TOUCHSTONE FAMILY OF FUNDS
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PROSPECTUS
MAY 3, 2000
(REVISED MAY 19, 2000)
o High Yield Fund
o Bond Fund
o Intermediate Term Government Income Fund
o Money Market Fund
o Short Term Government Income Fund
o Institutional Government Income Fund
[Photograph]
The Mark of Excellence
Touchstone
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Family of Funds
The Securities and Exchange Commission has not approved the Funds' shares as an
investment or determined whether this Prospectus is accurate or complete. Anyone
who tells you otherwise is committing a crime.
Multiple Classes of Shares are
Offered by this Prospectus
<PAGE>
TOUCHSTONE FAMILY OF FUNDS
Each Fund is a series of Touchstone Investment Trust (the "Trust") which is a
group of 6 taxable bond and money market funds. The Trust is part of the
Touchstone Family of Funds which also includes Touchstone Strategic Trust, a
group of 8 equity mutual funds, and Touchstone Tax-Free Trust, a group of 6
tax-free bond and money market funds. Each Fund has a different investment goal
and risk level. For further information about the Touchstone Family of Funds,
contact Touchstone at 800.543.0407.
2
<PAGE>
TABLE OF CONTENTS
Page
Touchstone High Yield Fund 4
Touchstone Bond Fund 7
Touchstone Intermediate Term Government Income Fund 11
Touchstone Money Market Fund 15
Touchstone Short Term Government Income Fund 19
Touchstone Institutional Government Income Fund 23
Investment Strategies And Risks 26
The Funds' Management 33
Investing With Touchstone 36
Distributions And Taxes 47
Financial Highlights 49
For More Information 56
3
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TOUCHSTONE HIGH YIELD FUND
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THE FUND'S INVESTMENT GOAL
The High Yield Fund seeks to achieve a high level of income as its main goal.
Capital appreciation is a secondary consideration.
ITS PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in non-investment grade debt securities (at least 65%
of total assets) of domestic corporations. Non-investment grade debt securities
are often referred to as "junk bonds" and are considered speculative. The Fund
expects to have an average maturity between 6 and 10 years, but may vary between
4 and 12 years.
THE KEY RISKS
The Fund's share price will fluctuate. You could lose money on your investment
in the Fund and the Fund could also return less than other investments:
o If the U.S. enters into an economic downturn or recession
o If interest rates go up, causing the value of any debt securities held
by the Fund to decline
o Because the issuers of non-investment grade securities held by the
Fund are more likely to be unable to make timely payments of interest
or principal
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other government entity.
As with any mutual fund, there is no guarantee that the Fund will achieve its
goal.
You can find more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading "Investment
Strategies And Risks" later in this Prospectus.
WHO MAY WANT TO INVEST
This Fund is most appropriate for you if you are an aggressive investor and are
willing to assume a relatively high amount of risk. You should be comfortable
with extreme levels of volatility, and safety of principal in the short term
should not be a high priority for you.
PERFORMANCE NOTE
The Fund's performance information is only shown when the Fund has had a full
calendar year of operations. Since the Fund started on May 3, 2000, there is no
performance information included in this Prospectus.
4
<PAGE>
THE FUND'S FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees paid
directly from your investment)
Class A Shares Class C Shares
Maximum Sales Charge (Load) 4.75% 2.25%
- --------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 4.75%1 1.25%
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price * 1.00%2
or the amount redeemed, whichever is less)
- --------------------------------------------------------------------------------
Redemption Fee ** **
- --------------------------------------------------------------------------------
Exchange Fee None None
- --------------------------------------------------------------------------------
Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 0.60% 0.60%
- --------------------------------------------------------------------------------
Distribution (12b-1) Fees 0.35% 1.00%
- --------------------------------------------------------------------------------
Other Expenses3 1.00% 1.00%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.95% 2.60%
- --------------------------------------------------------------------------------
Fee Waiver and/or Expense Reimbursement4 0.90% 0.80%
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Net Expenses 1.05% 1.80%
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* There is no sales charge at the time of purchase for purchases of $1
million or more but a sales charge of 1.00% will be assessed on shares
redeemed within one year of their purchase.
** You will be charged a fee for each wire redemption. This fee is
subject to change.
1 You may pay a reduced sales charge on very large purchases. There is
also no initial sales charge on certain purchases in a Roth IRA, a
Roth Conversion IRA or a qualified retirement plan.
2 The 1.00% is waived for benefits paid to you through a qualified
pension plan or if shares are held for one year or longer.
3 Other Expenses are based on estimated amounts for the current fiscal
year.
5
<PAGE>
4 Touchstone Advisors, Inc. has contractually agreed to waive or
reimburse certain of the Total Annual Fund Operating Expenses of each
Class of the Fund (the "Sponsor Agreement"). The Sponsor Agreement
will remain in place until at least March 31, 2001.
The following example should help you compare the cost of investing in the High
Yield Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then sell
all of your shares at the end of those periods. The example assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. The costs would be the same whether or not shares are redeemed
at the end of the time periods indicated. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
Class A Shares Class C Shares
1 Year $577 $306
----------------------------------------------------------------------
3 Years $975 $848
----------------------------------------------------------------------
The example for the 3 year period is calculated using the Total Fund
Operating Expenses before the limits agreed to under the Sponsor
Agreement for periods after year 1.
6
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TOUCHSTONE BOND FUND
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THE FUND'S INVESTMENT GOAL
The Bond Fund seeks to provide as high a level of current income as is
consistent with the preservation of capital.
ITS PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in investment grade debt securities (at least 65% of
total assets). The Fund's investment in debt securities may be determined by the
direction in which interest rates are expected to move because the value of
these securities generally moves in the opposite direction from interest rates.
The Fund expects to have an average effective maturity between 5 and 15 years.
The Fund invests in:
o Mortgage-related securities (up to 60%)
o Asset-backed securities
o Government securities
o Corporate debt securities
THE KEY RISKS
The Fund's share price will fluctuate. You could lose money on your investment
in the Fund and the Fund could also return less than other investments:
o If interest rates go up, causing the value of any debt securities held
by the Fund to decline
o Because mortgage-related securities and asset-backed securities may
lose more value due to changes in interest rates than other debt
securities and are subject to prepayment
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other government entity.
As with any mutual fund, there is no guarantee that the Fund will achieve its
goal.
You can find more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading "Investment
Strategies And Risks" later in this Prospectus.
7
<PAGE>
WHO MAY WANT TO INVEST
This Fund is most appropriate for you if you prefer to take a relatively low
risk approach to investing. Safety of your investment may the most important
factor to you. You may be willing to accept potentially lower returns in order
to maintain a lower, more tolerable level of risk.
THE FUND'S PERFORMANCE
The bar chart shown below indicates the risks of investing in the Bond Fund. It
shows changes in the performance of the Fund's Class A shares from year to year
since the Fund's inception. The chart does not reflect any sales charges. Sales
charges will reduce return.
The Fund's past performance does not necessarily indicate how it will perform in
the future.
The return for Class C shares offered by the Fund will differ from the Class A
returns shown in the bar chart, depending on the expenses of that class.
BOND FUND - CLASS A
YEARS TOTAL RETURN
1995 16.95%
1996 2.85%
1997 7.30%
1998 8.56%
1999 -1.68%
During the period shown in the bar chart, the highest quarterly return was
5.21% (for the quarter ended June 30, 1995) and the lowest quarterly return
was -2.10% (for the quarter ended March 31, 1998).
The table below indicates the risks of investing in the Bond Fund. It shows how
the Fund's average annual returns for the periods shown compare to those of the
Lehman Brothers Aggregate Index. The Lehman Brothers Aggregate Index is
comprised of approximately 6,000 publicly traded bonds with an average maturity
of about 10 years. The table shows the effect of the applicable sales charge.
8
<PAGE>
FOR THE PERIODS ENDED DECEMBER 31, 1999
Since Fund
1 Year 5 Years Started*
------ ------- -------
Bond Fund - Class A -6.37% 5.59% 5.37%
---------------------------------
Bond Fund - Class C -3.65% 5.37% 5.15%
---------------------------------
Lehman Brothers Aggregate Index -0.83% 7.72% 7.43%
---------------------------------
* Inception date for the Bond Fund Class A was October 3, 1994, and
Class C was January 1, 1999. We calculated the Class C performance
information in the table using the historical performance information
of the Fund's predecessor, restated to reflect the current sales load
applicable to Class C shares.
THE FUND'S FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees paid
directly from your investment)
Class A Shares Class C Shares
Maximum Sales Charge (Load) 4.75% 2.25%
- --------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 4.75%1 1.25%
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price * 1.00%2
or the amount redeemed, whichever is less)
- --------------------------------------------------------------------------------
Redemption Fee ** **
- --------------------------------------------------------------------------------
Exchange Fee None None
- --------------------------------------------------------------------------------
Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 0.50% 0.50%
- --------------------------------------------------------------------------------
Distribution (12b-1) Fees 0.25% 1.00%
- --------------------------------------------------------------------------------
Other Expenses 1.51% 1.51%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses3 2.26% 3.01%
- --------------------------------------------------------------------------------
Fee Waiver and/or Expense Reimbursement4 1.36% 1.36%
- --------------------------------------------------------------------------------
Net Expenses 0.90% 1.65%
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9
<PAGE>
* There is no sales charge at the time of purchase for purchases of $1
million or more but a sales charge of 1.00% will be assessed on shares
redeemed within one year of their purchase.
** You will be charged a fee for each wire redemption. This fee is
subject to change.
1 You may pay a reduced sales charge on very large purchases. There is
also no initial sales charge on certain purchases in a Roth IRA, a
Roth Conversion IRA or a qualified retirement plan.
2 The 1.00% is waived for benefits paid to you through a qualified
pension plan or if shares are held for one year or longer.
3 The expense information in the table has been restated to reflect
current fees.
4 Touchstone Advisors, Inc. has contractually agreed to waive or
reimburse certain of the Total Annual Fund Operating Expenses of each
Class of the Fund. The contractual waiver will remain in place until
at least December 31, 2000.
The following example should help you compare the cost of investing in the Bond
Fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the Fund for the time periods indicated and then sell all
of your shares at the end of those periods. The example assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. The costs would be the same whether or not shares are redeemed
at the end of the time periods indicated. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
Class A Shares Class C Shares
1 Year $562 $291
-------------------------------------------------------------------
3 Years $1,023 $917
-------------------------------------------------------------------
5 Years $1,509 $1,569
-------------------------------------------------------------------
10 Years $2,846 $3,316
-------------------------------------------------------------------
The examples for the 3, 5 and 10 year periods are calculated using the
Total Fund Operating Expenses before the limits agreed to under the
written contract between Touchstone Advisors and the Trust for the
periods after year 1.
10
<PAGE>
TOUCHSTONE INTERMEDIATE TERM GOVERNMENT INCOME FUND
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THE FUND'S INVESTMENT GOAL
The Intermediate Term Government Income Fund seeks high current income,
consistent with the protection of capital. To the extent consistent with the
Fund's primary goal, capital appreciation is a secondary goal.
ITS PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in intermediate-term U.S. Government securities (at
least 65% of total assets) including mortgage-related securities, having an
effective maturity of 20 years or less. The dollar-weighted average maturity of
the Fund's portfolio normally will be between 3 and 10 years.
The Fund invests in:
o U.S. Government securities
o Mortgage-related securities
o Securities issued on a to-be-announced basis
THE KEY RISKS
The Fund's share price will fluctuate. You could lose money on your investment
in the Fund and the Fund could also return less than other investments:
o If interest rates go up, causing the value of any debt securities held
by the Fund to decline
o Because fluctuations in interest rates generally have a more
pronounced effect on longer-term debt securities
o Because mortgage-related securities may lose more value due to changes
in interest rates than other debt securities and are subject to
prepayment
o Because to-be-announced securities involve additional risks, such as
committing to purchase securities before all the specific information
about the securities is known
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC, the U.S. Treasury or any other government entity.
As with any mutual fund, there is no guarantee that the Fund will achieve its
goal.
You can find more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading "Investment
Strategies And Risks" later in this Prospectus.
11
<PAGE>
WHO MAY WANT TO INVEST
This Fund is most appropriate for you if you prefer to take a relatively low
risk approach to investing. Safety of your investment may be the most important
factor to you. You may be willing to accept potentially lower returns in order
to maintain a lower, more tolerable level of risk. This Fund is appropriate for
you if you want the added convenience of writing checks directly from your
account.
THE FUND'S PERFORMANCE
The bar chart shown below indicates the risks of investing in the Intermediate
Term Government Income Fund. It shows changes in the performance of the Fund's
Class A shares from year to year during the past 10 years. The chart does not
reflect any sales charges. Sales charges will reduce return.
The Fund's past performance does not necessarily indicate how it will perform in
the future.
The return for Class C shares offered by the Fund will differ from the Class A
returns shown in the bar chart, depending on the expenses of that class.
INTERMEDIATE TERM GOVERNMENT INCOME FUND - CLASS A
YEARS TOTAL RETURN
1990 6.98%
1991 15.09%
1992 6.60%
1993 10.33%
1994 -6.30%
1995 16.86%
1996 2.53%
1997 7.22%
1998 7.97%
1999 -1.96%
During the period shown in the bar chart, the highest quarterly return was
5.95% (for the quarter ended June 30, 1995) and the lowest quarterly return
was -4.07% (for the quarter ended March 31, 1994).
