SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
Pre-Effective Amendment No.
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Post-Effective Amendment No. 39
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. 38
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(Check appropriate box or boxes.)
MIDWEST GROUP TAX FREE TRUST File Nos. 2-72101 and 811-3174
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312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202
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(Address of Principal Executive Offices) Zip Code
Registrant's Telephone Number, including Area Code:(513) 629-2000
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Robert H. Leshner, 312 Walnut Street, 21st Floor, Cincinnati, OH 45202
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/X/ 60 days after filing pursuant to paragraph (a)
/ / on (date) pursuant to paragraph (a) of Rule 485
Registrant registered an indefinite number of securities under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940.
Registrant's Rule 24f-2 Notice for the fiscal year ended June 30, 1996 was
filed with the Commission on August 27, 1996.
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CROSS REFERENCE SHEET
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FORM N-1A
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ITEM SECTION IN PROSPECTUS
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1....................... Cover Page
2....................... Expense Information
3....................... Financial Highlights, Performance Information
4....................... Operation of the Fund, Investment Objectives
and Policies
5....................... Operation of the Fund, Financial Highlights
6....................... Cover Page, Operation of the Fund, Dividends and
Distributions, Taxes
7....................... How to Purchase Shares, Operation of the Fund,
Shareholder Services, Calculation of
Share Price, Exchange Privilege, Distribution Plan,
Application
8....................... How to Redeem Shares, Shareholder Services
9....................... None
ITEM SECTION IN STATEMENT OF ADDITIONAL
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INFORMATION
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10...................... Cover Page
11...................... Table of Contents
12...................... The Trust
13...................... Municipal Obligations, Quality Ratings of Municipal
Obligations, Definitions, Policies and Risk
Considerations, Investment Limitations, Portfolio
Turnover
14...................... Trustees and Officers
15...................... Principal Security Holders
16...................... The Investment Adviser and Underwriter,
Distribution Plan, Custodian, Accountants,
MGF Service Corp., Securities Transactions
17...................... Securities Transactions
18...................... The Trust
19...................... Calculation of Share Price, Other Purchase Information,
Redemption in Kind
20...................... Taxes
21...................... The Investment Adviser and Underwriter
22...................... Historical Performance Information, Tax
Equivalent Yield Table
23...................... Annual Report
<PAGE>
PROSPECTUS
January 7, 1997
OHIO TAX-FREE MONEY FUND
RETAIL SHARES
The Ohio Tax-Free Money Fund (the "Fund"), a separate series of Midwest
Group Tax Free Trust, seeks the highest level of current income exempt from
federal income tax and Ohio personal income tax, consistent with liquidity and
stability of principal. The Fund invests primarily in a portfolio of
high-quality, short-term Ohio municipal obligations.
THE FUND'S PORTFOLIO SECURITIES ARE VALUED ON AN AMORTIZED COST BASIS.
FUND SHARES ARE NEITHER INSURED NOR GUARANTEED BY THE UNITED STATES GOVERNMENT
OR ANY OTHER ENTITY. IT IS ANTICIPATED, BUT THERE IS NO ASSURANCE, THAT THE FUND
WILL MAINTAIN A STABLE NET ASSET VALUE PER SHARE OF $1.
THE FUND IS A NON-DIVERSIFIED SERIES AND MAY INVEST A SIGNIFICANT
PERCENTAGE OF ITS ASSETS IN A SINGLE ISSUER. THEREFORE, AN INVESTMENT IN THE
FUND MAY BE RISKIER THAN AN INVESTMENT IN OTHER TYPES OF MONEY MARKET FUNDS.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
The Fund offers two classes of shares: Class A shares ("Retail Shares"),
sold subject to a 12b-1 fee of up to .25% of average daily net assets, and Class
B shares ("Institutional Shares"), sold without a 12b-1 fee. Each Retail and
Institutional Share of the Fund represents identical interests in the Fund's
investment portfolio and has the same rights, except that (i) Retail Shares bear
the expenses of distribution fees, which will cause Retail Shares to have a
higher expense ratio and to pay lower dividends than Institutional Shares; (ii)
certain class specific expenses will be borne solely by the class to which such
expenses are attributable; (iii) each class has exclusive voting rights with
respect to matters affecting only that class; and (iv) Retail Shares are subject
to a lower minimum initial investment requirement and offer certain shareholder
services not available to Institutional Shares such as checkwriting and
automatic investment and redemption plans.
Midwest Group Financial Services, Inc. (the "Adviser") manages the
Fund's investments and its business affairs.
This Prospectus sets forth concisely the information about Retail Shares
that you should know before investing. Please retain this Prospectus for future
reference. Institutional Shares are offered in a separate prospectus and
additional information about Institutional Shares may be obtained by calling one
of the numbers listed below. A Statement of Additional Information dated January
7, 1997 has been filed with the Securities and Exchange Commission and is hereby
incorporated by reference in its entirety. A copy of the Statement of Additional
Information can be obtained at no charge by calling one of the numbers listed
below.
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For Information or Assistance in Opening An Account, Please Call:
Nationwide (Toll-Free)............................................800-543-0407
Cincinnati........................................................513-629-2050
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<PAGE>
EXPENSE INFORMATION
RETAIL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Exchange Fee None
Redemption Fee None*
Check Redemption Processing Fee (per check):
First six checks per month None
Additional checks per month $0.25
* A wire transfer fee is charged by the Fund's Custodian in the case
of redemptions made by wire. Such fee is subject to change and is
currently $8. See "How to Redeem Shares."
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
Management Fees .46%
12b-1 Fees .19%(A)
Other Expenses .10%
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Total Operating Expenses .75%
====
(A)Retail Shares may incur 12b-1 fees in an amount up to .25% of average net
assets.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in Retail Shares will bear directly
or indirectly. The percentages expressing annual fund operating expenses are
based on amounts incurred during the most recent fiscal year. THE EXAMPLE BELOW
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Example 1 Year 3 Years 5 Years 10 Years
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You would pay the following
expenses on a $1,000 invest-
ment, assuming (1) 5% annual
return and (2) redemption at
the end of each time period: $ 8 $ 24 $ 42 $ 93
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FINANCIAL HIGHLIGHTS
The following information, which has been audited by Arthur Andersen LLP,
is an integral part of the audited financial statements and should be read in
conjunction with the financial statements. The financial statements as of June
30, 1996 and related auditors' report appear in the Statement of Additional
Information of the Fund, which can be obtained by shareholders at no charge by
calling MGF Service Corp. (Nationwide call toll-free 800-543-0407, in Cincinnati
call 629-2050) or by writing to the Trust at the address on the front of this
Prospectus.
<TABLE>
Per Share Data for a Share Outstanding Throughout Each Period
================================================================================================================
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
From
Date of
Public
Offering
From (Oct. 22,
Sept. 1, 1987)
Year Ended June 30, 1988 through
through Aug. 31,
June 30, 31,
1996 1995 1994 1993 1992 1991 1990 1989 1988
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Net asset value at beginning of
period.................... $1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $1.000
Net investment income....... 0.031 0.031 0.020 0.022 0.034 0.048 0.055 0.047 0.040
Distributions from net
investment income ........ (0.031) (0.031) (0.020) (0.022) (0.034) (0.048) (0.055) (0.047) (0.040)
Net asset value at
end of period ......... $1.000 $1.000 $1.000 $1.000 $1.000 $ 1.000 $ 1.000 $ 1.000 $1.000
====== ====== ====== ====== ====== ====== ====== ====== ======
Total return............. 3.14% 3.12% 1.99% 2.19% 3.52% 4.99% 5.62% 5.77%(B) 4.51%(B)
====== ====== ===== ====== ====== ===== ====== ====== ======
Net assets at end
of period (000's)........ $240,323 $226,606 $213,001 $221,775 $218,503 $204,034 $124,145 $78,241 $ 62,777
======== ======== ======= ======= ======= ======= ======= ====== =======
Ratio of expenses to
average net assets(A) ... 0.75% 0.74% 0.73% 0.74% 0.75% 0.77% 0.75% 0.71%(B) 0.62%(B)
Ratio of net investment income to
average net assets........ 3.09% 3.08% 1.97% 2.16% 3.43% 4.80% 5.47% 5.64%(B) 4.66%(B)
(A) Absent fee waivers by the Adviser, the ratio of expenses to average net assets would have been 0.85%(B)
and 1.02%(B) for the periods ended June 30, 1989 and August 31, 1988, respectively.
(B) Annualized.
</TABLE>
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The Fund is a series of Midwest Group Tax Free Trust (the "Trust"). The
Fund seeks the highest level of current income exempt from federal income tax
and Ohio personal income tax, consistent with liquidity and stability of
principal. The Fund is not intended to be a complete investment program, and
there is no assurance that its investment objective can be achieved. The Fund's
investment objective may be changed by the Board of Trustees without shareholder
approval, but only after notification has been given to shareholders and after
this Prospectus has been revised accordingly. If there is a change in the Fund's
investment objective, shareholders should consider whether the Fund remains an
appropriate investment in light of their then current financial position and
needs. Unless otherwise indicated, all investment practices and limitations of
the Fund are nonfundamental policies which may be changed by the Board of
Trustees without shareholder approval.
The Fund seeks to achieve its investment objective by investing
primarily in high-quality, short-term Ohio Obligations (described below)
determined by the Adviser, under the direction of the Board of Trustees, to
present minimal credit risks. The Fund will purchase only obligations that
enable it to employ the amortized cost method of valuation. Under the amortized
cost method of valuation, the Fund's obligations are valued at original cost
adjusted for amortization of premium or accumulation of discount, rather than
valued at market. This method should enable the Fund to maintain a stable net
asset value per share. The Fund will invest in obligations which have received a
short-term rating in one of the two highest categories by any two nationally
recognized statistical rating organizations ("NRSROs") or by any one NRSRO if
the obligation is rated by only that NRSRO. The Fund may purchase unrated
obligations determined by the Adviser, under the direction of the Board of
Trustees, to be of comparable quality to rated obligations meeting the Fund's
quality standards. These standards must be satisfied at the time an investment
is made. If an obligation ceases to meet these standards, or if the Board of
Trustees believes such obligation no longer presents minimal credit risks, the
Trustees will cause the Fund to dispose of the obligation as soon as
practicable. The Statement of Additional Information describes ratings of the
NRSROs.
The Fund's dollar-weighted average maturity will be 90 days or less.
The Fund will invest in obligations with remaining maturities of thirteen months
or less at the time of purchase.
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<PAGE>
It is a fundamental policy that under normal market conditions the Fund
will invest at least 80% of the value of its net assets in short-term
obligations the interest on which is exempt from federal income tax, including
the alternative minimum tax, and Ohio personal income tax. This policy may not
be changed without the affirmative vote of a majority of the outstanding shares
of the Fund. The term "majority" of the outstanding shares means the lesser of
(1) 67% or more of the outstanding shares of the Fund present at a meeting, if
the holders of more than 50% of the outstanding shares of the Fund are present
or represented at such meeting or (2) more than 50% of the outstanding shares of
the Fund.
The Fund may, from time to time, invest in other short-term,
high-quality obligations for temporary defensive purposes (subject to the
fundamental policy that under normal market conditions the Fund will invest at
least 80% of its net assets in obligations the interest on which is exempt from
federal income tax, including the alternative minimum tax, and Ohio personal
income tax). These include, but are not limited to, obligations the interest on
which is exempt from federal, but not Ohio, income tax and taxable obligations
such as certificates of deposit and other bank debt instruments, commercial
paper, obligations issued by the U.S. Government or any of its agencies or
instrumentalities and repurchase agreements. Except for temporary defensive
purposes, at no time will more than 20% of the value of the Fund's net assets be
invested in taxable obligations. Under normal market conditions, the Fund
anticipates that not more than 5% of the value of its net assets will be
invested in any one type of taxable obligation. Taxable obligations are more
fully described in the Statement of Additional Information. The Fund may invest
in these other short-term obligations, for example, due to market conditions
under which Ohio Obligations are temporarily unavailable for purchase or
available only in limited amounts, or pending investment of proceeds of sales of
shares or proceeds from the sale of portfolio securities or in anticipation of
redemptions. The Fund reserves the right to hold cash reserves as the Adviser
deems necessary for temporary defensive purposes. Although interest earned on
these short-term obligations is taxable as ordinary income for federal and/or
Ohio income tax purposes, the Fund intends to minimize taxable income through
investment, when possible, in other available securities exempt from federal
and/or Ohio income taxes, including shares of investment companies whose
dividends are tax-exempt. The Fund may invest up to 10% of its total assets in
shares of other investment companies. Investments by the Fund in shares of other
investment companies may result in duplication of sales loads and advisory,
administrative and distribution fees. The Fund will not invest more than 5% of
its total assets in securities of any single
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<PAGE>
investment company and will not purchase more than 3% of the outstanding voting
securities of any investment company. The Fund will only invest in securities of
other investment companies which hold themselves out to be money market funds.
Ohio Obligations
Ohio Obligations are debt 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 issuer, exempt from both federal income tax, including the
alternative minimum tax, and Ohio personal income tax. For purposes of this
definition, Ohio Obligations include participation interests in Ohio Obligations
and shares of an investment company which invests at least 80% of its net assets
in obligations the interest on which is exempt from federal income tax,
including the alternative minimum tax, and Ohio personal income tax. Ohio
Obligations are issued to obtain funds to construct, repair or improve various
public 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. Ohio Obligations
consist of tax-exempt bonds, tax-exempt notes and tax-exempt commercial paper.
The Statement of Additional Information contains a description of tax-exempt
bonds, notes and commercial paper.
The two principal classifications of Ohio Obligations 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, and therefore investments in these bonds have more potential risk. The
Fund's ability to achieve its investment objective depends to a great extent on
the ability of these various issuers to meet their scheduled payments of
principal and interest. Tax-exempt notes generally are used to provide
short-term capital needs and generally have maturities of one year or less. The
tax-exempt notes in which the Fund may invest are tax anticipation notes (TANs),
revenue anticipation notes (RANs) and bond anticipation notes (BANs). TANs, RANs
and BANs are issued by state and local government and public authorities as
interim financing in anticipation of tax collections, revenue receipts or bond
sales, respectively. Tax- exempt commercial paper typically represents
short-term, unsecured, negotiable promissory notes.
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<PAGE>
The Fund may invest in any combination of general obligation bonds,
revenue bonds and industrial development bonds. The Fund may invest more than
25% of its assets in tax-exempt obligations issued by municipal governments or
political subdivisions of governments within a particular segment of the bond
market, such as housing agency bonds, hospital revenue bonds or airport bonds.
It is possible that economic, business or political developments or other
changes affecting one bond may also affect other bonds in the same segment in
the same manner, thereby potentially increasing the risk of such investments.
From time to time, the Fund may invest more than 25% of the value of
its total assets in industrial development bonds which, although issued by
industrial development authorities, may be backed only by the assets and
revenues of the nongovernmental users. However, the Fund will not invest more
than 25% of its assets in securities backed by nongovernmental users which are
in the same industry. Interest on municipal obligations (including certain
industrial development bonds) which are private activity obligations, as defined
in the Internal Revenue Code, issued after August 7, 1986, while exempt from
federal income tax, is a preference item for purposes of the alternative minimum
tax. Where a regulated investment company receives such interest, a
proportionate share of any exempt-interest dividend paid by the investment
company will be treated as such a preference item to shareholders. The Fund will
invest no more than 20% of its net assets in obligations the interest from which
gives rise to a preference item for the purpose of the alternative minimum tax
and in other investments subject to federal income tax.
The Fund may purchase other types of tax-exempt obligations which may
become available in the future, provided the obligations are consistent with the
Fund's investment objective and policies, the Adviser believes their quality
meets the Fund's quality standards, and this Prospectus has been appropriately
revised to reflect the Fund's policies with respect to such obligations.
Risk Factors
The Fund's yield will fluctuate due to changes in interest rates,
economic conditions, quality ratings and other factors beyond the control of the
Adviser. In addition, the financial condition of an issuer or adverse changes in
general economic conditions, or both, may impair the issuer's ability to make
payments of interest and principal. There is no limit on the percentage of a
single issue of tax-exempt obligations that the Fund may own. If the Fund holds
a significant portion of the obligations of an issuer, there may not be a
readily available
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<PAGE>
market for the obligations. Reduced diversification could involve an increased
risk to the Fund should an issuer be unable to make interest or principal
payments or should the market value of Ohio Obligations decline.
There are also risks of reduced diversification because the Fund
invests primarily in obligations of issuers within a single state. The Fund is
more likely to invest its assets in the securities of fewer issuers because of
the relatively smaller number of issuers of Ohio Obligations. The Fund's
performance is closely tied to conditions within the State of Ohio and to the
financial condition of the State and its authorities and municipalities. The
economy in the State of Ohio is reliant in part upon durable goods
manufacturing, largely concentrated in motor vehicles and equipment, steel,
rubber products and household appliances. As a result, economic activity in Ohio
tends to be more cyclical than in some other states and in the nation as a
whole. However, during the last decade, the State has experienced steady growth
and diversification of employment and earnings. Statewide employment increased
3% between 1990 and 1995 and Ohio's unemployment rate since 1991 has remained
below that of the nation. Ohio remains highly industrialized, but the
manufacturing component of the economy in 1995 represents only 21.1% of
employment, compared to 28.9% in 1980. This is still above the national average
of 15.9%. Although manufacturing is expected to slow in the future, growth in
nonmanufacturing output and employment, led by the financial services,
distribution and trade sectors, has contributed to greater stability in the
State's economy. Economic problems, including high unemployment, have had and
may have varying effects on the different geographic areas of the State and the
political subdivisions located therein. While Ohio has in the past experienced
budget shortfalls due to weak revenue results and higher-than-budgeted human
services expenditures, improved economic performance has enabled the State to
accumulate sizable financial reserves. The State's unaudited financial
statements indicate a $500 million operating surplus for fiscal 1996 as a result
of tax revenues exceeding forecasts and spending below budgeted amounts.
Although revenue obligations of the State of Ohio or its political subdivisions
may be payable from a specific project or source, there can be no assurance that
future economic and political developments and the resulting impact on state and
local governmental finances will not adversely affect the market values and
marketability of the Ohio Obligations held by the Fund or the ability of a
specific issuer to make interest or principal payments.
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<PAGE>
The Fund is a non-diversified fund under the Investment Company Act of
1940. Thus, its investments may be more concentrated in fewer issuers than those
of a diversified fund. This concentration may increase the possibility of
fluctuation in the Fund's net asset value. As the Fund intends to comply with
Subchapter M of the Internal Revenue Code, it may invest up to 50% of its assets
at the end of each quarter of its fiscal year in as few as two issuers, provided
that no more than 25% of the assets are invested in one issuer. With respect to
the remaining 50% of its assets at the end of each quarter, it may invest no
more than 5% in one issuer.
Certain provisions in the Internal Revenue Code relating to the
issuance of municipal obligations may reduce the volume of municipal obligations
qualifying for federal tax exemptions. Shareholders should consult their tax
advisors concerning the effect of these provisions on an investment in the Fund.
Proposals that may further restrict or eliminate the income tax exemptions for
interest on municipal obligations may be introduced in the future. If any such
proposal were enacted that would reduce the availability of municipal
obligations for investment by the Fund so as to adversely affect its
shareholders, the Fund would reevaluate its investment objective and policies
and submit possible changes in the Fund's structure to shareholders for their
consideration. If legislation were enacted that would treat a type of municipal
obligation as taxable, the Fund would treat such security as a permissible
taxable investment within the applicable limits set forth herein.
Other Investment Techniques
The Fund may also engage in the following investment techniques, each
of which may involve certain risks:
PARTICIPATION INTERESTS. The Fund may purchase participation interests
in tax-exempt obligations owned by banks or other financial institutions. A
participation interest gives the Fund an undivided interest in the obligation in
the proportion that the Fund's participation interest bears to the principal
amount of the obligation and provides that the holder may demand repurchase
within a specified period. Participation interests frequently are backed by
irrevocable letters of credit or a guarantee of a bank. Participation interests
will be purchased only if, in the opinion of counsel to the issuer, interest
income on the participation interests will be tax-exempt when distributed as
dividends to shareholders. For certain participation interests, the Fund will
have the right to demand payment, on not more than seven days' notice, for all
or any part of its participation interest in the tax-exempt obligation, plus
accrued interest. As to these instruments, the Fund intends to
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<PAGE>
exercise its right to demand payment only upon a default under the terms of the
obligation, as needed to provide liquidity to meet redemptions, or to maintain a
high-quality investment portfolio. The Fund will not invest more than 10% of its
net assets in participation interests that do not have this demand feature and
all other illiquid securities.
FLOATING AND VARIABLE RATE OBLIGATIONS. The Fund may invest in floating
or variable rate tax-exempt obligations. Floating rate obligations have an
interest rate which is fixed to a specified interest rate, such as a bank prime
rate, and is automatically adjusted when the specified interest rate changes.
Variable rate obligations have an interest rate which is adjusted at specified
intervals to a specified interest rate. Periodic interest rate adjustments help
stabilize the obligations' market values. The Fund may purchase these
obligations from the issuers or may purchase participation interests in pools of
these obligations from banks or other financial institutions. Variable and
floating rate obligations usually carry demand features that permit the Fund to
sell the obligations back to the issuers or to financial intermediaries at par
value plus accrued interest upon not more than 30 days' notice at any time or
prior to specific dates. Certain of these variable rate obligations, often
referred to as "adjustable rate put bonds," may have a demand feature
exercisable on specific dates once or twice each year. The Fund will not invest
more than 10% of its net assets in floating or variable rate obligations as to
which the Fund cannot exercise the demand feature on not more than seven days'
notice if the Adviser, under the direction of the Board of Trustees, determines
that there is no secondary market available for these obligations and all other
illiquid securities. If the Fund invests a substantial portion of its assets in
obligations with demand features permitting sale to a limited number of
entities, the inability of the entities to meet demands to purchase the
obligations could affect the Fund's liquidity. However, obligations with demand
features frequently are secured by letters of credit or comparable guarantees
that may reduce the risk that an entity would not be able to meet such demands.
In determining whether an obligation secured by a letter of credit meets the
Fund's quality standards, the Adviser will ascribe to such obligation the same
rating given to unsecured debt issued by the letter of credit provider. In
looking to the creditworthiness of a party relying on a foreign bank for credit
support, the Adviser will consider whether adequate public information about the
bank is available and whether the bank may be subject to unfavorable political
or economic developments, currency controls or other governmental restrictions
affecting its ability to honor its credit commitment.
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<PAGE>
WHEN-ISSUED OBLIGATIONS. The Fund may invest in when- issued tax-exempt
obligations. Obligations offered on a when- issued basis are settled by delivery
and payment after the date of the transaction, usually within 15 to 45 days. The
Fund will maintain a segregated account with its Custodian of cash or
high-quality liquid debt securities, marked to market daily, in an amount equal
to its when-issued commitments. Because these transactions are subject to market
fluctuations, a significant commitment to when-issued purchases could result in
fluctuation of the Fund's net asset value. The Fund will only make commitments
to purchase when-issued obligations with the intention of actually acquiring the
obligations and not for the purpose of investment leverage.
LENDING PORTFOLIO SECURITIES. The Fund may make short-term loans of its
portfolio securities to banks, brokers and dealers. Lending portfolio securities
exposes the Fund to the risk that the borrower may fail to return the loaned
securities or may not be able to provide additional collateral or that the Fund
may experience delays in recovery of the loaned securities or loss of rights in
the collateral if the borrower fails financially. To minimize these risks, the
borrower must agree to maintain collateral marked to market daily, in the form
of cash and/or U.S. Government obligations, with the Fund's Custodian in an
amount at least equal to the market value of the loaned securities. The Fund
will limit the amount of its loans of portfolio securities to no more than 25%
of its net assets. This lending policy may not be changed by the Fund without
the affirmative vote of a majority of its outstanding shares.
OBLIGATIONS WITH PUTS ATTACHED. The Fund may purchase tax-exempt
obligations with the right to resell the obligation to the seller at a specified
price or yield within a specified period. The right to resell is commonly known
as a "put" or a "standby commitment." The Fund may purchase tax-exempt
obligations with puts attached from banks and broker-dealers. The Fund intends
to use obligations with puts attached for liquidity purposes to ensure a ready
market for the underlying obligations at an acceptable price. Although no value
is assigned to any puts on tax-exempt obligations, the price which the Fund pays
for the obligations may be higher than the price of similar obligations without
puts attached. The purchase of obligations with puts attached involves the risk
that the seller may not be able to repurchase the underlying obligation. The
Fund intends to purchase such obligations only from sellers deemed by the
Adviser, under the direction of the Board of Trustees, to present minimal credit
risks. In addition, the value of the obligations with puts attached held by the
Fund will not exceed 10% of its net assets.
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<PAGE>
SECURITIES WITH LIMITED MARKETABILITY. The Fund may invest in the
aggregate up to 10% of its net assets in securities that are not readily
marketable, including: participation interests that are not subject to the
demand feature described above; floating and variable rate obligations as to
which the Fund cannot exercise the related demand feature described above and as
to which there is no secondary market; and repurchase agreements not terminable
within seven days.
BORROWING AND PLEDGING. The Fund may borrow money from banks (provided
there is 300% asset coverage) or from banks or other persons for temporary
purposes (in an amount not exceeding 5% of its total assets). The Fund will not
make any borrowing which would cause its outstanding borrowings to exceed
one-third of the value of its total assets. The Fund may pledge assets in
connection with borrowings but will not pledge more than one-third 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. Borrowing
magnifies the potential for gain or loss on the Fund's portfolio securities and,
therefore, if employed, increases the possibility of fluctuation in its net
asset value. This is the speculative factor known as leverage. The Fund's
policies on borrowing and pledging are fundamental policies which may not be
changed without the affirmative vote of a majority of its outstanding shares.
HOW TO PURCHASE SHARES
Your initial investment in Retail Shares of the Fund ordinarily must be
at least $1,000. Shares of the Fund are sold on a continuous basis at the net
asset value next determined after receipt of a purchase order by the Trust.
Shares of the Fund purchased prior to January 7, 1997 are Retail Shares.
INITIAL INVESTMENTS BY MAIL. You may open an account and make an
initial investment in the Fund by sending a check and a completed account
application form to MGF Service Corp., P.O. Box 5354, Cincinnati, Ohio
45201-5354. Checks should be made payable to the "Ohio Tax-Free Money Fund." An
account application is included in this Prospectus.
You will be sent within five business days after the end of each month
a written statement disclosing each purchase or redemption effected and each
dividend or distribution credited to your account during the month. Certificates
representing shares are not issued. The Trust and the Adviser reserve the rights
to limit the amount of investments and to refuse to sell to any person.
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<PAGE>
Investors should be aware that the Fund's account application contains
provisions in favor of the Trust, MGF Service Corp. and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating to
the various services (for example, telephone redemptions and exchanges and check
redemptions) made available to investors.
Should an order to purchase shares be canceled because your check does
not clear, you will be responsible for any resulting losses or fees incurred by
the Trust or MGF Service Corp. in the transaction.
INITIAL INVESTMENTS BY WIRE. You may also purchase shares of the Fund
by wire. Please telephone MGF Service Corp. (Nationwide call toll-free
800-543-0407; in Cincinnati call 629- 2050) for instructions. You should be
prepared to give the name in which the account is to be established, the
address, telephone number and taxpayer identification number for the account,
and the name of the bank which will wire the money.
You may receive a dividend on the day of your wire investment provided
you have given notice of your intention to make such investment to MGF Service
Corp. by 4:00 p.m., Eastern time, on the preceding business day (or 12:00 noon,
Eastern time, on the same day of a wire investment in the case of investors
utilizing institutions that have made appropriate arrangements with MGF Service
Corp.). Your investment will be made at the net asset value next determined
after your wire is received together with the account information indicated
above. If the Trust does not receive timely and complete account information,
there may be a delay in the investment of your money and any accrual of
dividends. To make your initial wire purchase, you are required to mail a
completed account application to MGF Service Corp. Your bank may impose a charge
for sending your wire. There is presently no fee for receipt of wired funds, but
MGF Service Corp. reserves the right to charge shareholders for this service
upon thirty days' prior notice to shareholders.
ADDITIONAL INVESTMENTS. You may purchase and add shares to your account
by mail or by bank wire. Checks should be sent to MGF Service Corp., P.O. Box
5354, Cincinnati, Ohio 45201-5354. Checks should be made payable to the "Ohio
Tax-Free Money Fund." Bank wires should be sent as outlined above. You may also
make additional investments at the Trust's offices at 312 Walnut Street, 21st
Floor, Cincinnati, Ohio 45202. Each additional purchase request must contain the
name of your account and your account number to permit proper crediting to your
account. While there is no minimum amount required for subsequent investments,
the Trust reserves the right to impose such requirement.
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<PAGE>
CASH SWEEP PROGRAM. Cash accumulations in accounts with financial
institutions may be automatically invested in shares of the Fund at the next
determined net asset value on a day selected by the institution or its customer,
or when the account balance reaches a predetermined dollar amount (e.g.,
$5,000).
Participating institutions are responsible for prompt transmission of
orders relating to the program. Institutions participating in this program may
charge their customers fees for services relating to the program which would
reduce the customers' yield from an investment in the Fund. This Prospectus
should, therefore, be read together with any agreement between the customer and
the participating institution with regard to the services provided, the fees
charged for these services and any restrictions and limitations imposed.
SHAREHOLDER SERVICES
Contact MGF Service Corp. (Nationwide call toll-free 800- 543-0407; in
Cincinnati call 629-2050) for additional information about the shareholder
services described below.
Automatic Withdrawal Plan
If the Retail Shares in your account have a value of at least $5,000,
you may elect to receive, or may designate another person to receive, monthly or
quarterly payments in a specified amount of not less than $50 each. There is no
charge for this service.
Direct Deposit Plans
Retail Shares of the Fund may be purchased through direct deposit plans
offered by certain employers and government agencies. These plans enable a
shareholder to have all or a portion of his or her payroll or social security
checks transferred automatically to purchase shares of the Fund.
Automatic Investment Plan
You may make automatic monthly investments in Retail Shares of the Fund
from your bank, savings and loan or other depository institution account. The
minimum initial and subsequent investments must be $50 under the plan. MGF
Service Corp. pays the costs associated with these transfers, but reserves the
right, upon thirty days' written notice, to make reasonable charges for this
service. Your depository institution may impose its own charge for debiting your
account which would reduce your return from an investment in the Fund.
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<PAGE>
HOW TO REDEEM SHARES
You may redeem Retail Shares of the Fund on each day that the Trust is
open for business. You will receive the net asset value per share next
determined after receipt by MGF Service Corp. of a proper redemption request in
the form described below. Payment is normally made within three business days
after tender in such form, provided that payment in redemption of shares
purchased by check will be effected only after the check has been collected,
which may take up to fifteen days from the purchase date. To eliminate this
delay, you may purchase shares of the Fund by certified check or wire.
A contingent deferred sales load may be imposed on a redemption of
shares of the Fund if such shares had previously been acquired in connection
with an exchange from another fund in the Midwest Group which imposes a
contingent deferred sales load, as described in the Prospectus of such other
fund.
BY TELEPHONE. You may redeem shares by telephone. The proceeds will be
sent by mail to the address designated on your account or wired directly to your
existing account in any commercial bank or brokerage firm in the United States
as designated on your application. To redeem by telephone, call MGF Service
Corp. (Nationwide call toll-free 800-543-0407; in Cincinnati call 629-2050). The
redemption proceeds will normally be sent by mail or by wire within one business
day (but not later than three business days) after receipt of your telephone
instructions. Any redemption requests by telephone must be received in proper
form prior to 12:00 noon, Eastern time, on any business day in order for payment
by wire to be made that day.
The telephone redemption privilege is automatically available to all
shareholders. You may change the bank or brokerage account which you have
designated under this procedure at any time by writing to MGF Service Corp. with
your signature guaranteed by any eligible guarantor institution (including
banks, brokers and dealers, municipal securities brokers and dealers, government
securities brokers and dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations)
or by completing a supplemental telephone redemption authorization form. Contact
MGF Service Corp. to obtain this form. Further documentation will be required to
change the designated account if shares are held by a corporation, fiduciary or
other organization.
Neither the Trust, MGF Service Corp., nor their respective affiliates
will be liable for complying with telephone instructions they reasonably believe
to be genuine or for any loss, damage, cost or expense in acting on such
telephone instructions. The affected shareholders will bear the risk of
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<PAGE>
any such loss. The Trust or MGF Service Corp., or both, will employ reasonable
procedures to determine that telephone instructions are genuine. If the Trust
and/or MGF Service Corp. do not employ such procedures, they may be liable for
losses due to unauthorized or fraudulent instructions. These procedures may
include, among others, requiring forms of personal identification prior to
acting upon telephone instructions, providing written confirmation of the
transactions and/or tape recording telephone instructions.
BY MAIL. You may redeem any number of shares from your account by
sending a written request to MGF Service Corp. The request must state the number
of shares to be redeemed and your account number. The request must be signed
exactly as your name appears on the Trust's account records. If the shares to be
redeemed have a value of $25,000 or more, your signature must be guaranteed by
any of the eligible guarantor institutions outlined above.
Written redemption requests may also direct that the proceeds be
deposited directly in the bank account or brokerage account designated on your
account application for telephone redemptions. Proceeds of redemptions requested
by mail are normally mailed within three business days following receipt of
instructions in proper form.
BY CHECK. You may establish a special checking account with
the Fund for the purpose of redeeming Retail Shares by check.
Checks may be made payable to anyone for any amount, but checks
may not be certified.
When a check is presented to the Custodian for payment, MGF Service
Corp., as your agent, will cause the Fund to redeem a sufficient number of full
and fractional shares in your account to cover the amount of the check.
If the amount of a check is greater than the value of the shares held
in your account, the check will be returned. A check representing a redemption
request will take precedence over any other redemption instructions issued by a
shareholder.
As long as no more than six check redemptions are effected in your
account in any month, there will be no charge for the check redemption
privilege. However, after six check redemptions are effected in your account in
a month, MGF Service Corp. will charge you $.25 for each additional check
redemption effected that month. MGF Service Corp. charges shareholders its costs
for each stop payment and each check returned for insufficient funds. In
addition, MGF Service Corp. reserves the right to make additional charges to
recover the costs of providing the check
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<PAGE>
redemption service. All charges will be deducted from your account by redemption
of shares in your account. The check redemption procedure may be suspended or
terminated at any time upon written notice by the Trust or MGF Service Corp.
Shareholders who invest in the Fund through a cash sweep or similar
program with a financial institution are not eligible for the checkwriting
privilege.
ADDITIONAL REDEMPTION INFORMATION. If your instructions request a
redemption by wire, you will be charged an $8 processing fee by the Fund's
Custodian. The Trust reserves the right, upon thirty days' written notice, to
change the processing fee. All charges will be deducted from your account by
redemption of shares in your account. Your bank or brokerage firm may also
impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
Redemption requests may direct that the proceeds be deposited directly
in your account with a commercial bank or other depository institution via an
Automated Clearing House (ACH) transaction. There is currently no charge for ACH
transactions. Contact MGF Service Corp. for more information about ACH
transactions.
At the discretion of the Trust or MGF Service Corp., corporate
investors and other associations may be required to furnish an appropriate
certification authorizing redemptions to ensure proper authorization. The Trust
reserves the right to require you to close your account if at any time the value
of your shares is less than $1,000 (based on actual amounts invested, unaffected
by market fluctuations) or such other minimum amount as the Trust may determine
from time to time. After notification to you of the Trust's intention to close
your account, you will be given thirty days to increase the value of your
account to the minimum amount.
The Trust reserves the right to suspend the right of redemption or to
postpone the date of payment for more than three business days under unusual
circumstances as determined by the Securities and Exchange Commission.
EXCHANGE PRIVILEGE
Shares of the Fund and of any other fund distributed by the Adviser may
be exchanged for each other. A sales load will be imposed equal to the excess,
if any, of the sales load rate
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<PAGE>
applicable to the shares being acquired over the sales load rate, if any,
previously paid on the shares being exchanged.
The following are the funds of the Midwest Group of Funds currently
offered to the public. Funds which may be subject to a front-end or contingent
deferred sales load are indicated by an asterisk.
