UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3174
---------------------------------------------
Touchstone Tax-Free Trust
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(Exact name of registrant as specified in charter)
303 Broadway, Cincinnati, Ohio 45202
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(Address of principal executive offices) (Zip code)
Jill T. McGruder, 303 Broadway, Cincinnati, Ohio 45202
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(Name and address of agent for service)
Registrant's telephone number, including area code: (513) 878-4066
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Date of fiscal year end: 6/30
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Date of reporting period: 12/31/07
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Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection and policymaking roles.
A registrant is required to disclose the information specified by Form
N-CSR, and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
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DECEMBER 31, 2007
(UNAUDITED)
Semi-Annual Report
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TOUCHSTONE TAX-FREE TRUST
Touchstone Florida Tax-Free Money Market Fund
Touchstone Ohio Insured Tax-Free Fund
Touchstone Ohio Tax-Free Money Market Fund
Touchstone Tax-Free Money Market Fund
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[LOGO]TOUCHSTONE(R)
INVESTMENTS
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Table of Contents
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Page
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Tabular Presentation of Portfolios of Investments 3
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Statements of Assets and Liabilities 4-5
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Statements of Operations 6
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Statements of Changes in Net Assets 7-8
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Financial Highlights 9-12
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Notes to Financial Statements 13-19
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Portfolios of Investments:
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Florida Tax-Free Money Market Fund 20-21
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Ohio Insured Tax-Free Fund 22-23
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Ohio Tax-Free Money Market Fund 24-27
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Tax-Free Money Market Fund 28-30
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Notes to Portfolios of Investments 31
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Portfolio Composition 32
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Other Items 33-38
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2
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Tabular Presentation of Portfolios of Investments
December 31, 2007 (Unaudited)
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The illustrations below provide each Fund's sector allocation. We hope it will
be useful to shareholders as it summarizes key information about each Fund's
investments.
================================================================================
FLORIDA TAX-FREE MONEY MARKET FUND
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CREDIT QUALITY (% OF NET ASSETS)
A-1 / P-1 / AAA 94.6
FW1* 5.4
-----
Total 100.0
-----
PORTFOLIO ALLOCATION (% OF NET ASSETS)
Floating & Variable
Rate Demand Notes 83.6
Fixed Rate Revenue & General
Obligation Bonds 16.0
Other Assets/Liabilities (net) 0.4
-----
Total 100.0
-----
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================================================================================
OHIO INSURED TAX-FREE FUND
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CREDIT QUALITY (% OF NET ASSETS)
AAA / Aaa 94.4
AA / Aa 3.1
A/A 2.5
-----
Total 100.0
-----
PORTFOLIO ALLOCATION (% OF NET ASSETS)
Fixed Rate Revenue & General
Obligation Bonds 98.5
Floating & Variable Rate
Demand Notes 1.5
-----
Total 100.0
-----
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================================================================================
OHIO TAX-FREE MONEY MARKET FUND
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CREDIT QUALITY (% OF NET ASSETS)
A-1 / P-1 / AAA 84.6
FW1* 15.4
-----
Total 100.0
-----
PORTFOLIO ALLOCATION (% OF NET ASSETS)
Floating & Variable Rate
Demand Notes 78.4
Fixed Rate Revenue & General
Obligation Bonds 20.9
Adjustable Rate Put Bonds 1.5
Other Assets/Liabilities (net) (0.8)
-----
Total 100.0
-----
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================================================================================
TAX-FREE MONEY MARKET FUND
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CREDIT QUALITY (% OF NET ASSETS)
A-1 / P-1 / AAA 87.0
FW1* 13.0
-----
Total 100.0
-----
PORTFOLIO ALLOCATION (% OF NET ASSETS)
Floating & Variable Rate
Demand Notes 75.7
Fixed Rate Revenue & General
Obligation Bonds 22.4
Adjustable Rate Put Bonds 2.4
Other Assets/Liabilities (net) (0.5)
-----
Total 100.0
-----
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* Equivalent to Standard & Poor's and Moody's highest short-term ratings of
A-1 and P-1, respectively, based upon independent research conducted by
Fort Washington Investment Advisors, Inc.
3
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Statements of Assets and Liabilities
December 31, 2007 (Unaudited)
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FLORIDA OHIO OHIO TAX-FREE
TAX-FREE INSURED TAX-FREE MONEY
MONEY MARKET TAX-FREE MONEY MARKET MARKET
FUND FUND FUND FUND
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ASSETS
Investment securities:
At amortized cost $ 23,584,653 $ 57,885,476 $358,907,063 $ 69,254,892
- -----------------------------------------------------------------------------------------------------------------
At market value $ 23,584,653 $ 60,200,053 $358,907,063 $ 69,254,892
Cash 63,924 41,599 191,976 27,314
Interest receivable 112,796 427,835 2,123,277 405,232
Receivable for capital shares sold -- 19,315 -- --
Other assets 1,631 3,672 3,968 6,400
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TOTAL ASSETS 23,763,004 60,692,474 361,226,284 69,693,838
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LIABILITIES
Dividends payable 48,505 63,549 552,208 632
Payable for capital shares redeemed -- 365,587 -- --
Payable for securities purchased -- -- 4,309,608 702,800
Payable to Advisor 10,110 25,635 134,739 29,651
Payable to other affiliates 714 4,246 17,357 5,523
Payable to Trustees 5,328 3,777 4,529 2,525
Other accrued expenses and liabilities 13,519 36,483 79,221 41,682
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TOTAL LIABILITIES 78,176 499,277 5,097,662 782,813
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NET ASSETS $ 23,684,828 $ 60,193,197 $356,128,622 $ 68,911,025
=================================================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $ 23,690,401 $ 58,124,971 $356,128,622 $ 68,910,786
Accumulated net realized gains (losses) from
security transactions (5,573) (246,351) -- 239
Net unrealized appreciation on investments -- 2,314,577 -- --
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NET ASSETS $ 23,684,828 $ 60,193,197 $356,128,622 $ 68,911,025
=================================================================================================================
PRICING OF RETAIL SHARES
Net assets applicable to Retail shares $ -- $ -- $120,088,772 $ --
=================================================================================================================
Shares of beneficial interest outstanding
(unlimited number of shares authorized, no par value) -- -- 120,078,362 --
=================================================================================================================
Net asset value, offering price and redemption
price per share $ -- $ -- $ 1.00 $ --
PRICING OF INSTITUTIONAL SHARES
Net assets applicable to Institutional shares $ -- $ -- $236,039,850 $ --
=================================================================================================================
Shares of beneficial interest outstanding
(unlimited number of shares authorized, no par value) -- -- 236,037,272 --
=================================================================================================================
Net asset value, offering price and redemption price
per share $ -- $ -- $ 1.00 $ --
PRICING OF CLASS A SHARES
Net assets applicable to Class A shares $ 23,684,828 $ 55,245,633 $ -- $ 20,424,323
=================================================================================================================
Shares of beneficial interest outstanding
(unlimited number of shares authorized, no par value) 23,690,389 4,847,723 -- 20,434,432
=================================================================================================================
Net asset value and redemption price per share $ 1.00 $ 11.40 $ -- $ 1.00
Maximum offering price per share $ -- $ 11.97 $ -- $ --
4
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Statements of Assets and Liabilities (Continued)
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FLORIDA OHIO OHIO TAX-FREE
TAX-FREE INSURED TAX-FREE MONEY
MONEY MARKET TAX-FREE MONEY MARKET MARKET
FUND FUND FUND FUND
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PRICING OF CLASS C SHARES
Net assets applicable to Class C shares $ -- $ 4,947,564 $ -- $ --
===================================================================================================================
Shares of beneficial interest outstanding
(unlimited number of shares authorized, no par value) -- 433,720 -- --
===================================================================================================================
Net asset value, offering price and redemption price per share* $ -- $ 11.41 $ -- $ --
===================================================================================================================
PRICING OF CLASS S SHARES
Net assets applicable to Class S shares $ -- $ -- $ -- $48,486,702
===================================================================================================================
Shares of beneficial interest outstanding
(unlimited number of shares authorized, no par value) -- -- -- 48,486,509
===================================================================================================================
Net asset value, offering price and redemption price per share $ -- $ -- $ -- $ 1.00
===================================================================================================================
* Redemption price per share varies by length of time shares are held.
See accompanying notes to financial statements.
5
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Statements of Operations
For the Six Months Ended December 31, 2007 (Unaudited)
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FLORIDA OHIO OHIO TAX-FREE
TAX-FREE INSURED TAX-FREE MONEY
MONEY MARKET TAX-FREE MONEY MARKET MARKET
FUND FUND FUND FUND
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INVESTMENT INCOME
Interest income $ 532,348 $ 1,416,157 $ 5,516,828 $ 1,393,435
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EXPENSES
Investment advisory fees 73,696 152,847 683,508 188,964
Administration fees 29,484 61,140 304,564 75,744
Distribution expenses, Retail class -- -- 134,428 --
Distribution expenses, Class A 36,841 70,163 -- 24,089
Distribution expenses, Class C -- 25,044 -- --
Distribution expenses, Class S -- -- -- 168,945
Transfer Agent fees, Retail class -- -- 16,325 --
Transfer Agent fees, Institutional class -- -- 136 --
Transfer Agent fees, Class A 651 15,850 -- 7,259
Transfer Agent fees, Class C -- 1,837 -- --
Transfer Agent fees, Class S -- -- -- 30,484
Professional fees 7,765 10,436 12,724 10,396
Custodian fees 2,588 4,374 25,932 6,966
Trustees' fees and expenses 8,321 8,337 8,672 8,289
Pricing expenses 2,425 4,899 9,910 3,061
Postage and supplies 943 10,862 4,747 4,123
Reports to shareholders 1,882 5,543 5,636 4,642
Registration fees, Retail class -- -- 3,916 --
Registration fees, Class A 540 2,843 -- 4,269
Registration fees, Class C -- 1,796 -- --
Registration fees, Class S -- -- -- 1,664
Compliance fees and expenses 620 681 1,151 655
Other expenses 321 2,061 17,482 800
- ------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 166,077 378,713 1,229,131 540,350
Other operating expenses reimbursed by the Advisor (26,372) (70,216) (30,072) (56,203)
Fees waived by the Administrator (29,484) (61,140) (304,564) (75,744)
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NET EXPENSES 110,221 247,357 894,495 408,403
NET INVESTMENT INCOME 422,127 1,168,800 4,622,333 985,032
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REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized gains (losses) from security transactions 5 (246,351) 13,827 --
Net change in unrealized appreciation/depreciation on investments -- 986,073 -- --
- ------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 5 739,722 13,827 --
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NET INCREASE IN NET ASSETS FROM OPERATIONS $ 422,132 $ 1,908,522 $ 4,636,160 $ 985,032
========================================================================================================================
See accompanying notes to financial statements.
6
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Statements of Changes in Net Assets
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FLORIDA
TAX-FREE OHIO INSURED
MONEY MARKET TAX-FREE
FUND FUND
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SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
DECEMBER 31, ENDED DECEMBER 31, ENDED
2007 JUNE 30, 2007 JUNE 30,
(UNAUDITED) 2007 (UNAUDITED) 2007
- ---------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 422,127 $ 725,407 $ 1,168,800 $ 2,578,203
Net realized gains (losses) from
security transactions 5 150 (246,351) 903,514
Net change in unrealized appreciation/
depreciation on investments -- -- 986,073 (519,947)
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NET INCREASE IN NET ASSETS FROM OPERATIONS 422,132 725,557 1,908,522 2,961,770
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DISTRIBUTIONS TO SHAREHOLDERS
From net investment income, Class A (422,127) (725,407) (1,090,240) (2,390,149)
From net investment income, Class C -- -- (78,560) (188,160)
From net realized gains, Class A -- -- (567,571) (605,797)
From net realized gains, Class C -- -- (50,588) (57,110)
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DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (422,127) (725,407) (1,786,959) (3,241,216)
- ---------------------------------------------------------------------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS
CLASS A
Proceeds from shares sold 30,581,421 38,655,640 507,090 1,507,559
Reinvested distributions 22,019 88,299 1,135,237 1,997,247
Payments for shares redeemed (32,679,732) (40,406,783) (2,671,795) (11,330,197)
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NET DECREASE IN NET ASSETS FROM CLASS A SHARE TRANSACTIONS (2,076,292) (1,662,844) (1,029,468) (7,825,391)
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CLASS C
Proceeds from shares sold -- -- 175,651 139,590
Reinvested distributions -- -- 102,289 180,989
Payments for shares redeemed -- -- (509,205) (1,876,997)
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NET DECREASE IN NET ASSETS FROM CLASS C SHARE TRANSACTIONS -- -- (231,265) (1,556,418)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL DECREASE IN NET ASSETS (2,076,287) (1,662,694) (1,139,170) (9,661,255)
NET ASSETS
Beginning of period 25,761,115 27,423,809 61,332,367 70,993,622
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End of period $ 23,684,828 $ 25,761,115 $ 60,193,197 $ 61,332,367
=====================================================================================================================
ACCUMULATED NET INVESTMENT INCOME $ -- $ -- $ -- $ --
=====================================================================================================================
See accompanying notes to financial statements.
7
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Statements of Changes in Net Assets (Continued)
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OHIO
TAX-FREE TAX-FREE
MONEY MARKET MONEY MARKET
FUND FUND
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SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
DECEMBER 31, ENDED DECEMBER 31, ENDED
2007 JUNE 30, 2007 JUNE 30,
(UNAUDITED) 2007 (UNAUDITED) 2007
- ------------------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 4,622,333 $ 8,270,378 $ 985,032 $ 1,425,307
Net realized gains from security transactions 13,827 788 -- 239
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NET INCREASE IN NET ASSETS FROM OPERATIONS 4,636,160 8,271,166 985,032 1,425,546
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DISTRIBUTIONS TO SHAREHOLDERS
From net investment income, Retail (1,546,769) (2,884,708) -- --
From net investment income, Institutional (3,075,564) (5,385,670) -- --
From net investment income, Class A -- -- (268,665) (479,524)
From net investment income, Class S -- -- (716,367) (945,783)
From net realized gains, Retail (4,892) (6,368) -- --
From net realized gains, Institutional (9,723) (11,170) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (4,636,948) (8,287,916) (985,032) (1,425,307)
- ------------------------------------------------------------------------------------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS
RETAIL
Proceeds from shares sold 97,536,749 154,993,833 -- --
Reinvested distributions 1,546,113 2,872,822 -- --
Payments for shares redeemed (84,141,962) (144,795,154) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM RETAIL SHARE TRANSACTIONS 14,940,900 13,071,501 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL
Proceeds from shares sold 221,387,817 371,911,836 -- --
Reinvested distributions 163,691 129,858 -- --
Payments for shares redeemed (155,218,767) (385,429,495) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM INSTITUTIONAL SHARE
TRANSACTIONS 66,332,741 (13,387,801) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
Proceeds from shares sold -- -- 9,185,573 14,546,505
Reinvested distributions -- -- 264,432 469,892
Payments for shares redeemed -- -- (5,616,134) (14,704,961)
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM CLASS A SHARE TRANSACTIONS -- -- 3,833,871 311,436
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS S
Proceeds from shares sold -- -- 70,629,972 226,477,167
Reinvested distributions -- -- 713,521 946,943
Payments for shares redeemed -- -- (105,781,648) (177,156,980)
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NET INCREASE (DECREASE) IN NET ASSETS FROM CLASS S SHARE
TRANSACTIONS -- -- (34,438,155) 50,267,130
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 81,272,853 (333,050) (30,604,284) 50,578,805
NET ASSETS
Beginning of period 274,855,769 275,188,819 99,515,309 48,936,504
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End of period $ 356,128,622 $ 274,855,769 $ 68,911,025 $ 99,515,309
====================================================================================================================================
ACCUMULATED NET INVESTMENT INCOME $ -- $ -- $ -- $ --
====================================================================================================================================
See accompanying notes to financial statements.
