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: 12/31/08
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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, 2008
(UNAUDITED)
Semi-Annual Report
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TOUCHSTONE TAX-FREE TRUST
Touchstone Florida Tax-Free Money Market Fund
Touchstone Ohio Tax-Free Bond 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 9-13
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Notes to Financial Statements 14-22
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Portfolios of Investments:
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Florida Tax-Free Money Market Fund 23-24
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Ohio Tax-Free Bond Fund 25-26
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Ohio Tax-Free Money Market Fund 27-30
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Tax-Free Money Market Fund 31-33
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Notes to Portfolios of Investments 34
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Portfolio Composition 35
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Other Items 36-41
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2
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Tabular Presentation of Portfolios of Investments (Unaudited)
December 31, 2008
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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.
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FLORIDA TAX-FREE MONEY MARKET FUND
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CREDIT QUALITY (% OF INVESTMENT SECURITIES)
A-1 / P-1 / AAA 97.1
FW1* 2.9
------
Total 100.0
------
PORTFOLIO ALLOCATION (% OF NET ASSETS)
Floating & Variable Rate Demand Notes 81.9
Fixed Rate Revenue & General Obligation Bonds 17.8
Other Assets/Liabilities (net) 0.3
------
Total 100.0
------
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OHIO TAX-FREE MONEY MARKET FUND
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CREDIT QUALITY (% OF INVESTMENT SECURITIES)
A-1 / P-1 / AAA 84.5
FW1* 15.5
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Total 100.0
------
PORTFOLIO ALLOCATION (% OF NET ASSETS)
Floating & Variable Rate Demand Notes 75.5
Fixed Rate Revenue & General Obligation Bonds 24.0
Adjustable Rate Put Bonds 0.4
Other Assets/Liabilities (net) 0.1
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Total 100.0
------
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OHIO TAX-FREE BOND FUND
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CREDIT QUALITY (% OF INVESTMENT SECURITIES)
AAA / Aaa 31.1
AA / Aa 40.3
A/A 22.5
BBB/Baa 6.1
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Total 100.0
------
PORTFOLIO ALLOCATION (% OF NET ASSETS)
Fixed Rate Revenue & General Obligation Bonds 99.0
Floating & Variable Rate Demand Notes 0.5
Other Assets/Liabilities (net) 0.5
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Total 100.0
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TAX-FREE MONEY MARKET FUND
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CREDIT QUALITY (% OF INVESTMENT SECURITIES)
A-1 / P-1 / AAA 92.7
FW1* 7.3
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Total 100.0
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PORTFOLIO ALLOCATION (% OF NET ASSETS)
Floating & Variable Rate Demand Notes 69.4
Fixed Rate Revenue & General Obligation Bonds 29.7
Adjustable Rate Put Bonds 0.5
Other Assets/Liabilities (net) 0.4
------
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, 2008 (Unaudited)
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FLORIDA OHIO OHIO TAX-FREE
TAX-FREE TAX-FREE TAX-FREE MONEY
MONEY MARKET BOND MONEY MARKET MARKET
FUND FUND FUND FUND
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ASSETS
Investment securities:
At amortized cost $ 33,223,973 $ 54,358,857 $ 434,104,766 $ 66,393,614
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At market value $ 33,223,973 $ 53,710,161 $ 434,104,766 $ 66,393,614
Cash 55,577 54,710 7,775 81,619
Interest receivable 110,526 362,548 1,954,868 275,321
Receivable for capital shares sold -- 5,628 -- --
Other assets 2,652 1,555 8,496 894
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TOTAL ASSETS 33,392,728 54,134,602 436,075,905 66,751,448
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LIABILITIES
Dividends payable 13,455 69,593 304,661 147
Payable for capital shares redeemed -- 33,061 -- --
Payable for securities purchased -- -- 802,246 --
Payable to Advisor 14,442 22,287 167,395 28,350
Payable to other affiliates 375 9,387 18,787 25,913
Payable to Trustees 8,987 9,043 8,978 8,994
Other accrued expenses and liabilities 17,700 21,220 89,690 39,204
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TOTAL LIABILITIES 54,959 164,591 1,391,757 102,608
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NET ASSETS $ 33,337,769 $ 53,970,011 $ 434,684,148 $ 66,648,840
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NET ASSETS CONSIST OF:
Paid-in capital $ 33,343,664 $ 54,908,855 $ 434,684,197 $ 66,649,273
Accumulated net investment income (loss) (71) (3,076) -- --
Accumulated net realized losses on investments (5,824) (287,072) (49) (433)
Net unrealized depreciation on investments -- (648,696) -- --
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NET ASSETS $ 33,337,769 $ 53,970,011 $ 434,684,148 $ 66,648,840
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PRICING OF RETAIL SHARES
Net assets applicable to Retail shares $ -- $ -- $ 129,302,161 $ --
====================================================================================================================================
Shares of beneficial interest outstanding
(unlimited number of shares authorized, no par value) -- -- 129,283,307 --
====================================================================================================================================
Net asset value, offering price and redemption price per share $ -- $ -- $ 1.00 $ --
====================================================================================================================================
PRICING OF INSTITUTIONAL SHARES
Net assets applicable to Institutional shares $ -- $ -- $ 305,381,987 $ --
====================================================================================================================================
Shares of beneficial interest outstanding
(unlimited number of shares authorized, no par value) -- -- 305,387,902 --
====================================================================================================================================
Net asset value, offering price and redemption price per share $ -- $ -- $ 1.00 $ --
====================================================================================================================================
PRICING OF CLASS A SHARES
Net assets applicable to Class A shares $ 33,337,769 $ 48,698,481 $ -- $ 21,249,745
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Shares of beneficial interest outstanding
(unlimited number of shares authorized, no par value) 33,343,652 4,504,073 -- 21,260,091
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Net asset value and redemption price per share $ 1.00 $ 10.81 $ -- $ 1.00
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Maximum offering price per share $ -- $ 11.35 $ -- $ --
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4
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Statements of Assets and Liabilities (Continued)
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FLORIDA OHIO OHIO TAX-FREE
TAX-FREE TAX-FREE TAX-FREE MONEY
MONEY MARKET BOND MONEY MARKET MARKET
FUND FUND FUND FUND
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PRICING OF CLASS C SHARES
Net assets applicable to Class C shares $ -- $ 5,271,530 $ -- $ --
====================================================================================================================================
Shares of beneficial interest outstanding
(unlimited number of shares authorized, no par value) -- 487,115 -- --
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Net asset value, offering price and redemption price per share* $ -- $ 10.82 $ -- $ --
====================================================================================================================================
PRICING OF CLASS S SHARES
Net assets applicable to Class S shares $ -- $ -- $ -- $ 45,399,095
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Shares of beneficial interest outstanding
(unlimited number of shares authorized, no par value) -- -- -- 45,399,337
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Net asset value, offering price and redemption price per share $ -- $ -- $ -- $ 1.00
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* 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, 2008 (UNAUDITED)
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FLORIDA OHIO OHIO TAX-FREE
TAX-FREE TAX-FREE TAX-FREE MONEY
MONEY MARKET BOND MONEY MARKET MARKET
FUND FUND FUND FUND
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INVESTMENT INCOME
Interest Income $ 321,523 $ 1,334,833 $ 5,308,665 $ 761,453
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EXPENSES
Investment advisory fees 70,980 137,860 922,220 151,957
Administration fees 28,307 55,144 431,429 60,693
Distribution expenses, Retail class -- -- 164,309 --
Distribution expenses, Class A 35,483 62,085 -- 26,531
Distribution expenses, Class C -- 27,381 -- --
Distribution expenses, Class S -- -- -- 118,674
Transfer Agent fees, Retail class -- -- 15,086 --
Transfer Agent fees, Institutional class -- -- 151 --
Transfer Agent fees, Class A 603 15,479 -- 6,523
Transfer Agent fees, Class C -- 2,499 -- --
Transfer Agent fees, Class S -- -- -- 25,023
Money Market Insurance 3,638 -- 47,081 6,722
Professional fees 9,928 8,563 18,201 11,164
Trustees' fees and expenses 7,975 6,779 7,953 7,992
Postage and supplies 1,645 10,752 8,426 4,512
Pricing expenses 4,175 4,657 11,069 3,852
Registration fees, Retail class -- -- 317 --
Registration fees, Class A 2,343 6,046 -- 9,543
Registration fees, Class C -- 1,009 -- --
Registration fees, Class S -- -- -- 2,610
Reports to shareholders 2,023 4,829 5,792 4,111
Custodian fees 667 3,054 9,316 2,883
Compliance fees and expenses 627 698 1,153 2,375
Other expenses 256 510 2,435 606
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TOTAL EXPENSES 168,650 347,345 1,644,938 445,771
Fees waived by the Administrator (28,307) (55,144) (351,984) (60,693)
Other operating expenses reimbursed by the Advisor (30,033) (56,214) -- (55,742)
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NET EXPENSES 110,310 235,987 1,292,954 329,336
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NET INVESTMENT INCOME 211,213 1,098,846 4,015,711 432,117
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REALIZED AND UNREALIZED LOSSES ON INVESTMENTS
Net realized losses from security transactions -- (14,930) (49) --
Net change in unrealized appreciation/depreciation on investments -- (1,597,739) -- --
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NET REALIZED AND UNREALIZED LOSSES ON INVESTMENTS -- (1,612,669) (49) --
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NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 211,213 $ (513,823) $ 4,015,662 $ 432,117
====================================================================================================================================
See accompanying notes to financial statements.
