SEMI-ANNUAL
REPORT
September 30, 2000
(Unaudited)
Utility Fund
Equity Fund
Growth/Value Fund
[LOGO]
Agressive Growth Fund THE MARK OF EXCELLENCE(SM)
Enhanced 30 Fund
[GRAPHIC OMITTED] TOUCHSTONE
---------------------------------------------
Family of Funds
<PAGE>
TABLE OF CONTENTS
================================================================================
Page
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Letter from the President 3
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Statements of Assets and Liabilities 4-5
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Statements of Operations 6-7
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Statements of Changes in Net Assets 8-9
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Financial Highlights 10-19
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Notes to Financial Statements 20-26
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Portfolios of Investments:
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Utility Fund 27-28
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Equity Fund 29-30
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Growth/Value Fund 31-32
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Aggressive Growth Fund 33-34
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Enhanced 30 Fund 35-36
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TOUCHSTONE FAMILY OF FUNDS
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<PAGE>
LETTER FROM THE PRESIDENT
================================================================================
Dear Fellow Shareholders: [PICTURE]
Touchstone is pleased to present Touchstone Strategic Trust's semi-annual report
for the six months ended September 30, 2000. This report provides financial data
and performance information for the Aggressive Growth Fund, Growth/Value Fund,
Equity Fund, Enhanced 30 Fund and Utility Fund. These Funds represent five of
the equity products currently offered among the 20 mutual funds which comprise
the Touchstone Family of Funds.
The stock market experienced a particularly difficult September, erasing most of
August's strong gains. For the third quarter, the S&P 500 Index decreased 1.0%
and the NASDAQ Composite fell 7.4%. Weakness was concentrated in large
capitalization technology stocks. For the year, the indices have declined 1.4%
and 9.7%, respectively. These returns are a far cry from the 20% to 30% gains
equity investors have grown accustomed to in recent years, but given that the
long-term returns for stocks are about 11%, a period of consolidation is
understandable.
Investors are wondering if the U.S. economy will glide into a desirable "soft
landing" or something worse. Soft or hard, stockholders are concerned about what
it means for corporate earnings growth. The recent jump in oil prices is
approaching a 10-year high which has raised the specter of inflation. The
November election represents another uncertainty. The major policy proposals of
the presidential candidates could impact financial markets significantly,
especially if the winner's party also controls Congress.
After a year of Fed tightening that included six interest rate hikes, the
economy has finally slowed. While some economists have suggested the possibility
of a recession, the risk appears low. Jobs are plentiful, wages are rising and
consumer confidence remains high. Furthermore, businesses should continue to
spend on productivity-enhancing new technologies, although perhaps not at the
breakneck pace seen recently. Importantly, the negative factors that stirred
recession talk--namely Fed rate hikes and surging energy prices--have begun to
dissipate. Once investors gain confidence that the slowdown is just that,
financial markets may more clearly evaluate the earnings and inflation outlook
going forward.
There are some potential positives for the stock market. First, the benefits of
a soft landing--moderate, sustainable growth with low inflation--may be
appreciated once fundamentals stabilize and earnings guidance for 2001 is
clarified. Second, the financial outlook has improved. The Fed has probably
ended its tightening cycle and could adopt a neutral stance. Valuations have
become more attractive as falling interest rates improve the relative value of
stocks. Finally, the drop in stock prices already seems to discount much of the
potential bad news, setting up a scenario where a change--lower oil prices, a
stable euro or a switch in Fed policy--would be a catalyst for equity prices.
Touchstone remains committed to providing products and services that help
investors meet their financial goals. Our success has been built on the
confidence investors have extended to us. We thank you for your support and look
forward to offering continued service to you in the future.
Sincerely,
/s/ Jill T. McGruder
Jill T. McGruder
President
Touchstone Family of Funds
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<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000 (UNAUDITED)
=======================================================================================
UTILITY EQUITY
(000's) FUND FUND
---------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment securities:
At amortized cost ............................................ $ 24,065 $ 52,308
===================
At market value (Note 2) ..................................... $ 38,426 $ 67,349
Cash ........................................................... 1 712
Dividends and interest receivable .............................. 49 22
Receivable for capital shares sold ............................. 7 15
Other assets ................................................... 28 16
-------------------
TOTAL ASSETS ................................................... 38,511 68,114
-------------------
LIABILITIES
Dividends payable .............................................. 15 --
Payable for securities purchased ............................... 42 --
Payable for capital shares redeemed ............................ 102 62
Payable to affiliates (Note 4) ................................. 26 50
Other accrued expenses and liabilities ......................... 24 80
-------------------
TOTAL LIABILITIES .............................................. 209 192
-------------------
NET ASSETS ..................................................... $ 38,302 $ 67,922
===================
NET ASSETS CONSIST OF:
Paid-in capital ................................................ $ 20,452 $ 50,000
Undistributed net investment loss .............................. -- (268)
Accumulated net realized gains from security transactions ...... 3,489 3,149
Net unrealized appreciation on investments ..................... 14,361 15,041
-------------------
NET ASSETS ..................................................... $ 38,302 $ 67,922
===================
PRICING OF CLASS A SHARES
Net assets attributable to Class A shares ...................... $ 35,475 $ 64,480
===================
Shares of beneficial interest outstanding
(unlimited number of shares authorized, no par value) (Note 5) 2,184 3,009
===================
Net asset value and redemption price per share (Note 2) ........ $ 16.25 $ 21.43
===================
Maximum offering price per share (Note 2) ...................... $ 17.24 $ 22.74
===================
PRICING OF CLASS C SHARES
Net assets attributable to Class C shares ...................... $ 2,827 $ 3,442
===================
Shares of beneficial interest outstanding
(unlimited number of shares authorized, no par value) (Note 5) 174 166
===================
Net asset value and redemption price per share (Note 2) ........ $ 16.25 $ 20.75
===================
Maximum offering price per share (Note 2) ...................... $ 16.46 $ 21.01
===================
</TABLE>
See accompanying notes to financial statements.