The year-to-date return for the Fund's Class A shares as of March 31, 2000 is
1.67%.
12
<PAGE>
The table below indicates the risks of investing in Class A shares of the
Intermediate Term Government Income Fund. The table shows how the Fund's average
annual returns for the periods shown compare to those of the Lehman Brothers
Intermediate Government Bond Index. The Lehman Brothers Intermediate Government
Bond Index is an unmanaged index generally representative of intermediate term
U.S. Government securities. The table shows the effect of the sales charge.
FOR THE PERIODS ENDED DECEMBER 31, 1999
1 Year 5 Years 10 Years
------ ------- --------
Intermediate Term
Government Income Fund - Class A -6.61% 5.31% 5.80%
----------------------------------------
Lehman Brothers Intermediate Government 0.49% 6.93% 7.10%
Bond Index
----------------------------------------
THE FUND'S FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees paid
directly from your investment)
Class A Shares Class C Shares
Maximum Sales Charge (Load) 4.75% 2.25%
- --------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 4.75%1 1.25%
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) * 1.00%2
(as a percentage of original purchase price or
the amount redeemed, whichever is less)
- --------------------------------------------------------------------------------
Redemption Fee ** **
- --------------------------------------------------------------------------------
Exchange Fee None None
- --------------------------------------------------------------------------------
Check Redemption Processing Fee
- --------------------------------------------------------------------------------
First 6 checks per month None None
- --------------------------------------------------------------------------------
Additional checks per month $0.25 $0.25
- --------------------------------------------------------------------------------
Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 0.50% 0.50%
- --------------------------------------------------------------------------------
Distribution (12b-1) Fees 0.13% 1.00%
- --------------------------------------------------------------------------------
Other Expenses 0.36% 0.36%3
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 0.99% 1.86%
- --------------------------------------------------------------------------------
13
<PAGE>
* There is no sales charge at the time of purchase for purchases of $1
million or more but a sales charge of 1.00% will be assessed on shares
redeemed within one year of their purchase.
** You will be charged a fee for each wire redemption. This fee is
subject to change.
1 You may pay a reduced sales charge on very large purchases. There is
also no initial sales charge on certain purchases in a Roth IRA, a
Roth Conversion IRA or a qualified retirement plan.
2 The 1.00% is waived for benefits paid to you through a qualified
pension plan or if shares are held for one year or longer.
3 Other Expenses are based on estimated amounts for the current fiscal
year.
The following example should help you compare the cost of investing in the
Intermediate Term Government Income Fund with the cost of investing in other
mutual funds. The example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. The costs would be the
same whether or not shares are redeemed at the end of the time periods
indicated. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
Class A Class C
1 Year $571 $312
------------------------------------------------------------
3 Years $775 $702
------------------------------------------------------------
5 Years $996 $1,118
------------------------------------------------------------
10 Years $1,630 $2,278
------------------------------------------------------------
14
<PAGE>
TOUCHSTONE MONEY MARKET FUND
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THE FUND'S INVESTMENT GOAL
The Money Market Fund seeks high current income, consistent with liquidity and
stability of principal. The Fund is a money market fund and tries to maintain a
constant share price of $1.00 per share.
ITS PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily (at least 65% of total assets) in high-quality money
market instruments.
The Fund's investments may include:
o Domestic bank obligations including certificates of deposit, bankers'
acceptances and time deposits
o U.S. Government obligations issued directly by the U.S. Treasury or by
agencies of the U.S. Government
o Short-term corporate debt securities
o Taxable and tax-exempt municipal securities
o Variable and floating rate securities
o Repurchase agreements
To comply with SEC rules pertaining to money market funds, the Fund will limit
its investments as follows:
o The Fund will not invest more than 5% of its assets in the securities
of one issuer and will not invest more than 25% of its assets in any
particular industry.
o The Fund will invest in securities rated in one of the two highest
rating categories by a rating agency.
o The Fund may purchase unrated securities only if the Sub-Advisor
determines the securities meet the Fund's quality standards.
o The Fund will only invest in securities that mature in 13 months or
less.
o The dollar-weighted average maturity of its portfolio will be 90 days
or less.
THE KEY RISKS
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC, the U.S. Treasury or any other government entity. Although the Fund
seeks to preserve the value of your investment, it is possible to lose money by
investing in the Fund. The Fund's yield:
o Varies from day to day due to changes in interest rates and will
generally increase when interest rates increase and decrease when
interest rates decrease.
o Decreases if issuers are unable to make timely payments of interest or
principal
15
<PAGE>
As with any money market fund, there is no guarantee that the Fund will achieve
its goal or will maintain a constant share price of $1.00 per share.
You can find more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading "Investment
Strategies And Risks" later in this Prospectus.
WHO MAY WANT TO INVEST
This Fund is most appropriate for you if you seek a relatively low risk
short-term investment. Safety of your investment is of key importance to you.
Additionally, you are willing to accept potentially lower returns in order to
maintain a lower, more tolerable level of risk. This Fund is appropriate for you
if you want the added convenience of writing checks directly from your account.
THE FUND'S PERFORMANCE
The bar chart shown below indicates the risks of investing in the Money Market
Fund. It shows changes in the performance of the Fund's shares from year to year
since the Fund's inception.
The Fund's past performance does not necessarily indicate how it will perform in
the future.
MONEY MARKET FUND
YEARS TOTAL RETURN
1996 5.06%
1997 5.13%
1998 5.01%
1999 4.84%
During the period shown in the bar chart, the highest quarterly return was
1.30% (for the quarter ended December 31, 1999) and the lowest quarterly
return was 1.12% (for the quarter ended June 30, 1999).
For information on the Fund's current and effective 7-day yield, call
800.543.0407.
16
<PAGE>
The table below indicates the risks of investing in the Money Market Fund. It
shows the Fund's average annual returns for the periods indicated.
FOR THE PERIODS ENDED DECEMBER 31, 1999
Since Fund
1 Year Started*
------ --------
Money Market Fund 4.84% 5.02%
* Inception date for the Money Market Fund was September 29, 1995.
THE FUND'S FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees
paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases None
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) None
- --------------------------------------------------------------------------------
Redemption Fee *
- --------------------------------------------------------------------------------
Exchange Fee None
- --------------------------------------------------------------------------------
Check Redemption Processing Fee
- --------------------------------------------------------------------------------
First 6 checks per month None
- --------------------------------------------------------------------------------
Additional checks per month $0.25
- --------------------------------------------------------------------------------
Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 0.50%
- --------------------------------------------------------------------------------
Distribution (12b-1) Fees 0.02%
- --------------------------------------------------------------------------------
Other Expenses 0.59%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.11%
- --------------------------------------------------------------------------------
Fee Waiver and/or Expense Reimbursement 0.46%
- --------------------------------------------------------------------------------
Net Expenses1 0.65%
- --------------------------------------------------------------------------------
* You will be charged a fee for each wire redemption. This fee is
subject to change.
1 Pursuant to a written contract between Touchstone Advisors, Inc. and
the Trust, Touchstone Advisors has agreed to waive a portion of its
advisory fee and/or reimburse certain Fund expenses in order to limit
Total Annual Fund Operating Expenses to 0.65%. Touchstone Advisors has
agreed to maintain these expense limitations through at least
September 30, 2001.
17
<PAGE>
The following example should help you compare the cost of investing in the Money
Market Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated and
then sell all of your shares at the end of those periods. The example also
assumes that your investment has a 5% return each year and that the Fund's
operating expenses remain the same. The costs would be the same whether or not
shares are redeemed at the end of the periods indicated. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
1 Year $113
-----------------------------------------------
3 Years $353
-----------------------------------------------
5 Years $612
-----------------------------------------------
10 Years $1,352
-----------------------------------------------
* The examples for the 3, 5 and 10 year periods are calculated using the
Total Fund Operating Expenses before the limits agreed to under the
written contract between Touchstone Advisors and the Trust for the
periods after year 1.
18
<PAGE>
TOUCHSTONE SHORT TERM GOVERNMENT INCOME FUND
- --------------------------------------------
THE FUND'S INVESTMENT GOAL
The Short Term Government Income Fund seeks high current income, consistent with
the protection of capital. The Fund is a money market fund and tries to maintain
a constant share price of $1.00 per share.
ITS PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily (at least 65% of total assets) in short-term
government securities issued by the U.S. Government or its agencies, including
mortgage-related securities. The Fund invests only in U.S. Government securities
whose payment of principal and interest is guaranteed by the U.S. Treasury.
The Fund also invests in repurchase agreements collateralized by government
securities whose payment of principal and interest is guaranteed by the U.S.
Treasury.
The Fund will comply with SEC rules pertaining to money market funds and will
limit its investments as follows:
o The Fund will only invest in securities that mature in 13 months or
less.
o The dollar-weighted average maturity of its portfolio will be 90 days
or less.
THE KEY RISKS
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC, the U.S. Treasury or any other government entity. Although the Fund
seeks to preserve the value of your investment, it is possible to lose money by
investing in the Fund. The Fund's yield:
o Varies from day to day due to changes in interest rates and will
generally increase when interest rates increase and decrease when
interest rates decrease
o Decreases if mortgage-related securities are prepaid and the Fund must
reinvest the prepayment during a time of declining interest rates
As with any money market fund, there is no guarantee that the Fund will achieve
its goal or will maintain a constant share price of $1.00 per share.
You can find more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading "Investment
Strategies And Risks" later in this Prospectus.
19
<PAGE>
WHO MAY WANT TO INVEST
This Fund is most appropriate for you if you seek a relatively low risk
investment. Safety of your investment is of key importance to you. Additionally,
you are willing to accept potentially lower returns in order to maintain a
lower, more tolerable level of risk. This Fund is appropriate for you if you
want the added convenience of writing checks directly from your account.
THE FUND'S PERFORMANCE
The bar chart shown below indicates the risks of investing in the Short Term
Government Income Fund. It shows changes in the performance of the Fund's shares
from year to year during the past 10 years.
The Fund's past performance does not necessarily indicate how it will perform in
the future.
SHORT TERM GOVERNMENT INCOME FUND
YEARS TOTAL RETURN
1990 7.29%
1991 5.44%
1992 2.96%
1993 2.25%
1994 3.16%
1995 4.89%
1996 4.43%
1997 4.61%
1998 4.58%
1999 4.09%
During the period shown in the bar chart, the highest quarterly return was
1.81% (for the quarter ended September 30, 1990) and the lowest quarterly
return was 0.54% (for the quarter ended June 30, 1993).
For information on the Fund's current and effective 7-day yield, call
800.543.0407.
The table below indicates the risks of investing in the Short Term Government
Income Fund. It shows the Fund's average annual returns for the periods
indicated.
20
<PAGE>
FOR THE PERIODS ENDED DECEMBER 31, 1999
1 Year 5 Years 10 Years
------ ------- --------
Short Term Government Income Fund 4.09% 4.52% 4.36%
THE FUND'S FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees paid
directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases None
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) None
- --------------------------------------------------------------------------------
Redemption Fee *
- --------------------------------------------------------------------------------
Exchange Fee None
- --------------------------------------------------------------------------------
Check Redemption Processing Fee
- --------------------------------------------------------------------------------
First 6 checks per month None
- --------------------------------------------------------------------------------
Additional checks per month $0.25
- --------------------------------------------------------------------------------
Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 0.47%
- --------------------------------------------------------------------------------
Distribution (12b-1) Fees 0.13%
- --------------------------------------------------------------------------------
Other Expenses 0.35%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 0.95%
- --------------------------------------------------------------------------------
* You will be charged a fee for each wire redemption. This fee is
subject to change.
21
<PAGE>
The following example should help you compare the cost of investing in the Short
Term Government Income Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
1 Year $97
------------------------------------
3 Years $303
------------------------------------
5 Years $525
------------------------------------
10 Years $1,166
------------------------------------
22
<PAGE>
TOUCHSTONE INSTITUTIONAL GOVERNMENT INCOME FUND
- -----------------------------------------------
THE FUND'S INVESTMENT GOAL
The Institutional Government Income Fund seeks high current income, consistent
with the protection of capital. The Fund is a money market fund and tries to
maintain a constant share price of $1.00 per share.
ITS PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily (at least 65% of total assets) in short-term
government securities issued by the U.S. Treasury or agencies of the U.S.
Government, including mortgage-related securities.
The Fund also invests in repurchase agreements collateralized by U.S. Government
securities.
The Fund will comply with SEC rules pertaining to money market funds and will
limit its investments as follows:
o The Fund will only invest in securities that mature in 13 months or
less.
o The dollar-weighted average maturity of its portfolio will be 90 days
or less.
THE KEY RISKS
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC, the U.S. Treasury or any other government entity. Although the Fund
seeks to preserve the value of your investment, it is possible to lose money by
investing in the Fund. The Fund's yield:
o Varies from day to day due to changes in interest rates and will
generally increase when interest rates increase and decrease when
interest rates decrease
o Decreases if mortgage-related securities are prepaid and the Fund must
reinvest the prepayment proceeds during a time of declining interest
rates
As with any money market fund, there is no guarantee that the Fund will achieve
its goal or will maintain a constant share price of $1.00 per share.
You can find more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading "Investment
Strategies And Risks" later in this Prospectus.
WHO MAY WANT TO INVEST
This Fund is most appropriate for you if you seek a relatively low risk
investment. Safety of your investment is of key importance to you. Additionally,
you are willing to accept potentially lower returns in order to maintain a
lower, more tolerable level of risk.
