bond Fin. Rev., Ser. E (Save Our Coast) 12.000 07/01/1995 150,000
105,000 Okaloosa Co., FL, Water & Sewer Rev., Prerefunded @ 103........ 9.500 07/01/1995 108,150
300,000 Pompano Beach, FL, Water & Sewer Rev., Prerefunded @ 102....... 7.600 07/01/1995 306,000
100,000 East Chicago, IN, CSD COP, Prerefunded @ 103................... 9.600 08/01/1995 103,430
850,000 Lee Co., FL, School Board COP, Ser. A.......................... 5.700 08/01/1995 850,707
250,000 Marion Co., FL, Solid Waste Sys. Rev........................... 5.650 08/01/1995 250,298
125,000 Palm Beach Co., FL, School Dist. GO, Ser. A, Prerefunded @ 103. 7.875 08/01/1995 129,101
200,000 Pasco Co., FL, Gas Tax Rev..................................... 6.700 08/01/1995 200,404
250,000 Hillsborough Co., FL, School Dist. GO, Prerefunded @ 102....... 8.875 09/01/1995 256,726
100,000 Sarasota, FL, Infrastructure Sales Surtax Rev.,
Prerefunded @ 102 ........................................... 6.500 09/01/1995 102,238
180,000 Dunedin, FL, Hosp. Rev. (Mease Health Care), Prerefunded @ 102. 9.250 10/01/1995 185,733
400,000 Jacksonville, FL, Elec. Auth. Rev. (St. John's River),
Prerefunded @ 102 ........................................... 10.250 10/01/1995 413,649
230,000 Jacksonville, FL, Elec. Auth. Rev. (St. John's River),
Prerefunded @ 102 ........................................... 9.375 10/01/1995 237,255
100,000 Jacksonville, FL, Elec. Auth. Rev. (St. John's River),
Prerefunded @ 101.50 ........................................ 7.000 10/01/1995 102,114
200,000 Jacksonville, FL, Elec. Auth. Rev. (St. John's River),
Prerefunded @ 101.50 ........................................ 7.375 10/01/1995 204,448
100,000 Orlando, FL, Util. Common Water & Elec. Rev.,
Escrowed to Maturity ........................................ 5.700 10/01/1995 100,658
105,000 Tallahassee, FL, Airport Sys. Rev., Ser. A..................... 6.650 10/01/1995 105,411
315,000 Tampa, FL, Util. Tax & Special Rev., Prerefunded @ 102......... 8.875 10/01/1995 324,458
250,000 Tampa, FL, Water & Sewer Rev., Ser. B.......................... 6.800 10/01/1995 251,549
100,000 Valdosta & Lowndes Co., GA, Hosp. Auth. Ref. Rev.
(South Georgia Medical Center), Escrowed to Maturity........ 6.600 10/01/1995 100,566
110,000 Allegheny Co., PA, Health Fac. Rev. (Episcopal Church),
Prerefunded @ 100 ........................................... 8.100 12/01/1995 111,826
250,000 Broward Co., FL, Health Fac. Rev. (Holy Cross Hosp.),
Prerefunded @ 102 ........................................... 8.750 12/01/1995 258,731
170,000 Broward Co., FL, Health Fac. Rev. (Holy Cross Hosp.),
Prerefunded @ 102 ........................................... 9.250 12/01/1995 177,085
225,000 Clearwater, FL, Water & Sewer Rev., Prerefunded @ 102.......... 8.100 12/01/1995 233,187
445,000 Clearwater, FL, Water & Sewer Rev., Prerefunded @ 102.......... 8.400 12/01/1995 461,734
100,000 Lake Co., FL, Sales Rev., Prerefunded @ 102.................... 7.800 12/01/1995 103,594
150,000 Palm Beach Co., FL, Solid Waste Sewer Impt. Auth. Rev.,
Prerefunded @ 102 ........................................... 10.000 12/01/1995 155,982
500,000 Lawrence Twp., IN, Metro. School Dist. Tax
Anticipation Warrants, Ser. 1995 ............................ 5.500 12/29/1995 500,593
300,000 North Broward, FL, Hosp. Dist. Rev............................. 5.000 01/01/1996 300,820
100,000 Hillsborough Co., FL, Cap. Impt. Rev., Subser. 2,
Prerefunded @ 102 ........................................... 7.200 02/01/1996 103,699
250,000 South Broward, FL, Hosp. Dist. Rev., Prerefunded @ 102......... 7.250 05/01/1996 260,419
455,000 Florida St. Board of Educ. GO, Ser. B., Prerefunded @ 102...... 7.250 06/01/1996 477,364
100,000 Ft. Lauderdale, FL, GO, Prerefunded @ 102...................... 7.600 07/01/1996 105,258
- ------------- ------------
$ 8,880,000 TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS
- ------------- (Amortized Cost $9,072,487 )................................ $ 9,072,487
------------
</TABLE>
<PAGE>
<TABLE>
Principal Coupon Maturity
Amount Floating and Variable Rate Demand Notes-- 44.9% Rate Date Value
- ------------ ----------------------------------------------- -------- ---------- ---------
<C> <S> <C> <C> <C>
$ 200,000 Dade Co., FL, IDA IDR (Dates-Pot Co., Inc.).................... 4.550% 07/03/1995 $ 200,000
1,000,000 Jacksonville, FL, Health Fac. Auth. Rev.,
Ser. 1988 (River Garden) .................................... 4.700 07/03/1995 1,000,000
200,000 Dade Co., FL, IDA IDR (Dates-Young Assoc.)..................... 4.550 07/03/1995 200,000
1,100,000 Cuyahoga Co., OH, Hosp. Impt. Rev. (University Hosp. Cleveland) 4.200 07/03/1995 1,100,000
800,000 Florida HFA Rev. (Monterey Meadows)............................ 4.000 07/05/1995 800,000