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<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000 (UNAUDITED)
======================================================================================================
GROWTH/ AGGRESSIVE
VALUE GROWTH ENHANCED 30
(000's) FUND FUND FUND
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment securities:
At amortized cost ............................................ $115,000 $ 22,954 $ 6,718
==================================
At market value (Note 2) ..................................... $159,977 $ 43,099 $ 6,812
Cash ........................................................... 5 41 --
Dividends receivable ........................................... 11 1 7
Receivable for capital shares sold ............................. 3,427 611 --
Receivable for securities sold ................................. -- -- 118
Other assets ................................................... 47 51 29
----------------------------------
TOTAL ASSETS ................................................... 163,467 43,803 6,966
----------------------------------
LIABILITIES
Payable for securities purchased ............................... 5,865 -- 137
Payable for capital shares redeemed ............................ 606 9 --
Payable to affiliates (Note 4) ................................. 141 64 5
Other accrued expenses and liabilities ......................... 180 74 8
----------------------------------
TOTAL LIABILITIES .............................................. 6,792 147 150
----------------------------------
NET ASSETS ..................................................... $156,675 $ 43,656 $ 6,816
==================================
NET ASSETS CONSIST OF:
Paid-in capital ................................................ $112,390 $ 23,886 $ 6,821
Undistributed net investment loss .............................. (662) (329) --
Accumulated net realized losses from security transactions ..... (30) (46) (99)
Net unrealized appreciation on investments ..................... 44,977 20,145 94
----------------------------------
NET ASSETS ..................................................... $156,675 $ 43,656 $ 6,816
==================================
PRICING OF CLASS A SHARES
Net assets attributable to Class A shares ...................... $125,555 $ 41,443 $ 6,809
==================================
Shares of beneficial interest outstanding
(unlimited number of shares authorized, no par value) (Note 5) 3,703 1,194 681
==================================
Net asset value and redemption price per share (Note 2) ........ $ 33.91 $ 34.70 $ 10.00
==================================
Maximum offering price per share (Note 2) ...................... $ 35.98 $ 36.82 $ 10.61
==================================
PRICING OF CLASS C SHARES
Net assets attributable to Class C shares ...................... $ 31,120 $ 2,213 $ 7
==================================
Shares of beneficial interest outstanding
(unlimited number of shares authorized, no par value) (Note 5) 925 64 1
==================================
Net asset value and redemption price per share (Note 2) ........ $ 33.64 $ 34.60 $ 10.00
==================================
Maximum offering price per share (Note 2) ...................... $ 34.07 $ 35.04 $ 10.13
==================================
</TABLE>
See accompanying notes to financial statements.
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<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)
===================================================================================
UTILITY EQUITY
(000's) FUND FUND
-----------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Dividends ...................................................... $ 434 $ 117
Interest ....................................................... 14 103
---------------
TOTAL INVESTMENT INCOME ........................................ 448 220
---------------
EXPENSES
Investment advisory fees (Note 4) .............................. 138 268
Distribution expenses, Class A (Note 4) ........................ 42 85
Distribution expenses, Class C (Note 4) ........................ 13 17
Transfer agent fees, Class A (Note 4) .......................... 16 16
Transfer agent fees, Class C (Note 4) .......................... 6 6
Accounting services fees (Note 4) .............................. 18 21
Professional fees .............................................. 3 1
Registration fees, Common ...................................... 3 4
Registration fees, Class A ..................................... 4 4
Registration fees, Class C ..................................... 4 4
Custodian fees ................................................. 7 7
Postage and supplies ........................................... 5 5
Trustees' fees and expenses .................................... 2 2
Reports to shareholders ........................................ 2 2
Other expenses ................................................. 1 46
---------------
TOTAL EXPENSES ................................................. 264 488
Fees waived by the Adviser (Note 4) ............................ (4) --
---------------
NET EXPENSES ................................................... 260 488
---------------
NET INVESTMENT INCOME (LOSS) ................................... 188 (268)
---------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized gains from security transactions .................. 3,489 3,149
Net change in unrealized appreciation/depreciation on investments (204) (7,659)
---------------
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS ...... 3,285 (4,510)
---------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS .......... $3,473 $(4,778)
===============
</TABLE>
See accompanying notes to financial statements.
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<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000(A) (UNAUDITED)
========================================================================================================
GROWTH/ AGGRESSIVE
VALUE GROWTH ENHANCED 30
(000's) FUND FUND FUND
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends ...................................................... $ 136 $ 23 $ 35
Interest ....................................................... 197 9 9
----------------------------------
TOTAL INVESTMENT INCOME ........................................ 333 32 44
----------------------------------
EXPENSES
Investment advisory fees (Note 4) .............................. 560 184 23
Distribution expenses, Class A (Note 4) ........................ 120 61 --
Distribution expenses, Class C (Note 4) ........................ 85 -- --
Transfer agent fees, Class A (Note 4) .......................... 30 16 6
Transfer agent fees, Class C (Note 4) .......................... 11 5 4
Accounting services fees (Note 4) .............................. 22 17 14
Registration fees, Common ...................................... 13 6 2
Registration fees, Class A ..................................... 7 1 1
Registration fees, Class C ..................................... 12 2 1
Interest expense (Note 6) ...................................... -- 44 --
Custodian fees ................................................. 16 9 4
Professional fees .............................................. 6 5 3
Postage and supplies ........................................... 6 3 --
Trustees' fees and expenses .................................... 2 2 2
Amortization of organization costs (Note 2) .................... 3 3 --
Reports to shareholders ........................................ 3 1 --
Other expenses ................................................. 99 63 --
----------------------------------
TOTAL EXPENSES ................................................. 995 422 60
Fees waived and/or expenses reimbursed by the Adviser (Notes 4, 6) -- (61) (33)
----------------------------------
NET EXPENSES ................................................... 995 361 27
----------------------------------
NET INVESTMENT INCOME (LOSS) ................................... (662) (329) 17
----------------------------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized losses from security transactions ................. (915) (1,017) (99)
Net change in unrealized appreciation/depreciation on investments 7,780 2,267 94
----------------------------------
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS ...... 6,865 1,250 (5)
----------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ..................... $ 6,203 $ 921 $ 12
==================================
</TABLE>
(A) Except for the Aggressive Growth Fund Class C shares and the Enhanced 30
Fund Class A shares and Class C shares which represents the period from the
initial public offering (May 17, 2000), (May 1,2000) and (May 16, 2000)
through September 30, 2000, respectively.