23
<PAGE>
THE FUND'S PERFORMANCE
The bar chart shown below indicates the risks of investing in the Institutional
Government Income Fund. It shows changes in the performance of the Fund's shares
from year to year during the past 10 years.
The Fund's past performance does not necessarily indicate how it will perform in
the future.
INSTITUTIONAL GOVERNMENT INCOME FUND
YEARS TOTAL RETURN
1990 8.07%
1991 5.98%
1992 3.50%
1993 2.97%
1994 3.87%
1995 5.59%
1996 5.09%
1997 5.22%
1998 5.19%
1999 4.87%
During the period shown in the bar chart, the highest quarterly return was
1.99% (for the quarter ended June 30, 1990) and the lowest quarterly return
was 0.72% (for the quarter ended March 31, 1993).
For information on the Fund's current and effective 7-day yield, call
800.543.0407.
The table below indicates the risks of investing in the Institutional Government
Income Fund. It shows the Fund's average annual returns for the periods
indicated.
FOR THE PERIODS ENDED DECEMBER 31, 1999
1 Year 5 Years 10 Years
------ ------- --------
Institutional Government Income Fund 4.87% 5.19% 5.03%
24
<PAGE>
THE FUND'S FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees paid
directly from your investment)
Maximum Sales Charge (Load) Imposed on
Purchases None
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) None
- --------------------------------------------------------------------------------
Redemption Fee None
- --------------------------------------------------------------------------------
Exchange Fee None
- --------------------------------------------------------------------------------
Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 0.20%
- --------------------------------------------------------------------------------
Distribution (12b-1) Fees 0.01%
- --------------------------------------------------------------------------------
Other Expenses 0.26%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 0.47%
- --------------------------------------------------------------------------------
Fee Waiver and/or Expense Reimbursement 0.07%
- --------------------------------------------------------------------------------
Net Expenses1 0.40%
- --------------------------------------------------------------------------------
1 Pursuant to a written contract between Touchstone Advisors, Inc. and
the Trust, Touchstone Advisors has agreed to waive a portion of its
advisory fee and/or reimburse certain Fund expenses in order to limit
Total Annual Fund Operating Expenses to 0.40%. Touchstone Advisors has
agreed to maintain these expense limitations through at least March
31, 2001.
The following example should help you compare the cost of investing in the
Institutional Government Income Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time
periods indicated and then sell all of your shares at the end of those periods.
The example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
25
<PAGE>
1 Year $48
-----------------------------------------
3 Years $151
-----------------------------------------
5 Years $263
-----------------------------------------
10 Years $591
-----------------------------------------
The examples for the 3, 5 and 10 year periods are calculated using the
Total Fund Operating Expenses before the limits agreed to under the
written contract between Touchstone Advisors and the Trust for the
periods after year 1.
26
<PAGE>
INVESTMENT STRATEGIES AND RISKS
- -------------------------------
CAN A FUND DEPART FROM ITS NORMAL STRATEGIES?
Each Fund may depart from its investment strategies by taking temporary
defensive positions in response to adverse market, economic or political
conditions. During these times, a Fund may not achieve its investment goals.
DO THE FUNDS ENGAGE IN ACTIVE TRADING OF SECURITIES?
The Bond Fund may engage in active trading to achieve its investment goals. This
may cause the Fund to realize higher capital gains which would be passed on to
you. Higher capital gains could increase your tax liability. Frequent trading
also increases transaction costs which would lower the Fund's performance.
CAN A FUND CHANGE ITS INVESTMENT GOAL?
Each Fund (except the Money Market Fund and the Short Term Government Income
Fund) may change its investment goal by a vote of the Board of Trustees without
shareholder approval. You would be notified at least 30 days before any such
change took effect.
DO THE FUNDS HAVE OTHER INVESTMENT STRATEGIES, IN ADDITION TO THEIR PRINCIPAL
INVESTMENT STRATEGIES?
HIGH YIELD FUND. The Fund also invests in:
o Securities of foreign companies (up to 15%), but only up to 5% of its
assets in securities of foreign companies that are denominated in a
currency other than the U.S. dollar
o Debt securities of emerging market countries
o Mortgage-related securities and other types of loans and loan
participations
o Government Securities and securities of foreign governments
BOND FUND. The Fund also invests in:
o Preferred stock
o Non-investment grade U.S. and foreign debt securities rated as low as
B (up to 35%)
o Debt securities denominated by foreign currencies (up to 20%)
27
<PAGE>
THE FUNDS AT A GLANCE
The following two tables can give you a quick basic understanding of the types
of securities a Fund tends to invest in and some of the main risks associated
with a Fund's investments. You should read all of the information about a Fund
and its risks before deciding to invest.
HOW CAN I TELL, AT A GLANCE, WHICH TYPES OF SECURITIES A FUND MIGHT INVEST IN?
The following table shows the main types of securities in which a Fund generally
will invest. Investments marked P are principal investments. Investments marked
O are other types of securities in which the Fund may invest to a lesser extent.
Some of the Funds' investments are described in detail below:
<TABLE>
<CAPTION>
INTERMEDIATE
TERM SHORT TERM INSTITUTIONAL
HIGH YIELD BOND GOVERNMENT MONEY MARKET GOVERNMENT GOVERNMENT
FUND FUND INCOME FUND FUND INCOME FUND INCOME FUND
FINANCIAL INSTRUMENTS
<S> <C> <C> <C> <C> <C> <C>
Invests in money O O P P P
market instruments
- ---------------------------------------------------------------------------------------------------------
Invests in short-term O O O P P P
debt securities
- ---------------------------------------------------------------------------------------------------------
Invests in P P P
intermediate term debt
securities
- ---------------------------------------------------------------------------------------------------------
Invests in variable P O O
and floating rate
securities
- ---------------------------------------------------------------------------------------------------------
Invests in government O P P P P P
securities
- ---------------------------------------------------------------------------------------------------------
Invests in municipal O P O O
securities
- ---------------------------------------------------------------------------------------------------------
Invests in corporate P P P
debt securities
- ---------------------------------------------------------------------------------------------------------
Invests in O P P P P
mortgage-related
securities
- ---------------------------------------------------------------------------------------------------------
Invests in P O
asset-backed securities
- ---------------------------------------------------------------------------------------------------------
Invests in investment O P P P P P
grade debt securities
- ---------------------------------------------------------------------------------------------------------
Invests in P O
non-investment grade
debt securities
- ---------------------------------------------------------------------------------------------------------
Invests in foreign O
companies
- ---------------------------------------------------------------------------------------------------------
Invests in foreign O O
debt securities
- ---------------------------------------------------------------------------------------------------------
28
<PAGE>
<CAPTION>
INTERMEDIATE
TERM SHORT TERM INSTITUTIONAL
HIGH YIELD BOND GOVERNMENT MONEY MARKET GOVERNMENT GOVERNMENT
FUND FUND INCOME FUND FUND INCOME FUND INCOME FUND
INVESTMENT TECHNIQUES
<S> <C> <C> <C> <C> <C> <C>
Invests in repurchase O O O P P P
agreements
- ---------------------------------------------------------------------------------------------------------
Invests in P
to-be-announced
securities
- ---------------------------------------------------------------------------------------------------------
Invests in emerging O
market countries
- ---------------------------------------------------------------------------------------------------------
</TABLE>
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS
MONEY MARKET INSTRUMENTS include:
o Bank obligations
o Short-term government securities
o Short-term corporate debt securities
o Short-term municipal securities
o Variable and floating rate securities
BANK OBLIGATIONS include:
o Certificates of deposit, which are issued by banks in exchange for the
deposit of funds and have penalties for early withdrawal
o Bankers' acceptances, which are bills of exchange used by corporations
to finance the shipment and storage of goods and to furnish dollar
exchange
o Time deposits, which are deposits in a bank that earn a specified
interest rate over a given period of time
GOVERNMENT SECURITIES include:
o Obligations issued directly by the U.S. Treasury such as Treasury
bills, notes and bonds
o Obligations issued by agencies or instrumentalities of the U.S.
Government, such as Government National Mortgage Association, Student
Loan Marketing Association, Small Business Administration and
Tennessee Valley Authority
o U.S. Treasuries issued without interest coupons (STRIPS)
o Inflation-indexed bonds issued by the U.S. Treasury whose principal
value is periodically adjusted to the rate of inflation
Some government securities are backed by the full faith and credit of the U.S.
Treasury, meaning that payment of principal and interest is guaranteed by the
U.S. Treasury. Other government securities are backed only by the credit of the
agency or instrumentality issuing the security, which may include the right of
the issuer to borrow from the U.S. Treasury.
29
<PAGE>
CORPORATE DEBT SECURITIES are obligations of a corporation to pay interest and
repay principal. Corporate debt securities include commercial paper, notes and
bonds.
MUNICIPAL SECURITIES are issued to finance public works, to repay outstanding
obligations, to raise funds for general operating expenses and to lend money to
other public institutions. The two types of municipal securities are general
obligation and revenue bonds. General obligation bonds are secured by the
issuer's full faith and credit and taxing power, while revenue bonds are backed
only by the revenues of the specific project.
VARIABLE AND FLOATING RATE SECURITIES are securities with interest rates that
are adjusted when a specific interest rate index changes (floating rate
securities) or on a schedule (variable rate securities).
FOREIGN COMPANIES. A foreign company is organized under the laws of a foreign
country and:
o Has the principal trading market for its stock in a foreign country
o Derives at least 50% of its revenues or profits from operations in
foreign countries or has at least 50% of its assets located in foreign
countries
Foreign countries do not include companies based in Canada with respect to the
Funds.
FOREIGN DEBT SECURITIES are obligations of a country other than the U.S. to pay
interest and repay principal.
INVESTMENT GRADE SECURITIES. Investment grade securities are generally rated BBB
or better by Standard & Poor's Rating Service (S&P) or Baa or better by Moody's
Investor Service, Inc. (Moody's).
NON-INVESTMENT GRADE SECURITIES. Non-investment grade securities are higher
risk, lower quality securities, often referred to as "junk bonds" and are
considered speculative. They are rated by S&P as less than BBB or by Moody's as
less than Baa.
ASSET-BACKED SECURITIES. Asset-backed securities represent groups of other
assets, for example, credit card receivables, that are combined or pooled for
sale to investors.
MORTGAGE-RELATED SECURITIES. Mortgage-related securities represent groups of
mortgage loans that are combined for sale to investors. The loans may be grouped
together by agencies of the U.S. Government such as:
o The Government National Mortgage Association (GNMA)
o The Federal National Mortgage Association (FNMA)
o The Federal Home Loan Mortgage Corporation (FHLMC)
The loans may also be grouped together by private issuers such as:
30
<PAGE>
o Commercial banks
o Savings and loan institutions
o Mortgage bankers
o Private mortgage insurance companies
Mortgage-related securities include Collateralized Mortgage Obligations (CMOs)
and Real Estate Mortgage Investment Conduits (REMICs). CMOs and REMICs are types
of mortgage-related securities that provide an investor with a specified
interest in the cash flow from a pool of mortgage loans or other mortgage-backed
securities. CMOs and REMICs are issued in two or more classes with varying
maturity dates and interest rates. A REMIC is a private entity formed to hold a
fixed pool of mortgages secured by an interest in real property. A REMIC is a
type of CMO that qualifies for special tax treatment under the Internal Revenue
Code.
EMERGING MARKET SECURITIES. Emerging Market securities are issued by a company
that:
o Is organized under the laws of an emerging market country (any country
other than Australia, Austria, Belgium, Canada, Denmark, Finland,
France, Germany, Holland, Italy, Japan, Luxembourg, New Zealand,
Norway, Spain, Sweden, Switzerland, the United Kingdom and the United
States)
o Has its principal trading market for its stock in an emerging market
country
o Derives at least 50% of its revenues or profits from operations within
emerging market countries or has at least 50% of its assets located in
emerging market countries
REPURCHASE AGREEMENTS. Repurchase Agreements are collateralized by obligations
issued or guaranteed as to both principal and interest by the U.S. Government,
its agencies, and instrumentalities. A repurchase agreement is a transaction in
which a security is purchased with a simultaneous commitment to sell it back to
the seller (a commercial bank or recognized securities dealer) at an agreed upon
price on an agreed upon date. This date is usually not more than seven days from
the date of purchase. The resale price reflects the purchase price plus an
agreed upon market rate of interest, which is unrelated to the coupon rate or
maturity of the purchased security.
TO-BE-ANNOUNCED SECURITIES. To-Be-Announced securities are paid for and
delivered within 15 to 45 days from their date of purchase. In a to-be-announced
transaction, the parties to the transaction commit to purchasing or selling
securities before all the specific information, particularly the face amount of
the securities, is known. If a Fund invests in to-be-announced securities, it
will maintain a segregated account of cash or liquid securities to pay for its
to-be-announced securities and this account will be valued daily in order to
account for market fluctuations in the value of its to-be-announced commitments.
HOW CAN I TELL, AT A GLANCE, A FUND'S KEY RISKS?
The following table shows some of the main risks to which each Fund is subject.