735,000 Illinois Dev. Fin. Auth. MFH Rev. (Cobbler Square Proj.)....... 4.350 07/05/1995 735,000
250,000 Subiaco, AR, IDR (Cloves Gear)................................. 4.350 07/05/1995 250,000
1,000,000 Boca Raton, FL, IDR (Parking Garage)........................... 4.375 07/06/1995 1,000,000
1,000,000 Broward Co., FL, MFH Rev. (Sawgrass Pines)..................... 4.600 07/06/1995 1,000,000
550,000 Dade Co., FL, IDA (Kantor Brothers Neckwear Co.)............... 4.400 07/06/1995 550,000
1,000,000 Florida Muni. Power Rev. (Stanton II Proj.).................... 4.200 07/06/1995 1,000,000
400,000 Lee Co., FL, HFA Rev. (Forestwood Apts. Proj. A)............... 4.000 07/06/1995 400,000
700,000 Manatee Co., FL, HFA Rev. (Hampton Ct.)........................ 4.250 07/06/1995 700,000
1,900,000 Plant City, FL, Hosp. Rev. (South Florida Baptist Hosp.)....... 4.400 07/06/1995 1,900,000
- ------------- ------------
$10,835,000 TOTAL FLOATING AND VARIABLE RATE DEMAND NOTES
- ------------- (Amortized Cost $10,835,000)................................ $10,835,000
------------
</TABLE>
<TABLE>
Principal Coupon Maturity
Amount Adjustable Rate Put Bonds-- 11.9% Rate Date Value
- ------------ --------------------------------- -------- ---------- ---------
<C> <S> <C> <C> <C>
$ 725,000 Summit Co., OH, IDR (Akromold, Inc. Proj.)..................... 4.600% 11/01/1995 $ 725,000
2,135,000 Florida HFA Rev................................................ 4.250 12/15/1995 2,135,000
- ------------- ------------
$ 2,860,000 TOTAL ADJUSTABLE RATE PUT BONDS
- ------------- (Amortized Cost $2,860,000)................................. $ 2,860,000
------------
</TABLE>
<TABLE>
Principal Coupon Maturity
Amount Commercial Paper-- 4.1% Rate Date Value
- ------------ ----------------------- -------- ---------- ---------
<C> <S> <C> <C> <C>
$ 1,000,000 Greater Orlando, FL, Aviation Tax-Exempt Notes................. 4.300% 07/31/1995 $ 1,000,000
- ------------- ------------
$ 1,000,000 TOTAL COMMERCIAL PAPER
- ------------- (Amortized Cost $1,000,000)................................ $ 1,000,000
------------
$23,575,000 TOTAL INVESTMENTS AT VALUE -- 98.5%
============= (Amortized Cost $23,767,487)................................ $23,767,487
OTHER ASSETS AND LIABILITIES, NET-- 1.5% ...................... 351,085
------------
NET ASSETS-- 100.0% ........................................... $24,118,572
============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE TERM FUND
PORTFOLIO OF INVESTMENTS
June 30, 1995
Principal Coupon Maturity
Amount Municipal Bonds Rate Date Value
- ------------ --------------- -------- ---------- ---------
<C> <S> <C> <C> <C>
ALABAMA -- .2%
$ 200,000 Montgomery Co., AL, Waterworks & Sani. Sewer Rev.,
Prerefunded @ 100 ........................................... 9.700% 03/01/1996 $ 207,828
------------
ALASKA -- .5%
385,000 Alaska St. HFC Rev............................................. 7.650 12/01/2010 407,811
60,000 Alaska St. HFC Coll. Home Mtg. Rev............................. 7.250 12/01/2011 60,823
------------
468,634
------------
ARIZONA -- 2.3%
500,000 Pima Co., AZ, USD No. 1 (Tuscon), Prerefunded @ 102............ 6.750 07/01/1998 543,255
400,000 Arizona Educ. Loan Mkt. Corp. Rev., Ser. A..................... 6.700 03/01/2000 420,664
600,000 Maricopa Co., AZ, School Dist. Rev., Ser. 1991C (Tempe Elem.).. 8.000 07/01/2004 722,436
255,000 Maricopa Co., AZ, SFM Rev., Ser. 1991.......................... 7.375 08/01/2005 273,230
------------
1,959,585
------------
CALIFORNIA -- 2.7%
245,000 California Health Fac. Auth. Rev. (Stanford Univ. Hosp.),
Prerefunded @ 102 ........................................... 7.125 11/01/1996 259,690
300,000 California St. Public Works Dept. of Corrections Rev.,
Prerefunded @ 102 ........................................... 7.375 11/01/1996 319,281
500,000 Santa Clara Co., CA, Hsg. Auth. ARPB (Orchard Glen Apts.)...... 5.250 11/01/1998 502,985
490,000 Sacramento Co., CA, MFH ARPB (Fairway One Apts.)............... 5.875 02/01/2003 496,238
500,000 Santa Monica, CA, Redev. Agy. Lease Rev........................ 6.000 07/01/2003 524,245
250,000 California HFA Multi-Unit Rental Rev., Ser. B.................. 6.500 08/01/2005 259,882
------------
2,362,321
------------
DELAWARE -- 1.2%
500,000 Delaware St. GO................................................ 7.100 05/01/1996 501,435
500,000 Delaware St. Transit Auth. Rev................................. 6.100 07/01/2002 531,855
------------
1,033,290
------------
FLORIDA -- 1.0%
100,000 Hillsborough Co., FL, Cap. Impt. Rev., Subser. 2,
Prerefunded @ 102 ........................................... 8.300 02/01/1996 104,649
500,000 Florida HFA MFH ARPB, Ser. B (Hampton Lakes II Proj.).......... 5.700 04/01/2001 508,580