6
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Statements of Changes in Net Assets
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FLORIDA OHIO
TAX-FREE TAX-FREE
MONEY MARKET BOND
FUND FUND
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SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
DECEMBER 31, ENDED DECEMBER 31, ENDED
2008 JUNE 30, 2008 JUNE 30,
(UNAUDITED) 2008 (UNAUDITED) 2008
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FROM OPERATIONS
Net investment income $ 211,213 $ 610,218 $ 1,098,846 $ 2,295,281
Net realized losses from security transactions -- (246) (14,930) (272,142)
Net change in unrealized appreciation/depreciation on investments -- -- (1,597,739) (379,461)
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NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS 211,213 609,972 (513,823) 1,643,678
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DISTRIBUTIONS TO SHAREHOLDERS
From net investment income, Class A (211,284) (610,218) (1,010,391) (2,133,730)
From net investment income, Class C -- -- (91,531) (161,551)
From net realized gains, Class A -- -- -- (567,571)
From net realized gains, Class C -- -- -- (50,588)
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DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (211,284) (610,218) (1,101,922) (2,913,440)
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FROM CAPITAL SHARE TRANSACTIONS
CLASS A
Proceeds from shares sold 33,887,408 44,245,136 1,434,456 1,456,249
Reinvested distributions 7,158 30,515 648,104 1,818,136
Payments for shares redeemed (19,473,267) (51,119,979) (3,376,836) (6,837,768)
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NET INCREASE (DECREASE) IN NET ASSETS FROM CLASS A SHARE
TRANSACTIONS 14,421,299 (6,844,328) (1,294,276) (3,563,383)
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CLASS C
Proceeds from shares sold -- -- 689,080 887,465
Reinvested distributions -- -- 67,648 164,399
Payments for shares redeemed -- -- (680,988) (746,794)
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NET INCREASE IN NET ASSETS FROM CLASS C SHARE TRANSACTIONS -- -- 75,740 305,070
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TOTAL INCREASE (DECREASE) IN NET ASSETS 14,421,228 (6,844,574) (2,834,281) (4,528,075)
NET ASSETS
Beginning of period 18,916,541 25,761,115 56,804,292 61,332,367
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End of period $ 33,337,769 $ 18,916,541 $ 53,970,011 $ 56,804,292
====================================================================================================================================
ACCUMULATED NET INVESTMENT LOSS $ (71) $ -- $ (3,076) $ --
====================================================================================================================================
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
2008 JUNE 30, 2008 JUNE 30,
(UNAUDITED) 2008 (UNAUDITED) 2008
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FROM OPERATIONS
Net investment income $ 4,015,711 $ 8,550,912 $ 432,117 $ 1,468,812
Net realized gains (losses) from security transactions (49) 130,470 -- (672)
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NET INCREASE IN NET ASSETS FROM OPERATIONS 4,015,662 8,681,382 432,117 1,468,140
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DISTRIBUTIONS TO SHAREHOLDERS
From net investment income, Retail (1,116,155) (2,759,518) -- --
From net investment income, Institutional (2,899,556) (5,791,394) -- --
From net investment income, Class A -- -- (169,137) (465,507)
From net investment income, Class S -- -- (262,980) (1,003,305)
From net realized gains, Retail (32,302) (4,892) -- --
From net realized gains, Institutional (84,341) (9,723) -- --
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DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (4,132,354) (8,565,527) (432,117) (1,468,812)
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FROM CAPITAL SHARE TRANSACTIONS
RETAIL
Proceeds from shares sold 107,647,742 251,754,217 -- --
Reinvested distributions 1,149,976 2,749,113 -- --
Payments for shares redeemed (113,199,764) (225,955,439) -- --
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NET INCREASE (DECREASE) IN NET ASSETS FROM RETAIL SHARE
TRANSACTIONS (4,402,046) 28,547,891 -- --
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INSTITUTIONAL
Proceeds from shares sold 320,242,862 453,352,308 -- --
Reinvested distributions 84,933 260,223 -- --
Payments for shares redeemed (277,114,318) (361,142,637) -- --
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NET INCREASE IN NET ASSETS FROM INSTITUTIONAL SHARE TRANSACTIONS 43,213,477 92,469,894 -- --
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CLASS A
Proceeds from shares sold -- -- 5,076,478 14,328,428
Reinvested distributions -- -- 167,192 456,924
Payments for shares redeemed -- -- (5,103,388) (10,266,105)
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NET INCREASE IN NET ASSETS FROM CLASS A SHARE TRANSACTIONS -- -- 140,282 4,519,247
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CLASS S
Proceeds from shares sold -- -- 61,337,299 149,100,506
Reinvested distributions -- -- 263,772 997,151
Payments for shares redeemed -- -- (47,222,614) (202,001,440)
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NET INCREASE (DECREASE) IN NET ASSETS FROM CLASS S SHARE
TRANSACTIONS -- -- 14,378,457 (51,903,783)
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TOTAL INCREASE (DECREASE) IN NET ASSETS 38,694,739 121,133,640 14,518,739 (47,385,208)
NET ASSETS
Beginning of period 395,989,409 274,855,769 52,130,101 99,515,309
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End of period $ 434,684,148 $ 395,989,409 $ 66,648,840 $ 52,130,101
====================================================================================================================================
ACCUMULATED NET INVESTMENT INCOME $ -- $ -- $ -- $ 239
====================================================================================================================================
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,
2008 --------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
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Net asset value at beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
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Income (loss) from investment operations:
Net investment income 0.008 0.023 0.029 0.023 0.011 0.004
Net realized gains (losses) on investments -- (0.000)(A) 0.000(A) -- (0.000)(A) (0.000)(A)
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Total from investment operations 0.008 0.023 0.029 0.023 0.011 0.004
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Less distributions:
Dividends from net investment income (0.008) (0.023) (0.029) (0.023) (0.011) (0.004)
Distributions from net realized gains -- -- -- -- -- (0.000)(A)
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Total distributions (0.008) (0.023) (0.029) (0.023) (0.011) (0.004)
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Net asset value at end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
====================================================================================================================================
Total return 1.52%(B) 2.29% 2.92% 2.28% 1.09% 0.36%
====================================================================================================================================
Net assets at end of period (000's) $ 33,338 $ 18,917 $ 25,761 $ 27,424 $ 28,144 $ 29,385
====================================================================================================================================
Ratio of net expenses to average net assets 0.78%(B)(C) 0.75% 0.75% 0.75% 0.75% 0.75%
Ratio of net investment income
to average net assets 1.48%(B) 2.37% 2.88% 2.23% 1.08% 0.35%
(A) Amount rounds to less than $0.001.
(B) Annualized.
(C) Absent money market insurance, the ratio of net expenses to average net
assets would have been 0.75%.
See accompanying notes to financial statements.
9
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Financial Highlights (Continued)
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OHIO TAX-FREE BOND FUND - CLASS A
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
DECEMBER 31, YEAR ENDED JUNE 30,
2008 --------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
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Net asset value at beginning of period $ 11.13 $ 11.37 $ 11.45 $ 12.10 $ 11.68 $ 12.36
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Income (loss) from investment operations:
Net investment income 0.22 0.44 0.45 0.46 0.45 0.48
Net realized and unrealized gains
(losses) on investments (0.32) (0.12) 0.03 (0.49) 0.43 (0.50)
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Total from investment operations (0.10) 0.32 0.48 (0.03) 0.88 (0.02)
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Less distributions:
Dividends from net investment income (0.22) (0.44) (0.45) (0.46) (0.45) (0.48)
Distributions from net realized gains -- (0.12) (0.11) (0.16) (0.01) (0.21)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.22) (0.56) (0.56) (0.62) (0.46) (0.69)
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Capital contributions -- -- -- -- -- 0.03
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Net asset value at end of period $ 10.81 $ 11.13 $ 11.37 $ 11.45 $ 12.10 $ 11.68
====================================================================================================================================
Total return (A) (0.86%)(B) 2.85% 4.19% (0.25%) 7.66% 0.04%(C)
====================================================================================================================================
Net assets at end of period (000's) $ 48,698 $ 51,440 $ 56,163 $ 64,266 $ 74,604 $ 77,837
====================================================================================================================================
Ratio of net expenses to average net assets 0.78%(D) 0.75% 0.75% 0.75% 0.75% 0.75%
Ratio of net investment income
to average net assets 4.05%(D) 3.92% 3.87% 3.87% 3.74% 3.94%
Portfolio turnover rate 2%(D) 17% 28% 24% 30% 36%
(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 contribution made
by the Advisor.
(D) Annualized.
See accompanying notes to financial statements.
10
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Financial Highlights (Continued)
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OHIO TAX-FREE BOND FUND - CLASS C
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
DECEMBER 31, YEAR ENDED JUNE 30,
2008 --------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 11.14 $ 11.39 $ 11.46 $ 12.11 $ 11.69 $ 12.41
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.18 0.36 0.36 0.37 0.36 0.39
Net realized and unrealized gains
(losses) on investments (0.32) (0.13) 0.04 (0.49) 0.43 (0.51)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.14) 0.23 0.40 (0.12) 0.79 (0.12)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.18) (0.36) (0.36) (0.37) (0.36) (0.39)
Distributions from net realized gains -- (0.12) (0.11) (0.16) (0.01) (0.21)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.18) (0.48) (0.47) (0.53) (0.37) (0.60)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 10.82 $ 11.14 $ 11.39 $ 11.46 $ 12.11 $ 11.69
====================================================================================================================================
Total return (A) (1.22%)(B) 2.00% 3.50% (1.00%) 6.86% (1.03%)
====================================================================================================================================
Net assets at end of period (000's) $ 5,272 $ 5,364 $ 5,169 $ 6,728 $ 9,400 $ 9,862
====================================================================================================================================
Ratio of net expenses to average net assets 1.52%(C) 1.50% 1.50% 1.50% 1.50% 1.50%
Ratio of net investment income
to average net assets 3.32%(C) 3.17% 3.12% 3.12% 2.99% 3.19%
Portfolio turnover rate 2%(C) 17% 28% 24% 30% 36%
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Not annualized.
(C) Annualized.
See accompanying notes to financial statements.
11
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
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,
2008 --------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
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 0.009 0.024 0.029 0.023 0.011 0.004
Net realized gains on investments 0.000(A) 0.000(A) 0.000(A) -- -- 0.000(A)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.009 0.024 0.029 0.023 0.011 0.004
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.009) (0.024) (0.029) (0.023) (0.011) (0.004)
Distributions from net realized gains (0.000)(A) (0.000)(A) (0.000)(A) -- (0.000)(A) (0.000)(A)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.009) (0.024) (0.029) (0.023) (0.011) (0.004)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
====================================================================================================================================
Total return 1.76%(B) 2.43% 2.96% 2.31% 1.13% 0.35%
====================================================================================================================================
Net assets at end of period (000's) $ 129,302 $ 133,736 $ 105,148 $ 92,082 $ 99,127 $ 165,145
====================================================================================================================================
Ratio of net expenses to average net assets 0.77%(B)(C) 0.75% 0.75% 0.75% 0.75% 0.75%
Ratio of net investment income
to average net assets 1.69%(B) 2.35% 2.92% 2.26% 1.05% 0.35%
(A) Amount rounds to less than $0.001.
(B) Annualized.
(C) Absent money market insurance, the ratio of net expenses to average net
assets would have been 0.75%.
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,
2008 --------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
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 0.010 0.027 0.032 0.025 0.014 0.006
Net realized gains on investments 0.000(A) 0.000(A) 0.000(A) -- -- 0.000(A)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.010 0.027 0.032 0.025 0.014 0.006
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.010) (0.027) (0.032) (0.025) (0.014) (0.006)
Distributions from net realized gains (0.000)(A) (0.000)(A) (0.000)(A) -- (0.000)(A) (0.000)(A)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.010) (0.027) (0.032) (0.025) (0.014) (0.006)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
====================================================================================================================================
Total return 2.01%(B) 2.68% 3.21% 2.57% 1.39% 0.60%
====================================================================================================================================
Net assets at end of period (000's) $ 305,382 $ 262,253 $ 169,708 $ 183,107 $ 192,346 $ 174,739
====================================================================================================================================
Ratio of net expenses to average net assets 0.52%(B)(C) 0.50% 0.50% 0.50% 0.50% 0.50%
Ratio of net investment income
to average net assets 1.93%(B) 2.58% 3.17% 2.50% 1.41% 0.59%
(A) Amount rounds to less than $0.001.
(B) Annualized.
(C) Absent money market insurance, the ratio of net expenses to average net
assets would have been 0.50%.
See accompanying notes to financial statements.
12
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
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,
2008 --------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
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 0.008 0.024 0.028 0.023 0.011 0.005
Net realized gains (losses) on investments -- (0.000)(A) 0.000(A) -- -- 0.000(A)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.008 0.024 0.028 0.023 0.011 0.005
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.008) (0.024) (0.028) (0.023) (0.011) (0.005)
Distributions from net realized gains -- -- -- -- -- (0.000)(A)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.008) (0.024) (0.028) (0.023) (0.011) (0.005)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
====================================================================================================================================
Total return 1.60%(B) 2.39% 2.88% 2.28% 1.14% 0.50%
====================================================================================================================================
Net assets at end of period (000's) $ 21,250 $ 21,109 $ 16,590 $ 16,279 $ 19,250 $ 20,263
====================================================================================================================================
Ratio of net expenses to average net assets 0.91%(B)(C) 0.89% 0.89% 0.89% 0.89% 0.89%
Ratio of net investment income
to average net assets 1.59%(B) 2.35% 2.85% 2.23% 1.13% 0.48%
(A) Amount rounds to less than $0.001.
(B) Annualized.
(C) Absent money market insurance, the ratio of net expenses to average net
assets would have been 0.89%.
