SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
Pre-Effective Amendment No. ----
Post-Effective Amendment No. 47
----
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. 46
----
(Check appropriate box or boxes.)
TOUCHSTONE TAX-FREE TRUST
-----------------------------
(Exact name of Registrant as Specified in Charter)
FILE NOS. 811-3174 and 2-72101
------------------------------
221 East Fourth Street, Suite 300, Cincinnati, Ohio 45202
-----------------------------------------------------------
(Address of Principal Executive Offices) Zip Code
Registrant's Telephone Number, including Area Code (513) 362-8000
-----------------------------------------------------------------
Jill T. McGruder, 221 East Fourth Street, Suite 300, Cincinnati, Ohio 45202
---------------------------------------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
(check appropriate box)
/X/ immediately upon filing pursuant to paragraph (b)
/ / on __________ pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / on ___________ pursuant to paragraph (a) of Rule 485
<PAGE>
TOUCHSTONE TAX-FREE TRUST
------------------------
FORM N-1A
CROSS REFERENCE SHEET
----------------------
ITEM SECTION IN PROSPECTUS
---- ---------------------
1........................... Cover Page; For More Information
2........................... Tax-Free Intermediate Term Fund, Ohio Insured Tax-
Free Fund, Tax-Free Money Fund, Ohio Tax-Free
Money Fund, California Tax-Free Money Fund,
Florida Tax-Free Money Fund; Investment Strategies
and Risks
3........................... Tax-Free Intermediate Term Fund, Ohio Insured Tax-
Free Fund, Tax-Free Money Fund, Ohio Tax-Free
Money Fund, California Tax-Free Money Fund,
Florida Tax-Free Money Fund
4........................... Investment Strategies and Risks
5.......................... None
6........................... The Funds' Management
7........................... Investing with Touchstone, Distributions and
Taxes
8............................ Investing with Touchstone
9........................... Financial Highlights
SECTION IN STATEMENT OF
ITEM ADDITIONAL INFORMATION
---- -----------------------
10.......................... Cover Page, Table of Contents
11.......................... The Trust
12.......................... The Trust, Municipal Obligations, Quality Ratings
of Municipal Obligations, Definitions, Policies
and Risk Considerations, Investment Limitations,
Insurance on the Ohio Insured Tax-Free Fund's
Securities, Portfolio Turnover
13.......................... Trustees and Officers, Code of Ethics, Choosing
a Share Class
14.......................... Principal Security Holders
15.......................... The Investment Adviser and Sub-Advisor, The
Distributor, Distribution Plans,
Custodian, Auditors, Transfer Agent, Securities
Transactions, Choosing a Share Class
16.......................... Securities Transactions
17.......................... The Trust, Choosing a Share Class
18.......................... Calculation of Share Price and Public
Offering Price, Other Purchase
Information, Redemption in Kind
19.......................... Taxes
20.......................... The Distributor
21.......................... Historical Performance Information, Tax Equivalent
Yield Tables
22.......................... Annual Report
<PAGE>
PROSPECTUS
November 1, 2000
o Tax-Free Intermediate Term Fund
o Ohio Insured Tax-Free Fund
o Tax-Free Money Fund
o Ohio Tax-Free Money Fund
o California Tax-Free Money Fund
o Florida Tax-Free Money Fund
Touchstone Family of Funds
--------------------------
The Securities and Exchange Commission has not approved the Funds' shares as an
investment or determined whether this Prospectus is accurate or complete. Anyone
who tells you otherwise is committing a crime.
Multiple Classes of Shares are Offered by this Prospectus.
<PAGE>
TOUCHSTONE FAMILY OF FUNDS
Each Fund is a series of Touchstone Tax-Free Trust (the "Trust"), a group of 6
tax-free bond and money market funds. The Trust is part of the Touchstone Family
of Funds, which also includes Touchstone Investment Trust, a group of 6 taxable
bond and money market mutual funds, Touchstone Strategic Trust, a group of 8
equity mutual funds and Touchstone Variable Series Trust, a group of 11 variable
series funds. Each Fund has a different investment goal and risk level. For
further information about the Touchstone Family of Funds, contact Touchstone at
800.543.0407.
<PAGE>
Table Of Contents
Page
TAX-FREE INTERMEDIATE TERM FUND...................................4
OHIO INSURED TAX-FREE FUND........................................9
TAX-FREE MONEY FUND..............................................14
OHIO TAX-FREE MONEY FUND.........................................19
CALIFORNIA TAX-FREE MONEY FUND...................................24
FLORIDA TAX-FREE MONEY FUND......................................29
INVESTMENT STRATEGIES AND RISKS..................................34
THE FUNDS' MANAGEMENT............................................39
INVESTING WITH TOUCHSTONE........................................41
DISTRIBUTIONS AND TAXES..........................................52
FINANCIAL HIGHLIGHTS.............................................54
FOR MORE INFORMATION.............................................64
<PAGE>
TAX-FREE INTERMEDIATE TERM FUND
The Fund's Investment Goal
--------------------------
The Tax-Free Intermediate Term Fund seeks high current income exempt from
federal income tax, consistent with the protection of capital. To the extent
consistent with the Fund's primary goal, capital appreciation is a secondary
goal.
Its Principal Investment Strategies
-----------------------------------
The Fund invests primarily in municipal obligations rated within the 3 highest
rating categories. If a security's rating is reduced below the 3 highest rating
categories by a rating agency, the security will be sold. The Fund may purchase
unrated securities only if the portfolio manager determines the securities meet
the Fund's quality standards.
The Fund invests primarily in municipal obligations with remaining maturities of
20 years or less and will seek to maintain an average weighted maturity of
between 3 and 10 years. However, the Fund may invest in securities of any
maturity.
The Fund has a fundamental investment policy that under normal circumstances at
least 80% of its annual income will be exempt from federal income tax, including
the alternative minimum tax. This fundamental policy may not be changed without
the approval of the Fund's shareholders.
The Fund may invest more than 25% of its assets in municipal obligations within
a particular segment of the bond market. The Fund may also invest more than 25%
of its assets in industrial development bonds, which may be backed only by
nongovernmental entities. The Fund will not invest more than 25% of its assets
in securities backed by nongovernmental entities that are in the same industry.
The Fund may also invest in the following types of municipal obligations:
o Tax-exempt bonds, including general obligation bonds, revenue bonds and
industrial development bonds
o Tax-exempt notes
o Tax-exempt commercial paper
o When-issued obligations
o Obligations with puts attached
The Key Risks
-------------
The Fund's share price will fluctuate. You could lose money on your investment
in the Fund and the Fund could also return less than other investments:
<PAGE>
o If interest rates go up, causing the value of any debt securities held by
the Fund to decline
o Because securities with longer maturities may lose more value due
to increases in interest rates than securities with shorter
maturities
o Because issuers may be unable to make timely payments of interest or
principal
o If the Fund's investments are concentrated in a particular segment
of the bond market and adverse economic developments affecting one
bond affect other bonds in the same segment
o Because the Fund's securities may have longer maturities and/or lower
ratings than other bond funds, which could cause greater
fluctuation in the Fund's share price
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other government entity.
As with any mutual fund, there is no guarantee that the Fund will achieve its
goal.
You can find more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading "Investment
Strategies And Risks" later in this Prospectus.
Who May Want to Invest
----------------------
This Fund is most appropriate for you if you seek an intermediate-term
investment with moderate risk that offers tax-exempt income. Safety of your
investment and the receipt of tax-exempt income are of key importance to you.
Additionally, you are willing to accept some interest rate risk in order to seek
a higher income return or higher yield than a short-term investment, like a
money market fund. This Fund is appropriate for you if you want the added
convenience of writing checks directly from your account.
<PAGE>
The Fund's Performance
----------------------
The bar chart shown below indicates the risks of investing in the Tax-Free
Intermediate Term Fund. It shows changes in the performance of the Fund's Class
A shares from year to year during the past 10 years. The chart does not reflect
any sales charges. Sales charges will reduce return.
The Fund's past performance does not necessarily indicate how it will perform in
the future.
The return for Class C shares offered by the Fund will differ from the Class A
returns shown in the bar chart, depending on the expenses of that class.
TAX-FREE INTERMEDIATE TERM FUND -- CLASS A
YEARS TOTAL RETURN
1990 6.04%
1991 9.09%
1992 7.71%
1993 10.94%
1994 -2.93%
1995 11.58%
1996 3.87%
1997 5.87%
1998 5.07%
1999 0.87%
During the period shown in the bar chart, the highest quarterly return
was 4.35% (for the quarter ended March 31, 1995) and the lowest
quarterly return was -3.37% (for the quarter ended March 31, 1994).
The year-to-date total return of the Fund's Class A shares as of
September 30, 2000 is 4.60%.
The following table indicates the risks of investing in the Tax-Free
Intermediate Term Fund. It shows how the Fund's average annual returns for the
periods shown compare to those of the Lehman Brothers 5-Year Municipal General
Obligation Bond Index. The Lehman Brothers 5-Year Municipal General Obligation
Bond Index consists of investment grade bonds with maturities ranging from 4
years up to (but not exceeding) 6 years. The table shows the effect of the
applicable sales charge.
<PAGE>
<TABLE>
<S> <C> <C> <C>
FOR THE PERIODS ENDED DECEMBER 31, 1999
1 Year 5 Years 10 Years
TAX-FREE INTERMEDIATE TERM FUND - CLASS A -5.58% 4.01% 5.03%
------------------------------------------ -- --------------- -- ------------- ---------------
Lehman Brothers 5-Year Municipal General
Obligation Bond Index 0.71% 5.80% 6.16%
------------------------------------------ -- --------------- -- ------------- ---------------
Since
Class
1 Year 5 Years Started*
TAX-FREE INTERMEDIATE TERM FUND - CLASS C -2.75% 4.10% 2.74%
------------------------------------------ -- --------------- -- ------------- ---------------
Lehman Brothers 5-Year Municipal General
Obligation Bond Index 0.71% 5.80% 4.47%
------------------------------------------ -- --------------- -- ------------- ---------------
* Class C shares began operations on February 1, 1994.
</TABLE>
The Fund's Fees and Expenses
----------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees paid
directly from your investment)
Class A Shares Class C Shares
Maximum Sales Charge (Load) 4.75% 2.25%
------------------------------------------------- ----------------------------
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 4.75%1 1.25%
------------------------------------------------- ----------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price * 1.00%2
or the amount redeemed, whichever is less)
------------------------------------------------------------------------------
Redemption Fee ** **
------------------------------------------------------------------------------
Exchange Fee None None
------------------------------------------------------------------------------
Check Redemption Processing Fee
------------------------------------------------------------------------------
First 6 checks per month None None
------------------------------------------------------------------------------
Additional checks per month $0.25 $0.25
------------------------------------------------------------------------------
<PAGE>
Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 0.50% 0.50%
--------------------------------------------------------------------------------
Distribution (12b-1) Fees 0.07% 0.41%
--------------------------------------------------------------------------------
Other Expenses 0.43% 0.85%
--------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.00% 1.76%
--------------------------------------------------------------------------------
Fee Waiver and/or Expense Reimbursement3 0.01% 0.02%
--------------------------------------------------------------------------------
Net Expenses 0.99% 1.74%
--------------------------------------------------------------------------------
1 You may pay a reduced sales charge on very large purchases.
* There is no sales charge at the time of purchase for purchases of $1
million or more but a sales charge of 1.00% will be assessed on shares
redeemed within 1 year of their purchase.
2 The 1.00% is waived if shares are held for 1 year or longer.
** You will be charged a fee for each wire redemption. This fee is subject
to change.
3 Pursuant to a written contract between Touchstone Advisors, Inc. and
the Trust, Touchstone Advisors has agreed to waive a portion of its
advisory fee and/or reimburse certain expenses in order to limit
Total Annual Fund Operating Expenses to 0.99% for Class A shares and
1.74% for Class C shares. Touchstone Advisors has agreed to
maintain these expense limitations through at least June 30, 2001.
The following example should help you compare the cost of investing in the
Tax-Free Intermediate Term Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time
periods indicated and then sell all of your shares at the end of those periods.
The example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain the same. The costs would be the same
whether or not shares are redeemed at the end of the time periods indicated.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
Class A Shares Class C Shares
1 Year $ 571 $ 300
----------------- --------------------- --------------------
3 Years $ 777 $ 670
----------------- --------------------- --------------------
5 Years $1,000 $1,065
----------------- --------------------- --------------------
10 Years $1,641 $2,171
----------------- --------------------- --------------------
* The examples for the 3, 5 and 10 year periods are calculated using the Total
Annual Fund Operating Expenses before the limits agreed to under the written
contract between Touchstone Advisors and the Trust for the periods after
year 1.
<PAGE>
OHIO INSURED TAX-FREE FUND
The Fund's Investment Goal
--------------------------
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 the
protection of capital.
Its Principal Investment Strategies
-----------------------------------
The Fund invests primarily (at least 65% of total assets) in high quality,
long-term Ohio municipal obligations that are rated within the highest rating
category by a rating agency and that are protected by insurance guaranteeing the
payment of principal and interest in the event of default. The Fund may also
purchase uninsured Ohio municipal obligations if they are either short-term Ohio
municipal obligations or obligations guaranteed by the U.S. Government.
The Fund has a fundamental investment policy that under normal circumstances at
least 80% of its annual income will be exempt from federal income tax, including
the alternative minimum tax, and Ohio personal income tax. This fundamental
policy may not be changed without the approval of the Fund's shareholders.
The Fund may purchase Ohio municipal obligations and other securities that are
rated within the 4 highest rating categories by a rating agency. If a security's
rating is reduced below the 4 highest rating categories, the security will be
sold. The Fund may purchase unrated obligations that are determined to be of
comparable quality.
The Fund will seek to maintain an average weighted maturity of more than 15
years. The Fund may reduce its average weighted maturity if warranted by market
conditions, but will not reduce its average weighted maturity to below 10 years.
The Fund may invest more than 25% of its assets in municipal obligations within
a particular segment of the bond market. The Fund may also invest more than 25%
of its assets in industrial development bonds, which may be backed only by
nongovernmental entities. The Fund will not invest more than 25% of its assets
in securities backed by nongovernmental entities that are in the same industry.
The Fund may also invest in the following types of municipal obligations:
o Tax-exempt bonds, including general obligation bonds, revenue bonds
and industrial development bonds
o Tax-exempt notes
o Tax-exempt commercial paper
o When-issued obligations
o Obligations with puts attached
<PAGE>
The Key Risks
-------------
The Fund's share price will fluctuate. You could lose money on your investment
in the Fund and the Fund could also return less than other investments:
o If interest rates go up, causing the value of any debt securities held by
the Fund to decline
o Because issuers of uninsured obligations may be unable to make timely
payments of interest or principal
o Because the Fund's securities may have longer maturities than other
bond funds, which could cause greater fluctuation in the Fund's share
price
o If the Fund's investments are concentrated in a particular segment
of the bond market and adverse economic developments affecting one
bond affect other bonds in the same segment
o If economic conditions within the State of Ohio decline
o Because the Fund is non-diversified, it may hold a significant
percentage of its assets in the securities of one issuer and the
securities of that issuer may not increase in value as expected
The portfolio manager believes that the Fund's credit risks will be
substantially reduced by insurance. Although insurance reduces the credit risks
to the Fund by protecting against losses from defaults by an issuer, it does not
protect against market fluctuation. Also, there are no guarantees that any
insurer will be able to meet its obligations under an insurance policy.
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other government entity.
As with any mutual fund, there is no guarantee that the Fund will achieve its
goal.
You can find more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading "Investment
Strategies And Risks" later in this Prospectus.
Who May Want to Invest
----------------------
This Fund is most appropriate for you if you are an Ohio resident looking for an
intermediate-term investment with moderate risk that offers income exempt from
both federal and Ohio income tax. Safety of your investment and the receipt of
tax-exempt income are of key importance to you. Additionally, you are willing to
accept some interest rate risk in order to seek a higher income return or higher
yield than a short-term investment, like a money market fund.
The Fund's Performance
----------------------
The bar chart shown below indicates the risks of investing in the Ohio Insured
Tax-Free Fund. It shows changes in the performance of the Fund's Class A shares
from year to year during the past 10 years. The chart does not reflect any sales
charges. Sales charges will reduce return.
<PAGE>
The Fund's past performance does not necessarily indicate how it will perform in
the future.
The return for Class C shares offered by the Fund will differ from the Class A
returns shown in the bar chart, depending on the expenses of that class.
OHIO INSURED TAX-FREE FUND -- CLASS A
YEARS TOTAL RETURN
1990 5.92%
1991 11.01%
1992 8.76%
1993 12.59%
1994 -5.37%
1995 15.86%
1996 3.07%
1997 7.20%
1998 5.54%
1999 -3.10%
During the period shown in the bar chart, the highest quarterly return
was 6.59% (for the quarter ended March 31, 1995) and the lowest
quarterly return was -5.28% (for the quarter ended March 31, 1994).
The year-to-date return of the Fund's Class A shares as of September
30, 2000 is 3.92%.
The following table indicates the risks of investing in the Ohio Insured
Tax-Free Fund. It shows how the Fund's average annual returns for the periods
shown compare to that of the Lehman Brothers 15-Year Municipal General
Obligation Bond Index and the Lehman Brothers General Municipal Index. The
Lehman Brothers 15-Year Municipal General Obligation Bond Index consists of
investment grade bonds with maturities ranging from 12 years up to (but not
exceeding) 17 years. The Lehman Brothers General Municipal Index consists of
a broad selection of investment grade general obligation and revenue bonds with
maturities ranging from 1 to 30 years. On November 1, 2000, the Fund changed
its comparative index from the Lehman Brothers 15-Year Municipal General
Obligation Bond Index to the Lehman Brothers General Municipal Index because the
Sub-Advisor believes the Lehman Brothers General Municipal Index more accurately
reflects the Fund's portfolio composition. The table shows the effect of the
applicable sales charge.
<PAGE>
FOR THE PERIODS ENDED DECEMBER 31, 1999
<TABLE>
<S> <C> <C> <C>
1 Year 5 Years 10 Years
OHIO INSURED TAX-FREE FUND - CLASS A -7.70% 4.51% 5.44%
------------------------------------------ -- --------------- -- ------------- ----- -------------
Lehman Brothers 15-Year Municipal
General Obligation Bond Index -2.92% 7.72% 7.27%
------------------------------------------ -- --------------- -- ------------- ----- -------------
Lehman Brothers General Municipal Index -2.07% 6.91% 6.89%
--------------------------------------------------------------------------------------------------
Since
Class
1 Year 5 Years Started*
------------------------------------------ -- --------------- -- ------------- ----- -------------
OHIO INSURED TAX-FREE FUND - CLASS C -5.02% 4.58% 2.87%
------------------------------------------ -- --------------- -- ------------- ----- -------------
Lehman Brothers 15-Year Municipal
General Obligation Bond Index -2.92% 7.72% 5.27%
------------------------------------------ -- --------------- -- ------------- ----- -------------
Lehman Brothers General Municipal Index -2.07% 6.91% 4.87%
--------------------------------------------------------------------------------------------------
* Class C shares began operations on November 1, 1993.
</TABLE>
The Fund's Fees and Expenses
----------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees paid
directly from your investment)
Class A Shares Class C Shares
Maximum Sales Charge (Load) 4.75% 2.25%
------------------------------------------------- ----------------------------
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 4.75%1 1.25%
------------------------------------------------- ----------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price * 1.00%2
or the amount redeemed, whichever is less)
------------------------------------------------------------------------------
Redemption Fee ** **
------------------------------------------------------------------------------
Exchange Fee None None
------------------------------------------------------------------------------
Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 0.50% 0.50%
--------------------------------------------------------------------------------
Distribution (12b-1) Fees 0.01% 0.54%
--------------------------------------------------------------------------------
Other Expenses 0.26% 0.52%
--------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 0.77% 1.56%
--------------------------------------------------------------------------------
Fee Waiver and/or Expense Reimbursement3 0.02% 0.06%
--------------------------------------------------------------------------------
Net Expenses 0.75% 1.50%
--------------------------------------------------------------------------------
1 You may pay a reduced sales charge on very large purchases.
* There is no sales charge at the time of purchase for purchases of $1
million or more but a sales charge of 1.00% will be
assessed on shares redeemed within 1 year of their purchase.
2 The 1.00% is waived if shares are held for 1 year or longer.
** You will be charged a fee for each wire redemption. This fee is
subject to change.
3 Pursuant to a written contract between Touchstone Advisors, Inc. and
the Trust, Touchstone Advisors has agreed to waive a portion of its
advisory fee and/or reimburse certain expenses in order to limit Total
Annual Fund Operating Expenses to 0.75% for Class A shares and 1.50%
for Class C shares. Touchstone Advisors has agreed to maintain these
expense limitations through at least June 30, 2001.
The following example should help you compare the cost of investing in the Ohio
Insured Tax-Free Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. The costs would be the same whether
or not shares are redeemed at the end of the time periods indicated. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
Class A Shares Class C Shares
1 Year $ 548 $ 276
---------------- --------------------- --------------------
3 Years $ 707 $ 606
---------------- --------------------- --------------------
5 Years $ 881 $ 959
---------------- --------------------- --------------------
10 Years $1,382 $1,953
---------------- --------------------- --------------------
* The examples for the 3, 5 and 10 year periods are calculated using Total
Annual Fund Operating Expenses before the limits agreed to under the
written contract between Touchstone Advisors and the Trust for the periods
after year 1.
<PAGE>
TAX-FREE MONEY FUND
The Fund's Investment Goal
--------------------------
The Tax-Free Money Fund seeks the highest level of interest income exempt from
federal income tax, consistent with the protection of capital. The Fund is a
money market fund which seeks to maintain a constant share price of $1.00 per
share.
Its Principal Investment Strategies
-----------------------------------
The Fund invests primarily in high-quality, short-term municipal obligations
that pay interest that is exempt from federal income tax.
The Fund has a fundamental investment policy that under normal circumstances at
least 80% of its annual income will be exempt from federal income tax, including
the alternative minimum tax. This fundamental policy may not be changed without
the approval of the Fund's shareholders.
The Fund may invest more than 25% of its assets in municipal obligations within
a particular segment of the bond market. The Fund may also invest more than 25%
of its assets in industrial development bonds, which may be backed only by
nongovernmental entities. The Fund will not invest more than 25% of its assets
in securities backed by nongovernmental entities that are in the same industry.
The Fund may also invest in the following types of municipal obligations:
o Tax-exempt bonds, including general obligation bonds, revenue bonds
and industrial development bonds
o Tax-exempt notes
o Tax-exempt commercial paper
o Floating and variable rate municipal obligations
o When-issued obligations
o Obligations with puts attached
To comply with SEC rules pertaining to money market funds, the Fund will limit
its investments as follows:
o The Fund will invest in securities rated in 1 of the 2 highest rating
categories by a rating agency.
o The Fund may purchase unrated securities only if the portfolio manager
determines the securities meet the Fund's quality standards.
o The Fund will only invest in securities that mature in 13 months or less.
o The dollar-weighted average maturity of its portfolio will be 90 days or
less.
<PAGE>
The Key Risks
--------------
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC, the U.S. Treasury or any other government entity. Although the Fund
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Fund. The Fund's yield may decrease:
o If interest rates decrease
o Because issuers may be unable to make timely payments of interest or
principal
o If the Fund's investments are concentrated in a particular segment
of the bond market and adverse economic developments affecting one
bond affect other bonds in the same segment
You can find more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading "Investment
Strategies And Risks" later in this Prospectus.
Who May Want to Invest
----------------------
This Fund is most appropriate for you if you seek a relatively low risk,
short-term investment that offers tax-exempt income. Safety of your investment
and the receipt of tax-exempt income are of key importance to you. Additionally,
you are willing to accept potentially lower returns in order to maintain a
lower, more tolerable level of risk and receive the benefits of tax-exempt
income. This Fund is appropriate for you if you are looking for an investment
that maintains a stable share price and offers the added convenience of writing
checks directly from your account.
The Fund's Performance
----------------------
The bar chart shown below indicates the risks of investing in the Tax-Free Money
Fund. It shows changes in the performance of the Fund's shares from year to year
during the past 10 years.
The Fund's past performance does not necessarily indicate how it will perform in
the future.
TAX-FREE MONEY FUND
YEARS TOTAL RETURN
1990 5.56%
1991 4.38%
1992 2.82%
1993 2.09%
1994 2.49%
1995 3.40%
1996 2.92%
1997 2.97%
1998 2.98%
1999 2.77%
During the period shown in the bar chart, the highest quarterly return
was 1.38% (for the quarter ended December 31, 1990) and the lowest
quarterly return was 0.47% (for the quarter ended September 30, 1993).
For information on the Fund's current and effective 7-day yield, call
800.543.0407.
<PAGE>
The following table indicates the risks of investing in the Tax-Free Money Fund.
It shows the Fund's average annual returns for the periods indicated.
FOR THE PERIODS ENDED DECEMBER 31, 1999
1 Year 5 Years 10 Years
Tax-Free Money Fund 2.77% 3.01% 3.23%
-------------------------------------------------------------------------------
<PAGE>
The Fund's Fees and Expenses
-----------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees paid
directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases None
------------------------------------------------- ----------------------------
Maximum Deferred Sales Charge (Load) None
------------------------------------------------------------------------------
Redemption Fee *
------------------------------------------------------------------------------
Exchange Fee None
------------------------------------------------------------------------------
Check Redemption Processing Fee
------------------------------------------------------------------------------
First 6 checks per month None
------------------------------------------------------------------------------
Additional checks per month $0.25
------------------------------------------------------------------------------
Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 0.50%
------------------------------------------------------------------------
Distribution (12b-1) Fees 0.01%
------------------------------------------------------------------------
Other Expenses 0.49%
------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.00%
------------------------------------------------------------------------
Fee Waiver and/or Expense Reimbursement1 0.11%
------------------------------------------------------------------------
Net Expenses 0.89%
------------------------------------------------------------------------
* You will be charged a fee for each wire redemption. This fee is subject
to change.
1 Pursuant to a written contract between Touchstone Advisors, Inc. and
the Trust, Touchstone Advisors has agreed to waive a portion of its
advisory fee and/or reimburse certain Fund expenses in order to limit
Total Annual Fund Operating Expenses to 0.89%. Touchstone Advisors has
agreed to maintain these expense limitations through at least June 30,
2001.
The following example should help you compare the cost of investing in the
Tax-Free Money Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. The costs would be the same whether
or not shares are redeemed at the end of the periods indicated. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
<PAGE>
1 Year $ 91
----------------- ---------------------
3 Years $ 307
----------------- ---------------------
5 Years $ 542
----------------- ---------------------
10 Years $1,215
----------------- ---------------------
* The examples for the 3, 5 and 10 year periods are calculated using the
Total Annual Fund Operating Expenses before the limits agreed to under the
written contract between Touchstone Advisors and the Trust for the periods
after year 1.
<PAGE>
OHIO TAX-FREE MONEY FUND
The Fund's Investment Goal
--------------------------
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 is a money market fund which seeks to
maintain a constant share price of $1.00 per share.
Its Principal Investment Strategies
-----------------------------------
The Fund invests primarily (at least 65% of total assets) in high-quality,
short-term Ohio municipal obligations issued by the State of Ohio, its agencies
and municipalities, that pay interest that is exempt from both federal income
tax and Ohio personal income tax.
The Fund has a fundamental investment policy that under normal circumstances at
least 80% of its total assets will be invested in short-term municipal
obligations that pay interest that is exempt from federal income tax, including
the alternative minimum tax. This fundamental policy may not be changed without
the approval of the Fund's shareholders.
The Fund may invest more than 25% of its assets in municipal obligations within
a particular segment of the bond market. The Fund may also invest more than 25%
of its assets in industrial development bonds, which may be backed only by
nongovernmental entities. The Fund will not invest more than 25% of its assets
in securities backed by nongovernmental entities that are in the same industry.
The Fund may also invest in the following types of Ohio municipal obligations
and other municipal obligations:
o Tax-exempt bonds, including general obligation bonds, revenue bonds
and industrial development bonds
o Tax-exempt notes
o Tax-exempt commercial paper
o Floating and variable rate municipal obligations
o When-issued obligations
o Obligations with puts attached
To comply with SEC rules pertaining to money market funds, the Fund will limit
its investments as follows:
o The Fund will invest in securities rated in 1 of the 2 highest rating
categories by a rating agency.
o The Fund may purchase unrated securities only if the portfolio manager
determines the securities meet the Fund's quality standards.
o The Fund will only invest in securities that mature in 13 months or less.
o The dollar-weighted average maturity of its portfolio will be 90 days or
less.
<PAGE>
The Key Risks
-------------
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC, the U.S. Treasury or any other government entity. Although the Fund
is a money market fund and seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund. The
Fund's yield may decrease:
o If interest rates decrease
o Because issuers may be unable to make timely payments of interest or
principal
o If the Fund's investments are concentrated in a particular
segment of the bond market and adverse economic developments
affecting one bond affect other bonds in the same segment
o If economic conditions within the State of Ohio decline
o Because the Fund is non-diversified it may hold a significant
percentage of its assets in the securities of one issuer and the
securities of that issuer may not increase in value as expected
You can find more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading "Investment
Strategies And Risks" later in this Prospectus.
Who May Want to Invest
----------------------
This Fund is most appropriate for you if you are an Ohio resident seeking a
relatively low risk, short-term investment that offers income exempt from both
federal and Ohio income tax. Safety of your investment and the receipt of
tax-exempt income are of key importance to you. Additionally, you are willing to
accept potentially lower returns in order to maintain a lower, more tolerable
level of risk and receive the benefits of tax-exempt income. This Fund is
appropriate for you if you are looking for an investment that maintains a stable
share price and offers (retail shareholders) the added convenience of writing
checks directly from their account.
<PAGE>
The Fund's Performance
----------------------
The bar chart shown below indicates the risks of investing in the Ohio Tax-Free
Money Fund. It shows changes in the performance of the Fund's Retail (Class A)
shares from year to year during the past 10 years.
The Fund's past performance does not necessarily indicate how it will perform in
the future.
The return for Institutional shares offered by the Fund will differ from the
returns of Retail shares shown in the bar chart, depending on the expenses of
that class.
OHIO TAX-FREE MONEY FUND - RETAIL SHARES
YEARS TOTAL RETURN
1990 5.48%
1991 4.25%
1992 2.68%
1993 1.99%
1994 2.40%
1995 3.40%
1996 2.94%
1997 3.08%
1998 2.96%
1999 2.70%
During the period shown in the bar chart, the highest quarterly return
was 1.37% (for the quarter ended December 31, 1990) and the lowest
quarterly return was 0.46% (for the quarter ended March 31, 1994).
For information on the Fund's current and effective 7-day yield, call
800.543.0407.
The following table indicates the risks of investing in the Ohio Tax-Free Money
Fund. It shows the Fund's average annual returns for the periods indicated.
<PAGE>
FOR THE PERIODS ENDED DECEMBER 31, 1999
1 Year 5 Years 10 Years
Ohio Tax-Free Money Fund - Retail Shares 2.70% 3.01% 3.18%
-------------------------------------------------------------------------------
1 Year Since Class Started*
--------------------------------------------------------------------------------
Ohio Tax-Free Money Fund - Institutional
Shares 2.96% 3.17%
--------------------------------------------------------------------------------
*Institutional shares began operations on January 7, 1997.
The Fund's Fees and Expenses
----------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees paid
directly from your investment)
-------------------------------------------------------------------------------
Retail Institutional
Shares Shares
Maximum Sales Charge (Load) Imposed on Purchases None None
------------------------------------------------------------------------ -------
Maximum Deferred Sales Charge (Load) None None
------------------------------------------------------------------------ -------
Redemption Fee * None
------------------------------------------------------------------------ -------
Exchange Fee None None
------------------------------------------------------------------------ -------
Check Redemption Processing Fee Checking
Not Available
------------------------------------------------------------------------ -------
First 6 checks per month None
------------------------------------------------------------------------ -------
Additional checks per month $0.25
------------------------------------------------------------------------ -------
Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 0.50% 0.50%
--------------------------------------------------------------------------------
Distribution (12b-1) Fees 0.23% None
--------------------------------------------------------------------------------
Other Expenses 0.04% 0.02%
--------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 0.77% 0.52%
--------------------------------------------------------------------------------
Fee Waiver and/or Expense Reimbursement1 0.02% 0.02%
--------------------------------------------------------------------------------
Net Expenses 0.75% 0.50%
--------------------------------------------------------------------------------
* Retail shareholders will be charged a fee for each wire redemption. This
fee is subject to change.
<PAGE>
1 Pursuant to a written contract between Touchstone Advisors, Inc. and
the Trust, Touchstone Advisors has agreed to waive a portion of its
advisory fee and/or reimburse certain expenses in order to limit Total
Annual Fund Operating Expenses to 0.75% for Retail Shares and 0.50% for
Institutional Shares. Touchstone Advisors has agreed to maintain these
expense limitations through at least June 30, 2001.
The following example should help you compare the cost of investing in the Ohio
Tax-Free Money Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. The costs would be the same whether
or not shares are redeemed at the end of the periods indicated. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
Institutional
Retail Shares Shares
1 Year $ 77 $ 51
----------------- --------------------- --------------------
3 Years $244 $165
----------------- --------------------- --------------------
5 Years $426 $289
----------------- --------------------- --------------------
10 Years $952 $651
----------------- --------------------- --------------------
* The examples for the 3, 5 and 10 year periods are calculated using the
Total Annual Fund Operating Expenses before the limits agreed to under
the written contract between Touchstone Advisors and the Trust for the
periods after year 1.
<PAGE>
CALIFORNIA TAX-FREE MONEY FUND
The Fund's Investment Goal
--------------------------
The California Tax-Free Money Fund seeks the highest level of current income
exempt from federal income tax and California income tax, consistent with
liquidity and stability of principal. The Fund is a money market fund which
seeks to maintain a constant share price of $1.00 per share.
Its Principal Investment Strategies
-----------------------------------
The Fund invests primarily (at least 65% of total assets) in high-quality,
short-term California municipal obligations issued by the State of California,
its agencies and municipalities, that pay interest that is exempt from both
federal income tax and California income tax.
The Fund has a fundamental investment policy that under normal circumstances at
least 80% of its annual income will be exempt from federal income tax, including
the alternative minimum tax. This fundamental policy may not be changed without
the approval of the Fund's shareholders.
The Fund may invest more than 25% of its assets in municipal obligations within
a particular segment of the bond market. The Fund may also invest more than 25%
of its assets in industrial development bonds, which may be backed only by
non-governmental entities. The Fund will not invest more than 25% of its assets
in securities backed by non-governmental entities that are in the same industry.
The Fund may also invest in the following types of California municipal
obligations and other municipal obligations:
o Tax-exempt bonds, including general obligation bonds, revenue bonds and
industrial development bonds
o Tax-exempt notes
o Tax-exempt commercial paper
o Floating and variable rate municipal obligations
o When-issued obligations
o Obligations with puts attached
To comply with SEC rules pertaining to money market funds, the Fund will limit
its investments as follows:
o The Fund will invest in securities rated in 1 of the 2 highest rating
categories by a rating agency.
o The Fund may purchase unrated securities only if the portfolio manager
determines the securities meet the Fund's quality standards.
o The Fund will only invest in securities that mature in 13 months or less.
o The dollar-weighted average maturity of its portfolio will be 90 days or
less.
<PAGE>
The Key Risks
--------------
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC, the U.S. Treasury or any other government entity. Although the Fund
is a money market fund and seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund. The
Fund's yield may decrease:
o If interest rates decrease
o Because issuers may be unable to make timely payments of interest or
principal
o If the Fund's investments are concentrated in a particular
segment of the bond market and adverse economic developments
affecting one bond affect other bonds in the same segment
o If economic conditions within the State of California decline
o Because the Fund is non-diversified it may hold a significant
percentage of its assets in the securities of one issuer and the
securities of that issuer may not increase in value as expected
You can find more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading "Investment
Strategies And Risks" later in this Prospectus.
Who May Want to Invest
----------------------
This Fund is most appropriate for you if you are a California resident seeking a
relatively low risk, short-term investment that offers income exempt from both
federal and California income tax. Safety of your investment and the receipt of
tax-exempt income are of key importance to you. Additionally, you are willing to
accept potentially lower returns in order to maintain a lower, more tolerable
level of risk and receive the benefits of tax-exempt income. This Fund is
appropriate for you if you are looking for an investment that maintains a
constant share price and offers the added convenience of writing checks directly
from your account.
<PAGE>
The Fund's Performance
-----------------------
The bar chart shown below indicates the risks of investing in the California
Tax-Free Money Fund. It shows changes in the performance of the Fund's shares
from year to year during the past 10 years.
The Fund's past performance does not necessarily indicate how it will perform in
the future.
CALIFORNIA TAX-FREE MONEY FUND
YEARS TOTAL RETURN
1990 5.48%
1991 4.25%
1992 2.77%
1993 1.95%
1994 2.29%
1995 3.18%
1996 2.78%
1997 2.89%
1998 2.82%
1999 2.52%
During the period shown in the bar chart, the highest quarterly return
was 1.29% (for the quarter ended December 31, 1990) and the lowest
quarterly return was 0.44% (for the quarter ended March 31, 1994).
For information on the Fund's current and effective 7-day yield, call
800.543.0407.
The following table indicates the risks of investing in the California Tax-Free
Money Fund. It shows the Fund's average annual returns for the periods
indicated.
<PAGE>
FOR THE PERIODS ENDED DECEMBER 31, 1999
Since Fund
1 Year 5 Years 10 Years Started*
California Tax-Free Money Fund 2.52% 2.84% 3.09% 3.20%
-------------------------------------------------------------------------------
*The Fund began operations on July 25, 1989.
The Fund's Fees and Expenses
----------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees paid
directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases None
------------------------------------------------- ----------------------------
Maximum Deferred Sales Charge (Load) None
------------------------------------------------------------------------------
Redemption Fee *
------------------------------------------------------------------------------
Exchange Fee None
------------------------------------------------------------------------------
Check Redemption Processing Fee
------------------------------------------------------------------------------
First 6 checks per month None
------------------------------------------------------------------------------
Additional checks per month $0.25
------------------------------------------------------------------------------
Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 0.50%
------------------------------------------------------------------------
Distribution (12b-1) Fees 0.05%
------------------------------------------------------------------------
Other Expenses 0.20%
------------------------------------------------------------------------
Total Annual Fund Operating Expenses 0.75%
------------------------------------------------------------------------
* You will be charged a fee for each wire redemption. This fee is subject
to change.
<PAGE>
The following example should help you compare the cost of investing in the
California Tax-Free Money Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. The costs would be the same whether
or not shares are redeemed at the end of the periods indicated. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
1 Year $ 77
----------------- ---------------------
3 Years $240
----------------- ---------------------
5 Years $417
----------------- ---------------------
10 Years $930
----------------- ---------------------
<PAGE>
FLORIDA TAX-FREE MONEY FUND
The Fund's Investment Goal
--------------------------
The Florida Tax-Free Money Fund seeks the highest level of interest income
exempt from federal income tax, consistent with liquidity and stability of
principal. The Fund is a money market fund which seeks to maintain a constant
share price of $1.00 per share.
Its Principal Investment Strategies
-----------------------------------
The Fund invests primarily (at least 65% of total assets) in high-quality,
short-term Florida municipal obligations issued by the State of Florida, its
agencies and municipalities, that pay interest that is exempt from both federal
income tax and the Florida intangible personal property tax.
The Fund has a fundamental investment policy that under normal circumstances at
least 80% of its annual income will be exempt from federal income tax, including
the alternative minimum tax. This fundamental policy may not be changed without
the approval of the Fund's shareholders.
The Fund may invest more than 25% of its assets in municipal obligations within
a particular segment of the bond market. The Fund may also invest more than 25%
of its assets in industrial development bonds, which may be backed only by
non-governmental entities. The Fund will not invest more than 25% of its assets
in securities backed by non-governmental entities that are in the same industry.
The Fund may also invest in the following types of Florida municipal obligations
and other municipal obligations:
o Tax-exempt bonds, including general obligation bonds, revenue bonds and
industrial development bonds
o Tax-exempt notes
o Tax-exempt commercial paper
o Floating and variable rate municipal obligations
o When-issued obligations
o Obligations with puts attached
To comply with SEC rules pertaining to money market funds, the Fund will limit
its investments as follows:
o The Fund will invest in securities rated in 1 of the 2 highest rating
categories by a rating agency.
o The Fund may purchase unrated securities only if the portfolio manager
determines the securities meet the Fund's quality standards.
o The Fund will only invest in securities that mature in 13 months or less.
o The dollar-weighted average maturity of its portfolio will be 90 days or
less.
<PAGE>
The Key Risks
-------------
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC, the U.S. Treasury or any other government entity. Although the Fund
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Fund. The Fund's yield may decrease:
o If interest rates decrease
o Because issuers may be unable to make timely payments of interest or
principal
o If the Fund's investments are concentrated in a particular segment
of the bond market and adverse economic developments affecting one
bond affect other bonds in the same segment
o If economic conditions within the State of Florida decline
o Because the Fund is non-diversified it may hold a significant
percentage of its assets in the securities of one issuer and the
securities of that issuer may not increase in value as expected
You can find more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading "Investment
Strategies And Risks" later in this Prospectus.
Who May Want to Invest
----------------------
This Fund is most appropriate for you if you are a Florida resident seeking a
relatively low risk, short-term investment that offers income exempt from both
federal income tax and the Florida intangible personal property tax. Safety of
your investment and the receipt of tax-exempt income are of key importance to
you. Additionally, you are willing to accept potentially lower returns in order
to maintain a lower, more tolerable level of risk and receive the benefits of
tax-exempt income. This Fund is appropriate for you if you are looking for an
investment which maintains a constant share price and offers the added
convenience of writing checks directly from your account.
<PAGE>
The Fund's Performance
----------------------
The bar chart shown below indicates the risks of investing in the Florida
Tax-Free Money Fund. It shows changes in the performance of the Fund's shares
from year to year since the Fund started.
The Fund's past performance does not necessarily indicate how it will perform in
the future.
FLORIDA TAX-FREE MONEY FUND
YEARS TOTAL RETURN
1993 2.24%
1994 2.40%
1995 3.56%
1996 2.98%
1997 3.00%
1998 2.94%
1999 2.63%
During the period shown in the bar chart, the highest quarterly return
was 0.94% (for the quarter ended June 30, 1995) and the lowest
quarterly return was 0.49% (for the quarter ended March 31, 1994).
For information on the Fund's current and effective 7-day yield, call
800.543.0407.
The table below indicates the risks of investing in the Florida Tax-Free Money
Fund. It shows the Fund's average annual returns for the periods indicated.
For the periods ended December 31, 1999
Since
Fund
1 Year 5 Years Started*
Florida Tax-Free Money Fund 2.63% 3.02% 2.82%
-----------------------------------------------------------------------------
*The Fund began operations on November 13, 1992.
<PAGE>
The Fund's Fees and Expenses
----------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees paid
directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases None
------------------------------------------------- ----------------------------
Maximum Deferred Sales Charge (Load) None
------------------------------------------------------------------------------
Redemption Fee *
------------------------------------------------------------------------------
Exchange Fee None
------------------------------------------------------------------------------
Check Redemption Processing Fee
------------------------------------------------------------------------------
First 6 checks per month None
------------------------------------------------------------------------------
Additional checks per month $0.25
------------------------------------------------------------------------------
Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 0.50%
------------------------------------------------------------------------
Distribution (12b-1) Fees 0.09%
------------------------------------------------------------------------
Other Expenses 0.41%
------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.00%
------------------------------------------------------------------------
Fee Waiver and/or Expense Reimbursement1 0.27%
------------------------------------------------------------------------
Net Expenses 0.73%
------------------------------------------------------------------------
* You will be charged a fee for each wire redemption. This fee is subject
to change.
1 Pursuant to a written contract between Touchstone Advisors, Inc. and
the Trust, Touchstone Advisors has agreed to waive a portion of its
advisory fee and/or reimburse certain expenses in order to limit Total
Annual Fund Operating Expenses to 0.75% or below. Touchstone Advisors
has agreed to maintain these expense limitations through at least June
30, 2001.
The following example should help you compare the cost of investing in the
Florida Tax-Free Money Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. The costs would be the same whether
or not shares are redeemed at the end of the periods indicated. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
1 Year $ 75
----------------- ---------------------
3 Years $ 292
----------------- ---------------------
5 Years $ 526
----------------- ---------------------
10 Years $1,200
----------------- ---------------------
* The examples for the 3, 5 and 10 year periods are calculated using the
Total Annual Fund Operating Expenses before the limits agreed to under
the written contract between Touchstone Advisors and the Trust for the
periods after year 1.
<PAGE>
INVESTMENT STRATEGIES AND RISKS
Can a Fund Depart From its Normal Strategies?
---------------------------------------------
Each Fund may depart from its principal investment strategies by taking
temporary defensive positions in response to adverse market, economic or
political conditions. During these times, a Fund may not achieve its investment
goals.
Can a Fund Change Its Investment Goal?
--------------------------------------
The Tax-Free Intermediate Term Fund, the Ohio Insured Tax-Free Fund and the Ohio
Tax-Free Money Fund may each change its investment goal(s) by a vote of the
Board of Trustees, without shareholder approval. You would be notified at least
30 days before any such change took effect.
Do the Funds Have Other Investment Strategies in Addition to Their
Principal Investment Strategies?
------------------------------------------------------------------
The Tax-Free Intermediate Term Fund and Ohio Insured Tax-Free Fund may also
invest in:
o Floating and variable rate municipal obligations
o Lease obligations
The Funds at a Glance.
----------------------
The following two tables can give you a quick basic understanding of the types
of securities a Fund tends to invest in and some of the main risks associated
with a Fund's investments. You should read all of the information about a Fund
and its risks before deciding to invest.
<PAGE>
How Can I Tell, at a Glance, Which Types of Securities a Fund Might Invest in?
------------------------------------------------------------------------------
The following table shows the types of securities in which each Fund generally
will invest. Investments marked P are principal investments. Investments marked
O are other types of securities in which the Fund may invest to a lesser extent.
Some of the Funds' investments are described in detail below.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Tax-Free California Florida
Intermediate Ohio Insured Tax-Free Ohio Tax-Free Tax-Free Tax-Free
Term Fund Tax-Free Fund Money Fund Money Fund Money Fund Money Fund
Financial Instruments
---------------------
Invests primarily in P P P P P P
Municipal Obligations
Invests in money market P P P P
instruments
Invests primarily in
investment grade debt P P
securities
Invests in floating and
variable rate municipal O O P P P P
obligations
Invests in when-issued P P P P P P
obligations
Invests in obligations with P P P P P P
puts attached
Invests in lease obligations O O
Investment Techniques
---------------------
Emphasizes federal P P P P P P
tax-exempt income
Emphasizes state tax-exempt P P P P
income
Emphasizes insured P
municipal obligations
</TABLE>
Additional Information About Fund Investments
---------------------------------------------
MUNICIPAL OBLIGATIONS are debt securities issued by states and their political
subdivisions, agencies, authorities and instrumentalities to finance public
works facilities, to pay general operating expenses or to refinance outstanding
debt. Municipal obligations may also be issued to finance various private
activities for the construction of housing, educational or medical facilities or
the financing of privately owned or operated facilities. The two principal types
of municipal obligations are general obligation bonds and revenue bonds,
including industrial revenue bonds. General obligation bonds are backed by the
issuer's full faith and credit and taxing power. Revenue bonds are backed by the
revenues of a specific project, facility or tax. Industrial revenue bonds are
backed by the credit of a private user of the facility. Municipal obligations
pay interest that is, in the opinion of bond counsel to the issuer, exempt from
federal income tax, including the alternative minimum tax.
<PAGE>
o Ohio Municipal Obligations are issued by the State of Ohio and
its political subdivisions, agencies, authorities and
instrumentalities. They pay interest that is, in the opinion of
bond counsel to the issuer, exempt from both federal income tax
and Ohio personal income tax.
o California Municipal Obligations are issued by the State of
California and its political subdivisions, agencies, authorities
and instrumentalities. They pay interest that is, in the opinion
of bond counsel to the issuer, exempt from both federal income tax
and California income tax.
o Florida Municipal Obligations are issued by the State of Florida
and its political subdivisions, agencies, authorities and
instrumentalities. They pay interest that is, in the opinion of
bond counsel to the issuer, exempt from both federal income tax
and the Florida intangible personal property tax.
FLOATING AND VARIABLE RATE MUNICIPAL OBLIGATIONS are municipal obligations with
interest rates that are adjusted when a specific interest rate index changes
(floating rate obligations) or on a schedule (variable rate obligations).
Although there may not be an active secondary market for a particular floating
or variable rate obligation, these obligations usually have demand features
which permit a Fund to demand payment in full of the principal and interest.
Obligations with demand features are often secured by letters of credit issued
by a bank or other financial institution. A letter of credit may reduce the risk
that an entity will not be able to meet the Fund's demand for repayment of
principal and interest.
WHEN-ISSUED OBLIGATIONS are municipal obligations that are paid for and
delivered within 15 to 45 days after the date of purchase. A Fund investing in
when-issued obligations will maintain a segregated account of cash or liquid
securities to pay for its when-issued obligations and this account will be
valued daily in order to account for market fluctuations in the value of its
when-issued obligations.