200,000 Florida St. GO................................................. 6.500 05/01/2004 203,868
------------
817,097
------------
GEORGIA -- 1.2%
255,000 Atlanta, GA, Airport Extension & Impt. Rev.,
Escrowed to Maturity ........................................ 7.250 01/01/1998 272,121
700,000 Fulton Co., GA, Water & Sewer Rev., Ser. 1986,
Prerefunded @ 101 ........................................... 6.800 01/01/2000 766,500
------------
1,038,621
------------
HAWAII -- 1.9%
500,000 Honolulu, HI, City & Co. GO, Prerefunded @ 101.50.............. 7.400 07/01/1997 538,075
1,000,000 Honolulu, HI, City & Co. GO, Ser. D, Escrowed to Maturity...... 6.300 12/01/1998 1,064,880
------------
1,602,955
------------
ILLINOIS -- 4.4%
500,000 Aurora, IL, MFH Rev., Ser. 1988 (Fox Valley)................... 7.750 09/01/1998 531,080
480,000 Hoffman Estates, IL, MFH ARPB (Park Place Apts.)............... 7.000 11/30/1998 494,875
500,000 Joliet, IL, Gas Supply Rev. (Peoples Gas Light & Coke)......... 8.000 06/01/1999 560,685
1,000,000 Illinois St. GO................................................ 6.250 12/01/2001 1,036,490
660,000 Alsip, IL, MFH ARPB, Ser. A (Woodland Ct.)..................... 5.125 11/01/2003 647,836
500,000 Chicago, IL, Public Bldg. Comm. Rev., Escrowed to Maturity..... 7.700 01/01/2008 540,565
------------
3,811,531
------------
INDIANA -- 3.7%
1,500,000 Indianapolis, IN, Local Public Impt. Rev., Ser. A,
Prerefunded @ 102 ........................................... 6.500 01/15/1998 1,609,305
1,000,000 Indiana Bond Bank Special Prog. Rev., Ser. A1.................. 6.650 01/01/2004 1,065,360
500,000 Indiana HFA Multi-Unit Mtg. Prog. Rev., Ser. 1992A............. 6.600 01/01/2012 515,285
------------
3,189,950
------------
IOWA -- 1.4%
$ 250,000 Iowa Student Loan Liquidity Corp. Rev.......................... 6.400 07/01/2004 262,548
435,000 Iowa HFA Rev................................................... 6.500 07/01/2006 455,815
240,000 Iowa Student Loan Liquidity Corp. Rev.......................... 6.600 07/01/2008 249,902
250,000 Cedar Rapids, IA, Hosp. Fac. Rev. (St. Luke's Methodist Hosp.). 6.000 08/15/2009 252,050
------------
1,220,315
------------
KENTUCKY -- 2.4%
675,000 Owensboro, KY, Elec. Light & Power Rev., Prerefunded @ 102..... 0.000 01/01/2000 787,705
500,000 Louisville & Jefferson Co., KY, Airport Auth. System Rev....... 5.125 07/01/2004 494,150
750,000 Kentucky St. Turnpike Auth. EDR (Revitalization Proj.)......... 5.250 07/01/2005 751,732
------------
2,033,587
------------
LOUISIANA -- 1.8%
500,000 Louisiana St. Recovery Dist. Sales Tax Rev..................... 7.625 07/01/1996 511,555
440,000 Louisiana Public Fac. Auth. Rev. (Medical Ctr. of Louisiana)... 6.000 10/15/2003 460,007
500,000 West Ouachita Parish, LA, School Dist. GO, Ser. A.............. 6.700 03/01/2006 539,490
------------
1,511,052
------------
MAINE -- .7%
600,000 Maine St. GO................................................... 6.250 07/01/2000 643,512
------------
MARYLAND -- 1.3%
500,000 Maryland St. Health & Higher Educ. Fac. Auth. Rev.
(Univ. of Maryland Medical Sys.) ............................ 6.500 07/01/2001 543,330
500,000 Maryland St. Comm. Dev. Admin. Rev............................. 8.500 04/01/2002 533,720
------------
1,077,050
------------
MASSACHUSETTS -- 2.4%
750,000 Massachusetts St. Indust. Fin. Agy. ARPB (Asahi/America, Inc.). 5.100 03/01/1999 754,995
500,000 New England Educ. Loan Mkt. Corp. Rev., Ser. 1992A............. 6.500 09/01/2002 530,460
500,000 New England Educ. Loan Mkt. Corp. Rev., Ser. 1992B............. 6.600 09/01/2002 533,395
250,000 Massachusetts St. HFA MFH Rev.................................. 9.000 12/01/2009 260,610
------------
2,079,460
------------
MICHIGAN -- 3.1%
1,000,000 Michigan St. Bldg. Auth. Rev., Ser. I.......................... 5.200 10/01/1995 1,003,680
1,000,000 Michigan St. Bldg. Auth. Rev., Ser. II......................... 6.400 10/01/2004 1,080,550
600,000 Kalamazoo, MI, Hosp. Fin. Auth. Rev., Ser. A
(Borgess Medical Ctr.) ...................................... 5.000 06/01/2006 573,216
------------
2,657,446
------------
MISSISSIPPI -- .6%
500,000 Mississippi Higher Educ. Rev., Ser. B.......................... 6.100 07/01/2001 515,675
------------
NEBRASKA -- .9%
60,000 Nebraska Invest. Fin. Auth. SFM Rev., Ser. A................... 8.600 05/15/1997 61,800
705,000 Nebraska Invest. Fin. Auth. Rev., Ser. 1989
(Foundation for Educ. Fund) ................................. 7.000 11/01/2009 742,485
------------
804,285
------------
NEVADA -- 1.9%
1,000,000 Las Vegas, NV, GO, Sewer Impt. Rev............................. 6.500 10/01/2006 1,062,910
500,000 Washoe Co., NV, GO............................................. 7.375 07/01/2009 547,385
------------
1,610,295