Midwest Group Tax Free Trust Midwest Strategic Trust
Tax-Free Money Fund *U.S. Government Securities Fund
Ohio Tax-Free Money Fund *Equity Fund
California Tax-Free Money Fund *Utility Fund
Royal Palm Florida Tax-Free *Treasury Total Return Fund
Money Fund
*Tax-Free Intermediate Term Fund Midwest Trust
*Ohio Insured Tax-Free Fund Short Term Government Income Fund
Institutional Government Income
Fund
*Intermediate Term Government Income
Fund
*Adjustable Rate U.S. Government
Securities Fund
*Global Bond Fund
You may request an exchange by sending a written request to MGF Service Corp.
The request must be signed exactly as your name appears on the Trust's account
records. Exchanges may also be requested by telephone. If you are unable to
execute your transaction by telephone (for example during times of unusual
market activity) consider requesting your exchange by mail or by visiting the
Trust's offices at 312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202. An
exchange will be effected at the next determined net asset value (or offering
price, if sales load is applicable) after receipt of a request by MGF Service
Corp.
Exchanges may only be made for shares of funds then offered for sale in your
state of residence and are subject to the applicable minimum initial investment
requirements. The exchange privilege may be modified or terminated by the Board
of Trustees upon 60 days' prior notice to shareholders. An exchange results in a
sale of fund shares, which may cause you to recognize a capital gain or loss.
Before making an exchange, contact MGF Service Corp. to obtain a current
prospectus for any of the other funds in the Midwest Group and more information
about exchanges among the Midwest Group of Funds.
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<PAGE>
DIVIDENDS AND DISTRIBUTIONS
All of the net investment income of the Fund is declared as a dividend to
shareholders of record on each business day of the Trust and paid monthly.
Management will determine the timing and frequency of the distributions of any
net realized short-term capital gains. Although the Fund does not expect to
realize any long-term capital gains, if the Fund does realize such gains it will
distribute them at least once each year. The Fund will, at the time dividends
are paid, designate as tax-exempt the same percentage of the distribution as the
actual tax-exempt income earned during the period covered by the distribution
bore to total income earned during the period; the percentage of the
distribution which is tax-exempt may vary from distribution to distribution.
Dividends are automatically reinvested in additional shares of the Fund (the
Share Option) unless cash payments are specified on your application or are
otherwise requested by contacting MGF Service Corp. If you elect to receive
dividends in cash and the U.S. Postal Service cannot deliver your checks or if
your checks remain uncashed for six months, your dividends may be reinvested in
your account at the then-current net asset value and your account will be
converted to the Share Option.
TAXES
The Fund has qualified in all prior years and intends to continue to qualify
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. The Fund also intends
to meet all IRS requirements necessary to ensure that it is qualified to pay
"exempt-interest dividends," which means that it may pass on to shareholders the
federal tax-exempt status of its investment income.
The Fund intends to distribute substantially all of its net investment income
and any net realized capital gains to its shareholders. For federal income tax
purposes, a shareholder's proportionate share of taxable distributions from the
Fund's net investment income as well as from net realized short-term capital
gains, if any, is taxable as ordinary income. Since the Fund's investment income
is derived from interest rather than dividends, no portion of such distributions
is eligible for the dividends received deduction available to corporations.
Dividends received from the Fund that are exempt from federal income tax are
exempt from the Ohio personal income tax and the net income base of the Ohio
corporation franchise tax to the extent derived from interest on Ohio
Obligations. However, shares of the Fund will be included in the computation of
the
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<PAGE>
Ohio corporation franchise tax on the net worth basis. Distributions received
from the Fund are generally not subject to Ohio municipal income taxation.
Issuers of tax-exempt securities issued after August 31, 1986 are required to
comply with various restrictions on the use and investment of proceeds of sales
of the securities. Any failure by the issuer to comply with these restrictions
would cause interest on such securities to become taxable to the security
holders as of the date the securities were issued.
Interest on "specified private activity bonds," as defined by the Tax Reform
Act of 1986, is an item of tax preference possibly subject to the alternative
minimum tax (at the rate of 26% to 28% for individuals and 20% for
corporations). The Fund may invest in such "specified private activity bonds"
subject to the requirement that it invest at least 80% of its net assets in
obligations the interest on which is exempt from federal income tax, including
the alternative minimum tax. The Tax Reform Act of 1986 also created a tax
preference for corporations equal to one-half of the excess of adjusted net book
income over alternative minimum taxable income. As a result, one-half of
tax-exempt interest income received from the Fund may be a tax preference for
corporate investors.
Shareholders should be aware that interest on indebtedness incurred to
purchase or carry shares of the Fund is not deductible for federal income tax
purposes. Shareholders receiving Social Security benefits may be taxed on a
portion of those benefits as a result of receiving tax-exempt income.
The Fund will mail to each of its shareholders a statement indicating the
amount and federal income tax status of all distributions made during the year.
The Fund will report to its shareholders the percentage and source of income
earned on tax-exempt obligations held by it during the preceding year. An
exemption from federal income tax and Ohio personal income tax may not result in
similar exemptions under the laws of a particular state or local taxing
authority.
The tax consequences described in this section apply whether distributions are
taken in cash or reinvested in additional shares. The Fund may not be an
appropriate investment for persons who are "substantial users" of facilities
financed by industrial development bonds or are "related persons" to such users;
such persons should consult their tax advisors before investing in the Fund.
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<PAGE>
OPERATION OF THE FUND
The Fund is a non-diversified series of Midwest Group Tax Free Trust, an
open-end management investment company organized as a Massachusetts business
trust on April 13, 1981. The Board of Trustees supervises the business
activities of the Trust. Like other mutual funds, the Trust retains various
organizations to perform specialized services for the Fund.
The Trust retains Midwest Group Financial Services, Inc., 312 Walnut Street,
Cincinnati, Ohio 45202 (the "Adviser"), to manage the Fund's investments and its
business affairs. The Adviser was organized in 1974 and is also the investment
adviser to five other series of the Trust, five series of Midwest Trust and four
series of Midwest Strategic Trust. The Adviser is a subsidiary of Leshner
Financial, Inc., of which Robert H. Leshner is the controlling shareholder. The
Fund pays the Adviser a fee equal to the annual rate of .5% of the average value
of its daily net assets up to $100 million; .45% of such assets from $100
million to $200 million; .4% of such assets from $200 million to $300 million;
and .375% of such assets in excess of $300 million.
The Fund is responsible for the payment of all operating expenses, including
fees and expenses in connection with membership in investment company
organizations, brokerage fees and commissions, legal, auditing and accounting
expenses, expenses of registering shares under federal and state securities
laws, insurance expenses, taxes or governmental fees, fees and expenses of the
custodian, transfer agent and accounting and pricing agent of the Fund, fees and
expenses of members of the Board of Trustees who are not interested persons of
the Trust, the cost of preparing and distributing prospectuses, statements,
reports and other documents to shareholders, expenses of shareholders' meetings
and proxy solicitations, and such extraordinary or non-recurring expenses as may
arise, including litigation to which the Fund may be a party and indemnification
of the Trust's officers and Trustees with respect thereto. Retail Shares are
also responsible for the payment of expenses related to the distribution of such
shares (see "Distribution Plan").
The Trust has retained MGF Service Corp., P.O. Box 5354, Cincinnati, Ohio, a
subsidiary of Leshner Financial, Inc., to serve as the Fund's transfer agent,
dividend paying agent and shareholder service agent.
MGF Service Corp. also provides accounting and pricing services to the Fund.
MGF Service Corp. receives a monthly fee from the Fund for calculating daily net
asset value per share and maintaining such books and records as are necessary to
enable it to perform its duties.
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<PAGE>
In addition, MGF Service Corp. has been retained by the Adviser to assist the
Adviser in providing administrative services to the Fund. In this capacity, MGF
Service Corp. supplies executive, administrative and regulatory services,
supervises the preparation of tax returns, and coordinates the preparation of
reports to shareholders and reports to and filings with the Securities and
Exchange Commission and state securities authorities. The Adviser (not the Fund)
pays MGF Service Corp. a fee for these administrative services equal to the
annual rate of .1% of the average value of the Fund's daily net assets.
The Adviser serves as principal underwriter for the Fund and, as such, is the
exclusive agent for the distribution of shares of the Fund. Robert H. Leshner,
Chairman and a director of the Adviser, is President and a Trustee of the Trust.
John F. Splain, Secretary and General Counsel of the Adviser, is Secretary of
the Trust.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to its objective of seeking best execution
of portfolio transactions, the Adviser may give consideration to sales of shares
of the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions of the Fund. Subject to the requirements of the
Investment Company Act of 1940 and procedures adopted by the Board of Trustees,
the Fund may execute portfolio transactions through any broker or dealer and pay
brokerage commissions to a broker (i) which is an affiliated person of the
Trust, or (ii) which is an affiliated person of such person, or (iii) an
affiliated person of which is an affiliated person of the Trust or the Adviser.
Shares of the Fund have equal voting rights and liquidation rights. The Fund
shall vote separately on matters submitted to a vote of the shareholders except
in matters where a vote of all series of the Trust in the aggregate is required
by the Investment Company Act of 1940 or otherwise. Retail Shares of the Fund
shall vote separately on matters relating to the plan of distribution pursuant
to Rule 12b-1 (see "Distribution Plan"). When matters are submitted to
shareholders for a vote, each shareholder is entitled to one vote for each full
share owned and fractional votes for fractional shares owned. The Trust does not
normally hold annual meetings of shareholders. The Trustees shall promptly call
and give notice of a meeting of shareholders for the purpose of voting upon the
removal of any Trustee when requested to do so in writing by shareholders
holding 10% or more of the Trust's outstanding shares. The Trust will comply
with the provisions of Section 16(c) of the Investment Company Act of 1940 in
order to facilitate communications among shareholders.
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<PAGE>
The Fifth Third Bank Trust Department, 38 Fountain Square Plaza, Cincinnati,
Ohio, may be deemed to control the Fund by virtue of the fact that it owns of
record more than 25% of the Fund's shares as of the date of this Prospectus.
DISTRIBUTION PLAN
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, Retail Shares
of the Fund have adopted a plan of distribution (the "Class A Plan") under which
such shares may directly incur or reimburse the Adviser for certain
distribution- related expenses, including payments to securities dealers and
others who are engaged in the sale of such shares and who may be advising
investors regarding the purchase, sale or retention of such shares; expenses of
maintaining personnel who engage in or support distribution of shares or who
render shareholder support services not otherwise provided by MGF Service Corp.;
expenses of formulating and implementing marketing and promotional activities,
including direct mail promotions and mass media advertising; expenses of
preparing, printing and distributing sales literature and prospectuses and
statements of additional information and reports for recipients other than
existing shareholders of the Fund; expenses of obtaining such information,
analyses and reports with respect to marketing and promotional activities as the
Trust may, from time to time, deem advisable; and any other expenses related to
the distribution of such shares.
Pursuant to the Class A Plan, Retail Shares may make payments to dealers and
other persons, including the Adviser and its affiliates, who may be advising
investors regarding the purchase, sale or retention of Retail Shares of the
Fund. For the fiscal year ended June 30, 1996, Retail Shares of the Fund paid
$444,000 to the Adviser to reimburse it for payments made to dealers and other
persons who may be advising shareholders in this regard.
The annual limitation for payment of expenses pursuant to the Class A Plan is
.25% of the average daily net assets allocable to Retail Shares. Unreimbursed
expenditures will not be carried over from year to year. In the event the Class
A Plan is terminated by the Fund in accordance with its terms, the Fund will not
be required to make any payments for expenses incurred by the Adviser after the
date the Class A Plan terminates.
Pursuant to the Class A Plan, the Fund may also make payments to banks or
other financial institutions that provide shareholder services and administer
shareholder accounts. The Glass-Steagall Act prohibits banks from engaging in
the business of underwriting, selling or distributing securities. Although the
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<PAGE>
scope of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, management of the
Trust believes that the Glass- Steagall Act should not preclude a bank from
providing such services. However, state securities laws on this issue may differ
from the interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law. If a
bank were prohibited from continuing to perform all or a part of such services,
management of the Trust believes that there would be no material impact on the
Fund or its shareholders. Banks may charge their customers fees for offering
these services to the extent permitted by applicable regulatory authorities, and
the overall return to those shareholders availing themselves of the bank
services will be lower than to those shareholders who do not. The Fund may from
time to time purchase securities issued by banks which provide such services;
however, in selecting investments for the Fund, no preference will be shown for
such securities.
CALCULATION OF SHARE PRICE
On each day that the Trust is open for business, the share price (net asset
value) of the Fund's shares is determined as of 12:00 noon and 4:00 p.m.,
Eastern time. The Trust is open for business on each day the New York Stock
Exchange is open for business and on any other day when there is sufficient
trading in the Fund's investments that its net asset value might be materially
affected. The net asset value per share of the Fund is calculated by dividing
the sum of the value of the securities held by the Fund plus cash or other
assets minus all liabilities (including estimated accrued expenses) by the total
number of shares outstanding of the Fund, rounded to the nearest cent.
The Fund's portfolio securities are valued on an amortized cost basis. In
connection with the use of the amortized cost method of valuation, the Fund
maintains a dollar-weighted average portfolio maturity of 90 days or less,
purchases only United States dollar-denominated securities having remaining
maturities of thirteen months or less and invests only in securities determined
by the Board of Trustees to meet the Fund's quality standards and to present
minimal credit risks. Other assets of the Fund 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. It is
anticipated, but there is no assurance, that the use of the amortized cost
method of valuation will enable the Fund to maintain a stable net asset value
per share of $1.
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<PAGE>
PERFORMANCE INFORMATION
From time to time the Fund may advertise its "current yield" and "effective
yield." Both yield figures are based on historical earnings and are not intended
to indicate future performance. The "current yield" of the Fund refers to the
income generated by an investment in the Fund over a seven-day period (which
period will be stated in the advertisement). This income is then "annualized."
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The "effective yield" is calculated similarly but,
when annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The "effective yield" will be slightly higher than the "current
yield" because of the compounding effect of this assumed reinvestment. In
addition, the Fund may advertise together with its "current yield" or "effective
yield" a tax equivalent "current yield" or "effective yield" which reflects the
yield which would be required of a taxable investment at a stated income tax
rate in order to equal the Fund's "current yield" or "effective yield." Yields
are computed separately for Retail and Institutional Shares. The yield of
Institutional Shares is expected to be higher than the yield of Retail Shares
due to the distribution fees imposed on Retail Shares.
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<PAGE>
Account Application
Please mail account application to:
MGF Service Corp.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
ACCOUNT NO.___________________
(For Fund Use Only)
OHIO TAX-FREE MONEY FUND
(RETAIL SHARES)
FOR BROKER/DEALER USE ONLY
Firm Name:________________________________________
Home Office Address:______________________________
Branch Address:___________________________________
Rep Name & No.____________________________________
______________________________________________________________________________
Initial Investment of $___________________________ ($1,000 minimum)
[ ] Check or draft enclosed payable to the Fund.
[ ] Bank Wire From: _________________________________________________________
[ ] Exchange From: __________________________________________________________
(Fund Name) (Fund Account Number)
Account Name
_____________________________________________________________
Name of Individual, Corporation, Organization, or Minor, etc.
_________________________________________________________________
Name of Joint Tenant, Partner, Custodian
Address
___________________________________________________________________
Street or P.O. Box
___________________________________________________________________
City State Zip
S.S.#/Tax I.D.#
________________________________________________________
(In case of custodial account please list minor's S.S.#)
Citizenship: ___ U.S.
___ Other____________________
Phone
( )_________________________________
Business Phone
( )___________________________________
Home Phone
<TABLE>
<C> <C> <C>
Check Appropriate Box: [ ] Individual [ ] Joint Tenant (Right of survivorship presumed) [ ] Partnership
[ ] Corporation [ ] Trust [ ] Custodial [ ] Non-Profit [ ] Other
- -------------------------------------------------------------------------------------------------------------
TAXPAYER IDENTIFICATION NUMBER - Under penalties of perjury I certify that the Taxpayer Identification Number listed
above is my correct number. The Internal Revenue Service does not require your consent to any provision of this
document other than the certifications required to avoid backup withholding. Check box if appropriate:
[ ] I am exempt from backup withholding under the provisions of section 3406(a)(1)(c) of the Internal Revenue Code; or I
am not subject to backup withholding because I have not been notified that I am subject to backup withholding as a result of a
failure to report all interest or dividends; or the Internal Revenue Service has notified me that I am no longer subject to
backup withholding.
[ ] I certify under penalties of perjury that a Taxpayer Identification Number has not been issued to me and I have
mailed or delivered an application to receive a Taxpayer Identification Number to the Internal Revenue Service Center or Social
Security Administration Office. I understand that if I do not provide a Taxpayer Identification Number within 60 days that 31% of
all reportable payments will be withheld until I provide a number.
- -------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (Distributions are reinvested if no choice is indicated)
[ ] Reinvest all distributions
[ ] Pay all distributions in cash
- -------------------------------------------------------------------------------------------------------------------
REDEMPTION OPTIONS
I (we) authorize the Trust or MGF Service Corp. to act upon instructions received by telephone, or upon receipt of and
in the amounts of checks as described below (if checkwriting is selected), to have amounts withdrawn from my (our) account in
any fund in the Midwest Group (see prospectus for limitations on this option) and:
[ ] WIRED ($1,000 minimum OR MAILED to my (our) bank account designated below. I (we) further authorize the use of
automated cash transfers to and from the account designated below. NOTE: For wire redemptions, the indicated bank should be a
commercial bank. Please attach a voided check for the account.
Bank Account Number ____________________________________________Bank Routing Transit Number___________________________________
Name of Account Holder_________________________________________________________________________________________________________
Bank Name __________________________________________________Bank Address________________________________________________
City State
[ ] CHECKWRITING (A signature card must be completed)
... to deposit the proceeds of such redemptions in the applicable Midwest Group Pay Through Draft Account (PTDA) or
otherwise arrange for application of such proceeds to payment of said checks. I (we) authorize the persons whose signatures
appear on the PTDA signature card to draw checks on the PTDA and to cause the redemption of my (our) shares of the Trust. I
(we) agree to be bound by the Rules and Regulations for the Midwest Group Pay Through Draft Account as such Rules and
Regulations may be amended from time to time.
- ------------------------------------------------------------------------------------------------------------------------
SIGNATURES
By signature below each investor certifies that he has received a copy of the Fund's current Prospectus, that he is of
legal age, and that he has full authority and legal capacity for himself or the organization named below, to make this
investment and to use the options selected above. The investor appoints MGF Service Corp. as his agent to enter orders for shares
whether by direct purchase or exchange, to receive dividends and distributions for automatic reinvestment in additional shares of
the Fund for credit to the investor's account and to surrender for redemption shares held in the investor's account in accordance
with any of the procedures elected above or for payment of service charges incurred by the investor. The investor further
agrees that MGF Service Corp. can cease to act as such agent upon ten days' notice in writing to the investor at the address
contained in this Application. The investor hereby ratifies any instructions given pursuant to this Application and for himself and
his successors and assigns does hereby release MGF Service Corp., Midwest Group Tax Free Trust, Midwest Group Financial
Services, Inc., and their respective officers, employees, agents and affiliates from any and all liability in the performance of
the acts instructed herein. Neither the Trust, MGF Service Corp., nor their respective affiliates will be liable for complying
with telephone instructions they reasonably believe to be genuine or for any loss, damage, cost or expense in acting on such
telephone instructions. The investor(s) will bear the risk of any such loss. The Trust or MGF Service Corp., or both,
will employ reasonable procedures to determine that telephone instructions are genuine. If the Trust and/or MGF Service Corp.
do not employ such procedures, they may be liable for losses due to unauthorized or fraudulent instructions. These procedures
may include, among others, requiring forms of personal identification prior to acting upon telephone instructions, providing
written confirmation of the transactions and/or tape recording telephone instructions.
______________________________________________________________ ___________________________________________________
Signature of Individual Owner, Corporate Officer, Trustee, etc. Signature of Joint Owner, if Any
__________________________________________________
_______________________________________________________________ Date
Title of Corporate Officer, Trustee, etc.
NOTE: Corporations, trusts and other organizations must complete the
resolution form on the reverse side. Unless otherwise specified, each
joint owner shall have full authority to act on behalf of the account.
AUTOMATIC INVESTMENT PLAN (Complete for Investments into the Fund)
The Automatic Investment Plan is available for all established accounts of Midwest Group Tax Free Trust. There is no
charge for this service, and it offers the convenience of automatic investing on a regular basis. The minimum investment is $50.00
per month. For an account that is opened by using this Plan, the minimum initial and subsequent investments must be $50.00.
Though a continuous program of 12 monthly investments is recommended, the Plan may be discontinued by the shareholder at any
time.
Please invest $ __________per month in the Fund.
ABA Routing Number_______________________
FI Account Number________________________
[ ] Checking Account [ ] Savings Account
________________________________________________
Name of Financial Institution (FI)
_________________________________________________
City State
Please make my automatic investment on:
[ ] the last business day of each month
[ ] the 15th day of each month
[ ] both the 15th and last business day
X________________________________________________________________________
Signature of Depositor EXACTLY as it appears on FI Records)
X_________________________________________________________________________
(Signature of Joint Tenant - if any)
(Joint Signatures are required when bank account is in joint names. Please sign
exactly as signature appears on your FI's records.)
Please attach a voided check for the Automatic Investment Plan.
Indemnification to Depositor's Bank
In consideration of your participation in a plan which MGF Service Corp. ("MGF") has put into effect, by which
amounts, determined by your depositor, payable to the Fund, for purchase of shares of the Fund, are collected by MGF, MGF hereby
agrees:
MGF will indemnify and hold you harmless from any liability to any person or persons whatsoever arising out of the
payment by you of any amount drawn by the Fund to its own order on the account of your depositor or from any liability to any
person whatsoever arising out of the dishonor by you whether with or without cause or intentionally or inadvertently, of any
such amount. MGF will defend, at its own cost and expense, any action which might be brought against you by any person or
persons whatsoever because of your actions taken pursuant to the foregoing request or in any manner arising by reason of your
participation in this arrangement. MGF will refund to you any amount erroneously paid by you to the Fund if the claim
for the amount of such erroneous payment is made by you within six (6) months from the date of such erroneous payment;
your participation in this arrangement and that of the Fund may be terminated by thirty (30) days written notice from
either party to the other.
- ------------------------------------------------------------------------------------------------------------------------
AUTOMATIC WITHDRAWAL PLAN (Complete for Withdrawals from the Fund)
This is an authorization for you to withdraw $_________________ from my account beginning the last business day of
the month of _____________________.
Please Indicate Withdrawal Schedule (Check One):
[ ] Monthly _ Withdrawals will be made on the last business day of each month.
[ ] Quarterly _ Withdrawals will be made on or about 3/31, 6/30, 9/30 and 12/31.
[ ] Annually _ Please make withdrawals on the last business day of the month of:____________________.
Please Select Payment Method (Check One):
[ ] Exchange: Please exchange the withdrawal proceeds into another Midwest account number: ____ ____ _ ____ ____ ____
[ ] Check: Please mail a check for my withdrawal proceeds to the mailing address on this account.
[ ] ACH Transfer: Please send my withdrawal proceeds via ACH transfer to my bank checking or savings account as
indicated below. I understand that the transfer will be completed in two to three business days and that there is no charge.
[ ] Bank Wire: Please send my withdrawal proceeds via bank wire, to the account indicated below. I understand that the
wire will be completed in one business day and that there is an $8.00 fee.
Please attach a voided _______________________________________________________________________________________
check for ACH or bank wire Bank Name Bank Address
_______________________________________________________________________________________
Bank ABA# Account # Account Name
[ ] Send to special payee (other than applicant): Please mail a check for my withdrawal proceeds to the mailing address
below:
Name of payee_____________________________________________________________________________________________________________
Please send to:__________________________________________________________________________________________________________
Street address City State Zip
- ------------------------------------------------------------------------------------------------------------------------
RESOLUTIONS
(This Section to be completed by Corporations, Trusts, and Other Organizations)
RESOLVED: That this corporation or organization become a shareholder of the Midwest Group Tax Free Trust (the Trust) and
that
- ------------------------------------------------------------------------------------------------------------------------
is (are) hereby authorized to complete and execute the Application on behalf of the corporation or organization and to
take any ction for it as may be necessary or appropriate with respect to its shareholder account with the Fund, and it is
FURTHER RESOLVED: That any one of the above noted officers is authorized to sign any documents necessary or appropriate
to appoint MGF Service Corp. as redemption agent of the corporation or organization for shares of the Fund, to establish or
acknowledge terms and conditions governing the redemption of said shares and to otherwise implement the privileges
elected on the Application, and it is (If checkwriting privilege is not desired, please cross out the following resolution.)
FURTHER RESOLVED: That the corporation or organization participate in the Midwest Group Pay Through Draft Account (PTDA)
and that until otherwise ordered in writing, MGF Service Corp. is authorized to make redemptions of shares held by the
corporation or organization, and to make payment from PTDA upon and according to the check, draft, note or order of this corporation
or organization when signed by
- ------------------------------------------------------------------------------------------------------------------------
and to receive the same when so signed to the credit of, or payment to, the payee or any other holder without inquiry as
to the circumstances of issue or the disposition or proceeds, whether drawn to the individual order or tendered in payment of
individual obligations of the persons above named or other officers of this corporation or organization or otherwise.
Certificate
I hereby certify that the foregoing resolutions are in conformity with the
Charter and By-Laws or other empowering documents of the
- -------------------------------------------------------------------------------
(Name of Organization)
incorporated or formed under the laws of_______________________________________
(State)
and were adopted at a meeting of the Board of Directors or Trustees of the
organization or corporation duly called and held on _________________
at which a quorum was present and acting throughout, and that the same are
now in full force and effect.
I further certify that the following is (are) duly elected officer(s) of the
corporation or organization, authorized to act in accordance with the
foregoing resolutions.
Name Title
- --------------------------------------- ----------------------
- --------------------------------------- ----------------------
- --------------------------------------- ----------------------
Witness my hand and seal of the corporation or organization this________________
day of_____________________________, 19_______
- ----------------------------------- -------------------------------------
*Secretary-Clerk Other Authorized Officer (if required)
*If the Secretary or other recording officer is authorized to act by the above
resolutions, this certificate must also be signed by another officer.
</TABLE>
<PAGE>
MIDWEST GROUP TAX FREE TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
Nationwide: (Toll-Free) 800-543-8721
Cincinnati: 513-629-2000
BOARD OF TRUSTEES
Dale P. Brown
Gary W. Heldman
H. Jerome Lerner
Robert H. Leshner
Richard A. Lipsey
Donald J. Rahilly
Fred A. Rappoport
Oscar P. Robertson
Robert B. Sumerel
OFFICERS
Robert H. Leshner, President
John F. Splain, Secretary
Mark J. Seger, Treasurer
INVESTMENT ADVISER
MIDWEST GROUP FINANCIAL SERVICES, INC.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
TRANSFER AGENT
MGF SERVICE CORP.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Shareholder Service
Nationwide: (Toll-Free) 800-543-0407
Cincinnati: 513-629-2050
Rate Line
Nationwide: (Toll-Free) 800-852-3809
Cincinnati: 513-579-0999
<PAGE>
TABLE OF CONTENTS
Expense Information..........................................................
Financial Highlights ........................................................
Investment Objective and Policies............................................
How to Purchase Shares.......................................................
Shareholder Services.........................................................
How to Redeem Shares........................................................
Exchange Privilege............................................................
Dividends and Distributions..................................................
Taxes........................................................................
Operation of the Fund.........................................................
Distribution Plan. . . . .....................................................
Calculation of Share Price....................................................
Performance Information......................................................
- ----------------------------------------------------------------
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Trust. This Prospectus does not constitute an offer by the Trust to sell
shares in any State to any person to whom it is unlawful for the Trust to make
such offer in such State.
<PAGE>
PROSPECTUS
January 7, 1997
OHIO TAX-FREE MONEY FUND
INSTITUTIONAL SHARES
The Ohio Tax-Free Money Fund (the "Fund"), a separate series of Midwest
Group Tax Free Trust, seeks the highest level of current income exempt from
federal income tax and Ohio personal income tax, consistent with liquidity and
stability of principal. The Fund invests primarily in a portfolio of
high-quality, short-term Ohio municipal obligations.
THE FUND'S PORTFOLIO SECURITIES ARE VALUED ON AN AMORTIZED COST BASIS.
FUND SHARES ARE NEITHER INSURED NOR GUARANTEED BY THE UNITED STATES GOVERNMENT
OR ANY OTHER ENTITY. IT IS ANTICIPATED, BUT THERE IS NO ASSURANCE, THAT THE FUND
WILL MAINTAIN A STABLE NET ASSET VALUE PER SHARE OF $1.
THE FUND IS A NON-DIVERSIFIED SERIES AND MAY INVEST A SIGNIFICANT
PERCENTAGE OF ITS ASSETS IN A SINGLE ISSUER. THEREFORE, AN INVESTMENT IN THE
FUND MAY BE RISKIER THAN AN INVESTMENT IN OTHER TYPES OF MONEY MARKET FUNDS.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
The Fund offers two classes of shares: Class A shares ("Retail Shares"),
sold subject to a 12b-1 fee of up to .25% of average daily net assets, and Class
B shares ("Institutional Shares"), sold without a 12b-1 fee. Each Retail and
Institutional Share of the Fund represents identical interests in the Fund's
investment portfolio and has the same rights, except that (i) Retail Shares bear
the expenses of distribution fees, which will cause Retail Shares to have a
higher expense ratio and to pay lower dividends than Institutional Shares; (ii)
certain class specific expenses will be borne solely by the class to which such
expenses are attributable; (iii) each class has exclusive voting rights with
respect to matters affecting only that class; and (iv) Retail Shares are subject
to a lower minimum initial investment requirement and offer certain shareholder
services not available to Institutional Shares such as checkwriting and
automatic investment and redemption plans.
Midwest Group Financial Services, Inc. (the "Adviser") manages the
Fund's investments and its business affairs.
This Prospectus sets forth concisely the information about Institutional
Shares that you should know before investing. Please retain this Prospectus for
future reference. Retail Shares are offered in a separate prospectus and
additional information about Retail Shares may be obtained by calling one of the
numbers listed below. A Statement of Additional Information dated January 7,
1997 has been filed with the Securities and Exchange Commission and is hereby
incorporated by reference in its entirety. A copy of the Statement of Additional
Information can be obtained at no charge by calling one of the numbers listed
below.
- -----------------------------------------------------------------------
For Information or Assistance in Opening An Account, Please Call:
Nationwide (Toll-Free)..........................................800-543-0407
Cincinnati......................................................513-629-2050
- -----------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- 2 -
<PAGE>
EXPENSE INFORMATION
INSTITUTIONAL SHARES
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Exchange Fee None
Redemption Fee None
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
Management Fees .46%
12b-1 Fees None
Other Expenses After Reimbursements .04%(A)
---
Total Operating Expenses After Reimbursements .50%(B)
====
(A) Absent expense reimbursements by the Adviser, other expenses would be
.10%.
(B) Absent expense reimbursements by the Adviser, total operating expenses
would be .56%.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in Institutional Shares will bear
directly or indirectly. The percentages expressing annual operating expenses are
based on estimated amounts for the current fiscal year. THE EXAMPLE BELOW SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Example
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
You would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return and
(2) redemption at the end
of each time period: $ 5 $ 16 $ 28 $ 63
- 2 -
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The Fund is a series of Midwest Group Tax Free Trust (the "Trust"). The
Fund seeks the highest level of current income exempt from federal income tax
and Ohio personal income tax, consistent with liquidity and stability of
principal. The Fund is not intended to be a complete investment program, and
there is no assurance that its investment objective can be achieved. The Fund's
investment objective may be changed by the Board of Trustees without shareholder
approval, but only after notification has been given to shareholders and after
this Prospectus has been revised accordingly. If there is a change in the Fund's
investment objective, shareholders should consider whether the Fund remains an
appropriate investment in light of their then current financial position and
needs. Unless otherwise indicated, all investment practices and limitations of
the Fund are nonfundamental policies which may be changed by the Board of
Trustees without shareholder approval.
The Fund seeks to achieve its investment objective by investing
primarily in high-quality, short-term Ohio Obligations (described below)
determined by the Adviser, under the direction of the Board of Trustees, to
present minimal credit risks. The Fund will purchase only obligations that
enable it to employ the amortized cost method of valuation. Under the amortized
cost method of valuation, the Fund's obligations are valued at original cost
adjusted for amortization of premium or accumulation of discount, rather than
valued at market. This method should enable the Fund to maintain a stable net
asset value per share. The Fund will invest in obligations which have received a
short-term rating in one of the two highest categories by any two nationally
recognized statistical rating organizations ("NRSROs") or by any one NRSRO if
the obligation is rated by only that NRSRO. The Fund may purchase unrated
obligations determined by the Adviser, under the direction of the Board of
Trustees, to be of comparable quality to rated obligations meeting the Fund's
quality standards. These standards must be satisfied at the time an investment
is made. If an obligation ceases to meet these standards, or if the Board of
Trustees believes such obligation no longer presents minimal credit risks, the
Trustees will cause the Fund to dispose of the obligation as soon as
practicable. The Statement of Additional Information describes ratings of the
NRSROs.
The Fund's dollar-weighted average maturity will be 90 days or less.
The Fund will invest in obligations with remaining maturities of thirteen months
or less at the time of purchase.
- 3 -
<PAGE>
It is a fundamental policy that under normal market conditions the Fund
will invest at least 80% of the value of its net assets in short-term
obligations the interest on which is exempt from federal income tax, including
the alternative minimum tax, and Ohio personal income tax. This policy may not
be changed without the affirmative vote of a majority of the outstanding shares
of the Fund. The term "majority" of the outstanding shares means the lesser of
(1) 67% or more of the outstanding shares of the Fund present at a meeting, if
the holders of more than 50% of the outstanding shares of the Fund are present
or represented at such meeting or (2) more than 50% of the outstanding shares of
the Fund.
The Fund may, from time to time, invest in other short-term,
high-quality obligations for temporary defensive purposes (subject to the
fundamental policy that under normal market conditions the Fund will invest at
least 80% of its net assets in obligations the interest on which is exempt from
federal income tax, including the alternative minimum tax, and Ohio personal
income tax). These include, but are not limited to, obligations the interest on
which is exempt from federal, but not Ohio, income tax and taxable obligations
such as certificates of deposit and other bank debt instruments, commercial
paper, obligations issued by the U.S. Government or any of its agencies or
instrumentalities and repurchase agreements. Except for temporary defensive
purposes, at no time will more than 20% of the value of the Fund's net assets be
invested in taxable obligations. Under normal market conditions, the Fund
anticipates that not more than 5% of the value of its net assets will be
invested in any one type of taxable obligation. Taxable obligations are more
fully described in the Statement of Additional Information. The Fund may invest
in these other short-term obligations, for example, due to market conditions
under which Ohio Obligations are temporarily unavailable for purchase or
available only in limited amounts, or pending investment of proceeds of sales of
shares or proceeds from the sale of portfolio securities or in anticipation of
redemptions. The Fund reserves the right to hold cash reserves as the Adviser
deems necessary for temporary defensive purposes. Although interest earned on
these short-term obligations is taxable as ordinary income for federal and/or
Ohio income tax purposes, the Fund intends to minimize taxable income through
investment, when possible, in other available securities exempt from federal
and/or Ohio income taxes, including shares of investment companies whose
dividends are tax-exempt. The Fund may invest up to 10% of its total assets in
shares of other investment companies. Investments by the Fund in shares of other
investment companies may result in duplication of sales loads and advisory,
administrative and distribution fees. The Fund will not invest more than 5% of
its total assets in securities of any single
- 4 -
<PAGE>
investment company and will not purchase more than 3% of the outstanding voting
securities of any investment company. The Fund will only invest in securities of
other investment companies which hold themselves out to be money market funds.
Ohio Obligations
Ohio Obligations are debt 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 issuer, exempt from both federal income tax, including the
alternative minimum tax, and Ohio personal income tax. For purposes of this
definition, Ohio Obligations include participation interests in Ohio Obligations
and shares of an investment company which invests at least 80% of its net assets
in obligations the interest on which is exempt from federal income tax,
including the alternative minimum tax, and Ohio personal income tax. Ohio
Obligations are issued to obtain funds to construct, repair or improve various
public 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. Ohio Obligations
consist of tax-exempt bonds, tax-exempt notes and tax-exempt commercial paper.
The Statement of Additional Information contains a description of tax-exempt
bonds, notes and commercial paper.