OBLIGATIONS WITH PUTS ATTACHED are municipal obligations that may be resold back
to the seller at a specific price or yield within a specific period of time. A
Fund will purchase obligations with puts attached for liquidity purposes and may
pay a higher price for obligations with puts attached 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.
LEASE OBLIGATIONS are municipal obligations that constitute participations in
lease obligations of municipalities to acquire land and a wide variety of
equipment and facilities. While a lease obligation is not a general obligation
of the municipality that has pledged its taxing power, a lease obligation is
ordinarily backed by the municipality's promise to budget for, appropriate for
and make payments due under the obligation. Some lease obligations may contain
specific clauses providing that the municipality has no obligation to make lease
or installment purchase payments in future years unless money is appropriated
for such purpose on an annual basis.
INSURED MUNICIPAL OBLIGATIONS are municipal obligations that require an insurer
to make payments of principal and interest, when due, if the issuer defaults on
its payments. The obligations purchased by the Ohio Insured Tax-Free Fund will
be insured either through an insurance policy purchased by the issuer of the
obligation or through an insurance policy purchased by the Fund.
<PAGE>
HOW CAN I TELL, AT A GLANCE, A FUND'S KEY RISKS?
The following table shows some of the main risks to which each Fund is subject.
Risks marked P are principal risks. Risks marked O are other risks that may
impact the Fund to a lesser extent. Each risk is described in detail below.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Tax-Free California Florida
Intermediate Ohio Insured Tax-Free Ohio Tax-Free Tax-Free Tax-Free Money
Term Fund Tax-Free Fund Money Fund Money Fund Money Fund Fund
Credit Risk P P P P P P
-----------
Interest Rate Risk P P P P P P
------------------
Non-Diversification Risk P P P P
------------------------
Concentration Risk P P P P P P
------------------
Tax Risk O O O O O O
--------
</TABLE>
Risks of Investing in the Funds
-------------------------------
CREDIT RISK. The securities in a Fund's portfolio are subject to the possibility
that a deterioration in the financial condition of an issuer, or a deterioration
in general economic conditions could cause an issuer to fail to make timely
payments of principal or interest, when due. Also, some municipal obligations
may be backed by a letter of credit issued by a bank or other financial
institution. Adverse developments affecting banks could have a negative effect
on the value of a Fund's portfolio securities.
INTEREST RATE RISK. Each of the Tax-Free Intermediate Term Fund and the Ohio
Insured Tax-Free Fund is subject to the risk that the market value of its
portfolio securities will decline because of rising interest rates. The prices
of debt securities are generally linked to the prevailing market interest rates.
In general, when interest rates rise, the prices of debt securities fall, and
when interest rates fall, the prices of debt securities rise. The price
volatility of a debt security also depends on its maturity. Generally, the
longer the maturity of a debt security, the greater its sensitivity to changes
in interest rates. To compensate investors for this higher risk, debt securities
with longer maturities generally offer higher yields than debt securities with
shorter maturities.
The yield of the Tax-Free Money Fund, the Ohio Tax-Free Money Fund, the
California Tax-Free Money Fund and the Florida Tax-Free Money Fund will vary
from day to day due to changes in interest rates. Generally, each Fund's yield
will increase when interest rates increase and will decrease when interest rates
decrease.
NON-DIVERSIFICATION RISK. A non-diversified Fund may invest more than 5% of its
assets in the securities of a single issuer. This may cause the value of the
Fund's shares to be more sensitive to any single economic, business, political
or regulatory occurrence than the value of shares in a diversified fund.
CONCENTRATION RISK. A Fund that invests a significant portion of its total
assets (more than 25%) in the securities of a particular bond market segment
(e.g., housing agency bonds or airport bonds) or in the securities of a
particular state is subject to the risk that adverse circumstances will have a
greater impact on the Fund than a fund that does not concentrate its
investments. It is possible that economic, business or political developments or
other changes affecting one security in the area of concentration will affect
other securities in that area of concentration in the same manner, thereby
increasing the risk of such investments.
o Ohio Municipal Obligations. Economic and political conditions in the
state of Ohio may impact the value of Ohio Municipal Obligations.
Ohio's economy retains a strong industrial manufacturing base while
steady growth in the services and trade sectors diversifies the
state's overall employment. Ohio's economy continued to perform well
in 1999. Unemployment remains low at 4% in November 1999 and overall
job growth, led by the services and trade sectors, tracks the
national average. At the end of the 1999 fiscal year the state had a
general revenue fund balance of $2.6 billion. The state's 2000-2001
budget reflects a 6% spending increase in fiscal 2000, with spending
for education being the highest priority. The state is working to
correct the constitutional deficiencies of the current education
funding system in response to a 1998 decision by the Ohio Supreme
Court declaring the current system unconstitutional. The Ohio Supreme
Court's decision poses challenges to the state to balance education
funding with competing state spending requirements, while maintaining
its strong financial position. Although no issuers of Ohio Municipal
Obligations are currently in default on their payments of principal
and interest, a default could adversely impact the market values and
marketability of all Ohio Municipal Obligations.
o California Municipal Obligations. Economic and political conditions
in the state of California may impact the value of California
Municipal Obligations. California has a broad-based economy, with
manufacturing representing just 14% of state employment, trade 23%,
services 31% and government 16%. Although the nationwide recession
of the early 1990s severely affected several key industries, such as
defense, aerospace and high technology, gains in the construction,
entertainment, tourism and computer sectors (particularly Internet-
related firms) have helped drive the recent recovery. The state
accounted for 40% of the nation's non-farm job growth in August 1999.
This has led to improved state finances and has eliminated the need
to borrow externally across fiscal years for cash flow purposes.
After running general fund operating deficits, the state ended fiscal
1998 with a general fund surplus of $3 billion. The state's future
budgets will be challenged by school enrollment growth and
Proposition 98 mandated school funding levels, prison funding
required by new mandatory sentencing laws, social service needs and a
two-thirds legislative requirement for budget passage. Although no
issuers of California municipal obligations are currently in default
on their payments of interest and principal, a default could
adversely impact the market values and marketability of all
California Municipal Obligations.
<PAGE>
o Florida Municipal Obligations. Economic and political conditions in
the state of Florida may impact the value of Florida Municipal
Obligations. Florida has a service-based economy that continues to
diversify and grow at a steady pace. Florida does not have a tax on
personal income but has an ad valorem tax on intangible personal
property as well as sales and use taxes. These taxes are the
principal source of funds to meet state expenses, including the
repayment of its debt obligations. As a result, the state has a
relatively narrow tax base with 71% of its revenues derived from the
6% sales and use tax. The state's income structure depends more on
property income (dividends, income and rent) and transfer payments
(social security and pension benefits) due to the significant
retirement age population. Despite this reliance on a cyclical
revenue source, Florida has managed its overall financial program
well. The state has generated operating surpluses in recent years
while maintaining tax levels and funding growth-related service
requirements. Florida's future budgets will be challenged by the
passage of a constitutional amendment obligating the state to make
ample provision for high-quality education for all children, limits
on state sales tax growth due to the rapid expansion of Internet
commerce, and the effect of international economic uncertainty on the
state's exports and tourism business. Although no issuers of
Florida Municipal Obligations are currently in default on their
payments of principal and interest, a default could adversely impact
the market values and marketability of all Florida Municipal
Obligations.
TAX RISK. Certain provisions of the Internal Revenue Code relating to the
issuance of municipal obligations may reduce the volume of municipal securities
that qualify for federal tax exemptions. 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 became law, it may reduce the
number of municipal obligations available for purchase by a Fund and could
adversely affect the Fund's shareholders. If this occurs, the Fund would
reevaluate its investment goals and strategies and may submit possible changes
in its structure to shareholders.
THE FUNDS' MANAGEMENT
Investment Advisor
------------------
Touchstone Advisors, Inc. (the "Advisor" or "Touchstone Advisors") located at
221 East Fourth Street, Cincinnati, Ohio 45202, is the investment advisor for
the Funds.
Touchstone Advisors has been registered as an investment advisor under the
Investment Advisers Act of 1940, as amended (the "Advisers Act") since 1994. As
of December 31, 1999, Touchstone Advisors had approximately $422 million in
assets under management.
Touchstone Advisors is responsible for selecting each Fund's Sub-Advisor,
subject to review by the Board of Trustees. Touchstone Advisors selects a
Sub-Advisor that has shown good investment performance in its areas of
expertise. Touchstone Advisors considers various factors in evaluating the
Funds' Sub-Advisor, including:
o Level of knowledge and skill
o Performance as compared to its peers or benchmark
o Consistency of performance over 5 years or more
o Level of compliance with investment rules and strategies
o Employees, facilities and financial strength
o Quality of service
Touchstone Advisors will also continually monitor the performance of the Funds'
Sub-Advisor through various analyses and through in-person, telephone and
written consultations with the Sub-Advisor.
Touchstone Advisors discusses its expectations for performance with the
Sub-Advisor. Touchstone Advisors provides written evaluations and
recommendations to the Board of Trustees, including whether or not a
Sub-Advisor's contract should be renewed, modified or terminated.
Touchstone Advisors is responsible for running all of the operations of the
Funds, except for those that are subcontracted to the Sub-Advisor, custodian,
transfer agent and administrator.
Each Fund will pay Touchstone Advisors a fee for its services. Out of this fee
Touchstone Advisors pays the Sub-Advisor a fee for its services. The fee to be
paid to Touchstone Advisors by each Fund is 0.50% of assets up to $100 million,
0.45% of assets from $100 million to $200 million, 0.40% of assets from $200
million to $300 million, and 0.375% of assets over $300 million.
Fund Sub-Advisor
----------------
The Sub-Advisor makes the day-to-day decisions regarding buying and selling
specific securities for each Fund. The Sub-Advisor manages the investments
held by a Fund according to the Fund's investment goals and strategies.
Sub-Advisor to the Funds
------------------------
FORT WASHINGTON INVESTMENT ADVISORS, INC. (FORT WASHINGTON)
420 East Fourth Street, Cincinnati, OH 45202
Fort Washington has been registered as an investment advisor under the
Advisers Act since 1990. Fort Washington provides investment advisory
services to individual and institutional clients. As of December 31, 1999,
Fort Washington had assets under management of $18 billion. Fort Washington
has been managing each Fund since May 1, 2000.
John J. Goetz, CFA, is primarily responsible for managing each Fund's
portfolio and has been managing the Funds since October 1986. Mr. Goetz has
been a Vice President and Senior Portfolio Manager of Fort Washington since
May 2000. He was employed by the Trust's previous investment adviser from
1981 until April 2000.
Fort Washington is an affiliate of Touchstone Advisors. Therefore,
Touchstone Advisors may have a conflict of interest when making decisions
to keep Fort Washington as the Funds' Sub-Advisor. The Board of Trustees
reviews all of Touchstone Advisors' decisions to reduce the possibility of
a conflict of interest situation.
<PAGE>
INVESTING WITH TOUCHSTONE
CHOOSING THE APPROPRIATE INVESTMENTS TO MATCH YOUR GOALS. Investing well
requires a plan. We recommend that you meet with your financial advisor to
plan a strategy that will best meet your financial goals.
Opening an Account
-------------------
You can contact your financial advisor to purchase shares of the Funds. You
may also purchase shares of any Fund directly from Touchstone Securities,
Inc. ("Touchstone"). In any event, you must complete the Investment
Application included in this Prospectus. You may also obtain an Investment
Application from Touchstone or your financial advisor.
! INVESTOR ALERT: Touchstone may choose to refuse any purchase order.
You should read this Prospectus carefully and then determine how much you
want to invest. Check below to find the minimum investment amount required
to purchase shares as well as to learn about the various ways you can
purchase your shares
Class A Shares Institutional
Class C Shares Shares
Initial Additional Initial Additional
Investment Investment Investment Investment
Regular Account $1,000 None $1,000,000 None
---------------
Investments through the Automatic $50 $50 Not Not
Investment Plan Available Available
---------------
! INVESTOR ALERT: Touchstone may change these initial and additional
investment minimums at any time.
Pricing of Fund Shares
----------------------
The share price, also called net asset value (NAV), of each of the Tax-Free
Money Fund, the Ohio Tax-Free Money Fund, the California Tax-Free Money Fund and
the Florida Tax-Free Money Fund (the "Money Market Funds") is determined as of
12:00 noon and 4:00 p.m., Eastern time. The offering price (NAV plus a sales
charge, if applicable) of each of the Tax-Free Intermediate Term Fund and the
Ohio Insured Tax-Free Fund is determined as of the close of trading (normally
4:00 p.m. Eastern time) every day the New York Stock Exchange (NYSE) is open.
Each Fund calculates its NAV per share, generally using market prices, by
dividing the total value of its net assets by the number of shares outstanding.
Shares are purchased at NAV (or the next offering price) determined after your
purchase or sale order is received in proper form by Touchstone.
<PAGE>
The Money Market Funds seek to maintain a constant share price of $1.00 per
share by valuing investments on an amortized cost basis. Under the amortized
cost method of valuation, each Money Market Fund maintains a dollar-weighted
average portfolio maturity of 90 days or less, purchases only United States
dollar-denominated securities with maturities of 13 months or less and invests
only in securities that meet its quality standards and present minimal credit
risks. The Money Market Funds' obligations are valued at original cost adjusted
for amortization of premium or accumulation of discount, rather than at market
value. This method should enable the Money Market Funds to maintain a stable net
asset value per share. However, there is no assurance that any Money Market Fund
will be able to do so.
The tax-exempt assets held by the Tax-Free Intermediate Term Fund and the Ohio
Insured Tax-Free Fund are valued by an outside independent pricing service. The
service uses a computerized grid matrix of tax-exempt securities and evaluations
by its staff to determine the fair value of the securities. If the Sub-Advisor
believes that the valuation provided by the service does not accurately reflect
the fair value of a tax-exempt security, it will value the security at the
average of the prices quoted by at least two independent market makers. The
quoted price will represent the market maker's opinion of the price a willing
buyer would pay for the security. All other securities (and other assets) of the
Funds for which market quotations are not available will be determined in good
faith using procedures established by the Board of Trustees.
Choosing a Class of Shares
--------------------------
(TAX-FREE INTERMEDIATE TERM FUND AND OHIO INSURED TAX-FREE FUND)
The Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund each
offer Class A and Class C shares. Each class of shares has different sales
charges and distribution fees. The amount of sales charges and distribution fees
you pay will depend on which class of shares you decide to purchase.
Class A Shares
--------------
The offering price of Class A shares of each of the Tax-Free Intermediate Term
Fund and the Ohio Insured Tax-Free Fund is equal to its NAV plus a front-end
sales charge that you pay when you buy your shares. The front-end sales charge
is generally deducted from the amount of your investment.
The following table shows the amount of front-end sales charge you will pay on
purchases of Class A shares for accounts opened after July 31, 1999. Accounts
opened before July 31, 1999 are subject to different sales charges. These sales
charges are shown in the Statement of Additional Information ("SAI"). The amount
of front-end sales charge in the following table is shown as a percentage of (1)
offering price and (2) the net amount invested after the charge has been
subtracted. Note that the front-end sales charge gets lower as your investment
amount gets larger.
<PAGE>
Sales Sales
Charge Charge
as % of as % of
Offering Net Amount
Amount of Your Investment Price Invested
Under $50,000 4.75% 4.99%
$50,000 but less than $100,000 4.50% 4.72%
$100,000 but less than $250,000 3.50% 3.63%
$250,000 but less than $500,000 2.95% 3.04%
$500,000 but less than $1 million 2.25% 2.31%
$1 million or more 0.00% 0.00%
There is no front-end sales charge if you invest $1 million or more in a Fund.
This includes large total purchases made through programs such as Aggregation,
Concurrent Purchases, Letters of Intent and Rights of Accumulation. These
programs are described more fully in the SAI. In addition, there is no front-end
sales charge on purchases by certain persons related to the Funds or its service
providers and certain other persons listed in the SAI. At the option of the
Trust, the front-end sales charge may be included on purchases by such persons
in the future.
If you redeem shares that you purchased as part of the $1 million purchase
within 1 year, you will pay a contingent deferred sales charge (a sales charge
you pay when you redeem your shares) of 1% on the shares redeemed.
The Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund have each
adopted a distribution plan under Rule 12b-1 of the Investment Company Act of
1940, as amended (the "1940 Act") for its Class A shares. This plan allows each
Fund to pay distribution fees for the sale and distribution of its Class A
shares.
Under the plan, each Fund pays an annual fee of up to 0.25% of its average daily
net assets that are attributable to Class A shares. Because these fees are paid
out of a Fund's assets on an ongoing basis, these fees will increase the cost of
your investment and over time may cost you more than paying other types of sales
charges.
Class C Shares
--------------
The offering price of Class C shares of each of the Tax-Free Intermediate Term
Fund and the Ohio Insured Tax-Free Fund is equal to its NAV plus a 1.25%
front-end sales charge that you pay when you buy your shares. The front-end
sales charge is generally deducted from the amount of your investment. A
contingent deferred sales charge of 1.00% of the offering price will be charged
on Class C shares redeemed within 1 year after you purchased them.
No contingent deferred sales charge is applied if:
o The shares which you redeem were acquired through the reinvestment
of dividends or capital gains distributions
o The amount redeemed resulted from increases in the value of the
account above the amount of the total purchase payments
When we determine whether a contingent deferred sales charge is payable on a
redemption, we assume that:
o The redemption is made first from amounts free of any contingent
deferred sales charge; then
o From the earliest purchase payment(s) that remain invested in the Fund
<PAGE>
When we determine if amounts are available for redemption free of any contingent
deferred sales charge, we:
o Add together all of your original purchase payments
o Subtract any amounts previously withdrawn
o Check if there is any remaining amount free of any contingent
deferred sales charge that can be applied to the total of the
current value of the shares you have asked to redeem
The Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund have each
adopted a distribution plan under Rule 12b-1 of the 1940 Act for its Class C
shares. This plan allows each Fund to pay distribution and other fees for the
sale and distribution of its Class C shares and for services provided to holders
of Class C shares.
Under the plan, each Fund pays an annual fee of up to 1.00% of its average daily
net assets that are attributable to Class C shares. Because these fees are paid
out of the Funds' assets on an ongoing basis, these fees will increase the cost
of your investment and over time may cost you more than paying other types of
sales charges.
Money Market Funds
------------------
Each Money Market Fund has adopted a distribution plan under Rule 12b-1 of the
1940 Act for its shares. This plan allows each Money Market Fund to pay an
annual fee of up to 0.25% of its average daily net assets for the sale and
distribution of shares. The Ohio Tax-Free Money Fund's plan is for its Retail
shares only. Because these fees are paid out of a Fund's assets on an ongoing
basis, these fees will increase the cost of your investment and over time may
cost you more than paying other types of sales charges.
Institutional Shares of the Ohio Tax-Free Money Fund
----------------------------------------------------
The minimum initial investment in Institutional shares of the Ohio Tax-Free
Money Fund ordinarily is $1 million. Institutional shares are not subject to
Rule 12b-1 distribution fees. Institutional shares do not offer checkwriting
privileges, the automatic investment plan, or the systematic withdrawal plan.
Purchasing Your Shares
----------------------
For information about how to purchase shares, telephone Touchstone at
800.543.0407.
<PAGE>
Opening an account
------------------
BY MAIL OR THROUGH YOUR FINANCIAL ADVISOR
o Please make your check (in U.S. dollars) payable to the applicable Fund.
o Send your check with the completed account application to Touchstone,
P.O. Box 5354, Cincinnati, Ohio 45201-5354. Your application will
be processed subject to your check clearing.
o You may also open an account through your financial advisor.
o We price direct purchases in the Tax-Free Intermediate Term Fund and the
Ohio Insured Tax-Free Fund based upon the next determined public offering
price (NAV plus any applicable sales load) after your order is received.
Direct purchase orders received by Touchstone by the close of the regular
session of trading on the NYSE, generally 4:00 p.m., Eastern time, are
processed at that day's public offering price. Direct investments
received by Touchstone after the close of the regular session of trading
on the NYSE, generally 4:00 p.m., Eastern time, are processed at the
public offering price next determined on the following business day.
Purchase orders received from financial advisors before the close of the
regular session of trading on the NYSE, generally 4:00 p.m., Eastern
time, and transmitted to Touchstone by 5:00 p.m., Eastern time, are
processed at that day's public offering price. Purchase orders received
from financial advisors after 5:00 p.m., Eastern time, are processed at
the public offering price next determined on the following business day.
o You may receive a dividend in the Money Market Funds on the day you
wire an investment if you notify Touchstone of your wire by 12:00 noon,
Eastern time, on that day. Your purchase will be priced based upon the
NAV after a proper order is received.
BY EXCHANGE
o You may exchange shares of the Funds for shares of the same class of
another Touchstone Fund at NAV. You may also exchange shares of the Funds
for shares of any Touchstone Money Market Fund.
o You do not have to pay any exchange fee for these exchanges.
o You should review the disclosure provided in the Prospectus relating to
the exchanged-for shares carefully before making an exchange of your Fund
shares.
<PAGE>
Adding to your account
----------------------
BY CHECK
o Complete the investment form provided at the bottom of a recent account
statement.
o Make your check payable to the applicable Fund.
o Write your account number on the check.
o Either: (1) Mail the check with the investment form in the envelope
provided with your account statement; or (2) Mail your check directly to
your financial advisor at the address printed on your account statement.
Your financial advisor is responsible for forwarding payment promptly to
Touchstone.
BY WIRE
o Specify your name and account number.
o Purchases in the Tax-Free Intermediate Term Fund and the Ohio Insured
Tax-Free Fund will be processed at that day's public offering price if
Touchstone receives a properly executed wire by 4:00 p.m. Eastern time on
a day when the NYSE is open for regular trading.
o You may receive a dividend in any Money Market Fund on the day you wire
an investment if you notify Touchstone of your wire by 12:00 noon,
Eastern time, on that day.
BY EXCHANGE
o You may exchange your shares by calling Touchstone.
o You do not have to pay any exchange fee for these exchanges.
o You should review the disclosure provided in the Prospectus relating to
the exchanged-for shares carefully before making an exchange of your Fund
shares.
INFORMATION ABOUT WIRE TRANSFERS
---------------------------------
You may make additional purchases in the Funds directly by wire transfers.
Contact your bank and ask it to wire federal funds to Touchstone. Banks may
charge a fee for handling wire transfers. You should contact Touchstone or your
financial advisor for further instructions.
<PAGE>
AUTOMATIC INVESTMENT OPTIONS
----------------------------
The various ways that you can invest in the Funds are outlined below. Touchstone
does not charge any fees for these services.
AUTOMATIC INVESTMENT PLAN. You can pre-authorize monthly investments of $50 or
more in a Fund to be processed electronically from a checking or savings
account. You will need to complete the appropriate section in the Investment
Application to do this. This option is not available to Institutional shares of
the Ohio Tax-Free Money Fund. For further details about this service, call
Touchstone at 800.543.0407.
REINVESTMENT/CROSS REINVESTMENT. Dividends and capital gains can be
automatically reinvested in the Fund that pays them or in another Fund within
the same class of shares without a fee or sales charge. Dividends and capital
gains will be reinvested in the Fund that pays them, unless you indicate
otherwise on your account application. You may also choose to have your
dividends or capital gains paid to you in cash.
DIRECT DEPOSIT PURCHASE PLAN. You may automatically invest Social Security
checks, private payroll checks, pension pay outs or any other pre-authorized
government or private recurring payments in our Funds. This occurs on a monthly
basis and the minimum investment is $50. This option is not available to
Institutional shares of the Ohio Tax-Free Money Fund.
DOLLAR COST AVERAGING. Our Dollar Cost Averaging program allows you to diversify
your investments by investing the same amount on a regular basis. You can set up
periodic automatic transfers of at least $50 from one Touchstone Fund to any
other. The applicable sales charge, if any, will be assessed.
CASH SWEEP PROGRAM (AVAILABLE ONLY TO THE MONEY MARKET FUNDS). Cash
accumulations in accounts with financial institutions may be automatically
invested in the Money Market Funds at the next determined NAV on a day selected
by the institution or customer, or when the account balance reaches a
predetermined dollar amount. Institutions participating in this program are
responsible for placing their orders in a timely manner. You may be charged a
fee by your financial institution for participating in this program.
PROCESSING ORGANIZATIONS. You may also purchase shares of the Funds through a
"processing organization," (e.g., a mutual fund supermarket) which is a
broker-dealer, bank or other financial institution that purchases shares for its
customers. Some of the Funds have authorized certain processing organizations to
receive purchase and sales orders on their behalf. Before investing in the Funds
through a processing organization, you should read any materials provided by the
processing organization together with this Prospectus.
When shares are purchased this way, there may be various differences. The
processing organization may:
o Charge a fee for its services
o Act as the shareholder of record of the shares
<PAGE>
o Set different minimum initial and additional investment requirements
o Impose other charges and restrictions
o Designate intermediaries to accept purchase and sales orders on the
Funds' behalf
Touchstone considers a purchase or sales order as received when an authorized
processing organization, or its authorized designee, receives the order in
proper form. These orders will be priced based on the Fund's NAV next computed
after such order is received in proper form.
Shares held through a processing organization may be transferred into your name
following procedures established by your processing organization and Touchstone.
Certain processing organizations may receive compensation from the Funds,
Touchstone, Touchstone Advisors or their affiliates.
Selling Your Shares
-------------------
You may sell some or all of your Fund shares on any day that the Fund calculates
its NAV. If your request is received in proper form before the close of regular
trading on the NYSE, you will receive a price based on that day's NAV for the
shares you sell. Otherwise, the price you receive will be based on the NAV that
is next calculated.
BY TELEPHONE
o You can sell or exchange your shares over the telephone, unless you
have specifically declined this option. If you do not wish to have this
ability, you must mark the appropriate section of the Investment
Application. You may only sell shares over the telephone if the amount is
less than $25,000.
o To sell your Fund shares by telephone, call Touchstone at 800.543.0407
BY MAIL
o Write to Touchstone.
o Indicate the number of shares or dollar amount to be sold.
o Include your name and account number.
o Sign your request exactly as your name appears on your Investment
Application.
BY WIRE
o Complete the appropriate information on the Investment Application.
o If your proceeds are $1,000 or more, you may request that Touchstone
wire them to your bank account.
<PAGE>
o You may be charged a fee. (There is no fee for wire redemptions of
Institutional shares in the Ohio Tax-Free Money Fund.)
o Redemption proceeds will only be wired to a commercial bank or
brokerage firm in the United States.
o Your redemption proceeds may be deposited without a charge directly into
your bank account through an ACH transaction. Contact Touchstone for
more information.
BY CHECK
o You may open a checking account in any Fund (except the Ohio Insured
Tax-Free Fund and Institutional Shares of the Ohio Tax-Free Money Fund)
and redeem shares by check.
o Checks will be processed at the NAV the day the check is presented to
the Custodian for payment.
o If the amount of your check is more than the value of the shares held
in your account, you will be charged for each check returned for
insufficient funds.
o If you do not write more than 6 checks per month, there is no fee for
your checking account. If you write more than 6 checks a month, you will
be charged 25(cent) for each additional check written that month.
o Shareholders in the Tax-Free Intermediate Term Fund should be aware that
the Fund's NAV fluctuates daily and that writing a check is a taxable
event.
o Checks may not be certified.
o If you invest in a Money Market Fund through a cash sweep program with a
financial institution, you may not open a checking account.
THROUGH YOUR FINANCIAL ADVISOR
o You may also sell shares by contacting your financial advisor, who may
charge you a fee for this service. Shares held in street name must be
sold through your financial advisor or, if applicable, the processing
organization.
o Your financial advisor is responsible for making sure that sale
requests are transmitted to Touchstone in proper form in a timely
manner.
ooo Special Tax Consideration
Selling your shares in the Tax-Free Intermediate Term Fund or the Ohio Insured
Tax-Free Fund may cause you to incur a taxable gain or loss.
! INVESTOR ALERT: Unless otherwise specified, proceeds will be sent
to the record owner at the address shown on Touchstone's records.
SIGNATURE GUARANTEES. Some circumstances require that the request for the sale
of shares have a signature guarantee. A signature guarantee helps protect you
against fraud. You can obtain one from most banks or securities dealers, but not
from a notary public. Some circumstances requiring a signature guarantee
include:
o Proceeds from the sale of shares that exceed $25,000
o Proceeds to be paid when the name or the address on the account has
been changed within 30 days of your sale request
TELEPHONE SALES. If we receive your share sale request before 4:00 p.m., Eastern
time on a day when the NYSE is open for regular trading, the sale of your shares
will be processed at the next determined NAV on that day. Otherwise it will
occur on the next business day. The proceeds of sales of shares in a Money
Market Fund may be wired to you on the same day of your telephone request, if
your request is properly made before 12:00 noon Eastern time.
Interruptions in telephone service could prevent you from selling your shares in
this manner when you want to. When you have difficulty making telephone sales,
you should mail (or send by overnight delivery) a written request for sale of
your shares to Touchstone.
In order to protect your investment assets, Touchstone will only follow
instructions received by telephone that it reasonably believes to be genuine.
However, there is no guarantee that the instructions relied upon will always be
genuine and Touchstone will not be liable, in those cases. Touchstone has
certain procedures to confirm that telephone instructions are genuine. If it
does not follow such procedures in a particular case it may be liable for any
losses due to unauthorized or fraudulent instructions. Some of these procedures
include:
o Requiring personal identification
o Making checks payable only to the owner(s) of the account shown on
Touchstone's records
o Mailing checks only to the account address shown on Touchstone's records
o Directing wires only to the bank account shown on Touchstone's records
o Providing written confirmation for transactions requested by telephone
o Tape recording instructions received by telephone
SYSTEMATIC WITHDRAWAL PLAN. You may elect to receive or send to a third party
monthly or quarterly withdrawals of $50 or more if your account value is at
least $5,000. There is no special fee for this service. The Systematic
Withdrawal Plan is not available to Institutional shareholders of the Ohio
Tax-Free Money Fund.
ooo Special Tax Consideration
<PAGE>
If you exercise the Reinstatement Privilege, you should contact your tax
advisor.
ooo Special Tax Consideration
Involuntary sales in the Tax-Free Intermediate Term Fund or the Ohio Insured
Tax-Free Fund may result in the sale of your shares at a loss or may result in
taxable investment gains.
REINSTATEMENT PRIVILEGE. You may reinvest proceeds from a sale of shares of the
Tax-Free Intermediate Term Fund or the Ohio Insured Tax-Free Fund (or a dividend
or capital gain distribution on these shares) without a sales charge in any of
the Touchstone Funds. You may do so by sending a written request and a check to
Touchstone within 90 days after the date of the sale, dividend or distribution.
Reinvestment will be at the next NAV calculated after Touchstone receives your
request.
Low Account Balances
--------------------
Touchstone may sell your Fund shares and send the proceeds to you if your
balance falls below the minimum amount required for your account as a result of
redemptions that you have made (as opposed to a reduction from market changes).
This involuntary sale does not apply to custodian accounts under the Uniform
Gifts/Transfers to Minors Act (UGTMA). Touchstone will notify you if your shares
are about to be sold and you will have 30 days to increase your account balance
to the minimum amount.
Receiving Sale Proceeds
-----------------------
TAX-FREE INTERMEDIATE TERM FUND AND OHIO INSURED TAX-FREE FUND
Touchstone will forward the proceeds of your sale to you (or to your financial
advisor) within 7 days (normally within 3 business days) from the date of a
proper request.
MONEY MARKET FUNDS
Touchstone will forward the proceeds of your sale to you (or to your financial
adviser) within 3 business days (normally within 3 business days after receipt
of a proper written request and within 1 business day after receipt of a proper
telephone request).
PROCEEDS SENT TO FINANCIAL ADVISORS
-----------------------------------
Proceeds that are sent to your financial advisor will not usually be re-invested
for you unless you provide specific instructions to do so. Therefore, the
financial advisor may benefit from the use of your money.
FUND SHARES PURCHASED BY CHECK
------------------------------
If you purchase Fund shares by personal check, the proceeds of a sale of those
shares will not be sent to you until the check has cleared, which may take up to
15 days. If you may need your money more quickly, you should purchase shares by
federal funds, bank wire, or with a certified or cashier's check.
It is possible that the payments of your sale proceeds could be postponed or
your right to sell your shares could be suspended during certain circumstances.
These circumstances can occur:
o When the NYSE is closed for other than customary weekends and holidays
o When trading on the NYSE is restricted
o When an emergency situation causes the Sub-Advisor to not be reasonably
able to dispose of certain securities or to fairly determine the value
of its net assets
o During any other time when the SEC, by order, permits.
DISTRIBUTIONS AND TAXES
ooo Special Tax Consideration
You should consult with your tax advisor to address your own tax situation.
Each Fund intends to distribute to its shareholders substantially all of its
income and capital gains. Each Fund's dividends will be declared daily and paid
daily. Distributions of any capital gains earned by a Fund will be made at least
annually.
Tax Information
---------------
DISTRIBUTIONS. Each Fund intends to distribute substantially all of its net
investment income and any net realized capital gains to its shareholders. Each
Fund 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.
Each Fund may invest a portion of its assets in taxable obligations and may make
distributions that may be taxed as ordinary income. Income exempt from federal
tax may be subject to state and local tax. Taxable distributions may be subject
to federal income tax whether you reinvest your dividends in additional shares
of a Fund or choose to receive cash. Since each Fund's investment income is
derived from interest rather than dividends, no portion of these distributions
is eligible for the dividends received deduction available to corporations.
ORDINARY INCOME. Net investment income and short-term capital gains that are
distributed to you are taxable as ordinary income for federal income tax
purposes regardless of how long you have held your Fund shares. The capital
gains may be taxable at different rates depending upon how long the Fund holds
its assets.
<PAGE>
CAPITAL GAINS. (Tax-Free Intermediate Term Fund and Ohio Insured Tax-Free Fund)
Net capital gains (i.e., the excess of net long-term capital gains over net
short-term capital losses) distributed to you are taxable as capital gains for
federal income tax purposes regardless of how long you have held your Fund
shares.
ooo Special Tax Consideration
For federal income tax purposes, an exchange of shares is treated as a sale of
the shares and a purchase of the shares you receive in exchange. Therefore, you
may incur a taxable gain or loss in connection with the exchange.
STATEMENTS AND NOTICES. You will receive an annual statement outlining the tax
status of your distributions. Your statement will give the percentage and source
of income earned on tax-exempt obligations held by the Funds during the
preceding year.
The Funds may not be appropriate investments for persons who are "substantial
users" of facilities financed by industrial development bonds or are "related
persons" to such users. Such users should consult their tax advisors before
investing in the Funds.
ooo SPECIAL TAX CONSIDERATIONS
o Ohio Insured Tax-Free Fund and Ohio Tax-Free Money Fund. Dividends
from each Fund that are exempt from federal income tax are exempt
from Ohio personal income tax to the extent derived from interest on
Ohio municipal obligations. Distributions received from the Funds are
generally not subject to Ohio municipal income taxation. Dividends
from the Funds that are exempt from federal income tax are excluded
from the net income base of the Ohio corporation franchise tax.
However, shares of the Funds will be included in the computation of
the Ohio corporation franchise tax on the net worth basis.
o California Tax-Free Money Fund. The Fund expects that substantially
all dividends paid by the Fund will not be subject to California
state income tax. However, the Fund may invest a portion of its
assets in obligations which pay interest that is not exempt from
federal income tax and/or California income tax.
o Florida Tax-Free Money Fund. Florida does not impose an income tax on
individuals but does have a corporate income tax. For purposes of the
Florida income tax, corporate shareholders are generally subject to
tax on all distributions from the Fund. Florida imposes an intangible
personal property tax on shares of the Fund owned by a Florida
resident on January 1 of each year unless the shares qualify for an
exemption from that tax. Shares of the Fund owned by a Florida
resident will be exempt from the intangible personal property tax as
long as the portion of the Fund's portfolio not invested in direct
U.S. Government obligations is at least 90% invested in Florida
municipal obligations exempt from that tax. The Fund will attempt to
ensure that, on January 1 of each year, at least 90% of its portfolio
consists of Florida municipal obligations exempt from the Florida
intangible personal property tax.
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------
The financial highlights table is intended to help you understand each Fund's
financial performance for the past 5 years or during the period of its
operations. Certain information reflects financial results for a single Fund
share. The total returns in the table represent the rate an investor would have
earned or lost on an investment in the Funds (assuming reinvestment of all
dividends and distributions). The information for the period ended June 30, 2000
has been audited by Ernst & Young LLP, whose report, along with the Funds'
financial statements, is included in the SAI, which is available upon request.
Information for periods ended before June 30, 2000 was audited by other
independent accountants.
<TABLE>
<S> <C> <C> <C> <C> <C>
TAX-FREE INTERMEDIATE TERM FUND - CLASS A
==========================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
----------------------------------------------------------------------------------------------------------
Year Ended June 30,
------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------
Net asset value at beginning of year ..... $ 10.87 $ 11.12 $ 11.01 $ 10.85 $ 10.86
------------------------------------------------------------
Income from investment operations:
Net investment income .................. 0.48 0.48 0.50 0.50 0.50
Net realized and unrealized gains (losses)
on investments ....................... (0.19) (0.25) 0.11 0.16 (0.01)
------------------------------------------------------------
Total from investment operations ......... 0.29 0.23 0.61 0.66 0.49
------------------------------------------------------------
Dividends from net investment income ..... (0.48) (0.48) (0.50) (0.50) (0.50)
------------------------------------------------------------
Net asset value at end of year ........... $ 10.68 $ 10.87 $ 11.12 $ 11.01 $ 10.85
============================================================
Total return(A) .......................... 2.75% 2.07% 5.63% 6.19% 4.51%
============================================================
Net assets at end of year (000's) ........ $ 36,817 $ 47,899 $ 52,896 $ 58,485 $ 67,675
============================================================
Ratio of net expenses to average net assets 0.99%(B) 0.99% 0.99% 0.99% 0.99%
Ratio of net investment income to
average net assets ..................... 4.47% 4.33% 4.50% 4.55% 4.52%
Portfolio turnover rate .................. 41% 51% 36% 30% 37%
----------------------------------------------------------------------------------------------------------
</TABLE>
(A) Total returns shown exclude 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 1.00% for the year ended
June 30, 2000.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
TAX-FREE INTERMEDIATE TERM FUND - CLASS C
==========================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
----------------------------------------------------------------------------------------------------------
Year Ended June 30,
------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------
Net asset value at beginning of year ..... $ 10.88 $ 11.12 $ 11.01 $ 10.85 $ 10.86
------------------------------------------------------------
Income from investment operations:
Net investment income .................. 0.40 0.40 0.42 0.43 0.44
Net realized and unrealized gains (losses)
on investments ....................... (0.20) (0.24) 0.11 0.16 (0.01)
------------------------------------------------------------
Total from investment operations ......... 0.20 0.16 0.53 0.59 0.43
------------------------------------------------------------
Dividends from net investment income ..... (0.40) (0.40) (0.42) (0.43) (0.44)
------------------------------------------------------------
Net asset value at end of year ........... $ 10.68 $ 10.88 $ 11.12 $ 11.01 $ 10.85
============================================================
Total return(A) .......................... 1.88% 1.40% 4.85% 5.49% 4.00%
============================================================
Net assets at end of year (000's) ........ $ 3,374 $ 4,634 $ 4,747 $ 5,161 $ 5,239
============================================================
Ratio of net expenses to average net assets 1.74%(B) 1.74% 1.74% 1.65% 1.49%
Ratio of net investment income to
average net assets ..................... 3.72% 3.58% 3.75% 3.89% 4.02%
Portfolio turnover rate .................. 41% 51% 36% 30% 37%
---------------------------------------------------------------------------------------------------------
</TABLE>
(A) Total returns shown exclude 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 1.76% for the year ended
June 30, 2000.
<PAGE>
OHIO INSURED TAX-FREE FUND - CLASS A
<TABLE>
<S> <C> <C> <C> <C> <C>
==========================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
----------------------------------------------------------------------------------------------------------
Year Ended June 30,
------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------
Net asset value at beginning of year ..... $ 11.74 $ 12.37 $ 12.22 $ 11.97 $ 11.99
------------------------------------------------------------
Income from investment operations:
Net investment income .................. 0.58 0.58 0.61 0.61 0.62
Net realized and unrealized gains (losses)
on investments ....................... (0.29) (0.34) 0.23 0.25 (0.02)
------------------------------------------------------------
Total from investment operations ......... 0.29 0.24 0.84 0.86 0.60
------------------------------------------------------------
Less distributions:
Dividends from net investment income ... (0.58) (0.58) (0.61) (0.61) (0.62)
Distributions from net realized gains .. -- (0.29) (0.08) -- --
------------------------------------------------------------
Total distributions ...................... (0.58) (0.87) (0.69) (0.61) (0.62)
------------------------------------------------------------
Net asset value at end of year ........... $ 11.45 $ 11.74 $ 12.37 $ 12.22 $ 11.97
============================================================
Total return(A) .......................... 2.60% 1.81% 7.03% 7.36% 5.05%
============================================================
Net assets at end of year (000's) ........ $ 59,600 $ 62,737 $ 69,289 $ 70,816 $ 75,938
============================================================
Ratio of net expenses to
average net assets ..................... 0.75%(B) 0.75% 0.75% 0.75% 0.75%
Ratio of net investment income to
average net assets ..................... 5.08% 4.72% 4.95% 5.05% 5.12%
Portfolio turnover rate .................. 66% 26% 41% 33% 46%
-------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Total returns shown exclude 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% for the year ended
June 30, 2000.
<PAGE>
OHIO INSURED TAX-FREE FUND - CLASS C
<TABLE>
<S> <C> <C> <C> <C> <C>
==========================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
----------------------------------------------------------------------------------------------------------
Year Ended June 30,
------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------
Net asset value at beginning of year ..... $ 11.74 $ 12.37 $ 12.22 $ 11.97 $ 12.00
------------------------------------------------------------
Income from investment operations:
Net investment income .................. 0.49 0.49 0.52 0.53 0.56
Net realized and unrealized gains
(losses) on investments .............. (0.30) (0.34) 0.23 0.25 (0.03)
------------------------------------------------------------
Total from investment operations ......... 0.19 0.15 0.75 0.78 0.53
------------------------------------------------------------
Less distributions:
Dividends from net investment income ... (0.49) (0.49) (0.52) (0.53) (0.56)
Distributions from net realized gains .. -- (0.29) (0.08) -- --
------------------------------------------------------------
Total distributions ...................... (0.49) (0.78) (0.60) (0.53) (0.56)
------------------------------------------------------------
Net asset value at end of year ........... $ 11.44 $ 11.74 $ 12.37 $ 12.22 $ 11.97
============================================================
Total return(A) .......................... 1.75% 1.05% 6.24% 6.65% 4.44%
============================================================
Net assets at end of year (000's) ........ $ 3,585 $ 4,740 $ 5,215 $ 4,639 $ 3,972
============================================================
Ratio of net expenses to
average net assets(B) .................. 1.50% 1.50% 1.50% 1.42% 1.25%
Ratio of net investment income to
average net assets ..................... 4.42% 3.97% 4.20% 4.37% 4.62%
Portfolio turnover rate .................. 66% 26% 41% 33% 46%
-----------------------------------------------------------------------------------------------------------
</TABLE>
(A) Total returns shown exclude 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 1.56% for the year ended
June 30, 2000.
(C) Annualized.
<PAGE>
TAX-FREE MONEY FUND
<TABLE>
<S> <C> <C> <C> <C> <C>
=======================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
-------------------------------------------------------------------------------------------------------
Year Ended June 30,
---------------------------------------------------------
2000 1999 1998 1997 1996
-------------------------------------------------------------------------------------------------------
Net asset value at beginning of year ..... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------------------------------------------------------
Net investment income .................... 0.032 0.027 0.030 0.029 0.031
---------------------------------------------------------
Dividends from net investment income ..... (0.032) (0.027) (0.030) (0.029) (0.031)
---------------------------------------------------------
Net asset value at end of year ........... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
=========================================================
Total return ............................. 3.22% 2.75% 3.03% 2.89% 3.15%
=========================================================
Net assets at end of year (000's) ........ $ 25,194 $ 25,234 $ 37,383 $ 30,126 $ 25,342
=========================================================
Ratio of net expenses to
average net assets(A) .................. 0.89% 0.89% 0.92% 0.99% 0.99%
Ratio of net investment income to
average net assets ..................... 3.15% 2.74% 2.98% 2.85% 3.09%
--------------------------------------------------------------------------------------------------------
</TABLE>
(A) Absent fee waivers by the Adviser, the ratio of expenses to average net
assets would have been 1.00% and 0.95% for the years ended June 30, 2000
and 1999, respectively.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
OHIO TAX-FREE MONEY FUND - RETAIL
=========================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
----------------------------------------------------------------------------------------------------------
Year Ended June 30,
------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------
Net asset value at beginning of year ..... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------------------------------------------------------
Net investment income .................... 0.031 0.027 0.030 0.030 0.031
------------------------------------------------------------
Dividends from net investment income ..... (0.031) (0.027) (0.030) (0.030) (0.031)
------------------------------------------------------------
Net asset value at end of year ........... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
============================================================
Total return ............................. 3.09% 2.73% 3.07% 2.99% 3.14%
============================================================
Net assets at end of year (000's) ........ $214,561 $214,691 $205,316 $166,719 $240,323
============================================================
Ratio of net expenses to
average net assets(A) .................. 0.75% 0.75% 0.75% 0.75% 0.75%
Ratio of net investment income to
average net assets ..................... 3.04% 2.68% 3.02% 2.93% 3.09%
-----------------------------------------------------------------------------------------------------------
</TABLE>
(A) Absent fee waivers and/or expense reimbursements by the Adviser, the ratio
of expenses to average net assets would have been 0.77%, 0.77%, 0.76% and
0.77% for the years ended June 30, 2000, 1999, 1998 and 1997, respectively.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
OHIO TAX-FREE MONEY FUND - INSTITUTIONAL
==============================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
----------------------------------------------------------------------------------------------
PERIOD
YEAR ENDED JUNE 30, ENDED
---------------------------------- JUNE 30,
2000 1999 1998 1997(A)
----------------------------------------------------------------------------------------------
Net asset value at beginning of period ... $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------------------------------------------
Net investment income .................... 0.033 0.029 0.033 0.016
------------------------------------------------
Dividends from net investment income ..... (0.033) (0.029) (0.033) (0.016)
------------------------------------------------
Net asset value at end of period ......... $ 1.000 $ 1.000 $ 1.000 $ 1.000
================================================
Total return ............................. 3.35% 2.98% 3.33% 3.31%(C)
================================================
Net assets at end of period (000's) ...... $132,889 $176,106 $115,266 $ 97,589
================================================
Ratio of net expenses to average net
assets(B) .............................. 0.50% 0.50% 0.50% 0.50%(C)
Ratio of net investment income to average
net assets ............................. 3.25% 2.93% 3.27% 3.28%(C)
------------------------------------------------------------------------------------------------
</TABLE>
(A) Represents the period from the initial public offering of Institutional
shares (January 7, 1997) through June 30, 1997.
(B) Absent fee waivers and/or expense reimbursements by the Adviser, the ratio
of expenses to average net assets would have been 0.52%, 0.51%, 0.52% and
0.56%(C) for the periods ended June 30, 2000, 1999, 1998 and 1997,
respectively.
(C) Annualized.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
CALIFORNIA TAX-FREE MONEY FUND
==========================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
----------------------------------------------------------------------------------------------------------
Year Ended June 30,
------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------
Net asset value at beginning of year ..... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------------------------------------------------------
Net investment income .................... 0.027 0.025 0.029 0.028 0.029
------------------------------------------------------------
Dividends from net investment income ..... (0.027) (0.025) (0.029) (0.028) (0.029)
------------------------------------------------------------
Net asset value at end of year ........... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
============================================================
Total return ............................. 2.75% 2.56% 2.94% 2.81% 2.95%
============================================================
Net assets at end of year (000's) ........ $ 62,900 $ 47,967 $ 41,013 $ 32,186 $ 36,122
============================================================
Ratio of net expenses to
average net assets ..................... 0.75% 0.75% 0.77% 0.80% 0.80%(A)
Ratio of net investment income to
average net assets ..................... 2.72% 2.52% 2.89% 2.76% 2.88%
---------------------------------------------------------------------------------------------------------
</TABLE>
(A) Absent fee waivers and/or expense reimbursements by the Adviser, the ratio
of expenses to average net assets would have been 0.82% for the year ended
June 30, 1996.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
FLORIDA TAX-FREE MONEY FUND
==========================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
----------------------------------------------------------------------------------------------------------
Year Ended June 30,
------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------
Net asset value at beginning of year ..... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------------------------------------------------------
Net investment income .................... 0.030 0.026 0.030 0.029 0.032
------------------------------------------------------------
Dividends from net investment income ..... (0.030) (0.026) (0.030) (0.029) (0.032)
------------------------------------------------------------
Net asset value at end of year ........... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
============================================================
Total return ............................. 3.05% 2.68% 3.03% 2.90% 3.29%
============================================================
Net assets at end of year (000's) ........ $ 18,244 $ 21,371 $ 14,368 $ 22,434 $ 28,906%
============================================================
Ratio of net expenses to
average net assets(A)................... 0.73% 0.75% 0.75% 0.75% 0.61%
Ratio of net investment income to
average net assets ..................... 2.98% 2.58% 2.98% 2.85% 3.24%
---------------------------------------------------------------------------------------------------------
</TABLE>
(A) Absent fee waivers and/or expense reimbursements by the Adviser, the ratio
of expenses to average net assets would have been 1.00%, 0.98%, 0.95%, 0.94% and
0.80% for the years ended June 30, 2000, 1999, 1998, 1997 and 1996,
respectively.