Risks marked P are principal risks. Risks marked O are other risks that may
impact the Fund to a lesser extent. Each risk is described in detail below:
31
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE
TERM SHORT TERM INSTITUTIONAL
HIGH YIELD BOND GOVERNMENT MONEY MARKET GOVERNMENT GOVERNMENT
FUND FUND INCOME FUND FUND INCOME FUND INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
INTEREST RATE RISK P P P P P P
- ------------------------------------------------------------------------------------------------------------------
Mortgage-Related Securities O P P P P
- ------------------------------------------------------------------------------------------------------------------
CREDIT RISK P P P P P P
- ------------------------------------------------------------------------------------------------------------------
Non-Investment Grade P O
Securities
- ------------------------------------------------------------------------------------------------------------------
FOREIGN INVESTING RISK O O
- ------------------------------------------------------------------------------------------------------------------
Emerging Market Risk O
- ------------------------------------------------------------------------------------------------------------------
Political Risk O
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
RISKS OF INVESTING IN THE FUNDS
INTEREST RATE RISK. Each Fund (other than a money market fund) is subject to the
risk that the market value of the debt securities in which it invests will
decline because of rising interest rates. The prices of debt securities are
generally linked to the prevailing market interest rates. In general, when
interest rates rise, the prices of debt securities fall, and when interest rates
fall, the prices of debt securities rise. The price volatility of a debt
security also depends on its maturity. Generally, the longer the maturity of a
debt security the greater its sensitivity to changes in interest rates. To
compensate investors for this higher risk, debt securities with longer
maturities generally offer higher yields than debt securities with shorter
maturities.
o Mortgage-related securities. Payments from the pool of loans underlying a
mortgage-related security may not be enough to meet the monthly payments of the
mortgage-related security. If this occurs, the mortgage-related security will
lose value. Also, prepayments of mortgages or mortgage foreclosures will shorten
the life of the pool of mortgages underlying a mortgage-related security and
will affect the average life of the mortgage-related securities held by a Fund.
Mortgage prepayments vary based on several factors including the level of
interest rates, general economic conditions, the location and age of the
mortgage and other demographic conditions. In periods of falling interest rates,
there are usually more prepayments. The reinvestment of cash received from
prepayments will, therefore, usually be at lower interest rates than the
original investment, lowering a Fund's yield. Mortgage-related securities may be
less likely to increase in value during periods of falling interest rates than
other debt securities.
CREDIT RISK. The debt securities in each Fund's portfolio are subject to credit
risk. Credit risk is the possibility that an issuer will fail to make timely
payments of interest or principal. Securities rated in the lowest category of
investment grade securities have some risky characteristics and changes in
economic conditions are more likely to cause issuers of these securities to be
unable to make payments.
o Non-Investment Grade Securities. Non-investment grade securities are
sometimes referred to as "junk bonds" and are very risky with respect to their
issuers' ability to make payments of interest and principal. There is a high
risk that a Fund could suffer a loss from investments in non-investment grade
securities caused by the default of an issuer of such securities. Part of the
reason for this high risk is that, in the event of a default or bankruptcy,
holders of non-investment grade securities generally will not receive payments
until the holders of all other debt have been paid. In addition, the market for
non-investment grade securities has, in the past, had more
32
<PAGE>
frequent and larger price changes than the markets for other securities.
Non-investment grade securities can also be more difficult to sell for good
value.
FOREIGN INVESTING. Investing in foreign securities poses unique risks such as
fluctuation in currency exchange rates, market illiquidity, price volatility,
high trading costs, difficulties in settlement, regulations on stock exchanges,
limits on foreign ownership, less stringent accounting, reporting and disclosure
requirements, and other considerations. In the past, equity and debt instruments
of foreign markets have had more frequent and larger price changes than those of
U.S. markets.
o Emerging Markets Risk. Investments in a country that is still relatively
underdeveloped involves exposure to economic structures that are generally less
diverse and mature than in the U.S. and to political and legal systems which may
be less stable. In the past, markets of developing countries have had more
frequent and larger price changes than those of developed countries.
o Political Risk. Political risk includes a greater potential for revolts,
and the taking of assets by governments. For example, a Fund may invest in
Eastern Europe and former states of the Soviet Union. These countries were under
communist rule that took control of private industry. This could occur again in
this region or others in which a Fund may invest, in which case the Fund may
lose all or part of its investment in that country's issuers.
THE FUNDS' MANAGEMENT
- ---------------------
INVESTMENT ADVISOR
Touchstone Advisors, Inc. (the "Advisor" or "Touchstone Advisors") located at
311 Pike Street, Cincinnati, Ohio 45202, is the investment advisor for the
Funds.
Touchstone Advisors has been registered as an investment advisor under the
Investment Advisers Act of 1940, as amended (the "Advisers Act") since 1994. As
of December 31, 1999, Touchstone Advisors had approximately $422 million in
assets under management.
Touchstone Advisors is responsible for selecting each Fund's Sub-Advisor,
subject to review by the Board of Trustees. Touchstone Advisors selects a
Sub-Advisor that has shown good investment performance in its areas of
expertise. Touchstone Advisors considers various factors in evaluating the
Funds' Sub-Advisor, including:
o Level of knowledge and skill
o Performance as compared to its peers or benchmark
o Consistency of performance over five years or more
o Level of compliance with investment rules and strategies
o Employees, facilities and financial strength
o Quality of service
33
<PAGE>
Touchstone Advisors will also continually monitor the performance of the Funds'
Sub-Advisor through various analyses and through in-person, telephone and
written consultations with the Fund's Sub-Advisor.
Touchstone Advisors discusses its expectations for performance with the
Sub-Advisor. Touchstone provides written evaluations and recommendations to the
Board of Trustees, including whether or not the Sub-Advisor's contract should be
renewed, modified or terminated.
Beginning May 1, 2000, Touchstone Advisors is responsible for running all of the
operations of each Fund, except for those that are subcontracted to the
Sub-Advisor, custodian, transfer agent and administrator. Each Fund will pay
Touchstone Advisors a fee for its services. Out of this fee Touchstone Advisors
pays each Sub-Advisor a fee for its services. The fee to be paid to Touchstone
Advisors by each Fund is shown in the table below:
<TABLE>
<CAPTION>
Fee to Touchstone Advisors
(as % of average daily net assets)
<S> <C>
High Yield Fund 0.60% of assets*
- --------------------------------------------------------------------------------------------
Bond Fund 0.50% of assets
- --------------------------------------------------------------------------------------------
Intermediate Term Government Income Fund
Money Market Fund
Short Term Government Income Fund 0.50% of assets up to $50 million
0.45% of assets from $50 million to $150 million
0.40% of assets from $150 million to $250 million
0.375% of assets over $250 million
- --------------------------------------------------------------------------------------------
Institutional Government Income Fund 0.20% of assets
- --------------------------------------------------------------------------------------------
</TABLE>
* The High Yield Fund has been in operation for less than one full
fiscal year.
Touchstone Advisors was also responsible for running the operations of the Bond
Fund prior to May 1, 2000. The fee paid to Touchstone Advisors by the Bond Fund
for the fiscal year ended December 31, 1999 was 0.55% of the Fund's average
daily net assets.
Prior to May 1, 2000, a different investment advisor (the "Previous Advisor")
was responsible for running all of the operations of each Fund (other than the
High Yield Fund and the Bond Fund), except for those that are subcontracted to
the Sub-Advisor, custodian, transfer agent and administrator. The fee paid to
the Previous Advisor by each Fund for the last fiscal year is shown in the table
below:
34
<PAGE>
Fee to Previous Advisor
(as % of average daily net assets)
Intermediate Term Government Income Fund 0.50%
- --------------------------------------------------------------------------------
Money Market Fund 0.50%
- --------------------------------------------------------------------------------
Short Term Government Income Fund 0.47%
- --------------------------------------------------------------------------------
Institutional Government Income Fund 0.20%
- --------------------------------------------------------------------------------
FUND SUB-ADVISOR
The Sub-Advisor makes the day-to-day decisions regarding buying and selling
specific securities for the Funds. The Sub-Advisor manages the investments held
by the Fund according to the Fund's investment goals and strategies.
SUB-ADVISOR TO THE FUNDS
FORT WASHINGTON INVESTMENT ADVISORS, INC. (FORT WASHINGTON)
420 EAST FOURTH STREET, CINCINNATI, OH 45202
Fort Washington has been registered as an investment advisor under the Advisers
Act since 1990. Fort Washington provides investment advisory services to
individuals, institutions, mutual funds and variable annuity products. As of
December 31, 1999, Fort Washington had assets under management of $18 billion.
At Fort Washington, a primary manager and a secondary manager are responsible
for the day-to-day management of each of the Funds. The primary and secondary
managers for each of the High Yield Fund, the Bond Fund and the Intermediate
Term Government Income Fund are as follows:
FUND PRIMARY MANAGER SECONDARY MANAGER
- ---- --------------- -----------------
High Yield Fund Brendan M. White Roger M. Lanham
Bond Fund Roger M. Lanham Richard A. Loebig
Intermediate Term Government Income Fund Scott D. Weston Richard A. Loebig
Brendan M. White, CFA, is the primary manager of the High Yield Fund. Mr. White
is Senior Portfolio Manager of Fort Washington. He joined Fort Washington in
1993. Mr. White has 11 years of fixed income management experience and was with
Ohio Casualty prior to joining Fort Washington.
Roger M. Lanham, CFA, is the primary manager of the Bond Fund and the secondary
manager of the High Yield Fund. He joined Fort Washington in 1994. Prior to
joining Fort Washington, Mr. Lanham was a senior portfolio manager for the
Western-Southern Life Assurance Company.
35
<PAGE>
Richard A. Loebig, CFA, is the secondary manager of each of the Bond Fund and
the Intermediate Term Government Income Fund. He joined Fort Washington in 2000.
Mr. Loebig was previously employed as a senior fixed income portfolio manager at
Todd Investment Advisors, Inc., an affiliate of Fort Washington. He was also
previously employed as a fixed income portfolio manager for Chandler Liquid
Asset Management and a director of taxable fund income for PNC Bank.
Scott D. Weston is the primary manager of the Intermediate Term Government
Income Fund. He joined Fort Washington in 1999 upon the acquisition of the
Fund's Previous Advisor. He had been employed by the Previous Advisor since 1992
and has been managing the Fund's portfolio since 1996.
Fort Washington is an affiliate of Touchstone Advisors. Therefore, Touchstone
Advisors may have a conflict of interest when making decisions to keep Fort
Washington as a Fund's Sub-Advisor. The Board of Trustees reviews all of
Touchstone Advisor's decisions to reduce the possibility of a conflict of
interest situation.
INVESTING WITH TOUCHSTONE
- -------------------------
CHOOSING THE APPROPRIATE INVESTMENTS TO MATCH YOUR GOALS. Investing well
requires a plan. We recommend that you meet with your financial advisor to plan
a strategy that will best meet your financial goals.
OPENING AN ACCOUNT
You can contact your financial advisor to purchase shares of the Funds. You may
also purchase shares of each of the Funds directly from Touchstone Securities,
Inc. ("Touchstone"). In any event, you must complete the Investment Application
included in this Prospectus. You may also obtain an Investment Application from
Touchstone or your financial advisor.
Investor Alert: Touchstone may choose to refuse any purchase order.
You should read this Prospectus carefully and then determine how much you want
to invest. Check below to find the minimum investment amount required to
purchase shares as well as to learn about the various ways you can purchase your
shares.
<TABLE>
<CAPTION>
Initial Additional
Investment Investment
---------- ----------
<S> <C> <C>
Regular Account (All Funds except Institutional $ 1,000 None
Government Income Fund)
Regular Account - Institutional Government $100,000 None
Income Fund
Retirement Plan Account or Custodial Account under $ 250 None
a Uniform Gifts/Transfers to Minors Act ("UGTMA")
(Available to all Funds Except Institutional Government
Income Fund)
36
<PAGE>
Investments through the Automatic Investment Plan $ 50 $ 50
(Available to all Funds Except Institutional Government
Income Fund)
</TABLE>
o Investor Alert: Touchstone may change these initial and additional
investment minimums at any time.
PRICING OF FUND SHARES
The share price, also called net asset value ("NAV"), of each of the Money
Market Fund, the Short Term Government Income Fund and the Institutional
Government Income Fund is determined as of 12:30 p.m. and 4:00 p.m., Eastern
time, every day the New York Stock Exchange ("NYSE") is open. The offering price
(NAV plus a sales charge, if applicable) of the High Yield Fund, the Bond Fund
and the Intermediate Term Government Income Fund is determined as of the close
of trading (normally 4:00 p.m., Eastern time) every day the NYSE is open. Each
Fund calculates its NAV per share, generally using market prices, by dividing
the total value of its net assets by the number of shares outstanding. Shares
are purchased or sold at NAV (or the next offering price) determined after your
purchase or sale order is received in proper form by Touchstone.
The Money Market Fund, the Short Term Government Income Fund and the
Institutional Government Income Fund each seek to maintain a constant share
price of $1.00 per share by valuing investments on an amortized cost basis.
Under the amortized cost method of valuation, each Fund maintains a
dollar-weighted average portfolio maturity of 90 days or less, purchases only
United States dollar-denominated securities with maturities of thirteen months
or less and invests only in securities which meet its quality standards and
present minimal credit risks. Each Fund's obligations are valued at original
cost adjusted for amortization of premium or accumulation of discount, rather
than at market value. This method should enable each Fund to maintain a stable
net asset value per share. However, there is no assurance that a Fund will be
able to do so.