The two principal classifications of Ohio Obligations 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, and therefore investments in these bonds have more potential risk. The
Fund's ability to achieve its investment objective depends to a great extent on
the ability of these various issuers to meet their scheduled payments of
principal and interest. Tax-exempt notes generally are used to provide
short-term capital needs and generally have maturities of one year or less. The
tax-exempt notes in which the Fund may invest are tax anticipation notes (TANs),
revenue anticipation notes (RANs) and bond anticipation notes (BANs). TANs, RANs
and BANs are issued by state and local government and public authorities as
interim financing in anticipation of tax collections, revenue receipts or bond
sales, respectively. Tax- exempt commercial paper typically represents
short-term, unsecured, negotiable promissory notes.
- 5 -
<PAGE>
The Fund may invest in any combination of general obligation bonds,
revenue bonds and industrial development bonds. The Fund may invest more than
25% of its assets in tax-exempt obligations issued by municipal governments or
political subdivisions of governments within a particular segment of the bond
market, such as housing agency bonds, hospital revenue bonds or airport bonds.
It is possible that economic, business or political developments or other
changes affecting one bond may also affect other bonds in the same segment in
the same manner, thereby potentially increasing the risk of such investments.
From time to time, the Fund may invest more than 25% of the value of
its total assets in industrial development bonds which, although issued by
industrial development authorities, may be backed only by the assets and
revenues of the nongovernmental users. However, the Fund will not invest more
than 25% of its assets in securities backed by nongovernmental users which are
in the same industry. Interest on municipal obligations (including certain
industrial development bonds) which are private activity obligations, as defined
in the Internal Revenue Code, issued after August 7, 1986, while exempt from
federal income tax, is a preference item for purposes of the alternative minimum
tax. Where a regulated investment company receives such interest, a
proportionate share of any exempt-interest dividend paid by the investment
company will be treated as such a preference item to shareholders. The Fund will
invest no more than 20% of its net assets in obligations the interest from which
gives rise to a preference item for the purpose of the alternative minimum tax
and in other investments subject to federal income tax.
The Fund may purchase other types of tax-exempt obligations which may
become available in the future, provided the obligations are consistent with the
Fund's investment objective and policies, the Adviser believes their quality
meets the Fund's quality standards, and this Prospectus has been appropriately
revised to reflect the Fund's policies with respect to such obligations.
Risk Factors
The Fund's yield will fluctuate due to changes in interest rates,
economic conditions, quality ratings and other factors beyond the control of the
Adviser. In addition, the financial condition of an issuer or adverse changes in
general economic conditions, or both, may impair the issuer's ability to make
payments of interest and principal. There is no limit on the percentage of a
single issue of tax-exempt obligations that the Fund may own. If the Fund holds
a significant portion of the obligations of an issuer, there may not be a
readily available
- 6 -
<PAGE>
market for the obligations. Reduced diversification could involve an increased
risk to the Fund should an issuer be unable to make interest or principal
payments or should the market value of Ohio Obligations decline.
There are also risks of reduced diversification because the Fund
invests primarily in obligations of issuers within a single state. The Fund is
more likely to invest its assets in the securities of fewer issuers because of
the relatively smaller number of issuers of Ohio Obligations. The Fund's
performance is closely tied to conditions within the State of Ohio and to the
financial condition of the State and its authorities and municipalities. The
economy in the State of Ohio is reliant in part upon durable goods
manufacturing, largely concentrated in motor vehicles and equipment, steel,
rubber products and household appliances. As a result, economic activity in Ohio
tends to be more cyclical than in some other states and in the nation as a
whole. However, during the last decade, the State has experienced steady growth
and diversification of employment and earnings. Statewide employment increased
3% between 1990 and 1995 and Ohio's unemployment rate since 1991 has remained
below that of the nation. Ohio remains highly industrialized, but the
manufacturing component of the economy in 1995 represents only 21.1% of
employment, compared to 28.9% in 1980. This is still above the national average
of 15.9%. Although manufacturing is expected to slow in the future, growth in
nonmanufacturing output and employment, led by the financial services,
distribution and trade sectors, has contributed to greater stability in the
State's economy. Economic problems, including high unemployment, have had and
may have varying effects on the different geographic areas of the State and the
political subdivisions located therein. While Ohio has in the past experienced
budget shortfalls due to weak revenue results and higher-than-budgeted human
services expenditures, improved economic performance has enabled the State to
accumulate sizable financial reserves. The State's unaudited financial
statements indicate a $500 million operating surplus for fiscal 1996 as a result
of tax revenues exceeding forecasts and spending below budgeted amounts.
Although revenue obligations of the State of Ohio or its political subdivisions
may be payable from a specific project or source, there can be no assurance that
future economic and political developments and the resulting impact on state and
local governmental finances will not adversely affect the market values and
marketability of the Ohio Obligations held by the Fund or the ability of a
specific issuer to make interest or principal payments.
- 7 -
<PAGE>
The Fund is a non-diversified fund under the Investment Company Act of
1940. Thus, its investments may be more concentrated in fewer issuers than those
of a diversified fund. This concentration may increase the possibility of
fluctuation in the Fund's net asset value. As the Fund intends to comply with
Subchapter M of the Internal Revenue Code, it may invest up to 50% of its assets
at the end of each quarter of its fiscal year in as few as two issuers, provided
that no more than 25% of the assets are invested in one issuer. With respect to
the remaining 50% of its assets at the end of each quarter, it may invest no
more than 5% in one issuer.
Certain provisions in the Internal Revenue Code relating to the
issuance of municipal obligations may reduce the volume of municipal obligations
qualifying for federal tax exemptions. Shareholders should consult their tax
advisors concerning the effect of these provisions on an investment in the Fund.
Proposals that may further restrict or eliminate the income tax exemptions for
interest on municipal obligations may be introduced in the future. If any such
proposal were enacted that would reduce the availability of municipal
obligations for investment by the Fund so as to adversely affect its
shareholders, the Fund would reevaluate its investment objective and policies
and submit possible changes in the Fund's structure to shareholders for their
consideration. If legislation were enacted that would treat a type of municipal
obligation as taxable, the Fund would treat such security as a permissible
taxable investment within the applicable limits set forth herein.
Other Investment Techniques
The Fund may also engage in the following investment techniques, each
of which may involve certain risks:
PARTICIPATION INTERESTS. The Fund may purchase participation interests
in tax-exempt obligations owned by banks or other financial institutions. A
participation interest gives the Fund an undivided interest in the obligation in
the proportion that the Fund's participation interest bears to the principal
amount of the obligation and provides that the holder may demand repurchase
within a specified period. Participation interests frequently are backed by
irrevocable letters of credit or a guarantee of a bank. Participation interests
will be purchased only if, in the opinion of counsel to the issuer, interest
income on the participation interests will be tax-exempt when distributed as
dividends to shareholders. For certain participation interests, the Fund will
have the right to demand payment, on not more than seven days' notice, for all
or any part of its participation interest in the tax-exempt obligation, plus
accrued interest. As to these instruments, the Fund intends to
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exercise its right to demand payment only upon a default under the terms of the
obligation, as needed to provide liquidity to meet redemptions, or to maintain a
high-quality investment portfolio. The Fund will not invest more than 10% of its
net assets in participation interests that do not have this demand feature and
all other illiquid securities.
FLOATING AND VARIABLE RATE OBLIGATIONS. The Fund may invest in floating
or variable rate tax-exempt obligations. Floating rate obligations have an
interest rate which is fixed to a specified interest rate, such as a bank prime
rate, and is automatically adjusted when the specified interest rate changes.
Variable rate obligations have an interest rate which is adjusted at specified
intervals to a specified interest rate. Periodic interest rate adjustments help
stabilize the obligations' market values. The Fund may purchase these
obligations from the issuers or may purchase participation interests in pools of
these obligations from banks or other financial institutions. Variable and
floating rate obligations usually carry demand features that permit the Fund to
sell the obligations back to the issuers or to financial intermediaries at par
value plus accrued interest upon not more than 30 days' notice at any time or
prior to specific dates. Certain of these variable rate obligations, often
referred to as "adjustable rate put bonds," may have a demand feature
exercisable on specific dates once or twice each year. The Fund will not invest
more than 10% of its net assets in floating or variable rate obligations as to
which the Fund cannot exercise the demand feature on not more than seven days'
notice if the Adviser, under the direction of the Board of Trustees, determines
that there is no secondary market available for these obligations and all other
illiquid securities. If the Fund invests a substantial portion of its assets in
obligations with demand features permitting sale to a limited number of
entities, the inability of the entities to meet demands to purchase the
obligations could affect the Fund's liquidity. However, obligations with demand
features frequently are secured by letters of credit or comparable guarantees
that may reduce the risk that an entity would not be able to meet such demands.
In determining whether an obligation secured by a letter of credit meets the
Fund's quality standards, the Adviser will ascribe to such obligation the same
rating given to unsecured debt issued by the letter of credit provider. In
looking to the creditworthiness of a party relying on a foreign bank for credit
support, the Adviser will consider whether adequate public information about the
bank is available and whether the bank may be subject to unfavorable political
or economic developments, currency controls or other governmental restrictions
affecting its ability to honor its credit commitment.
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<PAGE>
WHEN-ISSUED OBLIGATIONS. The Fund may invest in when- issued tax-exempt
obligations. Obligations offered on a when- issued basis are settled by delivery
and payment after the date of the transaction, usually within 15 to 45 days. The
Fund will maintain a segregated account with its Custodian of cash or
high-quality liquid debt securities, marked to market daily, in an amount equal
to its when-issued commitments. Because these transactions are subject to market
fluctuations, a significant commitment to when-issued purchases could result in
fluctuation of the Fund's net asset value. The Fund will only make commitments
to purchase when-issued obligations with the intention of actually acquiring the
obligations and not for the purpose of investment leverage.
LENDING PORTFOLIO SECURITIES. The Fund may make short-term loans of its
portfolio securities to banks, brokers and dealers. Lending portfolio securities
exposes the Fund to the risk that the borrower may fail to return the loaned
securities or may not be able to provide additional collateral or that the Fund
may experience delays in recovery of the loaned securities or loss of rights in
the collateral if the borrower fails financially. To minimize these risks, the
borrower must agree to maintain collateral marked to market daily, in the form
of cash and/or U.S. Government obligations, with the Fund's Custodian in an
amount at least equal to the market value of the loaned securities. The Fund
will limit the amount of its loans of portfolio securities to no more than 25%
of its net assets. This lending policy may not be changed by the Fund without
the affirmative vote of a majority of its outstanding shares.
OBLIGATIONS WITH PUTS ATTACHED. The Fund may purchase tax-exempt
obligations with the right to resell the obligation to the seller at a specified
price or yield within a specified period. The right to resell is commonly known
as a "put" or a "standby commitment." The Fund may purchase tax-exempt
obligations with puts attached from banks and broker-dealers. The Fund intends
to use obligations with puts attached for liquidity purposes to ensure a ready
market for the underlying obligations at an acceptable price. Although no value
is assigned to any puts on tax-exempt obligations, the price which the Fund pays
for the obligations may be higher than the price of similar obligations without
puts attached. The purchase of obligations with puts attached involves the risk
that the seller may not be able to repurchase the underlying obligation. The
Fund intends to purchase such obligations only from sellers deemed by the
Adviser, under the direction of the Board of Trustees, to present minimal credit
risks. In addition, the value of the obligations with puts attached held by the
Fund will not exceed 10% of its net assets.
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SECURITIES WITH LIMITED MARKETABILITY. The Fund may invest in the
aggregate up to 10% of its net assets in securities that are not readily
marketable, including: participation interests that are not subject to the
demand feature described above; floating and variable rate obligations as to
which the Fund cannot exercise the related demand feature described above and as
to which there is no secondary market; and repurchase agreements not terminable
within seven days.
BORROWING AND PLEDGING. The Fund may borrow money from banks (provided
there is 300% asset coverage) or from banks or other persons for temporary
purposes (in an amount not exceeding 5% of its total assets). The Fund will not
make any borrowing which would cause its outstanding borrowings to exceed
one-third of the value of its total assets. The Fund may pledge assets in
connection with borrowings but will not pledge more than one-third 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. Borrowing
magnifies the potential for gain or loss on the Fund's portfolio securities and,
therefore, if employed, increases the possibility of fluctuation in its net
asset value. This is the speculative factor known as leverage. The Fund's
policies on borrowing and pledging are fundamental policies which may not be
changed without the affirmative vote of a majority of its outstanding shares.
HOW TO PURCHASE SHARES
Your initial investment in Institutional Shares of the Fund ordinarily
must be at least $100,000. Shares are sold on a continuous basis at the net
asset value next determined after receipt of a purchase order by the Trust.
Shares of the Fund purchased prior to January 7, 1997 are Retail Shares.
INITIAL INVESTMENTS BY MAIL. You may open an account and make an
initial investment in the Fund by sending a check and a completed account
application form to MGF Service Corp., P.O. Box 5354, Cincinnati, Ohio
45201-5354. Checks should be made payable to the "Ohio Tax-Free Money Fund." An
account application is included in this Prospectus.
You will be sent within five business days after the end of each month
a written statement disclosing each purchase or redemption effected and each
dividend or distribution credited to your account during the month. Certificates
representing shares are not issued. The Trust and the Adviser reserve the rights
to limit the amount of investments and to refuse to sell to any person.
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Investors should be aware that the Fund's account application contains
provisions in favor of the Trust, MGF Service Corp. and certain of their
affiliates, excluding such entities from certain liabilities (including, among
others, losses resulting from unauthorized shareholder transactions) relating to
the various services (for example, telephone redemptions and exchanges) made
available to investors.
Should an order to purchase shares be canceled because your check does
not clear, you will be responsible for any resulting losses or fees incurred by
the Trust or MGF Service Corp. in the transaction.
INITIAL INVESTMENTS BY WIRE. You may also purchase shares of the Fund
by wire. Please telephone MGF Service Corp. (Nationwide call toll-free
800-543-0407; in Cincinnati call 629- 2050) for instructions. You should be
prepared to give the name in which the account is to be established, the
address, telephone number and taxpayer identification number for the account,
and the name of the bank which will wire the money.
You may receive a dividend on the day of your wire investment provided
you have given notice of your intention to make such investment to MGF Service
Corp. by 12:00 noon, Eastern time, on that day. Your investment will be made at
the net asset value next determined after your wire is received together with
the account information indicated above. If the Trust does not receive timely
and complete account information, there may be a delay in the investment of your
money and any accrual of dividends. To make your initial wire purchase, you are
required to mail a completed account application to MGF Service Corp. Your bank
may impose a charge for sending your wire. There is presently no fee for receipt
of wired funds, but MGF Service Corp. reserves the right to charge shareholders
for this service upon thirty days' prior notice to shareholders.
ADDITIONAL INVESTMENTS. You may purchase and add shares to your account
by mail or by bank wire. Checks should be sent to MGF Service Corp., P.O. Box
5354, Cincinnati, Ohio 45201-5354. Checks should be made payable to the "Ohio
Tax-Free Money Fund." Bank wires should be sent as outlined above. You may also
make additional investments at the Trust's offices at 312 Walnut Street, 21st
Floor, Cincinnati, Ohio 45202. Each additional purchase request must contain the
name of your account and your account number to permit proper crediting to your
account. While there is no minimum amount required for subsequent investments,
the Trust reserves the right to impose such requirement.
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<PAGE>
CASH SWEEP PROGRAM. Cash accumulations in accounts with financial
institutions may be automatically invested in shares of the Fund at the next
determined net asset value on a day selected by the institution or its customer,
or when the account balance reaches a predetermined dollar amount (e.g.,
$5,000).
Participating institutions are responsible for prompt transmission of
orders relating to the program. Institutions participating in this program may
charge their customers fees for services relating to the program which would
reduce the customers' yield from an investment in the Fund. This Prospectus
should, therefore, be read together with any agreement between the customer and
the participating institution with regard to the services provided, the fees
charged for these services and any restrictions and limitations imposed.
HOW TO REDEEM SHARES
You may redeem Institutional Shares of the Fund on each day that the
Trust is open for business. You will receive the net asset value per share next
determined after receipt by MGF Service Corp. of a proper redemption request in
the form described below. Payment is normally made within three business days
after tender in such form, provided that payment in redemption of shares
purchased by check will be effected only after the check has been collected,
which may take up to fifteen days from the purchase date. To eliminate this
delay, you may purchase shares of the Fund by certified check or wire.
A contingent deferred sales load may be imposed on a redemption of
shares of the Fund if such shares had previously been acquired in connection
with an exchange from another fund in the Midwest Group which imposes a
contingent deferred sales load, as described in the Prospectus of such other
fund.
BY TELEPHONE. You may redeem shares by telephone. The proceeds will be
sent by mail to the address designated on your account or wired directly to your
existing account in any commercial bank or brokerage firm in the United States
as designated on your application. To redeem by telephone, call MGF Service
Corp. (Nationwide call toll-free 800-543-0407; in Cincinnati call 629-2050). The
redemption proceeds will normally be sent by mail or by wire within one business
day (but not later than three business days) after receipt of your telephone
instructions. Any redemption requests by telephone must be received in proper
form prior to 12:00 noon, Eastern time, on any business day in order for payment
by wire to be made that day.
The telephone redemption privilege is automatically available to all
shareholders. You may change the bank or brokerage account which you have
designated under this procedure at any time by writing to MGF Service Corp. with
your signature
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<PAGE>
guaranteed by any eligible guarantor institution (including banks, brokers and
dealers, municipal securities brokers and dealers, government securities brokers
and dealers, credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations) or by completing a
supplemental telephone redemption authorization form. Contact MGF Service Corp.
to obtain this form. Further documentation will be required to change the
designated account if shares are held by a corporation, fiduciary or other
organization.
Neither the Trust, MGF Service Corp., nor their respective affiliates
will be liable for complying with telephone instructions they reasonably believe
to be genuine or for any loss, damage, cost or expense in acting on such
telephone instructions. The affected shareholders will bear the risk of any such
loss. The Trust or MGF Service Corp., or both, will employ reasonable procedures
to determine that telephone instructions are genuine. If the Trust and/or MGF
Service Corp. do not employ such procedures, they may be liable for losses due
to unauthorized or fraudulent instructions. These procedures may include, among
others, requiring forms of personal identification prior to acting upon
telephone instructions, providing written confirmation of the transactions
and/or tape recording telephone instructions.
BY MAIL. You may redeem any number of shares from your account by
sending a written request to MGF Service Corp. The request must state the number
of shares to be redeemed and your account number. The request must be signed
exactly as your name appears on the Trust's account records. If the shares to be
redeemed have a value of $25,000 or more, your signature must be guaranteed by
any of the eligible guarantor institutions outlined above.
Written redemption requests may also direct that the proceeds be
deposited directly in the bank account or brokerage account designated on your
account application for telephone redemptions. Proceeds of redemptions requested
by mail are normally mailed within three business days following receipt of
instructions in proper form.
ADDITIONAL REDEMPTION INFORMATION. There is currently no charge for
processing wire redemptions. However, the Trust reserves the right, upon thirty
days' written notice, to make reasonable charges for wire redemptions. All
charges will be deducted from your account by redemption of shares in your
account. Your bank or brokerage firm may also impose a charge for processing the
wire. In the event that wire transfer of funds is impossible or impractical, the
redemption proceeds will be sent by mail to the designated account.
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<PAGE>
Redemption requests may direct that the proceeds be deposited directly
in your account with a commercial bank or other depository institution via an
Automated Clearing House (ACH) transaction. There is currently no charge for ACH
transactions. Contact MGF Service Corp. for more information about ACH
transactions.
At the discretion of the Trust or MGF Service Corp., corporate
investors and other associations may be required to furnish an appropriate
certification authorizing redemptions to ensure proper authorization. The Trust
reserves the right to require you to close your account if at any time the value
of your shares is less than $100,000 (based on actual amounts invested,
unaffected by market fluctuations) or such other minimum amount as the Trust may
determine from time to time. After notification to you of the Trust's intention
to close your account, you will be given thirty days to increase the value of
your account to the minimum amount.
The Trust reserves the right to suspend the right of redemption or to
postpone the date of payment for more than three business days under unusual
circumstances as determined by the Securities and Exchange Commission.
EXCHANGE PRIVILEGE
Shares of the Fund and of any other fund distributed by the Adviser may
be exchanged for each other. A sales load will be imposed equal to the excess,
if any, of the sales load rate applicable to the shares being acquired over the
sales load rate, if any, previously paid on the shares being exchanged.
The following are the funds of the Midwest Group of Funds currently
offered to the public. Funds which may be subject to a front-end or contingent
deferred sales load are indicated by an asterisk.
Midwest Group Tax Free Trust Midwest Strategic Trust
Tax-Free Money Fund *U.S. Government Securities Fund
Ohio Tax-Free Money Fund *Equity Fund
California Tax-Free Money Fund *Utility Fund
Royal Palm Florida Tax-Free *Treasury Total Return Fund
Money Fund
*Tax-Free Intermediate Term Fund Midwest Trust
*Ohio Insured Tax-Free Fund Short Term Government Income Fund
Institutional Government Income
Fund
*Intermediate Term Government Income
Fund
*Adjustable Rate U.S. Government
Securities Fund
*Global Bond Fund
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<PAGE>
You may request an exchange by sending a written request to MGF Service
Corp. The request must be signed exactly as your name appears on the Trust's
account records. Exchanges may also be requested by telephone. If you are unable
to execute your transaction by telephone (for example during times of unusual
market activity) consider requesting your exchange by mail or by visiting the
Trust's offices at 312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202. An
exchange will be effected at the next determined net asset value (or offering
price, if sales load is applicable) after receipt of a request by MGF Service
Corp.
Exchanges may only be made for shares of funds then offered for sale in
your state of residence and are subject to the applicable minimum initial
investment requirements. The exchange privilege may be modified or terminated by
the Board of Trustees upon 60 days' prior notice to shareholders. An exchange
results in a sale of fund shares, which may cause you to recognize a capital
gain or loss. Before making an exchange, contact MGF Service Corp. to obtain a
current prospectus for any of the other funds in the Midwest Group and more
information about exchanges among the Midwest Group of Funds.
SUBACCOUNTING SERVICES
Institutions are encouraged to open single master accounts. However,
certain institutions may wish to use the transfer agent's subaccounting system
to minimize their internal recordkeeping requirements. MGF Service Corp. may
charge a subaccounting fee based on the level of services rendered. Institutions
holding Fund shares in a fiduciary, agency, custodial or similar capacity may
charge or pass through subaccounting fees as part of or in addition to normal
trust or agency account fees. This Prospectus should, therefore, be read
together with any agreement between the customer and the institution with regard
to the services provided, the fee charged for those services and any
restrictions and limitations imposed.
DIVIDENDS AND DISTRIBUTIONS
All of the net investment income of the Fund is declared as a dividend to
shareholders of record on each business day of the Trust and paid monthly.
Management will determine the timing and frequency of the distributions of any
net realized short-term capital gains. Although the Fund does not expect to
realize any long-term capital gains, if the Fund does realize such gains it will
distribute them at least once each year. The Fund will, at the time dividends
are paid, designate as tax-exempt the same percentage of the distribution as the
actual tax-exempt income earned during the period covered by the distribution
bore to total income earned during the period; the percentage of the
distribution which is tax-exempt may vary from distribution to distribution.
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<PAGE>
Dividends are automatically reinvested in additional shares of the Fund
(the Share Option) unless cash payments are specified on your application or are
otherwise requested by contacting MGF Service Corp. If you elect to receive
dividends in cash and the U.S. Postal Service cannot deliver your checks or if
your checks remain uncashed for six months, your dividends may be reinvested in
your account at the then-current net asset value and your account will be
converted to the Share Option.
TAXES
The Fund has qualified in all prior years and intends to continue to
qualify 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. The Fund also
intends to meet all IRS requirements necessary to ensure that it is qualified to
pay "exempt-interest dividends," which means that it may pass on to shareholders
the federal tax-exempt status of its investment income.
The Fund intends to distribute substantially all of its net investment
income and any net realized capital gains to its shareholders. For federal
income tax purposes, a shareholder's proportionate share of taxable
distributions from the Fund's net investment income as well as from net realized
short-term capital gains, if any, is taxable as ordinary income. Since the
Fund's investment income is derived from interest rather than dividends, no
portion of such distributions is eligible for the dividends received deduction
available to corporations.
Dividends received from the Fund that are exempt from federal income tax
are exempt from the Ohio personal income tax and the net income base of the Ohio
corporation franchise tax to the extent derived from interest on Ohio
Obligations. However, shares of the Fund will be included in the computation of
the Ohio corporation franchise tax on the net worth basis. Distributions
received from the Fund are generally not subject to Ohio municipal income
taxation.
Issuers of tax-exempt securities issued after August 31, 1986 are required
to comply with various restrictions on the use and investment of proceeds of
sales of the securities. Any failure by the issuer to comply with these
restrictions would cause interest on such securities to become taxable to the
security holders as of the date the securities were issued.
Interest on "specified private activity bonds," as defined by the Tax
Reform Act of 1986, is an item of tax preference possibly subject to the
alternative minimum tax (at the rate of
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26% to 28% for individuals and 20% for corporations). The Fund may invest in
such "specified private activity bonds" subject to the requirement that it
invest at least 80% of its net assets in obligations the interest on which is
exempt from federal income tax, including the alternative minimum tax. The Tax
Reform Act of 1986 also created a tax preference for corporations equal to
one-half of the excess of adjusted net book income over alternative minimum
taxable income. As a result, one-half of tax-exempt interest income received
from the Fund may be a tax preference for corporate investors.
Shareholders should be aware that interest on indebtedness incurred to
purchase or carry shares of the Fund is not deductible for federal income tax
purposes. Shareholders receiving Social Security benefits may be taxed on a
portion of those benefits as a result of receiving tax-exempt income.
The Fund will mail to each of its shareholders a statement indicating the
amount and federal income tax status of all distributions made during the year.
The Fund will report to its shareholders the percentage and source of income
earned on tax-exempt obligations held by it during the preceding year. An
exemption from federal income tax and Ohio personal income tax may not result in
similar exemptions under the laws of a particular state or local taxing
authority.
The tax consequences described in this section apply whether distributions
are taken in cash or reinvested in additional shares. The Fund may not be an
appropriate investment for persons who are "substantial users" of facilities
financed by industrial development bonds or are "related persons" to such users;
such persons should consult their tax advisors before investing in the Fund.
OPERATION OF THE FUND
The Fund is a non-diversified series of Midwest Group Tax Free Trust, an
open-end management investment company organized as a Massachusetts business
trust on April 13, 1981. The Board of Trustees supervises the business
activities of the Trust. Like other mutual funds, the Trust retains various
organizations to perform specialized services for the Fund.
The Trust retains Midwest Group Financial Services, Inc., 312 Walnut
Street, Cincinnati, Ohio 45202 (the "Adviser"), to manage the Fund's investments
and its business affairs. The Adviser was organized in 1974 and is also the
investment adviser to five other series of the Trust, five series of Midwest
Trust and four series of Midwest Strategic Trust. The Adviser is a subsidiary of
Leshner Financial, Inc., of which Robert H. Leshner
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is the controlling shareholder. The Fund pays the Adviser a fee equal to the
annual rate of .5% of the average value of its daily net assets up to $100
million; .45% of such assets from $100 million to $200 million; .4% of such
assets from $200 million to $300 million; and .375% of such assets in excess of
$300 million.
The Fund is responsible for the payment of all operating expenses,
including fees and expenses in connection with membership in investment company
organizations, brokerage fees and commissions, legal, auditing and accounting
expenses, expenses of registering shares under federal and state securities
laws, insurance expenses, taxes or governmental fees, fees and expenses of the
custodian, transfer agent and accounting and pricing agent of the Fund, fees and
expenses of members of the Board of Trustees who are not interested persons of
the Trust, the cost of preparing and distributing prospectuses, statements,
reports and other documents to shareholders, expenses of shareholders' meetings
and proxy solicitations, and such extraordinary or non-recurring expenses as may
arise, including litigation to which the Fund may be a party and indemnification
of the Trust's officers and Trustees with respect thereto.
The Trust has retained MGF Service Corp., P.O. Box 5354, Cincinnati, Ohio,
a subsidiary of Leshner Financial, Inc., to serve as the Fund's transfer agent,
dividend paying agent and shareholder service agent.
MGF Service Corp. also provides accounting and pricing services to the
Fund. MGF Service Corp. receives a monthly fee from the Fund for calculating
daily net asset value per share and maintaining such books and records as are
necessary to enable it to perform its duties.
In addition, MGF Service Corp. has been retained by the Adviser to assist
the Adviser in providing administrative services to the Fund. In this capacity,
MGF Service Corp. supplies executive, administrative and regulatory services,
supervises the preparation of tax returns, and coordinates the preparation of
reports to shareholders and reports to and filings with the Securities and
Exchange Commission and state securities authorities. The Adviser (not the Fund)
pays MGF Service Corp. a fee for these administrative services equal to the
annual rate of .1% of the average value of the Fund's daily net assets.
The Adviser serves as principal underwriter for the Fund and, as such, is
the exclusive agent for the distribution of shares of the Fund. Robert H.
Leshner, Chairman and a director of the Adviser, is President and a Trustee of
the Trust. John F. Splain, Secretary and General Counsel of the Adviser, is
Secretary of the Trust.
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<PAGE>
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to its objective of seeking best execution
of portfolio transactions, the Adviser may give consideration to sales of shares
of the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions of the Fund. Subject to the requirements of the
Investment Company Act of 1940 and procedures adopted by the Board of Trustees,
the Fund may execute portfolio transactions through any broker or dealer and pay
brokerage commissions to a broker (i) which is an affiliated person of the
Trust, or (ii) which is an affiliated person of such person, or (iii) an
affiliated person of which is an affiliated person of the Trust or the Adviser.
Shares of the Fund have equal voting rights and liquidation rights. The
Fund shall vote separately on matters submitted to a vote of the shareholders
except in matters where a vote of all series of the Trust in the aggregate is
required by the Investment Company Act of 1940 or otherwise. Each class of
shares of the Fund shall vote separately on matters relating to its own
distribution arrangements. When matters are submitted to shareholders for a
vote, each shareholder is entitled to one vote for each full share owned and
fractional votes for fractional shares owned. The Trust does not normally hold
annual meetings of shareholders. The Trustees shall promptly call and give
notice of a meeting of shareholders for the purpose of voting upon the removal
of any Trustee when requested to do so in writing by shareholders holding 10% or
more of the Trust's outstanding shares. The Trust will comply with the
provisions of Section 16(c) of the Investment Company Act of 1940 in order to
facilitate communications among shareholders.
The Fifth Third Bank Trust Department, 38 Fountain Square Plaza,
Cincinnati, Ohio, may be deemed to control the Fund by virtue of the fact that
it owns of record more than 25% of the Fund's shares as of the date of this
Prospectus.
CALCULATION OF SHARE PRICE
On each day that the Trust is open for business, the share price (net
asset value) of the Fund's shares is determined as of 12:00 noon and 4:00 p.m.,
Eastern time. The Trust is open for business on each day the New York Stock
Exchange is open for business and on any other day when there is sufficient
trading in the Fund's investments that its net asset value might be materially
affected. The net asset value per share of the Fund is calculated by dividing
the sum of the value of the securities held by the Fund plus cash or other
assets minus all liabilities (including estimated accrued expenses) by the total
number of shares outstanding of the Fund, rounded to the nearest cent.
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The Fund's portfolio securities are valued on an amortized cost basis. In
connection with the use of the amortized cost method of valuation, the Fund
maintains a dollar-weighted average portfolio maturity of 90 days or less,
purchases only United States dollar-denominated securities having remaining
maturities of thirteen months or less and invests only in securities determined
by the Board of Trustees to meet the Fund's quality standards and to present
minimal credit risks. Other assets of the Fund 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. It is
anticipated, but there is no assurance, that the use of the amortized cost
method of valuation will enable the Fund to maintain a stable net asset value
per share of $1.
PERFORMANCE INFORMATION
From time to time the Fund may advertise its "current yield" and
"effective yield." Both yield figures are based on historical earnings and are
not intended to indicate future performance. The "current yield" of the Fund
refers to the income generated by an investment in the Fund over a seven-day
period (which period will be stated in the advertisement). This income is then
"annualized." That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. The "effective yield" will be slightly higher than
the "current yield" because of the compounding effect of this assumed
reinvestment. In addition, the Fund may advertise together with its "current
yield" or "effective yield" a tax equivalent "current yield" or "effective
yield" which reflects the yield which would be required of a taxable investment
at a stated income tax rate in order to equal the Fund's "current yield" or
"effective yield." Yields are computed separately for Institutional and Retail
Shares. The yield of Institutional Shares is expected to be higher than the
yield of Retail Shares due to the distribution fees imposed on Retail Shares.
- 21 -
<PAGE>
Account Application
ACCOUNT NO. - ________________
(For Fund Use Only)
Please mail account application to:
MGF Service Corp.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
FOR BROKER/DEALER USE ONLY
Firm Name:_____________________________________
Home Office Address:___________________________
Branch Address:________________________________
Rep Name & No._________________________________
OHIO TAX-FREE MONEY FUND
(Institutional Shares)
Initial Investment of $___________________________ ($100,000 Minimum)
[ ] Check or draft enclosed payable to the Fund.
[ ] Bank Wire From: _________________________________________________
[ ] Exchange From: __________________________________________________
(Fund Name) (Fund Account Number)
Account Name
_________________________________________________________________
Name of Individual, Corporation, Organization, or Minor, etc.
_________________________________________________________________
Name of Joint Tenant, Partner, Custodian
Address
___________________________________________________________________
Street or P.O. Box
____________________________________________________________________
City State Zip
S.S.#/Tax I.D.#
________________________________________________________
(In case of custodial account please list minor's S.S.#)
Citizenship: ___ U.S. Phone
___ Other ( )______________________
Business Phone
( )______________________
Home Phone
<TABLE>
<C> <C> <C> <C>
Check Appropriate Box: [ ] Individual [ ] Joint Tenant (Right of survivorship presumed) [ ] Partnership
[ ] Corporation [ ] Trust [ ] Custodial [ ] Non-Profit [ ] Other
- --------------------------------------------------------------------------------------------------------------
TAXPAYER IDENTIFICATION NUMBER - Under penalties of perjury I certify that the Taxpayer Identification Number listed
above is my correct number. The Internal Revenue Service does not require your consent to any provision of this document
other than the certifications required to avoid backup withholding. Check box if appropriate:
[ ] I am exempt from backup withholding under the provisions of section 3406(a)(1)(c) of the Internal Revenue Code; or I
am not subject to backup withholding because I have not been notified that I am subject to backup withholding as a result of a
failure to report all interest or dividends; or the Internal Revenue Service has notified me that I am no longer subject to
backup withholding.
[ ] I certify under penalties of perjury that a Taxpayer Identification Number has not been issued to me and I have
mailed or delivered an application to receive a Taxpayer Identification Number to the Internal Revenue Service Center or Social
Security Administration Office. I understand that if I do not provide a Taxpayer Identification Number within 60 days that 31% of
all reportable payments will be withheld until I provide a number.
- -------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (If no election is checked the SHARE OPTION will be assigned.)
[ ] Share Option - Income distributions and capital gains distributions automatically reinvested in additional shares.
[ ] Cash Option - Income distributions and capital gains distributions paid in cash.
- -------------------------------------------------------------------------------------------------------------------
REDEMPTION OPTIONS
I (we) authorize the Trust or MGF Service Corp. to act upon instructions received by telephone, or upon receipt of and
in the amounts of checks as described below (if checkwriting is selected), to have amounts withdrawn from my (our) account in
any fund in the Midwest Group (see prospectus for limitations on this option) and:
[ ] WIRED ($1,000 minimum OR MAILED to my (our) bank account designated below. I (we) further authorize the used of
automated cash transfers to and from the account designated below. NOTE: For wire redemptions, the indicated bank should be a
commercial bank. Please attach a voided check for the account.