<PAGE>
FOR MORE INFORMATION
For investors who want more information about the Funds, the following documents
are available free upon request:
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Funds and is legally a part of this Prospectus.
ANNUAL/SEMI-ANNUAL REPORTS: The Funds' annual and semi-annual reports provide
additional information about the Funds' investments. In the annual report, you
will find a discussion of the market conditions and investment strategies that
significantly affected a Fund's performance during its last fiscal year.
You can get free copies of the SAI, the reports, other information and answers
to your questions about the Funds by contacting your financial advisor, or the
Funds at:
Touchstone Family of Funds
221 East Fourth Street
Cincinnati, Ohio 45202
800.543.0407
http://www.touchstonefunds.com
Information about the Funds (including the SAI) can be reviewed and copied at
the Securities and Exchange Commission's Public Reference Room in Washington,
D.C. You can receive information about the operation of the Public Reference
Room by calling the SEC at 1.202.942.8090.
Reports and other information about the Funds are available on the SEC's
Internet site at http://www.sec.gov. For a fee, you can get text-only copies of
reports and other information by writing to the Public Reference Room of the
SEC, 450 Fifth Street N.W., Washington, D.C. 20549-0102 or by sending an e-mail
request to: [email protected].
Investment Company Act file no. 811-3174
<PAGE>
TOUCHSTONE FAMILY OF FUNDS
DISTRIBUTOR
Touchstone Securities, Inc.
221 East Fourth Street
Cincinnati, Ohio 45202
800.638.8194
www.touchstonefunds.com
-----------------------
INVESTMENT ADVISOR
Touchstone Advisors, Inc.
221 East Fourth Street
Cincinnati, Ohio 45202
TRANSFER AGENT
Integrated Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
SHAREHOLDER SERVICE
800.543.0407
<PAGE>
<TABLE>
<S> <C> <C>
TOUCHSTONE
Family of Funds
-------------------------------------------------------------------------------
LOGO] Touchstone Return completed form to:
---------- Touchstone Family of Funds
Family of Funds P.O. Box 5354
Cincinnati, OH 45202
For assistance in completing this form, call
NOT FOR USE WITH IRAS, SEP, SIMPLE OR 403B PLANS 800-543-0407
Was order previously telephoned in? o Yes o No If yes, date ( / / ) and confirmation #______________________________________
------------------------------------------------------------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION (check one box only)
------------------------------------------------------------------------------------------------------------------------------------
[ ] INDIVIDUAL [ ] JOINT TENANT (For joint-owners, joint tenancy with right of survivorship is presumed unless otherwise specified.)
------------------------------------------------------------------------------------------------------------------------------------
Name of Individual Owner - First, Initial, Last Name of Joint Owner (if any) - First, Initial, Last
------------------------------------------------------------------------------------------------------------------------------------
Owner's Social Security # Date of Birth Joint Owner's Social Security # Date of Birth
------------------------------------------------------------------------------------------------------------------------------------
[ ] GIFT/TRANSFER TO A MINOR (Only one custodian and minor)
------------------------------------------------------------------------------------------------------------------------------------
Name of Minor - First, Initial, Last Under ___________________ the Uniform Gifts/Transfers to Minors Act
(State of minor's residence)
------------------------------------------------------------------------------------------------------------------------------------
Name of Custodian - First, Initial, Last Minor's Social Security # Minor's Date of Birth
------------------------------------------------------------------------------------------------------------------------------------
[ ] TRUST
------------------------------------------------------------------------------------------------------------------------------------
Name of Trust Agreement Taxpayer I.D. Number Date of Trust Agreement
------------------------------------------------------------------------------------------------------------------------------------
Name of Trustee(s) - First, Initial, Last Name of Beneficiary - First, Initial, Last
------------------------------------------------------------------------------------------------------------------------------------
Name of Plan Administrator Address Phone Number Fax Number E-mail Address
------------------------------------------------------------------------------------------------------------------------------------
[ ] CORPORATION, PARTNERSHIP OR OTHER ENTITY
------------------------------------------------------------------------------------------------------------------------------------
Name of Corporation or Other Entity
------------------------------------------------------------------------------------------------------------------------------------
Taxpayer I.D. Number
------------------------------------------------------------------------------------------------------------------------------------
2. ADDRESS (P.O. Box not acceptable without street address)
------------------------------------------------------------------------------------------------------------------------------------
Street Home Phone
( )
------------------------------------------------------------------------------------------------------------------------------------
City Business Phone
( )
------------------------------------------------------------------------------------------------------------------------------------
State Zip Are you a U.S. Citizen? [ ] Yes [ ] No (please specify country):
------------------------------------------------------------------------------------------------------------------------------------
3. INITIAL INVESTMENT
------------------------------------------------------------------------------------------------------------------------------------
[ ] ALLOCATE MY INVESTMENT USING THE FOLLOWING FUNDS: [ ] A SHARES OR [ ] C SHARES (A SHARES WILL BE PURCHASED UNLESS
INDICATED OTHERWISE.)
STOCK FUNDS TAXABLE BOND FUNDS TAX-FREE BOND FUNDS
[ ] International Equity Fund $________ [ ] High Yield Fund $________ [ ] Ohio Insured Tax-Free Fund $_______
[ ] Emerging Growth Fund $________ [ ] Bond Fund $________ [ ] Tax-Free Intermediate Term Fund $_______
[ ] Aggressive Growth Fund $________ [ ] Intermediate Term
[ ] Growth/Value Fund $________ Government Income Fund $________ TAX-FREE MONEY MARKET FUNDS
[ ] Equity Fund $________ [ ] Tax-Free Money Fund $_______
[ ] Enhanced 30 Fund $________ TAXABLE MONEY MARKET FUNDS [ ] California Tax-Free Money Fund $_______
[ ] Value Plus Fund $________ [ ] Money Market Fund $________ [ ] Florida Tax-Free Money Fund $_______
[ ] Utility Fund $________ [ ] Short Term Government $________ [ ] Ohio Tax-Free Money Fund - R $_______
Income Fund [ ] Ohio Tax-Free Money Fund - I $_______
[ ] Institutional Government
Income Fund $________
[ ] Total investment of $________
Please make check payable to the TOUCHSTONE FAMILY OF FUNDS.
------------------------------------------------------------------------------------------------------------------------------------
4. DISTRIBUTION OPTION (check one box only)
------------------------------------------------------------------------------------------------------------------------------------
[ ] Reinvest all dividends and capital gains in additional shares [ ] Pay all capital gains in cash and reinvest dividends
[ ] Pay all dividends and capital gains in cash [ ] Cross Reinvestment: Please call Touchstone at
800-543-0407 for further instructions.
[ ] Pay all dividends in cash and reinvest capital gains
If not specified, dividends and capital gains will be reinvested in the Fund that pays them.
------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
------------------------------------------------------------------------------------------------------------------------------------
5. RIGHTS OF ACCUMULATION
------------------------------------------------------------------------------------------------------------------------------------
If you already have an account with the Touchstone Family of Funds, you may be eligible for reduced sales charges subject to
Touchstone's confirmation of the following eligible holdings:
------------------------------------------------------------------------------------------------------------------------------------
Fund Name
------------------------------------------------------------------------------------------------------------------------------------
Shareholder Name
------------------------------------------------------------------------------------------------------------------------------------
Account Number
------------------------------------------------------------------------------------------------------------------------------------
6. LETTER OF INTENT
------------------------------------------------------------------------------------------------------------------------------------
If you intend to invest a certain amount over a 13-month period in one or more of the Touchstone Family of Funds, you may be
entitled to a reduced sales charge. I agree to the terms of the Letter of Intent set forth in the Prospectus.
[ ] Although I'm not obligated to do so, I plan to invest over a 13-month period a total of at least:
[ ] $50,000 [ ] $100,000 [ ] $250,000
[ ] $500,000 [ ] $1,000,000 or more
[ ] I am already investing under an existing Letter of Intent in the following account number: ___________________________________.
------------------------------------------------------------------------------------------------------------------------------------
7. AUTOMATIC INVESTMENT PLAN
------------------------------------------------------------------------------------------------------------------------------------
This plan provides for regular subsequent investments to be made electronically through Automated Clearing House (ACH) from your
bank account into the Fund(s) you select below. There is no charge at the Touchstone Family of Funds, and you may cancel at any time
with no obligations or penalty.
Please withdraw from my bank account $ ___________ (minimum $50) on the [ ] 8th [ ] 15th [ ] 22nd [ ] 29th
[ ] Monthly [ ] Quarterly [ ] Annual basis, beginning ____/____/____ (date) to be invested per the instructions below.
STOCK FUNDS TAXABLE BOND FUNDS TAX-FREE BOND FUNDS
[ ] International Equity Fund $________ [ ] High Yield Fund $________ [ ] Ohio Insured Tax-Free Fund $_______
[ ] Emerging Growth Fund $________ [ ] Bond Fund $________ [ ] Tax-Free Intermediate Term Fund $_______
[ ] Aggressive Growth Fund $________ [ ] Intermediate Term
[ ] Growth/Value Fund $________ Government Income Fund $________ TAX-FREE MONEY MARKET FUNDS
[ ] Equity Fund $________ [ ] Tax-Free Money Fund $_______
[ ] Enhanced 30 Fund $________ TAXABLE MONEY MARKET FUNDS [ ] California Tax-Free Money Fund $_______
[ ] Value Plus Fund $________ [ ] Money Market Fund $________ [ ] Florida Tax-Free Money Fund $_______
[ ] Utility Fund $________ [ ] Short Term Government $________ [ ] Ohio Tax-Free Money Fund - R $_______
Income Fund [ ] Ohio Tax-Free Money Fund - I $_______
[ ] Institutional Government
Income Fund $________
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[ ] Checking Account (please attach a voided check) o Savings Account (please attach a preprinted deposit slip)
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Bank Account Registration Bank Name
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Street City State Zip
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Bank Routing Number Bank Account Number
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Any Joint Owner of your bank account who is not a Joint Owner of this Date
new account with the Touchstone Family of Funds must sign here:
X
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8. TELEPHONE TRANSFERS AND REDEMPTIONS
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Unless the boxes below are checked, by signing this Application, the investor authorizes each Fund and its Transfer Agent to act on
the investor's telephone instructions, or on telephone instructions from any person representing to be an authorized agent of the
investor and requesting a redemption or exchange on the investor's behalf. The undersigned agrees that any redemption or exchange
made pursuant to this authorization shall be subject to the provisions of the current Prospectus of each Fund, and that neither the
Funds nor their Transfer Agent or Distributor, nor their respective affiliates, will be liable for any loss, damage, expense or cost
which may arise out of any telephone redemption or exchange request they reasonably believe to be genuine, including any fraudulent
or unauthorized requests. The investor(s) will bear the risk of any such loss. In an effort to determine that telephone requests are
genuine, the Funds and/or their Transfer Agent will employ reasonable procedures, which may include, among others, requiring forms
of personal identification prior to acting upon telephone instructions and providing written confirmation of the transactions.
Telephone conversations also may be recorded. REDEMPTION PROCEEDS OF $1,000 OR MORE MAY BE WIRED TO THE SHAREHOLDER'S ACCOUNT AT A
COMMERCIAL BANK OR BROKERAGE FIRM IN THE UNITED STATES UPON VERBAL REQUEST IF THE BANK ACCOUNT INFORMATION IN SECTION 7 IS COMPLETE.
(check only if you do not want to use telephone authorization.)
[ ] I DO NOT elect the telephone exchange privilege. [ ] I DO NOT elect the telephone redemption privilege.
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9. AUTOMATIC REBALANCING
------------------------------------------------------------------------------------------------------------------------------------
Do you wish to employ the automatic rebalancing feature? [ ] Yes (if yes, please attach Form 7062) [ ] No
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10. ELIGIBILITY FOR EXEMPTION FROM SALES CHARGE
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[ ] If you are eligible for exemption from sales charges as described in the Statement of Additional Information, please check here
and attach Form 7008.
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<PAGE>
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11. TAXPAYER I.D. NUMBER CERTIFICATION/SIGNATURES
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I (We) are of legal age and capacity, have legal authority to purchase shares, have received and read a current prospectus for each
Fund selected and agree to the terms and conditions on this Application and those contained in the current prospectus(es) (including
the Statement(s) of Additional Information) of the Fund(s) selected for purchase. I (We) acknowledge that the account will be
subject to the telephone exchange and redemption privileges (unless declined) described in the Fund's current Prospectus and agree
that the Fund, its Distributor and Transfer Agent will not be liable for any loss in acting on written or telephone instructions
reasonably believed by them to be authentic. I (We) hereby ratify any instructions given pursuant to this Application and for myself
(ourselves) and my (our) successors and assigns do hereby release each Fund, its Distributor and its Transfer Agent and their
respective officers, employees, agents and affiliates from any and all liability in the performance of the acts instructed herein.
I acknowledge that mutual fund shares are not deposits or obligations of, or guaranteed or endorsed by, any bank, credit union or
insurance company and are not federally insured by the FDIC, the Federal Reserve, or any other agency. Mutual fund shares involve
certain risks, including the possible loss of principal.
Under penalty of perjury, the undersigned whose Social Security (employer I.D.) number is shown on this application certifies that
(i) the number is my (our) correct taxpayer identification number and (ii) currently I (we) are not under IRS notification that I
(we) are subject to backup withholding (line out (ii) if under notification). If no such number is shown, the undersigned further
certifies, under penalties of perjury, that either (a) no such number has been issued, and a number has been or will soon be applied
for (if a number is not provided to you within sixty days, the undersigned understands that all payments -- including redemption --
are subject to a 31% withholding under federal tax law, until a number is provided); or (b) that the undersigned is not a citizen of
the U.S., and either does not expect to be in the U.S. for 183 days during each calendar year and does not conduct business in the
U.S. which should receive any gains from the Funds, or is exempt under an income tax treaty. My (Our) signature below constitutes my
(our) agreement and acceptance of all the terms, conditions and account features selected in any and all parts of this Application.
The Internal Revenue Service does not require your consent to any provision of this document other than the certifications required
to avoid backup withholding.
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INDIVIDUAL, JOINT OR CUSTODIAN ACCOUNTS
------------------------------------------------------------------------------------------------------------------------------------
Signature of Individual Owner or Custodian Date
X
------------------------------------------------------------------------------------------------------------------------------------
Signature of Joint Owner, if any Date
X
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Corporation, Partnership, Trust or Other Accounts
Signature of Authorized Officer, General Partner, Trustee, etc. Date
X
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Title of Corporate Officer, General Partner, Trustee, etc. Date
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12. FOR COMPLETION BY INVESTMENT DEALER
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We hereby submit this application for purchase of shares in accordance with the terms of our Selling Agreement with Touchstone
Securities, Inc. and with the current Prospectus for the Funds.
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Investment Dealer Name
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Dealer's Corporate Office Address City State Zip
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Representative's Name
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Representative's Branch Office Address City State Zip
------------------------------------------------------------------------------------------------------------------------------------
Representative's Telephone Number Representative's Number
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Authorized Signature of Investment Dealer
X
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Title
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FIFTH THIRD - SIGNATURE CARD CHECKING
------------------------------------------------------------------------------------------------------------------------------------
Submit one card to establish an optional check redemption account which allows you to write checks against your account in the
________________. Please see a Fund's current Prospectus to determine if checkwriting is available in that Fund.
(Name of Fund)
PRINT CLEARLY
Name of Account ____________________________________________________________________________________________________________________
Account Number ______________________________________________ Date ______________________________________________________________
The registered owner(s) of this account must sign below. By signing this card the signatory(ies) agrees to all of the terms and
conditions set forth on the reverse side of this card.
_____________________________________________________________ ___________________________________________________________________
Signature Signature
_____________________________________________________________ ___________________________________________________________________
Signature Signature
INSTITUTIONAL ACCOUNTS: JOINT TENANCY ACCOUNTS:
[ ] Check here if any two signatures are required on checks [ ] Check here if both signatures are required on checks
[ ] Check here if only one signature is required on checks [ ] Check here if only one signature is required on checks
------------------------------------------------------------------------------------------------------------------------------------
[ ] Check here if Business Style Checks (600 per book with voucher stub) are required. A charge will be made to your account.
Individual Style checks are provided at no charge.
------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
------------------------------------------------------------------------------------------------------------------------------------
SYSTEMATIC WITHDRAWAL PLAN
------------------------------------------------------------------------------------------------------------------------------------
This plan enables you to withdraw money regularly-either by check directly to you or electronically to your domestic bank account.
It eliminates your need to make a special request every month, quarter or year. There is no charge at the Touchstone Family of
Funds, and you may cancel at any time with no obligations or penalty.
Please make a total withdrawal of ___________ (minimum $50) from my Touchstone account(s) on a [ ] Monthly [ ] Quarterly [ ] Annual
basis, beginning on or about the last day of ________________ (month, year) from the fund(s) listed below:
STOCK FUNDS TAXABLE BOND FUNDS TAX-FREE BOND FUNDS
[ ] International Equity Fund $________ [ ] High Yield Fund $________ [ ] Ohio Insured Tax-Free Fund $_______
[ ] Emerging Growth Fund $________ [ ] Bond Fund $________ [ ] Tax-Free Intermediate Term Fund $_______
[ ] Aggressive Growth Fund $________ [ ] Intermediate Term
[ ] Growth/Value Fund $________ Government Income Fund $________ TAX-FREE MONEY MARKET FUNDS
[ ] Equity Fund $________ [ ] Tax-Free Money Fund $_______
[ ] Enhanced 30 Fund $________ TAXABLE MONEY MARKET FUNDS [ ] California Tax-Free Money Fund $_______
[ ] Value Plus Fund $________ [ ] Money Market Fund $________ [ ] Florida Tax-Free Money Fund $_______
[ ] Utility Fund $________ [ ] Short Term Government $________ [ ] Ohio Tax-Free Money Fund - R $_______
Income Fund [ ] Ohio Tax-Free Money Fund - I $_______
[ ] Institutional Government
Income Fund $________
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Existing Account Number (if applicable) [ ] Make check payable to the account owner(s) and send to the address of record
[ ] Make check payable to a third party and send to the name and address below:
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Name - First, Initial, Last Street
------------------------------------------------------------------------------------------------------------------------------------
City State Zip
------------------------------------------------------------------------------------------------------------------------------------
[ ] Deposit payments in my bank account electronically through Automated Clearing House (ACH) to the account designated below.
[ ] Checking Account (please attach a voided check)
[ ] Savings Account (please attach a preprinted deposit slip)
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Bank Account Registration Bank Name
------------------------------------------------------------------------------------------------------------------------------------
Street City State Zip
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Bank Routing Number Bank Account Number
------------------------------------------------------------------------------------------------------------------------------------
Any Joint Owner of this new account with the Touchstone Family of Funds Date
who is not a Joint Owner of your bank account must sign here:
X
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TERMS AND CONDITIONS
--------------------
1. REDEMPTION AUTHORIZATION: The signatory(ies) whose signature(s) appears on the reverse side, intending to be legally bound,
hereby agrees each with the other and with Fifth Third ("Bank"), that the Bank is appointed agent for such person(s) and as such
agent, is directed to redeem shares registered in the name of such signatory(ies) upon receipt of, and in the amount of, checks
drawn upon the above numbered accounts and to deposit the proceeds of such redemptions in said account or otherwise arrange for
application of such proceeds to payments of said checks. The Bank is expressly authorized to commingle such proceeds of such
redemptions in said account or otherwise arrange for application of such proceeds to payments of said checks also on behalf of
Integrated Fund Services, Inc. in effecting the redemption of shares.
The Bank is expressly authorized to honor checks as redemption instructions hereunder without requiring signature guarantees,
and shall not be liable for any loss or liability resulting from the absence of any such guarantee.
2. CHECK PAYMENT: The signatory(ies) authorizes and directs the Bank to pay each check presented hereunder, subject to all laws and
Bank rules and regulations pertaining to checking accounts. In addition, the signatory(ies) agrees that:
(a) No check shall be issued or honored, or redemption effected, for any amounts represented by shares for which certificates
have been issued.
(b) No check shall be issued or honored, or redemption effected, for any amounts represented by shares unless payment for such
shares has been made in full and any checks given in such payment have been collected through normal banking channels.
Shareholders who wish immediate availability of shares for check redemption may purchase their shares with federal funds or
may contact Integrated Fund Services, Inc. for assistance.
(c) Checks issued hereunder cannot be cashed over the counter at the Bank; and
(d) Checks shall be subject to any further information set forth in the applicable Prospectus, including without limitation any
additions, amendments and supplements thereto.
3. DUAL OWNERSHIP: If more than one person is indicated as a registered owner of shares, as by joint ownership, ownership in
common, or tenants by the entireties, then (a) each registered owner must sign this signature card, (b) each registered owner
must sign each check issued hereunder unless the parties have indicated on the face of this card that only one need sign, in
which case the Bank is authorized to act upon such signature, and (c) each signatory guarantees to the Bank the genuineness and
accuracy of the signature of the other signatory(ies). In the event of the death of a joint tenant or tenant by the entireties,
the survivor shall be deemed to own all of the shares and the proceeds thereof upon delivery of appropriate documentation.
4. TERMINATION: The Bank may at any time terminate this account, related share redemption service and its agency for the
signatory(ies) hereto without prior notice by Bank to the signatory(ies).
5. HEIRS AND ASSIGNS: These terms and conditions shall bind the respective heirs, executors, administrators and assigns of the
signatory(ies).
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</TABLE>
<PAGE>
TOUCHSTONE TAX-FREE TRUST
STATEMENT OF ADDITIONAL INFORMATION
November 1, 2000
Tax-Free Intermediate Term Fund
Ohio Insured Tax-Free Fund
Tax-Free Money Fund
Ohio Tax-Free Money Fund
California Tax-Free Money Fund
Florida Tax-Free Money Fund
This Statement of Additional Information is not a prospectus. It should be read
together with Touchstone Tax-Free Trust's prospectus dated November 1, 2000. A
copy of the Prospectus can be obtained by writing the Trust at 221 East Fourth
Street, Suite 300, Cincinnati, Ohio 45202, or by calling Touchstone nationwide,
800.543.0407, or in Cincinnati 362.4921.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Touchstone Tax-Free Trust
221 East Fourth Street, Suite 300
Cincinnati, Ohio 45202
TABLE OF CONTENTS PAGE
The Trust......................................................................3
Municipal Obligations..........................................................4
Quality Ratings of Municipal Obligations......................................10
Definitions, Policies and Risk Considerations.................................13
Investment Limitations........................................................17
Insurance on the Ohio Insured Tax-Free Fund's Securities......................22
Trustees and Officers.........................................................25
The Investment Advisor and Sub-Advisor........................................28
The Distributor...............................................................31
Distribution Plans............................................................32
Securities Transactions.......................................................34
Code of Ethics................................................................36
Portfolio Turnover............................................................36
Calculation of Share Price and Public Offering Price..........................37
Choosing a Share Class........................................................40
Other Purchase Information....................................................44
Taxes.........................................................................47
Redemption in Kind............................................................49
Historical Performance Information............................................50
Principal Security Holders....................................................54
Custodian.....................................................................56
Auditors......................................................................56
Transfer Agent................................................................57
Tax Equivalent Yield Tables...................................................58
ANNUAL REPORT ................................................................60
<PAGE>
THE TRUST
---------
Touchstone Tax-Free Trust (the "Trust"), formerly Countrywide Tax-Free Trust, an
open-end, diversified management investment company, was organized as a
Massachusetts business trust on April 13, 1981. The Trust currently offers six
series of shares to investors: the Tax-Free Money Fund, the Tax-Free
Intermediate Term Fund, the Ohio Insured Tax-Free Fund, the Ohio Tax-Free Money
Fund, the California Tax-Free Money Fund and the Florida Tax-Free Money Fund
(referred to individually as a "Fund" and collectively as the "Funds"). Each
Fund has its own investment goals and policies.
Shares of each Fund have equal voting rights and liquidation rights. Each 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 a
Fund shall vote separately on matters relating to its plan of distribution
pursuant to Rule 12b-1. 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.
Each share of a Fund represents an equal proportionate interest in the assets
and liabilities belonging to that Fund with each other share of that Fund and is
entitled to such dividends and distributions out of the income belonging to the
Fund as are declared by the Trustees. The shares do not have cumulative voting
rights or any preemptive or conversion rights, and the Trustees have the
authority from time to time to divide or combine the shares of any Fund into a
greater or lesser number of shares of that Fund so long as the proportionate
beneficial interest in the assets belonging to that Fund and the rights of
shares of any other Fund are in no way affected. In case of any liquidation of a
Fund, the holders of shares of the Fund being liquidated will be entitled to
receive as a class a distribution out of the assets, net of the liabilities,
belonging to that Fund. Expenses attributable to any Fund are borne by that
Fund. Any general expenses of the Trust not readily identifiable as belonging to
a particular Fund are allocated by or under the direction of the Trustees in
such manner as the Trustees determine to be fair and equitable. Generally, the
Trustees allocate such expenses on the basis of relative net assets or number of
shareholders. No shareholder is liable to further calls or to assessment by the
Trust without his express consent.
Both Class A (Retail) shares and Class B (Institutional) shares of the Ohio
Tax-Free Money 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) Class
A 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 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) Class A shares are subject to a lower minimum initial
investment requirement and offer certain shareholder services not available to
Class B shares such as checkwriting privileges and automatic investment and
redemption plans.
<PAGE>
Both Class A shares and Class C shares of the Tax-Free Intermediate Term Fund
and the Ohio Insured Tax-Free Fund represent an interest in the same assets of
such Fund, have the same rights and are identical in all material respects
except that (i) Class C shares bear the expenses of higher distribution fees;
(ii) certain other class specific expenses will be borne solely by the class to
which such expenses are attributable, including transfer agent fees attributable
to a specific class of shares, printing and postage expenses related to
preparing and distributing materials to current shareholders of a specific
class, registration fees incurred by a specific class of shares, the expenses of
administrative personnel and services required to support the shareholders of a
specific class, litigation or other legal expenses relating to a class of
shares, Trustees' fees or expenses incurred as a result of issues relating to a
specific class of shares and accounting fees and expenses relating to a specific
class of shares; and (iii) each class has exclusive voting rights with respect
to matters relating to its own distribution arrangements.
The Board of Trustees may classify and reclassify the shares of a Fund into
additional classes of shares at a future date.
Under Massachusetts law, under certain circumstances, shareholders of a
Massachusetts business trust could be deemed to have the same type of personal
liability for the obligations of the Trust as does a partner of a partnership.
However, numerous investment companies registered under the Investment Company
Act of 1940 have been formed as Massachusetts business trusts and the Trust is
not aware of an instance where such result has occurred. In addition, the Trust
Agreement disclaims shareholder liability for acts or obligations of the Trust
and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Trust or the Trustees.
The Trust Agreement also provides for the indemnification out of the Trust
property for all losses and expenses of any shareholder held personally liable
for the obligations of the Trust. Moreover, it provides that the Trust will,
upon request, assume the defense of any claim made against any shareholder for
any act or obligation of the Trust and satisfy any judgment thereon. As a
result, and particularly because the Trust assets are readily marketable and
ordinarily substantially exceed liabilities, management believes that the risk
of shareholder liability is slight and limited to circumstances in which the
Trust itself would be unable to meet its obligations. Management believes that,
in view of the above, the risk of personal liability is remote.
<PAGE>
MUNICIPAL OBLIGATIONS
---------------------
Each Fund invests primarily in Municipal Obligations. Municipal Obligations are
debt obligations issued by a state and its political subdivisions, agencies,
authorities and instrumentalities and other qualifying issuers which pay
interest that is, in the opinion of bond counsel to the issuer, exempt from
federal income tax. The Ohio Insured Tax-Free Fund and the Ohio Tax-Free Money
Fund invest primarily in Ohio Obligations, which are Municipal Obligations
issued by the State of Ohio and its political subdivisions, agencies,
authorities and instrumentalities and other qualifying issuers which pay
interest that is, in the opinion of bond counsel to the issuer, exempt from both
federal income tax and Ohio personal income tax. The California Tax-Free Money
Fund invests primarily in California Obligations, which are Municipal
Obligations issued by the State of California and its political subdivisions,
agencies, authorities and instrumentalities and other qualifying issuers which
pay interest that is, in the opinion of bond counsel to the issuer, exempt from
both federal income tax and California income tax. The Florida Tax-Free Money
Fund invests primarily in Florida Obligations, which are Municipal Obligations
issued by the State of Florida and its political subdivisions, agencies,
authorities and instrumentalities and other qualifying issuers, the value of
which is exempt from the Florida intangible personal property tax, which pay
interest that is, in the opinion of bond counsel to the issuer, exempt from
federal income tax.
Municipal obligations consist of tax-exempt bonds, tax-exempt notes and
tax-exempt commercial paper.
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.
Each Fund may invest in any combination of general obligation bonds, revenue
bonds and industrial development bonds. Each 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, each 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, a 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. Each Fund will invest its
assets so that no more than 20% of its annual income gives rise to a preference
item for the purpose of the alternative minimum tax and in other investments
subject to federal income tax.
<PAGE>
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.
WHEN-ISSUED OBLIGATIONS. Each Fund may invest in when-issued Municipal
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. In
connection with these investments, each Fund will direct its Custodian to place
cash or liquid securities in a segregated account in an amount sufficient to
make payment for the securities to be purchased. When a segregated account is
maintained because a Fund purchases securities on a when-issued basis, the
assets deposited in the segregated account will be valued daily at market for
the purpose of determining the adequacy of the securities in the account. If the
market value of such securities declines, additional cash or securities will be
placed in the account on a daily basis so that the market value of the account
will equal the amount of the Fund's commitments to purchase securities on a
when-issued basis. To the extent funds are in a segregated account, they will
not be available for new investment or to meet redemptions. Securities purchased
on a when-issued basis and the securities held in a Fund's portfolio are subject
to changes in market value based upon changes in the level of interest rates
(which will generally result in all of those securities changing in value in the
same way, i.e, all those securities experiencing appreciation when interest
rates decline and depreciation when interest rates rise). Therefore, if in order
to achieve higher returns, a Fund remains substantially fully invested at the
same time that it has purchased securities on a when-issued basis, there will be
a possibility that the market value of the Fund's assets will have greater
fluctuation. The purchase of securities on a when-issued basis may involve a
risk of loss if the broker-dealer selling the securities fails to deliver after
the value of the securities has risen.
<PAGE>
When the time comes for a Fund to make payment for securities purchased on a
when-issued basis, the Fund will do so by using then-available cash flow, by
sale of the securities held in the segregated account, by sale of other
securities or, although it would not normally expect to do so, by directing the
sale of the securities purchased on a when-issued basis themselves (which may
have a market value greater or less than the Fund's payment obligation).
Although a Fund will only make commitments to purchase securities on a
when-issued basis with the intention of actually acquiring the securities, the
Funds may sell these obligations before the settlement date if it is deemed
advisable by the Sub-Advisor 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. Each Fund may invest in participation interests in
Municipal Obligations owned by banks or other financial institutions.
Participation interests frequently are backed by irrevocable letters of credit
or a guarantee of a bank. A Fund will have the right to sell the interest back
to the bank or other financial institution and draw on the letter of credit on
demand, generally on seven days' notice, for all or any part of the Fund's
participation interest in the par value of the Municipal Obligation plus accrued
interest. Each Fund intends to exercise the demand on the letter of credit only
under the following circumstances: (1) default of any of the terms of the
documents of the Municipal Obligation, (2) as needed to provide liquidity in
order to meet redemptions, or (3) to maintain a high quality investment
portfolio. The bank or financial institution will retain a service and letter of
credit fee and a fee for issuing the repurchase commitment in an amount equal to
the excess of the interest paid by the issuer on the Municipal Obligations over
the negotiated yield at which the instruments were purchased by the Fund.
Participation interests will be purchased only if, in the opinion of counsel of
the issuer, interest income on the interests will be tax-exempt when distributed
as dividends to shareholders. Each Fund will not invest more than 10% of its net
assets in participation interests that do not have a demand feature and all
other illiquid securities.
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.
<PAGE>
FLOATING AND VARIABLE RATE OBLIGATIONS. Each Fund may invest in floating or
variable rate Municipal 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. Each 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 a 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. Each Fund will not invest more than 10% of its
net assets in floating or variable rate obligations as to which it cannot
exercise the demand feature on not more than seven days' notice if the
Sub-Advisor, 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 a 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 a Fund's
quality standards, the Sub-Advisor 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 Sub-Advisor 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.
INVERSE FLOATING OBLIGATIONS. Each of the Tax-Free Intermediate Term Fund and
the Ohio Insured Tax-Free Fund may invest in securities representing interests
in Municipal Obligations, known as inverse floating obligations, which pay
interest rates that vary inversely to changes in the interest rates of specified
short-term Municipal Obligations or an index of short-term Municipal
Obligations. The interest rates on inverse floating obligations will typically
decline as short-term market interest rates increase and increase as short-term
market rates decline. Such securities have the effect of providing a degree of
investment leverage, since they will generally increase or decrease in value in
response to changes in market interest rates at a rate which is a multiple
(typically two) of the rate at which fixed-rate, long-term Municipal Obligations
increase or decrease in response to such changes. As a result, the market value
of inverse floating obligations will generally be more volatile than the market
values of fixed-rate Municipal Obligations.
OBLIGATIONS WITH PUTS ATTACHED. Each Fund may purchase Municipal 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." Each Fund may purchase Municipal Obligations
with puts attached from banks and broker-dealers. Each 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 Municipal Obligations, the price which a 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. Each Fund
intends to purchase such obligations only from sellers deemed by the
Sub-Advisor, 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 a Fund will not exceed 10% of its net assets.
<PAGE>
LEASE OBLIGATIONS. The Tax-Free Intermediate Term Fund and the Ohio Insured
Tax-Free Fund may invest in Municipal Obligations that constitute participation
in lease obligations or installment purchase contract obligations (hereinafter
collectively called "lease obligations") of municipal authorities or entities.
Although lease obligations do not constitute general obligations of the
municipality for which the municipality's taxing power is pledged, a lease
obligation is ordinarily backed by the municipality's covenant to budget for,
appropriate and make the payments due under the lease obligation. Lease
obligations provide a premium interest rate, which along with the regular
amortization of the principal, may make them attractive for a portion of the
assets of the Funds. Certain of these lease obligations contain
"non-appropriation" clauses which provide that the municipality has no
obligation to make lease or installment purchase payments in future years unless
money is appropriated for such purpose on an annual basis. In addition to the
"non-appropriation" risk, these securities represent a relatively new type of
financing that has not yet developed the depth of marketability associated with
more conventional bonds. Although "non-appropriation" lease obligations are
secured by the leased property, the disposition of the property in the event of
foreclosure might prove difficult. The Trust will seek to minimize the special
risks associated with such securities by only investing in "non-appropriation"
lease obligations where (1) the nature of the leased equipment or property is
such that its ownership or use is essential to a governmental function of the
municipality, (2) the lease payments will commence amortization of principal at
an early date resulting in an average life of seven years or less for the lease
obligation, (3) appropriate covenants will be obtained from the municipal
obligor prohibiting the substitution or purchase of similar equipment if the
lease payments are not appropriated, (4) the lease obligor has maintained good
market acceptability in the past, (5) the investment is of a size that will be
attractive to institutional investors, and (6) the underlying leased equipment
has elements of portability and/or use that enhance its marketability in the
event foreclosure on the underlying equipment were ever required.
Each of the Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund
will not invest more than 10% of its net assets in lease obligations if the
Sub-Advisor determines that there is no secondary market available for these
obligations and all other illiquid securities. The Funds do not intend to invest
more than an additional 5% of their net assets in municipal lease obligations
determined by the Sub-Advisor, under the direction of the Board of Trustees, to
be liquid. In determining the liquidity of such obligations, the Sub-Advisor
will consider such factors as (1) the frequency of trades and quotes for the
obligation; (2) the number of dealers willing to purchase or sell the security
and the number of other potential buyers; (3) the willingness of dealers to
undertake to make a market in the security; and (4) the nature of the
marketplace trades, including the time needed to dispose of the security, the
method of soliciting offers and the mechanics of transfer. The Funds will only
purchase unrated lease obligations which meet the Fund's quality standards, as
determined by the Sub-Advisor, under the direction of the Board of Trustees,
including an assessment of the likelihood that the lease will not be cancelled.
<PAGE>
QUALITY RATINGS OF MUNICIPAL OBLIGATIONS
The Tax-Free Money Fund, the Ohio Tax-Free Money Fund, the California Tax-Free
Money Fund and the Florida Tax-Free Money Fund (the "Money Market Funds") 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 Money Market Funds
include Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings
Group ("S&P") or Fitch Investors Services, Inc. ("Fitch").
The Tax-Free Intermediate Term Fund may invest in Municipal Obligations rated at
the time of purchase within the three highest grades assigned by Moody's, S&P or
Fitch. The Ohio Insured Tax-Free Fund may invest in Municipal Obligations rated
at the time of purchase within the four highest grades assigned by Moody's, S&P
or Fitch. The Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund
may also invest in tax-exempt notes and commercial paper determined by the
Sub-Advisor to meet the Funds' quality standards. Each Fund's quality standards
limit its investments in tax-exempt notes to those which are rated within the
three highest grades by Moody's (MIG 1, MIG 2 or MIG 3) or Fitch (F-1+, F-1 or
F-2) or the two highest grades by S&P (SP-1 or SP-2) and in tax-exempt
commercial paper to those which are rated within the two highest grades by
Moody's (Prime-1 or Prime-2), S&P (A-1 or A-2) or Fitch (Fitch-1 or Fitch-2).
MOODY'S RATINGS
1. TAX-EXEMPT BONDS. The four highest ratings of Moody's for
tax-exempt bonds are Aaa, Aa, A and Baa. Bonds rated Aaa are judged
by Moody's to be of the best quality. They carry the smallest degree
of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such
issuers. Bonds rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are
generally known as high-grade bonds. Moody's says that Aa bonds are
rated lower than the best bonds because margins of protection or
other elements make long term risks appear somewhat larger than Aaa
bonds. Moody's describes bonds rated A as possessing many favorable
investment attributes and as upper medium grade obligations. Factors
giving security to principal and interest of A rated bonds are
considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future. Bonds which are
rated by Moody's in the fourth highest rating (Baa) are considered as
medium grade obligations, i.e., they are neither highly protected nor
poorly secured. Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length
of time. Such bonds lack outstanding investment characteristics and
in fact have speculative characteristics as well. Those obligations
in the A and Baa group which Moody's believes possess the strongest
investment attributes are designated by the symbol A 1 and Baa 1.
<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. Notes bearing the designation MIG-3 are
of favorable quality, with all security elements accounted for but
lacking the undeniable strength of the preceding grades. Market
access for refinancing, in particular, is likely to be less well
established.
3. TAX-EXEMPT COMMERCIAL PAPER. The rating Prime-1 is the highest
tax-exempt commercial paper rating assigned by Moody's. Issuers rated
Prime-1 are judged to be of the best quality. Their short-term debt
obligations carry the smallest degree of investment risk. Margins of
support for current indebtedness are large or stable with cash flow
and asset protection well assured. Current liquidity provides ample
coverage of near-term 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 four highest ratings of S&P for tax-exempt
bonds are AAA, AA, A and BBB. Bonds rated AAA have the highest rating
assigned by S&P to a debt obligation. Capacity to pay interest and
repay principal is extremely strong. Bonds rated AA have a very
strong capacity to pay interest and repay principal and differ from
the highest rated issues only in a small degree. Bonds rated A have a
strong capacity to pay interest and repay principal although they are
somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated
categories. Bonds which are rated by S&P in the fourth highest rating
(BBB) are regarded as having an adequate capacity to pay interest and
repay principal and are considered "investment grade." Whereas they
normally exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal than for bonds
in higher rated categories. The ratings for tax-exempt bonds may be
modified by the addition of a plus or minus sign to show relative
standing within the major rating categories.
2. TAX-EXEMPT NOTES. Tax-exempt note ratings are generally given by
S&P to notes that mature in three years or less. Notes rated SP-1
have very strong or strong capacity to pay principal and interest.
Issues determined to possess overwhelming safety characteristics will
be given a plus designation. Notes rated SP-2 have satisfactory
capacity to pay principal and interest.
<PAGE>
3. TAX-EXEMPT COMMERCIAL PAPER. The ratings A-1+ and A-1 are the
highest tax-exempt commercial paper ratings assigned by S&P. These
designations indicate the degree of safety regarding timely payment
is either overwhelming (A-1+) or very strong (A- 1). Capacity for
timely payment on issues rated A-2 is strong. However, the relative
degree of safety is not as overwhelming as for issues designated A-1.
FITCH RATINGS
1. TAX-EXEMPT BONDS. The four highest ratings of Fitch for tax-exempt
bonds are AAA, AA, A and BBB. Bonds rated AAA are regarded by Fitch
as being of the highest quality, with the obligor having an
extraordinary ability to pay interest and repay principal which is
unlikely to be affected by reasonably foreseeable events. Bonds rated
AA are regarded by Fitch as high quality obligations. The obligor's
ability to pay interest and repay principal, while very strong, is
somewhat less than for AAA rated bonds, and more subject to possible
change over the term of the issue. Bonds rated A are regarded by
Fitch as being of good quality. The obligor's ability to pay interest
and repay principal is strong, but may be more vulnerable to adverse
changes in economic conditions and circumstances than bonds with
higher ratings. Bonds rated BBB are regarded by Fitch as being of
satisfactory quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to weaken this
ability than bonds with higher ratings. Fitch ratings may be modified
by the addition of a plus (+) or minus (-) sign.
2. TAX-EXEMPT NOTES. The ratings F-1+, F-1 and F-2 are the highest
ratings assigned by Fitch for tax-exempt notes. Notes assigned the
F-1+ rating are regarded by Fitch as having the strongest degree of
assurance for timely payment. Notes assigned the F-1 rating reflect
an assurance for timely payment only slightly less than the strongest
issues. Notes assigned the F-2 rating have a degree of assurance for
timely payment with a lesser margin of safety than higher-rated
notes.
3. TAX-EXEMPT COMMERCIAL PAPER. Commercial paper rated Fitch-1 is
regarded as having the strongest degree of assurance for timely
payment. Issues assigned the Fitch-2 rating reflect an assurance of
timely payment only slightly less in degree than the strongest
issues.
GENERAL. The ratings of Moody's, S&P and Fitch represent their opinions of the
quality of the obligations rated by them. It should be emphasized that such
ratings are general and are not absolute standards of quality. Consequently,
obligations with the same maturity, coupon and rating may have different yields,
while obligations of the same maturity and coupon, but with different ratings,
may have the same yield. It is the responsibility of the Sub-Advisor to appraise
independently the fundamental quality of the obligations held by the Funds.
Certain Municipal Obligations may be backed by letters of credit or similar
commitments issued by banks and, in such instances, the obligation of the bank
and other credit factors will be considered in assessing the quality of the
Municipal Obligations.
<PAGE>
Any Municipal Obligation which depends on credit of the U.S. Government (e.g.
project notes) will be considered by the Sub-Advisor 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. Each
Fund may also invest in Municipal Obligations which are not rated if, in the
opinion of the Sub-Advisor, such obligations are of comparable quality to those
rated obligations in which the applicable Fund may invest.
Subsequent to its purchase by a Fund, an obligation may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund. If
the rating of an obligation held by a Fund is reduced below its minimum
requirements, the Fund will be required to exercise the demand provision or sell
the obligation as soon as practicable.
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS
---------------------------------------------
A more detailed discussion of some of the investment policies of the Funds
described in the Prospectus appears below:
BANK DEBT INSTRUMENTS. Bank debt instruments in which the Funds may invest
consist of certificates of deposit, bankers' acceptances and time deposits
issued by national banks and state banks, trust companies and mutual savings
banks, or of banks or institutions the accounts of which are insured by the
Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance
Corporation. Certificates of deposit are negotiable certificates evidencing the
indebtedness of a commercial bank to repay funds deposited with it for a
definite period of time (usually from fourteen days to one year) at a stated or
variable interest rate. Bankers' acceptances are credit instruments evidencing
the obligation of a bank to pay a draft which has been drawn on it by a
customer, which instruments reflect the obligation both of the bank and of the
drawer to pay the face amount of the instrument upon maturity. The Funds will
only invest in bankers' acceptances of banks having a short-term rating of A-1
by S&P or Prime-1 by Moody's. Time deposits are non-negotiable deposits
maintained in a banking institution for a specified period of time at a stated
interest rate. Each Fund will not invest in time deposits maturing in more than
seven days if, as a result thereof, more than 10% of the value of its net assets
would be invested in such securities and other illiquid securities.
COMMERCIAL PAPER. Commercial paper consists of short-term (usually from one to
two hundred seventy days) unsecured promissory notes issued by corporations in
order to finance their current operations. Each Fund will only invest in taxable
commercial paper provided the paper is rated in one of the two highest
categories by any two NRSROs (or by any one NRSRO if the security is rated by
only that NRSRO). Each Fund 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 S&P. Certain notes may have floating or variable rates. Variable
and floating rate notes with a demand notice period exceeding seven days will be
subject to each Fund's restrictions on illiquid investments (see "Investment
Limitations") unless, in the judgment of the Sub-Advisor, subject to the
direction of the Board of Trustees, such note is liquid. The Funds do not
presently intend to invest in taxable commercial paper.
<PAGE>
The rating of Prime-1 is the highest commercial paper rating assigned by
Moody's. 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 S&P has the following characteristics: liquidity ratios are adequate
to meet cash requirements; long-term senior debt is rated "A" or better,
although in some cases "BBB" credits may be allowed; the issuer has access to at
least two additional channels of borrowing; basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances; typically, the
issuer's industry is well established and the issuer has a strong position
within the industry; and the reliability and quality of management are
unquestioned. The relative strength or weakness of the above factors determines
whether the issuer's commercial paper is rated A-1 or A-2.
REPURCHASE AGREEMENTS. Repurchase agreements are transactions by which a Fund
purchases a security and simultaneously commits to resell that security to the
seller at an agreed upon time and price, thereby determining the yield during
the term of the agreement. In the event of a bankruptcy or other default of the
seller of a repurchase agreement, a Fund could experience both delays in
liquidating the underlying security and losses. To minimize these possibilities,
each Fund intends to enter into repurchase agreements only with its Custodian,
with banks having assets in excess of $10 billion and with broker-dealers who
are recognized as primary dealers in U.S. Government obligations by the Federal
Reserve Bank of New York. Collateral for repurchase agreements is held in
safekeeping in the customer-only account of the Funds' Custodian at the Federal
Reserve Bank. A Fund will not enter into a repurchase agreement not terminable
within seven days if, as a result thereof, more than 10% of the value of its net
assets would be invested in such securities and other illiquid securities.
Although the securities subject to a repurchase agreement might bear maturities
exceeding one year, settlement for the repurchase would never be more than one
year after the Fund's acquisition of the securities and normally would be within
a shorter period of time. The resale price will be in excess of the purchase
price, reflecting an agreed upon market rate effective for the period of time
the Fund's money will be invested in the securities, and will not be related to
the coupon rate of the purchased security. At the time a Fund enters into a
repurchase agreement, the value of the underlying security, including accrued
interest, will equal or exceed the value of the repurchase agreement, and in the
case of a repurchase agreement exceeding one day, the seller will agree that the
value of the underlying security, including accrued interest, will at all times
equal or exceed the value of the repurchase agreement. The collateral securing
the seller's obligation must 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.
<PAGE>
For purposes of the Investment Company Act of 1940, a repurchase agreement is
deemed to be a loan from a Fund to the seller subject to the repurchase
agreement and is therefore subject to that Fund's investment restriction
applicable to loans. It is not clear whether a court would consider the
securities purchased by a Fund subject to a repurchase agreement as being owned
by that Fund or as being collateral for a loan by the Fund to the seller. In the
event of the commencement of bankruptcy or insolvency proceedings with respect
to the seller of the securities before repurchase of the security under a
repurchase agreement, a Fund may encounter delays and incur costs before being
able to sell the security. Delays may involve loss of interest or decline in
price of the security. If a court characterized the transaction as a loan and a
Fund has not perfected a security interest in the security, that Fund may be
required to return the security to the seller's estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, a Fund would be at
the risk of losing some or all of the principal and income involved in the
transaction. As with any unsecured debt obligation purchased for a Fund, the
Sub-Advisor seeks to minimize the risk of loss through repurchase agreements by
analyzing the creditworthiness of the obligor, in this case, the seller. Apart
from the risk of bankruptcy or insolvency proceedings, there is also the risk
that the seller may fail to repurchase the security, in which case a Fund may
incur a loss if the proceeds to that Fund of the sale of the security to a third
party are less than the repurchase price. However, if the market value of the
securities subject to the repurchase agreement becomes less than the repurchase
price (including interest), the Fund involved will direct the seller of the
security to deliver additional securities so that the market value of all
securities subject to the repurchase agreement will equal or exceed the
repurchase price. It is possible that a Fund will be unsuccessful in seeking to
enforce the seller's contractual obligation to deliver additional securities.