8
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Financial Highlights
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FLORIDA TAX-FREE MONEY MARKET FUND
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
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SIX MONTHS
ENDED
DECEMBER 31, YEAR ENDED JUNE 30,
2007 ----------------------------------------------------------------------
(UNAUDITED) 2007 2006 2005 2004 2003
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Net asset value at beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.014 0.029 0.023 0.011 0.004 0.008
Net realized gains (losses) on investments -- 0.000(A) -- (0.000)(A) (0.000)(A) 0.000(A)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.014 0.029 0.023 0.011 0.004 0.008
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.014) (0.029) (0.023) (0.011) (0.004) (0.008)
Distributions from net realized gains -- -- -- -- (0.000)(A) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.014) (0.029) (0.023 (0.011) (0.004) (0.008)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
====================================================================================================================================
Total return 2.91%(B) 2.92% 2.28% 1.09% 0.36% 0.76%
====================================================================================================================================
Net assets at end of period (000's $ 23,685 $ 25,761 $ 27,424 $ 28,144 $ 29,385 $ 29,657
====================================================================================================================================
Ratio of net expenses to
average net assets 0.75%(B) 0.75% 0.75% 0.75% 0.75% 0.69%
Ratio of net investment income to
average net assets 2.86%(B) 2.88% 2.23% 1.08% 0.35% 0.77%
(A) Amount rounds to less than $0.001.
(B) Annualized.
OHIO INSURED TAX-FREE FUND - CLASS A
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED
DECEMBER 31, YEAR ENDED JUNE 30,
2007 ------------------------------------------------------------------------
(UNAUDITED) 2007 2006 2005 2004 2003
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Net asset value at beginning of period $ 11.37 $ 11.45 $ 12.10 $ 11.68 $ 12.36 $ 11.94
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.22 0.45 0.46 0.45 0.48 0.49
Net realized and unrealized gains
(losses) on investments 0.15 0.03 (0.49) 0.43 (0.50) 0.49
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.37 0.48 (0.03) 0.88 (0.02) 0.98
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.22) (0.45) (0.46) (0.45) (0.48) (0.49)
Distributions from net realized gains (0.12) (0.11) (0.16) (0.01) (0.21) (0.07)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.34) (0.56) (0.62) (0.46) (0.69) (0.56)
- ------------------------------------------------------------------------------------------------------------------------------------
Capital contributions -- -- -- -- 0.03 --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 11.40 $ 11.37 $ 11.45 $ 12.10 $ 11.68 $ 12.36
====================================================================================================================================
Total return (A) 3.30%(B) 4.19% (0.25%) 7.66% 0.04%(C) 8.43%
====================================================================================================================================
Net assets at end of period (000's) $ 55,246 $ 56,163 $ 64,266 $ 74,604 $ 77,837 $ 59,683
====================================================================================================================================
Ratio of net expenses to
average net assets 0.75%(D) 0.75% 0.75% 0.75% 0.75% 0.75%
Ratio of net investment income to
average net assets 3.88%(D) 3.87% 3.87% 3.74% 3.94% 4.03%
Portfolio turnover rate 20%(D) 28% 24% 30% 36% 24%
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Not annualized.
(C) Total return would have been (0.21%) without the capital contribuiton made
by the Advisor.
(D) Annualized. See accompanying notes to financial statements.
9
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
OHIO INSURED TAX-FREE FUND - CLASS C
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED
DECEMBER 31, YEAR ENDED JUNE 30,
2007 ---------------------------------------------------------------
(UNAUDITED) 2007 2006 2005 2004 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 11.39 $ 11.46 $ 12.11 $ 11.69 $ 12.41 $ 11.96
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.18 0.36 0.37 0.36 0.39 0.40
Net realized and unrealized gains
(losses) on investments 0.14 0.04 (0.49) 0.43 (0.51) 0.52
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.32 0.40 (0.12) 0.79 (0.12) 0.92
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.18) (0.36) (0.37) (0.36) (0.39) (0.40)
Distributions from net realized gains (0.12) (0.11) (0.16) (0.01) (0.21) (0.07)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.30) (0.47) (0.53) (0.37) (0.60) (0.47)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 11.41 $ 11.39 $ 11.46 $ 12.11 $ 11.69 $ 12.41
====================================================================================================================================
Total return (A) 2.82%(B) 3.50% (1.00%) 6.86% (1.03)% 7.89%
====================================================================================================================================
Net assets at end of period (000's) $ 4,947 $ 5,169 $ 6,728 $ 9,400 $ 9,862 $ 7,388
====================================================================================================================================
Ratio of net expenses to
average net assets 1.50%(C) 1.50% 1.50% 1.50% 1.50% 1.50%
Ratio of net investment income to
average net assets 3.14%(C) 3.12% 3.12% 2.99% 3.19% 3.27%
Portfolio turnover rate 20%(C) 28% 24% 30% 36% 24%
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Not annualized.
(C) Annualized.
OHIO TAX-FREE MONEY MARKET FUND - RETAIL
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED
DECEMBER 31, YEAR ENDED JUNE 30,
2007 -------------------------------------------------------------------------
(UNAUDITED) 2007 2006 2005 2004 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.015 0.029 0.023 0.011 0.004 0.008
Net realized gains on investments 0.000(A) 0.000(A) -- -- 0.000(A) 0.000(A)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.015 0.029 0.023 0.011 0.004 0.008
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.015) (0.029) (0.023) (0.011) (0.004) (0.008)
Distributions from net realized gains (0.000)(A) (0.000)(A) -- (0.000)(A) (0.000)(A) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.015) (0.029) (0.023) (0.011) (0.004) (0.008)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
====================================================================================================================================
Total return 2.95%(B) 2.96% 2.31% 1.13% 0.35% 0.78%
====================================================================================================================================
Net assets at end of period (000's) $ 120,089 $ 105,148 $ 92,082 $ 99,127 $ 165,145 $ 155,810
====================================================================================================================================
Ratio of net expenses to
average net assets 0.75%(B) 0.75% 0.75% 0.75% 0.75% 0.75%
Ratio of net investment income to
average net assets 2.88%(B) 2.92% 2.26% 1.05% 0.35% 0.79%
(A) Amount rounds to less than $0.001.
(B) Annualized.
See accompanying notes to financial statements.
10
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
OHIO TAX-FREE MONEY MARKET FUND - INSTITUTIONAL
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED
DECEMBER 31, YEAR ENDED JUNE 30,
2007 --------------------------------------------------------------------------
(UNAUDITED) 2007 2006 2005 2004 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.016 0.032 0.025 0.014 0.006 0.010
Net realized gains on investments 0.000(A) 0.000(A) -- -- 0.000(A) 0.000(A)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.016 0.032 0.025 0.014 0.006 0.010
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.016) (0.032) (0.025) (0.014) (0.006) (0.010)
Distributions from net realized gains (0.000)(A) (0.000)(A) -- (0.000)(A) (0.000)(A) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.016) (0.032) (0.025) (0.014) (0.006) (0.010)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
====================================================================================================================================
Total return 3.20%(B) 3.21% 2.57% 1.39% 0.60% 1.03%
====================================================================================================================================
Net assets at end of period (000's) $ 236,040 $ 169,708 $ 183,107 $ 192,346 $ 174,739 $ 266,120
====================================================================================================================================
Ratio of net expenses to
average net assets 0.50%(B) 0.50% 0.50% 0.50% 0.50% 0.50%
Ratio of net investment income to
average net assets 3.12%(B) 3.17% 2.50% 1.41% 0.59% 1.02%
(A) Amount rounds to less than $0.001.
(B) Annualized.
TAX-FREE MONEY MARKET FUND - CLASS A
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED
DECEMBER 31, YEAR ENDED JUNE 30,
2007 -----------------------------------------------------------------------
(UNAUDITED) 2007 2006 2005 2004 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.014 0.028 0.023 0.011 0.005 0.008
Net realized gains on investments -- 0.000(A) -- -- 0.000(A) 0.000(A)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.014 0.028 0.023 0.011 0.005 0.008
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.014) (0.028) (0.023) (0.011) (0.005) (0.008)
Distributions from net realized gains -- -- -- -- (0.000)(A) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.014) (0.028) (0.023) (0.011) (0.005) (0.008)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
====================================================================================================================================
Total return 2.85%(B) 2.88% 2.28% 1.14% 0.50% 0.99%
====================================================================================================================================
Net assets at end of period (000's) $ 20,424 $ 16,590 $ 16,279 $ 19,250 $ 20,263 $ 21,375
====================================================================================================================================
Ratio of net expenses to
average net assets 0.89%(B) 0.89% 0.89% 0.89% 0.89% 0.89%
Ratio of net investment income to
average net assets 2.79%(B) 2.85% 2.23% 1.13% 0.48% 0.79%
(A) Amount rounds to less than $0.001.
(B) Annualized. See accompanying notes to financial statements.
11
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
TAX-FREE MONEY MARKET FUND - CLASS S
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED PERIOD
DECEMBER 31, YEAR ENDED JUNE 30, ENDED
2007 ---------------------------------------------------- JUNE 30,
(UNAUDITED) 2007 2006 2005 2004 2003(A)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.013 0.026 0.020 0.009 0.002 0.001
Net realized gains on investments -- 0.000(B) -- -- 0.000(B) 0.000(B)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.013 0.026 0.020 0.009 0.002 0.001
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.013) (0.026) (0.020) (0.009) (0.002) (0.001)
Distributions from net realized gains -- -- -- -- (0.000)(B) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.013) (0.026) (0.020) (0.009) (0.002) (0.001)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
====================================================================================================================================
Total return 2.58%(C) 2.61% 2.01% 0.87% 0.25% 0.32%(C)
====================================================================================================================================
Net assets at end of period (000's) $ 48,487 $ 82,925 $ 32,658 $ 13,075 $ 16,381 $ 18,692
====================================================================================================================================
Ratio of net expenses
to average net assets 1.15%(C) 1.15% 1.15% 1.15% 1.15% 1.15%(C)
Ratio of net investment income
to average net assets 2.54%(C) 2.58% 2.10% 0.86% 0.22% 0.31%(C)
(A) Represents the period from commencement of operations (February 3, 2003)
through June 30, 2003.
(B) Amount rounds to less than $0.001.
(C) Annualized.
See accompanying notes to financial statements.
12
- --------------------------------------------------------------------------------
Notes to Financial Statements
December 31, 2007 (Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION
The Florida Tax-Free Money Market Fund, the Ohio Insured Tax-Free Fund, the Ohio
Tax-Free Money Market Fund, and the Tax-Free Money Market Fund (individually, a
Fund, and collectively, the Funds) are each a separate series 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 Funds are registered to offer different classes of shares: Retail class
shares, Institutional class shares, Class A shares, Class C shares, and Class S
shares. The assets of each Fund are segregated, and a shareholder's interest is
limited to the Fund in which shares are held. The Funds' prospectus provides a
description of each Fund's investment objectives, policies, and strategies along
with information on the classes of shares currently being offered.
The Florida Tax-Free Money Market Fund offers one class of shares: Class A
shares (sold subject to a distribution fee of up to 0.25% of average daily net
assets of Class A shares).
The Ohio Insured Tax-Free Fund offers 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 that are attributable to Class A
shares), and Class C shares (sold subject to a maximum contingent deferred sales
load of 1.00% for a one-year period and a distribution fee of up to 1.00% of
average daily net assets that are attributable to Class C shares). 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 Class A shares;
(ii) certain other class specific expenses will be borne solely by the class to
which such expenses are attributable; and (iii) each class has exclusive voting
rights with respect to matters relating to its own distribution arrangements.
The Ohio Tax-Free Money Market 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 Retail shares) 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
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
systematic withdrawal plans.
The Tax-Free Money Market Fund offers two classes of shares: Class A shares
(sold subject to a distribution fee of up to 0.25% of average daily net assets
of Class A shares) and Class S shares (sold subject to a distribution fee of up
to 1.00% of average daily net assets that are attributable to Class S shares).
The current maximum distribution fee for Class S shares is limited to 0.60% of
average daily net assets of Class S shares.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Trust's significant accounting policies:
SECURITY VALUATION -- Florida Tax-Free Money Market Fund, Ohio Tax-Free Money
Market Fund and Tax-Free Money Market 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. 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 approved by the Board of Trustees.
13
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement on Financial Accounting Standards (SFAS) No. 157, "Fair Value
Measurements." This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and requires
additional disclosures about fair value measurements. SFAS No. 157 applies to
fair value measurements already required or permitted by existing standards.
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal years.
The changes to current generally accepted accounting principles (GAAP) from the
application of this Statement relate to the definition of fair value, the
methods used to measure fair value, and the expanded disclosures about fair
value measurements. As of December 31, 2007, the Trust does not believe the
adoption of SFAS No. 157 will impact the amounts reported in the financial
statements, however, additional disclosures may be required about the inputs
used to develop the measurements and the effect of certain of the measurements
reported on the statement of changes in net assets for a fiscal period.
SHARE VALUATION -- The net asset value per share of the Florida Tax-Free Money
Market Fund is calculated daily by dividing the total value of the 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 Insured Tax-Free Fund, the
Ohio Tax-Free Money Market Fund, and the Tax-Free Money Market Fund is
calculated daily by dividing the total value of each Fund's assets attributable
to that class, less liabilities attributable to that class, by the number of
shares outstanding attributable to that class.
The offering price per share of the Florida Tax-Free Money Market Fund, the Ohio
Tax-Free Money Market Fund and the Tax-Free Money Market Fund is equal to the
net asset value per share. The maximum offering price of Class A shares of 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 the Ohio Insured Tax-Free Fund
is equal to the net asset value per share.
The redemption price per share of each Fund, including each class of shares with
respect to the Florida Tax-Free Money Market Fund, the Ohio Insured Tax-Free
Fund, the Ohio Tax-Free Money Market Fund, and the Tax-Free Money Market Fund is
equal to the net asset value per share. However, Class C shares of the Ohio
Insured Tax-Free Fund are subject to a contingent deferred sales load of 1.00%
(if redeemed within a one-year period from the date of purchase) of the original
purchase price.
INVESTMENT INCOME -- Interest income is accrued as earned and includes, where
applicable, the pro rata amortization of premium or accretion of discount.
DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment income are
distributed 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. Gains and losses on 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.
14
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
ALLOCATIONS -- Investment income earned by a 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 all
classes. Realized capital gains and losses and unrealized appreciation and
depreciation are allocated daily to each class of shares based upon the
proportionate share of total net assets of the Fund. Class specific expenses are
charged directly to the class incurring the expense. Common expenses that 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. Expenses not
directly billed to a Fund are allocated daily to each Fund based on the
proportional share of each Fund's net assets in relation to total net assets of
all Funds in the Trust or another reasonable measure.
ESTIMATES -- The preparation of financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent 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 continue 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.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Fund's intention to declare and pay 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 tax character of distributions paid for the years ended June 30, 2007 and
2006 was as follows:
FLORIDA
TAX-FREE MONEY OHIO INSURED
MARKET FUND TAX-FREE FUND
- --------------------------------------------------------------------------------
2007 2006 2007 2006
- --------------------------------------------------------------------------------
From tax exempt income $ 725,407 $ 613,539 $2,578,309 $2,940,132
From long-term capital gains -- -- 662,907 1,068,116
- --------------------------------------------------------------------------------
$ 725,407 $ 613,539 $3,241,216 $4,008,248
- --------------------------------------------------------------------------------
OHIO TAX-FREE TAX-FREE
MONEY MARKET MONEY MARKET
FUND FUND
- --------------------------------------------------------------------------------
2007 2006 2007 2006
- --------------------------------------------------------------------------------
From tax exempt income $8,286,395 $6,473,158 $1,425,307 $ 972,176
From long-term capital gains 1,521 -- -- --
- --------------------------------------------------------------------------------
$8,287,916 $6,473,158 $1,425,307 $ 972,176
- --------------------------------------------------------------------------------
15
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
The following information is computed on a tax basis for each item as of June
30, 2007:
FLORIDA
TAX-FREE MONEY OHIO INSURED
MARKET FUND TAX-FREE FUND
- --------------------------------------------------------------------------------
Tax cost of portfolio investments $ 25,960,344 $ 59,700,394
================================================================================
Gross unrealized appreciation -- 1,634,827
Gross unrealized depreciation -- (306,323)
- --------------------------------------------------------------------------------
Net unrealized appreciation -- 1,328,504
Capital loss carryforward (5,578) --
Undistributed tax exempt income 59,137 36,098
Undistributed ordinary income -- 22,120
Undistributed long-term gains -- 596,039
Other temporary differences (59,137) (36,098)
- --------------------------------------------------------------------------------
Accumulated earnings (deficit) $ (5,578) $ 1,946,663
================================================================================
OHIO TAX-FREE TAX-FREE
MONEY MARKET MONEY MARKET
FUND FUND
- --------------------------------------------------------------------------------
Tax cost of portfolio investments $ 273,759,820 $ 99,302,417
================================================================================
Undistributed tax exempt income 441,247 745
Undistributed ordinary income 788 41
Undistributed long-term gains -- 198
Other temporary differences (441,247) (745)
- --------------------------------------------------------------------------------
Accumulated earnings $ 788 $ 239
================================================================================
The capital loss carryforward as of June 30, 2007 in the table above expires as
follows:
FUND AMOUNT EXPIRATION DATE
- --------------------------------------------------------------------------------
Florida Tax-Free Money Market Fund $ 5,380 June 30, 2013
$ 198 June 30, 2014
- --------------------------------------------------------------------------------
The capital loss carryforwards may be utilized in future years to offset net
realized capital gains, if any, prior to distributing such gains to
shareholders.
During the year ended June 30, 2007, the Florida Tax-Free Money Market Fund
utilized $150 of capital loss carryforwards.
RECLASSIFICATION OF CAPITAL ACCOUNTS -- Reclassifications result primarily from
the difference in the tax treatment of paydown securities. These
reclassifications have no impact on the net assets or net asset value per share
of the Funds and are designed to present the Funds' capital accounts on a tax
basis. For the year ended June 30, 2007, the Ohio Insured Tax-Free Fund
reclassified $106 of net investment loss to accumulated net realized gains on
the Statement of Assets and Liabilities.
FEDERAL TAX INFORMATION
The federal tax cost for the Florida Tax-Free Money Market Fund, Ohio Tax-Free
Money Market Fund and Tax-Free Money Market Fund is equal to the amortized cost
in the portfolio of investments. As of December 31, 2007, the aggregate
identified cost for federal income tax purposes for the Ohio Insured Tax-Free
Fund is $57,885,476, resulting in gross unrealized appreciation and depreciation
of $2,418,835 and $104,258, respectively, and net unrealized appreciation of
$2,314,577.
On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48). FIN
48 provides guidance for how uncertain tax positions should be recognized,
measured, presented and disclosed in the financial statements. FIN 48 requires
the evaluation of tax positions taken or expected to be taken in the course of
preparing the Funds' tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority. Tax
positions not deemed to meet the more-likely-than-not threshold would be
recorded as a tax benefit in the current year. Adoption of FIN 48 is required
for fiscal years beginning after December 15, 2006 and is to be applied to all
open tax years as of the effective date. The Funds have analyzed their tax
positions taken on Federal income tax returns for all open tax years (tax years
ended June 30, 2004 through 2007) for purposes of implementing FIN 48 and have
concluded that no provision for income tax is required in their financial
statements.
16
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments and government
securities) were as follows for the six months ended December 31, 2007:
OHIO INSURED
TAX-FREE FUND
- --------------------------------------------------------------------------------
Purchases of investment securities $5,940,863
Proceeds from sales and maturities of investment securities $8,272,773
- --------------------------------------------------------------------------------
4. TRANSACTIONS WITH AFFILIATES
Certain officers of the Trust were also officers of the Advisor (Touchstone
Advisors, Inc.), the Underwriter (Touchstone Securities, Inc.) and/or JPMorgan
Chase Bank, N.A. ("JPMorgan" and the Sub-Administrator and Transfer Agent to the
Funds) during the six months ended December 31, 2007. The Advisor and
Underwriter were each wholly owned indirect subsidiaries of The Western and
Southern Life Insurance Company (Western-Southern).
MANAGEMENT AGREEMENT
The Advisor provides general investment supervisory services for the Funds,
under the terms of an Advisory Agreement. Under the Advisory Agreement, each
Fund pays the Advisor a fee, which is computed and accrued daily and paid
monthly, at an annual rate based on average daily net assets of each Fund as
follows:
- --------------------------------------------------------------------------------
0.50% on the first $100 million
0.45% on the next $100 million
0.40% on the next $100 million
0.375% of such assets in excess of $300 million
- --------------------------------------------------------------------------------
Fort Washington Investment Advisors, Inc. (Sub-Advisor) has been retained by the
Advisor to manage the investments of the Funds under the terms of a Sub-Advisory
Agreement. The Sub-Advisor is a wholly-owned indirect subsidiary of
Western-Southern. The Advisor (not the Funds) pays the Sub-Advisor a fee for
these services.
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
The Advisor entered into an Administration and Accounting Services Agreement
with the Trust, whereby the Advisor is responsible for supplying executive and
regulatory compliance services, supervises the preparation of tax returns, and
coordinates the preparation of reports to shareholders and reports to, and
filings with, the Securities and Exchange Commission and state securities
authorities, materials for meetings of the Board of Trustees, calculating the
daily net asset value per share and maintaining the financial books and records
of each Fund. For its services, the Advisor receives an annual fee of 0.20% of
the aggregate average daily net assets of the Trust, Touchstone Funds Group
Trust, Touchstone Investment Trust (excluding Institutional Money Market Fund),
and Touchstone Strategic Trust up to and including $6 billion; 0.16% of the next
$4 billion of aggregate average daily net assets; and 0.12% of the aggregate
average daily net assets of all such assets in excess of $10 billion. The fee is
allocated among the Funds on the basis of relative daily net assets.
The Advisor has engaged JPMorgan as the Sub-Administrator to the Trust. JPMorgan
provides administrative and accounting services to the Trust and is compensated
directly by the Advisor, not the Trust.
17
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
EXPENSE LIMITATION AGREEMENT
The Trust and the Advisor have entered into an Expense Limitation Agreement to
contractually limit operating expenses of the Florida Tax-Free Money Market
Fund, Ohio Insured Tax-Free Fund, Ohio Tax-Free Money Market Fund, and Tax-Free
Money Market Fund. The maximum operating expense limit in any year with respect
to the Funds is based on a percentage of the average daily net assets of the
Funds. The Advisor has agreed to waive advisory fees and reimburse expenses in
order to maintain expense limitations for the Funds as follows through June 30,
2008:
CLASS R CLASS I CLASS A CLASS C CLASS S
- ---------------------------------------------------------------------------------------------
Florida Tax-Free Money Market Fund -- -- 0.75% -- --
Ohio Insured Tax-Free Fund -- -- 0.75% 1.50% --
Ohio Tax-Free Money Market Fund 0.75% 0.50% -- -- --
Tax-Free Money Market Fund -- -- 0.89% -- 1.15%
For the six months ended December 31, 2007, the Advisor waived investment
advisory fees, administration fees, and/or reimbursed expenses as follows:
INVESTMENT OTHER OPERATING
ADVISORY EXPENSES ADMINISTRATION
FEES WAIVED REIMBURSED FEES WAIVED
- -------------------------------------------------------------------------------------------
Florida Tax-Free Money Market Fund $ -- $ 26,372 $ 29,484
Ohio Insured Tax-Free Fund $ -- $ 70,216 $ 61,140
Ohio Tax-Free Money Market Fund $ -- $ 30,072 $ 304,564
Tax-Free Money Market Fund $ -- $ 56,203 $ 75,744
TRANSFER AGENT AGREEMENT
Under the terms of the Transfer Agent Agreement between the Trust and JPMorgan,
JPMorgan maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of each Fund's shares, acts as dividend and distribution disbursing
agent and performs other shareholder service functions. For these services,
JPMorgan receives a monthly fee per shareholder account from each Fund. In
addition, each Fund pays JPMorgan out-of-pocket expenses including, but not
limited to, postage and supplies.
For the six months ended December 31, 2007, the following Funds reimbursed the
Advisor for amounts paid to third parties that provide sub-transfer agency and
other administrative services to the Funds. These amounts are included in
transfer agent fees on the Statements of Operations:
AMOUNT
- --------------------------------------------------------------------------------
Ohio Insured Tax-Free Fund $ 605
Ohio Tax-Free Money Market Fund $ 4
Tax-Free Money Market Fund $ 30,471
UNDERWRITING AGREEMENT
The Underwriter is the Funds' principal underwriter and, as such, acts as the
exclusive agent for distribution of the Funds' shares. Under the terms of the
Underwriting Agreement between the Trust and the Underwriter, the Underwriter
earned $1,401 from underwriting and broker commissions on the sale of Class A
shares of the Ohio Insured Tax-Free Fund during the six months ended December
31, 2007. In addition, the Underwriter collected $15 of contingent deferred
sales loads on the redemption of Class C shares of the Ohio Insured Tax-Free
Fund.
PLANS OF DISTRIBUTION
The Trust has a Plan of Distribution (Class A Plan) under which shares of the
Florida Tax-Free Money Market Fund and Class A shares or Retail shares of all
other Funds may directly incur or reimburse the Advisor 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.
18
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
The Trust also has a Plan of Distribution (Class C Plan) under which Class C
shares of the Ohio Insured Tax-Free Fund may directly incur or reimburse the
Advisor or the Underwriter for expenses related to the distribution and
promotion of shares. The annual limitation for payment of such expenses under
the Class C Plan is 1.00% of average daily net assets attributable to Class C
shares.
The Trust also has a Plan of Distribution (Class S Plan) under which Class S
shares of the Tax-Free Money Market Fund may directly incur or reimburse the
Advisor or the Underwriter for expenses related to the distribution and
promotion of shares. The annual limitation for payment of such expenses under
the Class S Plan is 1.00% of average daily net assets attributable to such
shares. The current distribution expense fee for Class S shares is limited to
0.60% of average daily net assets attributable to such shares.
COMPLIANCE SERVICES AGREEMENT
Under the terms of the Compliance Services Agreement between the Trust and
JPMorgan, JPMorgan provides certain compliance services to the Trust and
provides administrative support services to the Funds' Compliance Program and
Chief Compliance Officer. For these services, JPMorgan receives a quarterly fee
from each Fund.
5. CAPITAL SHARE TRANSACTIONS
Capital share transactions for the Florida Tax-Free Money Market Fund, the Ohio
Tax-Free Money Market Fund and the Tax-Free Money Market Fund are the same as
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 Ohio Insured Tax-Free Fund are the result of
the following capital share transactions:
OHIO INSURED
TAX-FREE FUND
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR
DECEMBER 31, ENDED
2007 JUNE 30,
(UNAUDITED) 2007
- --------------------------------------------------------------------------------
CLASS A
Shares sold 44,333 129,809
Shares reinvested 99,384 171,567
Shares redeemed (233,627) (977,738)
- --------------------------------------------------------------------------------
Net decrease in shares outstanding (89,910) (676,362)
Shares outstanding, beginning of period 4,937,633 5,613,995
- --------------------------------------------------------------------------------
Shares outstanding, end of period 4,847,723 4,937,633
================================================================================
CLASS C
Shares sold 15,395 12,057
Shares reinvested 8,949 15,528
Shares redeemed (44,656) (160,738)
- --------------------------------------------------------------------------------
Net decrease in shares outstanding (20,312) (133,153)
Shares outstanding, beginning of period 454,032 587,185
- --------------------------------------------------------------------------------
Shares outstanding, end of period 433,720 454,032
================================================================================
6. COMMITMENTS AND CONTINGENCIES
The Funds indemnify the Trust's officers and trustees for certain liabilities
that might arise from their performance of their duties to the Funds.
Additionally, in the normal course of business, the Funds enter into contracts
that contain a variety of representations and warranties and which provide
general indemnifications. The Funds' maximum exposure under these arrangements
is unknown, as this would involve future claims that may be made against the
Funds that have not yet occurred. However, based on experience, the Funds expect
the risk of loss to be remote.