See accompanying notes to financial statements.
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<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
==========================================================================================================================
UTILITY FUND EQUITY FUND
--------------------------------------------------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
SEPTEMBER 30, ENDED SEPTEMBER 30, ENDED
2000 MARCH 31, 2000 MARCH 31,
(000's) (UNAUDITED) 2000 (UNAUDITED) 2000
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) ................................... $ 188 $ 779 $ (268) $ (193)
Net realized gains from security transactions .................. 3,489 5,713 3,149 9,634
Net change in unrealized appreciation/depreciationon
on investments ............................................... (204) 794 (7,659) 3,404
-----------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS .......... 3,473 7,286 (4,778) 12,845
-----------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income, Class A ............................ (190) (758) -- --
From net investment income, Class C ............................ -- (19) -- --
From net realized gains on security transactions, Class A ...... -- (6,701) -- (9,186)
From net realized gains on security transactions, Class C ...... -- (543) -- (521)
-----------------------------------------------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS
TO SHAREHOLDERS .............................................. (190) (8,021) -- (9,707)
-----------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5)
CLASS A
Proceeds from shares sold ...................................... 833 4,392 12,550 15,425
Reinvested distributions ....................................... 160 6,834 -- 9,128
Payments for shares redeemed ................................... (4,474) (12,989) (8,825) (17,887)
-----------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CLASS A
SHARE TRANSACTIONS ........................................... (3,481) (1,763) 3,725 6,666
-----------------------------------------------------
CLASS C
Proceeds from shares sold ...................................... 222 400 215 534
Reinvested distributions ....................................... -- 533 -- 515
Payments for shares redeemed ................................... (524) (1,239) (132) (667)
-----------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CLASS C
SHARE TRANSACTIONS ........................................... (302) (306) 83 382
-----------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ........................ (500) (2,804) (970) 10,186
-----------------------------------------------------
NET ASSETS
Beginning of period ............................................ 38,802 41,606 68,892 58,706
-----------------------------------------------------
End of period .................................................. $ 38,302 $ 38,802 $ 67,922 $ 68,892
=====================================================
</TABLE>
See accompanying notes to financial statements.
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<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
==============================================================================================================
GROWTH/ AGGRESSIVE GROWTH ENHANCED 30
VALUE FUND FUND FUND
--------------------------------------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
2000 MARCH 31, 2000(B) MARCH 31, 2000(C)
(000's) (UNAUDITED) 2000(A) (UNAUDITED) 2000 (UNAUDITED)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) ....... $ (662) $ (428) $ (329) $ (288) $ 17
Net realized gains (losses) from
security transactions ............ (915) 2,013 (1,017) 1,040 (99)
Net change in unrealized appreciation/
depreciation on investments ...... 7,780 27,647 2,267 14,559 94
--------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS .................. 6,203 29,232 921 15,311 12
--------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income, Class A -- -- -- -- (17)
From net realized gains on
security transactions, Class A ... -- (792) -- (69) --
From net realized gains on
security transaction, Class C .... -- (34) -- -- --
--------------------------------------------------------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS .... -- (826) -- (69) (17)
--------------------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS
(NOTE 5)
CLASS A
Proceeds from shares sold .......... 64,400 44,315 12,504 20,595 6,819
Reinvested distributions ........... -- 671 -- 62 17
Payments for shares redeemed ....... (23,146) (17,428) (12,084) (7,130) (22)
--------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM CLASS A SHARE TRANSACTIONS .. 41,254 27,558 420 13,527 6,814
--------------------------------------------------------------------
CLASS C
Proceeds from shares sold .......... 19,932 9,477 2,146 -- 7
Reinvested distributions ........... -- 33 -- -- --
Payments for shares redeemed ....... (574) (278) (2) -- --
--------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM CLASS C
SHARE TRANSACTIONS ............... 19,358 9,232 2,144 -- 7
--------------------------------------------------------------------
TOTAL INCREASE
IN NET ASSETS .................... 66,815 65,196 3,485 28,769 6,816
--------------------------------------------------------------------
NET ASSETS
Beginning of period ................ 89,860 24,664 40,171 11,402 --
--------------------------------------------------------------------
End of period ...................... $ 156,675 $ 89,860 $ 43,656 $ 40,171 $ 6,816
====================================================================
</TABLE>
(A) Except for the Growth/Value Fund Class C shares which represents the period
from the initial public offering (August 2, 1999) through March 31, 2000.
(B) Except for the Aggressive Growth Fund Class C shares which represents the
period from the initial public offering (May 17, 2000) through September
30, 2000.
(C) Represents the period from the initial public offering (May 1, 2000 for
Class A shares and May 16, 2000 for Class C shares) through September 30,
2000, respectively.
See accompanying notes to financial statements.
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<TABLE>
<CAPTION>
UTILITY FUND - CLASS A
FINANCIAL HIGHLIGHTS
===================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
-------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED
SEPT. 30, YEARS ENDED MARCH 31,
2000 -----------------------------------------------------
(UNAUDITED) 2000 1999 1998 1997 1996
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period ......... $ 14.85 $ 15.42 $ 16.76 $ 12.44 $ 12.24 $ 10.47
---------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income ........................ 0.08 0.25 0.38 0.43 0.46 0.47
Net realized and unrealized gains (losses)
on investments ............................. 1.40 2.50 (1.16) 4.56 0.22 1.77
---------------------------------------------------------------
Total from investment operations ............... 1.48 2.75 (0.78) 4.99 0.68 2.24
---------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income ......... (0.08) (0.25) (0.38) (0.43) (0.46) (0.47)
Distributions from net realized gains ........ -- (3.07) (0.18) (0.24) (0.02) --
---------------------------------------------------------------
Total distributions ............................ (0.08) (3.32) (0.56) (0.67) (0.48) (0.47)
---------------------------------------------------------------
Net asset value at end of period ............... $ 16.25 $ 14.85 $ 15.42 $ 16.76 $ 12.44 $ 12.24
===============================================================
Total return(A) ................................ 10.04%(D) 18.07% (4.79%) 40.92% 5.61% 21.65%
===============================================================
Net assets at end of period (000's) ............ $ 35,475 $ 35,915 $ 38,391 $ 42,463 $ 36,087 $ 40,424
===============================================================
Ratio of net expenses to
average net assets(B) ........................ 1.33%(C) 1.34% 1.33% 1.25% 1.25% 1.25%
Ratio of net investment income to
average net assets ........................... 1.11%(C) 1.85% 2.30% 3.03% 3.65% 3.97%
Portfolio turnover rate ........................ 51%(C) 22% 4% 0% 3% 11%
</TABLE>
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Absent fee waivers by the Adviser, the ratio of expenses to average net
assets would have been 1.35% (C) for the six months ended September 30,
2000.