------------
NEW HAMPSHIRE -- .5%
400,000 New Hampshire Higher Educ. Rev. (Dartmouth College)............ 5.250 06/01/2008 390,816
------------
NEW YORK -- 1.3%
415,000 New York, NY, GO, Prerefunded @ 102............................ 8.000 08/01/1997 455,168
500,000 New York Local Gov't. Asst. Corp. Rev., Ser. 1991B............. 7.000 04/01/2002 557,265
85,000 New York, NY, GO............................................... 8.000 08/01/2005 92,304
------------
1,104,737
------------
NORTH CAROLINA -- 2.8%
$ 1,065,000 Durham, NC, COP................................................ 6.375% 12/01/2006 $ 1,132,968
1,200,000 Asheville, NC, GO.............................................. 6.100 03/01/2008 1,261,848
------------
2,394,816
------------
OHIO -- 24.7%
1,500,000 Cuyahoga Co., OH, Hosp. Impt. VRDN (Univ. Hosp. Cleveland)..... 4.200 07/03/1995 1,500,000
750,000 Youngstown, OH, CSD RANS, Ser. 1994............................ 5.300 06/15/1996 752,752
245,000 Ohio HFA Mtg. Rev., Ser. A-1................................... 4.400 09/01/1996 245,512
500,000 Ohio St. Bldg. Auth. Rev., Ser. A.............................. 7.150 03/01/1999 543,255
1,000,000 Ohio St. Higher Educ. Fac. Rev. (Oberlin College),
Prerefunded @ 102 ........................................... 7.100 10/01/1999 1,101,770
700,000 Franklin Co., OH, Dev. & Ref. Rev., Ser. 1993
(American Chemical Soc.) .................................... 5.500 04/01/2000 699,930
500,000 Franklin Co., OH, Rev. (Online Computer Library Ctr.).......... 5.500 04/15/2000 499,325
500,000 Columbus, OH, CSD GO, Prerefunded @ 102........................ 7.000 12/01/2000 563,740
1,000,000 Franklin Co., OH, IDR Ref. Rev. (Hoover Universal, Inc.)....... 5.850 06/01/2002 1,019,860
950,000 Akron, Bath & Copley, OH, Joint Twp. Hosp. Rev.
(Summa Health Systems) ...................................... 5.900 11/15/2002 987,288
850,000 Columbus, OH, CSD GO, Prerefunded @ 102........................ 6.650 12/01/2002 957,959
270,000 Warren Co., OH, Hosp. Fac. Rev. (Otterbein Home)............... 7.000 07/01/2003 291,492
870,000 Lorain Co., OH, Hosp. Fac. Rev. (EMH Regl. Medical Ctr.)....... 5.000 11/01/2003 855,401
500,000 Hamilton Co., OH, Hosp. Fac. Rev. (Episcopal Retirement Home).. 6.600 01/01/2004 531,545
1,000,000 Columbus, OH, GO............................................... 4.950 06/15/2004 1,000,690
1,000,000 Ohio St. Natural Resources Fac. GO, Ser. B..................... 4.250 10/01/2004 927,370
425,000 Lorain Co., OH, Hosp. Fac. Rev. (EMH Regl. Medical Ctr.)....... 5.100 11/01/2004 423,096
485,000 Ohio St. Econ. Dev. Comm. Rev. (Cheryl & Co.).................. 5.500 12/01/2004 495,340
625,000 Cuyahoga Co., OH, Util. Sys. Impt. & Ref. Rev., Ser. 1995B..... 5.500 08/15/2005 625,431
1,005,000 Franklin Co., OH, Health Care Fac. Rev. (First Comm. Village).. 6.000 06/01/2006 969,111
1,000,000 Ohio St. Water Dev. Auth. PCR, Ser. 1995....................... 5.200 06/01/2006 986,040
400,000 Painesville, OH, Elec. Rev..................................... 6.000 11/01/2006 412,060
500,000 Delaware Co., OH, GO........................................... 5.250 12/01/2006 494,900
1,000,000 Mahoning Co., OH, GO........................................... 6.600 12/01/2006 1,088,780
500,000 Hamilton Co., OH, Hosp. Fac. Rev. (Episcopal Retirement Home).. 6.800 01/01/2008 527,275
800,000 West Clermont, OH, LSD GO...................................... 6.150 12/01/2008 839,488
500,000 Hamilton Co., OH, Hosp. Fac. Rev. (Bethesda Hosp.)............. 7.000 01/01/2009 521,525
600,000 Franklin Co., OH, GO........................................... 5.450 12/01/2009 592,890
750,000 Univ. of Cincinnati General Receipts, Ser. G................... 7.000 06/01/2011 811,493
------------
21,265,318
------------
PENNSYLVANIA -- 3.6%
840,000 Chartiers Valley, PA, Comm. Dev. ARPB
(Colonial Bldg. Partners Proj.) ............................. 5.625 12/01/1997 845,216
1,000,000 Washington Co., PA, Auth. Lease Rev., Prerefunded @ 103........ 7.450 06/15/2000 1,147,050
500,000 Pennsylvania St., IDR, Ser. A, Prerefunded @ 102............... 7.000 07/01/2001 564,580
500,000 Pennsylvania Fin. Auth. Muni. Cap. Impt. Proj. Rev............. 6.600 11/01/2009 515,810
------------
3,072,656
------------
PUERTO RICO -- 1.2%
175,000 Puerto Rico Commonwealth GO, Prerefunded @ 102................. 7.125 07/01/1997 188,515
825,000 Puerto Rico Commonwealth GO.................................... 7.125 07/01/2002 877,347
------------
1,065,862
------------
SOUTH CAROLINA -- 2.8%
1,000,000 Piedmont, SC, Muni. Power Agy. Rev., Ser. A.................... 6.000 01/01/2002 1,064,620
525,000 South Carolina St. GO, Ser. A.................................. 6.000 03/01/2004 560,144
725,000 Richland-Lexington, SC, Airport Dist. Rev., Ser. 1995