19
- --------------------------------------------------------------------------------
Portfolio of Investments
Florida Tax-Free Money Market Fund - December 31, 2007 (Unaudited)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FIXED RATE REVENUE & GENERAL OBLIGATION BONDS -- 16.0%
$ 220,000 Willard OH Var Purp Impt LTGO BANS 4.250 01/23/08 $ 220,052
330,000 MS St UTGO ETM 6.200 02/01/08 330,729
200,000 Lee Co FL Hosp Brd Directors Rev (Lee Mem Hlth Sys) 5.000 04/01/08 200,564
600,000 Miami-Dade Co FL Sch Brd COP Ser A 5.000 04/01/08 602,255
100,000 Orlando FL Util Comm Wtr & Elec Rev ETM 6.375 04/01/08 100,719
300,000 Mentor On The Lake OH LTGO BANS 4.150 06/25/08 300,420
300,000 AMP OH Elect Rev BANS (Newton Falls) 4.250 06/30/08 300,317
100,000 Hillsborough Co FL Sch Brd COP (Master Lease)
Ser B Prerefunded @ 101 5.000 07/01/08 101,691
300,000 Columbiana OH Elec Sys Impt BANS 4.250 07/10/08 300,303
100,000 NV St Nat Res Ser B 3.000 08/01/08 100,010
400,000 Union Twp OH TIF Rev BANS 4.250 09/17/08 401,790
455,000 Stark Co OH Swr Dist 2007-2 LTGO BANS 3.900 09/24/08 455,803
380,000 Cincinnati OH EDR BANS 3.600 11/07/08 380,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS $ 3,794,653
- ------------------------------------------------------------------------------------------------------------------------------------
FLOATING & VARIABLE RATE DEMAND NOTES -- 83.6%
$ 500,000 Alachua Co FL Hlth Facs Rev (Shands Teaching Hosp) (LOC: Suntrust Bank) 3.740 01/01/08 $ 500,000
180,000 Brevard Co FL Hlth Facs Auth Rev (Hlth First Inc) (LOC: Suntrust Bank) 3.740 01/01/08 180,000
650,000 FL St Brd Ed Muni Secs Tr Rcpts Ser SGA 102 (SPA: Societe Generale) 3.750 01/01/08 650,000
100,000 Martin Co FL PCR (Florida Power & Light) 3.770 01/01/08 100,000
300,000 Muni Sec Tr Ctfs Ser 01-161 (FL Brd of Ed) (SPA: Bear Stearns Capital Mkt) 3.750 01/01/08 300,000
550,000 Orange Co FL Hlth Facs Auth Rev Hosp (Orlando Regl Hlthcare)
Ser A-1 (SPA: Dexia Credit Local) 3.750 01/01/08 550,000
600,000 Putnam Co FL Dev Auth PCR (Florida Pwr & Light Co) 3.700 01/01/08 600,000
1,000,000 Sunshine St Governmental Fin Comm FL Rev (SPA: Dexia Credit Local) 3.750 01/01/08 1,000,000
500,000 Univ Athletic Assn Inc (FL Athletic Prog Rev) (LOC: Suntrust Bank) 3.750 01/01/08 500,000
500,000 Univ of North FL Rev (Parking Sys) (LOC: Wachovia Bank) 3.730 01/01/08 500,000
390,000 Broward Co FL HFA MFH Rev (Jacaranda Village Apts) (LOC: HSBC Bank) 3.420 01/02/08 390,000
400,000 Dade Co FL IDA IDR (Dolphin's Stadium) Ser A (LOC: Societe Generale) 3.300 01/02/08 400,000
1,000,000 FL HFC MFH Rev (Monterey Lake C) 3.470 01/02/08 1,000,000
1,000,000 JEA FL Wtr & Swr Sys Rev Ser B (SPA: Fortis Bank SA/NV) 3.400 01/02/08 1,000,000
100,000 Lee Co FL HFA MFH Rev (Forestwood Apts) (LOC: FNMA) 3.480 01/02/08 100,000
605,000 Marion Co FL HFA (Paddock Apts) (LOC: FNMA) 3.410 01/02/08 605,000
500,000 Nassau Co FL PCR (Rayonier) (LOC: Suntrust Bank) 3.400 01/02/08 500,000
500,000 Orange Co FL HFA Rev (LOC: FHLMC) 3.420 01/02/08 500,000
300,000 Palm Beach Co FL Rev (Norton Gallery) (LOC: Bank of America NA) 3.350 01/02/08 300,000
500,000 Port St Lucie FL Util Rev (SPA: Royal Bank of Canada) 3.450 01/02/08 500,000
450,000 Volusia Co FL HFA Rev (Fisherman's Landing) (LOC: FNMA) 3.410 01/02/08 450,000
1,000,000 AR Hosp Equip Fin Auth Rev (Baptist Hlth) (SPA: JPMorgan Chase Bank) 3.470 01/03/08 1,000,000
675,000 Duval Co FL HFA MFH Rev (Glades Apts) (SPA: FHLMC) 3.420 01/03/08 675,000
10,000 Gulf Breeze FL Loc Govt Loan Prog B (SPA: Dexia Credit Local) 3.480 01/03/08 10,000
350,000 Gulf Breeze FL Muni Bond Fund Ser A (LOC: Bank of America NA) 3.460 01/03/08 350,000
70,000 Highlands Co FL Hlth Facs Auth Rev (Adventist Hlth) (LOC: Suntrust Bank) 3.4 01/03/08 70,000
250,000 Hillsborough Co FL Rev (Carrollwood Day) (LOC: Wells Fargo Bank) 3.420 01/03/08 250,000
430,000 Marion Co FL IDA IDR (Hospice of Marion Co Inc) (LOC: Wachovia Bank) 3.480 01/03/08 430,000
1,000,000 Marion Co FL IDA Rev (Chambrel) (LOC: FNMA) 3.460 01/03/08 1,000,000
100,000 Palm Beach Co FL Edl Facs Auth Rev (Atlantic College)
(LOC: Bank of America NA) 3.500 01/03/08 100,000
1,000,000 Palm Beach Co FL Rev (Henry Morrison Flagler)
(LOC: Northern Trust Bank) 3.460 01/03/08 1,000,000
20
- --------------------------------------------------------------------------------
Florida Tax-Free Money Market Fund (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FLOATING & VARIABLE RATE DEMAND NOTES -- 83.6% (CONTINUED)
$ 200,000 Seminole Co FL IDA Rev (FL Living Nursing Ctr)
(LOC: Bank of America NA) 3.620 01/03/08 $ 200,000
900,000 Seminole Co FL IDA Rev (Master Academy) (LOC: Allied Irish Bank) 3.440 01/03/08 900,000
1,000,000 Tampa FL Rev (Tampa LLC-Univ Tampa) (LOC: Royal Bank of Canada) 3.430 01/03/08 1,000,000
800,000 Wauchula FL IDR (Hardee Co Ctr) (LOC: JPMorgan Chase Bank) 3.430 01/03/08 800,000
930,000 Lee Co FL IDA Hlthcare Facs Rev (Bonita Cmnty Hlth) (LOC: Fifth Third Bank) 3.460 01/04/08 930,000
450,000 Lexington-Fayette Co KY Urban Govt (Liberty Ridge) (LOC: US Bank NA) 3.520 01/04/08 450,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING & VARIABLE RATE DEMAND NOTES $ 19,790,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 99.6%
(Amortized Cost $23,584,653) $ 23,584,653
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.4% 100,175
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 23,684,828
====================================================================================================================================
See accompanying notes to portfolios of investments and notes to financial
statements.
21
- --------------------------------------------------------------------------------
Portfolio of Investments
Ohio Insured Tax-Free Fund - December 31, 2007 (Unaudited)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FIXED RATE REVENUE & GENERAL OBLIGATION BONDS -- 98.5%
$ 1,260,000 Cleveland OH Arpt Sys Rev Prerefunded @ 101 5.125 01/01/08 $ 1,272,600
74,906 Columbus OH Special Assessment GO 5.050 04/15/08 75,322
1,035,000 Reading OH Rev (St Mary's Ed Institute) 5.550 02/01/10 1,064,011
1,000,000 Hilliard OH CSD GO Prerefunded @ 101 5.750 12/01/10 1,081,890
525,000 Kings OH LSD GO Prerefunded @ 101 6.050 12/01/10 572,350
1,000,000 Summit Co OH GO Prerefunded @ 101 6.000 12/01/10 1,088,800
120,000 Cuyahoga Co OH Hosp Rev (Univ Hosp) ETM 9.000 06/01/11 131,917
1,000,000 Lorain Co OH Hosp Rev (Catholic Hlth) 5.625 10/01/11 1,072,200
1,000,000 Hamilton Co OH Swr Sys Rev 5.500 12/01/11 1,079,040
1,000,000 Pickerington OH LSD UTGO Prerefunded @ 100 5.250 12/01/11 1,076,020
1,000,000 Monroe OH LSD UTGO Prerefunded @ 100 5.000 12/01/12 1,078,900
1,750,000 Eaton OH CSD GO Prerefunded @ 101 5.000 12/01/13 1,903,020
500,000 Ross Twp OH LSD UTGO Prerefunded @ 100 5.000 12/01/13 544,215
1,480,000 Lakewood OH CSD GO Prerefunded @ 100 5.250 12/01/14 1,643,599
660,000 West Chester Twp OH GO 5.500 12/01/14 717,176
400,000 Warren OH Wtr Wrks Rev 5.500 11/01/15 436,604
845,000 Buckeye Valley OH LSD GO 6.850 12/01/15 958,737
620,000 Columbus-Polaris Hsg Corp Rev Prerefunded @ 100 7.400 01/01/16 719,088
2,750,000 Little Miami OH LSD GO Prerefunded @ 100 5.000 12/01/16 3,043,562
1,000,000 Lorain Co OH Hosp Rev (Catholic Hlth Partners) 5.500 09/01/19 1,050,260
1,000,000 Lucas Co OH Hosp Rev (Promedica Hlth Grp) 5.625 11/15/19 1,046,950
1,085,000 West Clermont OH LSD GO 5.000 12/01/19 1,149,850
850,000 West Chester Twp OH GO 5.000 12/01/20 899,317
1,210,000 Cincinnati OH Tech College Rev 5.250 10/01/21 1,302,371
1,185,000 Akron OH Impt GO 5.000 12/01/22 1,239,629
765,000 Fairfield Co OH GO 5.000 12/01/22 800,267
250,000 OH St Higher Ed Fac (Xavier Univ) 5.000 5/01/23 260,340
1,050,000 Harrison OH Wst Wtr Sys Rev 5.250 11/01/23 1,123,826
1,000,000 Akron OH Var Purp GO 5.000 12/01/23 1,044,750
450,000 Columbus OH TIF Rev (Polaris) 4.750 12/01/23 461,489
865,000 Fairfield Co OH GO 5.000 12/01/23 912,627
1,000,000 OH St Higher Ed Fac Rev (Univ Dayton) 5.000 12/01/23 1,046,330
1,000,000 Toledo OH CSD GO 5.000 12/01/23 1,042,450
1,000,000 Hamilton Co OH Hosp Rev (Children's Hosp Med Ctr) 5.000 05/15/24 1,022,380
400,000 Springboro OH Swr Sys Rev 5.000 06/01/24 418,752
2,000,000 Canal Winchester OH LSD UTGO 4.750 12/01/24 2,070,580
825,000 Parma OH GO 4.750 12/01/24 853,463
1,000,000 Columbus OH Arpt Rev 5.000 01/01/25 1,042,680
1,040,000 Franklin Co OH Hosp Rev (Children's Hosp) 5.000 05/01/25 1,062,339
810,000 Big Walnut OH LSD GO 5.000 12/01/25 847,033
580,000 New Albany Plain OH LSD GO 5.000 12/01/25 601,605
1,000,000 Univ of Cincinnati OH General Rcpts 4.750 06/01/26 1,024,360
1,500,000 Richland Co OH Hosp Facs Rev (MedCentral Hlth Sys) 5.125 11/15/26 1,495,410
1,995,000 Butler Co OH Trans Dist 4.750 12/01/26 2,023,309
1,090,000 Fairborn OH CSD GO 5.000 12/01/26 1,145,721
1,000,000 Kings OH LSD Impt UTGO 5.000 12/01/26 1,055,170
1,000,000 Lakewood OH CSD Facs Impt UTGO 5.000 12/01/26 1,049,400
3,000,000 OH St Higher Ed Fac Rev (Univ Dayton) 5.000 12/01/26 3,104,609
2,100,000 Oregon OH CSD GO 5.000 12/01/27 2,192,420
1,830,000 Columbus OH CSD Impt UTGO 5.000 12/01/28 1,921,903
1,185,000 Delaware OH GO 5.000 12/01/28 1,243,172
895,000 Licking Heights OH LSD GO 6.400 12/01/28 1,119,090
1,000,000 Mason OH Swr Sys Rev 5.000 12/01/28 1,037,150
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS $ 59,270,053
- ------------------------------------------------------------------------------------------------------------------------------------
22
- --------------------------------------------------------------------------------
Ohio Insured Tax-Free Fund (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FLOATING & VARIABLE RATE DEMAND NOTES -- 1.5%
$ 100,000 OH St Higher Edl Fac Rev (Case Western)
(SPA: Landesbank Hessen-Thuringen) 3.750 01/01/08 $ 100,000
695,000 OH St Wtr Dev Auth (Purewater) (SPA: State Street B&T Co) 3.500 01/02/08 695,000
135,000 OH St Higher Ed Fac Pooled Fin (1998) (LOC: Fifth Third Bank) 3.470 01/03/08 135,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING & VARIABLE RATE DEMAND NOTES $ 930,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 100.0%
(Amortized Cost $57,885,476) $ 60,200,053
LIABILITIES IN EXCESS OF OTHER ASSETS -- 0.0% (6,856)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 60,193,197
====================================================================================================================================
See accompanying notes to portfolios of investments and notes to financial
statements.