The value of the securities held by the High Yield Fund, the Bond Fund and the
Intermediate Term Government Income Fund is determined as follows: (1)
Securities which have available market quotations are priced according to the
most recent bid price quoted by one or more of the major market makers; (2)
Securities that do not have available market prices are priced at their fair
value using consistent procedures established in good faith by the Board of
Trustees.
37
<PAGE>
CHOOSING A CLASS OF SHARES
(HIGH YIELD FUND, BOND FUND AND INTERMEDIATE TERM GOVERNMENT INCOME FUND)
The High Yield Fund, the Bond Fund and the Intermediate Term Government Income
Fund offer Class A shares and Class C shares. Each class of shares has different
sales charges and distribution fees. The amount of sales charges and
distribution fees you pay will depend on which class of shares you decide to
purchase.
CLASS A SHARES
The offering price of Class A shares of the High Yield Fund, the Bond Fund and
the Intermediate Term Government Income Fund is equal to its NAV plus a
front-end sales charge that you pay when you buy your shares. The front-end
sales charge is generally deducted from the amount of your investment.
The following table shows the amount of front-end sales charge you will pay on
purchases of Class A shares for accounts opened after July 31, 1999. Accounts
opened before July 31, 1999 are subject to different sales charges. These sales
charges are shown in the Statement of Additional Information ("SAI"). The amount
of front-end sales charge in the following table is shown as a percentage of (1)
offering price and (2) the net amount invested after the charge has been
subtracted. Note that the front-end sales charge gets lower as your investment
amount gets larger.
<TABLE>
<CAPTION>
Sales Charge as % of Sales Charge as % of
Amount of Your Investment Offering Price Net Amount Invested
------------------------- -------------- -------------------
<S> <C> <C>
Under $50,000 4.75% 4.99%
$50,000 but less than $100,000 4.50% 4.72%
$100,000 but less than $250,000 3.50% 3.63%
$250,000 but less than $500,000 2.95% 3.04%
$500,000 but less than $1 million 2.25% 2.31%
$1 million or more 0.00% 0.00%
</TABLE>
There is no front-end sales charge if you invest $1 million or more in a Fund.
This includes large total purchases made through programs such as Aggregation,
Concurrent Purchases, Letters of Intent and Rights of Accumulation. These
programs are described more fully in the SAI. In addition, there is no front-end
sales charge on purchases by certain persons related to the Funds or their
service providers and certain other persons listed in the SAI.
If you redeem shares that you purchased as part of the $1 million purchase
within one year, you will pay a contingent deferred sales charge (a sales charge
you pay when you redeem your shares) of 1% on the shares redeemed.
The High Yield Fund, the Bond Fund and the Intermediate Term Government Income
Fund have each adopted a distribution plan under Rule 12b-1 of the Investment
Company Act of 1940, as amended (the "1940 Act") for its Class A shares. This
plan allows each Fund to pay distribution fees for the sale and distribution of
its Class A shares.
38
<PAGE>
Under the plan, each Fund pays an annual fee of up to 0.35% of its average daily
net assets that are attributable to its Class A shares. Touchstone Advisors has
agreed to waive a portion of the maximum annual Rule 12b-1 distribution fee
assessed on Class A shares of the Bond Fund until October 29, 2001, such that
the effective maximum Rule 12b-1 distribution fee on the Bond Fund Class A
shares during that time period will be equal to 0.25%. Because distribution fees
are paid out of each Fund's assets on an ongoing basis, these fees will increase
the cost of your investment and over time may cost you more than paying other
types of sales charges.
CLASS C SHARES
The offering price of Class C shares of each of the High Yield Fund, the Bond
Fund and the Intermediate Term Government Income Fund is equal to its NAV plus a
1.25% front-end sales charge that you pay when you buy your shares. The
front-end sales charge is generally deducted from the amount of your investment.
A contingent deferred sales charge of 1.00% of the offering price will be
charged on Class C shares redeemed within one year after you purchased them.
No contingent deferred sales charge is applied if:
o The shares which you redeem were acquired through the reinvestment of
dividends or capital gains distributions
o The amount redeemed resulted from increases in the value of the
account above the amount of the total purchase payments
When we determine whether a contingent deferred sales charge is payable on a
redemption, we assume that:
o The redemption is made first from amounts free of any contingent
deferred sales charge; then
o From the earliest purchase payment(s) that remain invested in the Fund
When we determine if amounts are available for redemption free of any contingent
deferred sales charge, we:
o Add together all of your original purchase payments
o Subtract any amounts previously withdrawn
o Check if there is any remaining amount free of any contingent deferred
sales charge that can be applied to the total of the current value of
the shares you have asked to redeem
The High Yield Fund, the Bond Fund and the Intermediate Term Government Income
Fund have each adopted a distribution plan under Rule 12b-1 of the 1940 Act for
its Class C shares. This plan allows each Fund to pay distribution and other
fees for the sale and distribution of its Class C shares and for services
provided to holders of Class C shares.
39
<PAGE>
Under the plan, each Fund pays an annual fee of up to 1.00% of its average daily
net assets that are attributable to Class C shares. Because these fees are paid
out of the Funds' assets on an ongoing basis, these fees will increase the cost
of your investment and over time may cost you more than paying other types of
sales charges.
MONEY MARKET FUND, SHORT TERM GOVERNMENT INCOME FUND AND INSTITUTIONAL
GOVERNMENT INCOME FUND
The Money Market Fund, the Short Term Government Income Fund and the
Institutional Government Income Fund each offer a single class of shares. Each
Fund has adopted a distribution plan under Rule 12b-1 of the 1940 Act for its
shares.
Under the plan, the Money Market Fund and the Short Term Government Income Fund
each pay an annual fee of up to 0.35% of its average daily net assets and the
Institutional Government Income Fund pays an annual fee of up to 0.10% of its
average daily net assets for the sale and distribution of shares. Because these
fees are paid out of a Fund's assets on an ongoing basis, these fees will
increase the cost of your investment.
PURCHASING YOUR SHARES
For information about how to purchase shares, telephone Touchstone (Nationwide
call toll-free 800.543.0407).
You can invest in the Funds in the following ways:
40
<PAGE>
OPENING AN ACCOUNT
- --------------------------------------------------------------------------------
By mail or through your financial advisor
o Please make your check (in U.S. dollars) payable to the
applicable Fund.
o Send your check with the completed account application
to Touchstone, P.O. Box 5354, Cincinnati, Ohio
45201-5354 Your application will be processed subject
to your check clearing.
o You may also open an account through your financial
advisor.
o We price direct purchases in the High Yield Fund, the
Bond Fund and the Intermediate Term Government Income
Fund based upon the next determined public offering
price (NAV plus any applicable sales load) after your
order is received. Direct purchase orders received by
Touchstone by 4:00 p.m., Eastern time, are processed at
that day's public offering price. Direct investments
received by Touchstone after 4:00 p.m., Eastern time,
are processed at the public offering price next
determined on the following business day. Purchase
orders received from financial advisors before 4:00
p.m., Eastern time, and transmitted to Touchstone by
5:00 p.m., Eastern time, are processed at that day's
public offering price. Purchase orders received from
financial advisors after 5:00 p.m., Eastern time, are
processed at the public offering price next determined
on the following business day.
o You may receive a dividend in the Money Market Fund,
the Short Term Government Income Fund or the
Institutional Government Income Fund on the day you
wire an investment if you notify Touchstone of your
wire by 12:30 p.m., Eastern time, on that day. Your
purchase will be priced based upon the NAV after a
proper order is received.
By Exchange
o You may exchange shares of the Funds for shares of the
same class of another Touchstone Fund at NAV. You may
also exchange shares of the Funds for shares of any
Touchstone money market fund.
o You do not have to pay any exchange fee for these
exchanges.
o You should review the disclosure provided in the
Prospectus relating to the exchanged-for shares
carefully before making an exchange of your Fund
shares.
Through Retirement Plans
o You may invest in the Funds through various retirement
plans. The Funds' shares are designed for use with
certain types of tax qualified retirement plans
including defined benefit and defined contribution
plans.
o For further information about any of the plans,
agreements, applications and annual fees, contact
Touchstone or your financial advisor.
ADDING TO YOUR ACCOUNT
- --------------------------------------------------------------------------------
By Check
o Complete the investment form provided at the bottom of
a recent account statement.
o Make your check payable to the applicable Fund.
o Write your account number on the check.
o Either: (1) Mail the check with the investment form in
the envelope provided with your account statement; or
(2) Mail your check directly to your financial advisor
at the address printed on your account statement. Your
financial advisor is responsible for forwarding payment
promptly to Touchstone.
41
<PAGE>
By Wire
o Specify your name and account number.
o Purchases in the High Yield Fund, the Bond Fund and the
Intermediate Term Government Income Fund will be
processed at that day's public offering price if
Touchstone receives a properly executed wire by 4:00
p.m. Eastern time on a day when the NYSE is open for
regular trading.
o You may receive a dividend in the Money Market Fund,
the Short Term Government Income Fund or the
Institutional Government Income Fund on the day you
wire an investment if you notify Touchstone of your
wire by 12:30 p.m., Eastern time, on that day.
By Exchange
o You may exchange your shares by calling Touchstone.
o You do not have to pay any exchange fee for these
exchanges.
o You should review the disclosure provided in the
Prospectus relating to the exchanged-for shares
carefully before making an exchange of your Fund
shares.
Through Retirement Plans
o You may add to your account in the Funds through
various retirement plans. For further information,
contact Touchstone or your financial advisor.
- --------------------------------------------------------------------------------
INFORMATION ABOUT WIRE TRANSFERS
You may make additional purchases in the Funds directly by wire transfers.
Contact your bank and ask it to wire federal funds to Touchstone. Banks may
charge a fee for handling wire transfers. You should contact Touchstone or your
financial advisor for further instructions.
MORE INFORMATION ABOUT RETIREMENT PLANS
Retirement Plans may include the following:
INDIVIDUAL RETIREMENT PLANS
o Traditional Individual Retirement Accounts (IRAs)
o Savings Incentive Match Plan for Employees (SIMPLE) IRAs
o Spousal IRAs
o Roth Individual Retirement Accounts (Roth IRAs)
o Education Individual Retirement Accounts (Education IRAs)
o Simplified Employee Pension Plans (SEP IRAs)
o 403(b) Tax Sheltered Accounts that employ as custodian a bank
acceptable to Touchstone
EMPLOYER SPONSORED RETIREMENT PLANS
o Defined benefit plans
o Defined contribution plans (including 401K plans, profit sharing plans
and money purchase plans)
o 457 plans
42
<PAGE>
ooo Special Tax Consideration
- --------------------------------------------------------------------------------
To determine which type of retirement plan is appropriate for you, please
contact your tax advisor.
AUTOMATIC INVESTMENT OPTIONS
The various ways that you can invest in each Fund are outlined below. Touchstone
does not charge any fees for these services.
AUTOMATIC INVESTMENT PLAN (AVAILABLE TO ALL FUNDS EXCEPT THE INSTITUTIONAL
GOVERNMENT INCOME FUND) You can pre-authorize monthly investments of $50 or more
in a Fund to be processed electronically from a checking or savings account. You
will need to complete the appropriate section in the Investment Application to
do this. For further details about this service call Touchstone at
1.800.543.0407.
DIRECT DEPOSIT PURCHASE PLAN. (AVAILABLE TO ALL FUNDS EXCEPT THE INSTITUTIONAL
GOVERNMENT INCOME FUND) You may automatically invest Social Security checks,
private payroll checks, pension pay outs or any other pre-authorized government
or private recurring payments in our Funds. This occurs on a monthly basis and
the minimum investment is $50.
REINVESTMENT/CROSS REINVESTMENT. Dividends and capital gains can be
automatically reinvested in the Fund that pays them or in another Fund within
the same class of shares without a fee or sales charge. Dividends and capital
gains will be reinvested in the Fund that pays them, unless you indicate
otherwise on your account application. You may also choose to have your
dividends or capital gains paid to you in cash.
DOLLAR COST AVERAGING. Our Dollar Cost Averaging program allows you to diversify
your investments by investing the same amount on a regular basis. You can set up
periodic automatic transfers of at least $50 from one Touchstone Fund to any
other. The applicable sales charge, if any, will be assessed.
PROCESSING ORGANIZATIONS. You may also purchase shares of the Funds through a
"processing organization," (e.g., a mutual fund supermarket) which is a
broker-dealer, bank or other financial institution that purchases shares for its
customers. Some of the Funds have authorized certain processing organizations to
receive purchase and sale orders on their behalf. Before investing in the Funds
through a processing organization, you should read any materials provided by the
processing organization in conjunction with this Prospectus.
When shares are purchased this way, there may be various differences. The
processing organization may:
o Charge a fee for its services
o Act as the shareholder of record of the shares
o Set different minimum initial and additional investment requirements
43
<PAGE>
o Impose other charges and restrictions
o Designate intermediaries to accept purchase and sales orders on the
Funds' behalf
Touchstone considers a purchase or sales order as received when an authorized
processing organization, or its authorized designee, receives the order in
proper form. These orders will be priced based on the Fund's NAV next computed
after such order is received in proper form.
Shares held through a processing organization may be transferred into your name
following procedures established by your processing organization and Touchstone.
Certain processing organizations may receive compensation from the Funds,
Touchstone, the Advisor or their affiliates.