(Columbia Metro.) ........................................... 6.000 01/01/2008 734,947
------------
2,359,711
------------
TENNESSEE -- .7%
525,000 Southeast, TN, Tax-Exempt Mtg. Trust ARPB, Ser. 1990........... 7.250 04/01/2003 569,420
------------
TEXAS -- 13.0%
510,000 Pasadena, TX, IDR (Univ. Space Research Assn.)................. 6.650 10/01/1996 520,435
5,000 Lancaster, TX, ISD GO.......................................... 9.700 02/01/1997 5,426
260,000 Lancaster, TX, ISD GO, Escrowed to Maturity.................... 9.700 02/01/1997 282,162
$ 500,000 Texas Turnpike Auth. Rev. (Dallas N. Tollway),
Prerefunded @ 102 ........................................... 7.250 01/01/1999 553,000
360,000 Texas St. Hsg. Agy. SFM Rev.................................... 9.000 03/01/1999 370,350
500,000 Fort Worth, TX, Water & Sewer Rev., Prerefunded @ 100.......... 6.500 02/15/2001 542,710
500,000 Houston, TX, Sr. Lien Rev., Ser. A
(Hotel Tax & Parking Fac.), Prerefunded @ 100 ............... 7.000 07/01/2001 559,260
1,000,000 Texas National Research Lab. Fin. Corp. Lease Rev.,
Prerefunded @ 102 ........................................... 6.850 12/01/2001 1,120,930
500,000 N. Texas Higher Educ. Student Loan Rev., Ser. 1991A............ 6.875 04/01/2002 534,355
1,000,000 Garland, TX, GO, Ser. B........................................ 5.000 08/15/2003 994,660
580,000 Texas St. Veterans GO.......................................... 8.000 12/01/2003 602,040
625,000 Texas St. Veterans GO.......................................... 8.000 12/01/2005 650,869
785,000 Ennis, TX, ISD Ref. & Impt. GO................................. 5.400 08/15/2006 786,154
750,000 Harris Co., TX, Ref. Rev. (Toll Road).......................... 5.000 08/15/2007 717,720
500,000 N. Central, TX, Health Fac. Rev. (Baylor Health Care),
Indexed Inverse Floater ..................................... 7.440 05/15/2008 537,965
515,000 Irving, TX, GO................................................. 5.500 09/15/2009 512,440
550,798 Midland, TX, HFC Rev., Ser. A2................................. 8.450 12/01/2011 607,254
515,000 Irving, TX, GO................................................. 5.500 09/15/2012 500,997
485,000 Irving, TX, GO................................................. 5.500 09/15/2013 469,781
315,000 Irving, TX, GO................................................. 5.500 09/15/2014 303,402
------------
11,171,910
------------
UTAH -- 1.4%
70,000 Intermountain Power Agy., UT, Power Supply Rev.,
Ser. I, Prerefunded @ 100 ................................... 7.000 07/01/1995 70,006
200,000 Utah St. HFA MFM Rev. (Colony Apts.)........................... 7.750 01/01/1997 204,020
870,000 Utah St. School Dist. Fin. Corp. Rev........................... 8.375 08/15/1998 963,186
------------
1,237,212
------------
VIRGINIA -- 5.2%
500,000 Chesterfield Co., VA, GO, Ser. B............................... 6.200 01/01/1999 530,585
1,000,000 Henrico Co., VA, IDA Rev....................................... 5.800 08/01/1999 1,044,570
1,060,000 Norfolk, VA, Indust. Dev. Hosp. Rev.
(Sentara Hosp.), Prerefunded @ 102 .......................... 7.000 11/01/2000 1,191,408
750,000 Virginia St. Public School Auth. Rev., Ser. B.................. 5.850 01/01/2002 790,972
500,000 Chesapeake, VA, GO............................................. 5.900 08/01/2005 527,840
345,000 Norfolk, VA, Redev. & Hsg. Auth. Educ. Fac. Rev.
(Tidewater Comm. College) ................................... 5.500 11/01/2006 342,675
------------
4,428,050
------------
WASHINGTON -- 5.0%
245,000 Washington St. GO, Prerefunded @ 100........................... 9.200 05/01/1996 255,888
750,000 Seattle, WA, Drain & Wastewater Util. Rev...................... 7.000 12/01/1999 795,652
1,000,000 Seattle, WA, Muni. Metro. Sewer Rev., Prerefunded @ 102........ 6.875 01/01/2000 1,106,150
440,000 Port of Everett, WA, Rev....................................... 6.500 04/01/2000 442,108
1,000,000 Washington St. Motor Vehicle Fuel Tax Ref. GO.................. 6.000 09/01/2004 1,057,890
300,000 Washington St. Hsg. Fin. Comm. Rev. (Gonzaga Univ.)............ 5.650 07/01/2007 295,128
335,000 Washington St. GO, Ser. A...................................... 6.400 03/01/2009 346,189
------------
4,299,005
------------
WEST VIRGINIA -- .6%
500,000 West Virginia Econ. Dev. Auth. Rev. (N. American Processing Co.) 7.850 11/01/2009 514,431
------------
WISCONSIN -- 3.0%
605,000 Village of Dresser, WI, PCR Ref. Rev. (F & A Dairy, Inc.)...... 6.000 05/01/2000 608,969
500,000 Wisconsin Public Power System Rev., Ser. A, Prerefunded @ 102.. 7.500 07/01/2000 571,135
700,000 Racine, WI, School Dist. GO.................................... 5.000 04/01/2003 697,718
750,000 Wisconsin St. Health & Educ. Fac. Auth. Rev.