23
- --------------------------------------------------------------------------------
Portfolio of Investments
Ohio Tax-Free Money Market Fund - December 31, 2007 (Unaudited)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FIXED RATE REVENUE & GENERAL OBLIGATION BONDS -- 20.9%
$ 1,500,000 Willard OH LTGO BANS 4.250 01/23/08 $ 1,500,354
200,000 Univ of Cincinnati OH General Rcpts Rev BANS Ser A 4.500 01/24/08 200,111
250,000 OH St Infrastructure Impt UTGO Ser B Prerefunded @ 101 5.250 02/01/08 252,926
3,000,000 Cincinnati OH BANS (Baldwin 300) 3.750 02/14/08 3,000,000
449,000 North Royalton OH Street Impt BANS 5.000 02/28/08 450,051
885,000 Southwest Regl Wtr Dist OH Rev BANS 4.250 03/12/08 885,839
1,200,000 Mason OH Golf Course Acq LTGO BANS 4.250 03/13/08 1,201,386
3,800,000 Niles OH LTGO BANS 4.125 03/13/08 3,802,374
1,500,000 Hamilton Twp OH UTGO BANS 4.250 03/20/08 1,501,582
2,560,000 Henry Co OH Var Purp LTGO BANS 4.500 03/21/08 2,564,098
3,000,000 Ironton OH CSD UTGO BANS 4.300 05/28/08 3,004,122
3,880,000 Middletown OH CSD UTGO BANS 4.250 06/05/08 3,887,242
2,330,000 Lakota OH LSD LTGO BANS Ser A 4.500 06/12/08 2,344,399
1,700,000 Lakota OH LSD LTGO BANS Ser B 4.000 06/12/08 1,706,800
1,600,000 Crestview OH LSD UTGO BANS 3.875 06/17/08 1,606,111
2,100,000 AMP OH Elect Rev BANS (Newton Falls) 4.250 06/30/08 2,102,212
500,000 Columbiana OH Elec Sys Impt BANS 4.250 07/10/08 500,506
1,000,000 AMP OH Elect Rev BANS (Woodville) 4.350 07/17/08 1,001,306
1,005,000 Greenhills OH Var Purp LTGO BANS 4.050 07/17/08 1,005,000
890,000 Columbiana OH Wtr Main Impt BANS 4.250 08/07/08 890,773
3,700,000 Arcanum-Butler OH LSD UTGO BANS (Classroom Facs) 3.850 08/12/08 3,712,193
850,000 Olmsted Falls OH Impt BANS (Fire Station) 3.950 08/20/08 851,568
1,080,000 Olmsted Falls OH Var Purp Impt BANS 3.950 08/20/08 1,081,992
3,000,000 Geauga Co OH Safety Ctr Impt BANS 4.000 08/27/08 3,004,732
2,560,000 Jackson Co OH LTGO BANS 4.300 09/04/08 2,565,838
3,600,000 Union Twp OH TIF Rev BANS 4.250 09/17/08 3,616,112
710,000 Warrensville Heights OH Var Purp Impt BANS 3.950 09/18/08 711,225
1,000,000 Stark Co OH Swr Dist 2007-2 LTGO BANS 3.900 09/24/08 1,001,766
3,500,000 Cuyahoga Heights OH Var Purp LTGO BANS 4.500 09/25/08 3,519,857
140,000 OH St Bldg Auth Arts Facs Bldg Fd A 5.000 10/01/08 142,048
1,000,000 Harrison Twp OH BANS (Fire Dept) 3.850 10/09/08 1,001,862
1,000,000 South Lebanon Village OH Tax Increment Rev BANS
(LOC: National City Bank) 3.750 10/27/08 1,000,000
2,000,000 Canal Winchester OH LTGO BANS (Diley Rd) 4.250 10/30/08 2,009,635
1,000,000 Cincinnati OH EDR BANS (LOC: National City Bank) 3.600 11/07/08 1,000,000
1,605,000 Hancock Co OH LTGO BANS 4.250 11/08/08 1,615,603
1,055,000 AMP OH Elect Rev BANS (Monroeville Village) 3.800 11/13/08 1,057,210
3,000,000 Deerfield Twp OH UTGO BANS 3.450 11/18/08 3,000,000
1,500,000 Niles OH Wtr Sys Impt LTGO BANS 4.000 11/21/08 1,505,152
3,210,000 Mahoning Co OH LTGO BANS Ser A 4.200 11/26/08 3,226,774
820,000 AMP OH Elect Rev BANS (Edgerton Village) 3.550 12/04/08 820,000
805,000 Oakwood OH Str Impt BANS Ser 2 3.750 12/04/08 806,791
1,980,000 North Baltimore OH LSD Impt UTGO BANS 4.100 12/11/08 1,989,910
1,655,000 Forest Park OH LTGO BANS 3.750 12/23/08 1,663,603
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS $ 74,311,063
- ------------------------------------------------------------------------------------------------------------------------------------
24
- --------------------------------------------------------------------------------
Ohio Tax-Free Money Market Fund (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FLOATING & VARIABLE RATE DEMAND NOTES -- 78.4%
$ 200,000 Cuyahoga Co OH Hosp (Univ Hosp) (LOC: JPMorgan Chase Bank) 3.630 01/01/08 $ 200,000
1,685,000 Cuyahoga Co OH IDR (S&R Playhouse Rlty) (LOC: HSBC Bank) 3.500 01/01/08 1,685,000
12,700,000 Cuyahoga Co OH Rev (Cleveland Clinic) (SPA: Bank of Nova Scotia) 3.750 01/01/08 12,700,000
2,400,000 Montgomery Co OH Rev (Miami Valley Hosp) (LOC: National City Bank) 3.750 01/01/08 2,400,000
8,620,000 OH St Air Quality Rev PCR (OH Edison) (LOC: Wachovia Bank) 3.750 01/01/08 8,620,000
4,560,000 OH St Higher Ed Fac (Case Western) (SPA: Landesbank Hessan-Thuringen) 3.750 01/01/08 4,560,000
1,000,000 OH St PCR (Sohio Air) 3.750 01/01/08 1,000,000
1,000,000 OH St PCR (Sohio Water) 3.780 01/01/08 1,000,000
3,185,000 OH St Wtr Dev Auth Rev (FirstEnergy) Ser A (LOC: Barclays Bank Plc) 3.740 01/01/08 3,185,000
3,000,000 Cleveland OH Arpt Sys Rev Tr Rcpts SGA 126 (SPA: Societe Generale) 3.510 01/02/08 3,000,000
545,000 Cleveland OH Inc Tax Rev (SPA: Dexia Credit Local) 3.280 01/02/08 545,000
1,400,000 Cleveland-Cuyahoga Co OH Port Auth Rev (Carnegie/96th Resh Bldg)
(LOC: Fifth Third Bank) 3.430 01/02/08 1,400,000
5,695,000 Cleveland-Cuyahoga Co OH Port Auth Rev (Euclid/93rd Garage Office)
(LOC: Fifth Third Bank) 3.430 01/02/08 5,695,000
1,455,000 Cuyahoga Co OH Ed Fac (Utd Cerebral Palsy Assn) (LOC: Key Bank NV) 3.480 01/02/08 1,455,000
165,000 Erie Co OH IDR (Toft Dairy Inc) (LOC: Key Bank NV) 3.480 01/02/08 165,000
1,080,000 Franklin Co OH Hosp Rev (OH Hlth Corp)
(SPA: Landesbank Hessen-Thuringen) 3.450 01/02/08 1,080,000
1,940,000 Franklin Co OH Rev (Trinity Hlth Credit-C-1) (SPA: US Bank NA) 3.450 01/02/08 1,940,000
545,000 Hamilton Co OH Hlth Facs (St Aloysius Orphanage) (LOC: Key Bank NA) 3.480 01/02/08 545,000
2,500,000 Hamilton Co OH Hosp Facs Rev (Eliz Gamble) (LOC: JPMorgan Chase Bank) 3.420 01/02/08 2,500,000
1,000,000 Hamilton Co OH Hosp Facs Rev (Hlth Alliance) Ser F (SPA: Dexia Credit Local) 3.420 01/02/08 1,000,000
800,000 Hamilton Co OH Hosp Rev (Hlth Alliance) Ser E (SPA: Dexia Credit Local) 3.260 01/02/08 800,000
6,400,000 Kent St Univ Gen Rcpts Rev (SPA: Dexia Credit Local) 3.500 01/02/08 6,400,000
1,510,000 Lorain Co OH IDR (EMH Regl Med Ctr) (LOC: Key Bank NA) 3.480 01/02/08 1,510,000
4,000,000 Middletown OH Dev Rev (Bishop-Fenwick HS) (LOC: JPMorgan Chase Bank) 3.460 01/02/08 4,000,000
1,900,000 Montgomery Co OH EDR (Dayton Art Inst) (LOC: National City Bank) 3.440 01/02/08 1,900,000
3,500,000 Montgomery Co OH Rev (Catholic Hlth) Ser B (SPA: Bayerische Landesbank) 3.430 01/02/08 3,500,000
1,500,000 OH St Air Quality Dev Auth PCR (FirstEnergy-A) (LOC: Key Bank NA) 3.450 01/02/08 1,500,000
2,550,000 OH St Air Quality Dev Auth Rev (FirstEnergy) Ser B (LOC: Barclays Bank Plc) 3.430 01/02/08 2,550,000
600,000 OH St Common Schools UTGO Ser B 3.370 01/02/08 600,000
500,000 OH St Infra Impt UTGO 3.400 01/02/08 500,000
3,200,000 OH St Wtr Dev Auth PCR (Firstenergy Nuclear B) (LOC: Wachovia Bank NA) 3.470 01/02/08 3,200,000
6,200,000 OH St Wtr Dev Auth PCR Facs Rev (First Energy) (LOC: Barclays Bank Plc) 3.420 01/02/08 6,200,000
5,180,000 OH Wtr Dev Auth Rev (Purewater) (SPA: State Street B&T Co) 3.500 01/02/08 5,180,000
1,300,000 Port Gtr Cincinnati OH Dev Auth Rev (Natl Underground RR-A)
(LOC: JPMorgan Chase Bank) 3.430 01/02/08 1,300,000
4,200,000 Puerto Rico Commonwealth Govt Dev Bk Rev (SPA: Credit Suisse) 3.180 01/02/08 4,200,000
300,000 Scioto Co OH Hosp Rev (VHA Ctr) Ser C (SPA: JPMorgan Chase Bank) 3.400 01/02/08 300,000
3,700,000 ABN AMRO MuniTOPS Ctfs Tr 2001-03 (Westerville OH CSD)
(SPA: Bank of America) 3.460 01/03/08 3,700,000
4,995,000 ABN AMRO MuniTops Ctfs Tr 2004-23 (OH Non-Amt Tr Ctf)
(SPA: Bank of America NA) 3.490 01/03/08 4,995,000
3,000,000 ABN AMRO MuniTOPS Ctfs Tr 2006-37 (SPA: Bank of America) 3.490 01/03/08 3,000,000
5,000,000 ABN AMRO MuniTOPS Ctfs Tr 2006-4 (SPA: Bank of America) 3.490 01/03/08 5,000,000
4,040,000 Akron Bath Copley OH Hosp (Summa Hlth) B (LOC: Bank One NA) 3.430 01/03/08 4,040,000
4,000,000 Akron Bath Copley OH Jt Twp Hosp Dist Rev (Hlthcare Fac-Summner)
(LOC: KBC Bank NV) 3.470 01/03/08 4,000,000
3,800,000 Athens Co OH Port Auth (Hsg for OH Univ) (LOC: Wachovia Bank) 3.490 01/03/08 3,800,000
6,665,000 Austin OH Ctfs Boa Ser Tr 2007-1010 (SPA: Bank of America) 3.500 01/03/08 6,665,000
660,000 Butler Co OH Hlthcare Facs Rev (Lifesphere) (LOC: US Bank NA) 3.420 01/03/08 660,000
1,085,000 Butler Co OH Hosp Facs (Berkeley Sq Ret) (LOC: Fifth Third Bank) 3.460 01/03/08 1,085,000
2,390,000 Cambridge OH Hosp Facs Rev (SE OH Regl Med) (LOC: National City Bank) 3.480 01/03/08 2,390,000
2,000,000 Carroll Co OH Hlthcare Facs (St Johns Village) (LOC: National City Bank) 3.480 01/03/08 2,000,000
4,225,000 Clark Co OH MFH Rev (OH Masonic Home) (SPA: Key Bank NA) 3.470 01/03/08 4,225,000
25
- --------------------------------------------------------------------------------
Ohio Tax-Free Money Market Fund (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FLOATING & VARIABLE RATE DEMAND NOTES -- 78.4% (CONTINUED)
$ 5,720,000 Cleveland OH Waterworks Rev Ser B (SPA: Dexia Credit Local) 3.400 01/03/08 $ 5,720,000
90,000 Coshocton Co OH Hosp (Echoing Hills Village) (LOC: JPMorgan Chase Bank) 3.650 01/03/08 90,000
2,700,000 Columbus OH Regl Arpt Auth Cap Fdg Rev Oasbo Expaned
Asset Sr Ser (LOC: US Bank NA) 3.470 01/03/08 2,700,000
2,040,000 Columbus OH Regl Arpt Auth Rev (LOC: US Bank NA) 3.470 01/03/08 2,040,000
1,360,000 Cuyahoga Co OH Civic Facs (West Side Ecumenical) (LOC: Key Bank NA) 3.480 01/03/08 1,360,000
1,315,000 Cuyahoga Co OH EDR (Cleveland Botanical) (LOC: Allied Irish Bank Plc) 3.430 01/03/08 1,315,000
5,200,000 Cuyahoga Co OH Hlthcare Facs Rev (A M McGregor Home)
(LOC: Keybank NA) 3.450 01/03/08 5,200,000
6,905,000 Delaware Co OH Hlthcare Facs Rev Impt (Sarah Moore)
(LOC: Fifth Third Bank) 3.520 01/03/08 6,905,000
1,705,000 Franklin Co OH EDR (Dominican Sisters) (LOC: Fifth Third Bank) 3.480 01/03/08 1,705,000
1,000,000 Franklin Co OH Hlth Facs (Friendship Village Dublin) (LOC: LaSalle Bank) 3.420 01/03/08 1,000,000
1,050,000 Franklin Co OH Hlth Facs (Heinzerling Fndtn) (LOC: JPMorgan Chase Bank) 3.540 01/03/08 1,050,000
1,800,000 Franklin Co OH Hosp Rev (Children's Hosp) (SPA: National City Bank) 3.460 01/03/08 1,800,000
3,000,000 Franklin Co OH Hosp Rev (Children's Hosp) Ser B (SPA: National City Bank) 3.430 01/03/08 3,000,000
1,900,000 Franklin Co OH Hosp Rev (Children's Hosp) Ser-A (SPA: National City Bank) 3.430 01/03/08 1,900,000
775,000 Franklin Co OH IDR (OH Girl Scout Council) (LOC: National City Bank) 3.800 01/03/08 775,000
8,050,000 Franklin Co OH Rev Var (Trinity Hlth Credit-F) (SPA: Bayerische Landesbank) 3.500 01/03/08 8,050,000
700,000 Geauga Co OH Hlth Fac (Heather Hill) (LOC: Bank One NA) 3.450 01/03/08 700,000
300,000 Hamilton Co OH EDR (Contemporary Arts Ctr) (LOC: National City Bank) 3.450 01/03/08 300,000
2,500,000 Hamilton Co OH Hlthcare (Life Enriching Cmntys) B (LOC: PNC Bank NA) 3.400 01/03/08 2,500,000
1,880,000 Hamilton Co OH Hlthcare Facs Rev (Episcopal) (LOC: Key Bank NA) 3.420 01/03/08 1,880,000
1,150,000 Hamilton Co OH Hosp (Beechwood Home) (LOC: US Bank NA) 3.460 01/03/08 1,150,000
2,980,000 Hamilton Co OH Hosp (Children's Hosp Med Ctr) Ser 1997
(LOC: PNC Bank NA) 3.420 01/03/08 2,980,000
4,100,000 Hamilton Co OH Hosp (Drake Ctr Inc) (LOC: US Bank NA) 3.420 01/03/08 4,100,000
1,650,000 Hamilton Co OH Hosp Facs Rev (Children's Hosp Med Ctr)
(LOC: US Bank NA) 3.420 01/03/08 1,650,000
1,736,000 Hamilton Co OH Hosp Facs Rev (Eliz Gamble)
Ser B (LOC: JPMorgan Chase Bank) 3.350 01/03/08 1,736,000
3,945,000 Henry Co OH Fac Impt Rev (Co Hosp) (LOC: Key Bank NA) 3.480 01/03/08 3,945,000
3,680,000 Highland Co OH Jt Twp Hosp Facs Rev (LOC: Key Bank NA) 3.470 01/03/08 3,680,000
2,415,000 Lima OH Hosp Facs (Lima Mem Hosp) (LOC: Bank One NA) 3.480 01/03/08 2,415,000
400,000 Lucas Co OH Hlth Facs (Lutheran Homes) (LOC: Fifth Third Bank) 3.430 01/03/08 400,000
4,400,000 Mahoning Co OH Hosp Facs Rev (Forum Hlth Oblig)
(LOC: JPMorgan Chase Bank) 3.430 01/03/08 4,400,000
150,000 Mahoning Co OH IDR (OH Heart Inst) (LOC: JPMorgan Chase Bank) 3.800 01/03/08 150,000
995,000 Mason OH TIF Rev (Central Parke of Mason) (LOC: US Bank) 3.510 01/03/08 995,000
910,000 Montgomery Co OH Hlth Facs (Cmnty Blood Ctr) (LOC: Bank One NA) 3.650 01/03/08 910,000
1,300,000 Montgomery Co OH Rev (St Vincent de Paul) (LOC: National City Bank) 3.440 01/03/08 1,300,000
1,700,000 OH St Higher Ed Fac Pooled Fin Rev (1997) (LOC: Fifth Third Bank) 3.470 01/03/08 1,700,000
2,100,000 OH St Higher Ed Fac Pooled Fin Rev (1998) (LOC: Fifth Third Bank) 3.470 01/03/08 2,100,000
1,275,000 OH St Higher Ed Fac Pooled Fin Rev (1999) (LOC: Fifth Third Bank) 3.470 01/03/08 1,275,000