(C) Annualized.
(D) Not annualized.
See accompanying notes to financial statements.
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<TABLE>
<CAPTION>
UTILITY FUND - CLASS C
FINANCIAL HIGHLIGHTS
===================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
-------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED
SEPT. 30, YEARS ENDED MARCH 31,
2000 -----------------------------------------------------
(UNAUDITED) 2000 1999 1998 1997 1996
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period ......... $ 14.86 $ 15.40 $ 16.74 $ 12.43 $ 12.23 $ 10.46
----------------------------------------------------------------
Income (loss) from investment operations:
Net investment income ........................ -- 0.13 0.18 0.31 0.35 0.37
Net realized and unrealized gains (losses)
on investments ............................. 1.39 2.50 (1.16) 4.57 0.24 1.78
---------------------------------------------------------------
Total from investment operations ............... 1.39 2.63 (0.98) 4.88 0.59 2.15
---------------------------------------------------------------
Less distributions:
Dividends from net investment income ......... -- (0.10) (0.18) (0.33) (0.37) (0.38)
Distributions from net realized gains ........ -- (3.07) (0.18) (0.24) (0.02) --
---------------------------------------------------------------
Total distributions ............................ -- (3.17) (0.36) (0.57) (0.39) (0.38)
---------------------------------------------------------------
Net asset value at end of period ............... $ 16.25 $ 14.86 $ 15.40 $ 16.74 $ 12.43 $ 12.23
===============================================================
Total return(A) ................................ 9.43(D) 17.16% (5.92%) 39.91% 4.82% 20.78%
===============================================================
Net assets at end of period (000's) ............ $ 2,184 $ 2,887 $ 3,215 $ 3,597 $ 3,099 $ 3,686
===============================================================
Ratio of net expenses to
average net assets(B) ........................ 2.50%(C) 2.46% 2.50% 2.00% 2.00% 2.00%
Ratio of net investment income to
average net assets ........................... 0.06%(C) 0.73% 1.13% 2.28% 2.89% 3.19%
Portfolio turnover rate ........................ 51%(C) 22% 4% 0% 3% 11%
</TABLE>
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Absent fee waivers by the Adviser, the ratio of expenses to average net
assets would have been 2.52% (C) for the six months ended September 30,
2000.
(C) Annualized.
(D) Not annualized.
See accompanying notes to financial statements.
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<TABLE>
<CAPTION>
EQUITY FUND - CLASS A
FINANCIAL HIGHLIGHTS
===================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
-------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED
SEPT. 30, YEARS ENDED MARCH 31,
2000 -----------------------------------------------------
(UNAUDITED) 2000 1999 1998 1997 1996
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period ......... $ 22.93 $ 22.12 $ 19.38 $ 13.76 $ 12.45 $ 9.84
---------------------------------------------------------------
Income from investment operations:
Net investment income (loss) ................. (0.08) (0.05) 0.04 0.09 0.12 0.13
Net realized and unrealized gains
on investments ............................. (1.42) 4.60 2.73 5.76 1.35 2.60
---------------------------------------------------------------
Total from investment operations ............... (1.50) 4.55 2.77 5.85 1.47 2.73
---------------------------------------------------------------
Less distributions:
Dividends from net investment income ......... -- -- (0.03) (0.08) (0.12) (0.12)
Distributions from net realized gains ........ -- (3.74) -- (0.15) (0.04) --
---------------------------------------------------------------
Total distributions ............................ -- (3.74) (0.03) (0.23) (0.16) (0.12)
---------------------------------------------------------------
Net asset value at end of period ............... $ 21.43 $ 22.93 $ 22.12 $ 19.38 $ 13.76 $ 12.45
===============================================================
Total return(A) ................................ (6.54%)(D) 20.60% 14.30% 42.74% 11.82% 27.90%
===============================================================
Net assets at end of period (000's) ............ $ 64,480 $ 65,274 $ 55,561 $ 38,336 $ 14,983 $ 8,502
===============================================================
Ratio of net expenses to
average net assets(B) ........................ 1.31%(C) 1.26% 1.31% 1.25% 1.25% 1.25%
Ratio of net investment income (loss) to
average net assets ........................... (0.70%)(C) (0.24%) 0.18% 0.53% 0.91% 1.06%
Portfolio turnover rate ........................ 68%(C) 78% 10% 7% 38% 38%
</TABLE>
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 1.43% and 2.02% for the
years ended March 31, 1997 and 1996, respectively.
(C) Annualized.
(D) Not annualized.
See accompanying notes to financial statements.
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<PAGE>
<TABLE>
<CAPTION>
EQUITY FUND - CLASS C
FINANCIAL HIGHLIGHTS
===================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
-------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED
SEPT. 30, YEARS ENDED MARCH 31,
2000 -----------------------------------------------------
(UNAUDITED) 2000 1999 1998 1997 1996
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period ......... $ 22.32 $ 21.86 $ 19.34 $ 13.77 $ 12.46 $ 9.86
---------------------------------------------------------------
Income from investment operations:
Net investment income (loss) ................. (0.19) (0.28) (0.19) (0.03) 0.02 0.05
Net realized and unrealized gains (losses)
on investments ............................. (1.38) 4.48 2.71 5.75 1.35 2.60
---------------------------------------------------------------
Total from investment operations ............... (1.57) 4.20 2.52 5.72 1.37 2.65
---------------------------------------------------------------
Less distributions:
Dividends from net investment income ......... -- -- -- -- (0.02) (0.05)
Distributions from net realized gains ........ -- (3.74) -- (0.15) (0.04) --
---------------------------------------------------------------
Total distributions ............................ -- (3.74) -- (0.15) (0.06) (0.05)
---------------------------------------------------------------
Net asset value at end of period ............... $ 20.75 $ 22.32 $ 21.86 $ 19.34 $ 13.77 $ 12.46
===============================================================
Total return(A) ................................ (7.03%)(D) 19.24% 13.03% 41.63% 11.01% 26.90%
===============================================================
Net assets at end of period (000's) ............ $ 3,442 $ 3,618 $ 3,146 $ 3,862 $ 2,770 $ 2,436
===============================================================
Ratio of net expenses to
average net assets(B) ........................ 2.41%(C) 2.68% 2.41% 2.00% 2.00% 2.00%
Ratio of net investment income (loss) to
average net assets ........................... (1.80%)(C) (1.34%) (0.92%) (0.18%) 0.15% 0.38%
Portfolio turnover rate ........................ 68%(C) 78% 10% 7% 38% 38%
</TABLE>
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 2.14% and 2.70% for the
years ended March 31, 1997 and 1996, respectively.