Bank Account Number ____________________________________________Bank Routing Transit Number________________________________
Name of Account Holder _____________________________________________________________________________________________________
Bank Name ______________________________________________________Bank Address________________________________________________
City State
- ------------------------------------------------------------------------------------------------------------------
SIGNATURES
By signature below each investor certifies that he has received a copy of the Fund's current Prospectus, that he is of
legal age, and that he has full authority and legal capacity for himself or the organization named below, to make this
investment and to use the options selected above. The investor appoints MGF Service Corp. as his agent to enter orders for shares
whether by direct purchase or exchange, to receive dividends and distributions for automatic reinvestment in additional shares of
the Fund for credit to the investor's account and to surrender for redemption shares held in the investor's account in accordance
with any of the procedures elected above or for payment of service charges incurred by the investor. The investor further
agrees that MGF Service Corp. can cease to act as such agent upon ten days' notice in writing to the investor at the address
contained in this Application. The investor hereby ratifies any instructions given pursuant to this Application and for himself and
his successors and assigns does hereby release MGF Service Corp., Midwest Group Tax Free Trust, Midwest Group Financial
Services, Inc., and their respective officers, employees, agents and affiliates from any and all liability in the performance of
the acts instructed herein. Neither the Trust, MGF Service Corp., nor their respective affiliates will be liable for complying
with telephone instructions they reasonably believe to be genuine or for any loss, damage, cost or expense in acting on such
telephone instructions. The investor(s) will bear the risk of any such loss. The Trust or MGF Service Corp., or both,
will employ reasonable procedures to determine that telephone instructions are genuine. If the Trust and/or MGF Service Corp.
do not employ such procedures, they may be liable for losses due to unauthorized or fraudulent instructions. These procedures
may include, among others, requiring forms of personal identification prior to acting upon telephone instructions, providing
written confirmation of the transactions and/or tape recording telephone instructions.
- -------------------------------------------------------------
Signature of Individual Owner, Corporate Officer, Trustee, etc.
- --------------------------------------------------------------
Signature of Joint Owner, if Any
- ---------------------------------------------------------------
Title of Corporate Officer, Trustee, etc.
- ---------------------------------------------------------------
Date
NOTE: Corporations, trusts and other organizations must complete the
resolution form on the reverse side. Unless otherwise specified, each
joint owner shall have full authority to act on behalf of the account.
- -----------------------------------------------------------------------------
RESOLUTIONS
(This Section to be completed by Corporations, Trusts, and Other Organizations)
RESOLVED: That this corporation or organization become a shareholder of the Midwest Group Tax Free Trust (the Trust) and
that
- ------------------------------------------------------------------------------------------------------------------------
is (are) hereby authorized to complete and execute the Application on behalf of the corporation or organization and to
take any action for it as may be necessary or appropriate with respect to its shareholder account with the Fund, and it is
FURTHER RESOLVED: That any one of the above noted officers is authorized to sign any documents necessary or appropriate
to appoint MGF Service Corp. as redemption agent of the corporation or organization for shares of the Fund, to establish or
acknowledge terms and conditions governing the redemption of said shares and to otherwise implement the privileges
elected on the Application.
Certificate
I hereby certify that the foregoing resolutions are in conformity with the Charter and By-Laws or other empowering
documents of the
- ------------------------------------------------------------------------------------------------------------------------
(Name of Organization)
incorporated or formed under the laws of
- ---------------------------------------------------------------------------------------------------------------------------
(State)
and were adopted at a meeting of the Board of Directors or Trustees of the organization or corporation duly called and
held on _________________ at which a quorum was present and acting throughout, and that the same are now in full force and
effect.
I further certify that the following is (are) duly elected officer(s) of the corporation or organization, authorized to
act in accordance with the foregoing resolutions.
Name Title
- ------------------------------ ------------------------------------
- ------------------------------ ------------------------------------
- ------------------------------ -------------------------------------
Witness my hand and seal of the corporation or organization this________________day of_____________________________,
19_______
- ------------------------------------------------
*Secretary-Clerk
- -------------------------------------------------
Other Authorized Officer (if required)
*If the Secretary or other recording officer is authorized to act by the above
resolutions, this certificate must also be signed by another officer.
</TABLE>
MIDWEST GROUP TAX FREE TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
Nationwide: (Toll-Free) 800-543-8721
Cincinnati: 513-629-2000
BOARD OF TRUSTEES
Dale P. Brown
Gary W. Heldman
H. Jerome Lerner
Robert H. Leshner
Richard A. Lipsey
Donald J. Rahilly
Fred A. Rappoport
Oscar P. Robertson
Robert B. Sumerel
OFFICERS
Robert H. Leshner, President
John F. Splain, Secretary
Mark J. Seger, Treasurer
INVESTMENT ADVISER
MIDWEST GROUP FINANCIAL SERVICES, INC.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
TRANSFER AGENT
MGF SERVICE CORP.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Shareholder Service
Nationwide: (Toll-Free) 800-543-0407
Cincinnati: 513-629-2050
Rate Line
Nationwide: (Toll-Free) 800-852-3809
Cincinnati: 513-579-0999
<PAGE>
TABLE OF CONTENTS
Expense Information........................................................
Investment Objective and Policies...........................................
How to Purchase Shares......................................................
How to Redeem Shares.........................................................
Exchange Privilege...........................................................
Subaccounting Services ......................................................
Dividends and Distributions...................................................
Taxes........................................................................
Operation of the Fund.........................................................
Calculation of Share Price...................................................
Performance Information.......................................................
- ----------------------------------------------------------------
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Trust. This Prospectus does not constitute an offer by the Trust to sell
shares in any State to any person to whom it is unlawful for the Trust to make
such offer in such State.
<PAGE>
MIDWEST GROUP TAX FREE TRUST
STATEMENT OF ADDITIONAL INFORMATION
January 7, 1997
Ohio Tax-Free Money Fund
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the Prospectus of the Ohio Tax- Free Money Fund of Midwest
Group Tax Free Trust dated January 7, 1997. A copy of the 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.
<PAGE>
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.................................... 7
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS...............................10
INVESTMENT LIMITATIONS......................................................13
TRUSTEES AND OFFICERS.......................................................16
THE INVESTMENT ADVISER AND UNDERWRITER......................................18
DISTRIBUTION PLAN...........................................................19
SECURITIES TRANSACTIONS.....................................................21
PORTFOLIO TURNOVER..........................................................23
CALCULATION OF SHARE PRICE................................................. 23
TAXES.......................................................................25
REDEMPTION IN KIND..........................................................27
HISTORICAL PERFORMANCE INFORMATION..........................................28
PRINCIPAL SECURITY HOLDERS..................................................29
CUSTODIAN...................................................................29
AUDITORS....................................................................30
MGF SERVICE CORP............................................................30
TAX EQUIVALENT YIELD TABLE..................................................31
ANNUAL REPORT . . . ........................................................32
- 2 -
<PAGE>
THE TRUST
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 California Tax-Free
Money Fund, the Royal Palm Florida Tax-Free Money Fund and the Ohio Tax-Free
Money Fund. This Statement of Additional Information provides information
relating to the Ohio Tax-Free Money Fund (the "Fund"). Information relating to
the Tax-Free Money Fund, the Tax-Free Intermediate Term Fund, the Ohio Insured
Tax-Free Fund, the California Tax-Free Money Fund and the Royal Palm Florida
Tax- Free Money Fund is provided in a separate Statement of Additional
Information. The Fund has its own investment objective and policies.
Each share of the Fund represents an equal proportionate interest in
the assets and liabilities belonging to the Fund with each other share of the
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
the Fund into a greater or lesser number of shares so long as the proportionate
beneficial interest in the assets belonging to the Fund and the rights of shares
of any other Fund are in no way affected. In case of any liquidation of the
Fund, the holders of shares will be entitled to receive as a class a
distribution out of the assets, net of the liabilities, belonging to the Fund.
Expenses attributable to the Fund are borne by the 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 ("Retail Shares") and Class B shares
("Institutional Shares") of the Fund represent an interest in the same assets of
the Fund, have the same rights and are identical in all material respects except
that (i) Retail Shares bear the expenses of distribution fees; (ii) certain
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 support the shareholders of a specific
- 3 -
<PAGE>
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; (iii) each class has exclusive voting rights with respect to matters
affecting only that class; and (iv) Retail Shares are subject to a lower minimum
initial investment requirement and offer certain shareholder services not
available to Institutional Shares such as checkwriting privileges and automatic
investment and redemption plans. The Board of Trustees may classify and
reclassify shares of the 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
The 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 Fund invests 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 issuer, exempt from both federal income tax and Ohio personal income tax.
- 4 -
<PAGE>
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 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.
- 5 -
<PAGE>
When-Issued Obligations. The Fund may invest in when-issued Municipal
Obligations. In connection with these investments, the Fund will direct its
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 the 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 the 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, the 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 the 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 (which may
have a market value greater or less than the Fund's payment obligation).
Although the Fund will only make commitments to purchase securities on a
when-issued basis with the intention of actually acquiring the securities, the
Fund 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.
Participation Interests. The Fund may invest in participation interests
in Municipal Obligations. The 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
- 6 -
<PAGE>
Fund's participation interest in the par value of the Municipal Obligation plus
accrued interest. The 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.
QUALITY RATINGS OF MUNICIPAL OBLIGATIONS
The 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 Fund include Moody's Investors Service, Inc. ("Moody's"),
Standard & Poor's Ratings Group ("S&P") or Fitch Investors Services, Inc.
("Fitch").
Moody's Ratings
1. Tax-Exempt Bonds. The two highest ratings of Moody's for tax-exempt
bonds are Aaa and Aa. 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.
- 7 -
<PAGE>
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.
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 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
1. Tax-Exempt Bonds. The two highest ratings of S&P for tax-exempt
bonds are AAA and AA. 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. 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).
- 8 -
<PAGE>
Fitch Ratings
1. Tax-Exempt Bonds. The two highest ratings of Fitch for tax-exempt
bonds are AAA and AA. 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 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. Fitch ratings may be modified by the
addition of a plus (+) or minus (-) sign.
2. Tax-Exempt Notes. The ratings F-1+ and F-1 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.
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 Fund. 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 foregoing ratings of Moody's, S&P or
Fitch. The 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 Fund may invest.
- 9 -
<PAGE>
Subsequent to its purchase by the 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 the 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
A more detailed discussion of some of the terms used and investment
policies described in the Prospectus (see "Investment Objective and Policies")
appears below:
Bank Debt Instruments. Bank debt instruments in which the Fund 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 Fund 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. The 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. The 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). The 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 the Fund's restrictions on illiquid investments
(see "Investment Limitations") unless, in the judgment of the Adviser, subject
to
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the direction of the Board of Trustees, such note is liquid. The Fund does 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
the 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, the Fund could experience both delays
in liquidating the underlying security and losses. To minimize these
possibilities, the 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 Fund's
Custodian at the Federal Reserve Bank. The Fund will not enter into a repurchase
agreement 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.
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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 the 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 the 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 consist of
either certificates of deposit, eligible bankers' acceptances or securities
which are issued or guaranteed by the United States Government or its agencies.
The collateral 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 the Fund to the seller subject to the
repurchase agreement and is therefore subject to the Fund's investment
restriction applicable to loans. It is not clear whether a court would consider
the securities purchased by the Fund subject to a repurchase agreement as being
owned by the 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, the 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
the Fund has not perfected a security interest in the security, the 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, the 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 the 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 the Fund may
incur a loss if the proceeds to the 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 becomes less than the repurchase
price (including interest), the Fund will direct the seller of the security to
deliver additional securities so that the market value of all
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securities subject to the repurchase agreement will equal or exceed the
repurchase price. It is possible that the Fund will be unsuccessful in seeking
to enforce the seller's contractual obligation to deliver additional securities.
Loans of Portfolio Securities. The 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 the Fund if the demand meets the terms of the
letter. Such terms and the issuing bank must be satisfactory to the Fund. The
Fund receives 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 Fund
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 Fund's loans must meet applicable tests
under the Internal Revenue Code and permit the Fund to reacquire loaned
securities on five days' notice or in time to vote on any important matter.
Majority. As used in the Prospectus and this Statement of Additional
Information, the term "majority" of the outstanding shares of the Trust (or of
the Fund) means the lesser of (1) 67% or more of the outstanding shares of the
Trust (or the Fund) present at a meeting, if the holders of more than 50% of the
outstanding shares of the Trust (or the Fund) are present or represented at such
meeting or (2) more than 50% of the outstanding shares of the Trust (or the
Fund).
INVESTMENT LIMITATIONS
The Trust has adopted certain fundamental investment limitations
designed to reduce the risk of an investment in the Fund. These limitations may
not be changed without the affirmative vote of a majority of the outstanding
shares of the Fund. For the purpose of these investment limitations, the
identification of the "issuer" of 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.
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THE LIMITATIONS APPLICABLE TO THE 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.
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.
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<PAGE>
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.
With respect to the percentages adopted by the Trust as maximum
limitations on the Fund's investment policies and restrictions, an excess above
the fixed percentage (except for the percentage limitations relative to the
borrowing of money and the holding of illiquid securities) 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
the 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. The statements of intention in
this paragraph reflect nonfundamental policies which may be changed by the Board
of Trustees without shareholder approval.
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<PAGE>
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, 1996. 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.
COMPENSATION
COMPENSATION FROM
NAME AGE POSITION HELD FROM TRUST MIDWEST COMPLEX
- ---- --- ------------- ---------- ---------------
*Robert H. Leshner 57 President/Trustee $ 0 $ 0
+Dale P. Brown 49 Trustee 1,367 5,300
Gary W. Heldman 49 Trustee 2,267 5,700
+H. Jerome Lerner 58 Trustee 2,467 7,500
+Richard A. Lipsey 57 Trustee 1,367 5,300
Donald J. Rahilly 50 Trustee 1,167 4,700
Fred A. Rappoport 49 Trustee 1,167 4,700
Oscar P. Robertson 57 Trustee 2,267 5,700
Robert B. Sumerel 55 Trustee 1,167 4,700
John F. Splain 40 Secretary 0 0
Mark J. Seger 34 Treasurer 0 0
* 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.
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.
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<PAGE>
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 Bank One Louisiana, 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 Co., a tire sales and service company.
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, Williamsburg
Investment Trust, Markman MultiFund Trust, The Tuscarora Investment Trust,
PRAGMA Investment Trust, Maplewood Investment Trust, a series company
and The Thermo Opportunity Fund, Inc. and Assistant Secretary of Schwartz
Investment Trust, Fremont Mutual Funds, Inc. and Capitol Square Funds,
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, Williamsburg Investment Trust, Markman MultiFund Trust, PRAGMA Investment
Trust, Maplewood Investment Trust, a series company, The Thermo Opportunity
Fund, Inc. and Capitol Square Funds, Assistant Treasurer of Schwartz Investment
Trust and The Tuscarora Investment Trust and Assistant Secretary of Fremont
Mutual Funds, Inc.
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<PAGE>
THE INVESTMENT ADVISER AND UNDERWRITER
Midwest Group Financial Services, Inc. (the "Adviser") is the Fund's
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 a controlling person and an affiliate of the Adviser by reason of
his indirect ownership of its shares and his position as the principal 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 agreement between the Trust
and the Adviser, the Adviser manages the Fund's investments. The 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 the 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, 1996, 1995 and 1994, the Fund paid
advisory fees of $1,117,233, $1,026,778 and $1,016,929, respectively.
The Fund is responsible for the payment of all expenses incurred in
connection with the organization, registration of shares and operations of the
Fund, including such extraordinary or non-recurring expenses as may arise, such
as litigation to which the Trust may be a party. The Fund 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 Fund's Retail Shares to the extent that such expenses are
not assumed by the Retail Shares under its plan of distribution (see below). The
Adviser pays from its own resources promotional expenses in connection with the
distribution of the Fund's Institutional Shares. 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 may be
paid by the Trust regardless of the Chief Financial Officer's relationship with
the Adviser.
By its terms, the Fund's investment advisory agreement will remain in
force until January 30, 1998 and from year to year thereafter, subject to annual
approval by (a) the Board of
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Trustees or (b) a vote of a majority of the 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
Fund's investment advisory agreement 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 the Fund's outstanding voting securities,
or by the Adviser. The investment advisory agreement automatically terminates in
the event of its assignment, as defined by the Investment Company Act of 1940
and the rules thereunder.
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 Fund and, as such,
the exclusive agent for distribution of shares of the Fund. The Adviser is
obligated to sell the shares on a best efforts basis only against purchase
orders for the shares. Shares of the Fund are offered to the public on a
continuous basis.
Retail Shares of the Fund may compensate dealers, including the Adviser
and its affiliates, based on the average balance of all accounts in Retail
Shares for which the dealer is designated as the party responsible for the
account. See "Distribution Plan" below.
DISTRIBUTION PLAN
As stated in the Prospectus, Retail Shares of the Fund have adopted a
plan of distribution (the "Class A Plan") pursuant to Rule 12b-1 under the
Investment Company Act of 1940 which permits Retail Shares to pay for expenses
incurred in the distribution and promotion of the Fund's Retail 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 Retail Shares of the Fund.
Unreimbursed expenses will not be carried over from year to year.
For the fiscal year ended June 30, 1996, the aggregate
distribution-related expenditures for Retail Shares of the Fund under the Class
A Plan were $451,624, of which $444,000 was for
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payments to broker-dealers and others for the sale or retention of Retail
Shares, $4,479 was for the preparation of prospectuses and reports for
prospective shareholders and $3,145 was for other promotional expenses.
Agreements implementing the Class A Plan (the "Implementation
Agreements"), including agreements with dealers wherein such dealers agree for a
fee to act as agents for the sale of the Fund's Retail Shares, are in writing
and have been approved by the Board of Trustees. All payments made pursuant to
the Class A Plan are made in accordance with written agreements.
The continuance of the Class A Plan 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 Class A Plan or
any Implementation Agreement (the "Independent Trustees") at a meeting called
for the purpose of voting on such continuance. The Class 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 Retail Shares of the
Fund. In the event the Class A Plan is terminated in accordance with its terms,
Retail Shares 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 Retail Shares on not more than 60 days' written
notice to any other party to the Implementation Agreement. The Class A Plan may
not be amended to increase materially the amount to be spent for distribution
without shareholder approval. All material amendments to the Class A Plan must
be approved by a vote of the Trust's Board of Trustees and by a vote of the
Independent Trustees.
In approving the Class A Plan, 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 Class A Plan will benefit the
Fund and the holders of its Retail Shares. The Board of Trustees believes that
expenditure of assets of Retail Shares for distribution expenses under the Class
A Plan should assist in the growth of such shares which will benefit the Fund
and the holders of its Retail Shares through increased economies of scale,
greater investment flexibility, greater portfolio diversification and less
chance of disruption of planned investment strategies. The Class A Plan will be
renewed only if the Trustees make a similar determination for each subsequent
year of the Plan. There can be no assurance that the benefits anticipated from
the expenditure of Retail Shares' assets for distribution will be realized.
While the Class A Plan is in effect, all amounts spent by Retail Shares pursuant
to the Plan and the purposes for which such expenditures were made must be
reported quarterly to the Board of
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<PAGE>
Trustees for its review. 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 Class
A Plan and the Implementation Agreements.
SECURITIES TRANSACTIONS
Decisions to buy and sell securities for the Fund and the placing of
the Fund's 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 purchase and sale of portfolio securities, the
Adviser seeks best execution for the Fund, 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 Fund attempts 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 Fund may be purchased
directly from the issuer. Because the portfolio securities of the Fund 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 Fund will consist primarily of dealer or underwriter
spreads. No brokerage commissions have been paid by the Fund during the last
three fiscal years.
The Adviser is specifically authorized to select brokers who also
provide brokerage and research services to the Fund 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 Fund and to accounts over which it
exercises investment discretion.
Research services include securities and economic analyses, reports on
issuers' financial conditions and future business
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<PAGE>
prospects, newsletters and opinions relating to interest trends, general advice
on the relative merits of possible investment securities for the Fund 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 Fund and the Adviser, it is not possible to place a dollar value
on it. Research services furnished by brokers through whom the Fund effects
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 Fund.
The Fund has 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 market conducted on an agency basis. The Fund will not 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 Fund does 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 Fund 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 the 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 Fund in the same (or equivalent) security.
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PORTFOLIO TURNOVER
The Adviser intends to hold the portfolio securities of the Fund to
maturity and to limit portfolio turnover to the extent possible. Nevertheless,
changes in the 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 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
Fund. The Adviser anticipates that the Fund's portfolio turnover rate normally
will not exceed 100%. A 100% turnover rate would occur if all of the portfolio
securities were replaced once within a one year period.
CALCULATION OF SHARE PRICE
The share price (net asset value) of the Fund's shares is determined as
of 12:00 noon and 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 the 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,
see "Calculation of Share Price" in the Prospectus.
Pursuant to Rule 2a-7 promulgated under the Investment Company Act of
1940, the Fund values its 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
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 Fund.
Pursuant to Rule 2a-7, the Fund maintains a dollar-weighted average
portfolio maturity of 90 days or less, purchases only securities having
remaining maturities of thirteen months or less
- 23 -
<PAGE>
and invests 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 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 the 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.
The Board of Trustees has established procedures designed to stabilize,
to the extent reasonably possible, the price per share of the Fund as computed
for the purpose of sales and redemptions at $1 per share. The procedures include
review of the Fund's portfolio holdings by the Board of Trustees to determine
whether the Fund's net asset value calculated by using available market
quotations deviates more than one-half of one percent from $1 per
- 24 -
<PAGE>
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
the 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 Fund would receive if it
sold the instrument. During periods of declining interest rates, the daily yield
on shares of the 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 the 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.
TAXES
The Prospectus describes generally the tax treatment of distributions
by the Fund. This section of the Statement of Additional Information includes
additional information concerning federal and state taxes.
The 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 the 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
- 25 -
<PAGE>
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).
The 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. The 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.
The Fund intends to invest primarily in obligations with interest
income exempt from federal income taxes. To the extent possible, the Fund
intends to invest primarily in obligations the income from which is exempt from
Ohio personal 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 Fund, 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 Fund). 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
- 26 -
<PAGE>
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.
The 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 June 30, 1996, the Fund had capital loss
carryforwards for federal income tax purposes of $709, which expires on June 30,
2004.
A federal excise tax at the rate of 4% will be imposed on the excess,
if any, of the Fund's "required distribution" over actual distributions in any
calendar year. Generally, the "required distribution" is 98% of the 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 Fund intends 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 the 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, the Fund intends to
make an election pursuant to Rule 18f-1 under the Investment Company Act of
1940. This election will require the Fund to redeem shares solely in cash up to
the lesser of $250,000 or 1% of the net asset value of the 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.
- 27 -
<PAGE>
HISTORICAL PERFORMANCE INFORMATION
Yield quotations on investments in the 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 Fund does not
normally recognize unrealized gains and losses under the amortized cost
valuation method). The current and effective yields of Retail Shares for the
seven days ended June 30, 1996 were 2.90% and 2.94%, respectively. The Fund may
also quote a tax-equivalent current or effective yield, computed by dividing
that portion of the 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 combined marginal
federal and Ohio income tax rate for individuals (44.13%), the tax-equivalent
current and effective yields of Retail Shares for the seven days ended June 30,
1996 were 5.19% and 5.26%, respectively.
The performance quotations described above are based on historical
earnings and are not intended to indicate future performance. Yield quotations
are computed separately for Retail Shares and Institutional Shares of the Fund.
The yield of Institutional Shares is expected to be higher than the yield of
Retail Shares due to the distribution fees imposed on Retail Shares.
To help investors better evaluate how an investment in the Fund might
satisfy their investment objective, advertisements regarding the Fund may
discuss various measures of Fund 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 Fund 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 Fund may
compare performance rankings with money market funds appearing in the
Tax Free State Specific Stockbroker & General Purpose Funds category.
Lipper Fixed Income Fund Performance
- 28 -
<PAGE>
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 Fund may provide comparative performance information appearing in the Ohio
Tax- Exempt Money Market 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 Fund's portfolio, 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 Fund to calculate its
performance. In addition, there can be no assurance that the Fund will continue
this performance as compared to such other averages.
PRINCIPAL SECURITY HOLDERS
As of October 18, 1996, The Fifth Third Bank Trust Department, 38
Fountain Square Plaza, Cincinnati, Ohio owned of record 25.92% of the Trust's
outstanding shares, including 36.94% of the outstanding shares of the Fund. The
Fifth Third Bank may be deemed to control the Trust and the Fund by virtue of
the fact that it owned of record more than 25% of each of their outstanding
shares as of such date. For purposes of voting on matters submitted to
shareholders, any person who owns more than 50% of the outstanding shares the
Trust or of the Fund generally would be able to cast the deciding vote on such
matters. As of October 18, 1996, BHC Securities, Inc., 2005 Market Street,
Philadelphia, Pennsylvania owned of record 17.76% of the outstanding shares of
the Fund.
As of October 18, 1996, 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 the Fund.
CUSTODIAN
The Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio, has
been retained to act as Custodian for investments of the Fund. The Fifth Third
Bank acts as the 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 the Fund a base fee at the annual rate of
.005% of average net assets (subject to a minimum annual fee of $1,500 and a
maximum fee of $5,000) plus transaction charges for each security transaction of
the Fund.
- 29 -
<PAGE>
AUDITORS
The firm of Arthur Andersen LLP has been selected as independent
auditors for the Trust for the fiscal year ending June 30, 1997. Arthur Andersen
LLP, 425 Walnut Street, Cincinnati, Ohio, performs an annual audit of the
Trust's financial statements and advises the Trust 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 Fund's
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 the Fund, provided, however,
that the minimum fee is $1,000 per month for each class of shares of the Fund.
In addition, the Fund pays 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 Fund pays MGF
a fee in accordance with the following schedule:
Asset Size of Fund Monthly Fee
$ 0 - $100,000,000 $4,250
$100,000,000 - $250,000,000 $4,750
$250,000,000 - $400,000,000 $5,250
Over $400,000,000 $5,750
In addition, the Fund pays all costs of external pricing services.
MGF is retained by the Adviser to assist the Adviser in providing
administrative services to the Fund. 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 Fund, 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 the annual rate of .1% of the average value of the Fund's daily
net assets. 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.
- 30 -
<PAGE>
TAX EQUIVALENT YIELD TABLE
The tax equivalent yield table illustrates approximately the yield an
individual investor would have to earn on taxable investments to equal a
tax-exempt yield in various income tax brackets.
The table below 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.
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 table has not
been adjusted to reflect the impact of these adjustments to taxable income.
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
<PAGE>
- 32 -
ANNUAL REPORT
The Fund's audited financial statements as of June 30, 1996 appear in the
Trust's annual report which is attached to this Statement of Additional
Information.
ANNUAL REPORT
JUNE 30, 1996
OHIO TAX-FREE
Money Fund
o
TAX-FREE
Money Fund
o
CALIFORNIA TAX-FREE
Money Fund
o
ROYAL PALM FLORIDA TAX-FREE
Money Fund
o
TAX-FREE INTERMEDIATE
Term Fund
o
OHIO INSURED
Tax-Free Fund
<PAGE>
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 market
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, 1996, the Fund's total returns (excluding the
impact of applicable sales loads) were 4.51% and 4.00% for Class A shares and
Class C shares, respectively. The yield for the Fund's Class A shares at June
30, 1996 was 4.54%, which is equivalent to a taxable yield of 7.52%, and the
yield for the Fund's Class C shares was 4.14%, which is equivalent to a
taxable yield of 6.85%, assuming the maximum federal income tax bracket for
individuals.
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, 1996, the Fund's total returns (excluding
the impact of applicable sales loads) were 5.05% and 4.44% for Class A shares
and Class C shares, respectively. The yield for the Fund's Class A shares at
June 30, 1996 was 4.91%, which is equivalent to a taxable yield of 8.79%, and
the yield for the Fund's Class C shares was 4.62%, which is equivalent to a
taxable yield of 8.27%, assuming the maximum combined federal and Ohio income
tax bracket for individuals.
Interest rates continued to decline in the second half of 1995 in response to
moderating economic growth and declining fears of inflation. Entering 1996,
interest rates were expected to remain low, aided by a slow economy. However,
this scenario changed dramatically in February as strong employment growth
indicated the economy was performing much better than expected. In the months
that followed, employment continued to surge, as did the overall economy.
Yields on bonds rose as investors anticipated a subsequent rise in the level
of inflation. Thus far, concerns about inflation have proved unwarranted.
Nevertheless, the damage had been done and interest rates at June 30, 1996
were higher by about 1% than they were at the beginning of 1996.
Performance in the municipal bond market during the first six months of the
fiscal year lagged the performance of the Treasury market. This was due
primarily to the persistent discussions regarding tax reform. The fears that
municipal income would lose its tax preference kept many investors out of the
market. As 1996 began and tax reform appeared less likely, investors began to
recognize the value of municipals compared to Treasuries. This caused
municipal bonds to outperform Treasury issues over the next six months. For
the twelve months ended June 30, 1996, the Lehman Brothers 5-Year Municipal
G.O. Bond Index returned 5.41% while the Lehman Brothers 15-Year Municipal
G.O. Bond Index returned 7.20%.
Performance of the Tax-Free Intermediate Term Fund was favorable in the first
half of the fiscal year as the average maturity was lengthened to take
advantage of declining interest rates. Conversely, the sharp reversal of
interest rates beginning in February 1996 negatively impacted the Fund's
performance versus the Lehman Brothers 5-Year Municipal G.O. Bond Index. We
have since shortened the average maturity of the Fund and continue to focus on
high quality issues which we believe will help to buffer the impact of
volatile market swings.
The Ohio Insured Tax-Free Fund performed comparably to the Lehman Brothers
15-Year Municipal G.O. Bond Index during the first six months of the fiscal
year. Again, the rise in interest rates experienced early in 1996, combined
with an average maturity slightly longer than the Index, had a detrimental
impact on the Fund's third quarter performance. Late in the fiscal year, we
initiated portfolio sales designed to generate tax losses for the Fund to
offset realized gains and, at the same time, shorten the Fund's average
maturity. This helped the Fund outperform the Index during the quarter ended
June 30, 1996.
Looking ahead, the economy appears strong as evidenced by robust second
quarter growth and employment which has continued to grow. Although there have
been some recent signs that the economy may be slowing, most notably in the
housing and manufacturing sectors, more evidence is necessary to confirm a
changing trend. As 1996 progresses, we believe that the economy will weaken
and interest rates will move lower; however, the timing of the slowdown
remains in question.
<PAGE>
APPENDIX
A representation of the graphic material contained in the Midwest Group Tax
Free Trust June 30, 1996 Annual Report is setforth below:
Comparison of the Change in Value since June 30, 1986 of a $10,000 Investment
in the Tax-Free Intermediate Term Fund* and the Lehman Brothers 5-Year Municipal
G.O. Index
<TABLE>
LEHMAN BROTHERS 5-YEAR MUNICIPAL G.O. INDEX: TAX-FREE INTERMEDIATE TERM FUND-CLASS A:
<S> <C> <C> <C> <C> <C>
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
06/30/86 10,000 06/30/86 9,800
09/30/86 3.69% 10,369 09/30/86 2.14% 10,010
12/31/86 2.63% 10,642 12/31/86 2.08% 10,219
03/31/87 2.28% 10,884 03/31/87 1.47% 10,369
06/30/87 -0.92% 10,784 06/30/87 -0.54% 10,313
09/30/87 -2.06% 10,562 09/30/87 -1.38% 10,171
12/31/87 3.82% 10,966 12/31/87 2.19% 10,395
03/31/88 3.10% 11,305 03/31/88 2.35% 10,639
06/30/88 0.42% 11,353 06/30/88 0.71% 10,714
09/30/88 1.14% 11,482 09/30/88 1.14% 10,836
12/31/88 0.61% 11,552 12/31/88 1.16% 10,962
03/31/89 -0.28% 11,520 03/31/89 0.79% 11,048
06/30/89 4.70% 12,061 06/30/89 2.56% 11,331
09/30/89 1.11% 12,195 09/30/89 1.54% 11,505
12/31/89 2.99% 12,560 12/31/89 2.32% 11,773
03/31/90 0.48% 12,620 03/31/90 0.57% 11,840
06/30/90 2.24% 12,903 06/30/90 1.78% 12,050
09/30/90 1.06% 13,040 09/30/90 0.47% 12,108
12/31/90 3.32% 13,473 12/31/90 3.11% 12,483
03/31/91 2.15% 13,762 03/31/91 1.93% 12,724
06/30/91 1.75% 14,003 06/30/91 1.69% 12,939
09/30/91 3.55% 14,500 09/30/91 2.89% 13,313
12/31/91 3.35% 14,986 12/31/91 2.29% 13,619
03/31/92 -0.08% 14,974 03/31/92 0.48% 13,684
06/30/92 3.25% 15,461 06/30/92 2.87% 14,076
09/30/92 2.49% 15,846 09/30/92 2.19% 14,384
12/31/92 1.59% 16,098 12/31/92 1.98% 14,669
03/31/93 2.54% 16,507 03/31/93 3.40% 15,167
06/30/93 2.36% 16,896 06/30/93 2.78% 15,589
09/30/93 2.16% 17,261 09/30/93 3.17% 16,083
12/31/93 1.23% 17,473 12/31/93 1.19% 16,274
03/31/94 -3.15% 16,923 03/31/94 -3.37% 15,724
06/30/94 1.34% 17,150 06/30/94 0.82% 15,853
09/30/94 0.81% 17,289 09/30/94 0.57% 15,943
12/31/94 -0.33% 17,232 12/31/94 -0.91% 15,797
03/31/95 4.06% 17,931 03/31/95 4.34% 16,484
06/30/95 2.55% 18,388 06/30/95 2.29% 16,861
09/30/95 2.73% 18,890 09/30/95 2.07% 17,209
12/31/95 1.83% 19,236 12/31/95 2.43% 17,627
03/31/96 0.32% 19,299 03/31/96 -0.43% 17,552
06/30/96 0.43% 19,382 06/30/96 0.40% 17,622
</TABLE>
Past performance is not predictive of future performance.
Tax-Free Intermediate Term Fund Average Annual Total Returns
1 Year 5 Years 10 Years Since Inception
Class A 2.42% 5.94% 5.83% 6.34%
Class C 4.00% N/A N/A 2.57%
*The chart above represents performance of Class A shares only, which will vary
from the performance of Class C shares based on the difference in loads and
fees paid by shareholders in the different classes. Fund inception was
September 10, 1981, and the initial public offering of Class C shares commenced
on February 1, 1994.
<PAGE>
Comparison of the Change in Value since June 30, 1986 of a $10,000 Investment
in the Ohio Insured Tax-Free Fund* and the Lehman Brothers 15-Year Municipal
G.O. Index
<TABLE>
LEHMAN BROTHERS 15-YEAR MUNICIPAL G.O. INDEX: OHIO INSURED TAX-FREE FUND-CLASS A:
<S> <C> <C> <C> <C> <C>
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
06/30/86 10,000 06/30/86 9,600
09/30/86 6.37% 10,637 09/30/86 4.23% 10,006
12/31/86 3.60% 11,020 12/31/86 3.60% 10,366
03/31/87 2.71% 11,319 03/31/87 2.58% 10,634
06/30/87 -4.83% 10,772 06/30/87 -3.65% 10,246
09/30/87 -3.49% 10,396 09/30/87 -2.38% 10,002
12/31/87 6.64% 11,086 12/31/87 3.41% 10,343
03/31/88 3.11% 11,431 03/31/88 3.62% 10,717
06/30/88 1.98% 11,657 06/30/88 2.10% 10,943
09/30/88 2.57% 11,957 09/30/88 2.15% 11,178
12/31/88 1.94% 12,189 12/31/88 2.24% 11,428
03/31/89 0.38% 12,235 03/31/89 0.79% 11,518
06/30/89 6.32% 13,008 06/30/89 4.27% 12,010
09/30/89 -0.43% 12,953 09/30/89 -0.04% 12,005
12/31/89 4.42% 13,525 12/31/89 3.71% 12,450
03/31/90 -0.01% 13,524 03/31/90 -0.10% 12,438
06/30/90 2.29% 13,833 06/30/90 1.90% 12,673
09/30/90 -0.41% 13,777 09/30/90 0.08% 12,684
12/31/90 4.42% 14,386 12/31/90 3.97% 13,187
03/31/91 1.85% 14,652 03/31/91 1.78% 13,422
06/30/91 1.96% 14,939 06/30/91 1.96% 13,685
09/30/91 4.09% 15,550 09/30/91 3.66% 14,186
12/31/91 3.13% 16,037 12/31/91 3.19% 14,638
03/31/92 0.54% 16,123 03/31/92 -0.06% 14,630
06/30/92 3.81% 16,738 06/30/92 4.35% 15,266
09/30/92 2.86% 17,216 09/30/92 1.95% 15,563
12/31/92 2.47% 17,641 12/31/92 2.29% 15,920
03/31/93 4.24% 18,389 03/31/93 3.78% 16,522
06/30/93 3.67% 19,064 06/30/93 3.70% 17,134
09/30/93 4.17% 19,859 09/30/93 3.86% 17,795
12/31/93 1.56% 20,169 12/31/93 0.73% 17,924
03/31/94 -6.78% 18,802 03/31/94 -5.28% 16,978
06/30/94 1.42% 19,069 06/30/94 0.50% 17,063
09/30/94 0.41% 19,147 09/30/94 0.17% 17,092
12/31/94 -1.75% 18,812 12/31/94 -0.77% 16,962
03/31/95 8.41% 20,394 03/31/95 6.59% 18,080
06/30/95 2.23% 20,849 06/30/95 1.69% 18,385
09/30/95 3.65% 21,610 09/30/95 2.33% 18,814
12/31/95 4.05% 22,485 12/31/95 4.45% 19,652
03/31/96 -0.95% 22,271 03/31/96 -2.15% 19,228
06/30/96 0.35% 22,349 06/30/96 0.44% 19,313
</TABLE>
Past performance is not predictive of future performance.