LOANS OF PORTFOLIO SECURITIES. Each Fund may make short-term loans of its
portfolio securities to banks, brokers and dealers. Lending portfolio securities
exposes a 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 a 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 liquid securities, with the Funds' Custodian in an amount at
least equal to the market value of the loaned securities. Each 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 a Fund without the affirmative
vote of a majority of its outstanding shares.
Under applicable regulatory requirements (which are subject to change), the loan
collateral must, on each business day, at least equal the value of the loaned
securities. To be acceptable as collateral, letters of credit must obligate a
bank to pay amounts demanded by a Fund if the demand meets the terms of the
letter. Such terms and the issuing bank must be satisfactory to the Fund. The
Funds receive amounts equal to the interest on loaned securities and also
receive one or more of (a) negotiated loan fees, (b) interest on securities used
as collateral, or (c) interest on short-term debt securities purchased with such
collateral; either type of interest may be shared with the borrower. The Funds
may also pay fees to placing brokers as well as custodian and administrative
fees in connection with loans. Fees may only be paid to a placing broker
provided that the Trustees determine that the fee paid to the placing broker is
reasonable and based solely upon services rendered, that the Trustees separately
consider the propriety of any fee shared by the placing broker with the
borrower, and that the fees are not used to compensate the Sub-Advisor or any
affiliated person of the Trust or an affiliated person of the Sub-Advisor or
other affiliated person. The terms of the Funds' loans must meet applicable
tests under the Internal Revenue Code and permit the Funds to reacquire loaned
securities on five days' notice or in time to vote on any important matter.
<PAGE>
BORROWING AND PLEDGING. As a temporary measure for extraordinary or emergency
purposes, 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 Florida
Tax-Free Money Fund may each borrow money from banks or other persons in an
amount not exceeding 10% of its total assets. Each Fund may pledge assets in
connection with borrowings but will not pledge more than 10% of its total
assets. The Funds will not make any additional purchases of portfolio securities
while borrowings are outstanding.
The Ohio Tax-Free Money 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 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 portfolio securities
of the Funds and, therefore, if employed, increases the possibility of
fluctuation in a Fund's net asset value. This is the speculative factor known as
leverage. To reduce the risks of borrowing, the Funds will limit their
borrowings as described above. Each 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.
SECURITIES WITH LIMITED MARKETABILITY. Each 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 demand features;
floating and variable rate obligations as to which the Funds cannot exercise the
related demand feature and as to which there is no secondary market; repurchase
agreements not terminable within seven days, and (for the Tax-Free Intermediate
Term Fund and the Ohio Insured Tax-Free Fund) lease obligations for which there
is no secondary market.
MAJORITY. As used in this Statement of Additional Information, the term
"majority" of the outstanding shares of the Trust (or of any Fund) means the
lesser of (1) 67% or more of the outstanding shares of the Trust (or the
applicable Fund) present at a meeting, if the holders of more than 50% of the
outstanding shares of the Trust (or the applicable Fund) are present or
represented at such meeting or (2) more than 50% of the outstanding shares of
the Trust (or the applicable Fund).
<PAGE>
INVESTMENT LIMITATIONS
----------------------
The Trust has adopted certain fundamental investment limitations designed to
reduce the risk of an investment in the Funds. These limitations may not be
changed with respect to any Fund without the affirmative vote of a majority of
the outstanding shares of that Fund. For the purpose of these investment
limitations, the identification of the "issuer" of Municipal Obligations which
are not general obligation bonds is made by the Sub-Advisor on the basis of the
characteristics of the obligation, the most significant of which is the source
of funds for the payment of principal of and interest on such obligations.
THE LIMITATIONS APPLICABLE TO THE TAX-FREE MONEY FUND, THE TAX-FREE INTERMEDIATE
TERM FUND AND THE OHIO INSURED TAX-FREE FUND ARE:
1. Borrowing Money. Each Fund will not borrow money or pledge, mortgage
or hypothecate its assets, except as a temporary measure for
extraordinary or emergency purposes and then only in amounts not in
excess of 10% of the value of its total assets. A Fund will not make
any additional purchases of portfolio securities while borrowings are
outstanding.
2. Underwriting. Each Fund will not act as underwriter of securities
issued by other persons, either directly or through a majority owned
subsidiary. This limitation is not applicable to the extent that, in
connection with the disposition of its portfolio securities (including
restricted securities), a Fund may be deemed an underwriter under
certain federal securities laws.
3. Illiquid Investments. Each Fund will not purchase securities for
which there are legal or contractual restrictions on resale or enter
into a repurchase agreement maturing in more than seven days if, as a
result thereof, more than 10% of the value of the total assets of the
Fund would be invested in such securities.
4. Real Estate. Each Fund will not purchase, hold or deal in real
estate, but this shall not prevent investments in Municipal Obligations
which are secured by or represent interests in real estate.
5. Commodities. Each Fund will not purchase, hold or deal in
commodities or commodities futures contracts, or invest in oil,
gas or other mineral explorative or development programs.
6. Loans. Each Fund will not make loans to other persons, except (a) by
the purchase of a portion of an issue of debt securities in accordance
with its investment objective, policies and limitations, (b) by loaning
portfolio securities, or (c) by engaging in repurchase transactions.
<PAGE>
7. Certain Companies. Each Fund will not purchase securities of a
company, if such purchase at the time thereof, would cause more than 5%
of the Fund's total assets to be invested in securities of companies,
which, including predecessors, have a record of less than three years'
continuous operation.
8. Obligations of One Issuer. Each Fund will not purchase more than 10%
of the outstanding publicly issued debt obligations of any issuer. With
respect to the Ohio Insured Tax-Free Fund, this limitation does not
apply to securities issued or guaranteed by the State of Ohio and its
political subdivisions and duly constituted authorities and
corporations. This limitation is not applicable to privately issued
Municipal Obligations.
9. Investing for Control. Each Fund will not invest in companies for
the purpose of exercising control.
10. Other Investment Companies. Each Fund will not invest more than 10%
of its total assets in the securities of other investment companies and
then only for temporary purposes in companies whose dividends are
tax-exempt or invest more than 5% of its total assets in the securities
of any investment company. Each Fund will not purchase more than 3% of
the outstanding voting stock of any investment company.
11. Margin Purchases. Each Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not
applicable to short-term credit obtained by a Fund for the clearance of
purchases and sales or redemption of securities.
12. Common Stocks. Each Fund will not invest in common stocks.
13. Securities Owned by Affiliates. Each Fund will not purchase or
retain the securities of any issuer if, to the Trust's knowledge, those
Trustees and officers of the Trust or of the Advisor, who individually
own beneficially more than 0.5% of the outstanding securities of such
issuer, together own beneficially more than 5% of such securities.
14. Short Sales and Options. Each Fund will not sell any securities
short or write call options. This limitation is not applicable to the
extent that sales by a Fund of Municipal Obligations with puts attached
or sales by a Fund of other securities in which the Fund may otherwise
invest would be considered to be sales of options.
15. Concentration. Each Fund will not invest more than 25% of its total
assets in a particular industry; this limitation is not applicable to
investments in tax-exempt obligations issued by governments or
political subdivisions of governments. Each Fund may invest more than
25% of its total assets in tax-exempt obligations in a particular
segment of the bond market.
16. Senior Securities. Each Fund will not issue or sell any class of
senior security as defined by the Investment Company Act of 1940 except
to the extent that notes evidencing temporary borrowings or the
purchase of securities on a when-issued basis might be deemed as such.
<PAGE>
As diversified series of the Trust, the Tax-Free Money Fund and the Tax-Free
Intermediate Term Fund have adopted the following additional investment
limitation, which may not be changed with respect to either Fund without the
affirmative vote of a majority of the outstanding shares of the applicable Fund.
Neither Fund will purchase the securities of any issuer if such purchase at the
time thereof would cause less than 75% of the value of the total assets of the
Fund to be invested in cash and cash items (including receivables), securities
issued by the U.S. Government, its agencies or instrumentalities, securities of
other investment companies, and other securities for the purposes of this
calculation limited in respect of any one issuer to an amount not greater in
value than 5% of the value of the total assets of a Fund and to not more than
10% of the outstanding voting securities of such issuer.
THE LIMITATIONS APPLICABLE TO THE OHIO TAX-FREE MONEY FUND ARE:
1. Borrowing Money. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is asset
coverage of 300% for all borrowings of the Fund; or (b) from a bank or
other persons for temporary purposes only, provided that, when made,
such temporary borrowings are in an amount not exceeding 5% of the
Fund's total assets. The Fund also will not make any borrowing which
would cause outstanding borrowings to exceed one-third of the value of
its total assets. The Fund will not make any additional purchases of
portfolio securities if outstanding borrowings exceed 5% of the value
of its total assets.
2. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any security owned or
held by it except as may be necessary in connection with borrowings
described in limitation (1) above. The Fund will not mortgage, pledge
or hypothecate more than one-third of its assets in connection with
borrowings.
3. Underwriting. The Fund will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the
extent that, in connection with the disposition of its portfolio
securities (including restricted securities), the Fund may be deemed
an underwriter under certain federal securities laws.
4. Illiquid Investments. The Fund will not invest more than 10% of its
net assets in securities for which there are legal or contractual
restrictions on resale, repurchase agreements maturing in more than
seven days and other illiquid securities.
5. Real Estate. The Fund will not purchase, hold or deal in real
estate. This limitation is not applicable to investments in
securities which are secured by or represent interests in real estate.
6. Commodities. The Fund will not purchase, hold or deal in commodities
or commodities futures contracts, or invest in oil, gas or other
mineral explorative or development programs. This limitation is not
applicable to the extent that the tax-exempt obligations, U.S.
Government obligations and other securities in which the Fund may
otherwise invest would be considered to be such commodities, contracts
or investments.
<PAGE>
7. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, or (b) by engaging in repurchase
agreements. For purposes of this limitation, the term "loans" shall not
include the purchase of a portion of an issue of tax-exempt obligations
or publicly distributed bonds, debentures or other securities.
8. Margin Purchases. The Fund will not purchase securities or evidences
of interest thereon on "margin." This limitation is not applicable to
short-term credit obtained by the Fund for the clearance of purchases
and sales or redemption of securities.
9. Short Sales and Options. The Fund will not sell any securities short
or sell put and call options. This limitation is not applicable to the
extent that sales by the Fund of tax-exempt obligations with puts
attached or sales by the Fund of other securities in which the Fund may
otherwise invest would be considered to be sales of options.
10. Other Investment Companies. The Fund will not invest more than 5%
of its total assets in the securities of any investment company and
will not invest more than 10% of its total assets in securities of
other investment companies.
11. Concentration. The Fund will not invest more than 25% of its total
assets in a particular industry; this limitation is not applicable to
investments in tax-exempt obligations issued by the U.S. Government,
its territories and possessions, the District of Columbia and their
respective agencies and instrumentalities or any state and its
political subdivisions, agencies, authorities and instrumentalities.
The Fund may invest more than 25% of its total assets in tax-exempt
obligations in a particular segment of the bond market.
12. Senior Securities. The Fund will not issue or sell any class of
senior security as defined by the Investment Company Act of 1940 except
to the extent that notes evidencing temporary borrowings or the
purchase of securities on a when-issued basis might be deemed as such.
THE LIMITATIONS APPLICABLE TO THE CALIFORNIA TAX-FREE MONEY FUND AND THE FLORIDA
TAX-FREE MONEY FUND ARE:
1. Borrowing Money. Each Fund will not borrow money, except from a bank
for temporary purposes only, provided that, when made, such temporary
borrowings are in an amount not exceeding 10% of its total assets. Each
Fund will not make any additional purchases of portfolio securities if
outstanding borrowings exceed 5% of the value of its total assets.
2. Pledging. Each Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any security owned or
held by the Fund except as may be necessary in connection with
borrowings described in limitation (1) above. Each Fund will not
mortgage, pledge or hypothecate more than 10% of the value of its total
assets in connection with borrowings.
<PAGE>
3. Underwriting. Each 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), a Fund may be deemed an
underwriter under certain federal securities laws.
4. Illiquid Investments. Each 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. Each 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. Each Fund will not purchase, hold or deal in
commodities or commodities futures contracts, or invest in oil, gas or
other mineral explorative or development programs. This limitation is
not applicable to the extent that the tax-exempt obligations, U.S.
Government obligations and other securities in which the Funds may
otherwise invest would be considered to be such commodities, contracts
or investments.
7. Loans. Each Fund will not make loans to other persons, except (a) by
loaning portfolio securities, or (b) by engaging in repurchase
agreements. For purposes of this limitation, the term "loans" shall not
include the purchase of a portion of an issue of tax-exempt obligations
or publicly distributed bonds, debentures or other securities.
8. Margin Purchases. Each Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not
applicable to short-term credit obtained by the Funds for the clearance
of purchases and sales or redemption of securities.
9. Short Sales and Options. Each Fund will not sell any securities
short or sell put and call options. This limitation is not applicable
to the extent that sales by a Fund of tax-exempt obligations with puts
attached or sales by a Fund of other securities in which a Fund may
otherwise invest would be considered to be sales of options.
10. Other Investment Companies. Each 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. Each Fund will not invest more than 25% of its total
assets in a particular industry; this limitation is not applicable to
investments in tax-exempt obligations issued by governments or
political subdivisions of governments.
<PAGE>
12. Senior Securities. Each Fund will not issue or sell any class of
senior security as defined by the Investment Company Act of 1940 except
to the extent that notes evidencing temporary borrowings or the
purchase of securities on a when-issued basis might be deemed as such.
With respect to the percentages adopted by the Trust as maximum limitations on
the 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 any Fund,
and the Trust presently intends to continue this policy. The Trust has never
acquired, nor does it presently intend to acquire, securities issued by any
other investment company or investment trust. The Funds will not purchase
securities for which there are legal or contractual restrictions on resale or
enter into a repurchase agreement maturing in more than seven days if, as a
result thereof, more than 10% of the value of a Fund's net assets would be
invested in such securities. The statements of intention in this paragraph
reflect nonfundamental policies which may be changed by the Board of Trustees
without shareholder approval.
Except for temporary defensive purposes, the assets of each of the Tax-Free
Money Fund, the Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free
Fund will be invested so that no more than 20% of the annual income of each Fund
will be subject to federal income tax. Except for temporary defensive purposes,
at no time will more than 20% of the value of the net assets of each of the Ohio
Tax-Free Money Fund, the California Tax-Free Money Fund and the Florida Tax-Free
Money Fund be invested in taxable obligations. Under normal market conditions,
each Fund anticipates that not more than 5% of its net assets will be invested
in any one type of taxable obligation.
INSURANCE ON THE OHIO INSURED TAX-FREE FUND'S SECURITIES
--------------------------------------------------------
Under normal market conditions, at least 65% of the value of the Ohio Insured
Tax-Free Fund's total assets will be invested in Ohio municipal obligations
which are insured as to payment of interest and principal either by an insurance
policy obtained by the issuer of the obligations at original issuance or by an
insurance policy obtained by the Fund from a recognized insurer. The Fund also
may own uninsured Ohio municipal obligations, including obligations where the
payment of interest and principal is guaranteed by an agency or instrumentality
of the U.S. Government, or where the payment of interest and principal is
secured by an escrow account consisting of obligations of the U.S. Government.
The Fund may also invest up to 20% of its net assets in short-term Ohio
municipal obligations which are not insured, since insurance on these
obligations is generally unavailable. For temporary defensive purposes, the Fund
may invest more than 20% of its net assets in uninsured short-term Ohio
municipal obligations. The Board of Trustees may terminate the practice of
investing in insured obligations if it determines that such practice is not in
the best interests of the Fund's shareholders.
<PAGE>
Ohio municipal obligations purchased by the Ohio Insured Tax-Free Fund may be
insured by one of the following types of insurance: new issue insurance, mutual
fund insurance, or secondary insurance.
NEW ISSUE INSURANCE. A new issue insurance policy is purchased by the issuer or
underwriter of an obligation in order to increase the credit rating of the
obligation. All premiums are paid in advance by the issuer or underwriter. A new
issue insurance policy is non-cancelable and continues in effect as long as the
obligation is outstanding and the insurer remains in business.
MUTUAL FUND INSURANCE. A mutual fund insurance policy is purchased by the Fund
from an insurance company. All premiums are paid from the Fund's assets, thereby
reducing the yield from an investment in the Fund. A mutual fund insurance
policy is non-cancelable except for non-payment of premiums and remains in
effect only as long as the Fund holds the insured obligation. In the event the
Fund sells an obligation covered by a mutual fund policy, the insurance company
is liable only for those payments of principal and interest then due and in
default. If the Fund holds a defaulted obligation, the Fund continues to pay the
insurance premium thereon but is entitled to collect interest payments from the
insurer and may collect the full amount of principal from the insurer when the
obligation becomes due. Accordingly, it is expected that the Fund will retain in
its portfolio any obligations so insured which are in default or are in
significant risk of default to avoid forfeiture of the value of the insurance
feature of such obligations, which would not be reflected in the price for which
the Fund could sell such obligations. In valuing such defaulted obligations, the
Fund will value the insurance in an amount equal to the difference between the
market value of the defaulted obligation and the market value of similar
obligations which are not in default. Because the Fund must hold defaulted
obligations in its portfolio, its ability in certain circumstances to purchase
other obligations with higher yields will be limited.
SECONDARY INSURANCE. A secondary insurance policy insures an obligation for as
long as it remains outstanding, regardless of the owner of such obligation.
Premiums are paid by the Fund and coverage is non-cancelable, except for
non-payment of premiums. Because secondary insurance provides continuous
coverage during the term of the obligation, it provides greater marketability of
the Fund's obligations than is allowed under a mutual fund insurance policy.
Thus, the Fund with secondary insurance may sell an obligation to a third party
as a high-rated insured security at a higher market price than would otherwise
be obtained if the obligation were insured under a mutual fund policy. Secondary
insurance also gives the Fund the option of selling a defaulted obligation
rather than compelling it to hold a defaulted security in its portfolio so that
it may continue to be afforded insurance protection.
The Ohio Insured Tax-Free Fund currently intends to purchase only Ohio municipal
obligations which are insured by the issuer of the obligation under a new issue
insurance policy. In the event the Sub-Advisor makes a recommendation to
purchase an obligation which is not otherwise insured, the Fund may purchase
such obligation and thereafter obtain mutual fund or secondary insurance.
<PAGE>
The Ohio Insured Tax-Free Fund may purchase insurance from, or obligations
insured by, one of the following recognized insurers of municipal obligations:
MBIA Insurance Corp. ("MBIA"), AMBAC Assurance Corp. ("AMBAC"), Financial
Guaranty Insurance Co. ("FGIC") or Financial Security Assurance Inc. ("FSA").
Each insurer is rated Aaa by Moody's and AAA by S&P and each insurer maintains a
statutory capital claims ratio well below the exposure limits set by the
Insurance Commissioner of New York (300:1 insurance risk exposure to every
dollar of statutory capital). The Fund may also purchase insurance from, or
obligations insured by, other insurance companies provided that such companies
have a claims-paying ability rated Aaa by Moody's or AAA by S&P. While such
insurance reduces the risk that principal or interest will not be paid when due,
it is not a protection against market risks arising from other factors, such as
changes in prevailing interest rates. If the issuer defaults on payments of
interest or principal, the trustee and/or payment agent of the issuer will
notify the insurer who will make payment to the bondholders. There is no
assurance that any insurance company will meet its obligations.
MBIA has been the leader in the municipal bond insurance market for the past
seventeen years, holding a 26% share of the market in 1999. MBIA's volume of new
issue municipal bonds was approximately $37 billion in 1999, a 37% decline from
the previous year. Although MBIA's insured municipal market share was down
versus the prior year, its adjusted gross premiums written declined by just
9.3%. This was attributable to the company's better pricing discipline, its
dedication to improved returns, tighter underwriting and balance sheet quality.
The company implemented strategic shifts in underwriting and business guidelines
last year which have yielded solid improvements in key financial strength
measurements. Across all sectors, premium rates have increased and capital
charges have decreased. MBIA's average premium rate increased to approximately
54 basis points for the 1999 book of business, compared to approximately 38
basis points for the 1998 book of business. Also evidencing the company's
improved credit quality initiative, 83% of the 1999 book of business was rated A
or better, compared with 80% of the 1998 book of business. Although municipal
bond insurance remains the dominant component of MBIA's insured book business,
during 1999 it insured $47.5 billion in gross structured finance, compared to
$36.9 billion of municipal business. In the international market, although par
insured declined in 1999, this area remains the company's most profitable
insurance sector. MBIA's efforts to capitalize on international insurance
opportunities began in 1995 when it entered into a European joint venture with
AMBAC and expanded further in 1998 with the opening of an office in Japan.
MBIA's international business volume as of December 31, 1999 represents 5% of
its total insured portfolio. MBIA is 98.4% publicly owned, with its remaining
shares owned by Aetna Casualty & Surety Company.
AMBAC is the oldest and second largest bond insurer. AMBAC has historically
taken a very conservative approach to the bond insurance business, beyond simply
underwriting, to a zero-loss philosophy. This strategy has served the company
well as it has avoided recent adverse industry events. Management remains
committed to investment-grade underwriting and risk management, not only for its
insurance business, but for all of its affiliate operations. AMBAC's disciplined
underwriting continues to produce a high-quality book of business with a very
low insured portfolio risk profile and a high margin of safety. Notwithstanding
the overall decline in new issue municipal volume in 1999, AMBAC reported a 19%
increase in gross par written. The transportation and higher education sectors
helped suppress the overall decline in volume with net par exposure for these
sectors rising 31% and 19%, respectively. As with other insurers, product
diversification has been a cornerstone of the AMBAC strategic plan. The AMBAC
and MBIA joint venture in Europe has made a material contribution to the overall
business success of AMBAC's specialized finance division and AMBAC's entry into
the structured and asset-based insurance sector now accounts for 25% of its net
par written. In 1999, the company wrote more structured and asset-backed par,
including international, than domestic municipal par. AMBAC is entirely owned by
public shareholders.
<PAGE>
FGIC is 99% owned by General Electric Capital Services and 1% owned by Sumitomo
Marine & Fire Insurance Co. Ltd. FGIC remains committed to low risk, high
quality underwriting and risk management standards. This has resulted in a
high-quality book of insured business. FGIC employs a conservative underwriting
strategy in terms of its target markets, focusing on the low-risk sectors of the
municipal market which provide predictable earnings, such as general
obligations, tax-backed, water and sewer, lease revenue and transportation
sectors. Suffering through the overall decline in the municipal market, FGIC
reported a 14% decline in net domestic municipal par written in 1999.
Notwithstanding the decline in volume, FGIC insured bonds made up 25% of the
insured municipal bond market in 1999, which is up from 22% in 1998. In 1999
FGIC had the lowest per-period capital charge, at 6.5%, compared to an industry
average of 10.3%. The company remains a very limited player in the international
market, but plans to re-enter and expand its presence in asset-backed sectors.
Although the growth of other asset-backed sectors may add a degree of
variability to FGIC's underwriting income due to the nature in which premiums
are earned in this business line, this growth is not likely to have a major
effect, due to management's cautious approach to its asset-backed expansion
initiatives.
FSA continues to expand its presence in the municipal bond market with a 23%
market share in 1999, up from 22% last year and 5% in 1995. FSA's modest gain in
the municipal market share in 1999 did not come at the cost of more liberal
underwriting. However, pricing suffered to a small degree with the company
recording a modest decline in its premium profitability ratio. Still, over time,
FSA has shown itself to be at the very top of the industry from a premium
profitability standpoint. Although FSA's roots are in the asset-based insurance
sector, its presence in the asset-backed market has diminished. FSA experienced
dramatic growth in the international sector in 1999, with net par outstanding
growing 92%. In March 2000, FSA announced that it had agreed to be acquired by
Dexia S.A., one of the 25 largest banking groups in Europe. No changes are
expected in FSA's core business strategies, senior management personnel or
fundamental operating practices once it is acquired by Dexia. FSA will operate
as an independent subsidiary and will remain true to the sound underwriting and
risk management guidelines that have served it well in the past. Together, FSA
and Dexia may pursue opportunities where they can combine their respective
strengths to create new products or services.
TRUSTEES AND OFFICERS
---------------------
The following is a list of the Trustees and executive officers of the Trust,
their compensation from the Trust and their aggregate compensation from the
Touchstone complex of funds for the fiscal year ended June 30, 2000. Each
Trustee who is an "interested person" of the Trust, as defined by the Investment
Company Act of 1940, is indicated by an asterisk.
<PAGE>
Aggregate
Compensation
Compensation from the
from the Touchstone
Name Position Held Trust Complex (1)
---- ------------- ----- -----------
William O. Coleman Trustee $3,500 $18,442
Philip R. Cox Trustee $3,500 $21,750
H. Jerome Lerner Trustee $5,500 $16,500
*Robert H. Leshner Trustee $0 $0
*Jill T. McGruder President/Trustee $0 $0
Oscar P. Robertson Trustee $6,000 $18,000
Nelson Schwab, Jr. Trustee $3,500 $18,442
Robert E. Stautberg Trustee $3,500 $21,750
Joseph S. Stern, Jr. Trustee $3,500 $18,250
J. Leland Brewster II Trustee $0 $0
Maryellen Peretzky Vice President $0 $0
Tina D. Hosking Secretary $0 $0
David E. Dennison Treasurer $0 $0
Terrie A. Wiedenheft Controller $0 $0
(1) The Touchstone complex of funds consists of six series of the
Trust, eight series of Touchstone Strategic Trust, six series of
Touchstone Investment Trust and eleven variable annuity series of
Touchstone Variable Series Trust. Each Trustee is also a Trustee of
Touchstone Strategic Trust and Touchstone Investment Trust. Messrs.
Coleman, Schwab, Stautberg and Stern are also Trustees of Touchstone
Variable Series Trust.
* Ms. McGruder, as President and a director of Touchstone Advisors,
Inc., the Trust's investment advisor and Touchstone Securities, Inc.,
the Trust's distributor, and Mr. Leshner, as a Managing Director of
Fort Washington Investment Advisors, Inc., the Trust's Sub-Advisor,
are each an "interested person" of the Trust within the meaning of
Section 2(a)(19) of the Investment Company Act of 1940.
Messrs. Lerner, Schwab, Stautberg and Stern are members of the Audit Committee.
The Audit Committee is responsible for overseeing the Trust's accounting and
financial reporting policies, practices and internal controls.
Messrs. Coleman, Cox and Robertson are members of the Valuation Committee. The
Valuation Committee is responsible for overseeing procedures for valuing
securities held by the Trust and responding to any pricing issues which may
arise.
The principal occupations of the Trustees and executive officers of the Trust
during the past five years are set forth below:
WILLIAM O. COLEMAN, Age 71, 2 Noel Lane, Cincinnati, Ohio is a retired General
Sales Manager and Vice President of The Procter & Gamble Company and a trustee
of The Procter & Gamble Profit Sharing Plan and The Procter & Gamble Employee
Stock Ownership Plan. He is a director of LCA-Vision (a laser vision correction
institute).
<PAGE>
PHILLIP R. COX, Age 52, 105 East Fourth Street, Cincinnati, Ohio is President
and Chief Executive Officer of Cox Financial Corp. (a financial services
company). He is a director of the Federal Reserve Bank of Cleveland, Cincinnati
Bell Inc. and Cinergy Corporation. Until 2000, he was a director of PNC
Bank N.A.
H. JEROME LERNER, Age 62, 7149 Knoll Road, Cincinnati, Ohio is a principal of
HJL Enterprises and is Chairman of Crane Electronics, Inc. (a manufacturer of
electronic connectors). He is also a director of Slush Puppy Inc. (a
manufacturer of frozen beverages) and Peerless Manufacturing (a manufacturer of
bakery equipment).
ROBERT H. LESHNER, Age 61, 311 Pike Street, Cincinnati, Ohio is a Managing
Director of Fort Washington Investment Advisors, Inc. (the sub-advisor of the
Trust). Until 1999, he was President and a director of Fort Washington
Brokerage Services, Inc. (a registered broker-dealer), Integrated Fund Services,
Inc. (a registered transfer agent) and IFS Fund Distributors, Inc. (a registered
broker-dealer).
JILL T. McGRUDER, Age 45, 221 East Fourth Street, Cincinnati, Ohio is President,
Chief Executive Officer and a director of IFS Financial Services, Inc. (a
holding company), Touchstone Advisors, Inc. (the investment advisor of the
Trust) and Touchstone Securities, Inc. (the principal underwriter of the Trust).
She is a Senior Vice President of The Western-Southern Life Assurance
Company and a director of Capital Analysts Incorporated (a registered investment
advisor and broker-dealer). She is also President and a director of IFS Agency
Services, Inc. (insurance agency), IFS Insurance Agency, Inc., Fort Washington
Brokerage Services, Inc., IFS Fund Distributors, Inc. and Integrated Fund
Services, Inc. She is President of Touchstone Variable Series Trust. Until
December 1996, she was National Marketing Director of Metropolitan Life
Insurance Co. From 1991 until 1996, she was Vice President of Touchstone
Advisors, Inc. and IFS Financial Services, Inc.
OSCAR P. ROBERTSON, Age 61, 4293 Muhlhauser Road, Fairfield, Ohio is President
of Orchem Corp., a chemical specialties distributor, and Orpack Stone
Corporation, a corrugated box manufacturer.
NELSON SCHWAB, JR., Age 82, 511 Walnut Street, Cincinnati, Ohio is Senior
Counsel of Graydon, Head & Ritchey (a law firm). He is a director of Rotex,
Inc., The Ralph J. Stolle Company and Security Rug Cleaning Company.
ROBERT E. STAUTBERG, Age 66, 4815 Drake Road, Cincinnati, Ohio is a retired
partner and director of KPMG Peat Marwick LLP. Until 2000, he was a trustee of
Good Samaritan Hospital, Bethesda Hospital and Tri Health.
JOSEPH S. STERN, JR., Age 82, 3 Grandin Place, Cincinnati, Ohio is a retired
Professor Emeritus of the University of Cincinnati College of Business.
J. LELAND BREWSTER II, Age 72, 201 East Fifth Street, Cincinnati, Ohio is a
retired Senior Partner of Frost Brown Todd LLP (a law firm).
TINA D. HOSKING, Age 32, 221 East Fourth Street, Cincinnati, Ohio is Vice
President and Associate General Counsel and of Integrated Fund Services, Inc.
and IFS Fund Distributors, Inc. She is also Secretary of Touchstone Investment
Trust, Touchstone Strategic Trust and Touchstone Variable Series Trust.
MARYELLEN PERETZKY, Age 48, 221 East Fourth Street, Cincinnati, Ohio is Senior
Vice President and Secretary of Fort Washington Brokerage Services, Inc.,
Integrated Fund Services, Inc. and IFS Fund Distributors, Inc. She is Assistant
Secretary of Fort Washington Investment Advisors, Inc. and is also Vice
President of Touchstone Investment Trust, Touchstone Strategic Trust and
Touchstone Variable Series Trust.
DAVID E. DENNISON, Age 38, 221 East Fourth Street, Cincinnati, Ohio is Senior
Vice President and Chief Operating Officer of Integrated Fund Services, Inc. and
IFS Fund Distributors, Inc. He is also Treasurer of Touchstone Strategic Trust
and Touchstone Investment Trust and Assistant Treasurer of Touchstone Variable
Series Trust.
TERRIE A. WIEDENHEFT, Age 38, 221 East Fourth Street, Cincinnati, Ohio is Senior
Vice President, Chief Financial Officer and Treasurer of Integrated Fund
Services, Inc., IFS Fund Distributors, Inc. and Fort Washington Brokerage
Services, Inc. She is Chief Financial Officer of IFS Financial Services, Inc.,
Touchstone Advisors, Inc. and Touchstone Securities, Inc. and Assistant
Treasurer of Fort Washington Investment Advisors, Inc. She is also Controller
of Touchstone Strategic Trust, Touchstone Investment Trust and Touchstone
Variable Series Trust.
Each Trustee, except for Mr. Leshner and Ms. McGruder, receives a quarterly
retainer of $1,500 and a fee of $1,500 for each Board meeting attended. Such
fees are split equally among the Trust, Touchstone Strategic Trust and
Touchstone Investment Trust.
THE INVESTMENT ADVISOR AND SUB-ADVISOR
--------------------------------------
THE INVESTMENT ADVISOR. Touchstone Advisors, Inc. (the "Advisor") is the Funds'
investment manager. The Advisor is a wholly-owned subsidiary of IFS Financial
Services, Inc., which is a wholly-owned subsidiary of Western-Southern Life
Assurance Company. Western-Southern Life Assurance Company is a wholly-owned
subsidiary of The Western and Southern Life Insurance Company. Ms. McGruder may
be deemed to be an affiliate of the Advisor because of her position as President
and Director of the Advisor. Mr. Leshner may be deemed to be an affiliate of
the Advisor because of his position as Managing Director of Fort Washington
Investment Advisors, Inc., the Funds' Sub-Advisor. Ms. McGruder and Mr.
Leshner, by reason of such affiliations may directly or indirectly receive
benefits from the advisory fees paid to the Advisor. Prior to May 1, 2000,
Fort Washington Brokerage Services, Inc. was the investment adviser for the
Funds.
<PAGE>
Under the terms of the investment advisory agreement between the Trust and the
Advisor, the Advisor appoints and supervises the Funds' Sub-Advisor, reviews and
evaluates the performance of the Sub-Advisor and determines whether or not the
Sub-Advisor should be replaced. The Advisor furnishes at its own expense all
facilities and personnel necessary in connection with providing these services.
Each Fund pays the Advisor a fee computed and accrued daily and paid monthly at
an annual rate of 0.50% of average daily net assets up to $100 million; 0.45% of
such assets from $100 million to $200 million; 0.40% of such assets from $200
million to $300 million; and 0.375% of assets over $300 million.
Set forth below are the advisory fees paid by the Funds during the fiscal years
ended June 30, 2000, 1999 and 1998.
2000 1999 1998
---- ---- ----
Tax-Free Money Fund(1) $133,557 $143,015 $150,790
Tax-Free Intermediate Term Fund(2) 235,711 271,849 302,947
Ohio Insured Tax-Free Fund(3) 315,274 353,019 378,345
Ohio Tax-Free Money Fund(4) 1,689,476 1,597,319 1,421,029
California Tax-Free Money Fund 317,209 278,310 210,813
Florida Tax-Free Money Fund(5) 132,570 285,704 276,608
(1) The investment adviser voluntarily waived $27,592 and $17,332 of its
fees during the fiscal years ended June 30, 2000 and 1999,
respectively, in order to reduce the operating expenses of the Fund.
(2) The investment adviser voluntarily waived $5,375 of its advisory fees
during the fiscal year ended June 30, 2000 in order to reduce the
operating expenses of the Fund.
(3) The investment adviser voluntarily waived $13,994 of its fees during
the fiscal year ended June 30, 2000 and reimbursed the Fund for $948
of Class A expenses for the fiscal year ended June 30, 1998 in order
to reduce the operating expenses of the Fund.
(4) The investment adviser voluntarily waived $80,268, $51,659 and $46,680
of its fees during the fiscal years ended June 30, 2000, 1999 and
1998, respectively, and reimbursed $7,979 of Institutional shares
expenses for the fiscal year ended June 30, 1998 in order to reduce
the operating expenses of the Fund.
(5) The investment advisor voluntarily waived $65,561, $124,338 and
$107,645 of its fees during the fiscal years ended June 30, 2000, 1999
and 1998, respectively, and reimbursed the Fund $16,937 and $7,114 of
expenses for the fiscal years ended June 30, 2000 and 1998,
respectively, in order to reduce the operating expenses of the Fund.
The Funds shall pay the expenses of their operation, including but not limited
to (i) charges and expenses for accounting, pricing and appraisal services and
related overhead, (ii) the charges and expenses of auditors; (iii) the charges
and expenses of any custodian, transfer agent, plan agent, dividend disbursing
agent and registrar appointed by the Trust with respect to the Funds; (iv)
brokers' commissions, and issue and transfer taxes chargeable to the Funds in
connection with securities transactions to which a Fund is a party; (v)
insurance premiums, interest charges, dues and fees for membership in trade
associations and all taxes and fees payable to federal, state or other
governmental agencies; (vi) fees and expenses involved in registering and
maintaining registrations of the Funds with the SEC, state or blue sky
securities agencies and foreign countries, including the preparation of
Prospectuses and Statements of Additional Information for filing with the SEC;
(vii) all expenses of meetings of Trustees and of shareholders of the Trust and
of preparing, printing and distributing prospectuses, notices, proxy statements
and all reports to shareholders and to governmental agencies; (viii) charges and
expenses of legal counsel to the Trust; (ix) compensation of Trustees of the
Trust; and (x) interest on borrowed money, if any. The compensation and expenses
of any officer, Trustee or employee of the Trust who is an affiliate of the
Advisor is paid by the Advisor.
<PAGE>
By its terms, the Funds' investment advisory agreement will remain in force
until May 1, 2002, and from year to year thereafter, subject to annual approval
by (a) the Board of Trustees or (b) a vote of the majority of a Fund's
outstanding voting securities; provided that in either event continuance is also
approved by a majority of the Trustees who are not interested persons of the
Trust, by a vote cast in person at a meeting called for the purpose of voting
such approval. The Funds' investment advisory 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 a Fund's outstanding voting
securities, or by the Advisor. 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 SUB-ADVISOR. The Advisor has retained Fort Washington Investment Advisors,
Inc. ("the Sub-Advisor") to serve as the discretionary portfolio manager of each
Fund. The Sub-Advisor selects the portfolio securities for investment by a Fund,
purchases and sells securities of a Fund and places orders for the execution of
such portfolio transactions, subject to the general supervision of the Board of
Trustees and the Advisor. The Sub-Advisor receives a fee from the Advisor which
is paid monthly at an annual rate as follows:
Fee to Sub-Advisor
Fund (as % of average daily net assets)
---- ----------------------------------
Tax-Free Intermediate Term Fund 0.20%
Ohio Insured Tax-Free Fund 0.20%
Tax-Free Money Fund 0.15%
Ohio Tax-Free Money Fund 0.15%
California Tax-Free Money Fund 0.15%
Florida Tax-Free Money Fund 0.15%
The services provided by the Sub-Advisor are paid for wholly by the Advisor. The
compensation of any officer, director or employee of the Sub-Advisor who is
rendering services to a Fund is paid by the Sub-Advisor.
The employment of the Sub-Advisor will remain in force until May 1, 2002 and
from year to year thereafter, subject to annual approval by (a) the Board of
Trustees or (b) a vote of the majority of a Fund's outstanding voting
securities; provided that in either event continuance is also approved by a
majority of the Trustees who are not interested persons of the Trust, by a vote
cast in person at a meeting called for the purpose of voting such approval. The
employment of the Sub-Advisor 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 a majority of a Fund's outstanding voting securities, by the Advisor,
or by the Sub-Advisor. Each Sub-Advisory Agreement will automatically terminate
in the event of its assignment, as defined by the 1940 Act and the rules
thereunder.
<PAGE>
THE DISTRIBUTOR
---------------
Touchstone Securities, Inc. ("Touchstone") is the principal underwriter of the
Trust and, as such, the exclusive agent for distribution of shares of the Funds.
Touchstone is an affiliate of the Advisor by reason of common ownership.
Touchstone is obligated to sell the shares on a best efforts basis only against
purchase orders for the shares. Shares of each Fund are offered to the public on
a continuous basis. Prior to May 1, 2000, Fort Washington Brokerage Services,
Inc. was the principal underwriter of the Trust.
Touchstone currently allows concessions to dealers who sell shares of the
Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund. Touchstone
receives that portion of the sales load which is not reallowed to the dealers
who sell shares of the Funds. Touchstone retains the entire sales load on all
direct initial investments in the Funds and on all investments in accounts with
no designated dealer of record.
For the fiscal year ended June 30, 2000, the aggregate underwriting and broker
commissions on sales of the Tax-Free Intermediate Term Fund's shares were
$46,945 of which the underwriter paid $43,194 to unaffiliated broker-dealers in
the selling network, earned $272 as a broker-dealer in the selling network and
retained $3,479 in underwriting commissions. For the fiscal year ended June 30,
2000, the aggregate underwriting and broker commissions on sales of the Ohio
Insured Tax Free Fund's shares were $90,155 of which the underwriter paid
$74,627 to unaffiliated broker-dealers in the selling network, earned $1,582 as
a broker-dealer in the selling network and retained $13,946 in underwriting
commissions. For the fiscal year ended June 30, 1999, the aggregate underwriting
and broker commissions on sales of the Tax-Free Intermediate Term Fund's shares
were $58,611 of which the underwriter paid $54,787 to unaffiliated dealers in
the selling network, earned $965 as a broker-dealer in the selling network and
retained $2,859 in underwriting commissions. For the fiscal year ended June 30,
1999, the aggregate underwriting and broker commissions on sales of the Ohio
Insured Tax-Free Fund's shares were $68,267 of which the underwriter paid
$58,562 to unaffiliated dealers in the selling network, earned $4,048 as a
broker-dealer in the selling network and retained $5,657 in underwriting
commissions. For the fiscal year ended June 30, 1998, the aggregate underwriting
commissions on sales of the Tax-Free Intermediate Term Fund's shares were
$49,885 of which the underwriter paid $46,235 to unaffiliated broker-dealers in
the selling network, earned $1,298 as a broker-dealer in the selling network and
retained $2,352 in underwriting commissions. For the fiscal year ended June 30,
1998, the aggregate underwriting and broker commissions on sales of the Ohio
Insured Tax-Free Fund's shares were $77,704 of which the underwriter paid
$69,527 to unaffiliated dealers in the selling network, earned $1,683 as a
broker-dealer in the selling network and retained $6,493 in underwriting
commissions.
The underwriter retains the contingent deferred sales load on redemptions of
shares of the Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund
which are subject to a contingent deferred sales load. For the fiscal year ended
June 30, 2000, the underwriter retained $4,443 and $565 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. For the fiscal year
ended June 30, 1999, the underwriter retained $13,216 and $1,347 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. For the
fiscal year ended June 30, 1998, the underwriter retained $6,430 and $5,587 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.
<PAGE>
The Funds may compensate dealers, including Touchstone and its affiliates, based
on the average balance of all accounts in the Funds for which the dealer is
designated as the party responsible for the account. See "Distribution Plans"
below.
DISTRIBUTION PLANS
------------------
CLASS A PLAN -- The Funds have adopted a plan of distribution (the "Class A
Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 which
permits a Fund to pay for expenses incurred in the distribution and promotion of
its 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 Touchstone. The
Class A Plan expressly limits payment of the distribution expenses listed above
in any fiscal year to a maximum of .25% of the average daily net assets of the
Tax-Free Money Fund, the California Tax-Free Money Fund and the Florida Tax-Free
Money Fund and .25% of the average daily net assets of Class A shares of the
Tax-Free Intermediate Term Fund, the Ohio Insured Tax-Free Fund and the Ohio
Tax-Free Money Fund. Unreimbursed expenses will not be carried over from year to
year.
For the fiscal year ended June 30, 2000, the aggregate distribution-related
expenditures of the Tax-Free Money Fund ("MF"), the Tax-Free Intermediate Term
Fund ("ITF"), the Ohio Insured Tax-Free Fund ("OIF"), the Ohio Tax-Free Money
Fund ("OMF"), the California Tax-Free Money Fund ("CMF") and the Florida
Tax-Free Money Fund ("FMF") under the Class A Plan were $2,033, $30,834, $5,858,
$509,460, $33,894 and $16,063, respectively. Amounts were spent as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
MF ITF OIF OMF CMF FMF
Printing and mailing
of prospectuses and
reports to prospective
shareholders $2,033 $3,564 $5,754 $1,960 $2,894 $2,896
Payments to broker-
dealers and others
for the sale or
retention of assets --- 27,270 104 507,500 31,000 13,167
------ ------ ------ ------- ------- ------
TOTALS $2,033 $30,834 $5,858 $509,460 $33,894 $16,063
</TABLE>
<PAGE>
CLASS C PLAN (Tax-Free Intermediate Term Fund and Ohio Insured Tax-Free Fund) --
The Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund have also
adopted a plan of distribution (the "Class C Plan") with respect to the Class C
shares of such Funds. The Class C Plan provides for two categories of payments.
First, the Class C Plan provides for the payment to Touchstone of an account
maintenance fee, in an amount equal to an annual rate of .25% of the average
daily net assets of the Class C shares, which may be paid to other dealers based
on the average value of Class C shares owned by clients of such dealers. In
addition, a Fund may pay up to an additional .75% per annum of the daily net
assets of the Class C shares for expenses incurred in the distribution and
promotion of the shares, including prospectus costs for prospective
shareholders, costs of responding to prospective shareholder inquiries, payments
to brokers and dealers for selling and assisting in the distribution of Class C
shares, costs of advertising and promotion and any other expenses related to the
distribution of the Class C shares. Unreimbursed expenditures will not be
carried over from year to year. The Funds may make payments to dealers and other
persons in an amount up to .75% per annum of the average value of Class C shares
owned by their clients, in addition to the .25% account maintenance fee
described above.
For the fiscal year ended June 30, 2000, the aggregate distribution-related
expenditures of the Tax-Free Intermediate Term Fund ("ITF") and the Ohio Insured
Tax-Free Fund ("OIF") under the Class C Plan were $16,164 and $18,335,
respectively. Amounts were spent as follows:
ITF OIF
Printing and mailing of
prospectuses and reports
to prospective shareholders $331 $428
Payments to broker-dealers and
others for the sale or
retention of assets 15,833 17,907
------ ------
$16,164 $18,335
======= =======
GENERAL INFORMATION -- Agreements implementing the Plans (the "Implementation
Agreements"), including agreements with dealers wherein such dealers agree for a
fee to act as agents for the sale of the Funds' shares, are in writing and have
been approved by the Board of Trustees. All payments made pursuant to the Plans
are made in accordance with written agreements.
The continuance of the Plans and the Implementation Agreements must be
specifically approved at least annually by a vote of the Trust's Board of
Trustees and by a vote of the Trustees who are not interested persons of the
Trust and have no direct or indirect financial interest in the Plans or any
Implementation Agreement (the "Independent Trustees") at a meeting called for
the purpose of voting on such continuance. A Plan may be terminated at any time
by a vote of a majority of the Independent Trustees or by a vote of the holders
of a majority of the outstanding shares of a Fund or the applicable class of a
Fund. In the event a Plan is terminated in accordance with its terms, the
affected Fund (or class) will not be required to make any payments for expenses
incurred by Touchstone after the termination date. Each Implementation Agreement
terminates automatically in the event of its assignment and may be terminated at
any time by a vote of a majority of the Independent Trustees or by a vote of the
holders of a majority of the outstanding shares of a Fund (or the applicable
class) on not more than 60 days' written notice to any other party to the
Implementation Agreement. The Plans may not be amended to increase materially
the amount to be spent for distribution without shareholder approval. All
material amendments to the Plans must be approved by a vote of the Trust's Board
of Trustees and by a vote of the Independent Trustees.
<PAGE>
In approving the Plans, the Trustees determined, in the exercise of their
business judgment and in light of their fiduciary duties as Trustees, that there
is a reasonable likelihood that the Plans will benefit the Funds and their
shareholders. The Board of Trustees believes that expenditure of the Funds'
assets for distribution expenses under the Plans should assist in the growth of
the Funds which will benefit the Funds and their shareholders through increased
economies of scale, greater investment flexibility, greater portfolio
diversification and less chance of disruption of planned investment strategies.
The Plans will be renewed only if the Trustees make a similar determination for
each subsequent year of the Plans. There can be no assurance that the benefits
anticipated from the expenditure of the Funds' assets for distribution will be
realized. While the Plans are in effect, all amounts spent by the Funds pursuant
to the Plans and the purposes for which such expenditures were made must be
reported quarterly to the Board of Trustees for its review. Distribution
expenses attributable to the sale of more than one class of shares of a Fund
will be allocated at least annually to each class of shares based upon the ratio
in which the sales of each class of shares bears to the sales of all the shares
of such Fund. In addition, the selection and nomination of those Trustees who
are not interested persons of the Trust are committed to the discretion of the
Independent Trustees during such period.
Robert H. Leshner and Jill T. McGruder, as interested persons of the Trust, may
be deemed to have a financial interest in the operation of the Plans and the
Implementation Agreements.
SECURITIES TRANSACTIONS
-----------------------
Decisions to buy and sell securities for the Funds and the placing of the Funds'
securities transactions and negotiation of commission rates where applicable are
made by the Sub-Advisor and are subject to review by the Advisor and the Board
of Trustees of the Trust. In the purchase and sale of portfolio securities, the
Sub-Advisor's primary objective will be to obtain the most favorable price and
execution for a Fund, taking into account such factors as the overall direct net
economic result to the Fund (including commissions, which may not be the lowest
available but ordinarily should not be higher than the generally prevailing
competitive range), the financial strength and stability of the broker, the
efficiency with which the transaction will be effected, the ability to effect
the transaction at all where a large block is involved and the availability of
the broker or dealer to stand ready to execute possibly difficult transactions
in the future.
<PAGE>
Generally, the Funds attempt to deal directly with the dealers who make a market
in the securities involved unless better prices and execution are available
elsewhere. Such dealers usually act as principals for their own account. On
occasion, portfolio securities for the Funds may be purchased directly from the
issuer. Because the portfolio securities of the Funds are generally traded on a
net basis and transactions in such securities do not normally involve brokerage
commissions, the cost of portfolio securities transactions of the Funds will
consist primarily of dealer or underwriter spreads. No brokerage commissions
have been paid by the Funds during the last three fiscal years.