1,700,000 OH St Higher Ed Fac Pooled Fin Rev Ser B (LOC: Fifth Third Bank) 3.440 01/03/08 1,700,000
2,200,000 OH St Higher Ed Fac Rev (Marietta College) (LOC: JPMorgan Chase Bank) 3.450 01/03/08 2,200,000
1,450,000 OH St Higher Ed Fac Rev (Mt Union College) (LOC: JPMorgan Chase Bank) 3.430 01/03/08 1,450,000
200,000 OH St Higher Ed Rev (Malone College) (LOC: National City Bank) 3.480 01/03/08 200,000
3,610,000 OH St Tpk Rev Fltr Ctfs Ser 71 (SPA: Morgan Stanley Dean Witter) 3.550 01/03/08 3,610,000
400,000 OH Univ General Rcpts Rev (SPA: Dexia Credit Local) 3.440 01/03/08 400,000
675,000 Ottawa Co OH Hosp Facs Rev (Luther Home of Mercy)
Ser 97 (LOC: National City Bank) 3.530 01/03/08 675,000
1,260,000 Ottawa Co OH Hosp Rev (Luther Home of Mercy)
Ser 99 (LOC: National City Bank) 3.530 01/03/08 1,260,000
3,375,000 Port Gtr Cincinnati Dev Auth Rev (Cincinnati Zoo) (LOC: US Bank NA) 3.260 01/03/08 3,375,000
26
- --------------------------------------------------------------------------------
Ohio Tax-Free Money Market Fund (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FLOATING & VARIABLE RATE DEMAND NOTES -- 78.4% (CONTINUED)
$ 670,000 Port Gtr Cincinnati Dev Auth Rev (Cincinnati Zoo) (LOC: US Bank NA) 3.340 01/03/08 $ 670,000
3,900,000 Richland Co OH Hlthcare Facs Rev (Wesleyan)
Ser B (LOC: JPMorgan Chase Bank) 3.440 01/03/08 3,900,000
900,000 Salem OH Hosp Rev Impt (Salem Cmnty) (LOC: JPMorgan Chase Bank) 3.430 01/03/08 900,000
3,470,000 Sharonville OH IDR (Duke Rlty LP) (LOC: Fifth Third Bank) 3.540 01/03/08 3,470,000
2,240,000 Summit Co OH Civic Facs Rev (YMCA) (LOC: Key Bank NA) 3.480 01/03/08 2,240,000
1,215,000 Summit Co OH Hlth Facs (Evant Inc) (LOC: National City Bank) 3.530 01/03/08 1,215,000
3,995,000 Univ of Akron General Rcpts Fltr Ctfs Ser 165
(SPA: Morgan Stanley Dean Witter) 3.550 01/03/08 3,995,000
475,000 Univ of Cincinnati OH General Rcpts Ser B (SPA: Bayerische Landesbank) 3.470 01/03/08 475,000
1,700,000 Warren Co OH Hlthcare Facs Rev (Otterbien) (LOC: Fifth Third Bank) 3.390 01/03/08 1,700,000
1,600,000 Warren Co OH IDR (Liquid Container) (LOC: Bank of America) 3.420 01/03/08 1,600,000
4,085,000 Westlake OH Hlthcare Fac (Lutheran Home) (LOC: National City Bank) 3.400 01/03/08 4,085,000
4,720,000 Woodlawn OH EDR (Goodwill Inds) (LOC: US Bank NA) 3.460 01/03/08 4,720,000
1,040,000 Miami Co OH Hosp Facs (Upper Valley Med Ctr) (LOC: Fifth Third Bank) 3.460 01/04/08 1,040,000
5,700,000 Hamilton Co OH IDR (ADP) 3.100 01/15/08 5,700,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING & VARIABLE RATE DEMAND NOTES $ 279,331,000
- ------------------------------------------------------------------------------------------------------------------------------------
ADJUSTABLE RATE PUT BONDS -- 1.5%
$ 2,200,000 Cuyahoga Co OH IDR (Halle Office Bldg) (LOC: HSBC Bank) 3.850 04/01/08 $ 2,200,000
805,000 Clermont Co OH EDR (John Q Hammons/Clermont Hills)
(LOC: Fifth Third Bank) 3.800 05/01/08 805,000
1,935,000 Richland Co OH IDR (Mansfield Sq Ltd) (LOC: National City Bank) 3.750 05/15/08 1,935,000
325,000 Gallia Co OH IDR (Jackson Pike Assoc) (LOC: Fifth Third Bank) 3.500 06/15/08 325,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ADJUSTABLE RATE PUT BONDS $ 5,265,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 100.8%
(Amortized Cost $358,907,063) $ 358,907,063
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.8%) (2,778,441)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 356,128,622
====================================================================================================================================
See accompanying notes to portfolios of investments and notes to financial
statements.
27
- --------------------------------------------------------------------------------
Portfolio of Investments
Tax-Free Money Market Fund - December 31, 2007 (Unaudited)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FIXED RATE REVENUE & GENERAL OBLIGATION BONDS -- 22.4%
$ 500,000 Chicago IL LTGO ETM 5.000 01/01/08 $ 500,000
300,000 Columbus OH Mun Arpt Auth Rev (Port Columbus) Prerefunded @ 101 5.000 01/01/08 303,000
1,005,000 AMP OH Elect Rev BANS (Seville Village) 4.250 01/17/08 1,005,172
500,000 Willard OH LTGO Purp Impt BANS 4.250 01/23/08 500,118
200,000 Indianapolis IN Loc Pub Impt Bd Bk Ser A 5.500 02/01/08 200,329
200,000 Indianapolis IN Loc Pub Impt Bd Bk Ser A Prerefunded @ 101 5.000 02/01/08 202,230
145,000 MS St UTGO ETM 6.200 02/01/08 145,328
150,000 San Antonio TX Elec & Gas Ser A 5.000 02/01/08 150,186
100,000 Tarrant Co TX Hlth Facs Dev Corp Hlth Sys Rev
(TX Hlth Resources Sys) Ser A Prerefunded @ 102 5.250 02/15/08 102,202
160,000 Houston TX LTGO Ser C 7.000 03/01/08 160,785
200,000 Hamilton Twp OH LTGO BANS 4.250 03/20/08 200,134
100,000 LA St UTGO Ser B Prerefunded @101 5.000 04/15/08 101,541
300,000 WI St UTGO Ser A 4.000 05/01/08 300,517
100,000 Bedford MI Pub SD UTGO Prerefunded @ 100 4.400 05/08/08 100,249
100,000 Hamilton Co OH Sales Tax (Hamilton Co Football B) Prerefunded @101 5.000 06/01/08 101,574
700,000 Lakota OH LSD LTGO BANS Ser B 4.000 06/12/08 702,800
600,000 Mentor On The Lake OH LTGO BANS 4.150 06/25/08 600,839
450,000 AMP OH Elect Sys BANS (Newton Falls) 4.250 06/30/08 450,475
1,500,000 Munster IN Temp Ln Wts UTGO Ser 2 4.250 06/30/08 1,502,906
100,000 Pima Co AZ UTGO (Cmnty College) Ser C 4.000 07/01/08 100,243
420,000 Columbiana OH Elec Sys Impt BANS 4.250 07/10/08 420,425
340,000 East Porter Co IN Sch Bld Corp Prerefunded @ 101 4.600 07/15/08 345,433
400,000 AMP OH Elect Rev BANS (Woodville) 4.350 07/17/08 400,523
180,000 Lockhart TX ISD UTGO Prerefunded @100 5.000 08/01/08 181,579
645,000 Arcanum-Butler OH LSD UTGO Classroom Facs BANS 3.850 08/12/08 647,125
150,000 Lake Co OH Hosp Facs Rev (Lake Hosp Sys Inc) Prerefunded @101 5.000 08/15/08 152,788
586,500 Bratenahl OH BANS UTGO (Greenspace) 4.500 08/28/08 588,548
1,000,000 Union Twp OH TIF Rev BANS 4.250 09/17/08 1,004,476
707,750 AMP OH Elect Rev BANS (Hubbard) 3.700 09/25/08 707,750
530,000 AMP OH Elect Rev BANS (St Marys) 3.700 10/02/08 530,000
700,000 Ontario OH Wtr Sys Impt LTGO BANS 4.125 10/02/08 701,395
1,000,000 Kent OH LTGO BANS 4.000 10/16/08 1,003,060
450,000 South Lebanon Village OH Tax BANS (LOC: National City Bank) 3.750 10/27/08 450,000
500,000 Canal Winchester OH LTGO BANS (Diley Road) 4.250 10/30/08 502,409
150,000 DE River & Bay Auth Rev 5.000 01/01/09 152,852
200,000 Norfolk VA UTGO Cap Impt 5.000 01/01/09 203,901
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS $ 15,422,892
- ------------------------------------------------------------------------------------------------------------------------------------
FLOATING & VARIABLE RATE DEMAND NOTES -- 75.7%
$ 400,000 Alachua Co FL Hlth Facs Auth Rev Installment
(Shands Teach-A) (LOC: Suntrust Bank) 3.740 01/01/08 $ 400,000
800,000 Albany-Dougherty Co GA Hosp Auth Rev Rev Antic Ctfs
(Phoebe Hosp) (SPA: Regions Bank) 3.800 01/01/08 800,000
935,000 Arvada CO Wtr Sys Rev (SPA: Dexia Credit Local) 3.650 01/01/08 935,000
600,000 Beaver Co PA IDA PCR (Firstenergy Gen) (LOC: Barclays Bank Plc) 3.750 01/01/08 600,000
1,465,000 Carbon Co UT PCR (Pacificorp) (SPA: JPMorgan Chase Bank) 3.750 01/01/08 1,465,000
300,000 FL Higher Edl Facs Fing Auth Rev (St Thomas Univ) (LOC: Suntrust Bank) 3.740 01/01/08 300,000
600,000 ID Hlth Facs Auth Rev (St Lukes Med Ctr) (SPA: Harris Trust NA) 3.750 01/01/08 600,000
400,000 Jacksonville FL Elect Auth Rev (SPA: Bank of America) 3.750 01/01/08 400,000
500,000 Montgomery Co OH (Miami Valley Hosp) (LOC: National City Bank) 3.750 01/01/08 500,000
700,000 OH St Air Quality Rev PCR (Ohio Edison) 3.750 01/01/08 700,000
2,000,000 OH St PCR (Sohio Air) 3.750 01/01/08 2,000,000
700,000 Pinellas Co FL Hlth Facs Auth Rev (Pooled Hosp) (SPA: Wachovia Bank) 3.800 01/01/08 700,000
28
- --------------------------------------------------------------------------------
Tax-Free Money Market Fund - (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FLOATING & VARIABLE RATE DEMAND NOTES -- 75.7% (CONTINUED)
$ 400,000 Reg Arpts Impt Corp Los Angeles CA Term Facs
(Los Angeles Intl Arpt) (LOC: Societe Generale) 3.720 01/01/08 $ 400,000
775,000 Sunshine St Governmental Fing Comm FL Rev
(Lehman Conv 3/1/2000) (SPA: Dexia Credit Local) 3.750 01/01/08 775,000
2,000,000 Sweetwater Co WY Environmental Impt Rev
(Pacificorp) (LOC: Barclays Bank Plc) 3.850 01/01/08 2,000,000
2,640,000 Bibb Co GA Dev Auth Rev (First Presbyterian Day Sch)
(LOC: Suntrust Bank) 3.440 01/02/08 2,640,000
400,000 Bloomington IL Normal Arpt Auth (SPA: JPMorgan Chase Bank) 3.700 01/02/08 400,000
1,420,000 Broward Co FL HFA MFH Rev (Reflections Apts) (LOC: FHLMC) 3.410 01/02/08 1,420,000
1,610,000 IL Hlth Facs Auth Rev (The Carle Fndtn) Ser B (SPA: Wachovia Bank NA) 3.500 01/02/08 1,610,000
500,000 Orange Co FL HFA MFH Rev (Palm C) (LOC: FHLMC) 3.420 01/02/08 500,000
750,000 Port St Lucie FL Util Rev (SPA: Royal Bank of Canada) 3.450 01/02/08 750,000
1,100,000 Scio Twp MI EDR (ADP Inc) 3.620 01/02/08 1,100,000
575,000 Ulster Co NY IDA IDR (Viking Industries Inc) Ser A (LOC: Key Bank NA) 3.550 01/02/08 575,000
1,000,000 ABN AMRO MuniTOPS Ctfs Tr 2006-56
(Frisco TX) (SPA: ABN Amro Bank NV) 3.490 01/03/08 1,000,000
200,000 Akron Bath Copley OH Hosp (Visiting Nurse Svcs)
(LOC: National City Bank) 3.530 01/03/08 200,000
240,000 CA Infra EDB IDR (Metrotile Mfg) Ser A (LOC: Comerica Bank) 3.700 01/03/08 240,000
100,000 CA Statewide Cmntys IDR (American Modular Sys)
(LOC: Bank of the West) 3.530 01/03/08 100,000
100,000 Catawba Co NC Ind Fac (Lucky 7 Dev Grp) (LOC: Wachovia Bank) 3.600 01/03/08 100,000
1,000,000 Cl B Rev Ctfs Ser 2006-1 (SPA: AIG) 3.460 01/03/08 1,000,000
490,000 CO HFA EDR (Casarosa & Denver Gasket Inc) (LOC: Key Bank NA) 3.700 01/03/08 490,000
2,000,000 Cobb Co GA Hsg Auth Rev MFH (Six Flags Assoc) (LOC: FHLMC) 3.500 01/03/08 2,000,000
2,000,000 Delaware Co OH Hlthcare Facs Rev Impt
(Sarah Moore) (LOC: Fifth Third Bank) 3.520 01/03/08 2,000,000
1,280,000 Douglas GA Dev Auth IDR (Alp Lighting & Ceiling) (LOC: LaSalle Bank) 3.580 01/03/08 1,280,000
1,800,000 Duchesne SD UT Bldg Auth Rev (LOC: US Bank NA) 3.470 01/03/08 1,800,000
635,000 Eagan MN Rev RANS (LOC: Wells Fargo Bank) 3.470 01/03/08 635,000
235,000 Fargo ND CDR Rev (Kelly Inns Fargo) (LOC: US Bank NA) 3.650 01/03/08 235,000
175,000 Franklin Co VA IDA IDR (Mod-U-Kraf) (LOC: Lasalle Bank NA) 3.630 01/03/08 175,000
500,000 Hailey ID IDC Rev (Rocky Mountain Hardware) (LOC: Wells Fargo Bank) 3.620 01/03/08 500,000
920,000 Highland Co OH Jt Twp Hosp Dist Facs Rev (LOC: Key Bank NA) 3.470 01/03/08 920,000
820,000 Hillsborough Co FL IDR (Mosi Charter Sch-A) (LOC: Bank of America NA) 3.530 01/03/08 820,000
867,000 Indianapolis IN EDR (Pedcor Invts Waterfront-B)
(LOC: Federal Home Loan Bank) 3.790 01/03/08 867,000
740,000 Indianapolis IN MFH Rev (Nora Commons) (LOC: Federal Home Loan Bank) 3.630 01/03/08 740,000
225,000 Johnston Co NC IDA PCR (Inolex Chem Co) (LOC: Wells Fargo Bank) 3.620 01/03/08 225,000
1,000,000 Kalamazoo Co MI EDR (WBC Properties) (LOC: Fifth Third Bank) 3.480 01/03/08 1,000,000
280,000 Lake Co IL Cmnty SD #73 Putter Ser 329 (SPA: JPMorgan Chase Bank) 3.520 01/03/08 280,000
370,000 Lancaster NE IDR (Garner Inds) Ser B (LOC: Wells Fargo Bank) 3.520 01/03/08 370,000
100,000 Lemoore CA COP (Muni Golf Course) (LOC: Union Bank of California) 3.510 01/03/08 100,000
450,000 Lexington-Fayette Urban Co KY Govt IBR
(Liberty Ridge) (LOC: US Bank NA) 3.520 01/03/08 450,000
2,050,000 Lexington-Fayette Urban Co KY Rev IBR
(Eastland Pkwy) (LOC: US Bank NA) 3.520 01/03/08 2,050,000
245,000 MA St Ind Fin Agy Rev (Lower Mills Assoc LP) (LOC: Fleet Bank NA) 3.550 01/03/08 245,000
240,000 Maricopa Co AZ IDA Hsg Rev (San Angelin Apts) (LOC: FNMA) 3.700 01/03/08 240,000
970,000 Merrillville IN Hlthcare Facs Rev (LOC: JPMorgan Chase Bank) 3.590 01/03/08 970,000
470,000 Oakland CA Liq Fac Rev (Assoc Bay Area Govt) (LOC: Bank of the West) 3.530 01/03/08 470,000
535,000 Ottawa Co OH Hosp Facs Rev (Luther Home of Mercy)
Ser 97 (LOC: National City Bank) 3.530 01/03/08 535,000
200,000 Palm Beach Co FL Rev (Henry Morrison Flagler)
(LOC: Northern Trust Bank) 3.460 01/03/08 200,000
1,425,000 Rev Bd Ctfs Ser 04-13 (Centennial East Apts) (SPA: AIG) 3.640 01/03/08 1,425,000
29
- --------------------------------------------------------------------------------