TAX-FREE MONEY MARKET FUND - CLASS S
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
DECEMBER 31, YEAR ENDED JUNE 30,
2008 --------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
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 0.007 0.021 0.026 0.020 0.009 0.002
Net realized gains (losses) on investments -- (0.000)(A) 0.000(A) -- -- 0.000(A)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.007 0.021 0.026 0.020 0.009 0.002
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.007) (0.021) (0.026) (0.020) (0.009) (0.002)
Distributions from net realized gains -- -- -- -- -- (0.000)(A)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.007) (0.021) (0.026) (0.020) (0.009) (0.002)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
====================================================================================================================================
Total return 1.34%(B) 2.12% 2.61% 2.01% 0.87% 0.25%
====================================================================================================================================
Net assets at end of period (000's) $ 45,399 $ 31,021 $ 82,925 $ 32,658 $ 13,075 $ 16,381
====================================================================================================================================
Ratio of net expenses to average net assets 1.17%(B)(C) 1.15% 1.15% 1.15% 1.15% 1.15%
Ratio of net investment income
to average net assets 1.33%(B) 2.23% 2.58% 2.10% 0.86% 0.22%
(A) Amount rounds to less than $0.001.
(B) Annualized.
(C) Absent money market insurance, the ratio of net expenses to average net
assets would have been 1.15%.
See accompanying notes to financial statements.
13
- --------------------------------------------------------------------------------
Notes to Financial Statements
December 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION
The Florida Tax-Free Money Market Fund, the Ohio Tax-Free Bond Fund (formerly
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 Tax-Free Bond 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
Tax-Free Bond 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.
14
- --------------------------------------------------------------------------------
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.
Various inputs are used in determining the value of the Funds investments. These
inputs are summarized in the three broad levels listed below:
o Level 1 - quoted prices in active markets for identical securities
o Level 2 - other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit
risk, etc.)
o Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. For
example, money market securities are valued using amortized cost, in accordance
with rules under the Investment Company Act of 1940. Generally, amortized cost
approximates the current fair value of a security, but since the value is not
obtained from a quoted price in an active market, such securities are reflected
as Level 2.
The following is a summary of the inputs used to value the Funds net assets as
of December 31, 2008:
LEVEL 2 - LEVEL 3 -
OTHER SIGNIFICANT SIGNIFICANT
LEVEL 1 - OBSERVABLE UNOBSERVABLE
INVESTMENTS IN SECURITIES: QUOTED PRICES INPUTS INPUTS
- -------------------------------------------------------------------------------------------------
Florida Tax-Free Money Market Fund $ -- $ 33,223,973 $ --
Ohio Tax-Free Bond Fund -- 53,710,161 --
Ohio Tax-Free Money Market Fund -- 434,104,766 --
Tax-Free Money Market Fund -- 66,393,614 --
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 Tax-Free Bond 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.
15
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
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 Tax-Free Bond 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 Tax-Free Bond 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 Tax-Free Bond 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 Tax-Free
Bond 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.
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.
3. FEDERAL TAX INFORMATION
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.
16
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
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, 2008 and
2007 was as follows:
FLORIDA
TAX-FREE MONEY OHIO TAX-FREE
MARKET FUND BOND FUND
- --------------------------------------------------------------------------------
2008 2007 2008 2007
- --------------------------------------------------------------------------------
From tax exempt income $ 610,218 $ 725,407 $2,295,281 $2,578,309
From ordinary income -- -- 22,120 --
From long-term capital gains -- -- 596,039 662,907
- --------------------------------------------------------------------------------
$ 610,218 $ 725,407 $2,913,440 $3,241,216
- --------------------------------------------------------------------------------
OHIO TAX-FREE TAX-FREE
MONEY MARKET MONEY MARKET
FUND FUND
- --------------------------------------------------------------------------------
2008 2007 2008 2007
- --------------------------------------------------------------------------------
From tax exempt income $8,550,912 $8,286,395 $1,468,812 $1,425,307
From ordinary income 3,188 -- -- --
From long-term capital gains 11,427 1,521 -- --
- --------------------------------------------------------------------------------
$8,565,527 $8,287,916 $1,468,812 $1,425,307
- --------------------------------------------------------------------------------
The following information is computed on a tax basis for each item as of June
30, 2008:
FLORIDA
TAX-FREE MONEY OHIO TAX-FREE
MARKET FUND BOND FUND
- --------------------------------------------------------------------------------
Tax cost of portfolio investments $ 19,773,308 $ 56,963,438
================================================================================
Gross unrealized appreciation -- 1,517,571
Gross unrealized depreciation -- (568,528)
- --------------------------------------------------------------------------------
Net unrealized appreciation -- 949,043
Capital loss carryforward (5,573) (192,709)
Post-October loss (251) (79,433)
Undistributed tax exempt income 18,792 29,350
Other temporary differences (18,792) (29,350)
- --------------------------------------------------------------------------------
Accumulated earnings (deficit) $ (5,824) $ 676,901
- --------------------------------------------------------------------------------
OHIO TAX-FREE TAX-FREE
MONEY MARKET MONEY MARKET
FUND FUND
- --------------------------------------------------------------------------------
Tax cost of portfolio investments $ 388,485,431 $ 52,543,150
================================================================================
Post-October loss -- (672)
Undistributed tax exempt income 348,981 631
Undistributed ordinary income 23,216 --
Undistributed long-term gains 93,427 --
Other temporary differences (348,981) (392)
- --------------------------------------------------------------------------------
Accumulated earnings (deficit) $ 116,643 $ (433)
- --------------------------------------------------------------------------------
17
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
The capital loss carryforward as of June 30, 2008 in the table above expires as
follows:
FUND AMOUNT EXPIRATION DATE
- --------------------------------------------------------------------------------
Florida Tax-Free Money Market Fund $ 5,375 June 30, 2013
$ 198 June 30, 2014
- --------------------------------------------------------------------------------
Ohio Tax-Free Bond Fund $ 192,709 June 30, 2016
- --------------------------------------------------------------------------------
The capital loss carryforwards and Post-October losses 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, 2008, the Florida Tax-Free Money Market Fund
utilized $5 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, 2008, the Tax-Free Money Market Fund
increased undistributed net investment income by $239 and increased accumulated
net realized losses 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, 2008, the aggregate
identified cost for federal income tax purposes for the Ohio Tax-Free Bond Fund
is $54,358,857, resulting in gross unrealized appreciation and depreciation of
$1,775,777 and $2,424,473 respectively, and net unrealized depreciation of
$648,696.
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 a 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, 2005 through 2008) for purposes of implementing FIN 48 and have concluded
that no provision for income tax is required in their financial statements.
4. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments and government
securities) were as follows for the six months ended December 31, 2008:
OHIO TAX- FREE
BOND FUND
- --------------------------------------------------------------------------------
Purchases of investment securities $ 1,248,058
Proceeds from sales and maturities of investment securities $ 650,512
- --------------------------------------------------------------------------------
18
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
5. TRANSACTIONS WITH AFFILIATES
Certain officers of the Trust are also officers of the Advisor (Touchstone
Advisors, Inc.), the Underwriter (Touchstone Securities, Inc.) and/or JPMorgan
Chase Bank, N.A. (JPMorgan) the Sub-Administrator and Transfer Agent to the
Funds. The Advisor and Underwriter are each wholly-owned, indirect subsidiaries
of The Western and Southern Life Insurance Company (Western-Southern).
ADVISORY 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.
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 Tax-Free Bond 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,
2009:
CLASS R CLASS I CLASS A CLASS C CLASS S
- --------------------------------------------------------------------------------
Florida Tax-Free Money Market Fund -- -- 0.75% -- --
Ohio Tax-Free Bond Fund (A) -- -- 0.85% 1.60% --
Ohio Tax-Free Money Market Fund 0.75% 0.50% -- -- --
Tax-Free Money Market Fund -- -- 0.89% -- 1.15%
(A) Effective November 6, 2008, the Fund changed its expense limits from 0.75%
and 1.50% for Class A and Class C, respectively.
19
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
For the six months ended December 31, 2008, the Advisor waived administration
fees and/or reimbursed expenses as follows:
OTHER OPERATING
ADMINISTRATION EXPENSES
FEES WAIVED REIMBURSED
- --------------------------------------------------------------------------------
Florida Tax-Free Money Market Fund $ 28,307 $ 30,033
Ohio Tax-Free Bond Fund $ 55,144 $ 56,214
Ohio Tax-Free Money Market Fund $ 351,984 $ --
Tax-Free Money Market Fund $ 60,693 $ 55,742
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, 2008, 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 Tax-Free Bond Fund $ 672
Ohio Tax-Free Money Market Fund $ 13
Tax-Free Money Market Fund $ 25,012
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 $2,145 from underwriting and broker commissions on the sale of Class A
shares of the Ohio Tax-Free Bond Fund during the six months ended December 31,
2008. In addition, the Underwriter collected $3,640 of contingent deferred sales
loads on the redemption of Class C shares of the Ohio Tax-Free Bond 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.
The Trust also has a Plan of Distribution (Class C Plan) under which Class C
shares of the Ohio Tax-Free Bond 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.
20
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
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.
6. 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 Tax-Free Bond Fund are the result of the
following capital share transactions:
OHIO TAX-FREE
BOND FUND
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR
DECEMBER 31, ENDED
2008 JUNE 30,
(UNAUDITED) 2008
- --------------------------------------------------------------------------------
CLASS A
Shares sold 129,781 128,208
Shares reinvested 59,689 160,419
Shares redeemed (309,010) (602,647)
- --------------------------------------------------------------------------------
Net decrease in shares outstanding (119,540) (314,020)
Shares outstanding, beginning of period 4,623,613 4,937,633
- --------------------------------------------------------------------------------
Shares outstanding, end of period 4,504,073 4,623,613
================================================================================
CLASS C
Shares sold 61,651 78,817
Shares reinvested 6,234 14,496
Shares redeemed (62,412) (65,703)
- --------------------------------------------------------------------------------
Net increase in shares outstanding 5,473 27,610
Shares outstanding, beginning of period 481,642 454,032
- --------------------------------------------------------------------------------
Shares outstanding, end of period 487,115 481,642
================================================================================
7. 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.
8. TREASURY DEPARTMENT TEMPORARY GUARANTEE PROGRAM
During a meeting held October 7, 2008 of the Board of Trustees, the Trustees
unanimously approved the Touchstone Florida Tax-Free Money Market Fund,
Touchstone Ohio Tax-Free Money Market Fund and Touchstone Tax-Free Money Market
Fund's participation in the Treasury Department Temporary Guarantee Program, the
initial term of which extends through December 18, 2008, and has applied for
continued participation in the Program through the Program's extension date of
April 30, 2009. In the event that a Fund's NAV should drop below $0.995 (the
"Guarantee Event") and the Fund elects to liquidate, the Program provides
coverage to shareholders of the Fund for amounts held in that Fund as of the
close of business on September 19, 2008, subject to certain conditions and
limitations. Participation in the Program does not guarantee a $1.00 net asset
value upon redemption or liquidation of shares.
21
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
Any increase in the number of Fund shares held in an account after the close of
business on September 19, 2008 are not guaranteed. If the number of Fund shares
held in the account fluctuates during the period covered by the Program,
shareholders are covered for the lesser of the number of Fund shares held as of
the close of business on September 19, 2008, or the number of shares held in the
Fund on the date of the Guarantee Event.
The cost of the Program is $1.00 multiplied by the sum of all covered shares in
the Fund multiplied by 0.00015 (1.5 basis points) for the Extension Period. The
cost to participate in the Program is borne by the Fund without regard to any
expense limitation currently in effect, as these costs constitute "extraordinary
expenses not incurred in the ordinary course of the Fund's business," although
generally only shareholder balances as of September 19, 2008 are covered by the
Program.