The Sub-Advisor is specifically authorized to select brokers who also provide
brokerage and research services to the Funds and/or other accounts over which
the Sub-Advisor exercises investment discretion and to pay such brokers a
commission in excess of the commission another broker would charge if the
Sub-Advisor 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
Sub-Advisor's overall responsibilities with respect to the Funds and to accounts
over which it exercises investment discretion.
Research services include securities and economic analyses, reports on issuers'
financial conditions and future business prospects, newsletters and opinions
relating to interest trends, general advice on the relative merits of possible
investment securities for the Funds and statistical services and information
with respect to the availability of securities or purchasers or sellers of
securities. Although this information is useful to the Funds and the
Sub-Advisor, it is not possible to place a dollar value on it. Research services
furnished by brokers through whom the Funds effect securities transactions may
be used by the Sub-Advisor in servicing all of its accounts and not all such
services may be used by the Sub-Advisor in connection with the Funds.
The Funds have no obligation to deal with any broker or dealer in the execution
of securities transactions. However, the Funds 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. No
Fund will effect any brokerage transactions in its portfolio securities with an
affiliated broker if such transactions would be unfair or unreasonable to its
shareholders. Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers. Although the Funds do not
anticipate any ongoing arrangements with other brokerage firms, brokerage
business may be transacted from time to time with other firms. Affiliated
broker-dealers of the Trust will not receive reciprocal brokerage business as a
result of the brokerage business transacted by the Funds with other brokers.
Consistent with the conduct rules of the National Association of Securities
Dealers, Inc., and such other policies as the Board of Trustees may determine,
the Sub-Advisor may consider sales of shares of the Trust as a factor in the
selection of broker-dealers to execute portfolio transactions. The Sub-Advisor
will make such allocations if commissions are comparable to those charged by
nonaffiliated, qualified broker-dealers for similar services.
In certain instances there may be securities which are suitable for a Fund as
well as for the Sub-Advisor's other clients. Investment decisions for a Fund and
for the Sub-Advisor's other clients are made with a view to achieving their
respective investment objectives. It may develop that a particular security is
bought or sold for only one client even though it might be held by, or bought or
sold for, other clients. Likewise, a particular security may be bought for one
or more clients when one or more clients are selling that same security. Some
simultaneous transactions are inevitable when several clients receive investment
advice from the same investment advisor, particularly when the same security is
suitable for the investment objectives of more than one client. When two or more
clients are simultaneously engaged in the purchase or sale of the same security,
the securities are allocated among clients in a manner believed to be equitable
to each. It is recognized that in some cases this system could have a
detrimental effect on the price or volume of the security as far as a Fund is
concerned. However, it is believed that the ability of a Fund to participate in
volume transactions will produce better executions for the Fund.
<PAGE>
CODE OF ETHICS.
--------------
The Trust, the Advisor, the Sub-Advisor and Touchstone 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 access,
advisory and investment personnel of the Advisor, the Sub-Advisor and
Touchstone, and, as described below, imposes additional, more onerous,
restrictions on investment personnel of the Advisor and the Sub-Advisor. The
Code requires that all investment personnel of the Advisor and the Sub-Advisor
preclear personal securities investments in initial public offerings and limited
offerings. In addition, no access or advisory person may purchase or sell any
security (or equivalent) security if the employee has knowledge that it is being
purchased or sold at that time, or is being considered for purchase or sale, by
a Fund except under certain conditions. Furthermore, the Codes provide for
trading "blackout periods" which prohibit trading by investment personnel of the
Advisor and the Sub-Advisor within periods of trading by a Fund in the same (or
equivalent) security except under certain conditions. The Code of Ethics adopted
by the Trust, Touchstone, the Advisor and the Sub-Advisor are on public file
with, and are available from, the Securities and Exchange Commission.
PORTFOLIO TURNOVER
------------------
The Sub-Advisor intends to hold the portfolio securities of the Money Market
Funds to maturity and to limit portfolio turnover to the extent possible.
Nevertheless, changes in a Fund's portfolio will be made promptly when
determined to be advisable by reason of developments not foreseen at the time of
the original investment decision, and usually without reference to the length of
time a security has been held.
The Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund do not
intend to purchase securities for short term trading; however, a security may be
sold in anticipation of a market decline, or purchased in anticipation of a
market rise and later sold. Securities will be purchased and sold in response to
the Sub-Advisor's evaluation of an issuer's ability to meet its debt obligations
in the future. A security may be sold and another purchased when, in0 the
opinion of the Sub-Advisor, a favorable yield spread exists between specific
issues or different market sectors.
A Fund's portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for the fiscal year by the monthly
average of the value of the portfolio securities owned by the Fund during the
fiscal year. High portfolio turnover involves correspondingly greater brokerage
commissions and other transaction costs, which will be borne directly by the
Funds. The Sub-Advisor anticipates that the portfolio turnover rate for each
Fund normally will not exceed 100%. A 100% turnover rate would occur if all of a
Fund's portfolio securities were replaced once within a one year period.
<PAGE>
CALCULATION OF SHARE PRICE AND PUBLIC OFFERING PRICE
----------------------------------------------------
The share price (net asset value, "NAV") of the shares of the Money Market Funds
is determined as of 12:00 noon and 4:00 p.m., Eastern time, on each day the
Trust is open for business. The share price (NAV) and the public offering price
(NAV plus applicable sales load) of the shares of the Tax-Free Intermediate Term
Fund and the Ohio Insured Tax-Free Fund are determined as of the close of the
regular session of trading on the New York Stock Exchange (currently 4:00 p.m.,
Eastern time), on each day the Trust is open for business. The Trust is open for
business on every day except Saturdays, Sundays and the following holidays: New
Year's Day, Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas. The Trust may also
be open for business on other days in which there is sufficient trading in a
Fund's portfolio securities that its NAV might be materially affected. For a
description of the methods used to determine the share price and the public
offering price, see "Pricing of Fund Shares" in the Prospectus.
Pursuant to Rule 2a-7 of the Investment Company Act of 1940, the Money Market
Funds value their portfolio securities on an amortized cost basis. The use of
the amortized cost method of valuation involves valuing an instrument at its
cost and, thereafter, assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. Under the amortized cost method of
valuation, neither the amount of daily income nor the net asset value of a Money
Market 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 Money Market Funds.
Pursuant to Rule 2a-7, each Money Market Fund maintains a dollar-weighted
average portfolio maturity of 90 days or less, purchases only securities having
remaining maturities of thirteen months or less 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 a Money Market Fund will be determined as follows, provided that
the conditions set forth below are met. The maturity of a long-term 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 short-term floating rate instrument with a demand feature (or a participation
interest in such a floating rate instrument) will be one day. The maturity of a
long-term 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 maturity of a short-term variable rate instrument with a demand
feature (or a participation interest in such a variable rate instrument) will be
deemed to be the earlier 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.
<PAGE>
The demand feature of each such instrument must entitle a Fund to receive the
principal amount of the instrument plus accrued interest, if any, at the time of
exercise and must be exercisable either (1) at any time upon no more than thirty
days' notice or (2) at specified intervals not exceeding thirteen months and
upon no more than thirty days' notice. Furthermore, the maturity of any such
instrument may only be determined as set forth above as long as the instrument
continues to receive a short-term rating in one of the two highest categories
from any two nationally recognized statistical rating organizations ("NRSROs")
(or from any one NRSRO if the security is rated by only that NRSRO) or, if not
rated, is determined to be of comparable quality by the Sub-Advisor, 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 Sub-Advisor,
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 Money Market Funds as
computed for the purpose of sales and redemptions at $1 per share. The
procedures include review of each Fund's portfolio holdings by the Board of
Trustees to determine whether a Fund's net asset value calculated by using
available market quotations deviates more than one-half of one percent from $1
per share and, if so, whether such deviation may result in material dilution or
is otherwise unfair to existing shareholders. In the event the Board of Trustees
determines that such a deviation exists, it will take corrective action as it
regards necessary and appropriate, including the sale of portfolio securities
prior to maturity to realize capital gains or losses or to shorten average
portfolio maturities; withholding dividends; redemptions of shares in kind; or
establishing a net asset value per share by using available market quotations.
The Board of Trustees has also established procedures designed to ensure that
each Fund complies with the quality requirements of Rule 2a-7.
While the amortized cost method provides certainty in valuation, it may result
in periods during which the value of an instrument, as determined by amortized
cost, is higher or lower than the price a Money Market Fund would receive if it
sold the instrument. During periods of declining interest rates, the daily yield
on shares of a Money Market Fund may tend to be higher than a like computation
made by a fund with identical investments utilizing a method of valuation based
upon market prices and estimates of market prices for all of its portfolio
securities. Thus, if the use of amortized cost by a Money Market 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.
<PAGE>
Tax-exempt portfolio securities are valued for the Tax-Free Intermediate Term
Fund and the Ohio Insured Tax-Free Fund by an outside independent pricing
service approved by the Board of Trustees. The service generally utilizes a
computerized grid matrix of tax-exempt securities and evaluations by its staff
to determine what it believes is the fair value of the portfolio securities. The
Board of Trustees believes that timely and reliable market quotations are
generally not readily available to the Funds for purposes of valuing tax-exempt
securities and that valuations supplied by the pricing service are more likely
to approximate the fair value of the tax-exempt securities.
If, in the Sub-Advisor's opinion, the valuation provided by the pricing service
ignores certain market conditions affecting the value of a security, the
Sub-Advisor will use (consistent with procedures established by the Board of
Trustees) such other valuation as it considers to represent fair value.
Valuations, market quotations and market equivalents provided to the Tax-Free
Intermediate Term Fund and the Ohio Insured Tax-Free Fund by pricing services
will only be used when such use and the methods employed have been approved by
the Board of Trustees. Valuations provided by pricing services or the
Sub-Advisor may be determined without exclusive reliance on matrixes and may
take into consideration appropriate factors such as bid prices, quoted prices,
institution-size trading in similar groups of securities, yield, quality, coupon
rates, maturity, type of issue, trading characteristics and other market data.
Because it is difficult to evaluate the likelihood of exercise or the potential
benefit of a put attached to an obligation, it is expected that such puts will
be determined to have a value of zero, regardless of whether any direct or
indirect consideration was paid.
The Board of Trustees has adopted the policy for the Tax-Free Intermediate Term
Fund and the Ohio Insured Tax-Free Fund which may be changed without shareholder
approval, that the maturity of fixed rate or floating and variable rate
instruments with demand features will be determined as follows. The maturity of
each such fixed rate or floating rate instrument will be deemed to be the period
of time remaining until the principal amount owed can be recovered through
demand. The maturity of each such variable rate instrument will be deemed to be
the longer of the period remaining until the next readjustment of the interest
rate or the period remaining until the principal amount owed can be recovered
through demand.
Taxable securities, if any, held by the Tax-Free Intermediate Term Fund and the
Ohio Insured Tax-Free Fund for which market quotations are readily available are
valued at their most recent bid prices as obtained from one or more of the major
market makers for such securities. Securities (and other assets) for which
market quotations are not readily available are valued at their fair value as
determined in good faith in accordance with consistently applied procedures
established by and under the general supervision of the Board of Trustees.
<PAGE>
CHOOSING A SHARE CLASS
----------------------
The Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund each
offer Class A and Class C shares. Each class represents an interest in the same
portfolio of investments and has the same rights, but differs primarily in sales
loads and distribution expense amounts. Shares of the Tax-Free Intermediate Term
Fund purchased before February 1, 1994 are Class A shares. Shares of the Ohio
Insured Tax-Free Fund purchased before November 1, 1993 are Class A shares.
Before choosing a class, you should consider the following factors, as well as
any other relevant facts and circumstances:
The decision as to which class of shares is more beneficial to you depends on
the amount of your investment, the intended length of your investment and the
quality and scope of the value-added services provided by financial advisors who
may work with a particular sales load structure as compensation for their
services. If you qualify for reduced sales loads or, in the case of purchases of
$1 million or more, no initial sales load, you may find Class A shares
attractive because similar sales load reductions are not available for Class C
shares. Moreover, Class A shares are subject to lower ongoing expenses than
Class C shares over the term of the investment. As an alternative, Class C
shares are sold with a lower initial sales load so more of the purchase price is
immediately invested in a Fund. If you do not plan to hold your shares in a Fund
for a long time (less than 4 1/4 years), it may be better to purchase Class C
shares so that more of your purchase is invested directly in the Fund, although
you will pay higher distribution fees. If you plan to hold your shares in a Fund
for more than 4 1/4 years, it may be better to purchase Class A shares, since
after 4 1/4 years your accumulated distribution fees may be more than the sales
load paid on your purchase.
When determining which class of shares to purchase, you may want to consider the
services provided by your financial advisor and the compensation provided to
these financial advisors under each share class. Touchstone works with many
experienced and very qualified financial advisors throughout the country that
may provide valuable assistance to you through ongoing education, asset
allocation programs, personalized financial planning reviews or other services
vital to your long-term success. Touchstone believes that these value-added
services can greatly benefit you through market cycles and will work diligently
with your chosen financial advisor.
<PAGE>
Set forth below is a chart comparing the sales loads and 12b-1 fees applicable
to each class of shares:
CLASS SALES LOAD 12b-1 FEE
-------------------------------------------------------------------------------
A Maximum of 4.75% initial sales load reduced for 0.25%
purchases of $50,000 and over; shares sold
without an initial sales load may be subject to a 1.00%
contingent deferred sales load during first year if a
commission was paid to a dealer
C 1.25% initial sales load; 1.00% contingent 1.00%
deferred sales load during first year
-------------------------------------------------------------------------------
If you are investing $1 million or more, it is generally more beneficial for you
to buy Class A shares because there is no front-end sales load and the annual
expenses are lower.
Class A Shares
Class A shares are sold at NAV plus an initial sales load. In some cases,
reduced initial sales loads for the purchase of Class A shares may be available,
as described below. Investments of $1 million or more are not subject to a sales
load at the time of purchase but may be subject to a contingent deferred sales
load of 1.00% on redemptions made within 1 year after purchase if a commission
was paid by Touchstone to a participating unaffiliated dealer. Class A shares
are also subject to an annual 12b-1 distribution fee of up to .25% of a Fund's
average daily net assets allocable to Class A shares.
The following table illustrates the initial sales load breakpoints for the
purchase of Class A shares of the Tax-Free Intermediate Term Fund and the Ohio
Insured Tax-Free Fund for accounts opened after July 31, 1999:
Percentage Which Dealer
of Offering Equals this Reallowance
Price Deducted Percentage as Percentage
for Sales of Your Net of Offering
Amount of Investment Load Investment Price
-------------------- ---- ---------- -----
Less than $50,000 4.75% 4.99% 4.00%
$50,000 but less than $100,000 4.50 4.72 3.75
$100,000 but less than $250,000 3.50 3.63 2.75
$250,000 but less than $500,000 2.95 3.04 2.25
$500,000 but less than $1,000,000 2.25 2.31 1.75
$1,000,000 or more None None
The following table illustrates the initial sales load breakpoints for the
purchase of Class A shares of the Ohio Insured Tax-Free Fund for accounts opened
before August 1, 1999:
<PAGE>
Percentage Which Dealer
of Offering Equals this Reallowance
Price Deducted Percentage as Percentage
for Sales of Your Net of Offering
Amount of Investment Load Investment Price
-------------------- ---- ---------- -----
Less than $100,000 4.00% 4.17% 3.60%
$100,000 but less than $250,000 3.50 3.63 3.30
$250,000 but less than $500,000 2.50 2.56 2.30
$500,000 but less than $1,000,000 2.00 2.04 1.80
$1,000,000 or more None None
The following table illustrates the initial sales load breakpoints for the
purchase of Class A shares of the Tax-Free Intermediate Term Fund for accounts
opened before August 1, 1999 and after January 31, 1995:
<TABLE>
Percentage Which Dealer
of Offering Equals this Reallowance
Price Deducted Percentage as Percentage
for Sales of Your Net of Offering
Amount of Investment Load Investment Price
-------------------- ---- ---------- -----
Less than $100,000 1.80% 2.00% 2.04%
$100,000 but less than $250,000 1.35% 1.50% 1.52%
$250,000 but less than $500,000 .90% 1.00 1.01%
$500,000 but less than $1,000,000 0.65% 0.75% 0.76%
$1,000,000 or more None None
The following table illustrates the initial sales load breakpoints for the
purchase of Class A shares of the Tax-Free Intermediate Term Fund for accounts
opened before February 1, 1995:
<S> <C> <C> <C>
Percentage Which Dealer
of Offering Equals this Reallowance
Price Deducted Percentage as Percentage
for Sales of Your Net of Offering
Amount of Investment Load Investment Price
-------------------- ---- ---------- -----
Less than $500,000 1.00% 1.00% 1.01%
$500,000 but less than $1,000,000 0.76 0.76% 0.75%
$1,000,000 or more None None
</TABLE>
Under certain circumstances, Touchstone may increase or decrease the reallowance
to selected dealers. In addition to the compensation otherwise paid to
securities dealers, Touchstone may from time to time pay from its own resources
additional cash bonuses or other incentives to selected dealers in connection
with the sale of shares of the Funds. On some occasions, such bonuses or
incentives may be conditioned upon the sale of a specified minimum dollar amount
of the shares of a Fund and/or other funds in the Touchstone Family of Funds
during a specific period of time. Such bonuses or incentives may include
financial assistance to dealers in connection with conferences, sales or
training programs for their employees, seminars for the public, advertising,
sales campaigns and other dealer-sponsored programs or events.
<PAGE>
For initial purchases of Class A shares of $1 million or more and subsequent
purchases further increasing the size of the account, participating unaffiliated
dealers will receive first year compensation of up to 1.00% of such purchases
from Touchstone. In determining a dealer's eligibility for such commission,
purchases of Class A shares of the Funds may be aggregated with concurrent
purchases of Class A shares of other funds in the Touchstone Family of Funds.
Dealers should contact Touchstone for more information on the calculation of the
dealer's commission in the case of combined purchases.
An exchange from other Touchstone Funds will not qualify for payment of the
dealer's commission unless the exchange is from a Touchstone Fund with assets as
to which a dealer's commission or similar payment has not been previously paid.
No commission will be paid if the purchase represents the reinvestment of a
redemption from a Fund made during the previous twelve months. Redemptions of
Class A shares may result in the imposition of a contingent deferred sales load
if the dealer's commission described in this paragraph was paid in connection
with the purchase of such shares. See "Contingent Deferred Sales Load for
Certain Purchases of Class A Shares" below.
REDUCED SALES LOAD. You may use the Right of Accumulation to combine the cost or
current NAV (whichever is higher) of your existing Class A shares of any
Touchstone Fund sold with a sales load with the amount of any current purchases
in order to take advantage of the reduced sales loads set forth in the tables
above. Purchases made in any Touchstone load fund under a Letter of Intent may
also be eligible for the reduced sales loads. The minimum initial investment
under a Letter of Intent is $10,000. You should contact the transfer agent for
information about the Right of Accumulation and Letter of Intent.
CONTINGENT DEFERRED SALES LOAD FOR CERTAIN PURCHASES OF CLASS A SHARES. A
contingent deferred sales load is imposed upon certain redemptions of Class A
shares of the Funds (or shares into which such Class A shares were exchanged)
purchased at NAV in amounts totaling $1 million or more, if the dealer's
commission described above was paid by Touchstone and the shares are redeemed
within one year from the date of purchase. The contingent deferred sales load
will be paid to Touchstone and will be equal to the commission percentage paid
at the time of purchase as applied to the lesser of (1) the NAV at the time of
purchase of the Class A shares being redeemed, or (2) the NAV of such Class A
shares at the time of redemption. If a purchase of Class A shares is subject to
the contingent deferred sales load, you will be notified on the confirmation you
receive for your purchase. Redemptions of such Class A shares of the Funds held
for at least one year will not be subject to the contingent deferred sales load.
CLASS C SHARES
Class C shares are sold with an initial sales load of 1.25% and are subject to a
contingent deferred sales load of 1.00% on redemptions of Class C shares made
within one year of their purchase. The contingent deferred sales load will be a
percentage of the dollar amount of shares redeemed and will be assessed on an
amount equal to the lesser of (1) the NAV at the time of purchase of the Class C
shares being redeemed, or (2) the NAV of such Class C shares being redeemed. A
contingent deferred sales load will not be imposed upon redemptions of Class C
shares held for at least one year. Class C shares are subject to an annual 12b-1
fee of up to 1.00% of a Fund's average daily net assets allocable to Class C
shares. Touchstone intends to pay a commission of 2.00% of the purchase amount
to your broker at the time you purchase Class C shares.
<PAGE>
ADDITIONAL INFORMATION ON THE CONTINGENT DEFERRED SALES LOAD. The contingent
deferred sales load is waived for any partial or complete redemption following
death or disability (as defined in the Internal Revenue Code) of a shareholder
(including one who owns the shares with his or her spouse as a joint tenant with
rights of survivorship) from an account in which the deceased or disabled is
named. Touchstone may require documentation prior to waiver of the load,
including death certificates, physicians' certificates, etc.
All sales loads imposed on redemptions are paid to Touchstone. In determining
whether the contingent deferred sales load is payable, it is assumed that shares
not subject to the contingent deferred sales load are the first redeemed
followed by other shares held for the longest period of time. The contingent
deferred sales load will not be imposed upon shares representing reinvested
dividends or capital gains distributions, or upon amounts representing share
appreciation.
The following example will illustrate the operation of the contingent deferred
sales load. Assume that you open an account and purchase 1,000 shares at $10 per
share and that six months later the NAV per share is $12 and, during such time,
you have acquired 50 additional shares through reinvestment of distributions. If
at such time you should redeem 450 shares (proceeds of $5,400), 50 shares will
not be subject to the load because of dividend reinvestment. With respect to the
remaining 400 shares, the load is applied only to the original cost of $10 per
share and not to the increase in net asset value of $2 per share. Therefore,
$4,000 of the $5,400 redemption proceeds will be charged the load. At the rate
of 1.00%, the contingent deferred sales load would be $40. In determining
whether an amount is available for redemption without incurring a deferred sales
load, the purchase payments made for all Class C shares in your account are
aggregated.
OTHER PURCHASE INFORMATION
Additional information with respect to certain types of purchases of Class A
shares of the Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund
is set forth below.
AGGREGATION. Sales charge discounts are available for certain aggregated
investments. Investments which may be aggregated include those made by you, your
spouse and your children under the age of 21, if all parties are purchasing
shares for their own accounts. Individual purchases by trustees or other
fiduciaries may also be aggregated if the investments are: (1) for a single
trust estate or fiduciary account; or (2) for a common trust fund or other
pooled account not specifically formed for the purpose of accumulating Fund
shares. Purchases made for nominee or street name accounts (securities held in
the name of a dealer or another nominee such as a bank trust department instead
of the customer) may not be aggregated with those made for other accounts and
may not be aggregated with other nominee or street name accounts unless
otherwise qualified as described above.
<PAGE>
CONCURRENT PURCHASES. To qualify for a reduced sales charge, you may combine
concurrent purchases of shares of two or more Funds (other than a money market
fund). For example, if you concurrently invest $25,000 in one Fund and
$25,000 in another Fund, the sales charge would be reduced to reflect a $50,000
purchase.
RIGHT OF ACCUMULATION. A purchaser of shares of a Fund has the right to combine
the cost or current net asset value (whichever is higher) of his existing shares
of the load funds distributed by Touchstone with the amount of his current
purchases in order to take advantage of the reduced sales loads set forth in the
table in the Prospectus. The purchaser or his dealer must notify the Transfer
Agent that an investment qualifies for a reduced sales load. The reduced load
will be granted upon confirmation of the purchaser's holdings by the Transfer
Agent. A purchaser includes an individual and his immediate family members,
purchasing shares for his or their own account; or a trustee or other fiduciary
purchasing shares for a single fiduciary account although more than one
beneficiary is involved; or employees of a common employer, provided that
economies of scale are realized through remittances from a single source and
quarterly confirmation of such purchases; or an organized group, provided that
the purchases are made through a central administration, or a single dealer, or
by other means which result in economy of sales effort or expense (the
"Purchaser").
LETTER OF INTENT. The reduced sales loads set forth in the table in the
Prospectus may also be available to any Purchaser of shares of a Fund who
submits a Letter of Intent to the Transfer Agent. The Letter must state an
intention to invest within a thirteen month period in any load fund distributed
by Touchstone a specified amount which, if made at one time, would qualify for a
reduced sales load. A Letter of Intent may be submitted with a purchase at the
beginning of the thirteen month period or within ninety days of the first
purchase under the Letter of Intent. Upon acceptance of this Letter, the
Purchaser becomes eligible for the reduced sales load applicable to the level of
investment covered by such Letter of Intent as if the entire amount were
invested in a single transaction.
The Letter of Intent is not a binding obligation on the Purchaser to purchase,
or the Trust to sell, the full amount indicated. During the term of a Letter of
Intent, shares representing 5% of the intended purchase will be held in escrow.
These shares will be released upon the completion of the intended investment. If
the Letter of Intent is not completed during the thirteen month period, the
applicable sales load will be adjusted by the redemption of sufficient shares
held in escrow, depending upon the amount actually purchased during the period.
The minimum initial investment under a Letter of Intent is $10,000.
A ninety-day backdating period can be used to include earlier purchases at the
Purchaser's cost (without a retroactive downward adjustment of the sales
charge). The thirteen month period would then begin on the date of the first
purchase during the ninety-day period. No retroactive adjustment will be made if
purchases exceed the amount indicated in the Letter of Intent. The Purchaser or
his dealer must notify the Transfer Agent that an investment is being made
pursuant to an executed Letter of Intent.
<PAGE>
WAIVER OF SALES CHARGE. Sales charges do not apply to shares of the Funds
purchased:
1. By registered representatives or other employees (and their immediate
family members) of broker/dealers, banks or other financial
institutions having agreements with Touchstone.
2. By any director, officer or other employee (and their immediate family
members) of The Western and Southern Life Insurance Company or any of
its affiliates or any portfolio advisor or service provider to the
Trust.
3. By clients of an investment advisor or financial planner who has made
appropriate arrangements with the Trust or Touchstone.
4. In accounts as to which a broker-dealer charges an asset management
fee, provided the broker-dealer has an agreement with Touchstone.
5. As part of certain promotional programs established by the Fund and/or
Touchstone.
6. By one or more members of a group of persons engaged in a common
business, profession, civic or charitable endeavor or other activity
and retirees and immediate family members of such persons pursuant to a
marketing program between Touchstone and such group.
7. By banks, bank trust departments, savings and loan associations and
federal and state credit unions.
8. Through Processing Organizations described in the Prospectus.
9. Using the proceeds of a redemption from an unaffiliated mutual fund
(see below).
Immediate family members are defined as the spouse, parents, siblings, natural
or adopted children, mother-in-law, father-in-law, brother-in-law and
sister-in-law of a director, officer or employee. The term "employee" is deemed
to include current and retired employees.
Exemptions must be qualified in advance by Touchstone. Your financial advisor
should call Touchstone for more information.
REINVESTMENT OF PROCEEDS FROM OTHER MUTUAL FUNDS. You may purchase shares of the
Funds at NAV when the payment for your investment represents the proceeds from
the redemption of shares of any other mutual fund which has a front-end sales
load and is not distributed by Touchstone. Your investment will qualify for this
provision if the purchase price of the shares of the other fund included a sales
load and the redemption occurred within 1 year of the purchase of such shares
and no more than 60 days prior to your purchase of shares of a Fund. To make a
purchase at NAV under this arrangement, you must submit a copy of the
confirmations (or similar evidence) showing the purchase and redemption of
shares of the other fund. Your payment may be made with the redemption check
from the other mutual fund, endorsed to the order of the Touchstone Family of
Funds. The redemption of shares of the other fund is, for federal income tax
purposes, a sale on which you may realize a gain or loss.
OTHER INFORMATION. The Trust does not impose a front-end sales load or imposes a
reduced sales load in connection with purchases of shares of a Fund made under
the reinvestment privilege, purchases through exchanges and other purchases
which qualify for a reduced sales load as described herein because such
purchases require minimal sales effort by Touchstone. Purchases made at NAV may
be made for investment only, and the shares may not be resold except through
redemption by or on behalf of the Trust.
<PAGE>
TAXES
-----
The Prospectus describes generally the tax treatment of distributions by the
Funds. This section of the Statement of Additional Information includes
additional information concerning federal and state taxes.
Each Fund has qualified and intends to qualify annually for the special tax
treatment afforded a "regulated investment company" under Subchapter M of the
Internal Revenue Code so that it does not pay federal taxes on income and
capital gains distributed to shareholders. To so qualify a Fund must, among
other things, (i) derive at least 90% of its gross income in each taxable year
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock, securities or foreign currency, or
certain other income (including but not limited to gains from options, futures
and forward contracts) derived with respect to its business of investing in
stock, securities or currencies; and (ii) diversify its holdings so that at the
end of each quarter of its taxable year the following two conditions are met:
(a) at least 50% of the value of the Fund's total assets is represented by cash,
U.S. Government securities, securities of other regulated investment companies
and other securities (for this purpose such other securities will qualify only
if the Fund's investment is limited in respect to any issuer to an amount not
greater than 5% of the Fund's assets and 10% of the outstanding voting
securities of such issuer) and (b) not more than 25% of the value of the Fund's
assets is invested in securities of any one issuer (other than U.S. Government
securities or securities of other regulated investment companies).
Each Fund intends to invest in sufficient obligations so that it will qualify to
pay, for federal income tax purposes, "exempt-interest dividends" (as defined in
the Internal Revenue Code) to shareholders. A Fund's dividends payable from net
tax-exempt interest earned from tax-exempt obligations will qualify as
exempt-interest dividends for federal income tax purposes if, at the close of
each quarter of the taxable year of the Fund, at least 50% of the value of its
total assets consists of tax-exempt obligations. The percentage of income that
is exempt from federal income taxes is applied uniformly to all distributions
made during each calendar year. This percentage may differ from the actual
tax-exempt percentage during any particular month.
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 Funds may invest in such "specified private activity bonds"
subject to the requirement that each Fund invest its assets so that at least 80%
of its annual income will be 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 Funds may be a tax preference for
corporate investors.
<PAGE>
Each Fund intends to invest primarily in obligations with interest income exempt
from federal income taxes. To the extent possible, the Ohio Insured Tax-Free
Fund and the Ohio Tax-Free Money Fund intend to invest primarily in obligations
the income from which is exempt from Ohio personal income tax, the California
Tax-Free Money Fund intends to invest primarily in obligations the income from
which is exempt from California income tax and the Florida Tax-Free Money Fund
intends to invest primarily in obligations the value of which is exempt from the
Florida intangible personal property tax. Distributions from net investment
income and net realized capital gains, including exempt-interest dividends, may
be subject to state taxes in other states.
Under the Internal Revenue Code, interest on indebtedness incurred or continued
to purchase or carry shares of investment companies paying exempt-interest
dividends, such as the Funds, will not be deductible by the investor for federal
income tax purposes. Shareholders should consult their tax advisors as to the
application of these provisions.
Shareholders receiving Social Security benefits may be subject to federal income
tax (and perhaps state personal income tax) on a portion of those benefits as a
result of receiving tax-exempt income (including exempt-interest dividends
distributed by the Funds). In general, the tax will apply to such benefits only
in cases where the recipient's provisional income, consisting of adjusted gross
income, tax-exempt interest income and 50% of any Social Security benefits,
exceeds a base amount ($25,000 for single individuals and $32,000 for
individuals filing a joint return). In such cases, the tax will be imposed on
the lesser of 50% of the recipient's Social Security benefits or the excess of
provisional income over the base amount. A second tier of inclusion rules for
high-income social security recipients has been added for tax years beginning
after 1993. These new rules apply to taxpayers who have provisional income over
$44,000 (married filing jointly) or $34,000 (single). For these taxpayers, the
amount of benefit subject to tax is the lesser of (1) 85% of the social security
benefit received or (2) 85% of the excess of the taxpayer's provisional income
over $44,000 (married filing jointly) or $34,000 (single) plus the smaller of
(a) $6,000 (married filing jointly) or $4,500 (single) or (b) the amount taxable
under the 50% inclusion rules described above. Shareholders receiving Social
Security benefits may wish to consult their tax advisors.
All or a portion of the sales load incurred in purchasing Class A shares of each
of the Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund will
not be included in the federal tax basis of any of such shares sold within 90
days of their purchase (for the purpose of determining gain or loss upon the
sale of such shares) if the sales proceeds are reinvested in any other fund of
the Touchstone Family of Funds and a sales load that would otherwise apply to
the reinvestment is reduced or eliminated because the sales proceeds were
reinvested in a Touchstone fund. The portion of the sales load so excluded from
the tax basis of the shares sold will equal the amount by which the sales load
that would otherwise be applicable upon the reinvestment is reduced. Any portion
of such sales load excluded from the tax basis of the shares sold will be added
to the tax basis of the shares acquired in the reinvestment.
<PAGE>
A Fund's net realized capital gains from securities transactions will be
distributed only after reducing such gains by the amount of any available
capital loss carryforwards. Capital losses may be carried forward to offset any
capital gains for eight years, after which any undeducted capital loss remaining
is lost as a deduction. As of June 30, 2000, the Funds had the following capital
loss carryforwards for federal income tax purposes.
Amount Expires June 30
Tax-Free Money Fund $ 409 2003
564 2004
2,865 2008
California Tax-Free Money Fund $ 447 2007
Ohio Tax-Free Money Fund $ 90 2004
2,952 2008
Florida Tax-Free Money Fund $ 4,527 2007
6,777 2008
Tax-Free Intermediate Term Fund $ 313,244 2004
Ohio Insured Tax-Free Fund $ 35,418 2008
A federal excise tax at the rate of 4% will be imposed on the excess, if any, of
a Fund's "required distribution" over actual distributions in any calendar year.
Generally, the "required distribution" is 98% of a Fund's ordinary income for
the calendar year plus 98% of its net capital gains recognized during the one
year period ending on October 31 of the calendar year plus undistributed amounts
from prior years. The Funds intend to make distributions sufficient to avoid
imposition of the excise tax.
The Trust is required to withhold and remit to the U.S. Treasury a portion (31%)
of dividend income on any account unless the shareholder provides a taxpayer
identification number and certifies that such number is correct and that the
shareholder is not subject to backup withholding.
REDEMPTION IN KIND
------------------
Under unusual circumstances, when the Board of Trustees deems it in the best
interests of a Fund's shareholders, the Fund may make payment for shares
repurchased or redeemed in whole or in part in securities of the Fund taken at
current value. If any such redemption in kind is to be made, each Fund intends
to make an election pursuant to Rule 18f-1 under the Investment Company Act of
1940. This election will require the Funds to redeem shares solely in cash up to
the lesser of $250,000 or 1% of the net asset value of each Fund during any 90
day period for any one shareholder. Should payment be made in securities, the
redeeming shareholder will generally incur brokerage costs in converting such
securities to cash. Portfolio securities which are issued in an in-kind
redemption will be readily marketable.
<PAGE>
HISTORICAL PERFORMANCE INFORMATION
----------------------------------
Yield quotations on investments in the Money Market Funds 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 Money Market
Funds do not normally recognize unrealized gains and losses under the amortized
cost valuation method). The Tax-Free Money Fund's current and effective yields
for the seven days ended June 30, 2000 were 3.87% and 3.94%, respectively. The
Ohio Tax-Free Money Fund's current and effective yields for the seven days ended
June 30, 2000 were 3.85% and 3.92%, respectively, for Class A shares and 4.10%
and 4.18%, respectively, for Class B shares. The California Tax-Free Money
Fund's current and effective yields for the seven days ended June 30, 2000 were
3.62% and 3.69%, respectively. The Florida Tax-Free Money Fund's current and
effective yields for the seven days ended June 30, 2000 were 3.61% and 3.67%.
The Money Market Funds may also quote a tax-equivalent current or effective
yield, computed by dividing that portion of a Fund's current or effective yield
which is tax-exempt by one minus a stated income tax rate and adding the product
to that portion, if any, of the yield that is not tax-exempt. Based on the
highest marginal federal income tax rate for individuals (39.6%), the Tax-Free
Money Fund's tax-equivalent current and effective yields for the seven days
ended June 30, 2000 were 6.41% and 6.52%, respectively. Based on the highest
combined marginal federal and Ohio income tax rate for individuals (44.13%), the
Ohio Tax-Free Money Fund's tax-equivalent current and effective yields for the
seven days ended June 30, 2000 were 6.89% and 7.02%, respectively, for Class A
shares and 7.34% and 7.48%, respectively, for Class B shares. Based on the
highest combined marginal federal and California income tax rate for individuals
(45.22%), the California Tax-Free Money Fund's tax-equivalent current and
effective yields for the seven days ended June 30, 2000 were 6.61% and 6.74%,
respectively. Based on the highest marginal federal income tax rate for
individuals (39.6%), the Florida Tax-Free Money Fund's tax-equivalent current
and effective yields for the seven days ended June 30, 2000 were 3.61% and
3.67%.
From time to time, the Tax-Free Intermediate Term Fund and the Ohio Insured
Tax-Free Fund may advertise average annual total return. Average annual total
return quotations will be computed by finding the average annual compounded
rates of return over 1, 5 and 10 year periods that would equate the initial
amount invested to the ending redeemable value, according to the following
formula:
<PAGE>
P (1 + T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5 and 10 year
periods at the end of the 1, 5 or 10 year periods (or
fractional portion thereof)
The calculation of average annual total return assumes the reinvestment of all
dividends and distributions. The calculation also assumes the deduction of the
current maximum sales load from the initial $1,000 payment. If a Fund (or class)
has been in existence less than one, five or ten years, the time period since
the date of the initial public offering of shares will be substituted for the
periods stated. The average annual total returns of the Tax-Free Intermediate
Term Fund and the Ohio Insured Tax-Free Fund for the periods ended June 30, 2000
are as follows:
Tax-Free Intermediate Term Fund (Class A)
1 year -2.13%
5 years 3.21%
10 years 5.06%
Tax-Free Intermediate Term Fund (Class C)
1 year 0.61%
5 years 3.25%
Since inception (February 1, 1994) 2.88%
Ohio Insured Tax-Free Fund (Class A)
1 year -2.27%
5 years 3.73%
10 years 5.71%
Ohio Insured Tax-Free Fund (Class C)
1 year 0.48%
5 years 3.74%
Since inception (November 1, 1993) 3.25%
The Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund may also
advertise total return (a "nonstandardized quotation") which is calculated
differently from average annual total return. A nonstandardized quotation of
total return may be a cumulative return which measures the percentage change in
the value of an account between the beginning and end of a period, assuming no
activity in the account other than reinvestment of dividends and capital gains
distributions. This computation does not include the effect of the applicable
front-end or contingent deferred sales load which, if included, would reduce
total return. The total returns of the Tax-Free Intermediate Term Fund and the
Ohio Insured Tax-Free Fund as calculated in this manner for each of the last ten
fiscal years (or since inception) are as follows:
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Ohio Ohio
Tax-Free Tax-Free Insured Insured
Intermediate Intermediate Tax-Free Tax-Free
Term Fund Term Fund Fund Fund
Period Ended Class A Class C Class A Class C
------- ------- ------- -------
June 30, 1991 7.38% 7.98%
June 30, 1992 8.78% 11.55%
June 30, 1993 10.75% 12.24%
June 30, 1994 1.70% -3.40%(1) -0.41% -4.01%(2)
June 30, 1995 6.36% 5.82% 7.75% 7.31%
June 30, 1996 4.51% 4.00% 5.05% 4.44%
June 30, 1997 6.19% 5.49% 7.36% 6.65%
June 30, 1998 5.63% 4.85% 7.03% 6.24%
June 30, 1999 2.07% 1.40% 1.81% 1.05%
June 30, 2000 2.75% 1.88% 2.60% 1.75%
(1) From date of initial public offering on February 1, 1994.
(2) From date of initial public offering on November 1, 1993.
</TABLE>
A nonstandardized quotation may also indicate average annual compounded rates of
return without including the effect of the applicable front-end or contingent
deferred sales load or over periods other than those specified for average
annual total return. The average annual compounded rates of return for Class A
shares of the Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund
(excluding sales loads) for the periods ended June 30, 2000 are as follows:
TAX-FREE INTERMEDIATE TERM FUND (CLASS A)
1 Year 2.75%
3 Years 3.47%
5 Years 4.22%
10 Years 5.57%
Since inception (September 10, 1981) 5.98%
OHIO INSURED TAX-FREE FUND (CLASS A)
1 Year 2.60%
3 Years 3.79%
5 Years 4.75%
10 Years 6.22%
Since inception (April 1, 1985) 7.22%
A nonstandardized quotation of total return will always be accompanied by the
Fund's average annual total return as described above.
<PAGE>
From time to time, the Tax-Free Intermediate Term Fund and the Ohio Insured
Tax-Free Fund may advertise their yield and tax-equivalent yield. A yield
quotation is based on a 30-day (or one month) period and is computed by dividing
the net investment income per share earned during the period by the maximum
offering price per share on the last day of the period, according to the
following formula:
Yield = 2[(a-b)/cd + 1)6 - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
Generally, interest earned (for the purpose of "a" above) on debt obligations is
computed by reference to the yield to maturity of each obligation held based on
the market value of the obligation (including actual accrued interest) at the
close of business on the last business day prior to the start of the 30-day (or
one month) period for which yield is being calculated, or, with respect to
obligations purchased during the month, the purchase price (plus actual accrued
interest). The yields of Class A and Class C shares of the Tax-Free Intermediate
Term Fund for June 2000 were 4.20% and 3.62%, respectively. The yields of Class
A and Class C shares of the Ohio Insured Tax-Free Fund for June 2000 were 4.81%
and 4.25%, respectively. Tax-equivalent yield is computed by dividing that
portion of a Fund's yield which is tax-exempt by one minus a stated income tax
rate and adding the product to that portion, if any, of the Fund's yield that is
not tax-exempt. Based on the highest marginal federal income tax rate for
individuals (39.6%), the tax-equivalent yields of Class A and Class C shares of
the Tax-Free Intermediate Term Fund for June 2000 were 6.95% and 5.99%,
respectively. Based on the highest combined marginal federal and Ohio income tax
rate for individuals (44.13%), the tax-equivalent yields of Class A and Class C
shares of the Ohio Insured Tax-Free Fund for June 2000 were 8.61% and 7.61%,
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 Class A and Class B shares of the Ohio Tax-Free Money Fund. The
yield of Class B shares is expected to be higher than the yield of Class A
shares due to the distribution fees imposed on Class A shares. Average annual
total return and yield are computed separately for Class A and Class C shares of
the Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund. The
yield of Class A shares is expected to be higher than the yield of Class C
shares due to the higher distribution fees imposed on Class C shares.
To help investors better evaluate how an investment in a Fund might satisfy
their investment objective, advertisements regarding each Fund may discuss
various measures of Fund 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
to performance as reported by other investments, indices and averages. When
advertising current ratings or rankings, the Funds may use the following
publications or indices to discuss or compare Fund performance:
<PAGE>
IBC's Money Fund Report provides a comparative analysis of performance for
various categories of money market funds. The Tax-Free Money Fund may compare
performance rankings with money market funds appearing in the Tax-Free
Stockbroker & General Purpose Funds category. In addition, the Ohio Tax-Free
Money Fund, the California Tax-Free Money Fund and the Florida Tax-Free Money
Fund may compare performance rankings with money market funds appearing in the
Tax-Free State Specific Stockbroker & General Purpose Funds categories.
Lipper Fixed Income Fund Performance Analysis measures total return and average
current yield for the mutual fund industry and ranks individual mutual fund
performance over specified time periods assuming reinvestment of all
distributions, exclusive of sales loads. The Tax-Free Money Fund may provide
comparative performance information appearing in the Tax-Exempt Money Market
Funds category, the Ohio Tax-Free Money Fund may provide comparative performance
information appearing in the Ohio Tax-Exempt Money Market Funds category, the
California Tax-Free Money Fund may provide comparative performance information
appearing in the California Tax-Exempt Money Market Funds category and the
Florida Tax-Free Money Fund may provide comparative performance information
appearing in the Other States Tax-Exempt Money Market Funds category. The
Tax-Free Intermediate Term Fund may provide comparative performance information
appearing in the Intermediate (5-10 year) Municipal Debt Funds category and the
Ohio Insured Tax-Free Fund may provide comparative performance information
appearing in the Ohio Municipal Debt Funds category.
In assessing such comparisons of performance an investor should keep in mind
that the composition of the investments in the reported indices and averages is
not identical to the Funds' portfolios, that the averages are generally
unmanaged and that the items included in the calculations of such averages may
not be identical to the formula used by the Funds to calculate their
performance. In addition, there can be no assurance that the Funds will continue
this performance as compared to such other averages.
<PAGE>
PRINCIPAL SECURITY HOLDERS
As of October 6, 2000, the following shareholders held over 5% of the
outstanding shares of a Fund (or class):
<TABLE>
<S> <C> <C>
------------------------------------- ------------------------------------ -----------------
% of Fund
Fund Shareholder (or Class)
------------------------------------- ------------------------------------ -----------------
------------------------------------- ------------------------------------ -----------------
Tax-Free Money Fund Edward A. Striker 5.64%
Carol A. Striker
9711 Bennington Drive
Cincinnati, OH 45241
------------------------------------- ------------------------------------ -----------------
------------------------------------- ------------------------------------ -----------------
Tax-Free Money Fund Bear Stearns & Co. FBO 9.47%
An Account
1 Metrotech Center North
Brooklyn, NY 11201
------------------------------------- ------------------------------------ -----------------
<PAGE>
------------------------------------- ------------------------------------ -----------------
Tax-Free Money Fund David Tondow, Jr. 5.33%
Margaret L. Tondow
2937 Alpine Terrace
Cincinnati, OH 45208-3407
------------------------------------- ------------------------------------ -----------------
------------------------------------- ------------------------------------ -----------------
Tax-Free Intermediate Term Fund - Merrill Lynch, Pierce, Fenner & 6.11%
Class A Smith Incorporated For the Sole
Benefit of its Customers
4800 Deer Lake Dr. East
Jacksonville, FL 32246
------------------------------------- ------------------------------------ -----------------
------------------------------------- ------------------------------------ -----------------
Tax-Free Intermediate Term Fund - Donaldson Lufkin & Jenrette 8.71%
Class C Securities Corporation
P.O. Box 2052
Jersey City, NJ 07303
------------------------------------- ------------------------------------ -----------------
------------------------------------- ------------------------------------ -----------------
Tax-Free Intermediate Term Fund - Joyce Yates 6.46%
Class C 400 S. Lower Schooner Rd.
Nashville, IN 47448
------------------------------------- ------------------------------------ -----------------
------------------------------------- ------------------------------------ -----------------
Tax-Free Intermediate Term Fund - Janice R. Kirlin 5.97%
Class C 12049 Cooperwood
Cincinnati, OH 45242
------------------------------------- ------------------------------------ -----------------
------------------------------------- ------------------------------------ -----------------
Ohio Insured Tax-Free Fund - Class C PaineWebber for the Benefit of 7.47%
Leland F. Brubaker Trustee
4229 Westleton Ct.
Columbus, OH 43221
------------------------------------- ------------------------------------ -----------------
------------------------------------- ------------------------------------ -----------------
Ohio Insured Tax-Free Fund - Class C Fiserve Securities Inc. 7.16%
Attn: Mutual Funds
2005 Market Street
Philadelphia, PA 19103
------------------------------------- ------------------------------------ -----------------
------------------------------------- ------------------------------------ -----------------
Ohio Insured Tax-Free Fund - Class C Donaldson Lufkin & Jenrette 10.65%
Securities Corporation
P.O. Box 2052
Jersey City, NJ 07303
------------------------------------- ------------------------------------ -----------------
------------------------------------- ------------------------------------ -----------------
Ohio Insured Tax-Free Fund Class C Jeffrey R. Sloat 5.28%
Nancy E. Sloat
7091 Old Mill Road
Chesterland, OH 44026
------------------------------------- ------------------------------------ -----------------
------------------------------------- ------------------------------------ -----------------
Ohio Tax-Free Money Fund -Class A Fiserve Securities Inc.* 47.50%
2005 Market Street
Philadelphia, PA 19103
------------------------------------- ------------------------------------ -----------------
------------------------------------- ------------------------------------ -----------------
Ohio Tax-Free Money Fund - Class B Fifth Third Bank Trust* 87.20%
38 Fountain Square Plaza
Cincinnati, OH 45202
------------------------------------- ------------------------------------ -----------------
------------------------------------- ------------------------------------ -----------------
California Tax-Free Money Fund Bear Stearns & Co. FBO 6.24%
An Account
1 Metrotech Center North
Brooklyn, NY 11201
------------------------------------- ------------------------------------ -----------------
------------------------------------- ------------------------------------ -----------------
California Tax-Free Money Fund Bear Stearns & Co. FBO 7.72%
An Account
1 Metrotech Center North
Brooklyn, NY 11201
------------------------------------- ------------------------------------ -----------------
<PAGE>
------------------------------------- ------------------------------------ -----------------
California Tax-Free Money Fund Bear Stearns & Co. FBO 5.34%
An Account
1 Metrotech Center North
Brooklyn, NY 11201-3859
------------------------------------- ------------------------------------ -----------------
------------------------------------- ------------------------------------ -----------------
Florida Tax-Free Money Fund Fifth Third Bank Trust* 50.44%
38 Fountain Square Plaza
Cincinnati, OH 45263
------------------------------------- ------------------------------------ -----------------
------------------------------------- ------------------------------------ -----------------
Florida Tax-Free Money Fund Joseph H. Kanter 9.59%
9792 Windisch Road
West Chester, OH 45069
------------------------------------- ------------------------------------ -----------------
* May be deemed to control the Fund (or class) due to record ownership of 25% or
more of the outstanding shares as of October 6, 2000.