(C) Annualized.
(D) Not annualized.
See accompanying notes to financial statements.
TOUCHSTONE FAMILY OF FUNDS
----
13
----
<PAGE>
<TABLE>
<CAPTION>
GROWTH/VALUE FUND - CLASS A
FINANCIAL HIGHLIGHTS
=======================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
-----------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR YEAR SEVEN MONTHS YEAR PERIOD
SEPT. 30, ENDED ENDED ENDED ENDED ENDED
2000 MARCH 31, MARCH 31, MARCH 31, AUGUST 31, AUGUST 31,
(UNAUDITED) 2000 1999 1998(A) 1997 1996(B)
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period ......... $ 32.43 $ 17.50 $ 16.30 $ 15.90 $ 11.18 $ 10.00
---------------------------------------------------------------
Income from investment operations:
Net investment loss .......................... (0.14) (0.16) (0.17) (0.08) (0.13) (0.06)(C)
Net realized and unrealized gains
on investments ............................. 1.62 15.51 4.84 1.05 5.39 1.24
---------------------------------------------------------------
Total from investment operations ............... 1.48 15.35 4.67 0.97 5.26 1.18
---------------------------------------------------------------
Distributions from net realized gains .......... -- (0.42) (3.47) (0.57) (0.54) --
---------------------------------------------------------------
Net asset value at end of period ............... $ 33.91 $ 32.43 $ 17.50 $ 16.30 $ 15.90 $ 11.18
===============================================================
Total return(D) ................................ 4.56%(G) 88.88% 29.89% 6.43% 47.11% 11.80%(G)
===============================================================
Net assets at end of period (000's) ............ $125,555 $ 79,066 $ 24,664 $ 28,649 $ 26,778 $ 15,108
===============================================================
Ratio of net expenses to average
net assets(E) ................................ 1.65%(F) 1.52% 1.66% 1.66%(F) 1.95% 1.95%(F)
Ratio of net investment loss to average
net assets ................................... (1.06%)(F) (1.05%) (0.93%) (0.91%)(F) (1.03%) (0.62%)(F)
Portfolio turnover rate ........................ 23%(F) 44% 59% 62%(F) 52% 21%(F)
</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 March 31.
(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) Total returns shown exclude the effect of applicable sales loads.
(E) Absent fee waivers and/or expense reimbursements, the ratio of expenses to
average net assets would have been 2.83%(F) for the period ended August 31,
1996.
(F) Annualized.
(G) Not annualized.
See accompanying notes to financial statements.
TOUCHSTONE FAMILY OF FUNDS
----
14
----
<PAGE>
GROWTH/VALUE FUND - CLASS C
FINANCIAL HIGHLIGHTS
===============================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
-------------------------------------------------------------------------------
SIX MONTHS
ENDED PERIOD
SEPT. 30, ENDED
2000 MARCH 31,
(UNAUDITED) 2000(A)
-------------------------------------------------------------------------------
Net asset value at beginning of period ................. $ 32.30 $ 18.65
-------------------
Income from investment operations:
Net investment loss .................................. (0.17) (0.11)
Net realized and unrealized gains on investments ..... 1.51 14.18
-------------------
Total from investment operations ....................... 1.34 14.07
-------------------
Distributions from net realized gains .................. -- (0.42)
-------------------
Net asset value at end of period ....................... $ 33.64 $ 32.30
===================
Total return(B) ........................................ 4.15% 76.52%
===================
Net assets at end of period (000's) .................... $ 31,120 $ 10,794
===================
Ratio of net expenses to average net assets(C) ......... 2.40% 2.33%
Ratio of net investment loss to average net assets(C) .. (1.81%) (1.77%)
Portfolio turnover rate(C) ............................. 23% 44%
(A) Represents the period from the initial public offering(August 2, 1999)
through March 31, 2000.
(B) Total returns shown exclude the effect of applicable sales loads and are
not annualized.
(C) Annualized.
See accompanying notes to financial statements.
TOUCHSTONE FAMILY OF FUNDS
----
15
----
<PAGE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUND--CLASS A
FINANCIAL HIGHLIGHTS
=============================================================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
-----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR YEAR SEVEN MONTHS YEAR PERIOD
SEPT. 30, ENDED ENDED ENDED ENDED ENDED
2000 MARCH 31, MARCH 31, MARCH 31, AUGUST 31, AUGUST 31,
(UNAUDITED) 2000 1999 1998(A) 1997 1996(B)
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period ... $ 33.71 $ 15.73 $ 15.81 $ 16.29 $ 10.95 $ 10.00
-------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss .................... (0.27) (0.24) (0.27) (0.15) (0.17) (0.11)(C)
Net realized and unrealized gains (losses)
on investments ....................... 1.26 18.30 2.67 (0.33) 5.54 1.06
-------------------------------------------------------------------------
Total from investment operations ......... 0.99 18.06 2.40 (0.48) 5.37 0.95
-------------------------------------------------------------------------
Distributions from net realized gains .... -- (0.08) (2.48) -- (0.03) --
-------------------------------------------------------------------------
Net asset value at end of period ......... $ 34.70 $ 33.71 $ 15.73 $ 15.81 $ 16.29 $ 10.95
=========================================================================
Total return(D) .......................... 2.94%(G) 115.03% 15.46% (2.95%)(G) 49.09% 9.50%(G)
=========================================================================
Net assets at end of period (000's) ...... $ 41,443 $ 40,171 $ 11,402 $ 15,495 $ 13,984 $ 6,550
=========================================================================
Ratio of net expenses to
average net assets(E) .................. 1.94%(F) 1.81% 1.95% 1.95%(F) 1.94% 1.95%(F)
Ratio of net investment loss to
average net assets ..................... (1.77%)(F) (1.62%) (1.52%) (1.66%)(F) (1.57%) (1.26%)(F)
Portfolio turnover rate .................. 13%(F) 40% 93% 40%(F) 51% 16%
Amount of debt outstanding at end
of period ................................ $ -- $ -- $ -- n/a n/a n/a
Average daily amount of debt
outstanding during the period (000's) .. $ 690 $ 351 $ 80 n/a n/a n/a
Average daily number of capital shares
outstanding during the period (000's) .. 1,147 756 818 n/a n/a n/a
Average amount of debt per share during
the period ............................. $ 0.60 $ 0.46 $ 0.10 n/a n/a n/a
</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 March 31.