22
- --------------------------------------------------------------------------------
Portfolio of Investments
Florida Tax-Free Money Market Fund - December 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FIXED RATE REVENUE & GENERAL OBLIGATION BONDS -- 17.8%
$ 500,000 OH St Univ General Rcpts Ser B 3.750 01/14/09 $ 500,000
200,000 McAlester OK Pub Wrks Auth Util Sys Rev
Refunded Ser A Prerefunded @ 101 5.750 02/01/09 202,504
100,000 Collier Co FL Sch Brd COP 4.750 02/15/09 100,305
500,000 Monroe LA Sales Tax Increment EDR (Garret Rd) 4.000 03/01/09 501,201
350,000 Manistee MI Area Pub Schs UTGO Prerefunded @ 100 5.875 05/01/09 354,343
300,000 Lebanon OH Rd Impt UTGO BANS 3.000 06/23/09 300,838
400,000 FL Hurricane Catastrophe Fd Fin Corp Rev 5.000 07/01/09 405,136
350,000 FL St Dept Environmental Protection Preservation Rev (FL Forever) 5.000 07/01/09 354,999
300,000 Gilbert AZ LTGO 4.000 07/01/09 302,739
620,000 Orlando FL Commn Util Sys Rev 5.250 07/01/09 631,661
370,000 Columbiana OH Elec Sys Impt GO BANS 2.650 07/09/09 370,470
175,000 Palm Beach Co FL Sch Brd COP Ser A 3.750 08/01/09 176,713
300,000 Columbiana OH Var Purp UTGO BANS 2.850 09/15/09 300,619
295,000 Dade Co FL UTGO Ser DD 7.700 10/01/09 305,596
200,000 Orlando FL Utils Commn Wtr & Elec Rev 6.000 10/01/09 206,280
515,000 St Petersburg FL Excise Tax Rev 5.000 10/01/09 523,508
100,000 Tallahassee FL Cons Util Sys Rev 3.000 10/01/09 100,515
300,000 Niles OH UTGO BANS 3.500 11/19/09 301,546
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS $ 5,938,973
- ------------------------------------------------------------------------------------------------------------------------------------
FLOATING & VARIABLE RATE DEMAND NOTES -- 81.9%
$ 600,000 Collier Co FL Hlth Fac Auth Hosp Rev (Cleveland Clinic)
(LOC: JPMorgan Chase Bank) 1.100 01/01/09 $ 600,000
300,000 Cuyahoga Co OH Hosp Impt Rev (Univ Hosp Cleveland)
(LOC: JPMorgan Chase Bank) 0.950 01/01/09 300,000
1,175,000 Duval Co FL HFA MFH Rev (Glades Apts) (SPA: FHLMC) 1.200 01/01/09 1,175,000
1,000,000 Duval Co FL HFA MFH Rev (Sunbeam Rd Apts) (LOC: US Bank NA) 1.150 01/01/09 1,000,000
400,000 FL Hsg Fin Corp MFH Rev (Victoria Park) (LOC: FNMA) 1.200 01/01/09 400,000
350,000 Gulf Breeze FL Muni Bond Fund Ser A (LOC: Bank of America NA) 1.250 01/01/09 350,000
385,000 Hillsborough Co FL IDR (Mosi-Charter Sch A) (LOC: Bank of America NA) 1.250 01/01/09 385,000
250,000 Hillsborough Co FL Rev (Carrollwood Day) (LOC: Wells Fargo Bank) 1.130 01/01/09 250,000
995,000 Jacksonville FL EDR Hlthcare Facs (Methodist) (LOC: Suntrust Bank) 1.100 01/01/09 995,000
400,000 Jacksonville FL Elect Auth Rev (LOC: Bank of America NA) 1.150 01/01/09 400,000
600,000 Jacksonville FL Hlth Fac Auth Hosp Rev Ser C (LOC: Bank of America NA) 0.900 01/01/09 600,000
300,000 JEA FL Dist Energy Sys Rev (LOC: State Street Bank & Trust Co) 0.980 01/01/09 300,000
1,000,000 Leesburg FL Hosp Rev (Villages Regl Hosp B) (LOC: ScotiaBank) 1.200 01/01/09 1,000,000
610,000 Manatee Co FL PCR (FL Pwr & Light Co) 1.200 01/01/09 610,000
1,000,000 Marion Co FL IDA IDR (Hospice of Marion Co Inc) (LOC: Wachovia Bank NA) 2.030 01/01/09 1,000,000
600,000 Martin Co FL PCR (FL Pwr & Light Co) 1.550 01/01/09 600,000
300,000 OH St PCR (Sohio Wtr) 1.200 01/01/09 300,000
1,000,000 Orange Co FL Hlth Facs Auth (Orlando Regl Hlthcare)
Ser A-1 (SPA: Dexia Credit Local) 2.000 01/01/09 1,000,000
900,000 Orange Co FL IDA Rev (Trinity Prep Sch Inc) (LOC: Wachovia Bank NA) 2.050 01/01/09 900,000
500,000 Orange Co FL Sch Brd COP Ser E (LOC: Wachovia Bank NA) 0.900 01/01/09 500,000
900,000 Palm Beach Co FL Rev (Henry Morrison Flagler)
(LOC: Northern Trust Bank) 1.300 01/01/09 900,000
500,000 Palm Beach Co FL Rev (Raymond F Kravis Ctr) (LOC: Northern Trust Co) 1.750 01/01/09 500,000
800,000 Pinellas Co FL Hlth Facs Auth Rev (Bayfront) (LOC: Suntrust Bank) 1.100 01/01/09 800,000
1,000,000 Port Orange FL Rev (Palmer College) (LOC: LaSalle Bank NA) 1.200 01/01/09 1,000,000
800,000 Putnam Co FL Dev Auth PCR (FL Pwr & Light Co) 1.200 01/01/09 800,000
1,000,000 Sarasota Co FL Pub Hosp Dist Rev (Sarasota Mem Hosp A)
(LOC: Northern Trust Co) 0.850 01/01/09 1,000,000
200,000 Seminole Co FL IDA Rev (FL Living Nursing Ctr)
(LOC: Bank of America NA) 1.450 01/01/09 200,000
23
- --------------------------------------------------------------------------------
Florida Tax-Free Money Market Fund (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FLOATING & VARIABLE RATE DEMAND NOTES -- 81.9% (CONTINUED)
$ 800,000 Seminole Co FL IDA Rev (Master Academy) (LOC: Allied Irish Bank PLC) 1.200 01/01/09 $ 800,000
900,000 Tampa FL Rev (Tampa LLC-Univ Tampa) (LOC: Royal Bank of Canada) 1.150 01/01/09 900,000
900,000 Volusia Co FL IDA Rev (Retirement Hsg Fndtn) (LOC: KBC Bank NV) 1.100 01/01/09 900,000
800,000 Wauchula FL IDR (Hardee Co Ctr) (LOC: JPMorgan Chase Bank) 1.150 01/01/09 800,000
930,000 Lee Co FL IDA Hlthcare Facs Rev (Bonita Cmnty Hlth)
(LOC: Fifth Third Bank) 3.370 01/02/09 930,000
385,000 Broward Co FL HFA MFH Rev (Jacaranda Village Apts)
(LOC: HSBC Bank) 0.900 01/07/09 385,000
900,000 Broward Co FL HFA MFH Rev (Reflections Apts) (LOC: FHLMC) 0.850 01/07/09 900,000
200,000 Dade Co FL IDA IDR (Dolphins Stadium) (LOC: Societe Generale) 0.700 01/07/09 200,000
100,000 Lee Co FL HFA MFH Rev (Forestwood Apts) (LOC: FNMA) 0.850 01/07/09 100,000
605,000 Marion Co FL HFA Rev (Paddock Apts) (LOC: FNMA) 0.850 01/07/09 605,000
400,000 Orange Co FL HFA Multifamily Rev (Post Fountains) (LOC: FNMA) 0.900 01/07/09 400,000
850,000 Orange Co FL HFA Rev (LOC: FHLMC) 0.850 01/07/09 850,000
300,000 Palm Beach Co FL Rev (Norton Gallery) (LOC: Bank of America NA) 0.890 01/07/09 300,000
300,000 Pinellas Co FL Edl Facs Auth Rev (LOC: Suntrust Bank) 1.750 01/07/09 300,000
1,050,000 Volusia Co FL HFA Rev (Fisherman's Landing) (LOC: FNMA) 0.850 01/07/09 1,050,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING & VARIABLE RATE DEMAND NOTES $ 27,285,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 99.7%
(Amortized Cost $33,223,973) $ 33,223,973
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.3% 113,796
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 33,337,769
====================================================================================================================================
See accompanying notes to portfolios of investments and notes to financial
statements.
24
- --------------------------------------------------------------------------------
Portfolio of Investments
Ohio Tax-Free Bond Fund - December 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FIXED RATE REVENUE & GENERAL OBLIGATION BONDS -- 99.0%
$ 1,035,000 Reading OH Rev (St Mary's Ed Institute) 5.550 02/01/10 $ 1,047,886
525,000 Kings OH LSD GO Prerefunded @ 101 6.050 12/01/10 575,831
1,000,000 Summit Co OH GO Prerefunded @ 101 6.000 12/01/10 1,095,870
105,000 Cuyahoga Co OH Hosp Rev (Univ Hosp) ETM 9.000 06/01/11 114,898
1,000,000 Lorain Co OH Hosp Rev (Catholic Hlth) 5.625 10/01/11 1,048,500
1,000,000 Hamilton Co OH Swr Sys Rev 5.500 12/01/11 1,084,240
1,000,000 Pickerington OH LSD UTGO Prerefunded @ 100 5.250 12/01/11 1,099,980
1,750,000 Eaton OH CSD GO Prerefunded @ 101 5.000 12/01/12 1,963,482
1,000,000 Monroe OH LSD UTGO Prerefunded @ 100 5.000 12/01/12 1,112,740
250,000 OH St Higher Ed Fac (Xavier Univ) Prerefunded @ 100 5.000 05/01/13 277,245
500,000 Ross Twp OH LSD UTGO Prerefunded @ 100 5.000 12/01/13 566,140
1,480,000 Lakewood OH CSD GO Prerefunded @ 100 5.250 12/01/14 1,718,872
660,000 West Chester Twp OH GO 5.500 12/01/14 712,087
400,000 Warren OH Wtr Wrks Rev 5.500 11/01/15 411,364
760,000 Buckeye Valley OH LSD GO 6.850 12/01/15 850,174
595,000 Columbus-Polaris Hsg Corp Rev Prerefunded @ 100 7.400 01/01/16 696,549
2,750,000 Little Miami OH LSD GO Prerefunded @ 100 5.000 12/01/16 3,176,002
1,000,000 Lorain Co OH Hosp Rev (Catholic Hlth Partners) 5.500 09/01/19 1,005,750
1,000,000 Lucas Co OH Hosp Rev (Promedica Hlth Grp) 5.625 11/15/19 978,870
1,085,000 West Clermont OH LSD GO 5.000 12/01/19 1,124,711
850,000 West Chester Twp OH GO 5.000 12/01/20 872,432
1,210,000 Cincinnati OH Tech College Rev 5.250 10/01/21 1,084,959
1,185,000 Akron OH Impt GO 5.000 12/01/22 1,186,789
765,000 Fairfield Co OH GO 5.000 12/01/22 772,505
1,050,000 Harrison OH Wst Wtr Sys Rev 5.250 11/01/23 1,057,046
1,000,000 Akron OH Var Purp GO 5.000 12/01/23 996,010
450,000 Columbus OH TIF Rev (Polaris) 4.750 12/01/23 374,729
865,000 Fairfield Co OH GO 5.000 12/01/23 833,255
1,000,000 OH St Higher Ed Fac Rev (Univ Dayton) 5.000 12/01/23 956,380
1,000,000 Toledo OH CSD GO 5.000 12/01/23 944,650
1,000,000 Hamilton Co OH Hosp Rev (Children's Hosp Med Ctr) 5.000 05/15/24 884,810
400,000 Springboro OH Swr Sys Rev 5.000 06/01/24 373,848
2,000,000 Canal Winchester OH LSD UTGO 4.750 12/01/24 1,881,000
825,000 Parma OH GO 4.750 12/01/24 752,540
1,000,000 Columbus OH Arpt Rev 5.000 01/01/25 920,260
1,040,000 Franklin Co OH Hosp Rev (Children's Hosp) 5.000 05/01/25 946,712
810,000 Big Walnut OH LSD GO 5.000 12/01/25 820,344
1,000,000 Univ of Cincinnati OH General Rcpts 4.750 06/01/26 918,700
1,500,000 Richland Co OH Hosp Facs Rev (MedCentral Hlth Sys) 5.125 11/15/26 1,142,580
1,090,000 Fairborn OH CSD GO 5.000 12/01/26 1,102,742
1,000,000 Kings OH LSD Impt UTGO 5.000 12/01/26 995,270
1,000,000 Lakewood OH CSD Facs Impt UTGO 5.000 12/01/26 989,460
1,500,000 OH St Higher Ed Fac Rev (Univ Dayton) 5.000 12/01/26 1,367,310
2,100,000 Oregon OH CSD GO 5.000 12/01/27 2,104,472
1,000,000 OH St Higher Edl Fac Commn Rev (Xavier Univ C) 5.750 05/01/28 944,240
1,830,000 Columbus OH CSD Impt UTGO 5.000 12/01/28 1,823,064
1,185,000 Delaware OH GO 5.000 12/01/28 1,180,509
890,000 Licking Heights OH LSD GO 6.400 12/01/28 1,020,732
1,000,000 Mason OH Swr Sys Rev 5.000 12/01/28 738,550
1,500,000 Reynoldsburg OH CSD Facs Constr & Impt UTGO 5.250 12/01/28 1,506,570
1,000,000 Cleveland OH Income Tax Rev (Sub Lien Brdgs & Roadways B) 5.000 10/01/29 955,160
320,000 Brookfield LSD OH Sch Facs Impt UTGO 5.000 01/15/30 306,342
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS $ 53,415,161
- ------------------------------------------------------------------------------------------------------------------------------------
25
- --------------------------------------------------------------------------------
Ohio Tax-Free Bond Fund (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FLOATING & VARIABLE RATE DEMAND NOTES -- 0.5%
$ 95,000 OH St Higher Ed Fac Pooled Fin (1998) (LOC: Fifth Third Bank) 5.900 01/01/09 $ 95,000
200,000 OH St Wtr Dev Auth (PureWtr) (SPA: State Street B&T Co) 1.050 01/07/09 200,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING & VARIABLE RATE DEMAND NOTES $ 295,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 99.5%
(Amortized Cost $54,358,857) $ 53,710,161
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.5% 259,850
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 53,970,011
====================================================================================================================================
See accompanying notes to portfolios of investments and notes to financial
statements.