- ------------ (Hosp. Sisters Service, Inc.) .............................. 5.000 06/01/2003 737,940
------------
2,615,762
------------
$83,265,798 TOTAL MUNICIPAL BONDS -- 101.4%
============= (Amortized Cost $85,335,134)................................ $87,134,195
OTHER ASSETS AND LIABILITIES, NET-- (1.4)% .................... (1,180,234)
------------
NET ASSETS-- 100.0% ........................................... $85,953,961
============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OHIO INSURED TAX-FREE FUND
PORTFOLIO OF INVESTMENTS
June 30,1995
Principal Coupon Maturity
Amount Fixed Rate Revenue & General Obligation Bonds-- 98.0% Rate Date Value
- ------------ ----------------------------------------------------- -------- ---------- ---------
<C> <S> <C> <C> <C>
$ 470,000 Clermont Co., OH, Hosp. Fac. Rev. (Mercy Health Care),
Prerefunded @ 102 ........................................... 7.500% 09/01/1999 $ 531,203
500,000 Ohio St. Bldg. Auth. Local Jail Rev., Prerefunded @ 102........ 7.350 04/01/2000 558,840
500,000 Ohio St. Higher Educ. Fac. Rev. (Ohio Northern Univ.),
Prerefunded @ 100 ........................................... 7.250 05/15/2000 556,315
105,000 Puerto Rico Hsg. Fin. Corp. SFM Rev., Ser. A (Portfolio One)... 7.800 10/01/2000 111,335
500,000 Akron, Bath & Copley, OH, Joint Twp. Hosp. Rev.
(Children's Hosp.), Prerefunded @ 102 ....................... 7.450 11/15/2000 573,935
500,000 Franklin Co., OH, Convention Fac. Auth. Tax & Lease Rev.,
Prerefunded @ 102 ........................................... 7.000 12/01/2000 563,740
500,000 Fairfield Co., OH, Hosp. Fac. Rev.
(Lancaster-Fairfield Hosp.), Prerefunded @ 102 .............. 7.100 06/15/2001 569,020
250,000 Franklin Co., OH, IDR (1st Community Village Healthcare),
Crossover Refunded .......................................... 10.125 08/01/2001 311,963
30,000 Clermont Co., OH, Hosp. Fac. Rev. Ser. A (Mercy Health Sys.),
Prerefunded @ 100 ........................................... 7.500 09/01/2001 34,433
500,000 Clermont Co., OH, Sewer System Rev., Ser. 1991,
Prerefunded @ 102 ........................................... 7.100 12/01/2001 572,925
1,260,000 Cleveland, OH, Waterworks Impt. Rev., Prerefunded @ 102........ 6.500 01/01/2002 1,395,450
40,000 Ohio St. Bldg. Auth. Rev. (Frank Lausch Proj.),
Prerefunded @ 100 ........................................... 10.125 04/01/2003 50,134
160,000 Ohio St. Bldg. Auth. Rev. (Columbus St. Proj.),
Prerefunded @ 100 ........................................... 10.125 04/01/2003 201,158
290,000 Alliance, OH, CSD GO........................................... 6.900 12/01/2006 322,802
725,000 Cleveland, OH, Waterworks Rev.................................. 6.250 01/01/2007 762,533
1,000,000 Trumbull Co., OH, GO........................................... 5.250 12/01/2007 988,280
1,420,000 Stow, OH, Safety Center Const., GO............................. 6.150 12/01/2007 1,463,466
750,000 Ohio Municipal Elec. Generation Agency Joint Venture Rev....... 5.500 02/15/2008 742,553
1,430,000 Montgomery Co., OH, Hosp. Rev. (Sisters of Charity)............ 6.250 05/15/2008 1,501,414
520,000 Cleveland St. Univ. General Receipts........................... 5.375 06/01/2008 514,015
500,000 Hamilton, OH, Elec. System Rev., Ser. A........................ 6.125 10/15/2008 522,815
500,000 Cleveland, OH, Waterworks Impt. Rev., Ser. G (First Mtg.)...... 5.500 01/01/2009 494,835
775,000 Akron, OH, Waterworks System Mtg. Impt. Rev., Ser. 1994....... 5.900 03/01/2009 785,951
1,000,000 Franklin Co., OH, Hosp. Impt. Rev. (Holy Cross Health System).. 7.625 06/01/2009 1,123,070
500,000 Mansfield, OH, Hosp. Impt. Rev. (Mansfield General)............ 6.700 12/01/2009 541,100
250,000 Ohio St. Water Dev. Auth. Ref. & Impt. Rev.
(Pure Water), Escrowed to Maturity .......................... 7.000 12/01/2009 276,698
500,000 Ohio Capital Corp. MFH Rev..................................... 7.500 01/01/2010 540,305
500,000 Hamilton, OH, Water System Mtg. Rev., Ser. 1991A............... 6.400 10/15/2010 525,350
500,000 Montgomery Co., OH, Garbage & Refuse Rev., Ser. A.............. 7.100 11/01/2010 545,240
500,000 Butler Co., OH, Hosp. Fac. Rev. (Middletown Regional Hosp.).... 6.750 11/15/2010 543,085
1,000,000 Chillicothe, OH, Water System Mtg. Ref. Rev.................... 5.400 12/01/2010 966,450
500,000 St. Mary's, OH, Elec. System Rev............................... 7.150 12/01/2010 553,095
1,000,000 Canton, OH, Waterworks System GO, Ser. 1995.................... 5.750 12/01/2010 991,870
500,000 Cleveland, OH, Waterworks Impt. Rev............................ 6.500 01/01/2011 525,285
285,000 Cuyahoga Co., OH, Hosp. Rev. (University Hosp.),
Escrowed to Maturity ........................................ 9.000 06/01/2011 329,263
1,700,000 Ohio St. Water Dev. Auth. Rev.................................. 5.700 06/01/2011 1,671,984
500,000 Montgomery Co., OH, Sewer System Ref. Rev.