Tax-Free Money Market Fund - (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FLOATING & VARIABLE RATE DEMAND NOTES -- 75.7% (CONTINUED)
$ 1,000,000 Southglenn Met Dist CO Rev (LOC: BNP Paribas) 3.470 01/03/08 $ 1,000,000
640,000 St Charles Co MO IDA Rev (National Cart) Ser A (LOC: US Bank NA) 3.610 01/03/08 640,000
2,200,000 Storm Lake IA High Ed Facs Rev (Buena Vista) (SPA: Wells Fargo Bank) 3.570 01/03/08 2,200,000
940,000 WA St Fin Auth EDR Var (Benaroya Resc) (LOC: Bank of America) 3.470 01/03/08 940,000
2,200,000 WA St Hsg Fin Com (Eastside Catholic Sch-A) (LOC: Keybank NA) 3.460 01/03/08 2,200,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING & VARIABLE RATE DEMAND NOTES $ 52,212,000
- ------------------------------------------------------------------------------------------------------------------------------------
ADJUSTABLE RATE PUT BONDS -- 2.4%
$ 345,000 Dayton KY IBR (Patriot Signage Inc) (LOC: Fifth Third Bank) 4.500 03/01/08 $ 345,000
115,000 Summit Co OH IDR (Struktol Co America) (LOC: National City Bank) 4.400 03/01/08 115,000
80,000 Cuyahoga Co OH IDR (Halle Office Bldg) (LOC: HSBC Bank) 3.850 04/01/08 80,000
80,000 Newport KY IBR (Sumerel Tire) (LOC: US Bank NA) 4.100 06/01/08 80,000
1,000,000 Westmoreland Co PA IDA (White Cons Inds) (LOC: Bank of Nova Scotia) 4.125 06/01/08 1,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ADJUSTABLE RATE PUT BONDS $ 1,620,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 100.5%
(Amortized Cost $69,254,892) $ 69,254,892
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.5%) (343,867)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 68,911,025
====================================================================================================================================
See accompanying notes to portfolios of investments and notes to financial
statements.
30
- --------------------------------------------------------------------------------
Notes to Portfolios of Investments
December 31, 2007 (Unaudited)
- --------------------------------------------------------------------------------
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
December 31, 2007.
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:
BANS - Bond Anticipation Notes
CDR - Community Development Revenue
COP - Certificates of Participation
CSD - City School District
EDB -Economic Development Bank
EDR - Economic Development Revenue
ETM - Escrowed to Maturity
FHLMC - Federal Home Loan Mortgage Corporation
FNMA -Federal National Mortgage Association
GO - General Obligation
HFA - Housing Finance Authority/Agency
HFC - Housing Finance Corporation/Committee
IBR - Industrial Building Revenue
IDA - Industrial Development Authority/Agency
IDC - Industrial Development Corporation
IDR - Industrial Development Revenue
ISD - Independent School District
LOC - Line of Credit
LSD - Local School District
LTGO - Limited Tax General Obligation
MFH - Multi-Family Housing
PCR - Pollution Control Revenue
RANS - Revenue Anticipation Notes
SD - School District
SPA - Stand-by Purchase Agreement
TIF - Tax Increment Financing
UT - Unlimited Tax
UTGO - Unlimited Tax General Obligation
31
- --------------------------------------------------------------------------------
Portfolio Composition
December 31, 2007 (Unaudited)
- --------------------------------------------------------------------------------
As of December 31, 2007, the Ohio Insured Tax-Free Fund and the Ohio Tax-Free
Money Market 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 Florida Tax-Free Money Market Fund was 81.7%
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 federal income tax. As of December 31, 2007,
26.2% of the portfolio securities of the Tax-Free Money Market Fund were
concentrated in the State of Ohio, 4.2% in the State of Kentucky and 7.0% in the
State of Indiana.
The Florida Tax-Free Money Market Fund, the Ohio Insured Tax-Free Fund, and the
Ohio Tax-Free Money Market 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 December 31, 2007, there were no concentrations of
investments (10% or greater) in any one issuer.
The Florida Tax-Free Money Market Fund, the Ohio Tax-Free Money Market Fund and
the Tax-Free Money Market 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 Advisor, under the supervision of the Board of Trustees,
to be of comparable quality.
As of December 31, 2007, 94.4% of the Ohio Insured Tax-Free Fund's long-term
portfolio securities were either (1) insured by an insurance policy obtained
from a recognized insurer which carries a rating of AAA by S&P or Aaa by
Moody's, (2) guaranteed as to the payment of interest and principal by an agency
or instrumentality of the U.S. Government or (3) secured as to the payment of
interest and principal by an escrow account consisting of obligations of the
U.S. Government. Four private insurers individually insure more than 10% of the
Ohio Insured Tax-Free Fund's portfolio securities and collectively insure 91.1%
of its portfolio securities.
The concentration of investments for each Fund as of December 31, 2007,
classified by revenue source, was as follows:
FLORIDA TAX-FREE OHIO INSURED OHIO TAX-FREE TAX-FREE
MONEY MARKET TAX-FREE MONEY MARKET MONEY MARKET
FUND FUND FUND FUND
- ---------------------------------------------------------------------------------------------
General Obligations 10.0% 40.8% 5.2% 6.2%
- ---------------------------------------------------------------------------------------------
Revenue Bonds:
Industrial Development/
Pollution Control 2.9% -- 6.2% 14.7%
Hospital/Health Care 14.0% 13.0% 29.1% 14.1%
Utilities/Water & Sewer 1.3% 7.9% 5.9% 6.3%
Education 13.7% 11.3% 21.4% 15.8%
Housing/Mortgage 43.6% -- 3.5% 9.2%
Economic Development 4.2% -- 11.6% 8.9%
Public Facilities -- -- 1.7% 1.2%
Transportation -- 7.3% 6.2% 1.6%
Special Tax 3.2% -- 3.5% 8.5%
Miscellaneous 7.1% 19.7% 5.7% 13.5%
- ---------------------------------------------------------------------------------------------
Total Investments 100.0% 100.0% 100.0% 100.0%
=============================================================================================
32
- --------------------------------------------------------------------------------
Other Items (Unaudited)
- --------------------------------------------------------------------------------
PROXY VOTING DISCLOSURE
The Sub-Advisor is responsible for exercising the voting rights associated with
the securities purchased and held by the Funds. A description of the policies
and procedures that the Sub-Advisor uses in fulfilling this responsibility and
information regarding how those proxies were voted during the twelve month
period ended June 30 are available without charge upon request by calling toll
free 1.800.543.0407. These items are also available on the Securities and
Exchange Commission's website at http://www.sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The Trust files a complete listing of portfolio holdings for each Fund as of the
end of the first and third quarters of each fiscal year on Form N-Q. The
complete listing (i) is available on the Commission's website; (ii) may be
reviewed and copied at the Commission's Public Reference Room in Washington, DC;
and (iii) will be made available to shareholders upon request by calling
1.800.543.0407. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
SCHEDULE OF SHAREHOLDER EXPENSES
As a shareholder of the Funds, you incur two types of costs: (1) transaction
costs, including reinvested dividends or other distributions; and (2) ongoing
costs, including investment advisory fees; distribution (12b-1) fees; and other
Fund expenses. This example is intended to help you understand your ongoing
costs (in dollars) of investing in the Funds and to compare these costs with the
ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (July 1, 2007 through December 31, 2007).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During the Six
Months Ended December 31, 2007" to estimate the expenses you paid on your
account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Funds' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Funds' actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Funds and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
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Other Items (Continued)
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EXPENSES
NET EXPENSE BEGINNING ENDING PAID DURING
RATIO ACCOUNT ACCOUNT THE SIX MONTHS
ANNUALIZED VALUE VALUE ENDED
DECEMBER 31, JULY 1, DECEMBER 31, DECEMBER 31,
2007 2007 2007 2007*
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FLORIDA TAX-FREE MONEY MARKET FUND
Actual 0.75% $ 1,000.00 $ 1,014.50 $ 3.80
Hypothetical 0.75% $ 1,000.00 $ 1,021.43 $ 3.81
OHIO INSURED TAX-FREE FUND
Class A Actual 0.75% $ 1,000.00 $ 1,033.00 $ 3.83
Class A Hypothetical 0.75% $ 1,000.00 $ 1,021.44 $ 3.81
Class C Actual 1.50% $ 1,000.00 $ 1,028.20 $ 7.65
Class C Hypothetical 1.50% $ 1,000.00 $ 1,017.66 $ 7.61
OHIO TAX-FREE MONEY MARKET FUND
Retail Class Actual 0.75% $ 1,000.00 $ 1,014.70 $ 3.80
Retail Class Hypothetical 0.75% $ 1,000.00 $ 1,021.43 $ 3.81
Institutional Class Actual 0.50% $ 1,000.00 $ 1,015.90 $ 2.53
Institutional Class Hypothetical 0.50% $ 1,000.00 $ 1,022.69 $ 2.54
TAX-FREE MONEY MARKET FUND
Class A Actual 0.89% $ 1,000.00 $ 1,014.20 $ 4.51
Class A Hypothetical 0.89% $ 1,000.00 $ 1,020.73 $ 4.52
Class S Actual 1.15% $ 1,000.00 $ 1,012.90 $ 5.82
Class S Hypothetical 1.15% $ 1,000.00 $ 1,019.42 $ 5.84
* Expenses are equal to the Fund's annualized expense ratio, multiplied by
the average account value over the period, multiplied by [number of days
in most recent fiscal half-year/365] (to reflect the one-half year
period).
ADVISORY AGREEMENT APPROVAL DISCLOSURE
At a meeting held on November 15, 2007, the Board of Trustees (the "Board" or
"Trustees") of the Touchstone Tax-Free Trust (the "Trust"), and by a separate
vote, the Independent Trustees of the Trust, approved the continuance of the
Investment Advisory Agreement between the Trust and the Advisor with respect to
each Fund of the Trust and the Sub-Advisory Agreement with respect to each Fund
between the Advisor and the Sub-Advisor.
In determining whether to approve the continuation of the Investment Advisory
Agreement and the Sub-Advisory Agreements, the Advisor furnished information
necessary for a majority of the Independent Trustees to make the determination
that the continuance of the Investment Advisory Agreement and of the respective
Sub-Advisory Agreement was in the best interests of each the Funds and its
respective shareholders. The information provided to the Board included: (1)
industry data comparing advisory fees and expense ratios of comparable
investment companies; (2) comparative performance information; (3) the Advisor
and its affiliates' revenues and costs of providing services to the Funds; and
(4) information about the Advisor's and Sub-Advisor's personnel. Prior to
voting, the Independent Trustees reviewed the proposed continuance of the
Investment Advisory Agreement and the Sub-Advisory Agreements with management
and with experienced independent legal counsel and received materials from such
counsel discussing the legal standards for their consideration of the proposed
continuation of the Investment Advisory Agreement and the Sub-Advisory Agreement
with respect to each Fund. The Independent Trustees also reviewed the proposed
continuation of the Investment Advisory Agreement and the Sub-Advisory Agreement
with respect to each of the Funds in private sessions with independent legal
counsel at which no representatives of management were present.
34
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Other Items (Continued)
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In approving the Funds' Investment Advisory Agreement, the Board considered
various factors, among them: (1) the nature, extent and quality of services
provided to the Funds, including the personnel providing services; (2) the
Advisor's compensation and profitability; (3) a comparison of fees and
performance with other advisers; (4) economies of scale; and (5) the terms of
the Investment Advisory Agreement. The Board's analysis of these factors is set
forth below. The Independent Trustees were advised by independent legal counsel
throughout the process.