Ohio Insured Tax-Free Fund Average Annual Total Returns
1 Year 5 Years 10 Years Since Inception
Class A 0.85% 6.26% 6.80% 7.76%
Class C 4.44% N/A N/A 2.78%
*The chart above represents performance of Class A shares only, which
will vary from the performance of Class C shares based on the difference in
loads and fees paid by shareholders in the different classes. Fund inception
was April 1, 1985, and the initial public offering of Class C shares commenced
on November 1, 1993.
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1996
==========================================================================================================================
OHIO CALIFORNIA
TAX-FREE TAX-FREE TAX-FREE
MONEY FUND MONEY FUND MONEY FUND
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities:
At acquisition cost.................................... $ 239,927,043 $ 25,006,218 $ 37,663,286
=============== =============== ===============
At amortized cost...................................... $ 239,821,479 $ 24,955,523 $ 37,579,388
=============== =============== ===============
At value (Note 2)...................................... $ 239,821,479 $ 24,955,523 $ 37,579,388
Cash ..................................................... 389,643 201,132 217,437
Receivable for securities sold............................ 1,200,000 -- --
Interest receivable ...................................... 1,735,318 215,571 378,408
Other assets ............................................. 8,229 1,452 1,288
--------------- --------------- ---------------
TOTAL ASSETS......................................... 243,154,669 25,373,678 38,176,521
--------------- --------------- ---------------
LIABILITIES
Dividends payable......................................... 196,018 1,410 4,318
Payable for securities purchased.......................... 2,510,625 -- 2,017,280
Payable to affiliates (Note 4) ........................... 107,176 25,211 27,177
Other accrued expenses and liabilities ................... 17,958 4,669 5,685
--------------- --------------- ---------------
TOTAL LIABILITIES.................................... 2,831,777 31,290 2,054,460
--------------- --------------- ---------------
NET ASSETS .............................................. $ 240,322,892 $ 25,342,388 $ 36,122,061
=============== =============== ===============
Net assets consist of:
Capital shares ........................................... $ 240,309,987 $ 25,343,438 $ 36,123,641
Accumulated net realized gains (losses) from
security transactions.................................. 12,905 ( 1,050 ) ( 1,580 )
--------------- --------------- ---------------
Net assets................................................ $ 240,322,892 $ 25,342,388 $ 36,122,061
=============== =============== ===============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) ............ 240,309,987 25,353,881 36,123,641
=============== =============== ===============
Net asset value, offering price and redemption price
per share (Note 2) .................................... $ 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, 1996
=========================================================================================================================
OHIO CALIFORNIA
TAX-FREE TAX-FREE TAX-FREE
MONEY FUND MONEY FUND MONEY FUND
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income........................................ $ 9,278,740 $ 1,149,293 $ 1,046,105
--------------- --------------- ---------------
EXPENSES
Investment advisory fees (Note 4)...................... 1,117,233 140,891 142,143
Distribution expenses (Note 4)......................... 451,624 25,946 8,687
Accounting services fees (Note 4)...................... 45,000 39,000 39,000
Shareholder services and transfer agent fees (Note 4).. 71,194 25,208 14,237
Postage and supplies................................... 44,641 15,894 4,936
Professional fees...................................... 18,887 5,687 6,387
Insurance expense...................................... 21,136 4,054 3,615
Registration fees...................................... 6,791 8,994 1,223
Custodian fees (Note 4)................................ 7,148 3,701 4,639
Pricing expenses....................................... 5,954 2,099 3,108
Trustees' fees and expenses ........................... 3,433 3,433 3,433
Reports to shareholders ............................... 6,478 2,257 1,194
Other expenses ........................................ 13,633 1,796 1,424
--------------- --------------- ---------------
TOTAL EXPENSES ........................................... 1,813,152 278,960 234,026
Fees waived by the Adviser (Note 4) ................... -- -- ( 6,600)
--------------- --------------- ---------------
NET EXPENSES ............................................. 1,813,152 278,960 227,426
--------------- --------------- ---------------
NET INVESTMENT INCOME .................................... 7,465,588 870,333 818,679
--------------- --------------- ---------------
NET REALIZED GAINS (LOSSES) FROM
SECURITY TRANSACTIONS ................................. ( 709) ( 564) 116
--------------- --------------- ---------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS ....................................... $ 7,464,879 $ 869,769 $ 818,795
=============== =============== ===============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 1996 AND 1995
==================================================================================================================================
CALIFORNIA
OHIO TAX-FREE TAX-FREE TAX-FREE
MONEY FUND MONEY FUND MONEY FUND
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995 1996 1995
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ............... $7,465,588 $6,762,272 $870,333 $ 865,650 $ 818,679 $ 643,953
Net realized gains (losses) from
security transactions .............. ( 709) 8,226 ( 564) ( 774) 116 234
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets from
operations........................ 7,464,879 6,770,498 869,769 864,876 818,795 644,187
----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
FROM NET INVESTMENT INCOME ......... ( 7,465,588) ( 6,764,671) ( 873,034) ( 862,949) ( 818,679) (644,370)
----------- ----------- ----------- ----------- ----------- -----------
FROM CAPITAL SHARE
TRANSACTIONS (NOTE 5):
Proceeds from shares sold ........... 565,969,095 532,441,705 49,546,956 51,748,931 119,659,991 84,546,054
Net asset value of shares issued
in reinvestment of distributions
to shareholders.................... 4,885,920 4,449,982 839,246 814,800 753,406 572,727
Payments for shares redeemed ........ (557,137,769) ( 523,292,513) (51,732,766) (57,041,748) (103,816,208) (90,102,140)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
from capital share transactions...... 13,717,246 13,599,174 (1,346,564) (4,478,017) 16,597,189 (4,983,359)
----------- ----------- ----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN
NET ASSETS ......................... 13,716,537 13,605,001 (1,349,829) ( 4,476,090) 16,597,305 (4,983,542)
NET ASSETS:
Beginning of year................... 226,606,355 213,001,354 26,692,217 31,168,307 19,524,756 24,508,298
----------- ----------- ----------- ----------- ----------- -----------
End of year........................ $240,322,892 $226,606,355 $25,342,388 $26,692,217 $36,122,061 $19,524,756
============ ============ =========== =========== =========== ===========
UNDISTRIBUTED NET INVESTMENT INCOME... $ -- $ -- $ -- $ 2,701 $ -- $ --
============ ============ =========== =========== =========== ===========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1996
===========================================================================================================================
ROYAL PALM
TAX-FREE OHIO INSURED FLORIDA
INTERMEDIATE TAX-FREE TAX-FREE
TERM FUND FUND MONEY FUND
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities:
At acquisition cost.................................... $ 71,673,021 $ 76,483,492 $ 47,075,493
=============== =============== ===============
At amortized cost...................................... $ 71,287,629 $ 76,453,032 $ 46,976,072
=============== =============== ===============
At value (Note 2) ..................................... $ 72,708,536 $ 79,588,215 $ 46,976,072
Cash ..................................................... 100,018 40,602 18,144
Receivable for capital shares sold........................ 217,106 13,090 --
Recevable for securities sold............................. -- -- 750,000
Interest receivable ...................................... 1,321,055 692,613 383,034
Other assets ............................................. 3,657 3,374 1,355
--------------- --------------- ---------------
TOTAL ASSETS........................................... 74,350,372 80,337,894 48,128,605
--------------- --------------- ---------------
LIABILITIES
Dividends payable......................................... 47,457 73,272 50,161
Payable for capital shares redeemed ...................... 326,049 299,745 --
Payable for securities purchased.......................... 995,174 -- --
Payable to affiliates (Note 4) ........................... 57,085 43,498 21,006
Other accrued expenses and liabilities.................... 11,202 10,702 6,299
--------------- --------------- ---------------
TOTAL LIABILITIES ................................... 1,436,967 427,217 77,466
--------------- --------------- ---------------
NET ASSETS .............................................. $ 72,913,405 $ 79,910,677 $ 48,051,139
=============== =============== ===============
Net assets consist of:
Capital shares ........................................... $ 73,113,280 $ 76,775,988 $ 48,052,337
Accumulated net realized losses from security
transactions ........................................ ( 1,620,782) ( 494) ( 1,198)
Net unrealized appreciation on investments................ 1,420,907 3,135,183 --
--------------- --------------- ---------------
Net assets................................................ $ 72,913,405 $ 79,910,677 $ 48,051,139
=============== =============== ===============
PRICING OF CLASS A SHARES
Net assets applicable to Class A shares................... $ 67,674,858 $ 75,938,183 $ 28,906,381
=============== =============== ===============
Shares of beneficial interest outstanding
(unlimited number of shares
authorized, no par value) (Note 5)..................... 6,238,847 6,345,325 28,907,579
=============== =============== ===============
Net asset value and redemption price per share (Note 2) .. $ 10.85 $ 11.97 $ 1.00
=============== =============== ===============
Maximum offering price per share (Note 2) ................ $ 11.07 $ 12.47 $ 1.00
=============== =============== ===============
PRICING OF CLASS C SHARES(A)
Net assets applicable to Class C shares(A)................ $ 5,238,547 $ 3,972,494 $ 19,144,758
=============== =============== ===============
Shares of beneficial interest outstanding
(unlimited number of shares
authorized, no par value) (Note 5) .................... 482,869 331,937 19,144,758
=============== =============== ===============
Net asset value, offering price and redemption
price per share (Note 2) ............................ $ 10.85 $ 11.97 $ 1.00
=============== =============== ===============
<FN>
(A) Except for the Royal Palm Florida Tax-Free Money Fund which offers Class B shares (Note 2).
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996
==========================================================================================================================
ROYAL PALM
TAX-FREE OHIO INSURED FLORIDA
INTERMEDIATE TAX-FREE TAX-FREE
TERM FUND FUND MONEY FUND
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income........................................ $ 4,390,262 $ 4,651,670 $ 1,170,195
--------------- --------------- ---------------
EXPENSES
Investment advisory fees (Note 4)...................... 398,576 397,265 152,663
Distribution expenses, Class A (Note 4)................ 115,756 14,824 8,631
Distribution expenses, Class C (Note 4) ............... 22,701 12,297 --
Shareholder services and transfer agent fees,
Class A (Note 4) .................................... 72,503 40,277 12,000
Shareholder services and transfer agent fees,
Class C (Note 4) .................................... 12,000 12,000 --
Shareholder services and transfer agent fees,
Class B (Note 4) .................................... -- -- 1,000
Accounting services fees (Note 4) ..................... 57,000 57,000 40,000
Postage and supplies................................... 60,880 29,106 6,538
, Pricing expenses....................................... 17,468 15,413 2,778
Professional fees ..................................... 8,849 9,070 6,187
Insurance expense...................................... 10,086 9,181 3,637
Custodian fees......................................... 8,584 6,967 3,166
Registration fees, Common.............................. 3,924 2,285 2,129
Registration fees, Class A............................. 4,233 661 --
Registration fees, Class C............................. 4,145 353 --
Reports to shareholders ............................... 8,618 5,199 732
Trustees' fees and expenses ........................... 3,433 3,433 3,433
Other expenses ........................................ 5,970 4,866 1,766
--------------- --------------- ---------------
TOTAL EXPENSES ........................................... 814,726 620,197 244,660
Fees waived by the Advisor (Note 4).................... -- -- ( 58,284)
Class A expenses reimbursed by the Adviser (Note 4).... -- ( 2,708) --
Class B expenses reimbursed by the Advisor (Note 4).... -- -- ( 506)
--------------- --------------- ---------------
NET EXPENSES ............................................. 814,726 617,489 185,870
--------------- --------------- ---------------
NET INVESTMENT INCOME .................................... 3,575,536 4,034,181 984,325
--------------- --------------- ---------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions ....... 418,573 637,863 --
Net change in unrealized appreciation/depreciation
on investments .................................... (378,154) (557,750) --
--------------- --------------- ---------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS ........ 40,419 80,113 --
--------------- --------------- ---------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ............... $ 3,615,955 $ 4,114,294 $ 984,325
=============== =============== ===============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 1996 AND 1995
==================================================================================================================================
ROYAL PALM
TAX-FREE FLORIDA
INTERMEDIATE OHIO INSURED TAX-FREE
TERM FUND TAX-FREE FUND MONEY FUND
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30 JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995 1996 1995
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income .................. $3,575,536 $4,323,906 $4,034,181 $4,204,284 $ 984,325 $ 821,944
Net realized gains (losses) from
security transactions ................. 418,573 (1,487,447) 637,863 (553,505) -- 2
Net change in unrealized appreciation/
depreciation on investments ........... (378,154) 2,397,778 (557,750) 2,078,922 -- --
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets from operations 3,615,955 5,234,237 4,114,294 5,729,701 984,325 821,946
----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income, Class A .... (3,370,231) (4,158,531) (3,835,050) (4,060,262) (941,390) (822,616)
From net investment income, Class C .... (205,305) (182,065) (199,131) (165,164) -- --
From net investment income, Class B .... -- -- -- -- (42,935) --
----------- ----------- ----------- ----------- ----------- -----------
Decrease in net assets from
distributions to shareholders .......... (3,575,536) (4,340,596) (4,034,181) (4,225,426) (984,325) (822,616)
----------- ----------- ----------- ----------- ----------- -----------
FROM CAPITAL SHARES
TRANSACTIONS (NOTE 5):
CLASS A
Proceeds from shares sold .............. 15,528,848 27,134,058 149,454,410 135,489,969 51,380,671 44,740,157
Net asset value of shares
issued in reinvestment
of distributions to shareholders ...... 2,685,608 3,413,920 2,832,266 3,071,603 836,936 747,824
Payments for shares redeemed ........... (31,733,808) (56,693,107) (147,848,817) (148,483,241) (47,429,798) (47,644,429)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
from Class A share transactions ........ (13,519,352) (26,145,129) 4,437,859 (9,921,669) 4,787,809 (2,156,448)
----------- ----------- ----------- ----------- ----------- -----------
CLASS C (A)
Proceeds from shares sold .............. 3,208,583 7,031,053 1,212,806 1,936,052 19,950,303 --
Net asset value of shares issued
in reinvestment of distributions
to shareholders ....................... 192,684 174,884 173,201 141,387 -- --
Payments for shares redeemed ........... (2,962,890) (5,556,496) ( 1,551,557) (650,441) (805,545) --
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
from Class C share transactions (A) .... 438,377 1,649,441 (165,550) 1,426,998 19,144,758 --
----------- ----------- ----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE)
IN NET ASSETS ......................... (13,040,556) (23,602,047) 4,352,422 (6,990,396) 23,932,567 (2,157,118)
NET ASSETS:
Beginning of year ...................... 85,953,961 109,556,008 75,558,255 82,548,651 24,118,572 26,275,690
----------- ----------- ----------- ----------- ----------- -----------
End of year ............................ $72,913,405 $85,953,961 $79,910,677 $75,558,255 $48,051,139 $24,118,572
=========== =========== =========== =========== =========== ===========
UNDISTRIBUTED NET INVESTMENT INCOME ...... $ -- $ -- $ -- $ -- $ -- $ --
=========== =========== =========== =========== =========== ===========
<FN>
(A) Except for the Royal Palm Florida Tax-Free Money Fund which offers Class B shares (Note 2).
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,
1996 1995 1994 1993 1992
- - ---------------------------------------------------------------------------------------------------------------------------
<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 0.031 0.020 0.022 0.034
---------- ---------- ---------- ---------- ----------
Distributions from net investment income ....... ( 0.031) ( 0.031) ( 0.020) ( 0.022) ( 0.034)
---------- ---------- ---------- ---------- ----------
Net asset value at end of year.................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ==========
Total return.................................... 3.14% 3.12% 1.99% 2.19% 3.52%
========== ========== ========== ========== ==========
Net assets at end of year (000's) .............. $240,323 $226,606 $ 213,001 $ 221,775 $ 218,503
========== ========== ========== ========== ==========
Ratio of expenses to average net assets ........ 0.75% 0.74% 0.73% 0.74% 0.75%
Ratio of net investment income to average
net assets ............................... 3.09% 3.08% 1.97% 2.16% 3.43%
- - -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY FUND
FINANCIAL HIGHLIGHTS
==========================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
==========================================================================================================================
YEAR ENDED JUNE 30,
1996 1995 1994 1993 1992
- - --------------------------------------------------------------------------------------------------------------------------
<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 0.030 0.021 0.024 0.036
---------- ---------- ---------- ---------- ----------
Distributions from net investment income........ ( 0.031 ) ( 0.030) ( 0.021) ( 0.024) ( 0.036)
---------- ---------- ---------- ---------- ----------
Net asset value at end of year.................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ==========
Total return ................................... 3.15% 3.07% 2.12% 2.40% 3.63%
========== ========== ========== ========== ==========
Net assets at end of year (000's) .............. $25,342 $ 26,692 $ 31,168 $ 34,787 $ 50,000
========== ========== ========== ========== ==========
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................................ 3.09% 3.00% 2.09% 2.39% 3.55%
- - --------------------------------------------------------------------------------------------------------------------------
<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,
1996 1995 1994 1993 1992
- - --------------------------------------------------------------------------------------------------------------------------
<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 0.029 0.019 0.022 0.035
---------- ---------- ---------- ---------- ----------
Distributions from net investment income........ ( 0.029) ( 0.029) ( 0.019) ( 0.022) ( 0.035)
---------- ---------- ---------- ---------- ----------
Net asset value at end of year.................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========== ========== ========== ========== ==========
Total return ................................... 2.95% 2.95% 1.93% 2.26% 3.71%
========== ========== ========== ========== ==========
Net assets at end of year (000's) .............. $36,122 $ 19,525 $ 24,508 $ 34,487 $ 21,246
========== ========== ========== ========== ==========
Ratio of expenses to average net assets(A) .... 0.80% 0.70% 0.60% 0.56% 0.34%
Ratio of net investment income to average
net assets................................. 2.88% 2.83% 1.90% 2.22% 3.49%
- - --------------------------------------------------------------------------------------------------------------------------
<FN>
(A)Absent fee waivers and/or expense reimbursements by the Adviser, the ratio of expenses to average net assets would have
been 0.82%, 0.85%, 0.86%, 0.85% and 0.89% for the years ended June 30, 1996, 1995, 1994, 1993 and 1992,
respectively (Note 4).
See accompanying notes to finacial 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,
1996 1995 1994 1993 1992
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year............ $ 10.86 $ 10.69 $ 10.98 $ 10.42 $ 10.15
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income ....................... 0.50 0.49 0.48 0.53 0.59
Net realized and unrealized gains (losses)
on investments............................. ( 0.01 ) 0.17 ( 0.29) 0.56 0.27
---------- ---------- ---------- ---------- ----------
Total from investment operations ............... 0.49 0.66 0.19 1.09 0.86
---------- ---------- ---------- ---------- ----------
Distributions from net investment income ....... ( 0.50 ) ( 0.49) ( 0.48) ( 0.53 ) ( 0.59 )
---------- ---------- ---------- ---------- ----------
Net asset value at end of year.................. $ 10.85 $ 10.86 $ 10.69 $ 10.98 $ 10.42
========== ========== ========== ========== ==========
Total return(A) ................................ 4.51% 6.36% 1.70% 10.75% 8.78%
========== ========== ========== ========== ==========
Net assets at end of year (000's) .............. $67,675 $ 81,140 $106,472 $ 82,168 $ 26,720
========== ========== ========== ========== ==========
Ratio of expenses to average net assets ........ 0.99% 0.99% 0.99% 0.99% 1.07%
Ratio of net investment income to average net
assets..................................... 4.52% 4.59% 4.35% 4.90% 5.75%
Portfolio turnover rate......................... 37% 32% 46% 28% 12%
- - --------------------------------------------------------------------------------------------------------------------------
<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 ENDED JUNE 30, (FEB. 1, 1994)
THROUGH
1996 1995 JUNE 30, 1994
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value at beginning of period.................... $ 10.86 $ 10.69 $ 11.27
--------------- --------------- ---------------
Income from investment operations:
Net investment income.................................. 0.44 0.44 0.20
Net realized and unrealized gains (losses) on
investments.......................................... ( 0.01) 0.17 ( 0.58)
--------------- --------------- ---------------
Total from investment operations.......................... 0.43 0.61 ( 0.38 )
--------------- --------------- ---------------
Distributions from net investment income.................. ( 0.44 ) ( 0.44 ) ( 0.20 )
--------------- --------------- ---------------
Net asset value at end of period.......................... $ 10.85 $ 10.86 $ 10.69
=============== =============== ===============
Total return(A) .......................................... 4.00% 5.82% ( 8.28%)(C)
=============== =============== ===============
Net assets at end of period (000's)....................... $ 5,239 $ 4,814 $ 3,084
=============== =============== ===============
Ratio of expenses to average net assets(B) ............... 1.49% 1.49% 1.45% (C)
Ratio of net investment income to average net assets...... 4.02% 4.08% 3.79% (C)
Portfolio turnover rate................................... 37% 32% 46% (C)
- - --------------------------------------------------------------------------------------------------------------------------
<FN>
(A)The total returns shown do not include the effect of applicable sales loads.
(B)Absent expense reimbursements by the Adviser, the ratio of expenses to average net assets would have been 1.75%(C) for
the period ended June 30, 1994 (Note 4).
(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,
1996 1995 1994 1993 1992
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year............ $ 11.99 $ 11.74 $ 12.41 $ 11.67 $ 11.13
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income ....................... 0.62 0.63 0.61 0.65 0.70
Net realized and unrealized gains (losses)
on investments............................. ( 0.02 ) 0.25 ( 0.64) 0.74 0.54
---------- ---------- ---------- ---------- ----------
Total from investment operations ............... 0.60 0.88 ( 0.03) 1.39 1.24
---------- ---------- ---------- ---------- ----------
Less distributions:
Distributions from net investment income .... ( 0.62 ) ( 0.63) ( 0.61) ( 0.65 ) ( 0.70 )
Distributions from net realized gains........ -- -- ( 0.03) -- --
---------- ---------- ---------- ---------- ----------
Total distributions ............................ ( 0.62 ) ( 0.63) ( 0.64) ( 0.65 ) ( 0.70 )
---------- ---------- ---------- ---------- ----------
Net asset value at end of year.................. $ 11.97 $ 11.99 $ 11.74 $ 12.41 $ 11.67
========== ========== ========== ========== ==========
Total return(A) ............................... 5.05% 7.75% ( 0.41%) 12.24% 11.55%
========== ========== ========== ========== ==========
Net assets at end of year (000's) .............. $75,938 $ 71,393 $ 79,889 $ 81,101 $ 49,288
========== ========== ========== ========== ==========
Ratio of expenses to average net assets(B) .... 0.75% 0.75% 0.75% 0.75% 0.60%
Ratio of net investment income to average
net assets................................. 5.12% 5.35% 4.94% 5.35% 6.10%
Portfolio turnover rate......................... 46% 29% 45% 15% 3%
- - --------------------------------------------------------------------------------------------------------------------------
<FN>
(A)The total returns shown do not include the effect of applicable sales loads.
(B)Absent fee waivers and/or expense reimbursements by the Adviser, the ratio of expenses to average net assets would have
been 0.77% and 0.77% for the years ended June 30, 1995 and 1992, respectively (Note 4).
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 ENDED JUNE 30, (NOV. 1, 1993)
THROUGH
1996 1995 JUNE 30, 1994
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value at beginning of period.................... $ 12.00 $ 11.74 $ 12.62
--------------- --------------- ---------------
Income from investment operations:
Net investment income.................................. 0.56 0.57 0.36
Net realized and unrealized gains (losses)
on investments....................................... ( 0.03) 0.26 ( 0.85)
--------------- --------------- ---------------
Total from investment operations.......................... 0.53 0.83 ( 0.49 )
--------------- --------------- --------------
Less distributions:
Distributions from net investment income............... ( 0.56 ) ( 0.57 ) ( 0.36 )
Distributions from net realized gains.................. -- -- ( 0.03 )
--------------- --------------- ---------------
Total distributions....................................... ( 0.56 ) ( 0.57 ) ( 0.39 )
--------------- --------------- --------------
Net asset value at end of period.......................... $ 11.97 $ 12.00 $ 11.74
=============== =============== ===============
Total return(A) .......................................... 4.44% 7.31% ( 6.05%)(C)
=============== =============== ===============
Net assets at end of period (000's)....................... $ 3,972 $ 4,165 $ 2,659
=============== =============== ===============
Ratio of expenses to average net assets(B) ............... 1.25% 1.25% 1.22% (C)
Ratio of net investment income to average net assets...... 4.62% 4.84% 4.09% (C)
Portfolio turnover rate................................... 46% 29% 45% (C)
- - -------------------------------------------------------------------------------------------------------------------------
<FN>
(A)The total returns shown do not include the effect of applicable sales loads.
(B)Absent fee waivers and/or expense reimbursements by the Adviser, the ratio of expenses to average net assets would have
been 1.27% and 1.28%(C) for the periods ended June 30, 1995 and 1994, respectively (Note 4).
(C)Annualized.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ROYAL PALM FLORIDA TAX-FREE MONEY FUND - CLASS A
FINANCIAL HIGHLIGHTS
===========================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
===========================================================================================================================
FROM DATE OF
PUBLIC OFFERING
YEAR ENDED JUNE 30, (NOV. 13, 1992)
THROUGH
1996 1995 1994 JUNE 30, 1993(A)
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period ........ $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------ ------------- ------------- ------------
Net investment income.......................... 0.032 0.031 0.021 0.016
------------ ------------- ------------- ------------
Distributions from net investment income ...... ( 0.032) ( 0.031) ( 0.021) ( 0.016)
------------ ------------- ------------- ------------
Net asset value at end of period .............. $ 1.000 $ 1.000 $ 1.000 $ 1.000
============ ============= ============= ============
Total return .................................. 3.29% 3.17% 2.11% 2.49%(C)
============ ============= ============= ============
Net assets at end of period (000's) ........... $ 28,906 $ 24,119 $ 26,276 $ 21,907
============ ============= ============= ============
Ratio of expenses to average net assets(B) ... 0.61% 0.66% 0.58% 0.34%(C)
Ratio of net investment income to average
net assets............................... 3.24% 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)Absent fee waivers and/or expense reimbursements by the Adviser, the ratio of expenses to average net assets would have
been 0.80%, 0.80%, 0.81% and 0.94%(C) for the periods ended June 30, 1996, 1995, 1994 and 1993, respectively (Note 4).
(C)Annualized.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ROYAL PALM FLORIDA TAX-FREE MONEY FUND - CLASS B
FINANCIAL HIGHLIGHTS
==========================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
==========================================================================================================================
PERIOD
ENDED
JUNE 30, 1996 (A)
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value at beginning of period ........................................................ $ 1.000
------------
Net investment income.......................................................................... 0.003
------------
Distributions from net investment income ...................................................... $ ( 0.003)
------------
Net asset value at end of period .............................................................. $ 1.000
============
Total return................................................................................... 3.03%(C)
============
Net assets at end of period (000's) ........................................................... $ 19,145
============
Ratio of expenses to average net assets(B) ................................................... 0.50%(C)
Ratio of net investment income to average net assets........................................... 3.03%(C)
- - --------------------------------------------------------------------------------------------------------------------------
<FN>
(A)Represents the period from the initial public offering of Class B shares
(May 29, 1996) through June 30, 1996.
(B)Absent fee waivers and expense reimbursements by the Adviser, the ratio of
expenses to average net assets would have been 0.87%(C) (Note 4).
(C)Annualized.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
==============================================================================
1. ORGANIZATION
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 a 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 Ohio Tax-Free Money Fund seeks the highest level of current income exempt
from federal income tax and Ohio personal income tax, consistent with
liquidity and stability of principal. The Fund invests primarily in a
portfolio of high-quality, short-term Ohio municipal obligations.
The Tax-Free Money Fund seeks the highest level of interest income exempt from
federal income tax, consistent with protection of capital, by investing
primarily in high-quality, short-term municipal obligations.
The California Tax-Free Money Fund seeks the highest level of interest income
exempt from federal and California income taxes, consistent with liquidity and
stability of principal, by investing primarily in high-quality, short-term
California municipal obligations.
The Royal Palm Florida Tax-Free Money Fund seeks the highest level of interest
income exempt from federal income tax, consistent with liquidity and stability
of principal, by investing primarily in high-quality, short-term Florida
municipal obligations the value of which is exempt from the Florida intangible
personal property tax.
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 market
conditions of between three and ten years. To the extent consistent with the
Fund's primary objective, capital appreciation is a secondary objective.
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.
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 of 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 the Fund represents identical interests in the
Fund's investment portfolio and has the same rights, except that (i) Class C
shares bear the expenses of higher distribution fees, which is expected to
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.
<PAGE>
The Royal Palm Florida Tax-Free Money Fund offers two classes of shares: Class
A shares (Retail shares), sold subject to a distribution fee of up to .25% of
average daily net assets, and Class B shares (Institutional shares) sold
without a distribution fee. Each Retail and Institutional share of the Fund
represents identical interests in the Fund's investment portfolio and has the
same rights, except that (i) Retail shares bear the expenses of distribution
fees, which is expected to cause Retail shares to have a higher expense ratio
and to pay lower dividends than Institutional shares; (ii) certain other class
specific expenses will be borne solely by the class to which such expenses are
attributable; (iii) each class has exclusive voting rights with respect to
matters affecting only that class; and (iv) Retail shares are subject to a
lower minimum initial investment requirement and offer certain shareholder
services not available to Institutional shares such as check writing and
automatic investment and redemption plans.
2. SIGNIFICANT ACCOUNTING POLICIES
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 are valued at market and 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 its 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 each 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 attributable to that class, less liabilities attributable
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. However, Class C shares of each Fund are
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.
Investment income -- 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.
<PAGE>
Distributions to shareholders -- 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 Royal Palm
Florida Tax-Free Money Fund, 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 are
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. Common 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.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
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 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 upon distribution
to shareholders.
<PAGE>
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, 1996:
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------
TAX-FREE
INTERMEDIATE OHIO INSURED
TERM FUND TAX-FREE FUND
<S> <C> <C>
Gross unrealized appreciation............................................. $ 1,757,875 $ 3,422,103
Gross unrealized depreciation............................................. ( 336,968) ( 286,920)
--------------- ---------------
Net unrealized appreciation............................................... $ 1,420,907 $ 3,135,183
=============== ===============
- - ----------------------------------------------------------------------------------------------------------------
</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, 1996, 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
had capital loss carryforwards for federal income tax purposes of $709,
$1,338, $1,580, $1,198, $1,620,782 and $494, 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.
3. INVESTMENT TRANSACTIONS
For the year ended June 30, 1996, purchases and proceeds from sales and
maturities of investment securities, excluding short-term investments,
amounted to $28,765,136 and $45,159,470, respectively, for the Tax-Free
Intermediate Term Fund and $35,124,299 and $38,276,155, respectively, for the
Ohio Insured Tax-Free Fund.
<PAGE>
4. TRANSACTIONS WITH AFFILIATES
The President of the Trust is the controlling shareholder of Leshner
Financial, Inc., whose subsidiaries include Midwest Group Financial Services,
Inc. (the Adviser), the Trust's investment adviser and principal underwriter,
and MGF Service Corp. (MGF), the shareholder servicing and transfer agent and
accounting and pricing agent for the Trust.
MANAGEMENT AGREEMENT
Each Fund's investments are managed by the Adviser under 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, 1996. However, in order to
reduce the operating expenses of the California Tax-Free Money Fund and the
Royal Palm Florida Tax-Free Money Fund, the Adviser voluntarily waived
advisory fees of $6,600 and $58,284, respectively, during the year ended June
30, 1996. In addition, in order to reduce the operating expenses of Class A
shares of the Ohio Insured Tax-Free Fund and Class B shares of the Royal Palm
Florida Tax-Free Money Fund, the Adviser voluntarily reimbursed $2,708 of
Class A expenses for the Ohio Insured Tax-Free Fund and $506 of Class B
expenses for the Royal Palm Florida Tax-Free Money Fund during the period.
TRANSFER AGENT AND SHAREHOLDER SERVICE AGREEMENT
Under the terms of the Transfer Agent and Shareholder Service Agreement
between the Trust and MGF, 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. For these services, MGF receives a monthly fee 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. For these services, MGF receives a
monthly fee, based on current asset levels, of $3,750 per month from the Ohio
Tax-Free Money Fund, $3,250 per month from each of the Tax-Free Money Fund and
the California Tax-Free Money Fund, $4,250 per month from the Royal Palm
Florida 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.
<PAGE>
UNDERWRITING AGREEMENT
The Adviser is the Funds' principal underwriter and, as such, acts as
exclusive agent for distribution of the Funds' shares. Under the terms of the
Underwriting Agreement between the Trust and the Adviser, the Adviser and
affiliates earned $9,779 and $22,737 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, 1996. In
addition, the Advisor collected $5,802 and $349 of contingent deferred sales
loads on the redemption of Class C shares of the Tax-Free Intermediate Term
Fund and the Ohio Insured Tax-Free Fund, respectively.
PLANS OF DISTRIBUTION
The Trust has 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 attributable to such shares.
The Trust also 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 average daily net assets
attributable to Class C shares.
CUSTODIAN AGREEMENTS
The Fifth Third Bank, which serves as the custodian for each Fund except for
the Royal Palm Florida Tax-Free Money Fund, was a significant shareholder of
record of the Ohio Tax-Free Money Fund as of June 30, 1996. Under the terms of
its Custodian Agreement, The Fifth Third Bank receives from each such Fund an
asset-based fee plus transaction charges for each security transaction entered
into by the Funds. Huntington Trust Company, N.A. (Huntington), which serves
as the custodian for the Royal Palm Florida Tax-Free Money Fund, was a
significant shareholder of record of such Fund as of June 30, 1996. Under the
term of its Custodian Agreement, Huntington receives from the Fund an
asset-based fee.
<PAGE>
<TABLE>
5. 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, 1996 and 1995:
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------------
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,
1996 1995 1996 1995
- - ---------------------------------------------------------------------------------------------------------------------------
CLASS A
<S> <C> <C> <C> <C>
Shares sold.................................... 1,417,723 2,523,254 12,319,913 11,576,223
Shares issued in reinvestment of
distributions to shareholders............... 244,633 320,606 232,739 262,171
Shares redeemed................................ ( 2,894,267) ( 5,334,216) ( 12,159,274) ( 12,691,802)
------------ ------------- ------------- ------------
Net increase (decrease) in shares outstanding.. ( 1,231,911) ( 2,490,356) 393,378 ( 853,408)
Shares outstanding, beginning of year.......... 7,470,758 9,961,114 5,951,947 6,805,355
------------ ------------- ------------- ------------
Shares outstanding, end of year................ 6,238,847 7,470,758 6,345,325 5,951,947
============ ============= ============= ============
CLASS C
Shares sold.................................... 292,369 661,291 99,911 164,356
Shares issued in reinvestment of
distributions to shareholders............... 17,558 16,430 14,227 12,037
Shares redeemed................................ ( 270,313) ( 522,939) ( 129,418) ( 55,643)
------------ ------------- ------------- ------------
Net increase (decrease) in shares outstanding.. 39,614 154,782 ( 15,280) 120,750
Shares outstanding, beginning of year.......... 443,255 288,473 347,217 226,467
------------ ------------- ------------- ------------
Shares outstanding, end of year................ 482,869 443,255 331,937 347,217
============ ============= ============= ============
- - --------------------------------------------------------------------------------------------------------------------------
</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.