(Gtr. Moraine Beavercreek) .................................. 5.600 09/01/2011 491,610
605,000 Ohio HFA SFM Rev., Ser. D...................................... 7.000 09/01/2011 641,554
365,000 Bexley, OH, CSD GO............................................. 7.125 12/01/2011 424,243
500,000 Greene Co., OH, Water System Rev............................... 6.850 12/01/2011 545,975
500,000 Maple Heights, OH, Various Purpose GO.......................... 7.000 12/01/2011 552,300
425,000 Ohio St. Water Dev. Auth. PCR (Water Control Loan)............. 6.000 12/01/2011 431,141
500,000 Stark Co., OH, Various Purpose GO.............................. 7.050 12/01/2011 550,510
530,000 Urbana, OH, Wastewater Impt. GO................................ 7.050 12/01/2011 597,294
600,000 Westerville, OH, Water System Impt. GO......................... 6.450 12/01/2011 621,792
1,000,000 Hamilton Co., OH, Hosp. Ref. Rev. (Bethesda Hosp.)............. 6.250 01/01/2012 1,028,110
500,000 Cleveland, OH, GO, Ser. A...................................... 6.375 07/01/2012 518,525
500,000 Summit Co., OH, GO............................................. 6.900 08/01/2012 547,580
1,095,000 West Clermont, OH, LSD GO...................................... 6.900 12/01/2012 1,208,398
500,000 Brunswick, OH, CSD GO......................................... 6.900 12/01/2012 547,320
500,000 Cuyahoga Heights, OH, LSD Impt. Rev............................ 5.700 12/01/2012 488,645
500,000 Ohio St. Higher Educ. Fac. Rev. (Univ. of Dayton).............. 7.250 12/01/2012 555,175
500,000 Springfield, OH, LSD GO........................................ 6.600 12/01/2012 535,250
500,000 Summit Co., OH, Various Purpose GO............................. 6.625 12/01/2012 535,985
500,000 Warrensville Heights, OH, GO................................... 6.400 12/01/2012 524,840
500,000 Worthington, OH, CSD Ref. GO................................... 6.375 12/01/2012 520,120
1,250,000 Cleveland St. Univ. General Receipts........................... 5.500 06/01/2013 1,189,775
415,000 Ohio HFA SFM Rev., Ser. 1990D.................................. 7.500 09/01/2013 444,938
800,000 Franklin Co., OH, Convention Fac. Auth. Tax & Lease Rev........ 5.800 12/01/2013 787,512
1,000,000 Hamilton Co., OH, Hosp. Rev. (Sisters of Charity).............. 6.250 05/15/2014 1,025,820
500,000 Ohio St. Bldg. Auth. Rev., Ser. 94A (Juvenile Correctional Bldg.) 6.600 10/01/2014 529,485
500,000 Mahoning Co., OH, Hosp. Impt. Rev. (YHA, Inc.)................. 7.000 10/15/2014 548,260
290,000 Garfield Heights, OH, Various Purpose GO....................... 6.300 12/01/2014 300,742
1,000,000 Portage Co., OH, GO............................................ 6.200 12/01/2014 1,025,440
460,000 Bedford Heights, OH, GO........................................ 6.500 12/01/2014 485,015
1,250,000 Maumee, OH, Hosp. Fac. Rev. Bonds, Ser. 1994
(St. Luke's Hosp. Proj.) .................................... 5.800 12/01/2014 1,215,875
530,000 Ottawa Co., OH, GO............................................. 5.750 12/01/2014 518,457
290,000 Northwest, OH, LSD GO.......................................... 7.050 12/01/2014 320,444
1,000,000 Clermont Co., OH, Hosp. Fac. Rev. (Mercy Health System)........ 5.875 09/01/2015 977,380
500,000 Ohio St. Higher Educ. Fac. Rev. (Univ. of Dayton).............. 6.750 12/01/2015 538,915
550,000 Cambridge, OH, Water System Mtg. Rev........................... 5.500 12/01/2015 524,673
1,000,000 Tuscarawas, OH, LSD GO, Ser. 1995.............................. 6.600 12/01/2015 1,068,240
700,000 Canton, OH, Waterworks System GO, Ser. 1995.................... 5.850 12/01/2015 686,077
1,000,000 Akron, Bath & Copley, OH, Joint Twp. Hosp. Rev.