(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) Total returns shown exclude the effect of applicable sales loads.
(E) Absent fee waivers and/or expense reimbursements, the ratios of expenses to
average net assets would have been 2.27%(F) , 2.13%, 2.00%, 2.62% and 5.05%
(F) for the periods ended September 30, 2000, March 31, 2000 and 1999,
August 31, 1997 and 1996, respectively (Note 4).
(F) Annualized.
(G) Not annualized.
See accompanying notes to financial statements.
TOUCHSTONE FAMILY OF FUNDS
----
16
----
<PAGE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUND--CLASS C
FINANCIAL HIGHLIGHTS
==============================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
----------------------------------------------------------------------------------------------
PERIOD
ENDED
SEPT. 30,
2000(A)
(UNAUDITED)
----------------------------------------------------------------------------------------------
<S> <C>
Net asset value at beginning of period ......................................... $29.21
------
Income from investment operations:
Net investment income (loss) ................................................. (0.13)
Net realized and unrealized gains on investments ............................. 5.52
------
Total from investment operations ............................................... 5.39
------
Net asset value at end of period ............................................... $34.60
======
Total return(B) ................................................................ 19.67%
======
Net assets at end of period (000's) ............................................ $2,213
======
Ratio of net expenses to average net assets(C) ................................. 2.68%(D)
Ratio of net investment loss to average net assets ............................. (2.51%)(D)
Portfolio turnover rate ........................................................ 13%(D)
Amount of debt outstanding at end of period .................................... --
Average daily amount of debt outstanding during the period (000's) ............. $ 690
Average daily number of capital shares outstanding during the period (000's) ... 1,147
Average amount of debt per share during the period ............................. $ 0.60
</TABLE>
(A) Represents the period from the initial public offering of shares (May 17,
2000) through September 30, 2000.
(B) Total return shown excludes the effect of applicable sales loads and is not
annualized.
(C) Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 2.90% (D) for the period
ended September 30, 2000.
(D) Annualized.
See accompanying notes to financial statements.
TOUCHSTONE FAMILY OF FUNDS
----
17
----
<PAGE>
<TABLE>
<CAPTION>
ENHANCED 30 FUND--CLASS A
FINANCIAL HIGHLIGHTS
=============================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
---------------------------------------------------------------------------------------------
PERIOD
ENDED
SEPT. 30,
2000(A)
(UNAUDITED)
---------------------------------------------------------------------------------------------
<S> <C>
Net asset value at beginning of period ......................................... $10.00
------
Income from investment operations:
Net investment income ........................................................ 0.03
------
Less Distributions:
Dividends from net investments income ........................................ (0.03)
------
Net asset value at end of period ............................................... $10.00
======
Total return(B) ................................................................ 0.25%
======
Net assets at end of period (000's) ............................................ $6,809
======
Ratio of net expenses to average net assets(C) ................................. 0.99%(D)
Ratio of net investment income to average net assets ........................... 0.64%(D)
Portfolio turnover rate ........................................................ 6%(D)
</TABLE>
(A) Represents the period from the initial public offering of shares (May 1,
2000) through September 30, 2000.
(B) Total return shown excludes the effect of applicable sales loads and is not
annualized.
(C) Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 2.22% (D) for the period
ended September 30, 2000.
(D) Annualized.
See accompanying notes to financial statements.
TOUCHSTONE FAMILY OF FUNDS
----
18
----
<PAGE>
<TABLE>
<CAPTION>
ENHANCED 30 FUND--CLASS C
FINANCIAL HIGHLIGHTS
==============================================================================================
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
----------------------------------------------------------------------------------------------
PERIOD
ENDED
SEPT. 30,
2000(A)
(UNAUDITED)
----------------------------------------------------------------------------------------------
<S> <C>
Net asset value at beginning of period ......................................... $10.00
------
Income from investment operations:
Net investment loss .......................................................... (0.00)
------
Net asset value at end of period ............................................... $10.00
======
Total return(B) ................................................................ 0.00%
======
Net assets at end of period (000's) ............................................ $ 7
======
Ratio of net expenses to average net assets(C) ................................. 1.76%(D)
Ratio of net investment (loss) to average net assets ........................... (0.32%)(D)
Portfolio turnover rate ........................................................ 6%(D)
</TABLE>
(A) Represents the period from the initial public offering (May 16, 2000)
through September 30, 2000.
(B) Total return shown excludes the effect of applicable sales loads and is not
annualized.
(C) Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 54.29% (D) for the period
ended September 30, 2000.
(D) Annualized.
See accompanying notes to financial statements.
TOUCHSTONE FAMILY OF FUNDS
----
19
----
<PAGE>
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 (UNAUDITED)
================================================================================
1. ORGANIZATION
The Utility Fund, Equity Fund, Growth/Value Fund, Aggressive Growth Fund and
Enhanced 30 Fund (individually, a Fund, and collectively, the Funds) are each a
series of Touchstone Strategic Trust (the Trust). The Trust is registered under
the Investment Company Act of 1940 as an open-end management investment company.
The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 18, 1982. The Declaration of Trust, as amended, permits
the Trustees to issue an unlimited number of shares of each Fund.