<PAGE>
6. PORTFOLIO COMPOSITION
As of June 30, 1996, 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 by other issuers the interest from which is exempt from
Ohio income tax. The California Tax-Free Money Fund was invested in debt
obligations issued by the State of California and its political subdivisions,
agencies, authorities and instrumentalities and by other issuers the interest
from which is exempt from California income tax. As of June 30, 1996, 77.4% of
the Royal Palm Florida Tax-Free Money Fund was invested in debt obligations
issued by the State of Florida and its political subdivisions, agencies,
authorities and instrumentalities and by other issuers the value of which is
exempt from the Florida intangible personal property tax. As of June 30, 1996,
19.5% of the portfolio securities of the Tax-Free Money Fund were concentrated
in the State of Ohio, 13.5% in the State of Minnesota and 10.2% in the State
of Florida. For information regarding portfolio composition by state for the
Tax-Free Intermediate Term Fund as of June 30, 1996, 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 be invested in securities of issuers
which individually comprise more than 5% of its total assets.
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. As of June 30,
1996, neither the Ohio Tax-Free Money Fund nor the Royal Palm Florida Tax-Free
Money Fund had concentrations of investments (10% or greater) in any one
issuer. The California Tax-Free Money Fund and the Ohio Insured Tax-Free Fund
had 12.6% and 14.6% of their respective investments concentrated in the
securities of a single issuer as of June 30, 1996.
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, 1996, 46.9% 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 Service, Inc. (Moody's) ratings], 28.6%
were rated AA/Aa, 21.8% were rated A/A and 2.7% were not rated.
<PAGE>
As of June 30, 1996, 99.1% 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. Four private insurers individually insure
more than 10% of the Ohio Insured Tax-Free Fund's portfolio securities and
collectively insure 82.9% of its portfolio securities.
The concentration of investments for each Fund as of June 30, 1996, classified
by revenue source, was as follows:
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------------
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................. 28.6% 14.4% 11.3% 8.0% 21.8% 30.3%
Revenue Bonds:
Industrial Development/
Pollution Control............ 32.0% 42.8% 36.0% 30.6% 8.2% 15.2%
Hospital/Health Care.............. 22.7% 4.8% 2.2% 24.8% 18.0% 19.7%
Housing/Mortgage.................. 3.8% 17.8% 2.0% 19.1% 11.5% 5.5%
Utilities......................... 0.2% 3.6% 17.9% 5.6% 10.9% 18.0%
Education......................... 2.3% 3.0% 2.0% 1.9% 11.8% 3.4%
Transportation.................... -- 3.7% 4.0% 2.8% 3.9% 3.3%
Public Facilities................. -- 1.0% 4.7% 2.4% 3.6% 1.4%
Economic Development.............. 5.2% 6.4% -- -- 2.1% --
Leases............................ -- 1.2% 7.2% 1.8% 2.3% 0.7%
Special Tax....................... -- -- 4.9% 0.5% 3.9% --
Miscellaneous..................... 5.2% 1.3% 7.8% 2.5% 2.0% 2.5%
----------- ----------- ----------- ----------- ----------- -----------
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>
<TABLE>
<CAPTION>
OHIO TAX-FREE MONEY FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT FIXED RATE REVENUE & GENERAL OBLIGATION BONDS-- 31.5% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$1,665,000 Euclid City, OH, Various Impt. GO BANS......................... 4.250% 07/12/1996 $ 1,665,072
5,484,000 Greene Co., OH, GO............................................. 4.125 07/18/1996 5,485,568
675,000 Dayton, OH, Airport Impt. GO BANS.............................. 4.050 07/25/1996 675,063
1,667,040 Willoughby, OH, Landfill Closure GO BANS....................... 4.200 07/25/1996 1,667,355
1,450,000 Powell Village, OH, Road Impt. GO BANS......................... 4.100 08/15/1996 1,450,519
180,000 Powell Village, OH, Street Impt. GO BANS....................... 4.380 08/15/1996 180,103
2,500,000 Univ. of Cincinnati, OH, General Receipts, Ser. S.............. 4.250 08/28/1996 2,500,952
1,105,000 Lorain Co., OH, Water & Sewer Impt. GO BANS.................... 4.250 08/30/1996 1,105,261
245,000 Ohio HFA Mtg. Rev., Ser. A-1................................... 4.400 09/01/1996 245,150
1,000,000 Plain Township, OH, Fire Station Const. & Impt. BANS........... 4.390 09/17/1996 1,001,117
3,000,000 Cincinnati, OH, CSD Energy Conserv. BANS....................... 4.030 09/20/1996 3,003,437
800,000 Miamisburg, OH, Street Impt. GO BANS........................... 4.250 09/27/1996 800,462
2,260,000 Canfield, OH, LSD School Impt. GO BANS......................... 4.150 10/03/1996 2,261,115
2,000,000 Franklin Co., OH, Waterworks Sys. Impt. GO..................... 4.000 10/09/1996 2,002,033
400,000 Akron Bath Copley, OH, Rev. (Akron City Hosp. Proj.)........... 7.700 11/15/1996 405,905
2,300,000 Belmont Co., OH, Sanitary Sewer Impt. BANS..................... 4.090 11/26/1996 2,302,595
2,000,000 Euclid, OH, CSD TRANS.......................................... 3.520 12/12/1996 2,001,481
3,400,000 Loveland, OH, GO BANS.......................................... 3.875 12/12/1996 3,405,840
975,000 Marysville, OH, GO BANS........................................ 4.140 12/12/1996 976,220
1,064,490 Champaign Co., OH, GO BANS..................................... 4.750 12/17/1996 1,066,879
870,000 Highland, OH, LSD GO BANS...................................... 4.375 12/19/1996 872,086
1,432,500 Groveport-Madison, OH, LSD GO TANS............................. 3.990 12/30/1996 1,434,584
1,900,000 Erie Co., OH, Hosp. Impt. Rev. (Firelands Comm. Hosp.),
Prerefunded @101.............................................. 8.875 01/01/1997 1,967,510
675,000 Worthington, OH, CSD School Impt. GO BANS...................... 3.750 01/17/1997 675,533
500,000 Marysville, OH (Water Storage Tank Proj.) GO BANS.............. 3.880 01/31/1997 500,792
2,000,000 Toledo, OH, CSD (Energy Conservation) GO BANS.................. 4.000 01/31/1997 2,005,664
1,950,000 Marion Co., OH, GO BANS........................................ 3.600 02/13/1997 1,952,919
700,000 Ottawa Co., OH, GO BANS........................................ 3.550 02/27/1997 701,114
2,000,000 East Palestine, OH, CSD GO BANS................................ 3.500 02/28/1997 2,001,273
1,550,000 Salem, OH, CSD GO BANS......................................... 3.490 03/06/1997 1,550,708
932,000 Huron, OH, GO BANS............................................. 3.860 03/19/1997 933,666
800,000 Marysville, OH, GO BANS........................................ 3.960 03/21/1997 801,441
3,185,700 Greene Co., OH, GO............................................. 4.000 03/26/1997 3,192,455
950,000 Geneva on the Lake, OH, GO..................................... 4.100 04/03/1997 952,076
2,300,000 Ottawa Co., OH, GO BANS........................................ 3.980 04/09/1997 2,303,931
1,000,000 Trumbull Co., OH, Correctional Fac. GO BANS.................... 4.070 04/10/1997 1,002,016
1,000,000 Ashland, OH, CSD (Energy Conservation) GO BANS................. 4.150 04/15/1997 1,002,293
3,239,200 Hamilton, OH, GO BANS.......................................... 4.000 05/09/1997 3,240,442
2,300,000 Oregon, OH, GO BANS............................................ 4.050 05/29/1997 2,304,603
3,500,000 Claymont, OH, CSD GO BANS...................................... 4.000 06/04/1997 3,501,556
3,000,000 Greene Co., OH, GO............................................. 3.880 06/04/1997 3,004,278
1,040,000 Brook Park, OH, GO BANS........................................ 4.050 06/06/1997 1,042,519
2,000,000 Hudson, OH, Waterworks Impt. GO BANS........................... 4.000 06/11/1997 2,004,915
2,500,000 Mansfield, OH, CSD GO TANS..................................... 4.500 06/27/1997 2,510,620
- - ------------- ------------
$75,494,930 TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS
- - -------------
(Amortized Cost $75,661,121)................................... $75,661,121
------------
<CAPTION>
OHIO TAX-FREE MONEY FUND (CONTINUED)
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT FLOATING AND VARIABLE RATE DEMAND NOTES-- 55.5% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$1,000,000 Ohio Higher Educ. Fac. Rev. (John Carroll Univ.)............... 4.125% 07/01/1996 $ 1,000,000
2,800,000 Cuyahoga Co., OH, Hosp. Impt. Rev. (Univ. Hosp. Cleveland)..... 3.750 07/01/1996 2,800,000
400,000 Franklin Co., OH, Health Sys. Rev. (St. Anthony Medical Ctr.).. 3.600 07/01/1996 400,000
3,900,000 Hamilton Co., OH, Health Sys. Rev. (Franciscan Sisters)........ 3.750 07/01/1996 3,900,000
500,000 Ohio St. Air Quality Dev. Auth. Rev., Ser. 1995A............... 3.750 07/01/1996 500,000
1,700,000 Ohio St. Air Quality Dev. Auth. Rev., Ser. 1985B
(Cincinnati Gas & Elec.)..................................... 3.750 07/01/1996 1,700,000
700,000 Ohio St. PCR (Sohio Air Proj.)................................. 3.600 07/01/1996 700,000
4,320,000 Cuyahoga Co., OH, IDR (S & R Playhouse Realty)................. 3.750 07/01/1996 4,320,000
1,600,000 Delaware Co., OH, IDR (Radiation Sterilizers, Inc.)............ 3.750 07/01/1996 1,600,000
210,000 Franklin Co., OH, IDR (Boa Ltd. Proj.)......................... 3.850 07/01/1996 210,000
1,300,000 Franklin Co., OH, IDR (Jacobsen Stores)........................ 3.800 07/01/1996 1,300,000
600,000 Franklin Co., OH, IDR (Capitol South).......................... 3.800 07/01/1996 600,000
2,900,000 Muskingum Co., OH, IDR (Elder-Beerman)......................... 3.900 07/01/1996 2,900,000
500,000 Ohio St. Environ. Impt. Rev. (U.S. Steel Corp.)................ 3.800 07/01/1996 500,000
4,250,000 Cincinnati-Hamilton Co., OH, Port. Auth. Rev.
(Kaiser Agric. Chemical Co.)................................. 3.400 07/02/1996 4,250,000
245,000 Akron, OH, Sani. Sewer Sys. Rev., Ser. 1994.................... 3.450 07/03/1996 245,000
1,000,000 Butler Co., OH, IDR (Phillip Morris Co.)....................... 3.350 07/03/1996 1,000,000
1,000,000 Centerville, OH, Health Care Rev. (Bethany-Lutheran)........... 3.700 07/03/1996 1,000,000
8,100,000 Clermont Co., OH, Hosp. Fac. Rev., Ser. B (Mercy Health Sys.).. 3.500 07/03/1996 8,100,000
1,800,000 Cleveland-Cuyahoga Co., OH, Port. Auth. Rev.
(Rock & Roll Hall of Fame)................................... 3.450 07/03/1996 1,800,000
1,075,000 Cuyahoga Co., OH, Health Care Fac. Rev., Ser. 1993A
(Hospice of the Western Reserve)............................. 3.600 07/03/1996 1,075,000
1,750,000 Cuyahoga Co., OH, Health Care Fac. Rev., Ser. 1993B
(Hospice of the Western Reserve)............................. 3.600 07/03/1996 1,750,000
1,250,000 Cuyahoga Co., OH, Health Care Fac. Rev. (Benjamin Rose Inst.).. 3.500 07/03/1996 1,250,000
160,000 Cuyahoga Co., OH, IDR (Schottenstein Stores)................... 3.550 07/03/1996 160,000
2,000,000 Cuyahoga Co., OH, IDR, Ser. 1989 (Motch Corp. Proj.)........... 3.850 07/03/1996 2,000,000
970,000 Cuyahoga Co., OH, IDR (Pleasant Lake Assoc.)................... 3.600 07/03/1996 970,000
900,000 Delaware Co., OH, Indust. Rev., Ser. 1985 (MRG Limited Proj.).. 3.550 07/03/1996 900,000
2,390,000 Erie Co., OH, IDR (Toft Dairy, Inc.)........................... 3.600 07/03/1996 2,390,000
435,000 Franklin Co., OH, IDR (Columbus Dist.)......................... 3.600 07/03/1996 435,000
564,000 Franklin Co., OH, IDR, Ser. D (Kindercare)..................... 3.700 07/03/1996 564,000
1,605,000 Greene Co., OH, Healthcare Fac. Rev. (Green Oaks Proj.)........ 3.600 07/03/1996 1,605,000
900,000 Hardin Co., OH, Hosp. Impt. Rev., Ser. A
(Hardin Memorial Hosp.)..................................... 3.600 07/03/1996 900,000
375,000 Hudson Village, OH, IDR, Ser. A (Kindercare)................... 3.700 07/03/1996 375,000
1,160,000 Huron Co., OH, Ref. Rev. (Norfolk Furniture Corp.)............. 3.600 07/03/1996 1,160,000
494,000 Lorain Co., OH, IDR, Ser. C (Kindercare)....................... 3.700 07/03/1996 494,000
1,120,000 Lucas Co., OH, EDR (Glendale Meadows).......................... 3.600 07/03/1996 1,120,000
935,000 Lucas Co., OH, IDR, Ser. D (Kindercare)........................ 3.700 07/03/1996 935,000
300,000 Medina, OH, IDR (Kindercare)................................... 3.700 07/03/1996 300,000
1,100,000 Meigs Co., OH, IDR, Ser. 1985 (MRG Limited Proj.).............. 3.550 07/03/1996 1,100,000
287,000 Middletown, OH, IDR, Ser. A (Kindercare)....................... 3.700 07/03/1996 287,000
2,000,000 Montgomery Co., OH, EDR (Dayton Art Institute)................. 3.400 07/03/1996 2,000,000
935,000 Montgomery Co., OH, Healthcare Rev., Ser. A
(Dayton Area MRI Consortium)................................. 3.600 07/03/1996 935,000
340,000 Montgomery Co., OH, IDR (Kindercare)........................... 3.700 07/03/1996 340,000
1,000,000 Morrow Co., OH, IDR (Field Container Corp.).................... 3.400 07/03/1996 1,000,000
700,000 Ohio St. Air Quality Dev. Auth. Rev. (Honda of America)........ 3.700 07/03/1996 700,000
200,000 Ohio St. Water Dev. Auth. Rev. (Timken Co. Proj.).............. 3.350 07/03/1996 200,000
1,300,000 Ohio St. Environ. Impt. Rev. (Honda of America)................ 3.700 07/03/1996 1,300,000
850,000 Orrville, OH, Hosp. Fac. Rev., Ser. 1990 (Orrville Hosp.)...... 3.550 07/03/1996 850,000
200,000 Stark Co., OH, IDR, Ser. D (Kindercare)........................ 3.700 07/03/1996 200,000
2,650,000 Summit Co., OH, IDR (Bowery Assoc.)............................ 3.400 07/03/1996 2,650,000
375,000 Wadsworth, OH, IDR (Kindercare)................................ 3.700 07/03/1996 375,000
1,200,000 Wyandot Co., OH, Indust. Rev., Ser. 1985 (MRG Limited Proj.)... 3.550 07/03/1996 1,200,000
475,000 Akron, Bath & Copley, OH, Joint Twp. Hosp. Rev.
(Visiting Nurse Svcs. Proj.)................................. 3.500 07/04/1996 475,000
<PAGE>
<CAPTION>
OHIO TAX-FREE MONEY FUND (CONTINUED)
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT FLOATING AND VARIABLE RATE DEMAND NOTES-- 55.5% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1,750,000 Ashland, OH, IDR (Landover Properties)......................... 3.350% 07/04/1996 $ 1,750,000
4,190,000 Ashtabula Co., OH, Hosp. Fac. Rev., Ser. 95
(Ashtabula Co. Med. Ctr. Proj.).............................. 3.400 07/04/1996 4,190,000
1,900,000 Clinton Co., OH, Hosp. Rev. (Clinton Memorial)................. 3.500 07/04/1996 1,900,000
8,000,000 Franklin Co., OH, IDR (Berwick Steel).......................... 3.550 07/04/1996 8,000,000
1,240,000 Franklin Co., OH, IDR (Ohio Girl Scouts)....................... 3.400 07/04/1996 1,240,000
400,000 Franklin Co., OH, IDR (Columbus College)....................... 3.400 07/04/1996 400,000
2,000,000 Franklin Co., OH, IDR (Alco Standard Corp.).................... 3.400 07/04/1996 2,000,000
1,350,000 Hamilton Co., OH, EDR, Ser. 1995
(Cincinnati Assoc. Performing Arts).......................... 3.400 07/04/1996 1,350,000
425,000 Lucas Co., OH, Rev. (Sunshine Children's Home)................. 3.500 07/04/1996 425,000
2,000,000 Lucas Co., OH, IDR (Ohio Citizens Bank Proj.).................. 3.500 07/04/1996 2,000,000
485,000 Lucas Co., OH, IDR (Associates Proj.).......................... 3.500 07/04/1996 485,000
2,045,000 Mahoning Co., OH, Healthcare Fac. Rev. (Copeland Oaks)......... 3.400 07/04/1996 2,045,000
1,790,000 Mahoning Co., OH, Healthcare Fac. Rev. (Ohio Heart Institute).. 3.400 07/04/1996 1,790,000
4,150,000 Marion Co., OH, Hosp. Impt. Rev. (Pooled Lease Proj.).......... 3.400 07/04/1996 4,150,000
3,920,000 Montgomery Co., OH, Healthcare Rev. (Comm. Blood Ctr. Proj.)... 3.400 07/04/1996 3,920,000
4,800,000 Ohio EDR, Ser. 1983 (Court St. Ctr. Assoc. Ltd. Proj.)......... 3.400 07/04/1996 4,800,000
1,265,000 Pike Co., OH, EDR (Pleasant Hill).............................. 3.400 07/04/1996 1,265,000
1,100,000 Rickenbacker, OH, Port. Auth. Rev.
(Rickenbacker Holdings, Inc.)................................ 3.400 07/04/1996 1,100,000
660,000 Summit Co., OH, IDR (Go-Jo Indust.)............................ 3.400 07/04/1996 660,000
2,435,000 Toledo-Lucas Co., OH, Port. Auth. IDR Ref., Ser. 1994.......... 3.500 07/04/1996 2,435,000
4,200,000 Toledo, OH, City Svcs. Special Assessment Notes................ 3.350 07/04/1996 4,200,000
4,690,000 Trumbull Co., OH, Hosp. Rev. (Shepherd Valley Lutheran)........ 3.400 07/04/1996 4,690,000
1,600,000 Warren Co., OH, IDR (Liquid Container)......................... 3.550 07/04/1996 1,600,000
2,650,000 Westlake, OH, IDR (Nordson Co.)................................ 3.400 07/04/1996 2,650,000
100,000 Wood Co., OH, IDR (North American Science)..................... 3.600 07/04/1996 100,000
2,125,000 Ashland Co., OH, Hosp. Fac. Rev., Ser. 1989 (Good Shepherd).... 3.800 07/05/1996 2,125,000
1,400,000 Hamilton Co., OH, IDR (ADP System)............................. 3.700 07/15/1996 1,400,000
- - ------------- ------------
$133,490,000 TOTAL FLOATING AND VARIABLE RATE DEMAND NOTES
- - -------------
(Amortized Cost $133,490,000).................................. $133,490,000
------------
<PAGE>
<CAPTION>
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT ADJUSTABLE RATE PUT BONDS-- 12.8% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$2,500,000 Ohio St. Air Quality Dev. Auth. Rev., Ser. A (Duquesne Light).. 3.650% 08/15/1996 $ 2,500,000
971,155 Citizens Federal Tax-Exempt Mtg. Bond Trust.................... 3.450 09/01/1996 971,155
680,000 Riverside, OH, EDR (Riverside Assoc. Ltd. Proj.)............... 3.550 09/01/1996 680,000
4,895,000 Cuyahoga Co., OH, IDR (Halle Office Bldg.)..................... 3.883 10/01/1996 4,895,000
175,000 Franklin Co., OH, IDR (Pan Western Life)....................... 3.900 10/01/1996 175,000
1,270,000 Miami Valley Tax-Exempt Mtg. Bond Trust........................ 4.880 10/15/1996 1,270,000
690,000 Franklin Co., OH, IDR (GSW Proj.).............................. 3.650 11/01/1996 690,000
3,300,000 Ohio HFA MFH (Lincoln Park).................................... 3.900 11/01/1996 3,300,000
125,000 Ohio Company Tax-Exempt Mtg. Bond Trust, Ser. 1................ 3.760 11/01/1996 125,000
100,000 Summit Co., OH, IDR (SGS Tool Co. II).......................... 3.700 11/01/1996 100,000
3,835,000 Richland Co., OH, IDR (Mansfield Sq. Proj.).................... 3.650 11/15/1996 3,835,000
825,000 Cuyahoga Co., OH, Healthcare Rev.
(Cleveland Neighborhood Health Svcs.)........................ 4.375 12/01/1996 825,000
570,000 Cuyahoga Co., OH, IDR (Welded Ring)............................ 3.750 12/01/1996 570,000
2,415,000 Franklin Co., OH, IDR (Leveque & Assoc. Proj.)................. 3.750 12/01/1996 2,415,000
340,000 Lucas Co., OH, EDR (Cross County Inns., Inc.).................. 4.000 12/01/1996 340,000
960,000 Scioto Co., OH, Healthcare Rev. (Hillview Retirement).......... 3.750 12/01/1996 960,000
1,115,000 Gallia Co., OH, IDR (Jackson Pike Assoc.)...................... 3.600 12/15/1996 1,115,000
3,280,000 Ohio Company Tax-Exempt Mtg. Bond Trust, Ser. 2................ 3.900 12/15/1996 3,279,203
<PAGE>
<CAPTION>
OHIO TAX-FREE MONEY FUND (CONTINUED)
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT ADJUSTABLE RATE PUT BONDS-- 12.8% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 810,000 Franklin Co., OH, EDR (JAL Realty)............................. 3.950% 01/15/1997 $ 810,000
1,405,000 Hamilton, OH, IDR (Continental Commercial Properties Proj.).... 3.400 02/01/1997 1,405,000
410,000 Middletown, OH, IDR (Continental Commercial Properties Proj.).. 3.450 02/01/1997 410,000
- - ------------- ------------
$ 30,671,155 TOTAL ADJUSTABLE RATE PUT BONDS
- - -------------
(Amortized Cost $30,670,358)................................... $30,670,358
------------
$239,656,085 TOTAL INVESTMENTS AT VALUE -- 99.8%
=============
(Amortized Cost $239,821,479).................................. $239,821,479
OTHER ASSETS AND LIABILITIES, NET-- 0.2% ...................... 501,413
------------
NET ASSETS-- 100.0% ........................................... $240,322,892
============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT FIXED RATE REVENUE & GENERAL OBLIGATION BONDS-- 22.6% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 200,000 Greater Cleveland Regional Transit Auth. COP................... 9.100% 07/01/1996 $ 200,000
200,000 Pennsylvania St. IDA Rev., Escrowed to Maturity................ 6.300 07/01/1996 200,000
150,000 South Carolina St. Public Auth. Elec. Rev., Prerefunded @ 103.. 8.100 07/01/1996 154,500
110,000 Washington St. Pub. Power Supply Sys. Rev., Ser. 1990
(Nuclear Proj. #1), Prerefunded @ 103........................ 15.000 07/01/1996 113,300
100,000 Austin, TX, ISD GO............................................. 4.400 08/01/1996 100,045
100,000 Louisiana St. GO, Ser. A....................................... 6.400 08/01/1996 100,211
520,000 El Paso, TX, GO, Ser. 1994A.................................... 8.000 08/15/1996 522,531
200,000 Montgomery Co., AL, Waterworks & Sanit. Sewer Rev.,
Prerefunded @ 100............................................ 9.700 09/01/1996 200,000
500,000 Washington St. GO (Motor Vehicle Fuel Tax), Prerefunded @ 100.. 6.750 09/01/1996 502,430
245,000 Peoria, IL, School Dist. #150 Rev.............................. 4.600 09/15/1996 245,272
370,000 Brook Park, OH, Sewer Impt. GO BANS............................ 4.250 09/20/1996 370,157
105,000 Chicago, IL, Waterworks Rev., Prerefunded @ 101................ 6.750 11/01/1996 107,057
200,000 Greater New Orleans, LA, Expressway Rev., Prerefunded @ 103.... 7.800 11/01/1996 208,610
70,000 Connecticut St. Hsg. Fin. Auth. Refunding Rev., Ser. 1987B..... 7.900 11/15/1996 70,991
200,000 Chesapeake, VA, GO............................................. 3.750 12/01/1996 200,052
250,000 Columbia, SC, Parking Fac. Rev., Prerefunded @ 102............. 7.200 12/01/1996 258,471
300,000 Greensboro, NC, COP Pkg. Facs. Proj. Rev....................... 5.700 12/01/1996 302,070
105,000 Houston, TX, Water & Sewer Rev., Prerefunded @ 102............. 7.125 12/01/1996 108,534
200,000 Milwaukee, WI, GO.............................................. 4.100 12/01/1996 200,336
150,000 Jefferson Co., OH, School Dist. #R-001 GO...................... 4.400 12/15/1996 150,442
250,000 Broward Co., FL, GO, Ser. C.................................... 5.000 01/01/1997 251,580
525,000 Ross Co., OH, Airport Impt. GO BANS ........................... 4.540 04/25/1997 526,191
250,000 Columbus, OH, GO, Ser. 1....................................... 5.500 05/15/1997 253,430
200,000 Grand River, OK, Dam Auth., Rev................................ 6.450 06/01/1997 208,033
160,000 Mid-Prairie, IA, Comm. School Dist. GO......................... 6.750 06/01/1997 164,020
- - ------------- ------------
$ 5,660,000 TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS
- - -------------
(Amortized Cost $5,718,263).................................... $ 5,718,263
------------
<PAGE>
<CAPTION>
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT FLOATING AND VARIABLE RATE DEMAND NOTES-- 48.1% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 300,000 Franklin Co., OH, Health Sys. Rev. (St. Anthony Medical Ctr.).. 3.600% 07/01/1996 $ 300,000
900,000 Harris Co., TX, Health Facs. Dev. Hosp. Rev., Ser. D
(St. Luke's Episcopal)....................................... 3.700 07/01/1996 900,000
300,000 Hillsborough Co., FL, PCR (Tampa Elec.)........................ 3.550 07/01/1996 300,000
700,000 Jacksonville, FL, PCR (Florida Power & Light).................. 3.550 07/01/1996 700,000
330,000 NCNB Pooled Tax-Exempt Rev., Ser. 1990A........................ 4.125 07/01/1996 330,000
1,000,000 New Jersey EDA & EDR (Union Avenue Assoc.)..................... 3.650 07/01/1996 1,000,000
700,000 Ohio St. Air Quality Dev. Auth. Rev., Ser. 1985B
(Cincinnati Gas & Elec.)..................................... 3.750 07/01/1996 700,000
400,000 Pinal Co., AZ, IDA PCR (Magma Copper Co.)...................... 3.600 07/01/1996 400,000
900,000 Eddyville, IA, IDR (Heartland Lysine, Inc.).................... 3.850 07/03/1996 900,000
1,000,000 Illinois Dev. Fin. Auth. MFH Rev. (Cobbler Square Proj.)....... 3.850 07/03/1996 1,000,000
825,000 Brooklyn Park, MN, IDR (Schmidt Proj.)......................... 3.750 07/05/1996 825,000
1,000,000 District of Columbia MFH, Tyler House Trust COP, Ser. 1995A.... 3.800 07/05/1996 1,000,000
425,000 Frankfort, MN, IDR, Ser. 1995 (J&B, Inc.)...................... 3.950 07/05/1996 425,000
575,000 Frankfort, MN, IDR, Ser. 1995 (J&B, Inc.)...................... 3.650 07/05/1996 575,000
700,000 Marion, FL, Hsg. Fin. Auth. Rev. (Summer Trace Apts.).......... 3.600 07/05/1996 700,000
1,140,000 Redwood Falls, MN, IDR (Zytec Corp. Proj.)..................... 4.100 07/05/1996 1,140,000
<PAGE>
<CAPTION>
TAX-FREE MONEY FUND (CONTINUED)
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT FLOATING AND VARIABLE RATE DEMAND NOTES-- 48.1% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 400,000 St. Cloud, MN, Hsg. & Redev. Auth. (Coborn Realty Co.)......... 3.750% 07/05/1996 $ 400,000
600,000 Tamarac, FL, IDR, Ser. 1995 (Tamarac Business Ctr.)............ 3.550 07/05/1996 600,000
- - ------------- ------------
$12,195,000 TOTAL FLOATING AND VARIABLE RATE DEMAND NOTES
- - -------------
(Amortized Cost $12,195,000)................................... $12,195,000
------------
<PAGE>
<CAPTION>
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT ADJUSTABLE RATE PUT BONDS-- 27.8% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$1,125,000 Buckeye Tax-Exempt Mtg. Bond Trust............................. 3.800% 08/01/1996 $ 1,123,481
535,000 Milwaukee, WI, IDR (Wayne C. Oldenburg Proj.).................. 3.950 08/01/1996 535,000
330,000 Lansing, MI, EDR (LGH Office Bldg. Proj.)...................... 3.650 08/15/1996 330,000
153,845 Citizens Federal Tax-Exempt Mtg. Bond Trust.................... 3.450 09/01/1996 153,845
1,200,000 Owensboro, KY, IDR, Ser. 1985 (Dart Container)................. 3.600 09/01/1996 1,200,000
165,000 Cuyahoga Co., OH, IDR (Halle Office Bldg.)..................... 3.880 10/01/1996 165,000
230,000 Kansas City, KS, IDR (Lady Baltimore Foods).................... 4.250 10/01/1996 230,000
505,000 Romulus, MI, Econ. Dev. Corp. (Airport Realty Proj.)........... 3.700 10/01/1996 505,000
230,000 Medina Co., OH, IDR (Nationwide One Proj.)..................... 3.850 11/01/1996 229,934
560,000 Summit Co., OH, IDR (Akromold, Inc. Proj.)..................... 4.000 11/01/1996 560,000
275,000 Westlake, OH, EDR (Cross County Inns, Inc.).................... 3.750 11/01/1996 275,000
1,000,000 Westmoreland Co., PA, IDR (White Cons Indust.)................. 3.875 12/01/1996 1,000,000
735,000 Lexington-Fayette Co., KY, Urban Gov't. Rev.