CASH SWEEP PROGRAM (AVAILABLE TO THE MONEY MARKET FUND,THE SHORT TERM GOVERNMENT
INCOME FUND AND THE INSTITUTIONAL GOVERNMENT INCOME FUND). Cash accumulations
in accounts with financial institutions may be automatically invested in the
Funds at the next determined NAV on a day selected by the institution or
customer, or when the account balance reaches a predetermined dollar amount.
Institutions participating in this program are responsible for placing their
orders in a timely manner. You may be charged a fee by your financial
institution for participating in this program.
SELLING YOUR SHARES
You may sell some or all of your Fund shares on any day that the Fund calculates
its NAV. If your request is received in proper form before the close of regular
trading on the NYSE, you will receive a price based on that day's NAV for the
shares you sell. Otherwise, the price you receive will be based on the NAV that
is next calculated.
By telephone
o You can sell or exchange your shares over the
telephone, unless you have specifically declined this
option. If you do not wish to have this ability, you
must mark the appropriate section of the Investment
Application. You may only sell shares over the
telephone if the amount is less than $25,000.
o To sell your Fund shares by telephone, call Touchstone
at 800.543.0407.
o Shares held in IRA accounts cannot be sold by
telephone.
By mail
o Write to Touchstone.
o Indicate the number of shares or dollar amount to be sold.
o Include your name and account number.
o Sign your request exactly as your name appears on your Investment
Application
44
<PAGE>
By wire
o Complete the appropriate information on the Investment
Application.
o If your proceeds are $1,000 or more, you may request
that Touchstone wire them to your bank account.
o You may be charged a fee (There is no fee for wire
redemptions in the Institutional Government Income Fund).
o Redemption proceeds will only be wired to a commercial
bank or brokerage firm in the United States.
o Your redemption proceeds may be deposited without a
charge directly into your bank account through an ACH
transaction. Contact Touchstone for more information.
By Check
o You may open a checking account in the Intermediate
Term Government Income Fund, the Money Market Fund or
the Short Term Government Income Fund and redeem shares
by check.
o Checks will be processed at the NAV on the day the
check is presented to the Custodian for payment.
o If the amount of your check is more than the value of
the shares held in your account, you will be charged
for each check returned for insufficient funds.
o If you do not write more than 6 checks per month, there
is no fee for your checking account. If you write more
than 6 checks a month, you will be charged 25 for each
additional check written that month.
o There is no charge for checks written by certain
persons related to the Funds or their service providers
and certain other persons listed in the SAI.
o Shareholders of the Intermediate Term Government Income
Fund should be aware that the Fund's NAV fluctuates
daily and that writing a check is a taxable event.
o Checks may not be certified.
o If you invest in a Fund through a cash sweep program
with a financial institution, you may not open a
checking account.
Through Your Financial Advisor
o You may also sell shares by contacting your financial
advisor, who may charge you a fee for this service.
Shares held in street name must be sold through your
financial advisor or, if applicable, the processing
organization.
o Your financial advisor is responsible for making sure
that sale requests are transmitted to Touchstone in
proper form in a timely manner.
45
<PAGE>
ooo Special Tax Consideration
- --------------------------------------------------------------------------------
Selling your shares in the High Yield Fund, the Bond Fund or the Intermediate
Term Government Income Fund may cause you to incur a taxable gain or loss.
o Investor Alert: Unless otherwise specified, proceeds will be sent to
the record owner at the address shown on Touchstone's records.
SIGNATURE GUARANTEES. Some circumstances require that the request for the sale
of shares have a signature guarantee. A signature guarantee helps protect you
against fraud. You can obtain one from most banks or securities dealers, but not
from a notary public. Some circumstances requiring a signature guarantee
include:
o Proceeds from the sale of shares that exceed $25,000
o Proceeds to be paid when the name or the address on the account has
been changed within 30 days of your sale request
TELEPHONE SALES. If we receive your share sale request before 4:00 p.m., Eastern
time on a day when the NYSE is open for regular trading, the sale of your shares
will be processed at the next determined NAV on that day. Otherwise it will
occur on the next business day. The proceeds of sales of shares in the Money
Market Fund, the Short Term Government Income Fund and the Institutional
Government Income Fund may be wired to you on the same day of your telephone
request, if your request is properly made before 12:30 p.m. Eastern time.
Interruptions in telephone service could prevent you from selling your shares in
this manner when you want to. When you have difficulty making telephone sales,
you should mail (or send by overnight delivery) a written request for sale of
your shares to Touchstone.
In order to protect your investment assets, Touchstone will only follow
instructions received by telephone that it reasonably believes to be genuine.
However, there is no guarantee that the instructions relied upon will always be
genuine and Touchstone will not be liable, in those cases. Touchstone has
certain procedures to confirm that telephone instructions are genuine. If it
does not follow such procedures in a particular case it may be liable for any
losses due to unauthorized or fraudulent instructions. Some of these procedures
include:
o Requiring personal identification
o Making checks payable only to the owner(s) of the account shown on
Touchstone's records
o Mailing checks only to the account address shown on Touchstone's
records
o Directing wires only to the bank account shown on Touchstone's records
o Providing written confirmation for transactions requested by telephone
o Tape recording instructions received by telephone
SYSTEMATIC WITHDRAWAL PLAN. You may elect to receive or send to a third party
monthly or quarterly withdrawals of $50 or more if your account value is at
least $5,000. There is no special
46
<PAGE>
fee for this service and no minimum amount is required for retirement plans. The
Systematic Withdrawal Plan is not available to shareholders of the Institutional
Government Income Fund.
ooo Special Tax Consideration
- --------------------------------------------------------------------------------
If you exercise the Reinstatement Privilege, you should contact your tax
advisor.
ooo Special Tax Consideration
- --------------------------------------------------------------------------------
Involuntary sales in the High Yield Fund, the Bond Fund and the Intermediate
Term Government Income Fund may result in the sale of your Fund shares at a loss
or may result in taxable investment gains.
REINSTATEMENT PRIVILEGE. You may reinvest proceeds from a sale of shares of the
High Yield Fund, the Bond Fund or the Intermediate Term Government Income Fund
(or a dividend or capital gain distribution on these shares) without a sales
charge in any of the Touchstone Funds. You may do so by sending a written
request and a check to Touchstone within 90 days after the date of the sale,
dividend or distribution. Reinvestment will be at the next NAV calculated after
Touchstone receives your request.
LOW ACCOUNT BALANCES
Touchstone may sell your Fund shares and send the proceeds to you if your
balance falls below the minimum required for your account as a result of
redemptions that you have made (as opposed to a reduction from market changes).
This involuntary sale does not apply to retirement accounts or custodian
accounts under the Uniform Gift to Minors Act (UGTMA). Touchstone will let you
know that your shares are about to be sold and you will have 30 days to increase
your account balance to the minimum amount.
RECEIVING SALE PROCEEDS
HIGH YIELD FUND, BOND FUND AND INTERMEDIATE TERM GOVERNMENT INCOME FUND
Touchstone will forward the proceeds of your sale to you (or to your financial
advisor) within 7 days (normally within 3 business days) from the date of a
proper request.
MONEY MARKET FUND, SHORT TERM GOVERNMENT INCOME FUND AND INSTITUTIONAL
GOVERNMENT INCOME FUND
Touchstone will forward the proceeds of your sale to you (or to your financial
advisor) within 3 business days (normally within 3 business days after receipt
of a proper written request and within 1 business day after receipt of a proper
telephone request).
47
<PAGE>
PROCEEDS SENT TO FINANCIAL ADVISORS
Proceeds that are sent to your financial advisor will not usually be re-invested
for you unless you provide specific instructions to do so. Therefore, the
financial advisor may benefit from the use of your money.
FUND SHARES PURCHASED BY CHECK
If you purchase Fund shares by personal check, the proceeds of a sale of those
shares will not be sent to you until the check has cleared, which may take up to
15 days. If you may need your money more quickly, you should purchase shares by
federal funds, bank wire, or with a certified or cashier's check.
It is possible that the payments of your sale proceeds could be postponed or
your right to sell your shares could be suspended during certain circumstances.
These circumstances can occur:
o When the NYSE is closed for other than customary weekends and holidays
o When trading on the NYSE is restricted
o When an emergency situation causes the Sub-Advisor to not be
reasonably able to dispose of certain securities or to fairly
determine the value of a Fund's net assets
o During any other time when the SEC, by order, permits.
DISTRIBUTIONS AND TAXES
- -----------------------
ooo Special Tax Consideration
- --------------------------------------------------------------------------------
You should consult with your tax advisor to address your own tax situation.
Each Fund intends to distribute to its shareholders substantially all of its
income and capital gains. The table below outlines when dividends are declared
and paid for by each Fund:
Dividends Declared Dividends Paid
------------------ --------------
High Yield Fund
Bond Fund Monthly Monthly
- --------------------------------------------------------------------------------
Intermediate Term Government
Income Fund
Money Market Fund
Short Term Government Income Fund
Institutional Government Income Fund Daily Monthly
- --------------------------------------------------------------------------------
Distributions of any capital gains earned by a Fund will be made at least
annually.
TAX INFORMATION
DISTRIBUTIONS. Each Fund will make distributions that may be taxed as ordinary
income or capital gains (which may be taxed at different rates depending on the
length of time the Fund
48
<PAGE>
holds its assets). Each Fund's distributions may be subject to federal income
tax whether you reinvest such dividends in additional shares of the Fund or
choose to receive cash.
ORDINARY INCOME. Income and short-term capital gains that are distributed to you
are taxable as ordinary income for federal income tax purposes regardless of how
long you have held your Fund shares.
LONG-TERM CAPITAL GAINS. Long-term capital gains distributed to you are taxable
as long-term capital gains for federal income tax purposes regardless of how
long you have held your Fund shares.
ooo Special Tax Consideration
- --------------------------------------------------------------------------------
For federal income tax purposes, an exchange of shares is treated as a sale of
the shares and a purchase of the shares you receive in exchange. Therefore, you
may incur a taxable gain or loss in connection with the exchange.
STATEMENTS AND NOTICES. You will receive an annual statement outlining the tax
status of your distributions. You will also receive written notices of certain
distributions paid by the Funds during the prior taxable year.
49
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance of each Fund for the past five years or during the term of its
operation, whichever is shorter. Certain information reflects financial results
for a single Fund share. The total returns in the table represent the rate an
investor would have earned or lost on an investment in the Funds (assuming
reinvestment of all dividends and distributions). Ernst & Young LLP audited the
financial information of the Bond Fund for the year ended December 31, 1999.
Information for periods ended before December 31, 1999 for the Bond Fund was
audited by other independent auditors. All of the financial information for each
of the other Funds was audited by other independent auditors. The reports of the
auditors, along with the Funds' financial statements, are included in the SAI,
which is available upon request.
BOND FUND - CLASS A
<TABLE>
<CAPTION>
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- -----------------------------------------------------------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 10.39 $ 10.22 $ 10.17 $ 10.61 $ 9.88
--------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.59 0.55 0.61 0.71 0.56
Net realized and unrealized gains
(loss) on investments (0.76) 0.30 0.11 (0.43) 1.07
--------------------------------------------------------------------------
Total from investment operations (0.17) 0.85 0.72 0.28 1.63
--------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (0.68) (0.57) (0.66) (0.70) (0.86)
Realized capital gains -- (0.11) (0.01) (0.02) (0.04)
Return of capital (0.07) -- -- -- --
--------------------------------------------------------------------------
Total dividends and distributions (0.75) (0.68) (0.67) (0.72) (0.90)
--------------------------------------------------------------------------
Net asset value, end of year $ 9.47 $ 10.39 $ 10.22 $ 10.17 $ 10.61
==========================================================================
Total return(a) (1.68)% 8.56% 7.30% 2.85% 16.95%
==========================================================================
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of year (000s) $ 4,310 $ 4,924 $ 1,685 $ 821 $ 523
Ratios to average net assets
Expenses(b) 0.90% 0.90% 0.90% 0.90% 0.90%
Net investment income 5.92% 5.68% 6.08% 6.01% 6.21%
Portfolio turnover 57% 170% 88% 64% 78%
- -----------------------------------------------------------------------------------------------------------------------
a The return is calculated without the effects of a sales charge. Total
returns would have been lower had certain expenses not been reimbursed or
waived during the period shown.
b If the fee waiver and reimbursement had not been in place for the periods
listed, the ratios of expenses to average net assets would have been as
follows:
2.26% 4.13% 7.13% 13.61% 29.29%
</TABLE>
50
<PAGE>
BOND FUND - CLASS C(A)
SELECTED DATA FOR A SHARE OUTSTANDING
- --------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
1999
- --------------------------------------------------------
Net asset value, beginning of year $ 10.08
----------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.51
Net realized and unrealized gain
(loss) on investments (0.75)
Total from investment operations (0.24)
----------
LESS DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (0.62)
Realized capital gains --
Return of capital (0.07)
----------
Total dividends and distributions (0.69)
----------
Net asset value, end of year $ 9.15
==========
Total return(b) (2.41)%
==========
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of year (000s) $ 998
Ratios to average net assets(c)
Expenses 1.65%
Net investment income 5.18%
Portfolio turnover 120%
- --------------------------------------------------------
a The Class commenced operations on January 1, 1999.
b The return is calculated without the effects of a sales charge. Total
returns would have been lower had certain expenses not been reimbursed or
waived during the period shown.
c If the waiver and reimbursement had not been in place for the periods
listed, the ratio of expenses to average net assets would have been 3.01%.