26
- --------------------------------------------------------------------------------
Portfolio of Investments
Ohio Tax-Free Money Market Fund - December 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FIXED RATE REVENUE & GENERAL OBLIGATION BONDS -- 24.0%
$ 2,935,000 Cuyahoga Heights OH Var Purp UTGO BANS 2.300 01/01/09 $ 2,935,000
690,000 AMP OH Elect Rev BANS (Brewster Village) 3.500 01/09/09 690,060
2,270,000 OH St Univ General Rcpts 3.750 01/14/09 2,270,000
840,000 Defiance OH CSD UTGO BANS 4.200 01/15/09 840,396
952,000 AMP OH Elect Rev BANS (Seville Village) 3.500 01/16/09 952,215
5,500,000 Highland OH LSD UTGO BANS 2.850 01/22/09 5,502,665
780,000 AMP OH Elect Rev BANS (Woodsfield Village) 3.250 01/30/09 780,403
550,000 Lorain Co OH Hosp Rev Facs (Catholic-A-Rmkt) 4.000 02/01/09 550,662
550,000 Lorain Co OH Hosp Rev Facs (Catholic-B-Rmkt) 4.000 02/01/09 550,662
1,120,000 Mason OH LTGO BANS 3.000 03/12/09 1,121,589
2,970,000 Willowick OH Var Purp Impt LTGO BANS 3.000 03/12/09 2,971,399
2,361,975 Hamilton Twp OH Var Purp LTGO BANS 3.100 03/18/09 2,363,665
400,000 Deer Park - Silverton OH Jt Fire Dist LTGO BANS 3.500 04/07/09 400,775
1,250,000 Brookville OH UTGO BANS 2.750 04/23/09 1,251,887
1,900,000 Fayette Co OH Courthouse LTGO BANS 2.400 05/14/09 1,900,000
2,740,000 Strongsville OH Var Purp LTGO BANS Ser 2 3.250 05/14/09 2,744,478
1,145,000 Greene Co OH Var Purp UTGO BANS 2.750 05/19/09 1,148,201
1,265,000 Gates Mills OH Var Purp Impt LTGO BANS 3.250 05/21/09 1,270,255
3,000,000 Ironton OH CSD LTGO BANS 4.750 05/27/09 3,030,133
2,445,000 Ashtabula Co OH LTGO BANS 2.150 05/28/09 2,445,000
4,395,000 Cincinnati OH CSD LTGO BANS 2.500 05/28/09 4,401,320
3,690,000 Middletown OH CSD Sch Impt UTGO BANS 2.500 06/03/09 3,696,085
1,000,000 Tiffin OH Cap Impt LTGO BANS 2.500 06/04/09 1,001,660
2,000,000 Niles OH Swr Sys Impt LTGO BANS 2.750 07/01/09 2,003,402
1,250,000 AMP OH Elec Rev BANS (Woodville) 2.750 07/17/09 1,251,676
1,810,000 Kirtland OH Var Purp LTGO BANS 2.350 07/23/09 1,812,468
400,000 OH St Higher Ed Cap Facs Ser II-A 5.000 08/01/09 406,714
5,000,000 Columbus OH CSD UTGO BANS 1.850 08/13/09 5,018,238
1,995,000 AMP OH Elect Rev BANS (Cleveland Pub Pwr) 2.250 08/14/09 1,996,222
2,685,000 Jackson Co OH Var Purp Impt LTGO BANS 2.550 09/03/09 2,692,961
4,500,000 Union Twp OH TIF Rev BANS 3.000 09/15/09 4,531,142
1,722,000 Warrensville Heights OH Var Purp Impt LTGO BANS 2.850 09/17/09 1,732,208
3,500,000 Cuyahoga Heights OH Var Purp UTGO BANS 3.500 09/23/09 3,512,382
140,000 OH St Bldg Auth Facs (Adult Correctl) Ser A Prerefunded @ 101 5.500 10/01/09 144,793
1,800,000 Portage Co OH UTGO BANS 3.250 10/02/09 1,803,282
4,000,000 Ashland OH Var Purp Impt B LTGO BANS 3.500 10/15/09 4,015,312
1,000,000 Kent OH Var Purp UTGO BANS 3.750 10/15/09 1,003,432
4,000,000 AMP OH UTGO BANS 2.250 10/29/09 4,008,195
2,050,000 AMP OH Var Purp UTGO BANS 3.750 10/29/09 2,054,148
2,300,000 Springboro OH BANS (Real Estate Acq) 4.500 10/29/09 2,313,737
1,680,000 Celina OH Var Purp LTGO BANS 3.800 11/05/09 1,687,567
2,150,000 Cincinnati OH EDR BANS (Columbia Sq) Ser D 3.000 11/06/09 2,154,426
1,711,500 AMP OH Elec Rev BANS (Hubbard) 3.750 11/11/09 1,713,661
1,450,000 Trotwood OH Cap Facs Impt A UTGO BANS 3.625 11/12/09 1,454,552
3,900,000 Niles OH UTGO BANS 3.500 11/19/09 3,920,092
1,633,000 AMP OH Elec Rev BANS (Bowling Green) 3.000 11/24/09 1,638,782
3,300,000 Mahoning Co OH Var Purp LTGO BANS 4.450 11/24/09 3,324,293
2,500,000 Harrison OH Wst Wtr Sys Impt LTGO BANS 2.700 12/10/09 2,510,325
785,000 Defiance OH CSD UTGO BANS 4.350 01/13/10 802,246
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS $ 104,324,766
- ------------------------------------------------------------------------------------------------------------------------------------
27
- --------------------------------------------------------------------------------
Ohio Tax-Free Money Market Fund (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FLOATING & VARIABLE RATE DEMAND NOTES -- 75.5%
$ 3,940,000 Akron Bath Copley OH Jt Twp Hosp Dist Rev
(Summa Hlth Sys B) (LOC: Bank One NA) 1.400 01/01/09 $ 3,940,000
10,000,000 Akron Bath Copley OH Jt Twp Hosp Dist Rev
(Summner Proj) (LOC: KBC Bank NV) 1.400 01/01/09 10,000,000
400,000 Allen Co OH Hosp Facs Rev (Catholic Hlthcare) Ser C
(LOC: Wachovia Bank NA) 1.350 01/01/09 400,000
4,000,000 Austin Trust Ctfs Ser 2008-1094 (Lorain Co OH)
(SPA: Bank of America NA) 1.200 01/01/09 4,000,000
12,780,000 Austin Trust Ctfs Ser 2008-3310 (Lorain Co OH)
(SPA: Bank of America NA) 1.750 01/01/09 12,780,000
7,150,000 Butler Co OH Hlthcare Facs Rev (Lifesphere) (LOC: US Bank NA) 1.050 01/01/09 7,150,000
2,700,000 Cleveland OH Arpt Sys Rev Ser D (LOC: US Bank NA) 1.150 01/01/09 2,700,000
9,420,000 Cleveland OH Wtr Wrks Rev Ser B (SPA: Dexia Credit Local) 2.750 01/01/09 9,420,000
700,000 Columbus OH GO (SPA: JPMorgan Chase Bank) 0.900 01/01/09 700,000
3,720,000 Columbus OH Regl Arpt Auth Cap Fdg Rev (OASBO) Pooled Fin
(LOC: US Bank NA) 1.200 01/01/09 3,720,000
3,340,000 Columbus OH Regl Arpt Auth Rev (LOC: US Bank NA) 1.200 01/01/09 3,340,000
80,000 Coshocton Co OH Hosp (Echoing Hills Village)
(LOC: JPMorgan Chase Bank) 1.600 01/01/09 80,000
1,300,000 Cuyahoga Co OH Civic Facs (West Side Ecumenical) (LOC: Key Bank NA) 2.450 01/01/09 1,300,000
1,315,000 Cuyahoga Co OH EDR (Cleveland Botanical) (LOC: Allied Irish Bank PLC) 1.400 01/01/09 1,315,000
5,065,000 Cuyahoga Co OH Hlthcare Facs Rev (A M McGregor Home)
(LOC: Keybank NA) 1.200 01/01/09 5,065,000
1,800,000 Cuyahoga Co OH Hosp (Univ Hosp) (LOC: JPMorgan Chase Bank) 0.950 01/01/09 1,800,000
1,780,000 Cuyahoga Co OH MFH Rev (St Vitus Village Apts) (LOC: Keybank NA) 2.450 01/01/09 1,780,000
4,200,000 Cuyahoga Co OH Rev (Cleveland Clinic) (SPA: Bank of Nova Scotia) 1.050 01/01/09 4,200,000
8,905,000 Delaware Co OH Hlthcare Facs Rev (Sarah Moore) (LOC: Fifth Third Bank) 2.000 01/01/09 8,905,000
2,900,000 Franklin Co OH EDR (Dominican Sisters) (LOC: Fifth Third Bank) 3.000 01/01/09 2,900,000
1,000,000 Franklin Co OH Hlth Facs (Friendship Village Dublin) (LOC: LaSalle Bank) 1.100 01/01/09 1,000,000
905,000 Franklin Co OH Hlth Facs (Heinzerling Fndtn) (LOC: JPMorgan Chase Bank) 1.550 01/01/09 905,000
6,100,000 Franklin Co OH Hosp Rev Impt (US Hlth Corp) (LOC: US Bank NA) 1.030 01/01/09 6,100,000
2,485,000 Geauga Co OH Hlth Fac (Heather Hill) (LOC: Bank One NA) 1.040 01/01/09 2,485,000
2,500,000 Hamilton Co OH Hlthcare (Life Enriching Cmntys B) (LOC: PNC Bank NA) 1.150 01/01/09 2,500,000
3,600,000 Hamilton Co OH Hlthcare Facs Rev (Children's Home Cincinnati)
(LOC: US Bank NA) 1.200 01/01/09 3,600,000
1,050,000 Hamilton Co OH Hosp (Beechwood Home) (LOC: US Bank NA) 1.250 01/01/09 1,050,000
2,980,000 Hamilton Co OH Hosp (Children's Hosp Med Ctr) Ser 1997
(LOC: PNC Bank NA) 1.150 01/01/09 2,980,000
600,000 Hamilton Co OH Hosp (Children's Hosp Med Ctr) Ser 2000
(LOC: JPMorgan Chase Bank) 1.150 01/01/09 600,000
505,000 Hamilton Co OH Hosp (Drake Ctr Inc) (LOC: US Bank NA) 1.150 01/01/09 505,000
1,545,000 Hamilton Co OH Hosp Facs Rev (Children's Hosp Med Ctr)
(LOC: US Bank NA) 1.150 01/01/09 1,545,000
3,745,000 Henry Co OH Fac Impt Rev (Henry Co Hosp) (LOC: Key Bank NA) 1.850 01/01/09 3,745,000