(Akron General Proj.) ....................................... 5.500 01/01/2016 945,950
500,000 Cleveland, OH, Waterworks Impt. Rev............................ 6.250 01/01/2016 512,235
750,000 Columbus-Polaris Hsg. Corp. Ohio Mtg. Rev., Prerefunded @100... 7.400 01/01/2016 890,805
500,000 Ohio St. Air Quality Dev. Rev. (Ohio Edison)................... 7.450 03/01/2016 553,730
1,110,000 Ohio HFA SFM Rev., Ser. 1991D.................................. 7.050 09/01/2016 1,174,735
440,000 Ohio HFA SFM Rev., Ser. 1990F.................................. 7.600 09/01/2016 467,434
500,000 Celina, OH, Wastewater System Mtg. Rev......................... 6.550 11/01/2016 527,440
1,000,000 Cleveland, OH, Public Power System Rev......................... 7.000 11/15/2016 1,130,140
750,000 Montgomery Co., OH, Hosp. Rev. (Miami Valley Hosp.)............ 6.250 11/15/2016 764,310
705,000 Big Walnut, OH, LSD GO (Community Library Proj.)............... 6.650 12/01/2016 765,947
590,000 Garfield Heights, OH, Various Purpose GO....................... 7.050 12/01/2016 647,832
850,000 Alliance, OH, Waterworks System Rev............................ 6.650 10/15/2017 907,018
500,000 Toledo, OH, Sewer System Rev................................... 6.350 11/15/2017 517,150
675,000 Reynoldsburg, OH, CSD GO....................................... 6.550 12/01/2017 721,919
450,000 Mason, OH, Waterworks System Mtg. Rev.......................... 6.000 12/01/2017 451,895
750,000 Olmstead Falls, OH, CSD GO..................................... 5.850 12/15/2017 734,378
500,000 Ohio St. Air Quality Rev., Ser. 1990B (Ohio Edison)............ 7.100 06/01/2018 548,300
500,000 Newark, OH, Water System Impt. Rev............................. 6.000 12/01/2018 502,275
35,000 Ohio Water Dev. Auth. Ref. Rev................................. 9.375 12/01/2018 36,803
500,000 Seneca Co., OH, Jail Fac. GO................................... 6.500 12/01/2018 533,700
500,000 Franklin Co., OH, Hosp. Rev., Ser. 1991 (Mt. Carmel)........... 6.750 06/01/2019 538,515
500,000 Crawford Co., OH, GO........................................... 6.750 12/01/2019 545,250
360,000 Cuyahoga Co., OH, Hosp. Rev. (University Hosp.)................ 6.250 01/15/2020 365,209
500,000 Lucas Co., OH, Hosp. Impt. Rev. (St. Vincent).................. 6.750 08/15/2020 548,065
1,000,000 Ohio St. Air Qual. Dev. Rev., Ser. 1985A
(Columbus Southern Power) ................................... 6.375 12/01/2020 1,028,070
750,000 Fairfield, OH, CSD GO.......................................... 6.000 12/01/2020 750,525
200,000 Montgomery Co., OH, Hosp. Rev. (Sisters of Charity)............ 6.625 05/15/2021 210,424
460,000 Westerville, Minerva Park & Blendon, OH, Joint Hosp.
Dist. Rev. (St. Ann's) ...................................... 7.100 09/15/2021 508,640
1,000,000 Clermont Co., OH, Hosp. Fac. Rev. (Mercy Health System)........ 6.733 10/05/2021 1,068,780
1,000,000 Hamilton, OH, Water System Mtg. Rev., Ser. 1991A............... 6.300 10/15/2021 1,023,840
1,310,000 Cuyahoga Co., OH, Hosp. Rev. (Mt. Sinai)....................... 6.625 11/15/2021 1,389,714
1,000,000 Adams Co., Ohio Valley, LSD GO................................. 5.250 12/01/2021 911,000
1,000,000 Kent St. Univ. General Receipts................................ 6.500 05/01/2022 1,052,720
1,000,000 Ohio St. Higher Educ. Fac. Rev. (Case Western Res. Univ.)...... 6.000 10/01/2022 995,890
510,000 Fremont, OH, Hsg. Dev. Corp. Mtg. Ref. Rev.
(Little Bark View, Sect. 8) ................................. 10.125 03/01/2023 531,675
650,000 Ohio St. Air Quality Dev. Auth. PCR, Ser. 1994 (Penn Power).... 6.150 08/01/2023 655,675
250,000 Puerto Rico Hsg. Fin. Corp. Rev................................ 6.850 10/15/2023 260,856
1,000,000 Ohio St. Air Quality Dev. Auth. PCR (Penn Power)............... 6.450 05/01/2027 1,031,100
- ------------- ------------
$70,710,000 TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS
- ------------- (Amortized Cost $70,372,336)................................ $74,065,269
------------
</TABLE>
<PAGE>
<TABLE>
Principal Coupon Maturity
Amount Floating and Variable Rate Demand Notes-- .9% Rate Date Value
- ------------ --------------------------------------------- -------- ---------- ---------
<C> <S> <C> <C> <C>
$ 700,000 Ohio St. Infrastructure GO..................................... 4.100% 07/06/1995 $ 700,000
- ------------- ------------
$ 700,000 TOTAL FLOATING AND VARIABLE RATE DEMAND NOTES
- ------------- (Amortized Cost $700,000)................................... $ 700,000
------------
$71,410,000 TOTAL INVESTMENTS AT VALUE -- 98.9%
============= (Amortized Cost $71,072,336)................................ $74,765,269
OTHER ASSETS AND LIABILITIES, NET-- 1.1% ..................... 792,986
------------
NET ASSETS-- 100.0% ........................................... $75,558,255
============
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of the Midwest Group Tax Free Trust:
We have audited the accompanying statements of assets and liabilities of the
Ohio Tax-Free Money Fund, Tax-Free Money Fund, Tax-Free Intermediate Term Fund,
Ohio Insured Tax-Free Fund, California Tax-Free Money Fund and Royal Palm
Florida Tax-Free Money Fund of the Midwest Group Tax Free Trust (a Massachusetts
business trust), including the portfolios of investments, as of June 30, 1995,
and the related statements of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended and
the financial highlights for the periods indicated thereon. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1995, by correspondence with custodians and brokers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of the
Ohio Tax-Free Money Fund, Tax-Free Money Fund, Tax-Free Intermediate Term Fund,
Ohio Insured Tax-Free Fund, California Tax-Free Money Fund and Royal Palm
Florida Tax-Free Money Fund of the Midwest Group Tax Free Trust as of June 30,
1995, the results of their operations for the year then ended, the changes in
their net assets for each of the two years in the period then ended, and the
financial highlights for the periods indicated thereon, in conformity with
generally accepted accounting principles.
Cincinnati, Ohio,
August 11, 1995