51
<PAGE>
INTERMEDIATE TERM GOVERNMENT INCOME FUND - CLASS A
<TABLE>
<CAPTION>
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- -----------------------------------------------------------------------------------------------------------------------
YEARS ENDED SEPTEMBER 30,
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year $ 11.15 $ 10.67 $ 10.49 $ 10.73 $ 10.14
--------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.60 0.61 0.61 0.61 0.64
Net realized and unrealized gains
(losses) on investments (0.81) 0.48 0.18 (0.24) 0.59
--------------------------------------------------------------------------
Total from investment operations (0.21) 1.09 0.79 0.37 1.23
--------------------------------------------------------------------------
Dividends from net investment income (0.60) (0.61) (0.61) (0.61) (0.64)
--------------------------------------------------------------------------
Net asset value at end of year $ 10.34 $ 11.15 $ 10.67 $ 10.49 $ 10.73
==========================================================================
Total return (A) (1.93)% 10.54% 7.74% 3.55% 12.52%
==========================================================================
Net assets at end of year (000's) $ 45,060 $ 51,168 $ 53,033 $ 56,095 $ 56,969
==========================================================================
Ratio of net expenses to average net
assets 0.99% 0.99% 0.99% 0.99% 0.99%
Ratio of net investment income to
average net assets 5.59% 5.64% 5.78% 5.75% 6.17%
Portfolio turnover rate 58% 29% 49% 70% 58%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
A Total returns shown exclude the effect of applicable sales loads.
52
<PAGE>
MONEY MARKET FUND
<TABLE>
<CAPTION>
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- -----------------------------------------------------------------------------------------------------------------------
YEAR YEAR ONE MONTH YEAR PERIOD ENDED
ENDED ENDED ENDED ENDED AUGUST 31,
SEPT. 30, SEPT. 30, SEPT. 30, AUGUST 31, 1996(B)
1999 1998 1997(A) 1997
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------------------------------------------------------------------------
Net investment income 0.046 0.050 0.004 0.050 0.046(C)
--------------------------------------------------------------------------
Dividends from net investment income (0.046) (0.050) (0.004) (0.050) (0.046)
--------------------------------------------------------------------------
Net asset value at end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==========================================================================
Total return 4.74% 5.07% 4.99%(E) 5.14% 4.70%
==========================================================================
Net assets at end of period (000's) $ 23,198 $ 18,492 $ 73,821 $ 94,569 $ 76,363
==========================================================================
Ratio of net expenses to average net
assets (D) 0.65% 0.79% 0.80%(E) 0.65% 0.65%(E)
Ratio of net investment income to
average net assets 4.63% 4.95% 4.99%(E) 5.03% 4.94%(E)
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
A Effective as of the close of business on August 29, 1997, the Fund was
reorganized and its fiscal year-end, subsequent to August 31, 1997, was
changed to September 30.
B Represents the period from the commencement of operations (September 29,
1995) through August 31, 1996.
C Calculated using weighted average shares outstanding during the period.
D Absent fee waivers and/or expense reimbursements, the ratios of expenses to
average net assets would have been 1.11%, 0.79% and 0.99% e for the periods
ended September 30, 1999 and August 31, 1997 and 1996, respectively.
E Annualized.
53
<PAGE>
SHORT TERM GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- -----------------------------------------------------------------------------------------------------------------------
YEARS ENDED SEPTEMBER 30,
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------------------------------------------------------------------------
Net investment income 0.040 0.046 0.044 0.044 0.046
--------------------------------------------------------------------------
Dividends from net investment income (0.040) (0.046) (0.044) (0.044) (0.046)
--------------------------------------------------------------------------
Net asset value at end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==========================================================================
Total return 4.02% 4.74% 4.53% 4.51% 4.69%
==========================================================================
Net assets at end of year (000's) $ 110,060 $ 102,481 $ 96,797 $ 91,439 $ 87,141
==========================================================================
Ratio of net expenses to average net
assets (A) 0.95% 0.91% 0.97% 0.99% 0.99%
Ratio of net investment income to
average net assets 3.95% 4.63% 4.43% 4.42% 4.59%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
A Absent fee waivers, the ratio of expenses to average net assets would have
been 0.94% for the year ended September 30, 1998.
54
<PAGE>
INSTITUTIONAL GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- -----------------------------------------------------------------------------------------------------------------------
YEARS ENDED SEPTEMBER 30,
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------------------------------------------------------------------------
Net investment income 0.047 0.052 0.051 0.051 0.053
--------------------------------------------------------------------------
Dividends from net investment income (0.047) (0.052) (0.051) (0.051) (0.053)
--------------------------------------------------------------------------
Net asset value at end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==========================================================================
Total return 4.78% 5.30% 5.17% 5.18% 5.42%
==========================================================================
Net assets at end of year (000's) $49, 848 $ 44,797 $ 61,248 $ 39,382 $ 36,009
==========================================================================
Ratio of net expenses to average net
assets (A) 0.40% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to
average net assets 4.68% 5.17% 5.07% 5.06% 5.30%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
A Absent fee waivers, the ratios of expenses to average net assets would have
been 0.47%, 0.45%, 0.45%, 0.49% and 0.42% for the years ended September 30,
1999, 1998, 1997, 1996 and 1995, respectively.
55
<PAGE>
FOR MORE INFORMATION
- --------------------
For investors who want more information about the Funds, the following documents
are available free upon request:
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Funds and is legally a part of this Prospectus.
ANNUAL/SEMI-ANNUAL REPORTS: Each Fund's annual and semi-annual reports provide
additional information about each Fund's investments. In the annual report, you
will find a discussion of the market conditions and investment strategies that
significantly affected a Fund's performance during its last fiscal year.
You can get free copies of the SAI, the reports, other information and answers
to your questions about the Funds by contacting your financial advisor, or the
Funds at:
Touchstone Family of Funds
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
800.543.0407
http://www.touchstonefunds.com
You can view the Funds' SAI and the reports at the Public Reference Room of the
Securities and Exchange Commission.
For a fee, you can get text-only copies by writing to the Public Reference Room
of the SEC, 450 Fifth Street N.W., Washington, D.C. 20549-0102 or by calling the
SEC at 1-202-942-8090. You can get information about the operation of the Public
Reference Room by calling the SEC at 1.202.942.8090.
You can also view the SAI and the reports free from the SEC's Internet website
at http://www.sec.gov. You can get information about the SEC's Internet website
by writing to the SEC at the above address or by e-mailing a request to:
[email protected].
Investment Company Act file no. 811-2538
56
<PAGE>
<TABLE>
<S> <C>
[LOGO] Touchstone Return completed form to:
---------- Touchstone Family of Funds
Family of Funds P.O. Box 5354
Cincinnati, OH 45202
For assistance in completing this form, call
NOT FOR USE WITH IRAS, SEP, SIMPLE OR 403B PLANS 800-543-0407
Was order previously telephoned in? o Yes o No If yes, date ( / / ) and confirmation #______________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION (check one box only)
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] INDIVIDUAL [ ] JOINT TENANT (For joint-owners, joint tenancy with right of survivorship is presumed unless otherwise specified.)
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Individual Owner - First, Initial, Last Name of Joint Owner (if any) - First, Initial, Last
- ------------------------------------------------------------------------------------------------------------------------------------
Owner's Social Security # Date of Birth Joint Owner's Social Security # Date of Birth
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] GIFT/TRANSFER TO A MINOR (Only one custodian and minor)
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Minor - First, Initial, Last Under ___________________ the Uniform Gifts/Transfers to Minors Act
(State of minor's residence)
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Custodian - First, Initial, Last Minor's Social Security # Minor's Date of Birth
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] TRUST
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Trust Agreement Taxpayer I.D. Number Date of Trust Agreement
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Trustee(s) - First, Initial, Last Name of Beneficiary - First, Initial, Last
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Plan Administrator Address Phone Number Fax Number E-mail Address
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] CORPORATION, PARTNERSHIP OR OTHER ENTITY
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Corporation or Other Entity
- ------------------------------------------------------------------------------------------------------------------------------------
Taxpayer I.D. Number
- ------------------------------------------------------------------------------------------------------------------------------------
2. ADDRESS (P.O. Box not acceptable without street address)
- ------------------------------------------------------------------------------------------------------------------------------------
Street Home Phone
( )
- ------------------------------------------------------------------------------------------------------------------------------------
City Business Phone
( )
- ------------------------------------------------------------------------------------------------------------------------------------
State Zip Are you a U.S. Citizen? [ ] Yes [ ] No (please specify country):
- ------------------------------------------------------------------------------------------------------------------------------------
3. INITIAL INVESTMENT
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] ALLOCATE MY INVESTMENT USING THE FOLLOWING FUNDS: [ ] A SHARES OR [ ] C SHARES (A SHARES WILL BE PURCHASED UNLESS
INDICATED OTHERWISE.)
STOCK FUNDS TAXABLE BOND FUNDS TAX-FREE BOND FUNDS
[ ] International Equity Fund $________ [ ] High Yield Fund $________ [ ] Ohio Insured Tax-Free Fund $_______
[ ] Emerging Growth Fund $________ [ ] Bond Fund $________ [ ] Tax-Free Intermediate Term Fund $_______
[ ] Aggressive Growth Fund $________ [ ] Intermediate Term
[ ] Growth/Value Fund $________ Government Income Fund $________ TAX-FREE MONEY MARKET FUNDS
[ ] Equity Fund $________ [ ] Tax-Free Money Fund $_______
[ ] Enhanced 30 Fund $________ TAXABLE MONEY MARKET FUNDS [ ] California Tax-Free Money Fund $_______
[ ] Value Plus Fund $________ [ ] Money Market Fund $________ [ ] Florida Tax-Free Money Fund $_______
[ ] Utility Fund $________ [ ] Short Term Government $________ [ ] Ohio Tax-Free Money Fund - R $_______
Income Fund [ ] Ohio Tax-Free Money Fund - I $_______
[ ] Institutional Government
Income Fund $________
[ ] Total investment of $________
Please make check payable to the TOUCHSTONE FAMILY OF FUNDS.
- ------------------------------------------------------------------------------------------------------------------------------------
4. DISTRIBUTION OPTION (check one box only)
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] Reinvest all dividends and capital gains in additional shares [ ] Pay all capital gains in cash and reinvest dividends
[ ] Pay all dividends and capital gains in cash [ ] Cross Reinvestment: Please call Touchstone at
800-543-0407 for further instructions.
[ ] Pay all dividends in cash and reinvest capital gains
If not specified, dividends and capital gains will be reinvested in the Fund that pays them.
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
5. RIGHTS OF ACCUMULATION
- ------------------------------------------------------------------------------------------------------------------------------------
If you already have an account with the Touchstone Family of Funds, you may be eligible for reduced sales charges subject to
Touchstone's confirmation of the following eligible holdings:
- ------------------------------------------------------------------------------------------------------------------------------------
Fund Name
- ------------------------------------------------------------------------------------------------------------------------------------
Shareholder Name
- ------------------------------------------------------------------------------------------------------------------------------------
Account Number
- ------------------------------------------------------------------------------------------------------------------------------------
6. LETTER OF INTENT
- ------------------------------------------------------------------------------------------------------------------------------------
If you intend to invest a certain amount over a 13-month period in one or more of the Touchstone Family of Funds, you may be
entitled to a reduced sales charge. I agree to the terms of the Letter of Intent set forth in the Prospectus.
[ ] Although I'm not obligated to do so, I plan to invest over a 13-month period a total of at least:
[ ] $50,000 [ ] $100,000 [ ] $250,000
[ ] $500,000 [ ] $1,000,000 or more
[ ] I am already investing under an existing Letter of Intent in the following account number: ___________________________________.
- ------------------------------------------------------------------------------------------------------------------------------------
7. AUTOMATIC INVESTMENT PLAN
- ------------------------------------------------------------------------------------------------------------------------------------
This plan provides for regular subsequent investments to be made electronically through Automated Clearing House (ACH) from your
bank account into the Fund(s) you select below. There is no charge at the Touchstone Family of Funds, and you may cancel at any time
with no obligations or penalty.
Please withdraw from my bank account $ ___________ (minimum $50) on the [ ] 8th [ ] 15th [ ] 22nd [ ] 29th
[ ] Monthly [ ] Quarterly [ ] Annual basis, beginning ____/____/____ (date) to be invested per the instructions below.