4,910,000 Lancaster OH Port Auth Gas Rev (SPA: Royal Bank of Canada) 1.150 01/01/09 4,910,000
1,710,000 Lima OH Hosp Facs (Lima Mem Hosp) (LOC: Bank One NA) 1.450 01/01/09 1,710,000
400,000 Lucas Co OH Hlth Facs (Lutheran Homes) (LOC: Fifth Third Bank) 3.200 01/01/09 400,000
700,000 Lucas Co OH Hlth Rev (Sunset Retirement Cmnty) (LOC: Fifth Third Bank) 2.780 01/01/09 700,000
940,000 Mason OH TIF Rev (Central Parke of Mason) (LOC: US Bank NA) 2.500 01/01/09 940,000
820,000 Montgomery Co OH Hlth Facs (Cmnty Blood Ctr) (LOC: Bank One NA) 1.550 01/01/09 820,000
1,600,000 OH St Air Quality Dev Auth PCR (FirstEnergy A)
(LOC: Barclays Bank PLC) 1.100 01/01/09 1,600,000
3,200,000 OH St Higher Ed Fac (Case Western)
(SPA: Landesbank Hessen-Thuringen) 0.850 01/01/09 3,200,000
1,200,000 OH St Higher Ed Fac Pooled Fin Rev (1997) (LOC: Fifth Third Bank) 5.900 01/01/09 1,200,000
2,200,000 OH St Higher Ed Fac Rev (Marietta College) (LOC: JPMorgan Chase Bank) 1.230 01/01/09 2,200,000
1,450,000 OH St Higher Ed Fac Rev (Mt Union College) (LOC: JPMorgan Chase Bank) 1.250 01/01/09 1,450,000
28
- --------------------------------------------------------------------------------
Ohio Tax-Free Money Market Fund (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FLOATING & VARIABLE RATE DEMAND NOTES -- 75.5% (CONTINUED)
$ 7,700,000 OH St Higher Edl Fac Rev (Case Western Rsrv B-2)
(LOC: Bank of America NA) 1.000 01/01/09 $ 7,700,000
5,000,000 OH St Higher Edl Fac Rev (College Mt St Joseph) (LOC: Fifth Third Bank) 2.250 01/01/09 5,000,000
2,000,000 OH St Higher Edl Fac Rev (Otterbein College)
(LOC: JPMorgan Chase Bank) 2.600 01/01/09 2,000,000
440,000 OH St Higher Edl Fac Rev (Xavier Univ) (LOC: US Bank NA) 0.950 01/01/09 440,000
3,430,000 OH St Higher Edl Fac Rev (Xavier Univ) Ser B (LOC: US Bank NA) 0.950 01/01/09 3,430,000
2,000,000 OH St PCR (Sohio Air) 1.100 01/01/09 2,000,000
700,000 OH St PCR (Sohio Wtr) 1.200 01/01/09 700,000
700,000 OH St Univ General Rcpts Rev 1.000 01/01/09 700,000
4,445,000 Parma OH Hosp Impt Rev (Parma Cmnty Gen Hosp) Ser A
(LOC: JPMorgan Chase Bank) 1.400 01/01/09 4,445,000
630,000 Port Gtr Cincinnati OH Dev Auth Rev (Cincinnati Zoo Suppl)
(LOC: US Bank NA) 2.650 01/01/09 630,000
3,210,000 Port Gtr Cincinnati OH Dev Auth Rev (Cincinnati Zoo)
(LOC: US Bank NA) 2.650 01/01/09 3,210,000
3,000,000 Port of Gtr Cincinnati OH Dev Auth OH Spl Oblig Dev Rev
(Sycamore Twp Kenwood) Ser A (LOC: LaSalle Bank NA) 1.230 01/01/09 3,000,000
4,850,000 Puerto Rico Cmnwlth UTGO A-8 (LOC: Wachovia Bank NA) 1.850 01/01/09 4,850,000
3,750,000 Puerto Rico Cmnwlth UTGO A-9 (LOC: Wachovia Bank NA) 1.850 01/01/09 3,750,000
6,410,000 Richland Co OH Hlthcare Facs Rev (Wesleyan) Ser B
(LOC: JPMorgan Chase Bank) 1.130 01/01/09 6,410,000
5,800,000 Rickenbacker OH Port Auth EDR (YMCA Central OH)
(LOC: Fifth Third Bank) 5.900 01/01/09 5,800,000
900,000 Salem OH Hosp Rev Impt (Salem Cmnty) (LOC: JPMorgan Chase Bank) 1.050 01/01/09 900,000
3,090,000 Sharonville OH IDR (Duke Rlty LP) (LOC: Fifth Third Bank) 3.770 01/01/09 3,090,000
5,595,000 Summit Co OH Civic Facs Rev (YMCA) (LOC: Key Bank NA) 1.850 01/01/09 5,595,000
4,300,000 Toledo OH Spl Assess Nts (LOC: State Street B&T Co) 1.130 01/01/09 4,300,000
6,915,000 Univ of Cincinnati OH General Rcpts Ser B
(LOC: Bayerische Landesbank) 1.300 01/01/09 6,915,000
7,450,000 Univ of Cincinnati OH General Rcpts Ser F
(LOC: Bayerische Landesbank) 1.300 01/01/09 7,450,000
1,600,000 Warren Co OH IDR (Liquid Container) (LOC: Bank of America NA) 1.280 01/01/09 1,600,000
8,000,000 Westlake OH Hlthcare Fac (Lutheran Home) (LOC: National City Bank) 1.220 01/01/09 8,000,000
5,000,000 Wood Co OH Hosp Facs (Hosp Assn) (LOC: JPMorgan Chase Bank) 1.300 01/01/09 5,000,000
4,720,000 Woodlawn OH EDR (Goodwill Inds) (LOC: US Bank NA) 1.250 01/01/09 4,720,000
655,000 Miami Co OH Hosp Facs (Upper Valley Med Ctr) (LOC: Fifth Third Bank) 3.370 01/02/09 655,000
3,000,000 Cleveland OH Arpt Sys Rev Tr Rcpts SGA 126 (SPA: Societe Generale) 1.400 01/07/09 3,000,000
1,335,000 Cuyahoga Co OH Ed Fac (Utd Cerebral Palsy Assn) (LOC: Key Bank NA) 2.000 01/07/09 1,335,000
1,720,000 Hamilton Co OH Hlthcare Facs Rev (Deaconess)
(LOC: JPMorgan Chase Bank) 0.800 01/07/09 1,720,000
2,400,000 Hamilton Co OH Hosp Facs Rev (Eliz Gamble) Ser A
(LOC: JPMorgan Chase Bank) 0.800 01/07/09 2,400,000
3,655,000 Lorain Co OH IDR (EMH Regl Med Ctr) (LOC: Key Bank NA) 1.500 01/07/09 3,655,000
3,900,000 Middletown OH Dev Rev (Bishop-Fenwick HS)
(LOC: JPMorgan Chase Bank) 0.700 01/07/09 3,900,000
6,700,000 Montgomery Co OH Rev (Catholic Hlth) Ser B
(SPA: Bayerische Landesbank) 0.750 01/07/09 6,700,000
1,500,000 OH St Air Quality Dev Auth PCR (FirstEnergy A) (LOC: Key Bank NA) 1.250 01/07/09 1,500,000
3,050,000 OH St Air Quality Dev Auth PCR (FirstEnergy B)
(LOC: Barclays Bank PLC) 0.700 01/07/09 3,050,000
11,100,000 OH St Air Quality Dev Auth PCR (FirstEnergy B) (LOC: Wachovia Bank NA) 1.380 01/07/09 11,100,000
2,360,000 OH St GO Infrastructure Impt 0.650 01/07/09 2,360,000
1,500,000 OH St Higher Ed Fac Rev (Case Western)
(SPA: Landesbank Hessen-Thuringen) 0.750 01/07/09 1,500,000
1,900,000 OH St Higher Ed Fac Rev (Univ Hosps Hlth Sys)
(LOC: Wells Fargo Bank NA) 0.650 01/07/09 1,900,000
29
- --------------------------------------------------------------------------------
Ohio Tax-Free Money Market Fund (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FLOATING & VARIABLE RATE DEMAND NOTES -- 75.5% (CONTINUED)
$ 2,000,000 OH St Higher Edl Fac Rev (Case Western Rsrv A)
(LOC: Allied Irish Bank PLC) 0.500 01/07/09 $ 2,000,000
15,100,000 OH St Infra Impt UTGO 0.350 01/07/09 15,100,000
2,100,000 OH St Univ General Rcpts 0.350 01/07/09 2,100,000
885,000 OH St Univ General Rcpts Ser B 0.350 01/07/09 885,000
7,450,000 OH St Wtr Dev Auth PCR Facs Rev (FirstEnergy)
(LOC: Barclays Bank PLC) 0.750 01/07/09 7,450,000
12,245,000 OH Wtr Dev Auth Rev (PureWtr) (SPA: State Street B&T Co) 1.050 01/07/09 12,245,000
2,000,000 Port Gtr Cincinnati OH Dev Auth Rev (Natl Underground RR A)
(LOC: JPMorgan Chase Bank) 0.700 01/07/09 2,000,000
2,400,000 Wooster OH IDR (Allen Group Inc) (LOC: Wachovia Bank NA) 1.300 01/07/09 2,400,000
5,700,000 Hamilton Co OH IDR (ADP) 0.850 01/15/09 5,700,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING & VARIABLE RATE DEMAND NOTES $ 327,930,000
- ------------------------------------------------------------------------------------------------------------------------------------
ADJUSTABLE RATE PUT BONDS -- 0.4%
$ 1,200,000 Cuyahoga Co OH Rev (Cleveland Clinic) Subser B1
(SPA: JPMorgan Chase Bank) 1.050 01/01/09 $ 1,200,000
650,000 Clermont Co OH EDR (John Q Hammons/Clermont Hills)
(LOC: Fifth Third Bank) 4.000 05/01/09 650,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ADJUSTABLE RATE PUT BONDS $ 1,850,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 99.9%
(Amortized Cost $434,104,766) $ 434,104,766
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.1% 579,382
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 434,684,148
====================================================================================================================================
See accompanying notes to portfolios of investments and notes to financial
statements.