</TABLE>
As of October 6, 2000, the Trustees and officers of the Trust as a group owned
of record and beneficially less than 1% of the outstanding shares of the Trust
and of each Fund (or class).
CUSTODIAN
----------
The Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio, has been
retained to act as Custodian for investments of 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. The Fifth Third Bank
acts as each Fund's depository, safekeeps its portfolio securities, collects all
income and other payments with respect thereto, disburses funds as instructed
and maintains records in connection with its duties. As compensation, The Fifth
Third Bank receives from each Fund a base fee at the annual rate of .005% of
average net assets (subject to a minimum annual fee of $1,500 per Fund and a
maximum fee of $5,000 per Fund) plus transaction charges for each security
transaction of the Funds.
The Huntington Trust Company, N.A., 41 South High Street, Columbus, Ohio, has
been retained to act as Custodian for investments of the Florida Tax-Free Money
Fund. The Huntington Trust Company, N.A. 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 Huntington Trust Company
receives a fee at the annual rate of .026% of the Fund's average net assets.
INDEPENDENT AUDITORS
--------------------
The firm of Ernst & Young LLP, 250 East Fifth Street, Cincinnati, Ohio, has been
selected as independent auditors for the Trust for the fiscal year ending June
30, 2001. Ernst & Young performs an annual audit of the Trust's financial
statements and advises the Funds on certain accounting matters. Prior to the
fiscal year ending June 30, 2000 another accounting firm served as independent
auditors of the Trust.
<PAGE>
TRANSFER AGENT
--------------
The Trust's transfer agent, Integrated Fund Services, Inc. ("IFS"), maintains
the records of each shareholder's account, answers shareholders' inquiries
concerning their accounts, processes purchases and redemptions of the Funds'
shares, acts as dividend and distribution disbursing agent and performs other
shareholder service functions. IFS is an affiliate of the Advisor, the
Sub-Advisor and Touchstone by reason of common ownership. IFS receives for its
services as transfer agent a fee payable monthly at an annual rate of $25 per
account from each of the Money Market Funds and $21 per account from each of the
Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund, provided,
however, that the minimum fee is $1,000 per month for each class of shares of a
Fund. In addition, the Funds pay out-of-pocket expenses, including but not
limited to, postage, envelopes, checks, drafts, forms, reports, record storage
and communication lines.
IFS 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 IFS to perform its duties, the Tax-Free Money Fund, the
California Tax-Free Money Fund and the Florida Tax-Free Money Fund each pay IFS
a fee in accordance with the following schedule:
Asset Size of Fund Monthly Fee
$0 - $50,000,000 $2,500
$50,000,000 - $100,000,000 $3,000
$100,000,000 - $200,000,000 $3,500
$200,000,000 - $300,000,000 $4,000
Over $300,000,000 $5,000*
The Tax-Free Intermediate Term Fund, the Ohio Insured Tax-Free Fund and the Ohio
Tax-Free Money Fund each pay IFS a fee in accordance with the following
schedule:
Asset Size of Fund Monthly Fee
$0 - $50,000,000 $3,500
$50,000,000 - $100,000,000 $4,000
$100,000,000 - $200,000,000 $4,500
$200,000,000 - $300,000,000 $5,000
Over $300,000,000 $6,000
* Subject to an additional fee of .001% of average daily net assets in excess of
$300 million.
In addition, each Fund pays all costs of external pricing services.
IFS is retained by the Advisor to assist the Advisor in providing administrative
services to the Funds. In this capacity, IFS supplies non-investment related
statistical and research data, internal regulatory compliance services and
executive and administrative services. IFS supervises the preparation of tax
returns, reports to shareholders of the Funds, reports to and filings with the
Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees. For the performance of these
administrative services, IFS receives a fee from the Advisor. The Advisor is
solely responsible for the payment of these administrative fees to IFS, and IFS
has agreed to seek payment of such fees solely from the Advisor.
<PAGE>
TAX EQUIVALENT YIELD TABLES
---------------------------
The tax equivalent yield tables illustrate approximately the yield an individual
investor must earn on taxable investments to equal a tax-exempt yield in various
income tax brackets.
TAX-FREE MONEY FUND, TAX-FREE INTERMEDIATE TERM FUND AND FLORIDA TAX-FREE MONEY
FUND TABLE. The table on the following page shows the approximate taxable yields
for individuals that are equivalent to tax-exempt yields under marginal federal
2000 income tax rates. No adjustments have been made for state or local taxes.
OHIO INSURED TAX-FREE FUND AND OHIO TAX-FREE MONEY FUND TABLE. The table on the
following page shows the approximate taxable yields for individuals that are
equivalent to tax-exempt yields under combined marginal federal and Ohio 2000
income tax rates. Where more than one state bracket falls within a federal
bracket, the highest state tax bracket has been combined with the federal
bracket. The combined marginal state and federal tax brackets shown reflect the
fact that state income tax payments are currently deductible for federal tax
purposes.
CALIFORNIA TAX-FREE MONEY FUND TABLE. The table on the following page shows the
approximate taxable yields for individuals that are equivalent to tax-exempt
yields under combined marginal federal and California 2000 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 $124,500 (single return) or $186,800 (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 $124,500. The tax equivalent yield tables have not
been adjusted to reflect the impact of these adjustments to taxable income.
<PAGE>
TAX-FREE MONEY FUND, TAX-FREE INTERMEDIATE TERM FUND
AND FLORIDA TAX-FREE MONEY FUND
Tax-Exempt Yield
3.0% 3.5% 4.0% 4.5% 5.0% 5.5%
Federal
Tax Bracket* Tax Equivalent Yield
15% 3.53% 4.12% 4.71% 5.29% 5.88% 6.47
28% 4.17 4.86 5.56 6.25 6.94 7.64
31% 4.35 5.07 5.80 6.52 7.25 7.97
36% 4.69 5.47 6.25 7.03 7.81 8.59
39.6% 4.97 5.79 6.62 7.45 8.28 9.11
OHIO INSURED TAX-FREE FUND
OHIO TAX-FREE MONEY FUND
Tax-Exempt Yield
Combined
Ohio and 3.0% 3.5% 4.0% 4.5% 5.0% 5.5%
Federal
Tax Bracket* Tax Equivalent Yield
18.788% 3.69% 4.31% 4.93% 5.54% 6.16% 6.77
31.745% 4.40 5.13 5.86 6.59 7.33 8.06
35.761% 4.67 5.45 6.23 7.01 7.78 8.56
40.800% 5.07 5.91 6.76 7.60 8.45 9.29
44.130% 5.37 6.26 7.16 8.05 8.95 9.84
CALIFORNIA TAX-FREE MONEY FUND
Tax-Exempt Yield
Combined
California and 3.0% 3.5% 4.0% 4.5% 5.0% 5.5%
Federal
Tax Bracket* Tax Equivalent Yield
20.100% 3.75% 4.38% 5.01% 5.63% 6.26% 6.88
34.696% 4.59 5.36 6.13 6.89 7.66 8.42
37.417% 4.79 5.59 6.39 7.19 7.99 8.79
41.952% 5.17 6.03 6.89 7.75 8.61 9.47
45.217% 5.48 6.39 7.30 8.21 9.13 10.04
*Tax Brackets Combined Combined
------------- Ohio and California
Federal Federal and Federal
Single Joint Tax Tax Tax
Return Return Bracket Bracket Bracket
------- ------ ------- ------- -------
Not over $26,250 Not Over $43,850 15% 18.788% 20.100%
$26,250-$63,550 $43,850-$105,950 28% 31.745% 34.696%
$63,550-$132,600 $105,950-$161,450 31% 35.761% 37.417%
$132,600-$288,350 $161,450-$288,350 36% 40.800% 41.952%
Over $288,350 Over $288,350 39.6% 44.130% 45.217%
<PAGE>
ANNUAL REPORT
-------------
The financial statements as of June 30, 2000 appear in the Trust's annual report
which is attached to this Statement of Additional Information.
Tax-Free Money Fund
California Tax-Free Money Fund
Ohio Tax-Free Money Fund
Florida Tax-Free Money Fund
Tax-Free Intermediate Term Fund
Ohio Insured Tax-Free Fund
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
================================================================================
OVERVIEW
The past year proved to be one of superlatives for the economy. Growth remained
impressive with the current expansion marking its ninth anniversary. Strong job
growth, rising incomes and a continuation of the bull market in stocks provided
the impetus for rising consumption. The housing market experienced record
growth, and with consumer confidence at historically high levels, retail sales
were robust. Commodity prices, most notably oil, and wages began to move higher
prompting concern that inflation would be on the rise. The combination of
accelerating economic growth and heightened inflation fears forced the Fed into
action. The Fed began tapping the brakes at the end of the second quarter of
1999, and over the course of the next twelve months raised the fed funds rate a
total of 1.75% bringing it to 6.50%.
Interest rates rose and the Treasury curve "flattened" in response to tighter
monetary policy. In February 2000 the Treasury announced that the issuance of
long-term Treasury debt would be reduced and that it would begin to buy back
Treasury debt further reducing outstanding supply. The combination of the Fed
raising interest rates and the Treasury buyback program caused an inversion of
the yield curve with short-term Treasuries yielding more than longer-term
issues. Strong demand for Treasuries caused other sectors of the bond market to
perform poorly as yield spreads in these sectors widened out relative to
Treasury securities. Municipals were negatively impacted as well and long term
municipal bonds were soon trading at yields nearly equal to comparable maturity
Treasury securities. Limited new issue supply and attractive yields, however,
caused investors to step up their demand for municipal bonds helping the
municipal sector to perform quite well during the first and second quarters of
2000.
TAX-FREE INTERMEDIATE TERM FUND
The Tax-Free Intermediate Term Fund seeks high current income exempt from
federal income tax, consistent with the protection of capital, by investing
primarily in high-grade municipal obligations maturing within twenty years or
less with a dollar-weighted average portfolio maturity under normal conditions
of between three and ten years. To the extent consistent with the Fund's primary
objective, capital appreciation is a secondary objective. For the fiscal year
ended June 30, 2000, the Fund's total returns (excluding the impact of
applicable sales loads) were 2.75% and 1.88% for Class A and Class C shares,
respectively. The Lehman Brothers 5-Year Municipal G.O. Bond Index returned
3.66% during the same period.
Our objective in managing the Tax-Free Intermediate Term Fund remains to
maximize the tax-free yield while minimizing share price volatility. In pursuing
this strategy we typically invest in premium bonds which we can often buy at
attractive prices compared to current coupon issues. Thus we can buy issues,
which provide us with better yield, and also cushion the Fund if interest rates
should increase. For the year ended June 30, 2000, the Fund outperformed its
Lipper peers, which were up 2.50%, and performed comparable to the Lehman
Brothers Index when the operating expenses of the Fund are taken into
consideration. During the second quarter of the year, strong investor demand for
intermediate bonds helped this sector outperform the longer-term sector. We used
strength in the municipal market during the period to sell lower rated issues
and reinvested proceeds into higher quality issues that we believe will perform
better as we move forward. The municipal market remains a very attractive
investment for individuals looking to diversify their portfolios and earn
tax-free income. The new issue supply in the market should continue to be lower
than what has been experienced in recent years, and this should help municipals
perform well relative to other bond market sectors.
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
================================================================================
OHIO INSURED TAX-FREE FUND
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 the
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, 2000, the Fund's total returns (excluding the
impact of applicable sales loads) were 2.60% and 1.75% for Class A and Class C
shares, respectively. The Lehman Brothers 15-Year Municipal G.O. Bond Index
returned 3.99% during the same period.
For the year ended June 30, 2000, the Ohio Tax-Free Insured Fund outperformed
its Lipper peer group, which was up 1.04%, by a significant margin and slightly
underperformed the Lehman Brothers 15-year municipal G.O. Bond Index after
factoring in the associated expenses of the Fund. Over the course of the fiscal
year we initiated several swaps in the portfolio to improve performance
characteristics. More specifically, we sold issues with shorter call features
and bought new issues with longer call protection. Additionally, we executed
several tax swaps. This involves selling and buying similar bonds so as to
realize a loss without materially changing the portfolio. The losses can then be
used to offset future potential gains allowing us to be more tax efficient. For
new purchases in the Fund, we will continue to focus on issues in the 20-year
maturity range offering call protection of at least ten years. We believe these
issues provide the best combination of yield and total return. The outlook for
the municipal market remains favorable. Limited new issue supply should continue
to help municipal bonds perform well relative to other bond market sectors, and
longer maturity municipals to trade at very attractive levels compared to
Treasuries.
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
================================================================================
COMPARISON OF THE CHANGE IN VALUE SINCE JUNE 30, 1990
OF A $10,000 INVESTMENT IN THE TAX-FREE INTERMEDIATE TERM FUND - CLASS A*
AND THE LEHMAN BROTHERS 5-YEAR MUNICIPAL G.O. BOND INDEX
[GRAPHIC OMITTED]
6/00
----
TAX-FREE INTERMEDIATE TERM FUND - CLASS A $16,386
LEHMAN BROTHERS 5-YEAR MUNICIPAL G.O. BOND INDEX $18,198
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 -2.13% 3.21% 5.06% 5.71%
CLASS C 0.61% 3.25% -- 2.88%
--------------------------------------------------------
* 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.
COMPARISON OF THE CHANGE IN VALUE SINCE JUNE 30, 1990
OF A $10,000 INVESTMENT IN THE OHIO INSURED TAX-FREE FUND - CLASS A*
AND THE LEHMAN BROTHERS 15-YEAR MUNICIPAL G.O. BOND INDEX
[GRAPHIC OMITTED]
6/00
----
OHIO INSURED TAX-FREE FUND - CLASS A $17,423
LEHMAN BROTHERS 15-YEAR MUNICIPAL G.O. BOND INDEX $20,782
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 -2.27% 3.73% 5.71% 6.88%
Class C 0.48% 3.74% -- 3.25%
--------------------------------------------------------
* 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>
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2000
================================================================================
California
Tax-Free Tax-Free
(000's) Money Fund Money Fund
--------------------------------------------------------------------------------
ASSETS
Investment securities:
At acquisition cost .................... $ 25,151 $ 66,489
============================
At amortized cost ...................... $ 25,132 $ 66,411
============================
At market value (Note 2) ............... $ 25,132 $ 66,411
Cash ....................................... 23 308
Interest receivable ........................ 252 567
Other assets ............................... 10 2
----------------------------
TOTAL ASSETS ............................... 25,417 67,288
----------------------------
LIABILITIES
Dividends payable .......................... 1 3
Payable to affiliates (Note 4) ............. 14 50
Payable for securities purchased ........... 200 4,315
Other accrued expenses and liabilities ..... 8 20
----------------------------
TOTAL LIABILITIES .......................... 223 4,388
----------------------------
NET ASSETS ................................. $ 25,194 $ 62,900
============================
NET ASSETS CONSIST OF:
Paid-in capital ............................ $ 25,197 $ 62,900
Accumulated net realized losses from security
transactions ............................. (3) --
----------------------------
NET ASSETS ................................. $ 25,194 $ 62,900
============================
Shares of beneficial interest outstanding
(unlimited number of shares authorized,
no par value) (Note 5) ................... 25,208 62,900
============================
Net asset value, offering price and redemption
price per share (Note 2) ................. $ 1.00 $ 1.00
============================
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2000
================================================================================
OHIO FLORIDA
TAX-FREE TAX-FREE
(000'S) MONEY FUND MONEY FUND
--------------------------------------------------------------------------------
ASSETS
Investment securities:
At acquisition cost .................... $ 345,254 $ 18,109
============================
At amortized cost ...................... $ 345,159 $ 18,077
============================
At market value (Note 2) ............... $ 345,159 $ 18,077
Cash ....................................... -- 72
Interest receivable ........................ 3,567 165
Other assets ............................... 12 3
----------------------------
TOTAL ASSETS ............................... 348,738 18,317
----------------------------
LIABILITIES
Bank overdraft ............................. 590 --
Dividends payable .......................... 469 54
Payable to affiliates (Note 4) ............. 192 9
Other accrued expenses and liabilities ..... 37 10
----------------------------
TOTAL LIABILITIES .......................... 1,288 73
----------------------------
NET ASSETS ................................. $ 347,450 $ 18,244
============================
NET ASSETS CONSIST OF:
Paid-in capital ............................ $ 347,452 $ 18,257
Accumulated net realized losses from security
transactions ............................. (2) (13)
----------------------------
NET ASSETS ................................. $ 347,450 $ 18,244
============================
PRICING OF RETAIL SHARES
Net assets applicable to Retail shares ..... $ 214,561 $ 18,244
============================
Shares of beneficial interest outstanding
(unlimited number of shares authorized,
no par value) (Note 5) ................... 214,557 18,257
============================
Net asset value, offering price and redemption
price per share (Note 2) ................. $ 1.00 $ 1.00
============================
PRICING OF INSTITUTIONAL SHARES
Net assets applicable to Institutional shares $ 132,889 $ --
============================
Shares of beneficial interest outstanding
(unlimited number of shares authorized,
no par value) (Note 5) ................... 132,895 --
============================
Net asset value, offering price and redemption
price per share (Note 2) ................. $ 1.00 $ --
============================
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2000
================================================================================
TAX-FREE OHIO INSURED
INTERMEDIATE TAX-FREE
(000'S) TERM FUND FUND
--------------------------------------------------------------------------------
ASSETS
Investment securities:
At acquisition cost .................... $ 39,584 $ 62,488
============================
At amortized cost ...................... $ 39,401 $ 62,405
============================
At market value (Note 2) ............... $ 39,571 $ 63,628
Cash ....................................... 100 758
Interest receivable ........................ 628 590
Receivable for capital shares sold ......... 25 504
Other assets ............................... 19 12
----------------------------
TOTAL ASSETS ............................... 40,343 65,492
----------------------------
LIABILITIES
Dividends payable .......................... 33 80
Payable for capital shares redeemed ........ 79 1,218
Payable for securities purchased ........... -- 957
Payable to affiliates (Note 4) ............. 26 35
Other accrued expenses and liabilities ..... 14 17
----------------------------
TOTAL LIABILITIES .......................... 152 2,307
----------------------------
NET ASSETS ................................. $ 40,191 $ 63,185
============================
NET ASSETS CONSIST OF:
Paid-in capital ............................ $ 40,861 $ 62,286
Accumulated net realized losses from security
transactions ............................. (840) (324)
Net unrealized appreciation on investments . 170 1,223
----------------------------
NET ASSETS ................................. $ 40,191 $ 63,185
============================
PRICING OF CLASS A SHARES
Net assets applicable to Class A shares .... $ 36,817 $ 59,600
============================
Shares of beneficial interest outstanding
(unlimited number of shares authorized, no
par value) (Note 5) ...................... 3,446 5,207
============================
Net asset value and redemption price per
share (Note 2) ........................... $ 10.68 $ 11.45
============================
Maximum offering price per share (Note 2) .. $ 11.21 $ 12.02
============================
PRICING OF CLASS C SHARES
Net assets applicable to Class C shares .... $ 3,374 $ 3,585
============================
Shares of beneficial interest outstanding
(unlimited number of shares authorized, no
par value) (Note 5) ...................... 316 313
============================
Net asset value and redemption price per
share (Note 2) ........................... $ 10.68 $ 11.44
============================
Maximum offering price per share (Note 2) .. $ 10.82 $ 11.58
============================
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2000
================================================================================
CALIFORNIA
TAX-FREE TAX-FREE
(000'S) MONEY FUND MONEY FUND
--------------------------------------------------------------------------------
INVESTMENT INCOME
Interest income ............................ $ 1,079 $ 2,209
----------------------------
EXPENSES
Investment advisory fees (Note 4) .......... 134 317
Accounting services fees (Note 4) .......... 30 36
Transfer agent fees (Note 4) ............... 30 27
Distribution expenses (Note 4) ............. 2 34
Custodian fees ............................. 12 19
Postage and supplies ....................... 17 6
Professional fees .......................... 9 11
Registration fees .......................... 14 6
Trustees' fees and expenses ................ 8 9
Reports to shareholders .................... 5 3
Pricing expenses ........................... 2 5
Insurance expense .......................... 1 4
Other expenses ............................. 2 1
----------------------------
TOTAL EXPENSES ............................. 266 478
Fees waived by the Adviser (Note 4) ........ (28) --
----------------------------
NET EXPENSES ............................... 238 478
----------------------------
NET INVESTMENT INCOME ...................... 841 1,731
----------------------------
NET REALIZED GAINS FROM SECURITY TRANSACTIONS -- 13
----------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS . $ 841 $ 1,744
============================
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2000
================================================================================
OHIO FLORIDA
TAX-FREE TAX-FREE
(000'S) MONEY FUND MONEY FUND
--------------------------------------------------------------------------------
INVESTMENT INCOME
Interest income ............................ $ 14,723 $ 968
----------------------------
EXPENSES
Investment advisory fees (Note 4) .......... 1,689 133
Distribution expenses, Retail class (Note 4) 510 16
Accounting services fees (Note 4) .......... 73 41
Transfer agent fees, Retail class (Note 4) . 72 12
Transfer agent fees, Institutional class (Note 4) 12 10
Custodian fees (Note 4) .................... 65 13
Insurance expense .......................... 43 4
Postage and supplies ....................... 39 2
Professional fees .......................... 28 8
Registration fees .......................... 24 1
Trustees' fees and expenses ................ 8 8
Pricing expenses ........................... 11 3
Reports to shareholders .................... 5 1
Other expenses ............................. 13 3
----------------------------
TOTAL EXPENSES ............................. 2,592 255
Fees waived by the Adviser (Note 4) ........ (80) (82)
----------------------------
NET EXPENSES ............................... 2,512 173
NET INVESTMENT INCOME ...................... 12,211 795
----------------------------
NET REALIZED LOSSES FROM SECURITY TRANSACTIONS (12) (2)
----------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS . $ 12,199 $ 793
============================
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2000
================================================================================
TAX-FREE OHIO INSURED
INTERMEDIATE TAX-FREE
(000'S) TERM FUND FUND
--------------------------------------------------------------------------------
INVESTMENT INCOME
Interest income ............................ $ 2,571 $ 3,672
----------------------------
EXPENSES
Investment advisory fees (Note 4) .......... 236 315
Transfer agent fees, Class A (Note 4) ...... 48 30
Transfer agent fees, Class C (Note 4) ...... 12 12
Accounting services fees (Note 4) .......... 45 48
Distribution expenses, Class A (Note 4) .... 31 6
Distribution expenses, Class C (Note 4) .... 16 18
Postage and supplies ....................... 33 17
Registration fees, Common .................. 5 6
Registration fees, Class A ................. 10 4
Registration fees, Class C ................. 9 2
Pricing expenses ........................... 12 13
Custodian fees ............................. 10 13
Professional fees .......................... 11 11
Trustees' fees and expenses ................ 8 8
Reports to shareholders .................... 9 6
Insurance expense .......................... 3 5
Other expenses ............................. 3 5
TOTAL EXPENSES ............................. 501 519
Fees waived by the Adviser (Note 4) ........ (5) (14)
----------------------------
NET INVESTMENT INCOME ...................... 2,075 3,167
----------------------------
REALIZED AND UNREALIZED LOSSES ON INVESTMENTS
Net realized losses from security transactions (478) (250)
Net change in unrealized appreciation/depreciation
on investments ........................... (481) (1,307)
----------------------------
NET REALIZED AND UNREALIZED LOSSES ON INVESTMENTS (959) (1,557)
----------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS . $ 1,116 $ 1,610
============================
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
==============================================================================================================
CALIFORNIA
TAX-FREE TAX-FREE
MONEY FUND MONEY FUND
----------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
(000'S) 2000 1999 2000 1999
--------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C> <C> <C>
Net investment income ...................................... $ 841 $ 783 $ 1,731 $ 1,401
Net realized gains (losses) from security transactions ..... -- (2) 13 (12)
----------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ................. 841 781 1,744 1,389
----------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ................................. (847) (777) (1,731) (1,401)
----------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5)
Proceeds from shares sold .............................. 48,617 48,307 333,265 196,122
Reinvested distributions ............................... 839 751 1,665 1,332
Payments for shares redeemed ........................... (49,490) (61,211) (320,010) (190,488)
----------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS ..................................... (34) (12,153) 14,920 6,966
----------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS .................... (40) (12,149) 14,933 6,954
NET ASSETS
Beginning of year .......................................... 25,234 37,383 47,967 41,013
----------------------------------------------
End of year ................................................ $ 25,194 $ 25,234 $ 62,900 $ 47,967
==============================================
UNDISTRIBUTED NET INVESTMENT INCOME ........................ $ -- $ 6 $ -- $ --
==============================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
==============================================================================================================
OHIO FLORIDA
TAX-FREE TAX-FREE
MONEY FUND MONEY FUND
----------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
(000'S) 2000 1999 2000 1999
--------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C> <C> <C>
Net investment income ...................................... $ 12,211 $ 10,174 $ 795 $ 1,596
Net realized losses from security transactions ............. (12) (3) (2) (11)
----------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ................. 12,199 10,171 793 1,585
----------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income, Retail ......................... (6,796) (5,927) (521) (501)
From net investment income, Institutional .................. (5,415) (4,247) (274) (1,095)
From net realized gains, Retail ............................ -- -- -- (6)
From net realized gains, Institutional ..................... -- -- -- (16)
----------------------------------------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS
TO SHAREHOLDERS .......................................... (12,211) (10,174) (795) (1,618)
----------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5)
RETAIL
Proceeds from shares sold .................................. 392,668 455,007 32,945 29,958
Reinvested distributions ................................... 6,577 5,786 448 495
Payments for shares redeemed ............................... (399,368) (451,416) (36,511) (23,442)
----------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
RETAIL SHARE TRANSACTIONS ................................ (123) 9,377 (3,118) 7,011
INSTITUTIONAL
Proceeds from shares sold .................................. 322,144 459,806 45,795 67,739
Reinvested distributions ................................... 472 18 52 427
Payments for shares redeemed ............................... (365,828) (398,983) (61,138) (102,016)
----------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
INSTITUTIONAL SHARE TRANSACTIONS ......................... (43,212) 60,841 (15,291) (33,850)
----------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS .................... (43,347) 70,215 (18,411) (26,872)
NET ASSETS
Beginning of year .......................................... 390,797 320,582 36,655 63,527
----------------------------------------------
End of year ................................................ $347,450 $390,797 $ 18,244 $ 36,655
==============================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
==============================================================================================================
TAX-FREE OHIO INSURED
INTERMEDIATE TAX-FREE
TERM FUND FUND
----------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
(000'S) 2000 1999 2000 1999
--------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C> <C> <C>
Net investment income ...................................... $ 2,075 $ 2,320 $ 3,167 $ 3,294
Net realized gains (losses) from security transactions ..... (478) 634 (250) 353
Net change in unrealized appreciation/depreciation
on investments ........................................... (481) (1,787) (1,307) (2,151)
----------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ................. 1,116 1,167 1,610 1,496
----------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income, Class A ........................ (1,930) (2,149) (2,986) (3,095)
From net investment income, Class C ........................ (145) (171) (181) (199)
From net realized gains, Class A ........................... -- -- -- (1,554)
From net realized gains, Class C ........................... -- -- -- (115)
----------------------------------------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS
TO SHAREHOLDERS .......................................... (2,075) (2,320) (3,167) (4,963)
----------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5)
CLASS A
Proceeds from shares sold .................................. 10,950 13,620 66,103 142,439
Reinvested distributions ................................... 1,548 1,723 2,115 3,500
Payments for shares redeemed ............................... (22,700) (19,292) (69,927) (149,279)
----------------------------------------------
NET DECREASE IN NET ASSETS FROM CLASS A
SHARE TRANSACTIONS ....................................... (10,202) (3,949) (1,709) (3,340)
----------------------------------------------
CLASS C
Proceeds from shares sold .................................. 899 2,454 138 550
Reinvested distributions ................................... 131 158 152 268
Payments for shares redeemed ............................... (2,211) (2,620) (1,316) (1,038)
----------------------------------------------
NET DECREASE IN NET ASSETS FROM CLASS C
SHARE TRANSACTIONS ....................................... (1,181) (8) (1,026) (220)
----------------------------------------------
TOTAL DECREASE IN NET ASSETS ............................... (12,342) (5,110) (4,292) (7,027)
NET ASSETS
Beginning of year .......................................... 52,533 57,643 67,477 74,504
----------------------------------------------
End of year ................................................ $ 40,191 $ 52,533 $ 63,185 $ 67,477
==============================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY FUND
FINANCIAL HIGHLIGHTS
=======================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
-------------------------------------------------------------------------------------------------------
Year Ended June 30,
---------------------------------------------------------
2000 1999 1998 1997 1996
-------------------------------------------------------------------------------------------------------
<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 .................... 0.032 0.027 0.030 0.029 0.031
---------------------------------------------------------
Dividends from net investment income ..... (0.032) (0.027) (0.030) (0.029) (0.031)
---------------------------------------------------------
Net asset value at end of year ........... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
=========================================================
Total return ............................. 3.22% 2.75% 3.03% 2.89% 3.15%
=========================================================
Net assets at end of year (000's) ........ $ 25,194 $ 25,234 $ 37,383 $ 30,126 $ 25,342
=========================================================
Ratio of net expenses to
average net assets(A) .................. 0.89% 0.89% 0.92% 0.99% 0.99%
Ratio of net investment income to
average net assets ..................... 3.15% 2.74% 2.98% 2.85% 3.09%
</TABLE>
(A) Absent fee waivers by the Adviser, the ratio of expenses to average net
assets would have been 1.00% and 0.95% for the years ended June 30, 2000
and 1999, respectively (Note 4).
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE MONEY FUND
FINANCIAL HIGHLIGHTS
==========================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
----------------------------------------------------------------------------------------------------------
Year Ended June 30,
------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------
<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 .................... 0.027 0.025 0.029 0.028 0.029
------------------------------------------------------------
Dividends from net investment income ..... (0.027) (0.025) (0.029) (0.028) (0.029)
------------------------------------------------------------
Net asset value at end of year ........... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
============================================================
Total return ............................. 2.75% 2.56% 2.94% 2.81% 2.95%
============================================================
Net assets at end of year (000's) ........ $ 62,900 $ 47,967 $ 41,013 $ 32,186 $ 36,122
============================================================
Ratio of net expenses to
average net assets ..................... 0.75% 0.75% 0.77% 0.80% 0.80%(A)
Ratio of net investment income to
average net assets ..................... 2.72% 2.52% 2.89% 2.76% 2.88%
</TABLE>
(A) Absent fee waivers and/or expense reimbursements by the Adviser, the ratio
of expenses to average net assets would have been 0.82% for the year ended
June 30, 1996.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
OHIO TAX-FREE MONEY FUND - RETAIL
FINANCIAL HIGHLIGHTS
==========================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
----------------------------------------------------------------------------------------------------------
Year Ended June 30,
------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------
<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 0.027 0.030 0.030 0.031
------------------------------------------------------------
Dividends from net investment income ..... (0.031) (0.027) (0.030) (0.030) (0.031)
------------------------------------------------------------
Net asset value at end of year ........... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
============================================================
Total return ............................. 3.09% 2.73% 3.07% 2.99% 3.14%
============================================================
Net assets at end of year (000's) ........ $214,561 $214,691 $205,316 $166,719 $240,323
============================================================
Ratio of net expenses to
average net assets(A) .................. 0.75% 0.75% 0.75% 0.75% 0.75%
Ratio of net investment income to
average net assets ..................... 3.04% 2.68% 3.02% 2.93% 3.09%
</TABLE>
(A) Absent fee waivers and/or expense reimbursements by the Adviser, the ratio
of expenses to average net assets would have been 0.77%, 0.77%, 0.76% and
0.77% for the years ended June 30, 2000, 1999, 1998 and 1997, respectively
(Note 4).
<TABLE>
<CAPTION>
OHIO TAX-FREE MONEY FUND - INSTITUTIONAL
FINANCIAL HIGHLIGHTS
==============================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
----------------------------------------------------------------------------------------------
PERIOD
YEAR ENDED JUNE 30, ENDED
---------------------------------- JUNE 30,
2000 1999 1998 1997(A)
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period ... $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------------------------------------------
Net investment income .................... 0.033 0.029 0.033 0.016
------------------------------------------------
Dividends from net investment income ..... (0.033) (0.029) (0.033) (0.016)
------------------------------------------------
Net asset value at end of period ......... $ 1.000 $ 1.000 $ 1.000 $ 1.000
================================================
Total return ............................. 3.35% 2.98% 3.33% 3.31%(C)
================================================
Net assets at end of period (000's) ...... $132,889 $176,106 $115,266 $ 97,589
================================================
Ratio of net expenses to average net
assets(B) .............................. 0.50% 0.50% 0.50% 0.50%(C)
Ratio of net investment income to average
net assets ............................. 3.25% 2.93% 3.27% 3.28%(C)
</TABLE>
(A) Represents the period from the initial public offering of Institutional
shares (January 7, 1997) through June 30, 1997.
(B) Absent fee waivers and/or expense reimbursements by the Adviser, the ratio
of expenses to average net assets would have been 0.52%, 0.51%, 0.52% and
0.56%(C) for the periods ended June 30, 2000, 1999, 1998 and 1997,
respectively (Note 4).
(C) Annualized.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
FLORIDA TAX-FREE MONEY FUND - RETAIL
FINANCIAL HIGHLIGHTS
==========================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
----------------------------------------------------------------------------------------------------------
Year Ended June 30,
------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ..... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------------------------------------------------------
Net investment income .................... 0.030 0.026 0.030 0.029 0.032
------------------------------------------------------------
Dividends from net investment income ..... (0.030) (0.026) (0.030) (0.029) (0.032)
------------------------------------------------------------
Net asset value at end of year ........... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
============================================================
Total return ............................. 3.05% 2.68% 3.03% 2.90% 3.29%
============================================================
Net assets at end of year (000's) ........ $ 18,244 $ 21,371 $ 14,368 $ 22,434 $ 28,906
============================================================
Ratio of net expenses to
average net assets(A) .................. 0.73% 0.75% 0.75% 0.75% 0.61%
Ratio of net investment income to
average net assets ..................... 2.98% 2.58% 2.98% 2.85% 3.24%
</TABLE>
(A) Absent fee waivers and/or expense reimbursements by the Adviser, the ratio
of expenses to average net assets would have been 1.00%, 0.98%, 0.95%,
0.94% and 0.80% for the years ended June 30, 2000, 1999, 1998, 1997 and
1996, respectively (Note 4).
See accompanying notes to financial statements.
<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,
------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ..... $ 10.87 $ 11.12 $ 11.01 $ 10.85 $ 10.86
------------------------------------------------------------
Income from investment operations:
Net investment income .................. 0.48 0.48 0.50 0.50 0.50
Net realized and unrealized gains (losses)
on investments ....................... (0.19) (0.25) 0.11 0.16 (0.01)
------------------------------------------------------------
Total from investment operations ......... 0.29 0.23 0.61 0.66 0.49
------------------------------------------------------------
Dividends from net investment income ..... (0.48) (0.48) (0.50) (0.50) (0.50)
------------------------------------------------------------
Net asset value at end of year ........... $ 10.68 $ 10.87 $ 11.12 $ 11.01 $ 10.85
============================================================
Total return(A) .......................... 2.75% 2.07% 5.63% 6.19% 4.51%
============================================================
Net assets at end of year (000's) ........ $ 36,817 $ 47,899 $ 52,896 $ 58,485 $ 67,675
============================================================
Ratio of net expenses to average net assets 0.99%(B) 0.99% 0.99% 0.99% 0.99%
Ratio of net investment income to
average net assets ..................... 4.47% 4.33% 4.50% 4.55% 4.52%
Portfolio turnover rate .................. 41% 51% 36% 30% 37%
</TABLE>
(A) Total returns shown exclude 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 1.00% for the year ended
June 30, 2000.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE TERM FUND - CLASS C
FINANCIAL HIGHLIGHTS
==========================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
----------------------------------------------------------------------------------------------------------
Year Ended June 30,
------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ..... $ 10.88 $ 11.12 $ 11.01 $ 10.85 $ 10.86
------------------------------------------------------------
Income from investment operations:
Net investment income .................. 0.40 0.40 0.42 0.43 0.44
Net realized and unrealized gains (losses)
on investments ....................... (0.20) (0.24) 0.11 0.16 (0.01)
------------------------------------------------------------
Total from investment operations ......... 0.20 0.16 0.53 0.59 0.43
------------------------------------------------------------
Dividends from net investment income ..... (0.40) (0.40) (0.42) (0.43) (0.44)
------------------------------------------------------------
Net asset value at end of year ........... $ 10.68 $ 10.88 $ 11.12 $ 11.01 $ 10.85
============================================================
Total return(A) .......................... 1.88% 1.40% 4.85% 5.49% 4.00%
============================================================
Net assets at end of year (000's) ........ $ 3,374 $ 4,634 $ 4,747 $ 5,161 $ 5,239
============================================================
Ratio of net expenses to average net assets 1.74%(B) 1.74% 1.74% 1.65% 1.49%
Ratio of net investment income to
average net assets ..................... 3.72% 3.58% 3.75% 3.89% 4.02%
Portfolio turnover rate .................. 41% 51% 36% 30% 37%
</TABLE>
(A) Total returns shown exclude 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 1.76% for the year ended
June 30, 2000.
See accompanying notes to financial statements.
<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,
------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ..... $ 11.74 $ 12.37 $ 12.22 $ 11.97 $ 11.99
------------------------------------------------------------
Income from investment operations:
Net investment income .................. 0.58 0.58 0.61 0.61 0.62
Net realized and unrealized gains (losses)
on investments ....................... (0.29) (0.34) 0.23 0.25 (0.02)
------------------------------------------------------------
Total from investment operations ......... 0.29 0.24 0.84 0.86 0.60
------------------------------------------------------------
Less distributions:
Dividends from net investment income ... (0.58) (0.58) (0.61) (0.61) (0.62)
Distributions from net realized gains .. -- (0.29) (0.08) -- --
------------------------------------------------------------
Total distributions ...................... (0.58) (0.87) (0.69) (0.61) (0.62)
------------------------------------------------------------
Net asset value at end of year ........... $ 11.45 $ 11.74 $ 12.37 $ 12.22 $ 11.97
============================================================
Total return(A) .......................... 2.60% 1.81% 7.03% 7.36% 5.05%
============================================================
Net assets at end of year (000's) ........ $ 59,600 $ 62,737 $ 69,289 $ 70,816 $ 75,938
============================================================
Ratio of net expenses to
average net assets ..................... 0.75%(B) 0.75% 0.75% 0.75% 0.75%
Ratio of net investment income to
average net assets ..................... 5.08% 4.72% 4.95% 5.05% 5.12%
Portfolio turnover rate .................. 66% 26% 41% 33% 46%
</TABLE>
(A) Total returns shown exclude 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% for the year ended
June 30, 2000.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
OHIO INSURED TAX-FREE FUND - CLASS C
FINANCIAL HIGHLIGHTS
==========================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
----------------------------------------------------------------------------------------------------------
Year Ended June 30,
------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ..... $ 11.74 $ 12.37 $ 12.22 $ 11.97 $ 12.00
------------------------------------------------------------
Income from investment operations:
Net investment income .................. 0.49 0.49 0.52 0.53 0.56
Net realized and unrealized gains
(losses) on investments .............. (0.30) (0.34) 0.23 0.25 (0.03)
------------------------------------------------------------
Total from investment operations ......... 0.19 0.15 0.75 0.78 0.53
------------------------------------------------------------
Less distributions:
Dividends from net investment income ... (0.49) (0.49) (0.52) (0.53) (0.56)
Distributions from net realized gains .. -- (0.29) (0.08) -- --
------------------------------------------------------------
Total distributions ...................... (0.49) (0.78) (0.60) (0.53) (0.56)
------------------------------------------------------------
Net asset value at end of year ........... $ 11.44 $ 11.74 $ 12.37 $ 12.22 $ 11.97
============================================================
Total return(A) .......................... 1.75% 1.05% 6.24% 6.65% 4.44%
============================================================
Net assets at end of year (000's) ........ $ 3,585 $ 4,740 $ 5,215 $ 4,639 $ 3,972
============================================================
Ratio of net expenses to
average net assets(B) .................. 1.50% 1.50% 1.50% 1.42% 1.25%
Ratio of net investment income to
average net assets ..................... 4.42% 3.97% 4.20% 4.37% 4.62%
Portfolio turnover rate .................. 66% 26% 41% 33% 46%
</TABLE>
(A) Total returns shown exclude 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 1.56% for the year ended
June 30, 2000.
(C) Annualized.
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
================================================================================
1. ORGANIZATION
The Tax-Free Money Fund, the California Tax-Free Money Fund, the Ohio Tax-Free
Money Fund, the Florida Tax-Free Money Fund, the Tax-Free Intermediate Term Fund
and the Ohio Insured Tax-Free Fund (collectively, the Funds) are each a separate
series of shares of Touchstone Tax-Free Trust (the Trust). The Trust is
registered under the Investment Company Act of 1940 (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 each Fund.
The Tax-Free Money Fund seeks the highest level of interest income exempt from
federal income tax, consistent with the protection of capital, by investing
primarily in high-quality, short-term municipal obligations.
The California Tax-Free Money Fund seeks the highest level of current 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 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 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 the 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 the
protection of capital. The Fund invests primarily in high 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 Ohio Tax-Free Money Fund offers two classes of shares: Retail shares (sold
subject to a distribution fee of up to 0.25% of average daily net assets of the
Fund) and 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 will cause Retail shares to have a
higher expense ratio and to pay lower dividends than those related to
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 checkwriting and automatic investment and
redemption plans.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Continued)
================================================================================
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 4.75% and a distribution fee of up to 0.25% of average daily net
assets of each Fund) and Class C shares (sold subject to a maximum contingent
deferred sales load of 1.25% for a one-year period and a distribution fee of up
to 1% of average daily net assets of each Fund). 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 will cause Class C shares to have a higher
expense ratio and to pay lower dividends than those related to 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
(Note 7).
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Trust's significant accounting policies:
Security valuation -- Tax-Free Money Fund, California Tax-Free Money Fund, Ohio
Tax-Free Money Fund and Florida Tax-Free Money Fund securities are valued on an
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. Tax-Free
Intermediate Term Fund and Ohio Insured Tax-Free Fund securities are valued at
market using 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 Tax-Free Money Fund, the
California Tax-Free Money Fund and the Florida Tax-Free Money Fund is calculated
daily by dividing the total value of a Fund's assets, less liabilities, by its
number of shares outstanding. The net asset value per share of each class of
shares of the Ohio Tax-Free Money Fund, the Tax-Free Intermediate Term Fund and
the Ohio Insured Tax-Free Fund is also calculated daily 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 offering price per share of the Tax-Free Money Fund, the California Tax-Free
Money Fund, the Ohio Tax-Free Money Fund and the Florida Tax-Free Money Fund is
equal to the net asset value per share. The maximum offering price of Class A
shares of the Tax-Free Intermediate Term Fund and the Ohio Insured Tax-Free Fund
is equal to the net asset value per share plus a sales load equal to 4.99% of
the net asset value (or 4.75% of the offering price). The offering price of
Class C shares of each Fund is equal to the net asset value per share plus a
sales load equal to 1.27% of the net asset value (or 1.25% of the offering
price) (Note 7).
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Continued)
================================================================================
The redemption price per share of each Fund, including each class of shares with
respect to the Ohio Tax-Free Money Fund, 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 the Tax-Free Intermediate Term Fund and the Ohio
Insured Tax-Free 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.
Distributions to shareholders -- Dividends 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 determined on a specific identification basis.
When-issued securities -- The Funds may purchase securities with delivery or
payments to occur at a later date. At the time the Funds enter into a commitment
to purchase a security, the transaction is recorded and the value of the
security is reflected in the net asset value. The value of the security may vary
with market fluctuations. No interest accrues to the Fund until payment takes
place. At the time the Fund enters into this type of transaction, it is required
to segregate cash or other liquid assets equal to the value of the securities
purchased. At June 30, 2000, the market value of securities segregated for these
types of transactions for the Tax-Free Intermediate Term Fund was $1,005,690 and
$1,050,680 for the Ohio Insured Tax-Free Fund.
Allocations between classes -- Investment income earned by the Ohio 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. 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 income 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 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>
NOTES TO FINANCIAL STATEMENTS
(Continued)
================================================================================
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, 2000:
--------------------------------------------------------------------------------
TAX-FREE OHIO INSURED
INTERMEDIATE TAX-FREE
(000'S) TERM FUND FUND
--------------------------------------------------------------------------------
Gross unrealized appreciation .................... $ 594 $1,581
Gross unrealized depreciation .................... (424) (358)
-----------------------
Net unrealized appreciation ...................... $ 170 $1,223
=======================
--------------------------------------------------------------------------------
The tax basis of portfolio investments for each Fund is equal to the amortized
cost as shown on the Statements of Assets and Liabilities.
As of June 30, 2000, the Funds had the following capital loss carryforwards for
federal income tax purposes. These capital loss carryforwards may be utilized in
future years to offset net realized capital gains prior to distribution to
shareholders.
--------------------------------------------------------------------------------
EXPIRES
FUND AMOUNT JUNE 30
--------------------------------------------------------------------------------
Tax-Free Money Fund .............................. $ 409 2003
564 2004
2,865 2008
California Tax-Free Money Fund ................... $ 447 2007
Ohio Tax-Free Money Fund ......................... $ 90 2004
2,952 2008
Florida Tax-Free Money Fund ...................... $ 4,527 2007
6,777 2008
Tax-Free Intermediate Term Fund .................. $313,244 2004
Ohio Insured Tax-Free Fund ....................... $ 35,418 2008
--------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) were as follows for
the year ended June 30, 2000:
--------------------------------------------------------------------------------
TAX-FREE OHIO INSURED
INTERMEDIATE TAX-FREE
(000'S) TERM FUND FUND
--------------------------------------------------------------------------------
Purchases of investment securities ............... $18,236 $41,760
Proceeds from sales and maturities of
investment securities .......................... $28,705 $39,561
--------------------------------------------------------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Continued)
================================================================================
4. TRANSACTIONS WITH AFFILIATES
The President and certain other officers of the Trust are also officers of
Touchstone Advisers, Inc. (the Adviser), the Trust's investment adviser,
Touchstone Securities, Inc. (the Underwriter), the Trust's principal
underwriter, and Integrated Fund Services, Inc. (IFS), the Trust's transfer
agent, shareholder service agent and accounting services agent. The Adviser, the
Underwriter and IFS are each wholly-owned indirect subsidiaries of the Western
and Southern Life Insurance Companies.
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 million, 0.45% of such net
assets from $100 million to $200 million, 0.4% of such net assets from $200
million to $300 million and 0.375% of such net assets in excess of $300 million.
In order to voluntarily reduce operating expenses during the year ended June 30,
2000, the Adviser waived investment advisory fees of $27,592 for the Tax-Free
Money Fund, $80,268 for the Ohio Tax-Free Money Fund, $5,375 for the Tax-Free
Intermediate Fund and $13,994 for the Ohio Insured Tax-Free Fund. The Adviser
waived $65,561 of investment advisory fees and $16,937 of other operating
expenses for the Florida Tax-Free Money Fund for the year ended June 30, 2000.