The Utility Fund seeks growth of capital and current income by investing
primarily in securities of public utilities. The Fund invests primarily in a
diversified portfolio of common, preferred and convertible preferred stocks and
bonds of domestic public utilities. Public utilities are those companies that
are involved in the production, supply or distribution of electricity, natural
gas, telecommunications (including cable and wireless companies) and water.
The Equity Fund seeks long-term growth of capital by investing primarily in
growth-oriented stocks. The Fund invests primarily in a diversified portfolio of
common stocks which are believed to have growth attributes superior to the
general market.
The Growth/Value Fund seeks long-term capital appreciation primarily through
equity investments in companies whose valuations may not yet reflect the
prospects for accelerated earnings/cash flow growth. The Fund invests primarily
in domestic stocks of large-cap growth companies which are believed to have a
demonstrated record of achievement with excellent prospects for earnings and/or
cash flow growth over a three to five year period.
The Aggressive Growth Fund seeks long-term capital appreciation primarily
through equity investments. The Fund seeks growth opportunities among companies
of various sizes whose valuation may not yet reflect the prospects for
accelerated earnings/cash flow growth. The Fund invests primarily in common
stocks of domestic growth companies which are likely to benefit from new or
innovative products, services or processes.
The Enhanced 30 Fund seeks to achieve a total return which is higher than the
total return of the Dow Jones Industrial Average. The Fund's portfolio is based
on the 30 stocks that comprise the Dow Jones Industrial Average.
The Utility Fund, Equity Fund, Growth/Value Fund, Enhanced 30 Fund and,
effective May 17, 2000, Aggressive Growth Fund each offer two classes of shares:
Class A shares (currently sold subject to a maximum front-end sales load of
5.75% and a distribution fee of up to 0.25% of average daily net assets) and
Class C shares (currently sold subject to a 1.25% front-end sales load, a 1%
contingent deferred sales load for a one-year period and a distribution fee of
up to 1% of average daily net assets). Each Class A and Class C share of a Fund
represents identical interests in the investment portfolio of such Fund and has
the same rights, except that (i) Class C shares bear the expenses of higher
distribution fees, which is expected to cause Class C shares to have a higher
expense ratio and to pay lower dividends than Class A shares; (ii) certain other
class specific expenses will be borne solely by the class to which such expenses
are attributable; and (iii) each class has exclusive voting rights with respect
to matters relating to its own distribution arrangements.
TOUCHSTONE FAMILY OF FUNDS
----
20
----
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
================================================================================
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Funds' significant accounting policies:
Security valuation -- The Funds' portfolio securities are valued as of the close
of the regular session of trading on the New York Stock Exchange (currently 4:00
p.m., Eastern time). Portfolio securities traded on stock exchanges and
securities traded in the over-the-counter market are valued at their last sales
price as of the close of the regular session of trading on the day the
securities are being valued. Securities not traded on a particular day, or for
which the last sale price is not readily available, are valued at their last
broker-quoted bid prices as obtained from one or more of the major market makers
for such securities by an independent pricing service. Securities for which
market quotations are not readily available are valued at their fair value as
determined in good faith in accordance with consistently applied procedures
established by and under the general supervision of the Board of Trustees.
Repurchase agreements -- Repurchase agreements, which are collateralized by U.S.
Government obligations, are valued at cost which, together with accrued
interest, approximates market. At the time each Fund enters into a repurchase
agreement, the seller agrees that the value of the underlying securities,
including accrued interest, will at all times be equal to or exceed the face
amount of the repurchase agreement.
Share valuation -- The net asset value per share of each class of shares of each
Fund is calculated daily by dividing the total value of a Fund's assets
attributable to that class, less liabilities attributable to that class, by the
number of shares of that class outstanding.
Effective August 1, 1999, the maximum offering price per share of Class A shares
of the Utility Fund, Equity Fund and Growth/Value Fund and effective May 17,
2000, Class A shares of the Aggressive Growth Fund is equal to the net asset
value per share plus a sales load equal to 6.10% of the net asset value (or
5.75% of the offering price). The maximum offering price per share of Class C
shares of the Utility Fund, Equity Fund and Growth/Value Fund and, effective May
17, 2000, Aggressive Growth Fund is equal to the net asset value per share plus
a sales load equal to 1.27% of the net asset value (or 1.25% of the offering
price).
Prior to August 1, 1999, the maximum offering price per share of Class A shares
of the Utility Fund and Equity Fund and shares of the Growth/Value Fund and
Aggressive Growth Fund was equal to the net asset value per share plus a sales
load equal to 4.17% of the net asset value (or 4% of the offering price). The
offering price of Class C shares of the Utility Fund and Equity Fund was equal
to the net asset value per share.
The redemption price per share of a Fund, or of each class of shares of a Fund,
is equal to the net asset value per share. However, Class C shares of the Funds
are subject to a contingent deferred sales load of 1% of the original purchase
price if redeemed within a one-year period from the date of purchase.
Investment income -- Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date. Discounts and premiums on securities purchased
are amortized in accordance with income tax regulations which approximate
generally accepted accounting principles.
Distributions to shareholders -- Dividends arising from net investment income,
if any, are declared and paid to shareholders quarterly for the Utility Fund,
Equity Fund and Enhanced 30 Fund and annually for the Growth/Value Fund and
Aggressive Growth Fund. With respect to each Fund, net realized short-term
capital gains, if any, may be distributed throughout the year and net realized
long-term capital gains, if any, are distributed at least once each year. Income
dividends and capital gain distributions are determined in accordance with
income tax regulations.
TOUCHSTONE FAMILY OF FUNDS
----
21
----
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
================================================================================
Allocations between classes -- Investment income earned, realized capital gains
and losses, and unrealized appreciation and depreciation for the Funds are
allocated daily to each class of shares based upon its proportionate share of
total net assets of the Fund. Class specific expenses are charged directly to
the class incurring the expense. Common expenses which are not attributable to a
specific class are allocated daily to each class of shares based upon its
proportionate share of total net assets of the Fund.
Security transactions -- Security transactions are accounted for on the trade
date. Securities sold are determined on a specific identification basis.