Nature, Extent and Quality of Advisor Services. The Board considered the level
and depth of knowledge of the Advisor, including the professional experience and
qualifications of senior personnel. The Board discussed the Advisor's
effectiveness in monitoring the performance of the Sub-Advisor, an affiliated of
the Advisor, and the Advisor's timeliness in responding to performance issues.
In evaluating the quality of services provided by the Advisor, the Board took
into account its familiarity with the Advisor's senior management through Board
meetings, discussions and reports during the preceding year. The Board also took
into account the Advisor's compliance policies and procedures. The quality of
administrative and other services, including the Advisor's role in coordinating
the activities of the Funds' other service providers, was also considered. The
Board also considered the Advisor's relationship with its affiliates and the
resources available to them, as well as any potential conflicts of interest. The
Trustees concluded that they were satisfied with the nature, extent and quality
of services provided to each Fund by the Advisor under the Investment Advisory
Agreement.
Advisor's Compensation and Profitability. The Board took into consideration the
financial condition and profitability of the Advisor and its affiliates
(including the Sub-Advisor) and the direct and indirect benefits derived by the
Advisor and its affiliates from the Advisor's relationship with the Funds. The
information considered by the Board included operating profit margin information
for the Advisor's business as a whole. The Board noted that the Advisor had
waived portions of the advisory fees paid by the Funds and also pays the
Sub-Advisor's sub-advisory fees out of the advisory fees the Advisor receives
from the Funds. The Board reviewed the profitability of the Advisor's
relationship with the Funds both before and after tax expenses and whether the
Advisor has the financial wherewithal to continue to provide a high level of
services to the Funds, noting the ongoing commitment of the Advisor's parent
company with respect to providing support and resources as needed. The Board
also considered that the Funds' distributor, an affiliate of the Advisor,
receives Rule 12b-1 distribution fees from the Funds and receives a portion of
the sales charges on sales or redemptions of certain classes of shares. The
Board also noted that the Advisor derives benefits to its reputation and other
benefits from its association with the Funds.
The Board recognized that the Advisor should be entitled to earn a reasonable
level of profits in exchange for the level of services it provides to each Fund
and the entrepreneurial risk that it assumes as Advisor. Based upon their
review, the Trustees concluded that the Advisor and its affiliate's level of
profitability, if any, from its relationship with each Fund was reasonable and
not excessive.
Expenses and Performance. The Board compared the respective advisory fees and
total expense ratios for each of the Funds with various comparative data,
including the median and average advisory fees and total expense ratios of each
Fund's respective peer group. The Board also considered the Funds' respective
performance results during the six-months, twelve-months, and twenty-four months
ended September 30, 2007 and noted that the Board reviews on a quarterly basis
detailed information about each Fund's performance results, portfolio
composition and investment strategies.
35
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Other Items (Continued)
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The Board also considered the effect of each Fund's growth and size on its
performance and expenses. The Board further noted that the Advisor had waived
portions of the advisory fees paid by the Funds in order to reduce the Funds'
respective operating expenses to targeted levels. The Board noted that the
sub-advisory fees under the Sub-Advisory Agreement with respect to each Fund
were paid by the Advisor out of the advisory fees it receives from the Fund and
the impact of such sub-advisory fees on the profitability of the Advisor. In
reviewing the respective expense ratios and performance of each of the Funds,
the Board also took into account the nature, extent and quality of the services
provided by the Advisor and its affiliates.
The Board considered, among other data, the specific factors and related
conclusions set forth below with respect to each Fund:
Florida Tax-Free Money Market Fund. The Fund's advisory fee and total expense
ratio (net of applicable expense waivers) were below the median and at the
median, respectively, of its peer group. The Board noted that the Advisor was
currently waiving a portion of its advisory fee. The Fund's performance for the
six-months, twelve-months, and twenty-four months ended September 30, 2007 was
in the 3rd quartile of its peer group. The Board took into account management's
discussion of the Fund's performance. The Board noted the relatively small range
of difference between the performance of the peer group's median and those of
the Fund. Based upon their review, the Trustees concluded that the Fund's
performance was satisfactory and that the advisory fee was reasonable in light
of the high quality of services received by the Fund from the Advisor and the
other factors considered.
Ohio Insured Tax-Free Fund. The Fund's advisory fee and total expense ratio (net
of applicable expense waivers) were below the median of its peer group. The
Board noted that the Advisor was currently waiving a portion of its advisory
fee. The Fund's performance for the six-months, twelve-months and twenty-four
months ended September 30, 2007 was in the 2nd quartile of its peer group. Based
upon their review, the Trustees concluded that the Fund's performance was
satisfactory and that the advisory fee was reasonable in light of the high
quality of services received by the Fund from the Advisor and the other factors
considered.
Ohio Tax-Free Money Market Fund. The Fund's advisory fee and total expense ratio
(net of applicable expense waivers) were above the median of its peer group. The
Board noted that the Advisor was currently waiving a portion of its advisory
fee. The Board also noted the relatively small range of difference between the
expenses of the peer group's median and those of the Fund, as well as with
respect to the performance of the peer group. The Fund's performance for the
six-months, twelve-months and twenty-four months ended September 30, 2007 was in
the 3rd quartile of its peer group. The Board also took into account
management's discussion of the Fund's performance. Based upon their review, the
Trustees concluded that the Fund's performance was satisfactory and that the
advisory fee was reasonable in light of the high quality of services received by
the Fund from the Advisor and the other factors considered.
Tax-Free Money Market Fund. The Fund's advisory fee and total expense ratio (net
of applicable expense waivers) were below the median and above the median,
respectively, of its peer group. The Board noted that the Advisor was currently
waiving a portion of its advisory fee. The Board also noted the relatively small
range of difference between the expenses of the peer group's median and those of
the Fund, as well as with respect to the performance of the peer group. The
Fund's performance for the six-months, twelve-months and twenty-four months
ended September 30, 2007 was in the 3rd quartile of its peer group. Based upon
their review, the Trustees concluded that the Fund's performance was
satisfactory and that the advisory fee was reasonable in light of the high
quality of services received by the Fund from the Advisor and the other factors
considered.
Economies of Scale. The Board considered the effect of each Fund's current size
and potential growth on its performance and fees. The Board considered the
effective advisory fees under the Investment Advisory Agreement as a percentage
of assets at different asset levels and possible economies of scale that might
be realized if the assets of each Fund increase. The Board noted that the
advisory fee schedule for each Fund contained breakpoints that would reduce the
respective advisory fee rate on assets above specified levels as the respective
Fund's assets increase. The Board noted that the current advisory fee for the
Ohio Tax-Free Money Market Fund reflected such economies of scale. The Board
also noted that if a Fund's assets increased over time, the Fund might realize
other economies of scale if assets increase proportionally more than certain
other expenses.
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Other Items (Continued)
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Conclusion. In considering the renewal of the Funds' Investment Advisory
Agreement, the Board, including the Independent Trustees, did not identify any
single factor as controlling, and each Trustee attributed different weights to
the various factors. The Trustees evaluated all information available to them on
a Fund-by-Fund basis, and their determinations were made separately with respect
to each Fund. The Board reached the following conclusions regarding the Funds'
Investment Advisory Agreement with the Advisor, among others: (a) the Advisor
had demonstrated that it possesses the capability and resources to perform the
duties required of it under the Investment Advisory Agreement; (b) the Advisor
maintains an appropriate compliance program; (c) the performance of each Fund is
reasonable or satisfactory in relation to the performance of funds with similar
investment objectives and to relevant indices; and (d) each Fund's advisory fee
is reasonable in relation to those of similar funds and to the services to be
provided by the Advisor. Based on their conclusions, the Trustees determined
with respect to each Fund that continuation of the Investment Advisory Agreement
was in the best interests of the Fund and its shareholders.
In approving the Funds' Sub-Advisory Agreements, the Board considered various
factors with respect to each Fund and its respective Sub-Advisory Agreement,
among them: (1) the nature, extent and quality of services provided to the Fund,
including the personnel providing services; (2) the Sub-Advisor's compensation;
(3) a comparison of the sub-advisory fee and performance with other advisers;
and (4) the terms of the Sub-Advisory Agreement. The Board's analysis of these
factors is set forth below. The Independent Trustees were advised by independent
legal counsel throughout the process.
Nature, Extent and Quality of Services Provided; Investment Personnel. The Board
considered information provided by the Advisor regarding the services provided
by the Sub-Advisor, including information presented periodically throughout the
previous year. The Board took into account the affiliation of the Sub-Advisor to
the Advisor, noting any potential conflicts of interest. The Board noted that,
on a periodic basis, the Board meets with portfolio managers of the Sub-Advisor
to discuss their performance and investment processes and strategies. The Board
considered the Sub-Advisor's level of knowledge and investment style. The Board
reviewed the experience and credentials of the investment personnel who are
responsible for managing the investment of portfolio securities with respect to
the Funds. The Board also noted the Sub-Advisor's brokerage practices. The Board
also considered the Sub-Advisor's regulatory and compliance history. The Board
noted that the Advisor's compliance monitoring processes includes quarterly
reviews of compliance reports and annual compliance reviews of the Sub-Advisor
and that compliance issues, if any, are reported to the Board.
Sub-Advisor's Compensation. The Board also took into consideration the financial
condition of the Sub-Advisor and any indirect benefits derived by the
Sub-Advisor and its affiliates from the Sub-Advisor's relationship with the
Funds. In considering the profitability to the Sub-Advisor of its relationship
with the Funds, the Board noted the undertakings of the Advisor to maintain
expense limitations for the Funds and also noted that the sub-advisory fees
under the Sub-Advisory Agreements were paid by the Advisor out of the advisory
fees that it receives under the Investment Advisory Agreement. As a consequence,
the profitability to the Sub-Advisor of its relationship with a Fund was not a
substantial factor in the Board's deliberations. For similar reasons, the Board
did not consider the potential economies of scale in the Sub-Advisor's
management of the Funds to be a substantial factor in its consideration,
although the Board noted that the sub-advisory fee schedule for each Fund
contained breakpoints that would reduce the sub-advisory fee rate on assets
above specified levels if the Fund's assets increased.
37
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Other Items (Continued)
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Sub-Advisory Fees and Fund Performance. The Board considered that each Fund pays
an advisory fee to the Advisor and that the Advisor pays the sub-advisory fee to
the Sub-Advisor. The Board considered the amount retained by the Advisor and the
sub-advisory fee paid to the Sub-Advisor with respect to the various services
provided by the Advisor and the Sub-Advisor. The Board compared the sub-advisory
fee for each Fund with various comparative data, including the median and
average sub-advisory fees of each Fund's peer group, and found that each Fund's
sub-advisory fee was reasonable and appropriate under the facts and
circumstances.
Florida Tax-Free Money Market Fund. The Fund's sub-advisory fee was at the
median of its peer group. Based upon their review, the Trustees concluded that
the sub-advisory fee was reasonable in light of the quality of services received
by the Fund from the Sub-Advisor and the other factors considered.
Ohio Insured Tax-Free Fund. The Fund's sub-advisory fee was at the median of its
peer group. Based upon their review, the Trustees concluded that the
sub-advisory fee was reasonable in light of the quality of services received by
the Fund from the Sub-Advisor and the other factors considered.
Ohio Tax-Free Money Market Fund. The Fund's sub-advisory fee was at the median
of its peer group. Based upon their review, the Trustees concluded that the
sub-advisory fee was reasonable given in light of the quality of services
received by the Fund from the Sub-Advisor and the other factors considered.
Tax-Free Money Market Fund. The Fund's sub-advisory fee was at the median of its
peer group. Based upon their review, the Trustees concluded that the
sub-advisory fee was reasonable in light of the quality of services received by
the Fund from the Sub-Advisor and the other factors considered.
As noted above, the Board considered each Fund's performance during the
six-months, twelve-months and twenty-four months ended September 30, 2007 as
compared to each Fund's peer group and noted that the Board reviews on a
quarterly basis detailed information about each Fund's performance results,
portfolio composition and investment strategies. The Board also noted the
Advisor's expertise and resources in monitoring the performance, investment
style and risk adjusted performance of the Sub-Advisor. The Board also was
mindful of the Advisor's focus on the Sub-Advisor's performance and the
Advisor's ways of addressing underperformance.
Conclusion. In considering the renewal of the Sub-Advisory Agreement with
respect to each Fund, the Board, including the Independent Trustees, did not
identify any single factor as controlling, and each Trustee attributed different
weights to the various factors. The Board reached the following conclusions
regarding the Sub-Advisory Agreement with respect to each Fund, among others:
(a) the Sub-Advisor was qualified to manage each Fund's assets in accordance
with the Fund's investment objectives and policies; (b) the Sub-Advisor
maintains an appropriate compliance program; (c) the performance of each Fund
was satisfactory or reasonable in relation to the performance of funds with
similar investment objectives and to relevant indices; (d) each Fund's advisory
fees are reasonable in relation to those of similar funds and to the services to
be provided by the Advisor and the Sub-Advisor; and (e) the Sub-Advisor's
investment strategies are appropriate for pursuing the investment objectives of
each Fund. Based on its conclusions, the Board determined that approval of the
Sub-Advisory Agreement with respect to each Fund was in the best interests of
the respective Fund and its shareholders.
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TOUCHSTONE INVESTMENTS
DISTRIBUTOR
Touchstone Securities, Inc.*
303 Broadway
Cincinnati, Ohio 45202-4203
800.638.8194
www.touchstoneinvestments.com
INVESTMENT ADVISOR
Touchstone Advisors, Inc.*
303 Broadway
Cincinnati, Ohio 45202-4203
TRANSFER AGENT
JPMorgan Chase Bank, N.A.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
SHAREHOLDER SERVICE
800.543.0407
A Member of Western & Southern Financial Group(R)
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[logo]TOUCHSTONE
INVESTMENTS
303 Broadway, Suite 1100
Cincinnati, OH 45202-4203
ITEM 2. CODE OF ETHICS.
Not required for Semiannual Reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not required for Semiannual Reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not required for Semiannual Reports
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable
ITEM 6. SCHEDULE OF INVESTMENTS.
The Schedule of Investments in securities of unaffiliated issuers is included in
the Semiannual Report filed under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No material changes have been made to the procedures by which shareholders may
recommend nominees to its Board of Trustees.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based on an evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the 1940 Act) the
registrant's principal executive officer and principal financial officer
have concluded that the registrant's disclosure controls and procedures
are effective as of a date within 90 days of the filing date of this
report.
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that
occurred during the registrant's last fiscal half-year that have
materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(2) Certifications required by Item 12 (a)(2) of Form N-CSR are filed
herewith.
(b) Certifications required by Item 11 (b) of Form N-CSR are filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Touchstone Tax-Free Trust
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By (Signature and Title)
/s/ Jill T. McGruder
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Jill T. McGruder
President
Date: March 3, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)
/s/ Jill T. McGruder
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Jill T. McGruder
President
Date: March 3, 2008
/s/ Terrie A. Wiedenheft
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Terrie A. Wiedenheft
Controller & Treasurer
Date: March 3, 2008