TRANSFER AGENT AGREEMENT
Under the terms of the Transfer, Dividend Disbursing, Shareholder Service and
Plan Agency Agreement between the Trust and IFS, IFS maintains the records for
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, IFS receives a monthly fee at an annual
rate of $25 per shareholder account from each of the Tax-Free Money Fund, the
California Tax-Free Money Fund, the Ohio Tax-Free Money Fund and the Florida
Tax-Free Money Fund and $21 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, as
applicable. In addition, each Fund pays IFS 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 IFS,
IFS calculates the daily net asset value per share and maintains the financial
books and records of each Fund. For these services, IFS receives a monthly fee,
based on current net assets, of $2,500 per month from the Tax-Free Money Fund,
$3,000 per month from the California Tax-Free Money Fund, $6,000 per month from
the Ohio Tax-Free Money Fund, $3,500 per month from the Florida Tax-Free Money
Fund, and $4,000 per month from each of the Tax-Free Intermediate Term Fund and
the Ohio Insured Tax-Free Fund. In addition, each Fund is subject to an
additional charge of 0.001% of its respective average daily net assets in excess
of $300 million, and each Fund pays certain out-of-pocket expenses incurred by
IFS in obtaining valuations of such Fund's portfolio securities.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Continued)
================================================================================
UNDERWRITING AGREEMENT
The Underwriter 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 Underwriter, the Underwriter
earned $2,231 and $4,477 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, 2000. In addition, the
Underwriter collected $4,443 and $565 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 or the Underwriter
for expenses related to the distribution and promotion of shares. The annual
limitation for payment of such expenses under the Class A Plan is 0.25% 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
Florida Tax-Free Money Fund, was a significant shareholder of record of the Ohio
Tax-Free Money Fund as of June 30, 2000. 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 National Bank, N.A. (Huntington), which serves as the
custodian for the Florida Tax-Free Money Fund, was a significant shareholder of
record of such Fund as of June 30, 2000. Under the terms of its Custodian
Agreement, Huntington receives from the Fund an asset-based fee.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Continued)
================================================================================
5. CAPITAL SHARE TRANSACTIONS
Capital share transactions for the Tax-Free Money Fund, the California Tax-Free
Money Fund, the Ohio Tax-Free Money Fund and the Florida Tax-Free Money Fund are
identical to the dollar value of those transactions as shown in the Statements
of Changes in Net Assets. Proceeds and payments on capital shares as shown in
the Statements of Changes in Net Assets for the Tax-Free Intermediate Term Fund
and the Ohio Insured Tax-Free Fund are the result of the following capital share
transactions:
<TABLE>
<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,
(000'S) 2000 1999 2000 1999
---------------------------------------------------------------------------------------------
CLASS A
<S> <C> <C> <C> <C>
Shares sold ................................ 1,024 1,222 5,795 11,637
Shares reinvested .......................... 145 154 185 287
Shares redeemed ............................ (2,128) (1,729) (6,116) (12,181)
-------------------------------------------
Net decrease in shares outstanding ......... (959) (353) (136) (257)
Shares outstanding, beginning of year ...... 4,405 4,758 5,343 5,600
-------------------------------------------
Shares outstanding, end of year ............ 3,446 4,405 5,207 5,343
===========================================
CLASS C
Shares sold ................................ 84 219 12 45
Shares reinvested .......................... 12 14 13 22
Shares redeemed ............................ (206) (234) (116) (85)
-------------------------------------------
Net decrease in shares outstanding ......... (110) (1) (91) (18)
Shares outstanding, beginning of year ...... 426 427 404 422
-------------------------------------------
Shares outstanding, end of year ............ 316 426 313 404
===========================================
---------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Continued)
================================================================================
6. PORTFOLIO COMPOSITION
As of June 30, 2000, 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 personal income
tax. The California Tax-Free Money Fund was invested exclusively in debt
obligations issued by the State of California and its political subdivisions,
agencies, authorities and instrumentalities and by other issuers the interest
from which is exempt from California income tax. The Florida Tax-Free Money Fund
was 94.0% 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, 2000, 26.6% of the portfolio securities of the
Tax-Free Money Fund were concentrated in the State of Ohio, and 13.3% in the
State of Illinois. For information regarding portfolio composition by state for
the Tax-Free Intermediate Term Fund, see the Fund's Portfolio of Investments.
The California Tax-Free Money Fund, the Ohio Tax-Free Money Fund, the 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, 2000, no non-diversified Fund
had concentrations of investments (10% or greater) in any one issuer.
The Tax-Free Money Fund, the California Tax-Free Money Fund, the Ohio Tax-Free
Money Fund and the 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, 2000, 43.4% 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], 28.5% were rated
AA/Aa, 26.3% were rated A/A and 1.5% were not rated.
As of June 30, 2000, 73.9% of the Ohio Insured Tax-Free Fund's long-term
portfolio securities were either (1) insured by an insurance policy obtained
from a recognized insurer which carries a rating of AAA by S&P or Aaa by
Moody's, (2) guaranteed as to the payment of interest and principal by an agency
or instrumentality of the U.S. Government or (3) secured as to the payment of
interest and principal by an escrow account consisting of obligations of the
U.S. Government. Three private insurers individually insure more than 10% of the
Ohio Insured Tax-Free Fund's portfolio securities and collectively insure 60.2%
of its portfolio securities.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Continued)
================================================================================
The concentration of investments for each Fund as of June 30, 2000, classified
by revenue source, was as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
CALIFORNIA OHIO 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 ............................ 6.8% 7.7% 16.4% 0.5% 16.3% 49.7%
Revenue Bonds:
Industrial Development/Pollution Control 45.5% 20.8% 17.9% 4.6% 6.8% --
Hospital/Health Care ................... 7.1% 17.6% 21.0% 22.4% 20.2% 14.5%
Utilities .............................. 7.4% 16.1% 19.9% 15.5% 10.1% 10.1%
Bank & Financial ....................... -- -- 1.4% 2.8% -- --
Education .............................. 6.5% 5.6% 8.0% 8.3% 16.5% 11.2%
Housing/Mortgage ....................... 2.0% 4.7% 4.4% 19.1% 11.9% 5.3%
Economic Development ................... 18.8% 16.5% 7.0% 7.3% 2.6% 1.6%
Public Facilities ...................... 2.6% 0.2% 1.9% 5.0% 7.3% 2.6%
Transportation ......................... -- 0.5% 0.3% 0.6% 4.4% 3.0%
Special Tax ............................ -- 0.6% 0.3% 0.6% 2.6% --
Leases ................................. -- 2.6% -- -- -- --
Miscellaneous .......................... 3.4% 7.1% 1.6% 13.3% 1.3% 2.1%
-------------------------------------------------------------
Total .......................................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
=============================================================
</TABLE>
7. MAXIMUM OFFERING PRICE PER SHARE
Effective August 1, 1999, for accounts opened after July 31, 1999, the maximum
offering price per share of Class A shares of the Tax-Free Intermediate Term
Fund and the Ohio Insured Tax-Free Fund is equal to the net asset value per
share plus a sales load equal to 4.99% of the net asset value (or 4.75% of the
offering price). Effective August 1, 1999, for all accounts, the maximum
offering price per share of Class C shares of each Fund is equal to the net
asset value per share plus a sales load equal to 1.27% of the net asset value
(or 1.25% of the offering price).
8. FEDERAL TAX INFORMATION FOR SHAREHOLDERS (UNAUDITED)
In accordance with federal tax requirements, each Fund designates its respective
dividends paid from net investment income during the year ended June 30, 2000,
as "exempt-interest dividends." Ninety-nine percent of the interest income
earned by the California Tax-Free Money Fund was derived from securities issued
in the state of California.
9. FLORIDA TAX-FREE MONEY FUND - INSTITUTIONAL
Effective April 28, 2000, the Florida Tax-Free Money Fund - Institutional Class
closed and the shares were moved into the Retail Class.
10. NAME CHANGE
Effective May 1, 2000, the Countrywide Tax-Free Trust changed its name to
Touchstone Tax-Free Trust. Countrywide Fund Services, Inc. changed its name to
Integrated Fund Services, Inc. Touchstone Advisors, Inc., upon shareholder
approval, became the new advisor for the Funds in the Trust. Fort Washington
Investment Advisors, Inc., upon shareholder approval, became the sub-advisor for
the Funds in the Trust. Touchstone Securities, Inc., became the
underwriter/distributor for the Funds in the Trust.
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 2000
==============================================================================================================================
PRINCIPAL MARKET
AMOUNT FIXED RATE REVENUE & COUPON MATURITY VALUE
(000'S) GENERAL OBLIGATION BONDS-- 21.7% RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 100 Brownsburg, IN, Multi-School Bldg. Corp. Rev ............................... 9.750 07/01/00 $ 100
100 Washington St. Public Power Supply Sys. Rev.,
Ser. C (Nuclear Proj. No. 1), Prerefunded @ 102 .......................... 8.000 07/01/00 102
155 Aransas Pass, TX, GO ....................................................... 4.200 08/01/00 155
200 Floresville, TX, Electric Light and Power Sys. Rev ......................... 5.570 08/15/00 200
250 American Municipal Power Sys. Impt. BANS (City Of Bryan Proj.) ............. 4.750 08/25/00 250
200 Johnson Co., KS, USD No. 233 GO ............................................ 5.500 09/01/00 201
660 Westminster CO, COP ........................................................ 3.800 09/01/00 660
100 Ohio St. Bldg. Auth. Rev. St. Fac. (Das Data Center Proj.) ................. 4.000 10/01/00 100
400 New Knoxville, OH, Waterworks Sys. BANS .................................... 4.250 10/05/00 400
450 Crestline Village, OH, Swimming Pool Impt. BANS ............................ 4.470 11/16/00 451
100 Westmoreland Co., PA, Municipal Auth. Serv. Rev.,
Ser. M, Prerefunded @ 100 ................................................ 7.250 12/01/00 100
520 American Municipal Power Sys. Impt. BANS (Wellington Village Proj.) ........ 4.300 12/15/00 520
501 American Municipal Power Sys. Impt. BANS (Milan Village Proj.) ............. 4.450 01/19/01 501
500 American Municipal Power Sys.Equipment BANS
(Distributive Generation Proj.) .......................................... 5.250 01/19/01 498
185 College Station, TX, Utility System Rev .................................... 5.875 02/01/01 186
105 San Antonio, TX, Electric & Gas Rev ........................................ 5.200 02/01/01 105
200 Webb Co., TX, COP .......................................................... 4.550 02/01/01 200
300 Richardson, TX, ISD, GO .................................................... 4.750 02/15/01 300
430 American Municipal Power Sys. Impt. BANS (Bradner Village Proj.) ........... 4.900 03/23/01 430
---------- ----------
$ 5,456 TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS
---------- (Amortized Cost $5,459) .................................................... $ 5,459
----------
<PAGE>
TAX-FREE MONEY FUND (CONTINUED)
==============================================================================================================================
PRINCIPAL MARKET
AMOUNT COUPON MATURITY VALUE
(000'S) FLOATING & VARIABLE DEMAND NOTES-- 51.7% RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
$ 500 Arapahoe Co., CO, IDR (Denver JetCenter Proj.) ............................. 4.550 07/01/00 $ 500
200 Illinois Health Fac. Auth. Rev., Ser. B (Elmhurst Memorial Hosp.) .......... 4.700 07/01/00 200
1,100 Puerto Rico Commonwealth Trans, Ser. A-1 ................................... 4.750 07/01/00 1,100
1,000 University Athletic Association, FL, Capital Impt. Rev
(Univ. of Florida Stadium Proj.) ......................................... 4.750 07/01/00 1,000
900 Eddyville, IA, IDR (Heartland Lysine, Inc.) ................................ 5.350 07/05/00 900
700 San Rafael, CA, IDR Bonds (Phoenix American Inc.) .......................... 5.000 07/05/00 700
1,100 Scio Twnp., MI, EDR ........................................................ 4.900 07/05/00 1,100
505 Brooklyn Park, MN, IDR (Schmidt Proj.) ..................................... 5.050 07/06/00 505
475 Frankfort, MN, IDR, Ser. 1995 (J&B, Inc.) .................................. 5.050 07/06/00 475
245 Frankfort, MN, IDR, Ser. 1995 (J&B, Inc.) .................................. 5.300 07/06/00 245
649 Franklin Park, IL, Rev., Ser. 1994 (A.M. Castle & Co. Proj.) ............... 5.150 07/06/00 649
1,395 Harvard, IL, Health Care Fac. Rev., Ser. 1998
(Harvard Memorial Hosp. Proj.) ........................................... 4.950 07/06/00 1,395
200 Hope, AR, IDR, Ser. A (Champion Parts, Inc. Proj.) ......................... 5.150 07/06/00 200
973 Kansas City, MO, IDR (A.M. Castle & Co. Proj.) ............................. 5.150 07/06/00 973
1,235 Mankato, MN, IDR, Ser. 1998 (Sacco Family LP Proj.) ........................ 5.200 07/06/00 1,235
1,000 Payne Co., OK, EDR, Ser. A (Collegiate Hsg. Foundation) .................... 4.750 07/06/00 1,000
188 Rosemont, IL. IDR, (A.M. Castle & Co. Proj.) ............................... 5.150 07/06/00 188
660 Wakarusa, IN, EDR (MMM-Invest Inc. Proj.) .................................. 5.000 07/06/00 660
---------- ----------
$ 13,025 TOTAL FLOATING & VARIABLE DEMAND NOTES
---------- (Amortized Cost $13,025) ................................................... $ 13,025
----------
------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON MATURITY VALUE
(000'S) ADJUSTABLE RATE PUT BONDS-- 26.4% RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
$ 620 Lexington-Fayette Co., KY, Urban Govt. Rev. (Providence Montessori) ........ 4.250 07/01/00 $ 620
505 Buckeye Tax-Exempt Mtg. Bond Trust ......................................... 4.520 08/01/00 503
1,110 Summit Co., OH, IDR (S.D. Myers Inc. Proj.) ................................ 4.350 08/15/00 1,110
200 Fairfield, OH, IDR ARPB (Skyline Chili, Inc. Proj.) ........................ 5.000 09/01/00 200
1,200 Owensboro, KY, IDR, Ser. 1985 (Dart Container) ............................. 4.700 09/01/00 1,200
270 Portage Co., OH, IDR (Neidlinger Proj.) .................................... 4.600 09/01/00 270
255 Summit Co., OH, IDR (Keltec Inc. Proj.) .................................... 4.600 09/01/00 255
500 Summit Co., OH, IDR (Struktol Co. America Proj.) ........................... 4.600 09/01/00 500
265 Summit Co., OH, IDR (Triscari Proj.) ....................................... 4.600 09/01/00 265
140 Cuyahoga Co.,OH, IDR (Halle Office Bldg.) .................................. 4.510 10/01/00 140
120 Richland Co., OH, IDR (Robon Partnership Proj.) ............................ 4.650 10/01/00 120
465 Summit Co., OH, IDR (L & W Mfg. Proj.) ..................................... 4.650 10/01/00 465
1,000 Westmoreland Co., PA, IDR (White Consolidated Industries) .................. 5.170 12/01/00 1,000
---------- ----------
$ 6,650 TOTAL ADJUSTABLE RATE PUT BONDS (AMORTIZED COST $6,648) .................... $ 6,648
---------- ----------
$ 25,131 TOTAL INVESTMENT SECURITIES-- 99.8%
========== (Amortized Cost $25,132) ................................................... $ 25,132
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.2% ............................... 62
----------
NET ASSETS-- 100.0% ........................................................ $ 25,194
==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE MONEY FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 2000
==============================================================================================================================
PRINCIPAL MARKET
AMOUNT FIXED RATE REVENUE & COUPON MATURITY VALUE
(000'S) GENERAL OBLIGATION BONDS-- 27.6% RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 200 California Health Fac. Fin. Auth. Rev., Ser. B (Catholic Health Facs.) ..... 4.250 07/01/00 $ 200
155 California Health Fac. Fin. Auth. Rev., Ser. B (Children's Hosp.),
Prerefunded @ 102 ........................................................ 6.500 07/01/00 158
200 Los Angeles Co., CA, Trans. Comm. Sales Tax Rev.,
Ser. A (Proposition C) ................................................... 5.500 07/01/00 200
400 Los Angeles Co., CA, Trans. Comm. Sales Tax Rev., Ser. B ................... 5.600 07/01/00 400
500 Puerto Rico Commonwealth Public Impt. GO, Ser. B ........................... 5.500 07/01/00 500
165 Sacramento, CA, Utility Dist. Rev., Ser. 7 ................................. 5.000 07/01/00 165
200 Sacramento, CA, Utility Dist. Rev., Ser. 7 ................................. 5.850 07/01/00 200
335 San Francisco, CA, Bay Area Rapid Trans. Dist. Sales Tax Rev.,
Prerefunded @ 102 ........................................................ 6.750 07/01/00 342
350 Southern California Rapid Trans. Dist. COP (Workers Comp.) ................. 7.625 07/01/00 350
1,000 Fremont, CA, USD, Alameda Co. TRANS ........................................ 4.000 07/28/00 1,000
255 Berkeley, CA, USD GO, Ser. D ............................................... 8.250 08/01/00 256
100 California St. Dept. of Veteran Affairs Home Purchase Rev., Ser. A ......... 6.450 08/01/00 100
250 California St. GO .......................................................... 5.000 08/01/00 250
800 California St. GO .......................................................... 6.900 08/01/00 802
200 Castaic Lake, CA, COP Water Sys. Impt. Rev ................................. 6.750 08/01/00 201
365 Jefferson, CA, USD GO, Ser. A .............................................. 5.750 08/01/00 366
160 Long Beach, CA USD GO, Ser. A .............................................. 7.500 08/01/00 161
1,040 Los Angeles Co.,CA, Schools Regionalized Business Svcs. Rev., Ser. A ....... 0.000 08/01/00 1,037
300 Paso Robles, CA, Joint USD COP ............................................. 4.500 08/01/00 300
185 San Lorenzo, CA, USD COP ................................................... 4.000 08/01/00 185
110 San Marcos, CA, Public Fac. Auth. Tax Rev., Ser. A ......................... 4.500 08/01/00 110
175 Santa Paula, CA, USD GO, Prerefunded @ 102 ................................. 7.200 08/01/00 184
100 Orange Co., CA, Water Dist., Prerefunded @ 102 ............................. 7.000 08/15/00 102
100 California St. GO .......................................................... 5.700 09/01/00 100
100 California St. Public Works Board Lease Rev. Ser. A Prerefunded @ 102 ...... 7.000 09/01/00 103
625 Corona, CA, Comnty Fac. Dist. Ref. Special Tax ............................. 4.000 09/01/00 625
320 Fontana, CA, Special Tax Ref. Comnty Fac. Dist. Special Tax, Ser. A ........ 4.000 09/01/00 320
300 Los Angeles, CA, GO, Ser. A ................................................ 5.100 09/01/00 301
205 San Bernardino, CA Joint Powers Fin. Auth. COP (Police Station Proj.) ...... 3.700 09/01/00 205
100 San Francisco, CA, City & Co. COP .......................................... 5.300 09/01/00 100
250 West Covina, CA COP Ref. (Civic Center Proj.) .............................. 5.250 09/01/00 251
150 California Educational Facs. Auth. Rev.,
(Univ. of San Diego Proj.) Prerefunded @ 102 ............................. 6.750 10/01/00 154
100 California St. Veterans GO, Ser. AS ........................................ 10.000 10/01/00 102
165 Kern Co., CA, COP Capital Impt. Proj. COP .................................. 4.000 11/01/00 165
175 Sacramento, CA, Redevelopment Agcy. Tax Alloc. Rev.,
Ser. A Prerefunded @ 102 ................................................. 6.500 11/01/00 180
875 Los Angeles, CA, Wastewater Sys. Rev., Series D Prerefunded @ 102 .......... 6.700 12/01/00 902
395 Santa Ana, CA, Comnty Redevelopment Agcy. Prerefunded @ 102 ................ 6.500 12/15/00 407
590 Santa Ana, CA, Comnty Redevelopment Agcy. Prerefunded @ 102 ................ 6.500 12/15/00 608
<PAGE>
CALIFORNIA TAX-FREE MONEY FUND (CONTINUED)
==============================================================================================================================
PRINCIPAL MARKET
AMOUNT FIXED RATE REVENUE & COUPON MATURITY VALUE
(000'S) GENERAL OBLIGATION BONDS-- 27.6% (CONTINUED) RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
$ 210 Santa Ana, CA, Comnty Redevelopment Agcy. Tax Allocation,
Ser. B, Prerefunded @ 102 ................................................ 6.500 12/15/00 $ 216
280 Jefferson, CA, USD GO, Ser. A .............................................. 5.750 02/01/01 283
100 Walnut Valley, CA, USD GO, Ser. A .......................................... 6.250 02/01/01 101
100 Contra Costa, CA, Trans. Auth. Sales Tax Rev., Ser. A ...................... 4.800 03/01/01 101
155 San Francisco, CA, City & Co. Arpt. Comm. Intl. Rev ........................ 6.100 05/01/01 158
100 Stanislaus Co., CA, COP Ref. Capital Impt. Ser. A .......................... 4.375 05/01/01 100
315 San Francisco, CA, City & Co. COP .......................................... 7.375 06/15/01 324
2,000 Los Angeles Co., CA, School Pooled Fin. Prog. COP Ser. A ................... 5.000 07/02/01 2,014
1,000 California School Cash Reserve Prog. Auth. Pooled Loan, Ser. A ............. 5.250 07/03/01 1,009
960 Fremont, CA, USD ........................................................... 5.000 07/10/01 968
---------- ----------
$ 17,215 TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS
---------- (Amortized Cost $17,366) ................................................... $ 17,366
----------
------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON MATURITY VALUE
(000'S) FLOATING & VARIABLE DEMAND NOTES-- 78.0% RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
$ 600 California Health Fac. Fin. Auth. Rev., Ser. A ............................. 4.000 07/01/00 $ 600
800 California PCR Fin. Auth. Rev., Ser.B (Southern CA Edison) ................. 4.400 07/01/00 800
400 California PCR Fin. Auth. Ser. A (Pacific Gas & Electric) .................. 4.000 07/01/00 400
1,600 Chula Vista, CA, IDR Ser. A (San Diego Gas & Elec. Co.) .................... 4.350 07/01/00 1,600
200 M-S-R Public Power Agency, CA, Rev., Ser. F (San Juan Proj.) ............... 4.150 07/01/00 200
600 Montebello, CA, IDA IDR (Sunclipse Proj.) .................................. 4.100 07/01/00 600
500 Newport Beach, CA, Rev., (Hoag Memorial Presbyterian Hosp.) ................ 4.250 07/01/00 500
1,800 Newport Beach, CA, Rev., Ser. A (Hoag Memorial Hosp.) ...................... 4.250 07/01/00 1,800
3,000 Newport Beach, CA, Rev., Ser. B (Hoag Memorial Hosp.) ...................... 4.250 07/01/00 3,000
5,600 Newport Beach, CA, Rev., Ser. C (Hoag Memorial Hosp.) ...................... 4.250 07/01/00 5,600
1,900 Orange Co., CA, Sanitation Dist. COP, Ser. C ............................... 4.000 07/01/00 1,900
3,000 Puerto Rico Commonwealth Trans, Ser. A-1 ................................... 4.750 07/01/00 3,000
700 Riverside, CA, IDA IDR Issue A (Sunclipse Inc. Proj.) ...................... 4.100 07/01/00 700
390 San Dimas CA, Redevelopment Agcy. Rev., Ser. 1983
(San Dimas Commerce Center) .............................................. 4.400 07/01/00 390
2,000 ABAG Fin. Auth. Nonprofit Corps. MFH Rev., Ser. A
(Vintage Chateau Proj.) .................................................. 5.000 07/05/00 2,000
2,000 ABN AMRO Munitops Trust Cert. (San Diego, CA) .............................. 4.470 07/05/00 2,000
2,000 ABN AMRO Munitops Trust Cert., Ser. 1999-7 ................................. 4.470 07/05/00 2,000
700 California School Fac. Fin. Corp. COP, Ser. B .............................. 4.400 07/05/00 700
480 California Statewide Cmntys. Dev. Corp. IDR ................................ 4.750 07/05/00 480
180 California Statewide Comnty. Dev Corp Rev .................................. 4.750 07/05/00 180
300 Huntington Park, CA, Public Fin. Auth. Lease Rev. Parking Proj., Ser. A .... 4.950 07/05/00 300
1,545 Oxnard CA, IDA IDR (Van R. Dental Prods, Inc.) ............................. 4.750 07/05/00 1,545
2,800 San Rafael, CA, IDR Bonds (Phoenix American Inc.) .......................... 5.000 07/05/00 2,800
1,600 Vacaville, CA, IDA IDR (Leggett & Platt, Inc.) Ser. B ...................... 4.650 07/05/00 1,600
1,400 Alameda Co., CA, IDR (Bat Prop. LLC Proj.) Ser. 1998A ...................... 4.400 07/06/00 1,400
<PAGE>
CALIFORNIA TAX-FREE MONEY FUND (CONTINUED)
==============================================================================================================================
PRINCIPAL MARKET
AMOUNT COUPON MATURITY VALUE
(000'S) FLOATING & VARIABLE DEMAND NOTES-- 78.0% (CONTINUED) RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
$ 500 California Health Fac. Fin. Auth. Rev., Ser. B Adventist Health Sys ........ 4.400 07/06/00 $ 500
1,400 Hanford, CA, Sewer Rev., Ser. A ............................................ 4.750 07/06/00 1,400
2,000 Los Angeles, CA, Dept. of Water And Power Electric Rev. Ser. A ............. 4.250 07/06/00 2,000
100 Petaluma, CA, Cmnty. Dev. MFH Rev., Ser. A ................................. 4.400 07/06/00 100
1,000 San Bernardino Co., CA, Capital Impt. Refinancing Proj. COP ................ 4.750 07/06/00 1,000
1,300 San Bernardino Co., CA, COP, Prerefunded @ 102 ............................. 4.420 07/06/00 1,300
900 San Bernardino, CA, IDR (La Quinta Motor Inns) ............................. 4.800 07/06/00 900
2,250 San Diego Co., CA, IDA (Apogee Enterprises, Inc.) Ser. A ................... 4.950 07/06/00 2,250
400 California PCR Fin. Auth. Rev. Ser. 83 (Southdown, Inc.) ................... 4.500 07/15/00 400
3,100 California PCR Fin. Auth. Rev., Ser. B (Southdown, Inc.) ................... 4.500 07/15/00 3,100
$ 49,045 TOTAL FLOATING & VARIABLE DEMAND NOTES (AMORTIZED COST $49,045) ............ $ 49,045
---------- ----------
$ 66,260 TOTAL INVESTMENT SECURITIES-- 105.6%
========== (Amortized Cost $66,411) ................................................... $ 66,411
LIABILITIES IN EXCESS OF OTHER ASSETS-- (5.6%) ............................. (3,511)
----------
NET ASSETS-- 100.0% ........................................................ $ 62,900
==========
</TABLE>
See accompanying notes to financial statements and notes to portfolios of
investments.
<PAGE>
<TABLE>
<CAPTION>
OHIO TAX-FREE MONEY FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 2000
==============================================================================================================================
PRINCIPAL MARKET
AMOUNT FIXED RATE REVENUE & COUPON MATURITY VALUE
(000'S) GENERAL OBLIGATION BONDS-- 30.2% RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,250 American Municipal Power Sys. Impt. Rev. BANS (Deshler, OH, Proj.) ......... 4.000 07/10/00 $ 1,250
1,000 American Municipal Power Sys. Impt. Rev. BANS
(Village of New Breman Proj.) ............................................ 3.700 07/10/00 1,000
2,350 American Municipal Power Sys. Impt. Rev. BANS (Montpelier Village Proj.) ... 4.000 07/13/00 2,350
6,997 Morgan, OH, LSD Impt. GO BANS, Ser. 1999 ................................... 4.520 07/14/00 6,998
520 Allen Co., OH, GO BANS Ser. 1999 ........................................... 4.300 07/20/00 520
2,000 Niles City, OH, Water Line Impt. GO BANS ................................... 4.150 07/20/00 2,000
1,800 American Municipal Power Sys. Impt. Rev. BANS (Wapakoneta Proj.) ........... 3.750 07/27/00 1,800
1,500 Athens, OH, CSD GO BANS .................................................... 4.780 07/27/00 1,501
6,000 American Municipal Power Sys. Impt. Rev. BANS (City of Bryan Proj.) ........ 3.900 08/25/00 6,000
1,200 Lisbon, OH, Exempted Village School Dist. Impt. GO BANS, Ser. 1999 ......... 3.800 08/31/00 1,200
900 Springboro, OH, Street Impt. GO BANS ....................................... 3.960 09/07/00 900
2,000 Springdale, OH, Street Impt. GO BANS ....................................... 3.800 09/14/00 2,000
700 Lorain Co., OH, Various Purpose GO BANS, Ser. 1999 ......................... 4.000 09/15/00 700
4,574 Lorain Co., OH, Various Purpose GO BANS, Ser. 1999 ......................... 4.000 09/15/00 4,576
500 North Ridgeville, OH, Road Impt. GO BANS, Ser. 2000 ........................ 4.950 10/19/00 501
1,795 Bluffton Village, OH, Water Sys. Rev. BANS ................................. 4.450 10/26/00 1,797
3,000 Mariemont, OH, CSD GO BANS ................................................. 4.840 10/31/00 3,005
2,200 American Municipal Power Sys. Impt. Rev. BANS (Pioneer Village Proj.) ...... 4.200 11/02/00 2,200
500 Cleveland-Cuyahoga Co., OH, Port Auth. TANS ................................ 3.700 11/15/00 499
600 Marysville, OH, Various Purpose GO BANS .................................... 4.210 11/16/00 601
2,015 Marysville, OH, Various Purpose GO BANS .................................... 4.460 11/16/00 2,017
3,350 Marysville, OH, Various Purpose GO BANS .................................... 5.050 11/16/00 3,354
3,120 Marysville, OH, Various Purpose GO BANS, Ser. 2000C-1 ...................... 4.500 11/16/00 3,123
2,325 Marysville, OH, Various Purpose GO BANS, Ser. 2000D ........................ 4.500 11/16/00 2,327
2,075 Belmont Co., OH, Sanitary Sewer Impt. GO BANS .............................. 4.210 11/21/00 2,077
2,000 American Municipal Power Sys. Impt. Rev. BANS (Bowling Green, OH, Proj.) ... 4.100 12/01/00 2,000
4,000 American Municipal Power Sys. Impt. Rev. BANS (Shelby Proj.) ............... 4.300 12/01/00 4,000
400 Cincinnati, OH, Public Impt. GO ............................................ 4.500 12/01/00 401
3,000 Dayton, OH, Airport Impt. GO BANS .......................................... 4.600 12/01/00 3,005
590 Garfield Heights, OH, Various Purpose GO BANS .............................. 7.050 12/01/00 608
1,000 Springboro, OH, Various Purpose GO BANS, Ser. 1999 ......................... 4.260 12/07/00 1,001
2,126 Union-Scioto, OH, LSD Classroom Fac. GO BANS ............................... 4.900 12/08/00 2,132
940 Clermont Co., OH, Road Impt. GO BANS ....................................... 4.300 12/14/00 941
2,000 Canton, OH, CSD GO BANS .................................................... 4.625 12/15/00 2,003
9,500 American Municipal Power Sys.Equipment Rev. BANS
(Distributive Generation Proj.) .......................................... 5.250 01/19/01 9,464
1,645 Marysville OH, GO (Acquisition Notes) ...................................... 5.010 01/25/01 1,647
1,685 Marysville, OH, Various Purpose GO BANS, Ser. 2000 ......................... 4.470 01/25/01 1,687
4,700 Hebron, OH, Sanitary Sewer Sys. Rev ........................................ 5.100 02/15/01 4,714
1,150 Mason, OH, CSD School Impt. GO BANS, Ser. 2000 ............................. 4.630 02/15/01 1,153
400 Portsmouth, OH, Water Line Fin. GO BANS .................................... 4.600 02/28/01 400
2,000 Beachwood, OH, Various Purpose GO BANS ..................................... 4.500 03/01/01 2,004
<PAGE>
OHIO TAX-FREE MONEY FUND (CONTINUED)
==============================================================================================================================
PRINCIPAL MARKET
AMOUNT FIXED RATE REVENUE & COUPON MATURITY VALUE
(000'S) GENERAL OBLIGATION BONDS-- 30.2% (CONTINUED) RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
$ 7,560 American Municipal Power Sys. Impt. Rev. BANS (Wadsworth Proj.) ............ 4.950 03/15/01 $ 7,583
265 Marysville, OH, Various Purpose GO BANS .................................... 4.610 03/15/01 265
200 Marysville, OH, Various Purpose GO BANS .................................... 5.260 03/15/01 200
300 Archbold, OH, Various Purpose GO BANS ...................................... 4.950 03/22/01 301
1,270 Deerfield Township, OH, Park Land Acquisition GO BANS ...................... 4.759 03/28/01 1,273
1,500 Ross Co., OH, Bldg. Auth. Acquisiton GO BANS ............................... 4.750 05/16/01 1,500
1,200 Hebron, OH, Municipal Building GO BANS ..................................... 5.030 05/17/01 1,200
1,100 Williard City, OH, Street Impt. GO BANS .................................... 5.300 05/24/01 1,104
---------- ----------
$ 104,802 TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS
---------- (Amortized Cost $104,882) .................................................. $ 104,882
----------
------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON MATURITY VALUE
(000'S) FLOATING & VARIABLE DEMAND NOTES-- 62.2% RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
$ 2,015 Cuyahoga Co., OH, Econ. Dev. Rev ...........................................
(The Cleveland Orchestra Proj.) .......................................... 4.500 07/01/00 $ 2,015
5,680 Cuyahoga Co., OH, Hosp. Rev., Ser. 1997D
(Cleveland Clinic Foundation) ............................................ 4.550 07/01/00 5,680
3,715 Cuyahoga Co., OH, IDR (S&R Playhouse Realty) ............................... 4.750 07/01/00 3,715
3,700 Delaware Co., OH, IDR (Radiation Sterilizers, Inc.) ........................ 4.500 07/01/00 3,700
1,565 Franklin Co., OH, IDR (Capitol South) ...................................... 4.750 07/01/00 1,565
1,200 Franklin Co., OH, IDR (Jacobsen Stores) .................................... 4.750 07/01/00 1,200
4,500 Montgomery Co., OH, (Miami Valley Hosp.) ................................... 4.500 07/01/00 4,500
2,700 Muskingum Co., OH, IDR (Elder-Beerman) ..................................... 4.450 07/01/00 2,700
2,550 Ohio St. Air Quality Dev. Auth. Rev. (CG&E), Ser. A ........................ 4.500 07/01/00 2,550
2,900 Ohio St. Air Quality Dev. Auth. Rev. (Mead Corp.) .......................... 4.450 07/01/00 2,900
1,000 Ohio St. Air Quality Dev. Auth. Rev., Ser. 1985A (CG&E) .................... 4.750 07/01/00 1,000
9,000 Ohio St. Air Quality Dev. Auth. Rev., Ser. 2000A ........................... 4.550 07/01/00 9,000
500 Ohio St. Environmental Impt. Rev. (U.S. Steel Corp. Proj.) ................. 4.450 07/01/00 500
1,110 Ohio St. PCR (Sohio Water Proj.) ........................................... 4.500 07/01/00 1,110
6,900 Puerto Rico Commonwealth Trans, Ser. A-1 ................................... 4.750 07/01/00 6,900
7,000 ABN AMRO Munitops Trust Cert. 1998-I8 (Cleveland Water Works) .............. 4.720 07/05/00 7,000
425 Brunswick, OH, IDR, Ser. A (Kindercare) .................................... 4.750 07/05/00 425
930 Centerville, OH, Health Care Rev. (Bethany Memorial) ....................... 4.850 07/05/00 930
1,280 Clermont Co., OH, Hosp. Fac. Rev. Ser. 1996A ............................... 4.850 07/05/00 1,280
6,211 Clermont Co., OH, Hosp. Fac. Rev., Ser. B (Mercy Health Sys. Proj.) ........ 4.950 07/05/00 6,211
7,000 Clinton Co., OH, Hosp. Rev. Pooled Fin. Prog ............................... 4.850 07/05/00 7,000
2,140 Cuyahoga Co., OH, Educ. Fac. Rev., Ser. 1998
(United Cerebral Palsy Assoc.) ........................................... 4.850 07/05/00 2,140
845 Cuyahoga Co., OH, IDR (Pleasant Lake Assoc.) ............................... 4.850 07/05/00 845
800 Delaware Co., OH, IDR, Ser. 1985 (MRG Ltd. Proj.) .......................... 5.000 07/05/00 800
1,990 Erie Co., OH, IDR (Toft Dairy, Inc.) ....................................... 4.850 07/05/00 1,990
980 Franklin Co., OH, IDR Ser. A (Kindercare) .................................. 4.750 07/05/00 980
564 Franklin Co., OH, IDR Ser. D (Kindercare) .................................. 4.750 07/05/00 564
<PAGE>
OHIO TAX-FREE MONEY FUND (CONTINUED)
==============================================================================================================================
PRINCIPAL MARKET
AMOUNT COUPON MATURITY VALUE
(000'S) FLOATING & VARIABLE DEMAND NOTES-- 62.2% (CONTINUED) RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
$ 1,120 Greene Co., OH, Health Care Fac. Rev. (Green Oaks Proj.) ................... 4.850 07/05/00 $ 1,120
200 Hamilton Co., OH, Hosp. Fac. Rev., Ser. F .................................. 4.850 07/05/00 200
(Health Alliance of Greater Cincinnati)
1,040 Hamilton, Co., OH, Health Care Fac. Rev. (Aloysius Orphanage Proj.) ........ 4.850 07/05/00 1,040
375 Hudson Village, OH, IDR, Ser. A (Kindercare) ............................... 4.750 07/05/00 375
725 Huron Co., OH, Rev. (Norwalk Furniture Corp.) .............................. 4.850 07/05/00 725
900 Lorain Co., OH, Hosp. Fac. Rev. (Catholic Healthcare Partners) ............. 4.850 07/05/00 900
1,865 Lorain Co., OH, IDR (EMH Med. Ctr. Proj.) .................................. 4.850 07/05/00 1,865
494 Lorain Co., OH, IDR, Ser. C (Kindercare) ................................... 4.750 07/05/00 494
935 Lucas Co., OH, IDR, Ser. D (Kindercare) .................................... 4.750 07/05/00 935
300 Medina, OH, IDR (Kindercare) ............................................... 4.750 07/05/00 300
800 Meigs Co., OH, IDR, Ser. 1985 (MRG Ltd. Proj.) ............................. 5.000 07/05/00 800
287 Middletown, OH, IDR, Ser. A (Kindercare) ................................... 4.750 07/05/00 287
945 Monroe, OH, IDR, Ser. 1985 (Magnode Corp.) ................................. 4.800 07/05/00 945
2,000 Montgomery Co., OH, EDR (Dayton Art Institute) ............................. 4.750 07/05/00 2,000
340 Montgomery Co., OH, IDR (Kindercare) ....................................... 4.750 07/05/00 340
360 Montgomery Co.,OH, Health Care Rev., Ser. A ................................ 4.850 07/05/00 360
(Dayton Area MRI Consortium)
1,000 Morrow Co., OH, IDR (Field Container Corp.) ................................ 4.800 07/05/00 1,000
3,500 Ohio St. Higher Educ. Fac. Rev. (Kenyon College Proj.) ..................... 4.750 07/05/00 3,500
3,400 Ohio St. Higher Educ. Fac. Rev., Ser. 1992 ................................. 4.750 07/05/00 3,400
1,200 Ohio St. Water Dev. Auth. Rev. (Timken Co. Proj.) .......................... 4.800 07/05/00 1,200
650 Orrville, OH, Hosp. Fac. Rev., Ser. 1990 (Orville Hosp.) ................... 4.800 07/05/00 650
437 Stark Co., OH, IDR, Ser. D (Kindercare) .................................... 4.750 07/05/00 437
3,200 Summit, OH, Civic Fac. Rev., Ser. 1997 (YMCA Proj.) ........................ 4.850 07/05/00 3,200
375 Wadsworth, OH, IDR (Kindercare) ............................................ 4.750 07/05/00 375
800 Wyandot Co., OH, IDR, Ser. 1985 (MRG Ltd. Proj.) ........................... 5.000 07/05/00 800
375 Akron, Bath & Copley, OH, Joint Twnsp. Hosp. Rev ........................... 4.850 07/06/00 375
(Visiting Nurse Svcs. Proj.)
3,000 Ashtabula Co., OH, Hosp. Fac. Rev., Ser. 1995 .............................. 4.800 07/06/00 3,000
(Ashtabula Co. Med. Ctr. Proj.)
2,390 Butler Co., OH, Hosp. Fac. Rev. Ser. 1998A ................................. 4.950 07/06/00 2,390
(Berkeley Square Retirement Ctr. Proj.)
6,965 Cleveland, OH, Waterworks Rev., Ser. 58 .................................... 4.870 07/06/00 6,965
1,400 Clinton Co., OH, Hosp. Rev. (Clinton Memorial Hosp.) ....................... 4.850 07/06/00 1,400
500 Columbus, OH, GO Rev., Ser. 1 .............................................. 4.600 07/06/00 500
2,100 Columbus, OH, GO, Ser. 1 ................................................... 4.600 07/06/00 2,100
2,000 Cuyahoga Co., OH, IDR Ser. 1989 (Motch Corp. Proj.) ........................ 4.950 07/06/00 2,000
3,500 Delaware Co., OH, Health Care Fac. Rev ..................................... 4.920 07/06/00 3,500
2,685 Franklin Co., OH, EDR (Dominican Sisters) .................................. 4.850 07/06/00 2,685
3,460 Franklin Co., OH, EDR, Ser. 1998 (Unity Resource Center Proj.) ............. 4.850 07/06/00 3,460
1,170 Franklin Co., OH, Health Care Fac. Rev ..................................... 4.850 07/06/00 1,170
2,000 Franklin Co., OH, IDR (Alco Standard Corp.) ................................ 4.800 07/06/00 2,000
400 Franklin Co., OH, IDR (Columbus College) ................................... 4.850 07/06/00 400
1,115 Franklin Co., OH, IDR (Ohio Girl Scouts) ................................... 4.850 07/06/00 1,115
<PAGE>
OHIO TAX-FREE MONEY FUND (CONTINUED)
==============================================================================================================================
PRINCIPAL MARKET
AMOUNT COUPON MATURITY VALUE
(000'S) FLOATING & VARIABLE DEMAND NOTES-- 62.2% (CONTINUED) RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
$ 1,900 Geauga Co., OH, Health Care Fac. Rev., Ser. 1998A (Heather Hill Proj.) ..... 4.870 07/06/00 $ 1,900
1,079 Hamilton Co., OH, EDR, Ser. 1995 ........................................... 4.950 07/06/00 1,079
(Cincinnati Assoc. for the Performing Arts)
100 Hamilton Co., OH, Hosp. Fac. (Children's Hospital) ......................... 4.900 07/06/00 100
3,000 Hamilton OH, MFH Rev., Ser. A (Knollwood Village Apts.) .................... 4.800 07/06/00 3,000
2,000 Hamilton, OH, MFH Rev. (Knollwood Village Apts.) ........................... 4.800 07/06/00 2,000
2,675 Hancock Co., OH, MFM Rev., Ser. A (Crystal Glen Apts. Proj. Phase II) ...... 4.800 07/06/00 2,675
6,605 Lima, OH, Hosp. Fac. & Impt. Rev., Ser. 1996 (Lima Memorial Hosp.) ......... 4.850 07/06/00 6,605
315 Lucas Co., OH, IDR (Associates Proj.) ...................................... 4.950 07/06/00 315
250 Lucas Co., OH, Rev. (Sunshine Children's Home) ............................. 4.850 07/06/00 250
1,850 Mahoning Co., OH, Health Care Fac. Rev. (Copeland Oaks) .................... 4.800 07/06/00 1,850
1,265 Mahoning Co., OH, Health Care Fac. Rev. (Ohio Heart Institute) ............. 4.850 07/06/00 1,265
3,410 Marion Co., OH, Hosp. Impt. Rev. (Pooled Lease Proj.) ...................... 4.800 07/06/00 3,410
590 Marion Co., OH, Hosp. Impt. Rev. (Pooled Lease Proj.) ...................... 4.800 07/06/00 590
340 Marion Co., OH, Hosp. Impt. Rev. (Pooled Lease Proj.) ...................... 4.900 07/06/00 340
1,150 Mason, OH, Tax Increment Fin. Rev. (Central Park Proj.) .................... 4.970 07/06/00 1,150
3,360 Montgomery Co., OH, Health Care Rev. (Comm. Blood Ctr. Proj.) .............. 4.850 07/06/00 3,360
3,200 Montgomery Co., OH, Ltd. Oblig. Rev., Ser. 1996 ............................ 4.800 07/06/00 3,200
(St.Vincent de Paul Proj.)
4,900 Ohio St. EDR, Ser. 1983 (Court St. Ctr. Assoc. Ltd. Proj.) ................. 4.950 07/06/00 4,900
4,100 Ohio St. Higher Educ. Fac. Rev. (Pooled Fin.) .............................. 4.850 07/06/00 4,100
4,100 Ohio St. Higher Educ. Fac. Rev. (Pooled Fin.) .............................. 4.850 07/06/00 4,100
4,800 Ohio St. Higher Educ. Fac. Rev. (Pooled Fin.) .............................. 4.850 07/06/00 4,800
590 Ohio St. IDR, Ser. 1994 (A.M. Castle & Co. Proj.) .......................... 5.150 07/06/00 590
1,110 Ohio St. Turnpike Rev., Ser. 71 ............................................ 4.870 07/06/00 1,110
1,755 Ottawa Co., OH, Hosp. Fac. Rev. (Luther Home of Mercy Proj.) ............... 4.850 07/06/00 1,755
160 Pike Co., OH, EDR (Pleasant Hill) .......................................... 4.800 07/06/00 160
800 Rickenbacker, OH, Port. Auth. Rev. (Rickenbacker Holdings, Inc.) ........... 4.850 07/06/00 800
5,555 Sharonville, OH, IDR (Duke Realty Proj.) ................................... 4.850 07/06/00 5,555
1,800 Summit Co., OH, Health Care Fac. Rev., Ser. 1997 (Evant, Inc. Proj.) ....... 4.850 07/06/00 1,800
630 Summit Co., OH, IDR (Go-Jo Indust., Inc. Proj.) ............................ 4.850 07/06/00 630
4,260 Trumbull Co., OH, Health Care Fac. Rev. (Shepherd of the Valley) ........... 4.800 07/06/00 4,260
3,995 Univ. of Akron, OH, Gen. Rec., Ser. 165 .................................... 4.870 07/06/00 3,995
1,210 Village of Andover, OH, Health Care Fac. Rev., Ser. 1996
(D&M Realty Proj.) ....................................................... 4.800 07/06/00 1,210
1,600 Warren Co., OH, IDR (Liquid Container Proj.) ............................... 4.850 07/06/00 1,600
850 Westlake, OH, IDR (Nordson Co.) ............................................ 4.900 07/06/00 850
1,400 Hamilton Co., OH, IDR (ADP System) ......................................... 4.500 07/15/00 1,400
---------- ----------
$ 216,212 TOTAL FLOATING & VARIABLE DEMAND NOTES
---------- (Amortized Cost $216,212) .................................................. $ 216,212
----------
<PAGE>
OHIO TAX-FREE MONEY FUND (CONTINUED)
==============================================================================================================================
PRINCIPAL MARKET
AMOUNT COUPON MATURITY VALUE
(000'S) ADJUSTABLE RATE PUT BONDS-- 6.9% RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
$ 2,470 Perry Co., OH, Nursing Fac. Rev., Ser. 1996 ................................ 3.700 09/01/00 $ 2,470
(New Lexington Health Corp. Proj.)
590 Riverside, OH, EDR (Riverside Assoc. Ltd. Proj.) ........................... 4.250 09/01/00 590
4,760 Cuyahoga Co.,OH, IDR (Halle Office Bldg.) .................................. 4.510 10/01/00 4,760
1,135 Miami Valley, OH, Tax-Exempt Mtg. Rev. Ser. 1986 ........................... 4.880 10/15/00 1,135
1,315 Clermont Co., OH, EDR (John Q. Hammons Proj.) .............................. 4.600 11/01/00 1,315
550 Franklin Co., OH, IDR (GSW Proj.) .......................................... 4.400 11/01/00 550
2,925 Ohio St. HFA MFH (Lincoln Park) ............................................ 4.400 11/01/00 2,925
3,275 Richland Co., OH, IDR (Mansfield Sq. Proj.) ................................ 4.500 11/15/00 3,275
315 Cuyahoga Co., OH, Health Care Rev .......................................... 5.050 12/01/00 315
4,690 Franklin Co., OH, IDR (Leveque & Assoc. Proj.) ............................. 4.800 12/01/00 4,690
975 Scioto Co., OH, Health Care Rev. (Hillview Retirement) ..................... 4.800 12/01/00 975
880 Gallia Co., OH, IDR (Jackson Pike Assoc.) .................................. 4.750 12/15/00 880
185 Cincinnati & Hamilton Co., OH, Port Auth. EDR
---------- (Kenwood Office Assoc. Proj.) ............................................ 3.600 08/01/01 185
----------
$ 24,065 TOTAL ADJUSTABLE RATE PUT BONDS (AMORTIZED COST $24,065) ................... $ 24,065
---------- ----------
$ 345,079 TOTAL INVESTMENT SECURITIES-- 99.3%
---------- (Amortized Cost $345,159) .................................................. $ 345,159
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.7% ............................... 2,291
----------
Net Assets-- 100.0% ........................................................ $ 347,450
==========
</TABLE>
See accompanying notes to financial statements and notes to portfolios of
investments.