30
- --------------------------------------------------------------------------------
Portfolio of Investments
Tax-Free Money Market Fund - December 31, 2008 (Unaudited)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FIXED RATE REVENUE & GENERAL OBLIGATION BONDS -- 29.7%
$ 150,000 DE River & Bay Auth Rev 5.000 01/01/09 $ 150,000
125,000 IL Hlth Facs Auth Rev (Alexian Bros Hlth Sys) Prerefunded @ 101 5.000 01/01/09 126,250
200,000 Norfolk VA UTGO Cap Impt 5.000 01/01/09 200,000
1,000,000 OH St Univ General Rcpts Ser B 3.750 01/14/09 1,000,000
250,000 Darien CT UTGO 3.000 01/15/09 250,000
690,000 Columbiana OH UTGO BANS (Wtr Treatment Sys) 3.450 01/22/09 690,097
750,000 Highland OH LSD UTGO BANS (Constr & Impt) 2.850 01/22/09 750,364
125,000 Douglas Co KS UTGO (Sales Tax) Ser A Prerefunded @ 100 5.500 02/01/09 125,365
100,000 IL St First Ser UTGO 5.250 02/01/09 100,268
275,000 Lake Co IL Fst Presv Dist UTGO 5.500 02/01/09 275,713
475,000 McAlester OK Pub Wrks Auth Util Sys Rev Ser A Prerefunded @ 101 5.750 02/01/09 480,948
100,000 OH St Higher Ed Cap Facs UTGO Ser A 5.125 02/01/09 100,191
105,000 Addison TX LTGO 3.500 02/15/09 105,139
200,000 Ft Worth TX Wtr & Swr Rev Impt 5.000 02/15/09 200,820
415,000 Louisville & Jefferson Co KY Impt (Univ Louisville A) 3.250 03/01/09 415,738
1,200,000 Monroe LA Sales Tax Increment EDR (Garret Rd) 4.000 03/01/09 1,202,883
445,000 De Forest WI Area SD UTGO Prerefunded @ 100 5.450 04/01/09 448,880
235,000 Hallsdale-Powell Util Dist Knox Co TN Wtr & Swr Rev 3.000 04/01/09 235,363
100,000 OH St Bldg Auth (Workers Comp Facs) Ser A 5.000 04/01/09 100,611
140,000 Broussard LA Sales & Use Tax Pub Impt Rev 3.750 05/01/09 140,613
100,000 Charlotte MI Pub SD UTGO Prerefunded @ 100 5.250 05/01/09 100,905
600,000 Cook Co IL Cmnty Cons SD No 065 Evanston UTGO Ser A
Prerefunded @ 100 6.000 05/01/09 607,981
105,000 OH St Higher Ed Cap Facs UTGO Ser B 5.250 05/01/09 106,262
200,000 Univ of KY Revs (Cons Edl Bldgs) ETM 5.000 05/01/09 201,984
295,000 Des Moines IA Area Cmnty College UTGO 3.750 06/01/09 296,201
210,000 Haverhill MA St Qualified Mun Purp Ln LTGO 4.000 06/01/09 211,939
100,000 MA St Spl Oblig Rev Ser A 4.000 06/01/09 100,530
250,000 OH St Higher Cap Facs Ser II-A 5.000 06/01/09 252,244
125,000 OH St Wtr Dev Auth PCR (Wtr Quality Ln Fd) 3.000 06/01/09 125,729
115,000 Topeka KS Pub Bldg Commn Rev (10th & Jackson) Prerefunded @ 100 5.000 06/01/09 116,180
100,000 Univ of Toledo OH General Rcpts Ser A 3.000 06/01/09 100,512
200,000 North Syracuse NY Cent SD UTGO 2.750 06/15/09 200,760
700,000 Lebanon OH Rd Impt UTGO BANS 3.000 06/23/09 701,955
335,000 IN St Office Bldg Commn Facs Rev (Southeast Regl Treatment Ctr E) 4.000 07/01/09 338,817
100,000 Indianapolis IN Loc Pub Impt Bd Bk (Wtr Wrks) 5.000 07/01/09 101,432
315,000 KY Hsg Corp Rev Ser C 3.850 07/01/09 315,000
100,000 NM St Severance Tax Ser A 5.000 07/01/09 101,381
800,000 Columbiana OH Elec Sys Impt BANS 2.650 07/09/09 801,017
250,000 AK St UTGO Ser A 5.250 08/01/09 255,278
200,000 IL St First Ser UTGO 5.500 08/01/09 203,955
110,000 IN Univ Revs Student Fee Ser O 5.000 08/01/09 112,167
310,000 New York NY UTGO Ser G 2.875 08/01/09 310,574
100,000 South Cent CT Regl Wtr Auth Wtr Sys Rev Fifteenth Ser A
Prerefunded @ 101 5.125 08/01/09 103,080
200,000 Univ of TX Univ Revs Fing Sys Ser B Prerefunded @ 100 5.700 08/15/09 205,060
560,000 Bratenahl OH UTGO BANS (Greenspace Acquisition) 2.750 08/27/09 561,789
100,000 OH St Bldg Auth St Facs (Trans Bldg A) 3.250 09/01/09 101,097
590,000 Columbiana OH Var Purp UTGO BANS 2.850 09/15/09 591,218
500,000 Union Twp OH TIF Rev BANS 3.000 09/15/09 503,460
100,000 New Castle Co DE UTGO 5.000 10/01/09 102,363
100,000 OH St Higher Edl Fac Commn Rev (Oberlin College) 4.000 10/01/09 101,744
663,000 Ashland OH Var Purp Impt B LTGO BANS 3.500 10/15/09 665,538
400,000 Springboro OH BANS (Real Estate Acq) 4.500 10/29/09 402,389
270,000 ME Mun Bd Bk Ser E Prerefunded @ 101 5.875 11/01/09 281,823
31
- --------------------------------------------------------------------------------
Tax-Free Money Market Fund (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FIXED RATE REVENUE & GENERAL OBLIGATION BONDS -- 29.7% (CONTINUED)
$ 400,000 Cincinnati OH EDR BANS (Columbia Sq) Ser D 3.000 11/06/09 $ 400,823
300,000 AMP OH Elec Rev BANS (Hubbard) 3.750 11/11/09 300,379
300,000 Trotwood OH UTGO BANS (Cap Facs Impt A) 3.625 11/12/09 300,942
150,000 MI St Hosp Fin Auth Rev (Ascension Hlth Credit) Ser A
Prerefunded @ 101 5.750 11/15/09 156,296
600,000 Niles OH UTGO BANS 3.500 11/19/09 603,091
565,000 AMP OH Elect Rev BANS (Amherst) 3.000 11/24/09 566,499
155,000 Olentangy LSD OH UTGO Prerefunded @ 101 5.250 12/01/09 161,687
200,000 Pepper Pike OH LTGO 3.800 12/01/09 203,517
250,000 Springfield OH CSD Sch Energy Consv Impt LTGO 3.500 12/01/09 251,680
450,000 Harrison OH TANS 3.250 12/10/09 453,093
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FIXED RATE REVENUE & GENERAL OBLIGATION BONDS $ 19,779,614
- ------------------------------------------------------------------------------------------------------------------------------------
FLOATING & VARIABLE RATE DEMAND NOTES -- 69.4%
$ 500,000 Alachua Co FL Hlth Facs Auth Rev Installment
(Shands Teach A) (LOC: Suntrust Bank) 1.100 01/01/09 $ 500,000
1,200,000 Allen Co OH Hosp Facs Rev (Catholic Hlthcare) Ser A
(LOC: Bank of America NA) 1.000 01/01/09 1,200,000
700,000 Ames TX Higher Ed Facs Corp Rev (St Gabriels)
(LOC: Allied Irish Bank PLC) 1.330 01/01/09 700,000
930,000 Arvada CO Wtr Sys Rev (SPA: Dexia Credit Local) 8.500 01/01/09 930,000
500,000 CA Fing Auth Res Recovery PCR (Burney Forest Prods A)
(LOC: Union Bank of California) 1.410 01/01/09 500,000
240,000 CA Infra EDB IDR (Metrotile Mfg) Ser A (LOC: Comerica Bank) 1.850 01/01/09 240,000
100,000 CA Statewide Cmntys IDR (American Modular Sys)
(LOC: Bank of the West) 1.450 01/01/09 100,000
1,000,000 Cincinnati & Hamilton Co OH Port Auth EDR
(Kenwood Office Assoc) (LOC: Fifth Third Bank) 3.950 01/01/09 1,000,000
2,100,000 CO Edl & Cultural Facs Auth Rev (Parker & Denver HS)
(LOC: Bank of America NA) 1.430 01/01/09 2,100,000
1,000,000 CO Edl & Cultural Facs Auth Rev (Clyford Still Museum)
(LOC: Wells Fargo Bank) 1.130 01/01/09 1,000,000
1,150,000 Collier Co FL Hlth Fac Auth (Cleveland Clinic)
(LOC: JPMorgan Chase Bank) 1.100 01/01/09 1,150,000
200,000 Cuyahoga Co OH Hosp Rev Impt (Univ Hosp)
(LOC: JPMorgan Chase Bank) 0.950 01/01/09 200,000
830,000 Dade Co FL IDR (Spectrum Programs Inc) (LOC: Bank of America NA) 1.250 01/01/09 830,000
1,150,000 Dayton KY TIF & Spl Assess (Belmont Lake) (LOC: LaSalle Bank NA) 1.250 01/01/09 1,150,000
300,000 Duval Co FL HFA MFH Rev (Sunbeam Rd Apts) (LOC: US Bank NA) 1.150 01/01/09 300,000
415,000 Eden Prairie MN MFH Rev (Lake Place Apts) (LOC: Wells Fargo Bank) 1.230 01/01/09 415,000
500,000 Franklin Co OH Hlthcare Facs Rev (Friendship Village Dublin B)
(LOC: LaSalle Bank) 1.100 01/01/09 500,000
175,000 Franklin Co VA IDA IDR (Mod-U-Kraf) (LOC: Lasalle Bank NA) 1.550 01/01/09 175,000
500,000 Hailey ID IDC Rev (Rocky Mountain Hardware) (LOC: Wells Fargo Bank) 1.380 01/01/09 500,000
245,000 Hillsborough Co FL IDR (Mosi-Charter Sch A) (LOC: Bank of America NA) 1.250 01/01/09 245,000
1,000,000 IL Dev Fin Auth Rev (Christian Heritage Academy)
(LOC: Glenview State Bank) 2.950 01/01/09 1,000,000
1,000,000 IN Hlth Fac Fing Auth Rev (Clark Mem Hosp)
(LOC: JPMorgan Chase Bank) 1.150 01/01/09 1,000,000
1,500,000 IN St Fin Auth Rev (LOC: Allied Irish Bank PLC) 1.330 01/01/09 1,500,000
859,000 Indianapolis IN EDR (Pedcor Invts Wtrfront B) (LOC: FHLB) 1.620 01/01/09 859,000
730,000 Indianapolis IN MFH Rev (Nora Commons) (LOC: FHLB) 1.450 01/01/09 730,000
500,000 Jacksonville FL Elect Auth Rev (Sub Elec Sys) Ser B
(SPA: Bank of America NA) 1.150 01/01/09 500,000
1,000,000 Kalamazoo Co MI EDR (WBC Properties) (LOC: Fifth Third Bank) 3.330 01/01/09 1,000,000
32
- --------------------------------------------------------------------------------
Tax-Free Money Market Fund (Continued)
- --------------------------------------------------------------------------------
PRINCIPAL COUPON MATURITY MARKET
AMOUNT RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
FLOATING & VARIABLE RATE DEMAND NOTES -- 69.4% (CONTINUED)
$ 345,000 Lancaster NE IDR (Garner Inds) Ser B (LOC: Wells Fargo Bank) 1.350 01/01/09 $ 345,000
100,000 Lemoore CA COP (Muni Golf Course) (LOC: Union Bank of California) 1.150 01/01/09 100,000
2,000,000 Lexington VA IDR Edl Facs (VMI Dev Brd Inc) (LOC: Wachovia Bank NA) 0.900 01/01/09 2,000,000
800,000 Lexington-Fayette Co KY Govt IBR (Liberty Ridge) (LOC: US Bank NA) 1.500 01/01/09 800,000
1,985,000 Lexington-Fayette Co KY Govt IBR (Eastland Pkwy) (LOC: US Bank NA) 1.400 01/01/09 1,985,000
1,000,000 MA St Dev Fin Agy Rev (Seven Hills Fndtn) (LOC: TD Banknorth NA) 1.250 01/01/09 1,000,000
245,000 MA St Ind Fin Agy Rev (Lower Mills Assoc LP) (LOC: Fleet Bank NA) 1.470 01/01/09 245,000
240,000 Maricopa Co AZ IDA Hsg Rev (San Angelin Apts) (LOC: FNMA) 1.450 01/01/09 240,000
1,000,000 Marion Co FL IDA Rev MFH (Chambrel) (LOC: FNMA) 1.150 01/01/09 1,000,000
245,000 Oakland CA Liq Fac Rev (Assoc Bay Area Govt) (LOC: Bank of the West) 1.350 01/01/09 245,000
1,000,000 OH St Higher Edl Fac Rev (Otterbein College)
(LOC: JPMorgan Chase Bank) 2.600 01/01/09 1,000,000
900,000 OH St PCR (Sohio Air) 1.100 01/01/09 900,000
2,000,000 Orange Co FL Sch Brd COP Ser E (LOC: Wachovia Bank NA) 0.900 01/01/09 2,000,000
350,000 Palm Beach Co FL Rev (Henry Morrison Flagler)
(LOC: Northern Trust Bank) 1.300 01/01/09 350,000
1,400,000 Putnam Co FL PCR Dev Auth (FL Pwr & Light Co) 1.200 01/01/09 1,400,000
1,000,000 Sarasota Co FL Pub Hosp Dist Rev (Sarasota Mem Hosp A)
(LOC: Northern Trust Co) 0.850 01/01/09 1,000,000
1,000,000 Southglenn Met Dist CO Rev (LOC: BNP Paribas) 1.250 01/01/09 1,000,000
540,000 St Charles Co MO IDA Rev (National Cart) Ser A (LOC: US Bank NA) 1.650 01/01/09 540,000
2,000,000 St Paul MN Hsg & Redev Auth Rev (Pur-Cretin-Derham Hall)
(LOC: Allied Irish Bank PLC) 1.280 01/01/09 2,000,000
400,000 Tampa FL Rev (Univ Tampa) (LOC: Royal Bank of Canada) 1.150 01/01/09 400,000
1,700,000 Volusia Co FL IDA Rev (Retirement Hsg Fndtn) (LOC: KBC Bank NV) 1.100 01/01/09 1,700,000
1,600,000 VT Edl & Hlth Bldgs (Brattleboro Mem Hosp) (LOC: TD Banknorth NA) 0.950 01/01/09 1,600,000
500,000 West Valley UT IDR (Johnson Matthey Inc) (LOC: HSBC Bank USA NA) 1.200 01/01/09 500,000
100,000 Broward Co FL HFA MFH Rev (Reflections Apts) (LOC: FHLMC) 0.850 01/07/09 100,000
605,000 Hillsborough Co FL IDR (Vigo Importing Co) (LOC: Bank of America NA) 1.250 01/07/09 605,000