(Providence Montessori)...................................... 3.900 01/01/1997 735,000
- - ------------- ------------
$ 7,043,845 TOTAL ADJUSTABLE RATE PUT BONDS
- - -------------
(Amortized Cost $7,042,260).................................... $ 7,042,260
------------
$24,898,845 TOTAL INVESTMENTS AT VALUE-- 98.5%
=============
(Amortized Cost $24,955,523)................................... $24,955,523
OTHER ASSETS AND LIABILITIES, NET-- 1.5% ...................... 386,865
------------
NET ASSETS-- 100.0% .......................................... $25,342,388
============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE MONEY FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT FIXED RATE REVENUE & GENERAL OBLIGATION BONDS-- 29.8% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 250,000 Orange Co., CA, Muni. Water Dist. 1992B (Allen McColloch Pipeline).......... 4.500% 07/01/1996 $ 250,000
120,000 Southern California Public Power Auth. Rev., Ser. 1986B, Prerefunded @ 102.. 7.000 07/01/1996 122,400
150,000 California Health Fac. Auth. Insured Hosp. (Childrens Hosp. San Diego)...... 4.250 07/01/1996 150,000
125,000 Southern California Public Power Auth. Rev., Ser 1986B, Prerefunded @ 102... 7.125 07/01/1996 127,500
500,000 San Mateo Co., CA, Schools Insurance Group RANS, Ser. 1995.................. 4.750 07/05/1996 500,040
500,000 Los Angeles Co., CA, Local Educ. Agy. COP TRANS, Ser. A..................... 4.750 07/05/1996 500,038
240,000 Oakland, CA, Misc. Rev. Bonds, Ser. 1988A................................... 6.800 08/01/1996 240,596
250,000 Brea & Olinda, CA, USD COP, Prerefunded @ 102............................... 7.700 08/01/1996 255,844
500,000 Sacramento, CA, School Dist. COP (Admin. Ctr. Proj.), Prerefunded @100...... 4.600 08/01/1996 500,447
100,000 Mountain View, CA, Cap. Impt. Fin. Auth. Rev. (City Hall/Community Theater). 5.100 08/01/1996 100,104
500,000 Orange Co., CA, Sanitation COP, Escrowed to Maturity........................ 12.000 08/01/1996 503,504
200,000 Fresno, CA, COP (City Hall/Golf Course), Prerefunded @ 102.................. 7.875 08/01/1996 204,642
230,000 Folsom, CA, School Facs. Proj. GO, Ser. B................................... 6.000 08/01/1996 230,542
500,000 South Coast, CA, Local Educ. Agencies Pooled TRANS.......................... 5.000 08/14/1996 500,866
135,000 La Mirada, CA, Redev. Agy. Tax Allocation, Ser. A........................... 5.625 08/15/1996 135,289
100,000 South Orange Co., CA, Pub. Fin. Auth. Special Tax Rev., Ser. 1994C.......... 4.250 08/15/1996 100,038
500,000 Victor Valley, CA, Union High School Dist. TRANS............................ 4.500 08/30/1996 500,336
250,000 San Jose, CA, COP (Convention Center Proj.), Prerefunded @ 102.............. 7.500 09/01/1996 256,494
245,000 Contra Costa Co., CA, Public Fac. Corp. COP, Escrowed to Maturity........... 7.100 09/01/1996 246,424
100,000 San Francisco, CA, City & Co. Sewer Ref. Rev................................ 5.500 10/01/1996 100,340
500,000 Santa Clara Co., CA, COP, Prerefunded @ 102................................. 8.000 10/01/1996 515,376
150,000 Sacramento, CA, Muni. Util. Dist. Elec. Rev., Ser. H, Escrowed to Maturity.. 6.100 10/01/1996 150,883
350,000 Univ. of California Hsg. Sys. Group A Rev, Prerefunded @ 102................ 7.600 11/01/1996 361,478
360,000 Univ. of California Hsg. Sys. Group A Rev., Ser. W, Prerefunded @ 102....... 7.800 11/01/1996 372,069
245,000 California Health Fac. Auth. Rev. (Stanford Univ. Hosp.), Prerefunded @ 102. 7.125 11/01/1996 252,407
300,000 California St. Public Works Dept. of Corrections Rev., Prerefunded @ 102.... 7.375 11/01/1996 309,315
100,000 Palm Springs, CA, COP (Palm Springs Public Fac. Corp.), Escrowed to Maturity 6.700 11/01/1996 101,046
400,000 Univ. of California Medical Ctr. Rev. (Satellite Medical Ctr.),
Escrowed to Maturity...................................................... 7.900 12/01/1996 407,005
100,000 California St. Dept. of Water Rev., Ser. B, Prerefunded @ 101.50............ 7.500 12/01/1996 103,042
150,000 Poway, CA, Redev. Agy. Tax Rev., Prerefunded @ 103.......................... 8.100 12/15/1996 157,460
500,000 California School Cash Reserve Program Auth. 1995 Pool Bonds, Ser. B........ 4.500 12/20/1996 501,583
2,000,000 California School Cash Reserve Program Auth. 1996 Pool Bonds, Ser. A........ 4.750 07/02/1997 2,017,280
- - ------------- ------------
$10,650,000 TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS
- - -------------
(Amortized Cost $10,774,388)................................................ $10,774,388
------------
<PAGE>
<CAPTION>
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT FLOATING AND VARIABLE RATE DEMAND NOTES-- 64.9% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 400,000 Irvine Ranch, CA, Water Dist. Rev., Ser. 1985B................. 3.450% 07/01/96 $ 400,000
1,700,000 California PCR Fin. Auth. (Delano Proj.)....................... 3.750 07/01/96 1,700,000
1,300,000 California PCR Fin. Auth. (Del Marva Power & Light -
Burney Forest Proj.)......................................... 3.650 07/01/96 1,300,000
800,000 California PCR Fin. Auth. (Honey Lake Power Proj.)............. 3.750 07/01/96 800,000
1,600,000 Irvine Ranch, CA, Assess. Dist. Impt. Rev., Ser. 1989-10....... 3.300 07/01/96 1,600,000
450,000 Irvine Ranch, CA, Water Dist. Cap. Impt. Proj. Rev., Ser. 1986. 3.500 07/01/96 450,000
1,000,000 California PCR Fin. Auth., Ser. A (Ultrapower-Rocklin)......... 3.799 07/01/96 1,000,000
500,000 Irvine Ranch, CA, Water Dist. Rev.............................. 3.450 07/01/96 500,000
1,400,000 Anaheim, CA, COP Police Facs. Rev.............................. 3.100 07/03/96 1,400,000
1,500,000 California PCR Fin. Auth. (Pacific Gas & Electric)............. 3.450 07/03/96 1,500,000
1,600,000 Vacaville, CA, IDR (Leggett & Platt, Inc.)..................... 3.850 07/03/96 1,600,000
1,500,000 Los Angeles, CA, Pension Obligation Ref. Rev., Ser. 1996C...... 3.150 07/03/96 1,500,000
<PAGE>
<CAPTION>
CALIFORNIA TAX-FREE MONEY FUND (CONTINUED)
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT FLOATING AND VARIABLE RATE DEMAND NOTES-- 64.9% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,900,000 San Rafael, CA, IDR, Ser. 1994 (Phoenix American, Inc.)........ 3.600% 07/03/96 $ 1,900,000
1,000,000 Santa Paula, CA, Public Fin. Auth. Rev., Ser. 1996
(Water Sys. Aquisition Proj.)................................ 3.750 07/03/96 1,000,000
1,500,000 Hanford, CA, Sewer Rev., Ser. A................................ 3.750 07/05/96 1,500,000
1,200,000 Los Angeles, CA, Dept. of Water & Power Rev.................... 3.300 07/05/96 1,200,000
1,000,000 San Bernardino Co., CA, IDR (LaQuinta Motor Inns).............. 3.400 07/05/96 1,000,000
1,000,000 San Bernardino Co., CA, Capital Impt. Proj. Rev................ 3.800 07/05/96 1,000,000
1,300,000 San Bernardino Co., CA, COP.................................... 3.600 07/05/96 1,300,000
800,000 San Francisco, CA, City & Co. Parking Auth. Rev................ 3.300 07/05/96 800,000
- - ------------- ------------
$23,450,000 TOTAL FLOATING AND VARIABLE RATE DEMAND NOTES
- - -------------
(Amortized Cost $23,450,000)................................... $23,450,000
------------
<PAGE>
<CAPTION>
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT ADJUSTABLE RATE PUT BONDS-- 2.4% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 855,000 California PCR Fin. Auth. (San Diego Gas & Elec.)............. 4.000% 09/01/1996 $ 855,000
- - ------------- ------------
$ 855,000 TOTAL ADJUSTABLE RATE PUT BONDS
- - -------------
(Amortized Cost $855,000)...................................... $ 855,000
------------
<PAGE>
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT COMMERCIAL PAPER-- 6.9% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$1,500,000 Riverside Co., CA, Transportation Sales Tax Rev................ 3.400% 07/18/1996 $ 1,500,000
1,000,000 California PCR Fin. Auth. (Pacific Gas & Elec.)................ 3.400 08/08/1996 1,000,000
- - ------------- ------------
$2,500,000 TOTAL COMMERCIAL PAPER
- - -------------
(Amortized Cost $2,500,000).................................... $ 2,500,000
------------
$37,455,000 TOTAL INVESTMENTS AT VALUE -- 104.0%
=============
(Amortized Cost $37,579,388)................................... $37,579,388
OTHER ASSETS AND LIABILITIES, NET-- (4.0)% .................... ( 1,457,327 )
------------
NET ASSETS-- 100.0% ........................................... $36,122,061
============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ROYAL PALM FLORIDA TAX-FREE MONEY FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT FIXED RATE REVENUE & GENERAL OBLIGATION BONDS-- 27.2% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 100,000 Broward Co., FL, GO, Prerefunded @ 102......................... 7.400% 07/01/1996 $ 102,000
100,000 Broward Co., FL, GO, Prerefunded @ 102......................... 7.500 07/01/1996 102,000
200,000 Cape Coral, FL, Special Obligation Wastewater Assessment Rev... 4.800 07/01/1996 200,000
100,000 Ft. Lauderdale, FL, GO, Prerefunded @ 102...................... 7.600 07/01/1996 102,000
250,000 Hernando Co., FL, School Board COP............................. 5.250 07/01/1996 250,000
100,000 Miami, FL, Sewer Impt. GO ..................................... 6.600 07/01/1996 100,000
110,000 Orlando & Orange Co., FL, Expressway Auth. Rev.,
Prerefunded @ 102............................................ 7.500 07/01/1996 112,200
125,000 Brevard Co., FL, Local Option Gas Tax Rev., Ser. B............. 4.300 08/01/1996 125,046
1,000,000 Dade Co., FL, Gtd. Entitlement Rev., Escrowed to Maturity...... 9.500 08/01/1996 1,004,694
100,000 Duval Co., FL, School Dist. GO, Prerefunded @ 102.............. 7.300 08/01/1996 102,276
100,000 Duval Co., FL, School Dist. GO, Ser. 1988, Prerefunded @ 102... 7.500 08/01/1996 102,298
340,000 Pinellas Co., FL, Transportation Impt. Rev..................... 5.000 08/01/1996 340,372
330,000 New York, NY, GO, Ser. A, Escrowed to Maturity................. 7.375 08/15/1996 331,480
250,000 Univ. of Texas General Tuition Rev., Prerefunded @ 102......... 8.000 08/15/1996 256,289
400,000 Immokalee, FL, Water & Sewer Dist. Rev. BANS................... 3.650 08/30/1996 400,000
120,000 Albany-Dougherty Co., GA, Hosp. Rev. (Pheobe Putney
Memorial Hosp.).............................................. 4.000 09/01/1996 120,083
250,000 Charleston, SC, Public Impt. COP............................... 3.700 09/01/1996 250,000
680,000 Nevada St. COP................................................. 3.900 09/01/1996 680,000
110,000 Ormond Beach, FL, Water & Sewer Rev., Prerefunded @ 102........ 7.875 09/01/1996 112,891
500,000 West Volusia, FL, Hosp. Auth. Rev., Ser. B, Prerefunded @ 103.. 9.375 09/01/1996 519,608
230,000 Broward Co., FL, Airport Sys. Rev., Prerefunded @ 100.......... 10.000 10/01/1996 233,453
175,000 Jacksonville, FL, Elec. Auth. Rev., Ser. 2 1987A-1............. 6.600 10/01/1996 176,110
130,000 Lee Co., FL, Water & Sewer Rev., Prerefunded @ 102............. 6.900 10/01/1996 133,534
1,295,000 Manatee Co., FL, GO, Ser. A, Prerefunded @ 102................. 7.375 10/01/1996 1,332,397
500,000 Orange Co., FL, Health Fac. Auth. Rev., Prerefunded Muni. Certfs.,
Ser. 3, Escrowed to Maturity................................... 4.650 10/01/1996 501,159
100,000 Orlando, FL, Waste Water Sys. Rev., Ser. B, Prerefunded @ 102.. 7.500 10/01/1996 102,901
100,000 Palm Beach Co., FL, Impt. Rev., Escrowed to Maturity........... 6.900 10/01/1996 100,737
250,000 St. Petersburg, FL, Public Util. Rev........................... 5.850 10/01/1996 251,197
100,000 Tampa, FL, Rev................................................. 6.200 10/01/1996 100,565
225,000 West Palm Beach, FL, Parking Fac. Rev., Prerefunded @ 102...... 7.700 10/01/1996 231,572
150,000 Brevard Co., FL, Second Gtd. Entitlement Rev................... 4.750 11/01/1996 150,560
500,000 Florida HFA MFH Rev., Prerefunded @ 100........................ 5.500 11/01/1996 502,602
435,000 West Virginia St. Hsg. Dev. Rev................................ 6.800 11/01/1996 438,730
125,000 Cook Co., IL, GO............................................... 3.800 11/15/1996 125,015
400,000 Philadelphia, PA, Muni. Auth. Justice Lease Rev., Ser. A....... 6.150 11/15/1996 403,815
420,000 Philadelphia, PA, Muni. Auth. Justice Lease Rev., Ser. B....... 6.150 11/15/1996 424,006
145,000 Clarksville, TN, Public Bldg. Auth. Rev........................ 4.000 12/01/1996 145,276
160,000 Ohio St. Higher Educ. Fac. Comm. Rev. (Kenyon College),
Prerefunded @ 102............................................ 7.125 12/01/1996 165,592
200,000 Utah St. University Agric. & Applied Science Rev., Ser. A,
Escrowed to Maturity......................................... 6.500 12/01/1996 202,291
250,000 Champaign Co., IL, Comm. USD #116 GO........................... 7.400 12/30/1996 254,867
100,000 Wakulla Co., FL, Sales Tax Rev., Prerefunded @ 102............. 7.000 01/01/1997 103,630
175,000 Escambia Co., FL, School Board COP............................. 5.250 02/01/1997 176,436
250,000 Dallas, TX, GO................................................. 5.000 02/15/1997 251,507
580,000 Florida St. Div. Board Fin. Dept. Rev. (Sunshine Skyway)....... 9.800 06/01/1997 611,099
375,000 Florida St. Div. Board Fin. Dept. Rev. (Dept. of
Nature Preservation)......................................... 5.750 07/01/1997 381,718
250,000 Venice, FL, Util. Rev., Prerefunded @ 102...................... 6.900 07/01/1997 262,066
- - ------------- ------------
$12,885,000 TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS
- - -------------
(Amortized Cost $13,076,072)................................... $13,076,072
------------
<PAGE>
<CAPTION>
ROYAL PALM FLORIDA TAX-FREE MONEY FUND (CONTINUED)
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT FLOATING AND VARIABLE RATE DEMAND NOTES-- 62.6% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 900,000 Dade Co., FL, IDA PCR (Florida Power & Light).................. 3.550% 07/01/1996 $ 900,000
1,000,000 Hamilton Co., OH, Health Sys. Rev. (Franciscan Sisters)........ 3.750 07/01/1996 1,000,000
2,600,000 Hillsborough Co., FL, IDA PCR (Tampa Elec.).................... 3.550 07/01/1996 2,600,000
300,000 Jacksonville, FL, Health Fac. Auth. Rev., Ser. 1988
(River Garden)............................................... 4.200 07/01/1996 300,000
1,500,000 Jacksonville, FL, Health Fac. Auth. Rev., Ser. 1996
(Genesis Rehab. Hosp.)....................................... 3.800 07/01/1996 1,500,000
2,500,000 Jacksonville, FL, PCR (Florida Power & Light).................. 3.550 07/01/1996 2,500,000
2,200,000 Ohio Air Quality Dev. Auth. Rev., Ser. 1985B (Cincinnati
Gas & Elec.)................................................. 3.750 07/01/1996 2,200,000
200,000 Pinal Co., AZ, IDA PCR (Magma Copper Co.)...................... 3.600 07/01/1996 200,000
1,200,000 Pinellas Co., FL, Health Fac. Rev. (Pooled Hosp. Loan)......... 3.600 07/01/1996 1,200,000
1,100,000 Broward Co., FL, HFA (Lake Park Assoc. Ltd. Partnership)....... 3.450 07/03/1996 1,100,000
1,735,000 Illinois Dev. Fin. Auth. MFH Rev. (Cobbler Square Proj.)....... 3.850 07/03/1996 1,735,000
2,000,000 Orange Co., FL, IDR, Ser. 1996A (Univ. of Central Florida
Proj.)....................................................... 3.350 07/03/1996 2,000,000
800,000 Rockport, IN, PCR, Ser. B (Indiana Michigan Power Co.)......... 3.250 07/03/1996 800,000
720,000 Volusia Co., FL, Health Facs. Auth. Rev. (Pooled Hosp. Loan)... 3.700 07/03/1996 720,000
1,000,000 Boca Raton, FL, IDR (Parking Garage)........................... 3.675 07/05/1996 1,000,000
980,000 Dade Co., FL, HFA (Kendall Court Apts.)........................ 3.450 07/05/1996 980,000
1,500,000 Jacksonville, FL, Health Fac. Auth. Rev. (Faculty Practice
Assoc.)...................................................... 3.400 07/05/1996 1,500,000
1,500,000 Marion Co., FL, HFA (Paddock Pl. Proj.)........................ 3.600 07/05/1996 1,500,000
1,000,000 Marion Co., FL, HFA (Summer Trace Apts.)....................... 3.600 07/05/1996 1,000,000
1,000,000 Orlando, FL, Util. Comm. Water & Elec. Rev..................... 3.250 07/05/1996 1,000,000
1,800,000 Plant City, FL, Hosp. Rev. (South Florida Baptist Hosp.)....... 3.550 07/05/1996 1,800,000
2,500,000 Volusia Co., FL, Health Facs. Auth. Rev. (West Volusia Health). 3.350 07/05/1996 2,500,000
- - ------------- ------------
$30,035,000 TOTAL FLOATING AND VARIABLE RATE DEMAND NOTES
- - -------------
(Amortized Cost $30,035,000)................................... $30,035,000
------------
<PAGE>
<CAPTION>
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT ADJUSTABLE RATE PUT BONDS-- 4.9% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 650,000 Broomfield, CO, Rev., Ser. 1992 (Up With People Proj.)......... 4.000% 07/01/1996 $ 650,000
1,715,000 Florida HFA Rev................................................ 3.800 12/15/1996 1,715,000
- - ------------- ------------
$ 2,365,000 TOTAL ADJUSTABLE RATE PUT BONDS
- - -------------
(Amortized Cost $2,365,000).................................... $ 2,365,000
------------
<CAPTION>
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT COMMERCIAL PAPER-- 3.1% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,500,000 St. Lucie Co., FL, PCR (Florida Power & Light Proj. B)......... 3.600% 08/07/1996 $ 1,500,000
- - ------------- ------------
$ 1,500,000 TOTAL COMMERCIAL PAPER
- - -------------
(Amortized Cost $1,500,000).................................... $ 1,500,000
------------
$46,785,000 TOTAL INVESTMENTS AT VALUE -- 97.8%
=============
(Amortized Cost $46,976,072)................................... $46,976,072
OTHER ASSETS AND LIABILITIES, NET-- 2.2% ...................... 1,075,067
------------
NET ASSETS-- 100.0% ........................................... $48,051,139
============
</TABLE>
<PAGE>
<TABLE>
TAX-FREE INTERMEDIATE TERM FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT MUNICIPAL BONDS RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALASKA -- 0.5%
$ 385,000 Alaska St. HFC Rev............................................. 7.650% 12/01/2010 $ 393,874
------------
ARIZONA -- 3.0%
300,000 Pinal Co., AZ, IDA PCR VRDN (Magma Copper Co.)................. 3.600 07/01/1996 300,000
500,000 Pima Co., AZ, USD No. 1 (Tuscon), Prerefunded @ 102............ 6.750 07/01/1998 533,610
400,000 Arizona Educ. Loan Mkt. Corp. Rev., Ser. A..................... 6.700 03/01/2000 416,948
600,000 Maricopa Co., AZ, School Dist. Rev., Ser. 1991C (Tempe Elem.).. 8.000 07/01/2004 713,664
205,000 Maricopa Co., AZ, SFM Rev., Ser. 1991.......................... 7.375 08/01/2005 216,365
------------
2,180,587
------------
CALIFORNIA -- 3.5%
800,000 Irvine, CA, Assess. Dist. Impt. Rev., VRDN, Ser. 89-10......... 3.300 07/01/1996 800,000
500,000 Santa Clara Co., CA, Hsg. Auth. ARPB (Orchard Glen Apts.)...... 5.250 11/01/1998 501,245
480,000 Sacramento Co., CA, MFH ARPB (Fairway One Apts.)............... 5.875 02/01/2003 486,461
500,000 Santa Monica, CA, Redev. Agy. Lease Rev........................ 6.000 07/01/2003 529,254
250,000 California HFA Multi-Unit Rental Rev., Ser. B.................. 6.500 08/01/2005 261,323
------------
2,578,283
------------
COLORADO -- 1.4%
1,000,000 Westminster, CO, MFH ARPB (Oasis Wexford Apts.)................ 5.350 12/01/2005 996,300
------------
FLORIDA -- 6.4%
1,200,000 Univ. of Florida Athletic Assn. Capital Impt. Rev. VRDN
(Stadium Proj.).............................................. 3.600 07/01/1996 1,200,000
800,000 Pinellas Co., FL, Health Fac. Rev. VRDN (Pooled Hosp. Loan).... 3.600 07/01/1996 800,000
200,000 Jacksonville, FL, Health Fac. Auth. Rev. VRDN, Ser. 1988
(River Garden)............................................... 4.200 07/01/1996 200,000
500,000 Florida HFA MFH ARPB, Ser. 1978B (Hampton Lakes II Proj.)...... 5.700 04/01/2001 505,025
1,000,000 Florida Board of Educ. Capital Outlay GO, Ser. A............... 5.500 05/01/2004 1,021,160
200,000 Florida St. GO................................................. 6.500 05/01/2004 202,994
750,000 Hillsborough Co., FL, Solid Waste Rev.......................... 5.500 10/01/2006 764,648
------------
4,693,827
------------
GEORGIA -- 2.1%
255,000 Atlanta, GA, Airport Extension & Impt. Rev.,
Escrowed to Maturity......................................... 7.250 01/01/1998 267,215
700,000 Fulton Co., GA, Water & Sewer Rev., Ser. 1986, Prerefunded
@ 101........................................................ 6.800 01/01/2000 753,921
500,000 Columbus, GA, Med. Ctr. Hosp. Auth. Rev........................ 6.400 08/01/2006 537,185
------------
1,558,321
------------
ILLINOIS -- 3.9%
500,000 Aurora, IL, MFH Rev., Ser. 1988 (Fox Valley)................... 7.750 09/01/1998 524,485
680,000 Illinois Educ. Fac. Auth. Rev., Ser. A (Loyola Univ.),
Prerefunded @ 102............................................ 7.125 07/01/2001 758,112
500,000 Chicago, IL, Public Bldg. Comm. Rev., Escrowed to Maturity..... 7.700 01/01/2008 523,360
1,000,000 Evergreen Park, IL, Hosp. Fac. Rev. (Little Co. Mary Hosp.).... 7.750 02/15/2009 1,065,140
------------
2,871,097
------------
INDIANA -- 2.2%
1,000,000 Indiana Bond Bank Special Prog. Rev., Ser. A1.................. 6.650 01/01/2004 1,064,740
500,000 Indiana HFA Multi-Unit Mtg. Prog. Rev., Ser. 1992A............. 6.600 01/01/2012 519,425
------------
1,584,165
------------
IOWA -- 1.7%
250,000 Iowa Student Loan Liquidity Corp. Rev.......................... 6.400 07/01/2004 262,765
420,000 Iowa HFA Rev................................................... 6.500 07/01/2006 438,346
240,000 Iowa Student Loan Liquidity Corp. Rev.......................... 6.600 07/01/2008 250,754
250,000 Cedar Rapids, IA, Hosp. Fac. Rev. (St. Luke's Methodist Hosp.). 6.000 08/15/2009 256,693
------------
1,208,558
------------
<PAGE>
<CAPTION>
TAX-FREE INTERMEDIATE TERM FUND (CONTINUED)
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT MUNICIPAL BONDS RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KENTUCKY -- 3.2%
$ 675,000 Owensboro, KY, Elec. Light & Power Rev., Prerefunded @ 102..... 10.250% 01/01/2000 $ 804,640
750,000 Kentucky St. Turnpike Auth. EDR (Revitalization Proj.)......... 5.250 07/01/2005 758,040
750,000 Kentucky St. Property & Bldg. Comm. Proj. #59 Rev.............. 5.200 05/01/2006 744,248
------------
2,306,928
------------
LOUISIANA -- 1.4%
440,000 Louisiana Public Fac. Auth. Rev. (Medical Ctr. of Louisiana)... 6.000 10/15/2003 462,026
500,000 West Ouachita Parish, LA, School Dist. GO, Ser. A.............. 6.700 03/01/2006 542,590
------------
1,004,616
------------
MARYLAND -- 1.5%
500,000 Maryland St. Health & Higher Educ. Fac. Auth. Rev.
(Univ. of Maryland Medical Sys.)............................. 6.500 07/01/2001 538,130
500,000 Maryland St. Comm. Dev. Admin. Rev............................. 8.500 04/01/2002 523,155
------------
1,061,285
------------
MASSACHUSETTS -- 4.4%
750,000 Massachusetts St. Indust. Fin. Agy. ARPB (Asahi/America, Inc.). 5.100 03/01/1999 755,348
500,000 New England Educ. Loan Mkt. Corp. Rev., Ser. 1992A............. 6.500 09/01/2002 533,370
500,000 New England Educ. Loan Mkt. Corp. Rev., Ser. 1992B............. 6.600 09/01/2002 534,345
1,280,000 Worcester, MA, GO.............................................. 6.000 07/01/2006 1,355,008
------------
3,178,071
------------
MICHIGAN -- 2.3%
1,000,000 Michigan St. Bldg. Auth. Rev., Ser. II......................... 6.400 10/01/2004 1,076,470
600,000 Kalamazoo, MI, Hosp. Fin. Auth. Rev., Ser. A
(Borgess Medical Ctr.)....................................... 5.000 06/01/2006 575,934
------------
1,652,404
------------
MINNESOTA -- 1.0%
700,000 Centennial, MN, ISD GO, Ser. A................................. 5.600 02/01/2002 727,839
------------
MISSISSIPPI -- 1.0%
500,000 Mississippi Higher Educ. Rev., Ser. B.......................... 6.100 07/01/2001 513,415
250,000 Hattiesburg, MS, Water & Sewer Rev............................. 4.800 08/01/2002 247,545
------------
760,960
------------
NEBRASKA -- 1.1%
47,000 Nebraska Invest. Fin. Auth. SFM Rev., Ser. A................... 8.600 05/15/1997 48,116
680,000 Nebraska Invest. Fin. Auth. Rev., Ser. 1989 (Foundation for
Educ. Fund), Escrowed to Maturity............................. 7.000 11/01/2009 734,237
------------
782,353
------------
NEVADA -- 2.2%
315,000 Washoe Co., NV, GO, Prerefunded @ 102.......................... 7.375 07/01/1999 344,790
1,000,000 Las Vegas, NV, GO, Sewer Impt. Rev............................. 6.500 10/01/2006 1,077,200
185,000 Washoe Co., NV, GO............................................. 7.375 07/01/2009 200,373
------------
1,622,363
------------
NEW YORK -- 2.6%
415,000 New York, NY, GO, Prerefunded @ 102............................ 8.000 08/01/1997 441,842
500,000 New York Local Gov't. Asst. Corp. Rev., Ser. 1991B............. 7.000 04/01/2002 549,710
85,000 New York, NY, GO............................................... 8.000 08/01/2005 89,833
810,000 New York St. Dorm. Auth. Rev. (Devereux Foundation)............ 4.850 07/01/2006 786,494
------------
1,867,879
------------
<PAGE>
<CAPTION>
TAX-FREE INTERMEDIATE TERM FUND (CONTINUED)
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT MUNICIPAL BONDS RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NORTH CAROLINA -- 8.0%
$ 500,000 Charlotte, NC, GO.............................................. 4.750% 02/01/2006 $ 485,355
1,065,000 Durham, NC, COP................................................ 6.375 12/01/2006 1,132,457
1,200,000 Asheville, NC, GO.............................................. 6.100 03/01/2008 1,266,072
1,000,000 Charlotte-Mecklenberg Hosp. NC, Health Care Sys. Rev........... 5.600 01/15/2009 1,005,040
980,000 Univ. of North Carolina Chapel Hill Rev. (Univ. NC Hosp.)...... 5.050 02/15/2009 924,816
1,000,000 Univ. of North Carolina Chapel Hill Rev. (Univ. NC Hosp.)...... 5.150 02/15/2010 947,380
------------
5,761,120
------------
OHIO -- 19.0%
1,400,000 Ohio Air Quality Dev. Auth. Rev., VRDN, Ser. 1985B
(Cincinnati Gas & Elec.)..................................... 3.750 07/01/1996 1,400,000
500,000 Ohio St. Bldg. Auth. Rev., Ser. A, Escrowed to Maturity........ 7.150 03/01/1999 532,870
700,000 Franklin Co., OH, Dev. & Ref. Rev., Ser. 1993
(American Chemical Soc.)..................................... 5.500 04/01/2000 700,707
500,000 Franklin Co., OH, Rev. (Online Computer Library Ctr.)......... 5.500 04/15/2000 499,750
750,000 Fairfield, OH, IDR ARPB (Skyline Chili, Inc.).................. 5.000 09/01/2000 746,048
950,000 Akron Bath & Copley, OH, Joint Twp. Hosp. Rev.
(Summa Health Systems)....................................... 5.900 11/15/2002 990,888
270,000 Warren Co., OH, Hosp. Fac. Rev. (Otterbein Home)............... 7.000 07/01/2003 290,528
1,000,000 Ohio St. EDR Ohio Enterprise Bond Fd. (Smith Steelite Proj.)... 5.600 12/01/2003 984,480
500,000 Hamilton Co., OH, Hosp. Fac. Rev. (Episcopal Retirement Home).. 6.600 01/01/2004 532,970
825,000 Jackson, OH, Electric Sys. Mtg. Rev............................ 5.200 07/15/2004 796,686
445,000 Ohio St. EDR Ohio Enterprise Bond Fd. (Cheryl & Co.)........... 5.500 12/01/2004 471,740
625,000 Cuyahoga Co., OH, Util. Sys. Impt. & Ref. Rev., Ser. 1995B..... 5.500 08/15/2005 632,106
1,005,000 Franklin Co., OH, Health Care Fac. Rev. (First Comm. Village).. 6.000 06/01/2006 1,004,940
400,000 Painesville, OH, Elec. Rev..................................... 6.000 11/01/2006 414,828
1,000,000 Mahoning Co., OH, GO........................................... 6.600 12/01/2006 1,086,970
590,000 Ohio St. GO.................................................... 4.950 08/01/2008 567,326
800,000 West Clermont, OH, LSD GO...................................... 6.150 12/01/2008 846,248
500,000 Hamilton Co., OH, Hosp. Fac. Rev. (Bethesda Hosp.)............. 7.000 01/01/2009 513,815
750,000 Univ. of Cincinnati, OH, General Receipts, Ser. G.............. 7.000 06/01/2011 818,580
------------
13,831,480
------------
PENNSYLVANIA -- 5.0%
605,000 Chartiers Valley, PA, Comm. Dev. ARPB
(Colonial Bldg. Partners Proj.).............................. 5.625 12/01/1997 609,271
500,000 Pennsylvania St., IDR, Ser. A, Prerefunded @ 102............... 7.000 07/01/2001 555,630
1,000,000 Allegheny Co., PA, Hosp. Dev. Auth. Rev.
(Univ. of Pittsburgh Medical Ctr.)........................... 4.850 12/01/2006 944,050
1,000,000 Pennsylvania Intergovt. Coop. Auth. Rev. (City of Philadelphia) 5.200 06/15/2007 980,190
500,000 Pennsylvania Fin. Auth. Muni. Cap. Impt. Proj. Rev............. 6.600 11/01/2009 527,750
------------
3,616,891
------------
PUERTO RICO -- 0.2%
175,000 Puerto Rico Commonwealth GO, Prerefunded @ 102................. 7.125 07/01/1997 184,408
------------
SOUTH CAROLINA -- 3.2%
1,000,000 Piedmont, SC, Muni. Power Agy. Rev., Ser. A.................... 6.000 01/01/2002 1,054,020
525,000 South Carolina St. GO, Ser. A.................................. 6.000 03/01/2004 557,655
725,000 Richland-Lexington, SC, Airport Dist. Rev., Ser. 1995
(Columbia Metro.)............................................ 6.000 01/01/2008 746,881
------------
2,358,556
------------
TENNESSEE -- 1.5%
525,000 Southeast, TN, Tax-Exempt Mtg. Trust ARPB,
Ser. 1990, Mandatory Put..................................... 7.250 04/01/2003 576,214
500,000 Nashville, TN, Metro. Airport Rev., Ser. C..................... 6.625 07/01/2007 536,045
------------
1,112,259
------------
<PAGE>
<CAPTION>
TAX-FREE INTERMEDIATE TERM FUND (CONTINUED)
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT MUNICIPAL BONDS RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TEXAS -- 8.2%
$ 510,000 Pasadena, TX, IDR (Univ. Space Research Assn.)................. 6.650% 10/01/1996 $ 512,876
500,000 Texas Turnpike Auth. Rev. (Dallas N. Tollway),
Prerefunded @ 102............................................ 7.250 01/01/1999 542,210
500,000 Houston, TX, Sr. Lien Rev., Ser. A (Hotel Tax & Parking Fac.),
Prerefunded @ 100............................................ 7.000 07/01/2001 549,155
350,000 Univ. of Texas, TX, Rev., Ser. B, Prerefunded @102............. 6.750 08/15/2001 386,680
1,000,000 Texas National Research Lab. Fin. Corp. Lease Rev.,
Prerefunded @ 102............................................ 6.850 12/01/2001 1,111,800
500,000 N. Texas Higher Educ. Student Loan Rev., Ser. 1991A............ 6.875 04/01/2002 523,945
650,000 Galveston, TX, Health Fac. Rev. (Devereux Foundation).......... 4.900 11/01/2006 628,056
500,000 N. Central, TX, Health Fac. Rev. (Baylor Health Care),
Indexed INFLOS............................................... 8.150 05/15/2008 539,755
479,105 Midland, TX, HFC Rev., Ser. A2................................. 8.450 12/01/2011 511,253
650,000 Univ. of Texas, TX, Rev., Ser. B............................... 6.750 08/15/2013 701,441
------------
6,007,171
------------
UTAH -- 1.2%
870,000 Utah St. School Dist. Fin. Corp. Rev., Mandatory Redemption.... 8.375 08/15/1998 927,255
------------
VIRGINIA -- 1.4%
500,000 Chesterfield Co., VA, GO, Ser. B............................... 6.200 01/01/1999 521,995
500,000 Chesapeake, VA, GO............................................. 5.900 08/01/2005 527,285
------------
1,049,280
------------
WASHINGTON -- 5.2%
750,000 Seattle, WA, Drain & Wastewater Util. Rev., Prerefunded @ 102.. 7.000 12/01/1999 819,487
1,000,000 Seattle, WA, Muni. Metro. Sewer Rev., Prerefunded @ 102........ 6.875 01/01/2000 1,087,940
335,000 Washington St. GO, Ser. A, Prerefunded @ 100................... 6.400 03/01/2001 357,613
440,000 Port of Everett, WA, Rev....................................... 6.500 04/01/2000 441,791
1,000,000 Washington St. Motor Vehicle Fuel Tax Ref. GO.................. 6.000 09/01/2004 1,056,040
------------
3,762,871
------------
WISCONSIN -- 1.4%
505,000 Village of Dresser, WI, PCR Ref. Rev. (F & A Dairy, Inc.)...... 6.000 05/01/2000 509,215
500,000 Wisconsin Public Power System Rev., Ser. A, Prerefunded @ 102.. 7.500 07/01/2000 558,320
- - ------------- ------------
1,067,535
------------
$69,946,105 TOTAL MUNICIPAL BONDS -- 99.7%
=============
(Amortized Cost $71,287,629) .................................. $72,708,536
OTHER ASSETS AND LIABILITIES, NET-- 0.3% ...................... 204,869
------------
NET ASSETS-- 100.0% ........................................... $72,913,405
============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OHIO INSURED TAX-FREE FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT FIXED RATE REVENUE & GENERAL OBLIGATION BONDS-- 88.8% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 470,000 Clermont Co., OH, Hosp. Fac. Rev. (Mercy Health Sys.),
Prerefunded @ 102............................................ 7.500% 09/01/1999 $ 519,256
500,000 Montgomery Co., OH, Garbage & Refuse Rev., Ser. A,
Prerefunded @ 102............................................ 7.100 11/01/1999 547,675
500,000 Ohio St. Bldg. Auth. Local Jail Rev. , Prerefunded @ 102....... 7.350 04/01/2000 554,040
500,000 Ohio St. Higher Educ. Fac. Rev. (Ohio Northern Univ.),
Prerefunded @ 100............................................ 7.250 05/15/2000 544,525
500,000 Akron, Bath & Copley, OH, Joint Twp. Hosp. Rev.
(Children's Hosp.), Prerefunded @ 102........................ 7.450 11/15/2000 561,440
500,000 Franklin Co., OH, Convention Fac. Auth. Tax & Lease Rev.,
Prerefunded @ 102............................................ 7.000 12/01/2000 553,370
500,000 Fairfield Co., OH, Hosp. Fac. Rev. (Lancaster-Fairfield Hosp.),
Prerefunded @ 102............................................ 7.100 06/15/2001 558,855
250,000 Franklin Co., OH, IDR (1st Community Village Healthcare),
Prerefunded @ 101.50......................................... 10.125 08/01/2001 306,442
30,000 Clermont Co., OH, Hosp. Fac. Rev., Ser. A (Mercy Health Sys.),
Prerefunded @ 100........................................... 7.500 09/01/2001 33,685
460,000 Westerville, Minerva Park & Blendon, OH, Joint Hosp. Dist.