STOCK FUNDS TAXABLE BOND FUNDS TAX-FREE BOND FUNDS
[ ] International Equity Fund $________ [ ] High Yield Fund $________ [ ] Ohio Insured Tax-Free Fund $_______
[ ] Emerging Growth Fund $________ [ ] Bond Fund $________ [ ] Tax-Free Intermediate Term Fund $_______
[ ] Aggressive Growth Fund $________ [ ] Intermediate Term
[ ] Growth/Value Fund $________ Government Income Fund $________ TAX-FREE MONEY MARKET FUNDS
[ ] Equity Fund $________ [ ] Tax-Free Money Fund $_______
[ ] Enhanced 30 Fund $________ TAXABLE MONEY MARKET FUNDS [ ] California Tax-Free Money Fund $_______
[ ] Value Plus Fund $________ [ ] Money Market Fund $________ [ ] Florida Tax-Free Money Fund $_______
[ ] Utility Fund $________ [ ] Short Term Government $________ [ ] Ohio Tax-Free Money Fund - R $_______
Income Fund [ ] Ohio Tax-Free Money Fund - I $_______
[ ] Institutional Government
Income Fund $________
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] Checking Account (please attach a voided check) o Savings Account (please attach a preprinted deposit slip)
- ------------------------------------------------------------------------------------------------------------------------------------
Bank Account Registration Bank Name
- ------------------------------------------------------------------------------------------------------------------------------------
Street City State Zip
- ------------------------------------------------------------------------------------------------------------------------------------
Bank Routing Number Bank Account Number
- ------------------------------------------------------------------------------------------------------------------------------------
Any Joint Owner of your bank account who is not a Joint Owner of this Date
new account with the Touchstone Family of Funds must sign here:
X
- ------------------------------------------------------------------------------------------------------------------------------------
8. TELEPHONE TRANSFERS AND REDEMPTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
Unless the boxes below are checked, by signing this Application, the investor authorizes each Fund and its Transfer Agent to act on
the investor's telephone instructions, or on telephone instructions from any person representing to be an authorized agent of the
investor and requesting a redemption or exchange on the investor's behalf. The undersigned agrees that any redemption or exchange
made pursuant to this authorization shall be subject to the provisions of the current Prospectus of each Fund, and that neither the
Funds nor their Transfer Agent or Distributor, nor their respective affiliates, will be liable for any loss, damage, expense or cost
which may arise out of any telephone redemption or exchange request they reasonably believe to be genuine, including any fraudulent
or unauthorized requests. The investor(s) will bear the risk of any such loss. In an effort to determine that telephone requests are
genuine, the Funds and/or their Transfer Agent will employ reasonable procedures, which may include, among others, requiring forms
of personal identification prior to acting upon telephone instructions and providing written confirmation of the transactions.
Telephone conversations also may be recorded. REDEMPTION PROCEEDS OF $1,000 OR MORE MAY BE WIRED TO THE SHAREHOLDER'S ACCOUNT AT A
COMMERCIAL BANK OR BROKERAGE FIRM IN THE UNITED STATES UPON VERBAL REQUEST IF THE BANK ACCOUNT INFORMATION IN SECTION 7 IS COMPLETE.
(check only if you do not want to use telephone authorization.)
[ ] I DO NOT elect the telephone exchange privilege. [ ] I DO NOT elect the telephone redemption privilege.
- ------------------------------------------------------------------------------------------------------------------------------------
9. AUTOMATIC REBALANCING
- ------------------------------------------------------------------------------------------------------------------------------------
Do you wish to employ the automatic rebalancing feature? [ ] Yes (if yes, please attach Form 7062) [ ] No
- ------------------------------------------------------------------------------------------------------------------------------------
10. ELIGIBILITY FOR EXEMPTION FROM SALES CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] If you are eligible for exemption from sales charges as described in the Statement of Additional Information, please check here
and attach Form 7008.
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
11. TAXPAYER I.D. NUMBER CERTIFICATION/SIGNATURES
- ------------------------------------------------------------------------------------------------------------------------------------
I (We) are of legal age and capacity, have legal authority to purchase shares, have received and read a current prospectus for each
Fund selected and agree to the terms and conditions on this Application and those contained in the current prospectus(es) (including
the Statement(s) of Additional Information) of the Fund(s) selected for purchase. I (We) acknowledge that the account will be
subject to the telephone exchange and redemption privileges (unless declined) described in the Fund's current Prospectus and agree
that the Fund, its Distributor and Transfer Agent will not be liable for any loss in acting on written or telephone instructions
reasonably believed by them to be authentic. I (We) hereby ratify any instructions given pursuant to this Application and for myself
(ourselves) and my (our) successors and assigns do hereby release each Fund, its Distributor and its Transfer Agent and their
respective officers, employees, agents and affiliates from any and all liability in the performance of the acts instructed herein.
I acknowledge that mutual fund shares are not deposits or obligations of, or guaranteed or endorsed by, any bank, credit union or
insurance company and are not federally insured by the FDIC, the Federal Reserve, or any other agency. Mutual fund shares involve
certain risks, including the possible loss of principal.
Under penalty of perjury, the undersigned whose Social Security (employer I.D.) number is shown on this application certifies that
(i) the number is my (our) correct taxpayer identification number and (ii) currently I (we) are not under IRS notification that I
(we) are subject to backup withholding (line out (ii) if under notification). If no such number is shown, the undersigned further
certifies, under penalties of perjury, that either (a) no such number has been issued, and a number has been or will soon be applied
for (if a number is not provided to you within sixty days, the undersigned understands that all payments -- including redemption --
are subject to a 31% withholding under federal tax law, until a number is provided); or (b) that the undersigned is not a citizen of
the U.S., and either does not expect to be in the U.S. for 183 days during each calendar year and does not conduct business in the
U.S. which should receive any gains from the Funds, or is exempt under an income tax treaty. My (Our) signature below constitutes my
(our) agreement and acceptance of all the terms, conditions and account features selected in any and all parts of this Application.
The Internal Revenue Service does not require your consent to any provision of this document other than the certifications required
to avoid backup withholding.
- ------------------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL, JOINT OR CUSTODIAN ACCOUNTS
- ------------------------------------------------------------------------------------------------------------------------------------
Signature of Individual Owner or Custodian Date
X
- ------------------------------------------------------------------------------------------------------------------------------------
Signature of Joint Owner, if any Date
X
- ------------------------------------------------------------------------------------------------------------------------------------
Corporation, Partnership, Trust or Other Accounts
Signature of Authorized Officer, General Partner, Trustee, etc. Date
X
- ------------------------------------------------------------------------------------------------------------------------------------
Title of Corporate Officer, General Partner, Trustee, etc. Date
- ------------------------------------------------------------------------------------------------------------------------------------
12. FOR COMPLETION BY INVESTMENT DEALER
- ------------------------------------------------------------------------------------------------------------------------------------
We hereby submit this application for purchase of shares in accordance with the terms of our Selling Agreement with Touchstone
Securities, Inc. and with the current Prospectus for the Funds.
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Dealer Name
- ------------------------------------------------------------------------------------------------------------------------------------
Dealer's Corporate Office Address City State Zip
- ------------------------------------------------------------------------------------------------------------------------------------
Representative's Name
- ------------------------------------------------------------------------------------------------------------------------------------
Representative's Branch Office Address City State Zip
- ------------------------------------------------------------------------------------------------------------------------------------
Representative's Telephone Number Representative's Number
- ------------------------------------------------------------------------------------------------------------------------------------
Authorized Signature of Investment Dealer
X
- ------------------------------------------------------------------------------------------------------------------------------------
Title
- ------------------------------------------------------------------------------------------------------------------------------------
FIFTH THIRD - SIGNATURE CARD CHECKING
- ------------------------------------------------------------------------------------------------------------------------------------
Submit one card to establish an optional check redemption account which allows you to write checks against your account in the
________________. Please see a Fund's current Prospectus to determine if checkwriting is available in that Fund.
(Name of Fund)
PRINT CLEARLY
Name of Account ____________________________________________________________________________________________________________________
Account Number ______________________________________________ Date ______________________________________________________________
The registered owner(s) of this account must sign below. By signing this card the signatory(ies) agrees to all of the terms and
conditions set forth on the reverse side of this card.
_____________________________________________________________ ___________________________________________________________________
Signature Signature
_____________________________________________________________ ___________________________________________________________________
Signature Signature
INSTITUTIONAL ACCOUNTS: JOINT TENANCY ACCOUNTS:
[ ] Check here if any two signatures are required on checks [ ] Check here if both signatures are required on checks
[ ] Check here if only one signature is required on checks [ ] Check here if only one signature is required on checks
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] Check here if Business Style Checks (600 per book with voucher stub) are required. A charge will be made to your account.
Individual Style checks are provided at no charge.
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
SYSTEMATIC WITHDRAWAL PLAN
- ------------------------------------------------------------------------------------------------------------------------------------
This plan enables you to withdraw money regularly-either by check directly to you or electronically to your domestic bank account.
It eliminates your need to make a special request every month, quarter or year. There is no charge at the Touchstone Family of
Funds, and you may cancel at any time with no obligations or penalty.
Please make a total withdrawal of ___________ (minimum $50) from my Touchstone account(s) on a [ ] Monthly [ ] Quarterly [ ] Annual
basis, beginning on or about the last day of ________________ (month, year) from the fund(s) listed below:
STOCK FUNDS TAXABLE BOND FUNDS TAX-FREE BOND FUNDS
[ ] International Equity Fund $________ [ ] High Yield Fund $________ [ ] Ohio Insured Tax-Free Fund $_______
[ ] Emerging Growth Fund $________ [ ] Bond Fund $________ [ ] Tax-Free Intermediate Term Fund $_______
[ ] Aggressive Growth Fund $________ [ ] Intermediate Term
[ ] Growth/Value Fund $________ Government Income Fund $________ TAX-FREE MONEY MARKET FUNDS
[ ] Equity Fund $________ [ ] Tax-Free Money Fund $_______
[ ] Enhanced 30 Fund $________ TAXABLE MONEY MARKET FUNDS [ ] California Tax-Free Money Fund $_______
[ ] Value Plus Fund $________ [ ] Money Market Fund $________ [ ] Florida Tax-Free Money Fund $_______
[ ] Utility Fund $________ [ ] Short Term Government $________ [ ] Ohio Tax-Free Money Fund - R $_______
Income Fund [ ] Ohio Tax-Free Money Fund - I $_______
[ ] Institutional Government
Income Fund $________
- ------------------------------------------------------------------------------------------------------------------------------------
Existing Account Number (if applicable) [ ] Make check payable to the account owner(s) and send to the address of record
[ ] Make check payable to a third party and send to the name and address below:
- ------------------------------------------------------------------------------------------------------------------------------------
Name - First, Initial, Last Street
- ------------------------------------------------------------------------------------------------------------------------------------
City State Zip
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] Deposit payments in my bank account electronically through Automated Clearing House (ACH) to the account designated below.
[ ] Checking Account (please attach a voided check)
[ ] Savings Account (please attach a preprinted deposit slip)
- ------------------------------------------------------------------------------------------------------------------------------------
Bank Account Registration Bank Name
- ------------------------------------------------------------------------------------------------------------------------------------
Street City State Zip
- ------------------------------------------------------------------------------------------------------------------------------------
Bank Routing Number Bank Account Number
- ------------------------------------------------------------------------------------------------------------------------------------
Any Joint Owner of this new account with the Touchstone Family of Funds Date
who is not a Joint Owner of your bank account must sign here:
X
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
TERMS AND CONDITIONS
--------------------
1. REDEMPTION AUTHORIZATION: The signatory(ies) whose signature(s) appears on the reverse side, intending to be legally bound,
hereby agrees each with the other and with Fifth Third ("Bank"), that the Bank is appointed agent for such person(s) and as such
agent, is directed to redeem shares registered in the name of such signatory(ies) upon receipt of, and in the amount of, checks
drawn upon the above numbered accounts and to deposit the proceeds of such redemptions in said account or otherwise arrange for
application of such proceeds to payments of said checks. The Bank is expressly authorized to commingle such proceeds of such
redemptions in said account or otherwise arrange for application of such proceeds to payments of said checks also on behalf of
Integrated Fund Services, Inc. in effecting the redemption of shares.
The Bank is expressly authorized to honor checks as redemption instructions hereunder without requiring signature guarantees,
and shall not be liable for any loss or liability resulting from the absence of any such guarantee.
2. CHECK PAYMENT: The signatory(ies) authorizes and directs the Bank to pay each check presented hereunder, subject to all laws and
Bank rules and regulations pertaining to checking accounts. In addition, the signatory(ies) agrees that:
(a) No check shall be issued or honored, or redemption effected, for any amounts represented by shares for which certificates
have been issued.
(b) No check shall be issued or honored, or redemption effected, for any amounts represented by shares unless payment for such
shares has been made in full and any checks given in such payment have been collected through normal banking channels.
Shareholders who wish immediate availability of shares for check redemption may purchase their shares with federal funds or
may contact Integrated Fund Services, Inc. for assistance.
(c) Checks issued hereunder cannot be cashed over the counter at the Bank; and
(d) Checks shall be subject to any further information set forth in the applicable Prospectus, including without limitation any
additions, amendments and supplements thereto.
3. DUAL OWNERSHIP: If more than one person is indicated as a registered owner of shares, as by joint ownership, ownership in
common, or tenants by the entireties, then (a) each registered owner must sign this signature card, (b) each registered owner
must sign each check issued hereunder unless the parties have indicated on the face of this card that only one need sign, in
which case the Bank is authorized to act upon such signature, and (c) each signatory guarantees to the Bank the genuineness and
accuracy of the signature of the other signatory(ies). In the event of the death of a joint tenant or tenant by the entireties,
the survivor shall be deemed to own all of the shares and the proceeds thereof upon delivery of appropriate documentation.
4. TERMINATION: The Bank may at any time terminate this account, related share redemption service and its agency for the
signatory(ies) hereto without prior notice by Bank to the signatory(ies).
5. HEIRS AND ASSIGNS: These terms and conditions shall bind the respective heirs, executors, administrators and assigns of the
signatory(ies).
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
TOUCHSTONE FAMILY OF FUNDS
DISTRIBUTOR
Touchstone Securities, Inc.
311 Pike Street
Cincinnati, Ohio 45202-4094
INVESTMENT ADVISOR
Touchstone Advisors, Inc.
311 Pike Street
Cincinnati, Ohio 45202-4094
TRANSFER AGENT
Integrated Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
SHAREHOLDER SERVICE
800.543.0407