<PAGE>
<TABLE>
<CAPTION>
FLORIDA TAX-FREE MONEY FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 2000
==============================================================================================================================
PRINCIPAL MARKET
AMOUNT FIXED RATE REVENUE & COUPON MATURITY VALUE
(000'S) GENERAL OBLIGATION BONDS-- 22.7% RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 100 Arizona St. Transportation Board, Ser. 1990 (Prerefunded @ 101) ............ 6.750 07/01/00 $ 101
500 First Florida Governmental Fin. Commission, Rev., Ser. C ................... 5.900 07/01/00 500
1,000 Florida St. Dept. of Natural Resources Preservation Rev .................... 4.500 07/01/00 1,000
500 Seminole Co., FL, School Dist. TANS ........................................ 4.000 07/28/00 500
500 Lee Co., FL, School Board COP, Ser. A ...................................... 6.200 08/01/00 501
250 American Municipal Power Sys. Impt. BANS(City Of Bryan Proj.) .............. 4.750 08/25/00 250
95 Louisiana St. GO Prerefunded @ 102 ......................................... 7.125 09/01/00 98
100 Jacksonville, FL, Excise Tax Rev ........................................... 3.900 10/01/00 100
500 Pembroke Pines, FL, Capital Improvement Rev ................................ 3.100 12/01/00 495
500 American Municipal Power Sys. Equipment BANS
(Distributive Generation Proj.) .......................................... 5.250 01/19/01 498
100 Indian River Co., FL, Water & Sewer Rev .................................... 6.500 05/01/01 104
---------- ----------
$ 4,145 TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS
---------- (Amortized Cost $4,147) .................................................... $ 4,147
----------
------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT COUPON MATURITY VALUE
(000'S) FLOATING & VARIABLE DEMAND NOTES-- 73.1% RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
$ 800 Collier Co., FL, Health Fac. Auth. Hosp. Rev. (Cleveland Clinic) ........... 4.500 07/01/00 $ 800
800 Hillsborough Co., FL, PCR (Tampa Elec. Co. Proj.) .......................... 4.550 07/01/00 800
1,000 Idaho HFA Rev., Ser. 1995 (St. Lukes Regional Hosp.) ....................... 4.600 07/01/00 1,000
1,000 Martin Co., FL, PCR (Florida Power & Light) ................................ 4.600 07/01/00 1,000
475 Volusia Co., FL, HFA MFH Rev., Ser. H (Sun Pointe Apts.) ................... 5.100 07/04/00 475
900 Brevard Co. FL, HFA MFH Rev. Ser. B
(Malabar Lakes & Park Village) ........................................... 4.850 07/05/00 900
300 Broward Co., FL, HFA MFH Rev. (Margate Invts. Proj.) ....................... 4.850 07/05/00 300
100 Clermont Co., OH, Hosp. Fac. Rev., Ser. B
(Mercy Health Sys. Proj.) ................................................ 4.950 07/05/00 100
180 Florida HFA MFH Rev., Ser. EEE (Carlton Arms II Proj.) ..................... 4.850 07/05/00 180
100 Florida Housing Fin. Corp. MFH Rev ......................................... 4.800 07/05/00 100
600 Florida Housing Fin. Corp. Rev., (Oaks at Regency) ......................... 4.800 07/05/00 600
500 Lee Co., FL, IDR Educ. Fac. Rev. (Canterbury School Proj.) ................. 4.800 07/05/00 500
900 Manatee Co., FL, HFA MFH Rev. (Harbour Proj. B) ............................ 4.600 07/05/00 900
900 Palm Beach Co., FL, Rev. (Henry Morrison Flagler Proj.) .................... 4.700 07/05/00 900
225 Putnam Co., FL, Dev. Auth. PCR, Ser. 1984D
(Seminole Elec. Coop.) ................................................... 4.850 07/05/00 225
900 St. Petersburg, FL, HFA Rev. Ser. 1997 (Menorah Manor Proj.) ............... 4.750 07/05/00 900
1,000 Jacksonville, FL, Health Fac. Rev. (Faculty Practice Assoc.) ............... 4.800 07/06/00 1,000
1,150 Jacksonville, FL, Health Fac. Rev. (River Garden) .......................... 4.850 07/06/00 1,150
1,500 ABN AMRO Munitops Trust Cert., Ser. 1998-8 ................................. 4.800 07/08/00 1,500
---------- ----------
$ 13,330 TOTAL FLOATING & VARIABLE DEMAND NOTES
---------- (Amortized Cost $13,330) ................................................... $ 13,330
----------
<PAGE>
FLORIDA TAX-FREE MONEY FUND (CONTINUED)
==============================================================================================================================
PRINCIPAL MARKET
AMOUNT COUPON MATURITY VALUE
(000'S) ADJUSTABLE RATE PUT BONDS-- 3.3% RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
$ 600 Putnam Co., FL, Dev. Auth. PCR, Ser. H-1 (Seminole Elec. Coop.) ............ 4.350 12/15/00 $ 600
---------- (Amortized Cost $600)
$ 18,075 TOTAL INVESTMENT SECURITIES-- 99.1% (Amortized Cost $18,077) ............... $ 18,077
==========
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.9% ............................... 167
----------
NET ASSETS-- 100.0% ........................................................ $ 18,244
==========
</TABLE>
See accompanying notes to financial statements and notes to portfolios of
investments.
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE TERM FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 2000
==============================================================================================================================
PRINCIPAL MARKET
AMOUNT COUPON MATURITY VALUE
(000'S) MUNICIPAL OBLIGATIONS-- 98.5% RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ARIZONA -- 2.7%
$ 600 Maricopa Co., AZ, School Dist. Rev., Ser. 1991C (Tempe Elem.) .............. 8.000 07/01/04 $ 670
300 Tucson, AZ, Water Dist. Rev ................................................ 9.750 07/01/10 410
----------
1,080
----------
CALIFORNIA -- 1.7%
440 Sacramento Co., CA, MFH ARPB (Fairway One Apts.) ........................... 5.875 02/01/03 440
250 California HFA Multi-Unit Rental Rev., Ser. B .............................. 6.500 08/01/05 257
----------
697
----------
COLORADO -- 2.6%
300 Highland Ranch, CO, Metro. Dist. GO, Ser. A ................................ 5.000 12/01/10 287
740 Broomfield, CO, Water Activity Enterprise Wtr Rev .......................... 5.300 12/01/11 752
----------
1,039
----------
FLORIDA -- 9.7%
500 Florida HFA MFH ARPB, Ser. 1978B (Hampton Lakes II Proj.) .................. 5.700 04/01/01 499
750 Hillsborough Co., FL, Solid Waste Rev ...................................... 5.500 10/01/06 771
455 Pensacola, FL, Airport Rev., Ser. 1997B .................................... 5.400 10/01/07 465
1,000 Pasco Co., FL, HFA MFH Rev., Ser. 1997B (Cypress Trail Apts.) .............. 5.500 06/01/08 1,006
1,120 Florida HFA MFH Sr. Lien, Ser. I-1 ......................................... 6.100 01/01/09 1,148
----------
3,889
----------
ILLINOIS -- 1.4%
500 Chicago, IL, Met Water Reclamation Dist Gtr Chicago ........................ 7.000 01/01/11 574
----------
INDIANA -- 6.4%
1,000 Indiana Bond Bank Special Prog. Rev., Ser. A-1 ............................. 6.650 01/01/04 1,030
1,000 Indiana Health Fac. Fin. Auth. Hosp. Rev. (Clarian Health Partners) ........ 6.000 02/15/05 1,033
500 Indiana HFA Multi-Unit Mtg. Prog. Rev., Ser. 1992A ......................... 6.600 01/01/12 516
----------
2,579
----------
IOWA -- 2.6%
120 Cedar Rapids, IA, Hosp. Fac. Rev. (St. Luke's Methodist Hosp.),
Prerefunded @ 102 ........................................................ 6.000 08/15/03 126
250 Iowa Student Loan Liquidity Corp. Rev ...................................... 6.400 07/01/04 259
280 Iowa HFA Rev., Ser. A ...................................................... 6.500 07/01/06 285
240 Iowa Student Loan Liquidity Corp. Rev ...................................... 6.600 07/01/08 248
130 Cedar Rapids, IA, Hosp. Fac. Rev. (St. Luke's Methodist Hosp.) ............. 6.000 08/15/09 135
----------
1,053
----------
LOUISIANA -- 1.1%
440 Louisiana Public Fac. Auth. Rev. (Medical Ctr. of Louisiana) ............... 6.000 10/15/03 450
----------
MASSACHUSETTS -- 3.7%
500 New England Educ. Loan Mkt. Corp. Rev., Ser. 1992A ......................... 6.500 09/01/02 517
500 New England Educ. Loan Mkt. Corp. Rev., Ser. 1992B ......................... 6.600 09/01/02 518
440 Massachusetts St. Indust. Fin. Agy. Rev., Ser. 1997 (Hudner Assoc.) ........ 5.000 01/01/08 438
----------
1,473
----------
<PAGE>
TAX-FREE INTERMEDIATE TERM FUND (CONTINUED)
==============================================================================================================================
PRINCIPAL MARKET
AMOUNT COUPON MATURITY VALUE
(000'S) MUNICIPAL OBLIGATIONS-- 98.5% (CONTINUED) RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
MICHIGAN -- 2.4%
$ 500 Detroit MI, GO Ref. Ser. B MBIA ............................................ 6.375 04/01/07 $ 533
425 Battle Creek, MI, EDR (Kellogg Co. Proj.) .................................. 5.125 02/01/09 427
----------
960
----------
MISSISSIPPI -- 1.3%
500 Mississippi Higher Educ. Rev., Ser. B ...................................... 6.100 07/01/01 507
----------
NEBRASKA -- 3.6%
555 Nebraska Invest. Fin. Auth. Rev., Ser. 1989
(Foundation for Educ. Fund), Escrowed to Maturity ........................ 7.000 11/01/09 562
1,000 Nebraska Gas Supply Rev., Ser. A (American Public Energy Agy.) ............. 4.600 06/01/10 891
----------
1,453
----------
NORTH CAROLINA-- 1.7%
350 Carteret Co., NC, COP ...................................................... 5.200 06/01/11 351
350 Carteret Co., NC, COP ...................................................... 5.300 06/01/13 349
----------
700
----------
OHIO -- 43.2%
1,400 Cuyahoga Co., OH, Hosp. Rev., Ser. 1997D
(Cleveland Clinic Foundation) VRDN ....................................... 4.550 07/03/00 1,400
370 Fairfield, OH, IDR ARPB (Skyline Chili, Inc. Proj.) ........................ 5.000 09/01/00 370
270 Warren Co., OH, Hosp. Fac. Rev. (Otterbein Home),
Prerefunded @ 102 ........................................................ 7.000 07/01/01 281
745 Ohio St. EDR Ohio Enterprise Bond Fd. (Smith Steelite Proj.) ............... 5.600 12/01/03 755
500 Hamilton Co., OH, Hosp. Fac. Rev. (Episcopal Retirement Home) .............. 6.600 01/01/04 515
265 Ohio St. EDR Ohio Enterprise Bond Fd. (Cheryl & Co.) ....................... 5.500 12/01/04 268
1,005 Franklin Co., OH, Health Care Rev. (First Comm. Village) ................... 6.000 06/01/06 1,030
530 Toledo, OH, GO ............................................................. 6.000 12/01/06 564
710 Hamilton Co., OH, Health Care Fac. (Twin Towers) ........................... 5.750 10/01/07 715
500 Ohio St. IDR, Ser. 1997 (Bomaine Corporation Proj.) ........................ 5.500 11/01/07 498
599 Columbus, OH, Special Assessment GO ........................................ 5.050 04/15/08 593
1,000 Ohio St. Bldg. Auth. Rev. St. Fac. (Juvenile Correction) ................... 5.000 10/01/08 1,003
800 West Clermont, OH, LSD GO .................................................. 6.150 12/01/08 842
500 Hamilton Co., OH, Hosp. Fac. Rev. (Bethesda Hosp.) ......................... 7.000 07/01/09 506
1,000 Franklin Co., OH, GO ....................................................... 5.450 12/01/09 1,021
1,035 Reading, OH, Rev. (St. Mary's Educ. Institute) ............................. 5.550 02/01/10 1,040
700 Hamilton Co., OH, Health Care Fac. (Twin Towers) ........................... 5.250 10/01/10 670
1,000 Franklin Co., OH, Rev (Online Computer Library Ctr.) ....................... 4.650 10/01/11 926
275 Akron, OH, GO .............................................................. 6.000 11/01/11 293
1,000 Hamilton Co., OH, Sewer Sys Rev Ser A ...................................... 5.500 12/01/11 1,034
1,000 Ohio St. University Rev., Ser. A ........................................... 5.125 12/01/11 995
1,000 Franklin Co., OH, Rev (Online Computer Library Ctr.) ....................... 4.700 10/01/12 921
615 Ohio St. University General Receipts Rev., Ser. A .......................... 5.750 12/01/13 640
465 Cincinnati, OH, Police & Fireman's Disability GO ........................... 5.750 12/01/16 475
----------
17,355
----------
PENNSYLVANIA -- 1.3%
500 Pennsylvania Fin. Auth. Muni. Capital Impt. Proj. Rev ...................... 6.600 11/01/09 529
----------
<PAGE>
TAX-FREE INTERMEDIATE TERM FUND (CONTINUED)
==============================================================================================================================
PRINCIPAL MARKET
AMOUNT COUPON MATURITY VALUE
(000'S) MUNICIPAL OBLIGATIONS-- 98.5% (CONTINUED) RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA-- 1.9%
$ 725 Richland-Lexington, SC, Airport Dist. Rev., Ser. 1995 (Columbia Metro.) .... 6.000 01/01/08 $ 751
----------
TENNESSEE -- 2.7%
525 Southeast, TN, Tax-Exempt Mtg. Trust ARPB, Ser. 1990 ....................... 7.250 04/01/03 547
500 Nashville, TN, Metro. Airport Rev., Ser. C ................................. 6.625 07/01/07 520
----------
1,067
----------
TEXAS -- 3.2%
50 N. Central, TX, Health Fac. Rev. (Baylor Health Care), Indexed INFLOS,
Prerefunded @ 102 ........................................................ 6.400 05/15/02 52
450 N. Central, TX, Health Fac. Rev. (Baylor Health Care), Indexed INFLOS ...... 6.400 05/15/08 467
515 Robinson, TX, ISD GO ....................................................... 5.750 08/15/10 539
192 Midland, TX, HFC Rev., Ser. A-2 ............................................ 8.450 12/01/11 209
10 San Antonio, TX, Elec. & Gas Rev., Escrowed to Maturity .................... 5.000 02/01/12 10
----------
1,277
----------
VIRGINIA -- 2.9%
1,195 Fairfax Co., VA, GO ........................................................ 5.000 06/01/13 1,165
----------
WASHINGTON -- 1.4%
550 Washington St. Power Supply Sys. Rev., Ser. A (Nuclear Proj. No. 2) ........ 6.500 07/01/03 569
----------
WISCONSIN -- 1.0%
430 Wisconsin St. Health & Educ. Fac. Auth. Rev. (Agnesian Healthcare, Inc.) ... 4.900 07/01/11 404
---------- ----------
$ 38,961 TOTAL MUNICIPAL OBLIGATIONS-- 98.5%
========== (Amortized Cost $39,401) ................................................... $ 39,571
OTHER ASSETS IN EXCESS OF LIABILITIES-- 1.5% ............................... 620
----------
NET ASSETS-- 100.0% ........................................................ $ 40,191
==========
</TABLE>
See accompanying notes to financial statements and notes to portfolios of
investments.
<PAGE>
<TABLE>
<CAPTION>
OHIO INSURED TAX-FREE FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 2000
==============================================================================================================================
PRINCIPAL MARKET
AMOUNT FIXED RATE REVENUE & COUPON MATURITY VALUE
(000'S) GENERAL OBLIGATION BONDS-- 96.7% RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 95 Ohio St. Higher Educ. Fac. Comm. Rev., Prerefunded @ 102 ................... 7.250 12/01/00 $ 98
245 Franklin Co., OH, IDR (1st Comm. Village Healthcare),
Crossover Prerefunded @ 101.5 ............................................ 10.125 08/01/01 262
30 Clermont Co., OH, Hosp. Fac. Rev. (Mercy Health Sys.), Prerefunded @ 100 ... 7.500 09/01/01 31
310 Ohio HFA SFM Rev., Ser. D .................................................. 7.000 09/01/01 321
1,000 Clermont Co., OH, Hosp. Fac. Rev. (Mercy Health Sys.), Prerefunded @ 102 ... 6.733 09/25/01 1,044
500 Summit Co., OH, Various Purpose GO, Prerefunded @ 102 ...................... 6.625 12/01/01 524
460 Cleveland, OH, Waterworks Impt. Rev., Ser. F, Prerefunded @ 102 ............ 6.500 01/01/02 481
360 Cuyahoga Co., OH, Hosp. Rev. (University Hosp.), Prerefunded @ 102 ......... 6.250 01/15/02 375
1,000 Kent St. University General Receipts Rev., Prerefunded @ 102 ............... 6.500 05/01/02 1,051
500 Franklin Co., OH, Hosp. Rev. Ser. 1991 (Holy Cross), Prerefunded @ 102 ..... 6.750 06/01/02 528
500 Mahoning Co., OH, Hosp. Impt. Rev. (YHA, Inc.), Prerefunded @ 100 .......... 7.000 10/15/02 514
675 Reynoldsburg, OH, CSD GO, Prerefunded @102 ................................. 6.550 12/01/02 716
500 Seneca Co., OH, GO (Jail Fac.), Prerefunded @ 102 .......................... 6.500 12/01/02 530
127 Ohio St. Bldg. Auth. Rev. (Columbus St. Proj.), Prerefunded @ 100 .......... 10.125 04/01/03 141
31 Ohio St. Bldg. Auth. Rev. (Frank Lausch Proj.), Prerefunded @ 100 .......... 10.125 04/01/03 34
230 Summit Co., OH, GO, Ser. A, Prerefunded @ 100 .............................. 6.900 08/01/03 244
591 Ohio HFA SFM Rev., Ser. 1991D .............................................. 7.050 09/01/03 611
500 Newark, OH, Water Sys. Impt. Rev., Prerefunded @ 102 ....................... 6.000 12/01/03 528
290 Northwest, OH, LSD GO, Prerefunded @ 102 ................................... 7.050 12/01/03 306
500 Ohio St. Bldg. Auth. Rev., Ser. 1994A (Juvenile Correctional Bldg.),
Prerefunded @ 102 ........................................................ 6.600 10/01/04 543
290 Alliance, OH, CSD GO ....................................................... 6.900 12/01/06 304
500 Mansfield, OH, Hosp. Impt. Rev. (Mansfield General) ........................ 6.700 12/01/09 522
450 Ohio Capital Corp. MFH Rev., Series 1990A .................................. 7.500 01/01/10 464
500 Hamilton, OH, Water Sys. Mtg. Rev., Ser. 1991A ............................. 6.400 10/15/10 517
500 Butler Co., OH, Hosp. Fac. Rev. (Middletown Regional Hospital) ............. 6.750 11/15/10 522
1,000 Alliance, OH, CSD GO ....................................................... 5.500 12/01/10 967
40 Cleveland, OH, Waterworks Impt. Rev., Ser. F ............................... 6.500 01/01/11 42
230 Cuyahoga Co., OH, Hosp. Rev. (University Hosp.)
Escrowed to Maturity ..................................................... 9.000 06/01/11 277
365 Bexley, OH, CSD GO ......................................................... 7.125 12/01/11 423
530 Urbana, OH, Wastewater Impt. GO ............................................ 7.050 12/01/11 565
600 Westerville, OH, Water Sys. Impt. GO ....................................... 6.450 12/01/11 628
500 Strongsville, OH, CSD GO ................................................... 5.375 12/01/12 510
1,095 West Clermont, OH, LSD GO .................................................. 6.900 12/01/12 1,202
500 Worthington, OH, CSD GO .................................................... 6.375 12/01/12 523
530 Ottawa Co., OH, GO ......................................................... 5.750 12/01/14 543
1,000 Portage Co., OH, GO ........................................................ 6.200 12/01/14 1,060
400 Warren, OH, Waterworks Rev ................................................. 5.500 11/01/15 405
1,000 Buckeye Valley, OH, LSD GO ................................................. 6.850 12/01/15 1,142
500 Ohio St. Higher Educ. Fac. Rev. (Univ. of Dayton) .......................... 6.750 12/01/15 530
500 Cleveland, OH, Waterworks Impt. Rev., Ser. F ............................... 6.250 01/01/16 519
<PAGE>
OHIO INSURED TAX-FREE FUND (CONTINUED)
==============================================================================================================================
PRINCIPAL MARKET
AMOUNT FIXED RATE REVENUE & COUPON MATURITY VALUE
(000'S) GENERAL OBLIGATION BONDS-- 96.7% (CONTINUED) RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
$ 740 Columbus-Polaris Hsg. Corp. Rev., Prerefunded @ 100 ........................ 7.400 01/01/16 $ 817
171 Ohio HFA SFM Rev., Ser. 1990F .............................................. 7.600 09/01/16 175
750 Montgomery Co., OH, Hosp. Rev. (Miami Valley Hosp.) ........................ 6.250 11/15/16 770
1,000 Greater Cleveland, OH, Regional Trans. Auth. GO ............................ 4.750 12/01/16 896
1,260 Cleveland, OH, Airport Sys. Rev., Ser. C ................................... 5.125 01/01/17 1,190
750 Butler Co.,OH, Transportation Impt. Dist., Ser. A .......................... 5.125 04/01/17 710
500 Toledo, OH, Sewer Sys. Rev ................................................. 6.350 11/15/17 530
1,000 Toledo, OH, Waterworks Sys. Mtg. Rev ....................................... 4.750 11/15/17 888
1,000 Rocky River, OH, CSD GO, Ser. 1998 ......................................... 5.375 12/01/17 989
1,000 Ohio St. Bldg. Auth. Rev. (Adult Correctional Bldg.) ....................... 5.250 10/01/18 959
1,670 Canton, OH, GO ............................................................. 4.750 12/01/18 1,478
2,500 Ohio St. Water Dev. Auth. Impt. Rev ........................................ 5.125 06/01/19 2,333
1,000 University of Cincinnati, OH, General Receipts Rev ......................... 5.750 06/01/19 1,007
1,000 Lucas Co., OH, Hsg. Dev. Corp. (Northgate Apts.) Ser. A .................... 5.950 07/01/19 1,003
1,000 Lorain Co., OH, Hosp. Rev. (Catholic Health Partners) ...................... 5.500 09/01/19 980
1,000 Lucas Co., OH, Hosp. Rev. (Promedica Health) ............................... 5.625 11/15/19 983
2,000 Avon Lake, OH, CSD GO ...................................................... 5.500 12/01/19 1,969
2,145 Brunswick, OH, CSD ......................................................... 5.750 12/01/19 2,165
745 Crawford Co., OH, GO ....................................................... 4.750 12/01/19 652
1,000 Evergreen OH, LSD .......................................................... 5.500 12/01/19 985
2,000 Hamilton, OH, CSD GO ....................................................... 5.500 12/01/19 1,960
1,250 Kings, OH, LSD GO .......................................................... 5.950 12/01/19 1,282
500 Akron, OH, GO .............................................................. 5.800 11/01/20 500
750 Greene Co., OH, Sewer Sys. Rev. ............................................ 5.125 12/01/20 696
1,000 Greene Co., OH, Sewer Sys. Rev ............................................. 5.625 12/01/20 992
1,245 Hamilton Co., OH, Swr. Sys. Impt. Rev., Ser. A ............................. 5.700 12/01/20 1,243
525 Kings, OH, LSD GO .......................................................... 6.050 12/01/21 539
2,000 Lake, OH, LSD GO (Stark Co.) ............................................... 5.750 12/01/21 2,003
1,000 Summit Co., OH, GO ......................................................... 6.000 12/01/21 1,032
1,035 Lima OH, CSD ............................................................... 5.500 12/01/22 997
500 Morgan, OH, LSD GO ......................................................... 5.750 12/01/22 501
1,250 Scioto Valley, OH, LSD ..................................................... 5.650 12/01/22 1,236
1,000 Hamilton, OH, CSD GO ....................................................... 5.625 12/01/24 985
1,000 Hilliard, OH, CSD GO ....................................................... 5.750 12/01/24 997
1,000 Kings, OH, LSD GO .......................................................... 5.650 12/01/24 968
1,250 Ohio St. University General Receipts Rev., Ser. A .......................... 5.750 12/01/24 1,247
1,000 Hilliard, OH, CSD GO ....................................................... 5.750 12/01/28 992
925 Licking Heights, OH, LSD GO ................................................ 6.400 12/01/28 932
---------- ----------
$ 60,935 TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS-- 100.7%
---------- (Amortized Cost $59,905) ................................................... $ 61,128
----------
<PAGE>
OHIO INSURED TAX-FREE FUND (CONTINUED)
==============================================================================================================================
PRINCIPAL MARKET
AMOUNT COUPON MATURITY VALUE
(000'S) FLOATING AND VARIABLE DEMAND NOTES-- 4.0% RATE DATE (000'S)
------------------------------------------------------------------------------------------------------------------------------
$ 2,400 Cuyahoga Co., OH, Hosp. Rev., Ser. 1997D (Cleveland Clinic Foundation) ..... 4.550 07/01/00 $ 2,400
100 Columbus, OH, GO Rev., Ser. 1 .............................................. 4.600 07/07/00 100
---------- ----------
$ 2,500 TOTAL FLOATING AND VARIABLE DEMAND NOTES
---------- (Amortized Cost $2,500) .................................................... $ 2,500
----------
$ 63,435 TOTAL INVESTMENTS AT VALUE-- 100.7%
========== (Amortized Cost $62,405) ................................................... $ 63,628
LIABILITIES IN EXCESS OF OTHER ASSETS-- (0.7%) ............................. (443)
----------
NET ASSETS-- 100.0% ........................................................ $ 63,185
==========
</TABLE>
See accompanying notes to financial statements and notes to portfolios of
investments.
<PAGE>
NOTES TO PORTFOLIOS OF INVESTMENTS
JUNE 30, 2000
================================================================================
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, 2000.
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 Bond
BANS - Bond Anticipation Notes
COP - Certificates of Participation
CSD - City School District
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
SFM - Single Family Mortgage
TANS - Tax Anticipation Notes
USD - Unified School District
VRDN - Variable Rate Demand Notes
<PAGE>
RESULTS OF SPECIAL MEETING OF SHAREHOLDERS
APRIL 19, 2000 (UNAUDITED)
================================================================================
On April 19, 2000, a Special Meeting of Shareholders of Touchstone Tax-Free
Trust (the Trust) was held (1) to approve or disapprove new investment advisory
agreements with Touchstone Advisers, Inc., (2) to approve or disapprove new
subadvisory agreements with Fort Washington Investment Advisors, Inc. and (3) to
approve or disapprove the termination of the Trust's current independent public
accountants and the selection of Ernst & Young LLP as independent auditors for
the fiscal year ended June 30, 2000. The total number of shares of the Trust
present by proxy represented 59.5% of the shares entitled to vote at the
meeting. Each of the matters submitted to shareholders was approved.
The results of the voting for or against the approval of the new investment
advisory agreements by each Fund was as follows:
--------------------------------------------------------------------------------
NUMBER OF SHARES
---------------------------------------------
FOR AGAINST ABSTAIN
--------------------------------------------------------------------------------
Tax-Free Money Fund 11,995,568 1,638,089 131,616
California Tax-Free Money Fund 67,424,730 37,530 12,322
Ohio Tax-Free Money Fund 208,471,312 151,320 1,288,677
Florida Tax-Free Money Fund 9,245,957 16 3,167
Tax-Free Intermediate Term Fund 2,065,412 24,552 90,986
Ohio Insured Tax-Free Fund 2,889,279 104,897 93,308
--------------------------------------------------------------------------------
The results of the voting for or against the approval of the new subadvisory
agreements by each Fund was as follows:
--------------------------------------------------------------------------------
NUMBER OF SHARES
---------------------------------------------
FOR AGAINST ABSTAIN
--------------------------------------------------------------------------------
Tax-Free Money Fund 11,995,568 1,638,089 131,616
California Tax-Free Money Fund 67,461,325 52 13,205
Ohio Tax-Free Money Fund 208,471,730 151,320 1,288,259
Florida Tax-Free Money Fund 9,245,972 -- 3,167
Tax-Free Intermediate Term Fund 2,066,323 21,507 93,120
Ohio Insured Tax-Free Fund 2,890,722 97,022 99,740
--------------------------------------------------------------------------------
The results of the voting for against the termination of the Trust's current
independent public accountants and the selection of Ernst & Young LLP as
independent auditors by each Fund was as follows:
--------------------------------------------------------------------------------
NUMBER OF SHARES
---------------------------------------------
FOR AGAINST ABSTAIN
--------------------------------------------------------------------------------
Tax-Free Money Fund 13,519,321 88,497 157,456
California Tax-Free Money Fund 67,405,279 52 69,251
Ohio Tax-Free Money Fund 208,020,856 1,323,823 566,630
Florida Tax-Free Money Fund 9,245,957 16 3,167
Tax-Free Intermediate Term Fund 2,072,247 16,206 92,496
Ohio Insured Tax-Free Fund 2,873,268 103,115 111,101
--------------------------------------------------------------------------------
<PAGE>
REPORT OF INDEPENDENT AUDITORS
================================================================================
To the Shareholders and Trustees of the Touchstone Tax-Free Trust
We have audited the accompanying statements of assets and liabilities, including
the schedules of portfolio investments, of Touchstone Tax-Free Trust (consisting
of Tax-Free Money Fund, California Tax-Free Money Fund, Ohio Tax-Free Money
Fund, Florida Tax-Free Money Fund, Tax-Free Intermediate Term Fund, Ohio Insured
Tax-Free Fund) (the Funds) as of June 30, 2000, the related statements of
operations and statements of changes in net assets for the year then ended and
the financial highlights for the period then ended. These financial statements
and financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The statements of changes in net
assets presented herein for the year ended June 30, 1999 and the financial
highlights presented herein for each of the respective years or periods ended
June 30, 1999 were audited by other auditors whose report dated August 6, 1999
expressed an unqualified opinion.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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, 2000, by correspondence with the 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 position of each
of the respective Funds constituting the Touchstone Tax-Free Trust as of June
30, 2000, the results of their operations and the changes in their net assets
for the year then ended and the financial highlights for the period then ended,
in conformity with accounting principles generally accepted in the United
States.
/s/ Ernst & Young LLP
Cincinnati, Ohio
August 15, 2000
<PAGE>
PART C. OTHER INFORMATION
------ -----------------
Item 23. Exhibits
------- --------
(a) (i) ARTICLES OF INCORPORATION
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) 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) 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.
(iv) Amendment No. 3, dated February 28, 1997, to Registrant's
Restated Agreement and Declaration of Trust, which was
filed as an Exhibit to Registrant's Post-Effective
Amendment No. 40, is hereby incorporated by reference.
(v) Amendment No. 4, dated March 24, 2000, to Registrant's
Restated Agreement and Declaration of Trust is filed
herewith.
(vi) Amendment No 5, dated September 21, 2000, to Registrant's
Restated Agreement and Declaration of Trust is filed
herewith.
(b) BYLAWS
Registrant's Bylaws, as amended, which were
filed as an Exhibit to Registrant's Post-Effective
Amendment No. 38, are hereby incorporated by
reference.
(c) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS
Article IV Of Registrant's Restated Agreement and
Declaration of Trust provides the following rights for
security holders:
LIQUIDATION. In event of the liquidation or
dissolution of the Trust, the Shareholders of each
Series that has been established and designated shall
be entitled to receive, as a Series, when and as
declared by the Trustees, the excess of the assets
belonging to that Series over the liabilities belonging
to that Series. The assets so distributable to the
Shareholders of any particular Series shall be
distributed among such Shareholders in proportion to
the number of Shares of that Series held by them and
recorded on the books of the Trust.
VOTING. All shares of all Series shall have "equal
voting rights" as such term is defined in the Investment
Company Act of 1940 and except as otherwise provided by
that Act or rules, regulations or orders promulgated
thereunder. On each matter submitted to a vote of the
Shareholders, all shares of each Series shall vote as a
single class except as to any matter with respect to
which a vote of all Series voting as a single series is
required by the 1940 Act or rules and regulations
promulgated thereunder, or would be required under the
Massachusetts Business Corporation Law if the Trust were
a Massachusetts business corporation. As to any matter
which does not affect the interest of a particular Series,
only the holders of Shares of the one or more affected
Series shall be entitled to vote.
<PAGE>
REDEMPTION BY SHAREHOLDER. Each holder of Shares of a
particular Series shall have the right at such times as
may be permitted by the Trust, but no less frequently
than once each week, to require the Trust to redeem all
or any part of his Shares of that Series at a
redemption price equal to the net asset value per Share
of that Series next determined in accordance with
subsection (h) of this Section 4.2 after the Shares are
properly tendered for redemption.
Notwithstanding the foregoing, the Trust may postpone
payment of the redemption price and may suspend the right
of the holders of Shares of any Series to require the Trust
to redeem Shares of that Series during any period or at any
time when and to the extent permissible under the 1940 Act,
and such redemption is conditioned upon the Trust having
funds or property legally available therefor.
TRANSFER. All Shares of each particular Series shall
be transferable, but transfers of Shares of a
particular Series will be recorded on the Share
transfer records of the Trust applicable to that Series
only at such times as Shareholders shall have the right
to require the Trust to redeem Shares of that Series
and at such other times as may be permitted by the
Trustees.
Article V of Registrant's Restated Agreement and
Declaration of Trust provides the following rights
for security holders:
VOTING POWERS. The Shareholders shall have power
to vote only (i) for the election or removal of
Trustees as provided in Section 3.1, (ii)
with respect to any contract with a Contracting Party as
provided in Section 3.3 as to which Shareholder approval is
required by the 1940 Act, (iii) with respect to any
termination or reorganization of the Trust or any Series
to the extent and as provided in Sections 7.1 and 7.2,
(iv) with respect to any amendment of this Declaration
of Trust to the extent and as provided in Section 7.3,
(v) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not
a court action, proceeding or claim should or should not
be brought or maintained derivatively or as a class
action on behalf of the Trust or the Shareholders, and
(vi) with respect to such additional matters relating to
the Trust as may be required by the 1940 Act, this
Declaration of Trust, the Bylaws or any registration of
the Trust with the Commission (or any successor agency)
in any state, or as the Trustees may consider necessary
or desirable. There shall be no cumulative voting in the
election of any Trustee or Trustees. Shares may be voted
in person or by proxy.
<PAGE>
(d) INVESTMENT ADVISORY CONTRACTS
(i) Advisory Agreement with Touchstone Advisors, Inc. is
filed herewith.
(ii) Sub-Advisory Agreement with Fort Washington Investment
Advisors, Inc. for the Tax-Free Money Fund is filed
herewith.
(iii) Sub-Advisory Agreement with Fort Washington Investment
Advisors, Inc. for the Tax-Free Intermediate Term Fund is
filed herewith.
(iv) Sub-Advisory Agreement with Fort Washington Investment
Advisors, Inc. for the Ohio Tax-Free Money Fund is filed
herewith.
(v) Sub-Advisory Agreement with Fort Washington Investment
Advisors, Inc. for the California Tax-Free Money Fund is
filed herewith.
(vi) Sub-Advisory Agreement with Fort Washington Investment
Advisors, Inc. for the Ohio Insured Tax-Free Fund is filed
herewith.
(vii) Sub-Advisory Agreement with Fort Washington Investment
Advisors, Inc. for the Florida Tax-Free Money Fund is filed
herewith.
(e) UNDERWRITING CONTRACTS
(i) Registrant's Distribution Agreement with Touchstone
Securities, Inc. is filed herewith.
(ii) Form of Underwriter's Dealer Agreement is filed herewith.
(f) BONUS OR PROFIT SHARING CONTRACTS
None.
(g) CUSTODIAN AGREEMENTS
(i) 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) Custody Agreement with The Huntington Trust Company, N.A.,
the Custodian for the Florida Tax-Free Money Fund, which was
filed as an Exhibit to Registrant's Post-Effective Amendment
No. 36, is hereby incorporated by reference.
<PAGE>
(h) OTHER MATERIAL CONTRACTS
(i) Registrant's Accounting and Pricing Services Agreement
is filed herewith.
(ii) Registrant's Transfer, Dividend Disbursing, Shareholder
Service and Plan Agency Agreement is filed herewith.
(iii) Administration Agreement between Touchstone Advisors,
Inc. and Integrated Fund Services, Inc. is filed herewith.
(iv) Registrant's Expense Limitation Agreement is filed herewith.
(i) LEGAL OPINION
Opinion and Consent of Counsel, which was filed as an Exhibit
to Registrant's Pre-Effective Amendment No. 1, is hereby
incorporated by reference.
(j) OTHER OPINIONS
Consent of Independent Auditors is filed herewith.
(k) OMITTED FINANCIAL STATEMENTS
None.
(l) INITIAL CAPITAL AGREEMENTS
Letter of Initial Stockholder, which was filed as an
Exhibit to Registrant's Pre-Effective Amendment No. 1, is
hereby incorporated by reference.
(m) RULE 12B-1 PLAN
(i) Registrant's Plans of Distribution Pursuant to Rule 12b-1,
are filed herewith.
(ii) Form of Administration Agreement for the administration of
shareholder accounts is filed herewith.
(n) FINANCIAL DATA SCHEDULE
Financial Data Schedules were filed as Exhibits to
Registrant's Form N-SAR filing.
(o) RULE 18f-3 PLAN
Amended Rule 18f-3 Plan Adopted with Respect to the Multiple
Class Distribution System, which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 41, is hereby
incorporated by reference.
<PAGE>
(p) CODE OF ETHICS
(i) Registrant's Code of Ethics is filed herewith.
(ii) Code of Ethics for Touchstone Securities, Inc. is filed
herewith.
(iii) Code of Ethics for Touchstone Advisors, Inc. is filed
herewith.
(iv) Code of Ethics for Fort Washington Investment Advisors, Inc.
is filed herewith.
(q) Powers of Attorney for J. Leland Brewster, William Coleman,
Phillip Cox, Robert Leshner, H. Jerome Lerner, Oscar
Robertson, Nelson Schwab Jr., Robert Stautberg and Joseph
Stern
Item 24. Persons Controlled by or Under Common Control with the
------- Registrant
-------------------------------------------------------
None
Item 25. INDEMNIFICATION
------- ---------------
(a) 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" 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.
<PAGE>
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, an "interested Covered Person"
is one against whom the action, suit or other proceeding in
question or another action, suit or other proceeding on the
same or similar grounds is then or has been pending or
threatened, and a "disinterested" person is a person against
whom none of such actions, suits or other proceedings or
another action, suit or other proceeding on the same or
similar grounds is then or has been pending or threatened.
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.
(b) The Registrant maintains a mutual fund and investment
advisory professional and directors and officers liability
policy. The policy provides coverage to the Registrant, its
trustees and officers, Touchstone Advisors, Inc. in its
capacity as investment advisor and Fort Washington Investment
Advisors, Inc. in its capacity as sub-advisor, and Touchstone
Securities, Inc., in its capacity as principal underwriter,
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 Agreement provides that the Advisor and any of
its affiliates, directors, officers and employees shall not be
liable for any act or omission in the course of rendering
services to the Registrant or for any losses sustained in the
purchase, holding or sale of any security, except a loss
resulting from willful misfeasance, bad faith, gross
negligence or reckless disregard of the Advisor in the
performance of its duties under the Agreement. Registrant will
advance attorneys' fees or other expenses incurred by the
Advisor in defending a proceeding, upon the undertaking
by or on behalf of the Advisor to repay the advance unless it
is ultimately determined that the Advisor is entitled to
indemnification.
<PAGE>
The Sub-Advisory Agreements provide that the Sub-Advisor and
any of its affiliates, directors, officers and employees shall
not be subject to liability to the Adviser, the Registrant, or
to any shareholder for any act or omission in the course of,
or connected with, rendering services hereunder or for any
loss in the purchase, holding or sale of any security, except
a loss resulting from willful misfeasance, bad faith, gross
negligence or the reckless disregard of the obligations and
duties of the Sub-Advisor.
Item 26. BUSINESS AND OTHER CONNECTIONS OF THE ADVISOR AND SUB-ADVISOR
-------- -------------------------------------------------------------
A. TOUCHSTONE ADVISORS, INC. ( the "Advisor") is a registered
investment adviser which provides investment advisory services to
the Funds. The Advisor also serves as the investment adviser to
Touchstone Investment Trust, Touchstone Strategic Trust and
Touchstone Variable Series Trust, registered investment
companies.
The following list sets forth the business and other connections
of the directors and executive officers of the Advisor. Unless
otherwise noted, the address of the corporations listed below is
221 E. Fourth Street Street, Cincinnati, Ohio 45202.
(1) Jill T. McGruder, President and a Director of the Advisor.
(a) President and a Director of Fort Washington Brokerage
Services, Inc., a broker-dealer, Integrated Fund
Services, Inc., a transfer agent, IFS Fund
Distributors, Inc., a broker-dealer and IFS
Holdings, Inc., a holding company.
(b) A Director of Capital Analysts Incorporated, 3 Radnor
Corporate Center, Radnor, PA, an investment adviser and
broker-dealer.
(c) President, Chief Executive Officer and a Director of
IFS Financial Services, Inc., a holding company and
Touchstone Securities, Inc., a broker-dealer.
(d) President and a Director of IFS Agency Services, Inc.,
an insurance agency, IFS Insurance Agency, Inc., an
insurance agency and IFS Systems, Inc., an information
systems provider, 400 Broadway, Cincinnati, Ohio.
(e) Senior Vice President of The Western-Southern Life
Insurance Company, 400 Broadway, Cincinnati, Ohio, an
insurance company.
(f) President and Trustee of Touchstone Strategic Trust,
Touchstone Investment Trust and Touchstone Tax-Free
Trust.
(g) President of Touchstone Variable Series Trust.
<PAGE>
(2) Edward S. Heenan, Vice President & Comptroller of the
Advisor
(a) Director, Vice President & Comptroller of IFS Financial
Services, Inc., IFS Agency Services, Inc., IFS
Insurance Agency, Inc. and IFS Systems, Inc.
(b) Director and Controller of Touchstone Securities, Inc.
(3) Patricia J. Wilson, Chief Compliance Officer of the Advisor
(a) Chief Compliance Officer of Touchstone Securities, Inc.
(4) Donald J. Wuebbling, Secretary and Director of the Advisor
(a) Director of Touchstone Securities, Inc., IFS Agency
Services, Inc., IFS Insurance Agency, Inc. and IFS
Systems, Inc.
(b) Vice President and General Counsel of The Western and
Southern Life Insurance Company
(c) Secretary of Fort Washington Investment Advisors, Inc.,
420 E. Fourth Street, Cincinnati, OH 45202 and IFS
Financial Services, Inc.
(5) William F. Ledwin, a Director of the Advisor
(a) A Director of Fort Washington Brokerage Services, Inc.,
Integrated Fund Services, Inc., IFS Fund Distributors,
Inc., Touchstone Advisors, Inc., IFS Agency Services,
Inc., Capital Analysts Incorporated, IFS Insurance
Agency, Inc., Touchstone Securities, Inc., IFS
Financial Services, Inc., IFS Systems, Inc. and Eagle
Realty Group, Inc., 421 East Fourth Street, a real
estate brokerage and management service provider.
(b) President and a Director of Fort Washington Investment
Advisors, Inc.
(c) Vice President and Chief Investment Officer of Columbus
Life Insurance Company, 400 East Fourth Street,
Cincinnati, OH., a life insurance company.
(d) Senior Vice President and Chief Investment Officer of
The Western-Southern Life Insurance Company.
(6) James N. Clark, a Director of the Advisor
(a) A Director of IFS Financial Services, Inc., IFS
Insurance Agency, Inc. and IFS Systems, Inc.
<PAGE>
(7) Richard K. Taulbee, Vice President of the Advisor
(a) Vice President of IFS Financial Services, Inc., IFS
Agency Services, Inc., IFS Insurance Agency, Inc., IFS
Systems, Inc. and Touchstone Securities, Inc.
(b) Assistant Treasurer of Fort Washington Investment
Advisors, Inc.
(8) James J. Vance, Vice President & Treasurer of the Advisor
(a) Vice President & Treasurer of The Western and Southern
Life Insurance Company, Fort Washington Investment
Advisors, Inc., IFS Financial Services, Inc., IFS
Agency Services, Inc., IFS Insurance Agency, Inc., IFS
Systems, Inc. and Touchstone Securities, Inc.
(b) Assistant Treasurer of Fort Washington Brokerage
Services, Inc., Integrated Fund Services, Inc. and IFS
Fund Distributors, Inc.
(9) Terrie A. Wiedenheft - Chief Financial Officer of the
Advisor
(a) Senior Vice President, Chief Financial Officer and
Treasurer of Integrated Holdings, Inc., Integrated Fund
Services, Inc., IFS Fund Distributors, Inc. and Fort
Washington Brokerage Services, Inc.
(b) Chief Financial Officer of IFS Financial Services, Inc.
and Touchstone Securities, Inc.
(c) Assistant Treasurer of Fort Washington Investment
Advisors, Inc.
(d) Controller of Touchstone Investment Trust, Touchstone
Tax-Free Trust, Touchstone Strategic Trust and
Touchstone Variable Series Trust.
B. FORT WASHINGTON INVESTMENT ADVISORS, INC.("Ft. Washington") is a
registered investment adviser which provides sub-advisory
services to the Funds. Ft. Washington serves as the Sub-Advisor
to Touchstone Investment Trust and certain series of Touchstone
Strategic Trust and Touchstone Variable Series Trust. Ft.
Washington also provides investment advice to institutional and
individual clients.
The following list sets forth the business and other connections
of the directors and executive officers of Ft. Washington.
(1) William J. Williams, Chairman and a director of Ft.
Washington
(a) Chairman of the Board of The Western and Southern Life
Insurance Company
(2) William F. Ledwin, President and a director of Ft.
Washington
See biography above
<PAGE>
(3) John F. Barrett, a Director of Ft. Washington
(a) President and Chief Executive Officer of The Western
and Southern Life Insurance Company
(4) James J. Vance, Vice President and Treasurer of Ft.
Washington
See biography above
(5) Rance G. Duke, Vice President and Senior Portfolio Manager
of Ft. Washington
(a) Second Vice President and Senior Portfolio Manager of
The Western and Southern Life Insurance Company
(6) John C. Holden, Vice President and Senior Portfolio Manager
of Ft. Washington
See biography above
(7) Charles E. Stutenroth IV, Vice President and Senior
Portfolio Manager of Ft. Washington
See biography above
(8) Brendan M. White, Vice President and Senior Portfolio
Manager of Ft. Washington
(9) John J. Goetz, Vice President of Ft. Washington
(a) Vice President of Ft. Washington Brokerage Services,
Inc. and Ft. Washington
(10) Robert H. Leshner, Managing Director of Ft. Washington
(11) James A. Markley, Managing Director of Ft. Washington
(12) Roger M. Lanham - Vice President of Ft. Washington
(13) Augustine A. Long, Managing Director, Marketing of Ft.
Washington
(14) John J. O'Connor, Vice President of Ft. Washington
Item 27 Principal Underwriters
------- ----------------------
(a) Touchstone Securities, Inc. also acts as
underwriter for Touchstone Strategic Trust,
Touchstone Investment Trust and Touchstone Variable
Series Trust. Unless otherwise noted, the address
of the persons named below is 221 East Fourth Street,
Cincinnati, Ohio 45202. *The address is 420 East
Fourth Street, Cincinnati, Ohio 45202. **The
address is 400 Broadway, Cincinnati, Ohio 45202.
<PAGE>
POSITION POSITION
WITH WITH
(b) NAME UNDERWRITER REGISTRANT
----- ----------- ----------
Jill T. McGruder President/Director President/
Trustee
William F. Ledwin* Director None
Patricia J. Wilson Chief Compliance None
Officer
Richard K. Taulbee** Vice President None
James J. Vance** Vice President None
& Treasurer
Edward S. Heenan** Controller/Director None
Donald J. Wuebbling** Director None
Robert F. Morand** Secretary None
Terrie A. Wiedenheft Chief Financial Controller
Officer
John R. Lindholm** Vice President None
Don W. Cummings** Vice President None
<PAGE>
(c) None
Item 28. 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 29. MANAGEMENT SERVICES NOT DISCUSSED IN PART A OR PART B
------- -----------------------------------------------------
None.
Item 30. UNDERTAKINGS
------- ------------
(a) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
trustees, officers and controlling persons of the
Registrant pursuant to the provisions of Massachusetts
law and the Agreement and Declaration of Trust of the
Registrant or the Bylaws of the Registrant, 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 the Registrant 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 has been settled by
controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as
expressed in the Act and will be governed by the
final adjudication of such issue.
(b) 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, the Registrant certifies that it meets all of the requirements
for effectiveness of this registration statement under rule 485(b) under the
Securities Act and has duly caused this registration statement to be signed on
its behalf by the undersigned, duly authorized, in the City of Cincinnati,
State of Ohio, on the 31st day of October, 2000.
TOUCHSTONE TAX-FREE TRUST
/s/ Tina D. Hosking
By:---------------------------
Tina D. Hosking,
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 31st day of October, 2000.
/s/ Jill T. McGruder
----------------------- President
JILL T. MCGRUDER and Trustee
/s/ David E. Dennison
----------------------- Treasurer
DAVID E. DENNISON
* WILLIAM O. COLEMAN Trustee
-----------------------
* PHILLIP R. COX Trustee
-----------------------
* H. JEROME LERNER Trustee
-----------------------
* ROBERT H. LESHNER Trustee
-----------------------
* OSCAR P. ROBERTSON Trustee
-----------------------
* NELSON SCHWAB, JR. Trustee
-----------------------
* ROBERT E. STAUTBERG Trustee
-----------------------
* JOSEPH S. STERN, JR. Trustee
-----------------------
* J. LELAND BREWSTER II Trustee
-----------------------
By: /s/ Tina D. Hosking
-------------------
TINA D. HOSKING
Attorney-in-Fact*
October 31, 2000