Rev. (St. Ann's), Prerefunded @ 102.......................... 7.100 09/15/2001 516,111
1,310,000 Cuyahoga Co., OH, Hosp. Rev. (Mt. Sinai), Prerefunded @ 102.... 6.625 11/01/2001 1,444,367
500,000 Clermont Co., OH, Sewer Sys. Rev., Ser. 1991, Prerefunded @ 102 7.100 12/01/2001 562,830
15,000 Summit Co., OH, GO, Ser. A, Prerefunded @ 100.................. 6.900 08/01/2002 16,579
40,000 Ohio St. Bldg. Auth. Rev. (Frank Lausch Proj.),
Prerefunded @ 100............................................ 10.125 04/01/2003 48,878
160,000 Ohio St. Bldg. Auth. Rev. (Columbus St. Proj.),
Prerefunded @ 100............................................ 10.125 04/01/2003 194,533
230,000 Summit Co., OH, GO, Ser. A, Prerefunded @ 100.................. 6.900 08/01/2003 256,100
290,000 Alliance, OH, CSD GO........................................... 6.900 12/01/2006 316,410
1,635,000 Montgomery Co., OH, Solid Waste Rev............................ 5.000 11/01/2007 1,594,828
500,000 Cleveland, OH, Waterworks Impt. Rev., Ser. G (First Mtg.)...... 5.500 01/01/2009 502,245
1,000,000 Franklin Co., OH, Hosp. Impt. Rev. (Holy Cross Health Sys.).... 7.625 06/01/2009 1,104,770
500,000 Mansfield, OH, Hosp. Impt. Rev. (Mansfield General)............ 6.700 12/01/2009 537,435
250,000 Ohio St. Water Dev. Auth. Ref. & Impt. Rev. (Pure Water),
Escrowed to Maturity......................................... 7.000 12/01/2009 281,370
500,000 Ohio Capital Corp. MFH Rev..................................... 7.500 01/01/2010 535,435
500,000 Hamilton, OH, Water Sys. Mtg. Rev., Ser. 1991A................. 6.400 10/15/2010 527,005
500,000 Montgomery Co., OH, Solid Waste Rev............................ 5.350 11/01/2010 488,230
500,000 Butler Co., OH, Hosp. Fac. Rev. (Middletown Regional Hosp.).... 6.750 11/15/2010 539,355
1,000,000 Canton, OH, Waterworks Sys. GO, Ser. 1995...................... 5.750 12/01/2010 1,013,330
500,000 St. Mary's, OH, Elec. Sys. Rev................................. 7.150 12/01/2010 550,845
500,000 Cleveland, OH, Waterworks Impt. Rev............................ 6.500 01/01/2011 530,100
275,000 Cuyahoga Co., OH, Hosp. Rev. (University Hosp.), Escrowed to
Maturity..................................................... 9.000 06/01/2011 303,979
1,700,000 Ohio St. Water Dev. Auth. PCR.................................. 5.700 06/01/2011 1,708,143
1,500,000 Ohio St. Water Dev. Auth. PCR.................................. 5.300 06/01/2011 1,448,925
590,000 Ohio HFA SFM Rev., Ser. 1991D.................................. 7.000 09/01/2011 622,167
365,000 Bexley, OH, CSD GO............................................. 7.125 12/01/2011 426,371
500,000 Greene Co., OH, Water Sys. Rev................................. 6.850 12/01/2011 541,900
500,000 Maple Heights, OH, Various Purpose GO.......................... 7.000 12/01/2011 551,860
760,000 Springboro, OH, CSD GO......................................... 6.000 12/01/2011 799,946
500,000 Stark Co., OH, Various Purpose GO.............................. 7.050 12/01/2011 548,670
530,000 Urbana, OH, Wastewater Impt. GO................................ 7.050 12/01/2011 593,038
600,000 Westerville, OH, Water Sys. Impt. GO........................... 6.450 12/01/2011 637,992
500,000 Cleveland, OH, GO, Ser. A...................................... 6.375 07/01/2012 524,400
255,000 Summit Co., OH, GO, Ser. A..................................... 6.900 08/01/2012 272,641
500,000 Brunswick, OH, CSD GO.......................................... 6.900 12/01/2012 541,835
500,000 Ohio St. Higher Educ. Fac. Rev. (Univ. of Dayton).............. 7.250 12/01/2012 552,805
500,000 Springfield, OH, LSD GO........................................ 6.600 12/01/2012 534,865
500,000 Summit Co., OH, Various Purpose GO............................. 6.625 12/01/2012 535,445
500,000 Warrensville Heights, OH, GO................................... 6.400 12/01/2012 536,455
1,095,000 West Clermont, OH, LSD GO...................................... 6.900 12/01/2012 1,211,103
500,000 Worthington, OH, CSD GO........................................ 6.375 12/01/2012 524,825
2,500,000 Hamilton Co., OH, Hosp. Fac. Rev., Ser. D
(Children's Hosp. Medical Ctr.).............................. 5.000 05/15/2013 2,296,450
<PAGE>
<CAPTION>
OHIO INSURED TAX-FREE FUND (CONTINUED)
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT FIXED RATE REVENUE & GENERAL OBLIGATION BONDS-- 88.8% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 370,000 Ohio HFA SFM Rev., Ser. 1990D.................................. 7.500% 09/01/2013 $ 390,195
1,425,000 Butler Co., OH, Sewer Sys. Rev................................. 5.125 12/01/2013 1,338,160
500,000 Ohio St. Bldg. Auth. Rev., Ser. 1994A
(Juvenile Correctional Bldg.)................................ 6.600 10/01/2014 533,735
500,000 Mahoning Co., OH, Hosp. Impt. Rev. (YHA, Inc.)................. 7.000 10/15/2014 541,020
460,000 Bedford Heights, OH, GO........................................ 6.500 12/01/2014 488,971
290,000 Garfield Heights, OH, Various Purpose GO....................... 6.300 12/01/2014 301,438
1,250,000 Maumee, OH, Hosp. Fac. Rev., Ser. 1994 (St. Luke's Hosp. Proj.) 5.800 12/01/2014 1,241,550
290,000 Northwest, OH, LSD GO.......................................... 7.050 12/01/2014 320,322
530,000 Ottawa Co., OH, GO............................................. 5.750 12/01/2014 527,588
1,000,000 Portage Co., OH, GO............................................ 6.200 12/01/2014 1,035,660
1,000,000 Clermont Co., OH, Hosp. Fac. Rev. (Mercy Health Sys.).......... 5.875 09/01/2015 999,330
550,000 Cambridge, OH, Water Sys. Mtg. Rev............................. 5.500 12/01/2015 534,638
1,750,000 Dayton, OH, Airport Rev. (James M. Cox Dayton Int'l. Airport).. 5.250 12/01/2015 1,644,440
500,000 Delaware, OH, CSD GO........................................... 5.750 12/01/2015 498,235
1,700,000 Massillon, OH, GO.............................................. 6.625 12/01/2015 1,821,754
500,000 Ohio St. Higher Educ. Fac. Rev. (Univ. of Dayton).............. 6.750 12/01/2015 539,065
1,420,000 Stow, OH, Safety Center Const., GO............................. 6.150 12/01/2015 1,463,409
1,000,000 Tuscarawas, OH, LSD GO, Ser. 1995.............................. 6.600 12/01/2015 1,076,500
500,000 Cleveland, OH, Waterworks Impt. Rev............................ 6.250 01/01/2016 512,925
750,000 Columbus-Polaris Hsg. Corp. Ohio Mtg. Rev., Prerefunded @100... 7.400 01/01/2016 840,540
500,000 Ohio St. Air Quality Dev. Auth. Rev. (Ohio Edison)............. 7.450 03/01/2016 547,185
1,000,000 Montgomery Co., OH, Hosp. Rev. (Kettering Medical Ctr.)........ 5.625 04/01/2016 976,030
405,000 Ohio HFA SFM Rev., Ser. 1990F.................................. 7.600 09/01/2016 429,191
1,085,000 Ohio HFA SFM Rev., Ser. 1991D.................................. 7.050 09/01/2016 1,140,834
500,000 Celina, OH, Wastewater Sys. Mtg. Rev........................... 6.550 11/01/2016 527,195
1,000,000 Cleveland, OH, Public Power Sys. Rev........................... 7.000 11/15/2016 1,104,420
750,000 Montgomery Co., OH, Hosp. Rev. (Miami Valley Hosp.)............ 6.250 11/15/2016 771,090
705,000 Big Walnut, OH, LSD GO (Community Library Proj.)............... 6.650 12/01/2016 756,310
590,000 Garfield Heights, OH, Various Purpose GO....................... 7.050 12/01/2016 646,687
850,000 Alliance, OH, Waterworks Sys. Rev.............................. 6.650 10/15/2017 906,245
500,000 Toledo, OH, Sewer Sys. Rev..................................... 6.350 11/15/2017 521,580
675,000 Reynoldsburg, OH, CSD GO....................................... 6.550 12/01/2017 718,963
500,000 Ohio St. Air Quality Dev. Auth. Rev., Ser. 1990B (Ohio Edison). 7.100 06/01/2018 542,230
500,000 Newark, OH, Water Sys. Impt. Rev............................... 6.000 12/01/2018 505,350
15,000 Ohio St. Water Dev. Auth. Ref. Rev............................. 9.375 12/01/2018 15,684
1,000,000 S. Euclid-Lyndhurst, OH, CSD GO, Ser. 1996..................... 6.400 12/01/2018 1,051,640
500,000 Seneca Co., OH, GO (Jail Fac.)................................. 6.500 12/01/2018 530,215
500,000 Franklin Co., OH, Hosp. Rev., Ser. 1991 (Mt. Carmel)........... 6.750 06/01/2019 533,075
500,000 Crawford Co., OH, GO........................................... 6.750 12/01/2019 541,630
360,000 Cuyahoga Co., OH, Hosp. Rev. (University Hosp.)................ 6.250 01/15/2020 368,230
500,000 Lucas Co., OH, Hosp. Impt. Rev. (St. Vincent's Hosp.).......... 6.750 08/15/2020 539,435
1,750,000 Celina, OH, CSD GO............................................. 5.250 12/01/2020 1,625,033
1,000,000 Ohio St. Air Quality Dev. Auth. Rev., Ser. 1985A
(Columbus Southern Power).................................... 6.375 12/01/2020 1,037,170
200,000 Montgomery Co., OH, Hosp. Rev. (Sisters of Charity)............ 6.625 05/15/2021 211,324
1,000,000 Clermont Co., OH, Hosp. Fac. Rev. (Mercy Health Sys.).......... 6.733 10/05/2021 1,058,390
20,000 Puerto Rico HFC SFM Rev., Ser. A .............................. 7.800 10/15/2021 20,599
1,220,000 Butler Co., OH, Sewer Sys. Rev................................. 5.250 12/01/2021 1,131,294
1,000,000 Kent St. Univ. General Receipts Rev............................ 6.500 05/01/2022 1,057,040
165,000 Puerto Rico HFC Rev............................................ 6.850 10/15/2023 171,092
1,000,000 Springboro, OH, Community CSD GO............................... 5.100 12/01/2023 904,420
1,000,000 Ohio St. Turnpike Rev., Ser. 1996A............................. 5.500 02/15/2026 953,630
1,000,000 Ohio St. Air Quality PCR (Penn Power).......................... 6.450 05/01/2027 1,041,670
- - ------------- ------------
$68,385,000 TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS
- - -------------
(Amortized Cost $67,853,032)................................... $70,988,215
------------
<PAGE>
<CAPTION>
OHIO INSURED TAX-FREE FUND (CONTINUED)
==================================================================================================================================
PRINCIPAL COUPON MATURITY MARKET
AMOUNT FLOATING AND VARIABLE RATE DEMAND NOTES-- 10.8% RATE DATE VALUE
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 8,600,000 Ohio St. Air Quality Dev. Auth. Rev., Ser. 1985B............... 3.750% 07/01/1996 $ 8,600,000
- - ------------- ------------
$ 8,600,000 TOTAL FLOATING AND VARIABLE RATE DEMAND NOTES
- - -------------
(Amortized Cost $8,600,000).................................... $ 8,600,000
------------
$76,985,000 TOTAL INVESTMENTS AT VALUE -- 99.6%
=============
(Amortized Cost $76,453,032)................................... $79,588,215
OTHER ASSETS AND LIABILITIES, NET-- 0.4% ..................... 322,462
------------
NET ASSETS-- 100.0% .......................................... $79,910,677
</TABLE>
<PAGE>
NOTES TO PORTFOLIOS OF INVESTMENTS
JUNE 30, 1996
==============================================================================
Variable and adjustable rate put bonds earn interest at a coupon rate which
fluctuates at specified intervals, usually daily, monthly or semi-annually.
The rates shown in the Portfolios of Investments are the coupon rates in
effect at June 30, 1996.
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.
PORTFOLIO ABBREVIATIONS:
ARPB - Adjustable Rate Put Bonds
BANS - Bond Anticipation Notes
COP - Certificates of Participation
CSD - City School District
EDA - Economic Development Authority
EDR - Economic Development Revenue
GO - General Obligation
HFA - Housing Finance Authority/Agency
HFC - Housing Finance Corporation
IDA - Industrial Development Authority/Agency
IDR - Industrial Development Revenue
ISD - Independent School District
LSD - Local School District
MFH - Multi-Family Housing
MFM - Multi-Family Mortgage
PCR - Pollution Control Revenue
RANS - Revenue Anticipation Notes
SFM - Single Family Mortgage
TANS - Tax Anticipation Notes
TRANS - Tax Revenue Anticipation Notes
USD - Unified School District
VRDN - Variable Rate Demand Notes
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
==============================================================================
Logo: Arthur Andersen LLP
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, 1996, 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, 1996, 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, 1996, 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.
/s/Arthur Andersen LLP
Cincinnati, Ohio,
August 1, 1996
<PAGE>
<PAGE>
MIDWEST GROUP TAX FREE TRUST
PART C. OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits
- ------- ---------------------------------
(a)(i) Financial Statements included in Part A:
Financial Highlights
(ii) Financial Statements included in Part B:
Portfolio of Investments, June 30, 1996
Statements of Assets and Liabilities, June 30,
1996
Statements of Operations for the Year Ended
June 30, 1996
Statements of Changes in Net Assets for the
Years Ended June 30, 1996 and 1995
Financial Highlights
Notes to Financial Statements, June 30, 1996
(b) Exhibits:
(1)(i) Copy of Registrant's Restated Agreement and
Declaration of Trust, which was filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 36, is hereby incorporated by
reference.
(ii) Copy of Amendment No. 1, dated May 25, 1994,
to Registrant's Restated Agreement and
Declaration of Trust, which was filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 36, is hereby incorporated by
reference.
(iii) Copy of Amendment No. 2, dated July 31, 1996,
to Registrant's Restated Agreement and
Declaration of Trust, which was filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 38, is hereby incorporated by
reference.
(2) Copy of Registrant's Bylaws, as amended, which
was filed as an Exhibit to Registrant's Post-
Effective Amendment No. 38, is hereby
incorporated by reference..
<PAGE>
(3) Voting Trust Agreements - None.
(4)(i) Specimen of Share Certificate for Tax-Free
Intermediate Term Fund (formerly Limited Term
Portfolio), which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 8,
is hereby incorporated by reference.
(ii) Specimen of Share Certificate for Ohio Insured
Tax-Free Fund (formerly Ohio Long Term
Portfolio), which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 8,
is hereby incorporated by reference.
(5)(i) Copy of Registrant's Management Agreement with
Midwest Group Financial Services, Inc. for 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, which was filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 32, is hereby incorporated by
reference.
(ii) Copy of Registrant's Management Agreement with
Midwest Group Financial Services, Inc. for the
Royal Palm Florida Tax-Free Money Fund, which
was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 32, is hereby
incorporated by reference.
(iii) Form of Registrant's Management Agreement with
Midwest Group Financial Services, Inc. for the
Michigan Tax-Free Money Fund, which was filed
as an Exhibit to Registrant's Post-Effective
Amendment No. 36, is hereby incorporated by
reference.
(6)(i) Copy of Registrant's Underwriting Agreement
with Midwest Group Financial Services, Inc.,
which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 38, is hereby
incorporated by reference.
(ii) Form of Underwriter's Dealer Agreement, which
was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 32, is hereby
incorporated by reference.
(7) Bonus, Profit Sharing, Pension or Similar
Contracts for the benefit of Directors or
Officers - None.
<PAGE>
(8)(i) Copy of Custody Agreement with The Fifth Third
Bank, the Custodian for 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, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 38,
is hereby incorporated by reference.
(ii) Copy of Custody Agreement with The Huntington
Trust Company, N.A., on behalf of the Royal Palm
Florida Tax-Free Money Fund and the Michigan
Tax-Free Money Fund, which was filed as an
Exhibit to Registrant's Post-Effective Amendment
No. 36, is hereby incorporated by reference.
(9)(i) Copy of Transfer Agency, Dividend Disbursing,
Shareholder Service and Plan Agency Agreement
with MGF Service Corp., which was filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 38, is hereby incorporated by
reference.
(ii) Copy of Accounting and Pricing Services
Agreement with MGF Service Corp., which was
filed as an Exhibit to Registrant's Post-
Effective Amendment No. 38, is hereby
incorporated by reference.
(iii) Copy of Administration Agreement between
Midwest Group Financial Services, Inc. and MGF
Service Corp. is filed herewith.
(10) Opinion and Consent of Goodwin, Procter & Hoar,
which was filed with Registrant's Rule 24f-2
Notice for the fiscal year ended June 30, 1996,
is hereby incorporated by reference.
(11) Consent of Independent Public Accountants is
filed herewith.
(12) Financial Statements Omitted from Item 23 -
None.
(13) Copy of Letter of Initial Stockholder, which
was filed as an Exhibit to Registrant's
Pre-Effective Amendment No. 1, is hereby
incorporated by reference.
(14) Copies of model plan used in the establishment
of any retirement plan - None.
<PAGE>
(15)(i) Registrant's Plans of Distribution Pursuant to
Rule 12b-1, which were filed as an Exhibit to
Registrant's Post-Effective Amendment No. 38,
are hereby incorporated by reference.
(ii) Form of Sales Agreement for Shares of No-load
Mutual Funds, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 30,
is hereby incorporated by reference.
(iii) Form of Administration Agreement with respect
to the administration of shareholder accounts,
which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 32, is hereby
incorporated by reference.
(16) Computations of each performance quotation
provided in response to Item 22, which were
filed as an Exhibit to Registrant's
Post-Effective Amendment No. 13, are hereby
incorporated by reference.
(17) Financial Data Schedule for Ohio Tax-Free
Money Fund is filed herewith.
(18) Amended Rule 18f-3 Plan Adopted With Respect
to the Multiple Class Distribution System of
the Midwest Group of Funds, which was filed as
an Exhibit to Registrant's Post-Effective
Amendment No. 38, is hereby incorporated by
reference.
Item 25. Persons Controlled by or Under Common Control with
the Registrant.
- ------- --------------------------------------------------
None.
Item 26. Number of Holders of Securities (as of September 4,
1996)
- ------- --------------------------------------------------
Title of Class Number of Record Holders
Tax-Free Money Fund 1,044
Tax-Free Intermediate Term Fund
Class A Shares 2,939
Class C Shares 385
Ohio Insured Tax-Free Fund
Class A Shares 1,682
Class C Shares 220
Ohio Tax-Free Money Fund 2,706
California Tax-Free Money Fund 657
<PAGE>
Royal Palm Florida Tax-Free Money Fund
Retail Shares 200
Institutional Shares 1
Michigan Tax-Free Money Fund 0
Item 27. Indemnification
- ------- ---------------
Article VI of the Registrant's Restated Agreement and
Declaration of Trust provides for indemnification of officers
and Trustees as follows:
Section 6.4 Indemnification of Trustees, Officers,
etc. The Trust shall indemnify each of its Trustees
and officers (including persons who serve at the
Trust's request as directors, officers or trustees of
another organization in which the Trust has any
interest as a shareholder, creditor or otherwise)
(hereinafter referred to as a "Covered Person")
against all liabilities, including but not limited to
amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and expenses,
including reasonable accountants' and counsel fees,
incurred by any Covered Person in connection with the
defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which
such Covered Person may be or may have been involved
as a party or otherwise or with which such person may
be or may have been threatened, while in office or
thereafter, by reason of being or having been such a
Trustee or officer, director or trustee, and except
that no Covered Person shall be indemnified against
any liability to the Trust or its Shareholders to
which such Covered Person would otherwise be subject
by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties
involved in the conduct of such covered Person's
office ("disabling conduct"). Anything herein
contained to the contrary notwithstanding, no Covered
Person shall be indemnified for any liability to the
Trust or its Shareholders to which such Covered
Person would otherwise be subject unless (1) a final
decision on the merits is made by a court or other
body before whom the proceeding was brought that the
Covered Person to be indemnified was not liable by
reason of disabling conduct or, (2) in the absence of
such a decision, a reasonable determination is made,
based upon a review of the facts, that the Covered
Person was not liable by reason of disabling conduct,
by (a) the vote of a majority of a quorum of Trustees
who are neither "interested persons"
<PAGE>
of the Company as defined in the Investment Company
Act of 1940 nor parties to the proceeding
("disinterested, non-party Trustees"), or (b) an
independent legal counsel in a written opinion.
Section 6.5 Advances of Expenses. The Trust shall
advance attorneys' fees or other expenses incurred by
a Covered Person in defending a proceeding, upon the
undertaking by or on behalf of the Covered Person to
repay the advance unless it is ultimately determined
that such Covered Person is entitled to
indemnification, so long as one of the following
conditions is met: (i) the Covered Person shall
provide security for his undertaking, (ii) the Trust
shall be insured against losses arising by reason of
any lawful advances, or (iii) a majority of a quorum
of the disinterested non-party Trustees of the Trust,
or an independent legal counsel in a written opinion,
shall determine, based on a review of readily
available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the
Covered Person ultimately will be found entitled to
indemnification.
Section 6.6 Indemnification Not Exclusive, etc. The
right of indemnification provided by this Article VI
shall not be exclusive of or affect any other rights
to which any such Covered Person may be entitled. As
used in this Article VI, "Covered Person" shall
include such person's heirs, executors and
administrators. Nothing contained in this article
shall affect any rights to indemnification to which
personnel of the Trust, other than Trustees and
officers, and other persons may be entitled by
contract or otherwise under law, nor the power of the
Trust to purchase and maintain liability insurance on
behalf of any such person.
The Registrant maintains a standard mutual fund and investment
advisory professional and directors and officers liability
policy. The policy provides coverage to the Registrant, its
Trustees and officers, and its Adviser, among others. Coverage
under the policy includes losses by reason of any act, error,
omission, misstatement, misleading statement, neglect or
breach of duty. The Registrant may not pay for insurance which
protects the Trustees and officers against liabilities rising
from action involving willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of their offices.
The Advisory Agreements with Midwest Group Financial
Services, Inc. (the "Adviser") provide that the Adviser
shall not be liable for any error of judgment or
<PAGE>
mistake of law or for any loss suffered by the Registrant in
connection with the matters to which the Agreement relates,
except a loss resulting from willful misfeasance, bad faith or
gross negligence of the Adviser in the performance of its
duties or from the reckless disregard by the Adviser of its
obligations under the Agreement. Registrant will advance
attorneys' fees or other expenses incurred by the Adviser in
defending a proceeding, upon the undertaking by or on behalf
of the Adviser to repay the advance unless it is ultimately
determined that the Adviser is entitled to indemnification.
The Underwriting Agreement provides that the Adviser (in its
capacity as underwriter), its directors, officers, employees,
shareholders and control persons shall not be liable for any
error of judgment or mistake of law or for any loss suffered
by Registrant in connection with the matters to which the
Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of any
of such persons in the performance of Adviser's duties or from
the reckless disregard by any of such persons of Adviser's
obligations and duties under the Agreement. Registrant will
advance attorneys' fees or other expenses incurred by any such
person in defending a proceeding, upon the undertaking by or
on behalf of such person to repay the advance if it is
ultimately determined that such person is not entitled to
indemnification.
Item. 28. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------
A. The Adviser is a registered investment adviser
providing investment advisory services to the
Registrant. The Adviser also acts as the investment
adviser to five series of Midwest Trust and four series
of Midwest Strategic Trust, both of which are
registered investment companies. The Adviser provides
investment advisory services to individual and
institutional accounts and is a registered
broker-dealer.
B. The following list sets forth the business and other
connections of the directors and officers of the Adviser.
Unless otherwise noted, the address of the corporations listed
below is 312 Walnut Street, Cincinnati, Ohio 45202.
(1) Robert H. Leshner - Chairman of the Board and a
Director of the Adviser.
(a) President and a Trustee of Midwest
Strategic Trust, Midwest Trust and Midwest
<PAGE>
Group Tax Free Trust, registered investment
companies.
(b) Chairman of the Board and a Director of
Leshner Financial, Inc., a financial services
company.
(c) Chairman of the Board and a Director of MGF
Service Corp., a registered transfer agent.
(d) President and a Director of Leshner Financial
Services, Inc., a registered investment adviser
and registered broker-dealer until December
1994.
(2) Michael F. Andrews - President of the Adviser.
(a) Vice President and a Director of Leshner
Financial, Inc.
(b) President of ABT Financial Services, Inc., 340
Royal Palm Way, Palm Beach, Florida 33480, until
June 1995.
(3) James A. Markley, Jr. - A Director of the Adviser.
(a) President and a Director of Leshner
Financial, Inc.
(b) A Director of MGF Service Corp.
(c) A Director of Sycamore National Bank,
3209 West Galbraith Road, Cincinnati, Ohio
45239.
(d) President of the Adviser until July 1995.
(e) President of MGF Service Corp. until
December 1994.
(f) A Director of Leshner Financial Services,
Inc. until December 1994.
(4) John J. Goetz - Chief Investment Officer of the
Adviser.
(a) Vice President of Leshner Financial, Inc.
(b) Vice President-Investments of Leshner
Financial Services, Inc. until December
1994.
<PAGE>
(5) Maryellen Peretzky - Vice President, Assistant
Secretary and a Director of the Adviser.
(a) Vice President and a Director of Leshner
Financial, Inc.
(b) Vice President of MGF Service Corp.
(c) Assistant Secretary of The Tuscarora
Investment Trust.
(d) Vice President and a Director of Leshner
Financial Services, Inc. until December
1994.
(6) Sharon L. Karp - Vice President of the Adviser.
(a) Vice President of Leshner Financial, Inc.
(7) John F. Splain - Secretary and General Counsel of
the Adviser.
(a) Secretary, General Counsel and a Director
of Leshner Financial, Inc.
(b) Secretary and General Counsel of MGF
Service Corp.
(c) Secretary of Midwest Group Tax Free Trust,
Midwest Trust, Midwest Strategic Trust,
Brundage, Story and Rose Investment Trust,
Williamsburg Investment Trust, Markman
MultiFund Trust, The Tuscarora Investment
Trust, PRAGMA Investment Trust, Maplewood
Investment Trust, a series company, and The
Thermo Opportunity Fund, Inc., registered
investment companies.
(d) Assistant Secretary of Fremont Mutual
Funds, Inc., Schwartz Investment Trust, The
Gannett Welsh & Kotler Funds and Capitol
Square Funds, registered investment
companies.
(e) Secretary and General Counsel of Leshner
Financial Services, Inc. until December
1994.
(f) Secretary of Leeb Personal Finance(TM)
Investment Trust, a registered investment
company, until November 1996.
<PAGE>
(8) Robert G. Dorsey - Treasurer of the Adviser.
(a) President of MGF Service Corp.
(b) Treasurer and a Director of Leshner
Financial, Inc.
(c) Vice President of Brundage, Story and Rose
Investment Trust, Markman MultiFund Trust,
PRAGMA Investment Trust, Maplewood
Investment Trust, a series company, The
Thermo Opportunity Fund, Inc. and Capitol
Square Funds.
(d) Assistant Vice President of Williamsburg
Investment Trust, Schwartz Investment Trust,
Fremont Mutual Funds, Inc., The Gannett Welsh &
Kotler Funds and The Tuscarora Investment Trust.
(e) Treasurer of Leshner Financial Services,
Inc. until December 1994.
(f) Vice President of Leeb Personal Finance(TM)
Investment Trust until November 1996.
(9) Susan F. Flischel - Vice President - Investments
of the Adviser.
(a) Assistant Vice President-Investments of
Leshner Financial Services, Inc. until
December 1994.
(10) Scott Weston - Assistant Vice President -
Investments of the Adviser.
(11) Michele McClellan Hawkins - Assistant Vice
President of the Adviser.
(12) Elizabeth A. Santen - Assistant Secretary of the
Adviser.
(a) Assistant Secretary of Leshner Financial
Inc.
(b) Assistant Vice President of MGF Service
Corp.
(c) Assistant Secretary of Midwest Group Tax
Free Trust, Midwest Trust, Midwest
Strategic Trust, The Tuscarora Investment
Trust and Maplewood Investment Trust, a
series company.
<PAGE>
(d) Assistant Secretary of Leshner Financial
Services, Inc. until December 1994.
Item 29. Principal Underwriters
- ------- ----------------------
(a) Midwest Group Financial Services, Inc. also acts
as underwriter for Midwest Strategic Trust,
Midwest Trust, Brundage, Story and Rose Investment
Trust and Maplewood Investment Trust, a series
company.
Position Position
with with
(b) Name Underwriter Registrant
Robert H. Leshner Chairman of President
the Board and
and Director Trustee
Michael F. Andrews President None
James A. Markley, Jr. Director None
John J. Goetz Chief None
Investment
Officer
Maryellen Peretzky Vice President, None
Assistant
Secretary and
Director
Sharon L. Karp Vice President None
John F. Splain Secretary and Secretary
General Counsel
Robert G. Dorsey Treasurer None
Susan F. Flischel Vice President- None
Investments
Scott Weston Assistant Vice None
President-
Investments
Michele M. Hawkins Assistant Vice None
President
Terrie Wiedenheft Controller None
Elizabeth A. Santen Assistant Assistant
Secretary Secretary
<PAGE>
The address of all of the above-named persons is 312
Walnut Street, Cincinnati, Ohio 45202.
(c) None
Item 30. Location of Accounts and Records
- ------- --------------------------------
Accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder will
be maintained by the Registrant.
Item 31. Management Services Not Discussed in Parts A or B
- ------- -------------------------------------------------
None.
Item 32. Undertakings
- ------- ------------
(a) Not Applicable.
(b) The Registrant undertakes to file a Post-Effective
Amendment, incorporating financial statements for the
Michigan Tax-Free Money Fund, which need not be
certified, within four to six months from the
effective date of the Fund's Registration Statement.
(c) The Registrant undertakes that, if so requested, it
will furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual
report to shareholders without charge.
(d) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted
to trustees, officers and controlling persons of
Midwest Group Tax Free Trust pursuant to the
provisions of Massachusetts law and the Restated
Agreement and Declaration of Trust of Midwest
Group Tax Free Trust or the Bylaws of Midwest
Group Tax Free Trust, or otherwise, the Registrant
has been advised that in the opinion of the
Securities and Exchange Commission such
indemnification is against public policy as
expressed in the Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other
than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or
controlling person of Midwest Group Tax Free Trust
in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer
or controlling person in connection with the
securities being registered, the Registrant will,
unless in the opinion of its counsel the matter
<PAGE>
has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question
whether such indemnification by it is against public
policy as expressed in the Act and will be governed
by the final adjudication of such issue.
(e) The Registrant undertakes that, within five
business days after receipt of a written
application by shareholders holding in the
aggregate at least 1% of the shares then
outstanding or shares then having a net asset
value of $25,000, whichever is less, each of whom
shall have been a shareholder for at least six
months prior to the date of application
(hereinafter the "Petitioning Shareholders"),
requesting to communicate with other shareholders
with a view to obtaining signatures to a request
for a meeting for the purpose of voting upon
removal of any Trustee of the Registrant, which
application shall be accompanied by a form of
communication and request which such Petitioning
Shareholders wish to transmit, Registrant will:
(i) provide such Petitioning Shareholders with
access to a list of the names and addresses
of all shareholders of the Registrant; or
(ii) inform such Petitioning Shareholders of the
approximate number of shareholders and the
estimated costs of mailing such
communication, and to undertake such
mailing promptly after tender by such
Petitioning Shareholders to the Registrant
of the material to be mailed and the
reasonable expenses of such mailing.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Cincinnati, State of Ohio, on the 8th
day of November, 1996.
MIDWEST GROUP TAX FREE TRUST
/s/ John F. Splain
----------------
By:John F. Splain
JOHN F. SPLAIN
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
/s/ Robert H. Leshner President November 8, 1996
- --------------------
ROBERT H. LESHNER and Trustee
/s/ Mark J. Seger Treasurer November 8, 1996
- -----------------
MARK J. SEGER
*DALE P. BROWN Trustee
*GARY W. HELDMAN Trustee
*H. JEROME LERNER Trustee
*RICHARD A. LIPSEY Trustee
*DONALD J. RAHILLY Trustee
*FRED A. RAPPOPORT Trustee
*OSCAR P. ROBERTSON Trustee
*ROBERT B. SUMEREL Trustee
By: /s/ John F. Splain
--------------------
JOHN F. SPLAIN
Attorney-In-Fact*
November 8, 1996
<PAGE>
EXHIBIT INDEX
1. Administration Agreement Between Midwest Group Financial Services, Inc.
and MGF Service Corp.
2. Consent of Independent Public Accountants
3. Financial Data Schedule for Ohio Tax-Free Money Fund
ADMINISTRATION AGREEMENT
AGREEMENT entered into as of September 30, 1993, and amended as of
October 1, 1996, between Midwest Group Financial Services, Inc. ("Adviser") and
MGF Service Corp. ("MGF"), both of which are Ohio corporations having their
principal place of business at 312 Walnut Street, Cincinnati, Ohio 45202.
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 and provides investment management services
under the terms of an investment advisory agreement (the "Management Agreement")
with Midwest Group Tax Free Trust (the "Trust"); and
WHEREAS, the Trust has been organized as a Massachusetts business trust
to operate as an investment company registered under the Investment Company Act
of 1940; and
WHEREAS, the Adviser manages the business affairs of the Trust
pursuant to the Management Agreement; and
WHEREAS, the Adviser wishes to avail itself of the information, advice,
assistance and facilities of MGF to perform on behalf of the Trust the services
as hereinafter described; and
WHEREAS, MGF wishes to provide such services to the Adviser under the
conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Adviser and MGF agree as follows:
1. Employment. The Adviser, being duly authorized, hereby employs
MGF to perform those services described in this Agreement. MGF shall perform
the obligations thereof upon the terms and conditions hereinafter set forth.
2. Trust Administration. Subject to the direction and control of the
Adviser, MGF shall assist the Adviser in supervising the Trust's business
affairs not otherwise supervised by other agents of the Trust. To the extent not
otherwise the primary responsibility of, or provided by, other agents of the
Trust, MGF shall supply (i) non-investment related statistical and research
data, (ii) internal regulatory compliance services, and (iii) executive and
administrative services. MGF shall supervise the preparation of (i) tax returns,
(ii) reports to shareholders of the Trust, (iii) reports to and filings with the
Securities and Exchange Commission, state securities commissions and Blue Sky
authorities including preliminary and definitive proxy materials and
post-effective amendments to the Trust's registration statement, and (iv)
necessary materials for meetings of the Trust's Board of Trustees unless
prepared by other parties under agreement.
- 1 -
<PAGE>
3. Recordkeeping and Other Information. MGF shall create and maintain
all necessary records in accordance with all applicable laws, rules and
regulations, including but not limited to records required by Section 31(a) of
the Investment Company Act of 1940 and the rules thereunder, as the same may be
amended from time to time, pertaining to the various functions performed by it
and not otherwise created and maintained by another party pursuant to contract
with the Trust. Where applicable, such records shall be maintained by MGF for
the periods and in the places required by Rule 31a-2 under the Investment
Company Act of 1940.
4. Audit, Inspection and Visitation. MGF shall make available to the
Adviser during regular business hours all records and other data created and
maintained pursuant to the foregoing provisions of this Agreement for reasonable
audit and inspection by the Trust or any regulatory agency having authority over
the Trust.
5. Compensation. For the performance of its obligations under this
Agreement, the Adviser shall pay MGF, with respect to ech series of the Trust, a
fee each month equal to the annual rate of .1% of the average value of such
series' daily net assets. The Adviser is solely responsible for the payment of
fees to MGF, and MGF agrees to seek payment of its fees solely from the Adviser.
MGF shall not reimburse the Adviser for (or have deducted from its fees) any
Trust expenses in excess of expense limitations imposed by certain state
securities commissions having jurisdiction over the Trust.
6. Limitation of Liability. MGF shall not be liable for any action
taken, omitted or suffered to be taken by it in its reasonable judgment, in good
faith and believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement, or in accordance with instructions
from the Adviser, provided, however, that such acts or omissions shall not have
resulted from MGF's willful misfeasance, bad faith or gross negligence.
7. Compliance with the Investment Company Act of 1940. The parties
hereto acknowledge and agree that nothing contained herein shall be construed to
require MGF to perform any services for the Adviser which services could cause
MGF to be deemed an "investment adviser" of the Trust within the meaning of
Section 2(a)(20) of the Investment Company Act of 1940 or to supercede or
contravene the Prospectus or Statement of Additional Information of the Trust or
any provisions of the Investment Company Act of 1940 and the rules thereunder.
- 2 -
<PAGE>
8. Termination. This Agreement may be terminated by either party upon
sixty (60) days' written notice to the other party. This Agreement shall
terminate automatically in the event of termination of the Management Agreement.
Upon the termination of this Agreement, the Adviser shall pay MGF such
compensation as may be payable for the period prior to the effective date of
such termination.
9. No Trust Liability. MGF is hereby expressly put on notice that the
Trust is not a contracting party to this Agreement and assumes no obligations
pursuant to this Agreement. MGF shall seek satisfaction of any obligations
arising out of this Agreement only from the Adviser, and not from the Trust nor
its Trustees, officers, employees or shareholders. MGF shall not act as agent
for or bind either the Adviser or the Trust in any matter.
10. Miscellaneous. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the 1st day of October, 1996.
MIDWEST GROUP FINANCIAL SERVICES, INC.
By: /s/ Michael F. Andrews
----------------------------------
MGF SERVICE CORP.
By: /s/ Robert G. Dorsey
------------------------------------
- 3 -
<PAGE>
Consent of Independent Public Accountants
- -----------------------------------------
As independent public accountants, we hereby consent to the use in this
Post-Effective Amendment No. 39 of our report dated August 1, 1996, and to all
references to our Firm included or made a part of this Post-Effective
Amendment.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Cincinnati, Ohio
November 8, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000352667
<NAME> MIDWEST GROUP TAX FREE TRUST
<SERIES>
<NUMBER> 6
<NAME> OHIO TAX-FREE MONEY FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 239,927,043
<INVESTMENTS-AT-VALUE> 239,821,479
<RECEIVABLES> 2,935,318
<ASSETS-OTHER> 389,643
<OTHER-ITEMS-ASSETS> 8,229
<TOTAL-ASSETS> 243,154,669
<PAYABLE-FOR-SECURITIES> 2,510,625
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 321,152
<TOTAL-LIABILITIES> 2,831,777
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 240,309,987
<SHARES-COMMON-STOCK> 240,309,987
<SHARES-COMMON-PRIOR> 226,592,739
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,905
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 240,322,892
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9,278,740
<OTHER-INCOME> 0
<EXPENSES-NET> 1,813,152
<NET-INVESTMENT-INCOME> 7,465,588
<REALIZED-GAINS-CURRENT> (709)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 7,464,879
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,465,588
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 565,969,095
<NUMBER-OF-SHARES-REDEEMED> 557,137,769
<SHARES-REINVESTED> 4,885,920
<NET-CHANGE-IN-ASSETS> 13,716,537
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 13,614
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,117,233
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,813,152
<AVERAGE-NET-ASSETS> 241,455,415
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .031
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .031
<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