1,000,000 IL Fin Auth Rev (Lake Forest College) (LOC: Northern Trust Co) 0.900 01/07/09 1,000,000
1,100,000 Scio Twp MI EDR (ADP) 1.800 01/07/09 1,100,000
525,000 Ulster Co NY IDA IDR (Viking Industries Inc) (LOC: Key Bank NA) 2.000 01/07/09 525,000
300,000 Volusia Co FL HFA MFH Rev (Fisherman's Landing Apt) (LOC: FNMA) 0.850 01/07/09 300,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FLOATING & VARIABLE RATE DEMAND NOTES $ 46,304,000
- ------------------------------------------------------------------------------------------------------------------------------------
ADJUSTABLE RATE PUT BONDS -- 0.5%
$ 310,000 Dayton KY IBR (Patriot Signage Inc) (LOC: Fifth Third Bank) 3.250 03/01/09 $ 310,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 99.6%
(Amortized Cost $66,393,614) $ 66,393,614
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.4% 255,226
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 66,648,840
====================================================================================================================================
See accompanying notes to portfolios of investments and notes to financial
statements.
33
- --------------------------------------------------------------------------------
Notes to Portfolios of Investments
December 31, 2008 (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, 2008.
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
COP - Certificates of Participation
CSD - City School District
EDB -Economic Development Bank
EDR - Economic Development Revenue
ETM - Escrowed to Maturity
FHLB - Federal Home Loan Bank
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
GO - General Obligation
HFA - Housing Finance Authority/Agency
IBR - Industrial Building Revenue
IDA - Industrial Development Authority/Agency
IDC - Industrial Development Corporation
IDR - Industrial Development Revenue
LOC - Letter of Credit
LSD - Local School District
LTGO - Limited Tax General Obligation
MFH - Multi-Family Housing
PCR - Pollution Control Revenue
SD - School District
SPA - Stand-by Purchase Agreement
TANS - Tax Anticipation Notes
TIF - Tax Increment Financing
UTGO - Unlimited Tax General Obligation
34
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Portfolio Composition (Unaudited)
December 31, 2008
- --------------------------------------------------------------------------------
As of December 31, 2008, the Ohio Tax-Free Bond 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 88.5% 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, 2008, 23.6% of the
portfolio securities of the Tax-Free Money Market Fund were concentrated in the
State of Ohio, 7.8% in the State of Kentucky and 7.0% in the State of Indiana.
The Florida Tax-Free Money Market Fund, the Ohio Tax-Free Bond 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, 2008, 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.
The concentration of investments for each Fund as of December 31, 2008,
classified by revenue source, was as follows:
FLORIDA TAX-FREE OHIO TAX-FREE OHIO TAX-FREE TAX-FREE
MONEY MARKET BOND MONEY MARKET MONEY MARKET
FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------
General Obligations 6.6% 42.3% 3.3% 8.9%
- -------------------------------------------------------------------------------------------
Revenue Bonds:
Industrial Development/
Pollution Control 9.0% -- 6.1% 13.4%
Hospital/Health Care 21.6% 13.2% 30.5% 19.4%
Utilities/Water & Sewer 6.3% 7.2% 6.3% 3.4%
Education 7.7% 10.0% 20.8% 15.4%
Housing/Mortgage 32.9% -- 2.7% 11.0%
Economic Development 1.5% -- 11.1% 9.9%
Public Facilities 3.6% -- 2.2% --
Transportation -- 3.5% 2.9% --
Special Tax -- -- 5.1% 7.5%
Miscellaneous 10.8% 23.8% 9.0% 11.1%
- -------------------------------------------------------------------------------------------
Total Investments 100.0% 100.0% 100.0% 100.0%
===========================================================================================
35
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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, 2008 through December 31, 2008).
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, 2008" 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.
36
- --------------------------------------------------------------------------------
Other Items (Continued)
- --------------------------------------------------------------------------------
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,
2008 2008 2008 2008*
- ----------------------------------------------------------------------------------------------------
FLORIDA TAX-FREE MONEY MARKET FUND
Actual 0.78% $ 1,000.00 $ 1,007.60 $ 3.92
Hypothetical 0.78% $ 1,000.00 $ 1,021.30 $ 3.95
OHIO TAX-FREE BOND FUND
Class A Actual 0.78% $ 1,000.00 $ 991.40 $ 3.92
Class A Hypothetical 0.78% $ 1,000.00 $ 1,021.27 $ 3.98
Class C Actual 1.52% $ 1,000.00 $ 987.80 $ 7.59
Class C Hypothetical 1.52% $ 1,000.00 $ 1,017.57 $ 7.71
OHIO TAX-FREE MONEY MARKET FUND
Retail Class Actual 0.77% $ 1,000.00 $ 1,008.80 $ 3.90
Retail Class Hypothetical 0.77% $ 1,000.00 $ 1,021.32 $ 3.92
Institutional Class Actual 0.52% $ 1,000.00 $ 1,010.10 $ 2.64
Institutional Class Hypothetical 0.52% $ 1,000.00 $ 1,022.57 $ 2.66
TAX-FREE MONEY MARKET FUND
Class A Actual 0.91% $ 1,000.00 $ 1,008.10 $ 4.60
Class A Hypothetical 0.91% $ 1,000.00 $ 1,020.62 $ 4.63
Class S Actual 1.17% $ 1,000.00 $ 1,006.70 $ 5.93
Class S Hypothetical 1.17% $ 1,000.00 $ 1,019.29 $ 5.97
* 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 [or 366]] (to reflect the one-half
year period).
ADVISORY AGREEMENT APPROVAL DISCLOSURE
At a meeting held on November 13, 2008, 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.
37
- --------------------------------------------------------------------------------
Other Items (Continued)
- --------------------------------------------------------------------------------
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 affiliate 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 affiliates' level of
profitability, if any, from their 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, among other data, the
Funds' respective performance results during the six-month period, twelve-month
period, and thirty-six month period ended September 30, 2008 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 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.
38
- --------------------------------------------------------------------------------
Other Items (Continued)
- --------------------------------------------------------------------------------
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 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 took into account the
impact that the relatively small size of the Fund has upon expenses. The Fund's
performance for the six-month period, twelve-month period, and thirty-six month
period ended September 30, 2008 was in the 3rd quartile of its peer group. The
Board took into account management's discussion of the Fund's performance. The
Board also 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 Tax-Free Bond Fund (formerly Touchstone 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 and the cap on the Fund's
expenses had increased on November 1, 2008. The Board took into account the
impact that the relatively small size of the Fund has upon expenses. The Fund's
performance for the six-month period, twelve-month period and thirty-six month
period ended September 30, 2008 was in the 2nd quartile of its peer group. The
Board noted that the Fund had implemented changes to its investment strategy on
April 29, 2008. 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 at 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-month period ended September 30, 2008 was in the
2nd quartile of its peer group and in the 3rd quartile for the twelve-month
period and thirty-six month period ended September 30, 2008. The Board took into
account management's discussion of the Fund's performance. 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. 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 at 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 took into account the impact
that the relatively small size of the Fund has upon expenses. The Fund's
performance for the six-month period, twelve-month period and thirty-six month
period ended September 30, 2008 was in the 1st, 2nd and 3rd quartiles,
respectively, of its peer group. The Board took into account management's
discussion of the Fund's performance. 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
Board also noted the Fund's improved 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.
39
- --------------------------------------------------------------------------------
Other Items (Continued)
- --------------------------------------------------------------------------------
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.
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 visits to 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.
40
- --------------------------------------------------------------------------------
Other Items (Continued)
- --------------------------------------------------------------------------------
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 below 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 Bond Fund (formerly Touchstone Ohio Insured Tax-Free Fund). The
Fund's sub-advisory fee was below 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 below 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 below 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-month period, twelve-month period and thirty-six month period ended
September 30, 2008 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.
41
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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
- --------------------------------------------------------------------------------
[LOGO] TOUCHSTONE (R)
INVESTMENTS
303 Broadway, Suite 1100
Cincinnati, OH 45202-4203
TSF-58-TTFT-SAR-0812
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
-------------------------------------------------------------------
By (Signature and Title)
/s/ Jill T. McGruder
- --------------------------------------------------------------------------------
Jill T. McGruder
President
Date: March 2, 2009
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
- --------------------------------------------------------------------------------
Jill T. McGruder
President
Date: March 2, 2009
/s/ Terrie A. Wiedenheft
- --------------------------------------------------------------------------------
Terrie A. Wiedenheft
Controller & Treasurer
Date: March 2, 2009