Organization costs -- Costs incurred by the Growth/Value Fund and Aggressive
Growth Fund in connection with their organization and registration of shares,
net of certain expenses, have been capitalized and are being amortized on a
straight-line basis over a five year period beginning with each Fund's
commencement of operations.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
Federal income tax -- It is each Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Fund's intention to declare as dividends
in each calendar year at least 98% of its net investment income (earned during
the calendar year) and 98% of its net realized capital gains (earned during the
twelve months ending October 31) plus undistributed amounts from prior years.
The following information is based upon the federal income tax cost of portfolio
investments as of September 30, 2000:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
GROWTH/ AGGRESSIVE
UTILITY EQUITY VALUE GROWTH ENHANCED 30
FUND FUND FUND FUND FUND
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gross unrealized appreciation .... $ 15,520,370 $ 19,774,280 $ 50,763,490 $ 22,054,828 $ 568,248
Gross unrealized depreciation .... (1,208,255) (4,847,992) (5,786,317) (1,910,097) (474,155)
------------------------------------------------------------------------
Net unrealized appreciation ...... $ 14,312,115 $ 14,926,288 $ 44,977,173 $ 20,144,731 $ 94,093
========================================================================
Federal income tax cost .......... $ 24,113,418 $ 52,423,123 $114,999,727 $ 22,954,243 $ 6,717,976
========================================================================
--------------------------------------------------------------------------------------------------------------
</TABLE>
TOUCHSTONE FAMILY OF FUNDS
----
22
----
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
================================================================================
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) were as follows for
the period ended September 30, 2000:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
GROWTH/ AGGRESSIVE
UTILITY EQUITY VALUE GROWTH ENHANCED 30
FUND FUND FUND FUND FUND
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Purchases of investment securities $ 9,254,771 $ 26,273,367 $ 70,693,216 $ 3,821,988 $ 6,870,339
========================================================================
Proceeds from sales and maturities
of investment securities ....... $ 14,779,401 $ 23,136,616 $ 12,663,077 $ 2,556,433 $ 160,972
========================================================================
--------------------------------------------------------------------------------------------------------------
</TABLE>
4. TRANSACTIONS WITH AFFILIATES
The President and certain other officers of the Trust are also officers of
Touchstone Advisors, Inc. (the Adviser), the Trust's investment adviser, or
Touchstone Securities, Inc. (the Underwriter), the Trust's principal
underwriter, and Integrated Fund Services, Inc. (IFS), the Trust's
administrator, transfer agent and accounting services agent. The Adviser, the
Underwriter and IFS are each wholly-owned, indirect subsidiaries of The Western
and Southern Life Insurance Company.
MANAGEMENT AGREEMENTS
The Adviser provides general investment supervisory services for the Funds,
under the terms of separate Management Agreements. Under the Management
Agreements, the Utility Fund and Equity Fund each pay the Adviser a fee, which
is computed and accrued daily and paid monthly, at an annual rate of 0.75% of
its respective average daily net assets up to $200 million; 0.70% of such net
assets from $200 million to $500 million; and 0.50% of such net assets in excess
of $500 million. The Growth/Value Fund and Aggressive Growth Fund each pay the
Adviser a fee, which is computed and accrued daily and paid monthly, at an
annual rate of 1.00% of its respective average daily net assets up to $50
million; 0.90% of such net assets from $50 million to $100 million; 0.80% of
such net assets from $100 million to $200 million; and 0.75% of such net assets
in excess of $200 million. The Enhanced 30 Fund pays the Adviser a fee, which is
computed and accrued daily and paid monthly, at an annual rate of 0.65% of
average daily net assets.
Fort Washington Investment Advisors, Inc. (Fort Washington) has been retained by
the Adviser to manage the investments of the Utility Fund and Equity Fund. The
Adviser (not the Funds) pays Fort Washington a fee for these services.
Mastrapasqua and Associates, Inc. (Mastrapasqua) has been retained by the
Adviser to manage the investments of the Growth/Value Fund and Aggressive Growth
Fund. The Adviser (not the Funds) pays Mastrapasqua a fee for these services.
Todd Investment Advisors, Inc. (Todd) has been retained by the Adviser to manage
the investments of the Enhanced 30 Fund. The Adviser (not the Fund) pays Todd a
fee for these services.
In order to voluntarily reduce operating expenses of the Utility Fund,
Aggressive Growth Fund and Enhanced 30 Fund, the Adviser waived $3,683, $61,025
and $33,452, respectively, of its investment advisory fees during the period
ended September 30, 2000.
TOUCHSTONE FAMILY OF FUNDS
----
23
----
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
================================================================================
TRANSFER AGENT AND SHAREHOLDER SERVICE AGREEMENT
Under the terms of the Transfer, Dividend Disbursing, Shareholder Service and
Plan Agency Agreement between the Trust and IFS, IFS maintains the records of
each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of each Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. For these services, IFS receives a monthly fee at an annual
rate of $17 per shareholder account from each Fund, subject to a $1,000 minimum
monthly fee for each Fund, or for each class of shares of a Fund, as applicable.
In addition, each Fund pays IFS out-of-pocket expenses including, but not
limited to, postage and supplies.
ACCOUNTING SERVICES AGREEMENT
Under the terms of the Accounting Services Agreement between the Trust and IFS,
IFS calculates the daily net asset value per share and maintains the financial
books and records of each Fund. For these services, IFS receives a monthly fee,
based on current net asset levels, of $3,500 from each of the Equity Fund and
Growth/Value Fund, $3,000 from the Utility Fund, Aggressive Growth Fund and
Enhanced 30 Fund. In addition, each Fund pays IFS certain out-of-pocket expenses
incurred by IFS in obtaining valuations of such Fund's portfolio securities.
UNDERWRITING AGREEMENT
The Underwriter is the Funds' principal underwriter and, as such, acts as the
exclusive agent for distribution of the Funds' shares. Under the terms of the
Underwriting Agreement between the Trust and Underwriter, the Underwriter earned
$1,488, $4,783, $166,177, $41,469 and $137 from underwriting and broker
commissions on the sale of shares of the Utility Fund, Equity Fund, Growth/Value
Fund, Aggressive Growth Fund and Enhanced 30 Fund, respectively, during the
period ended September 30, 2000. In addition, the Underwriter collected $202,
$40, $3,147 of contingent deferred sales loads on the redemption of Class C
shares of the Utility Fund, Equity Fund and Growth/Value Fund, respectively.
PLANS OF DISTRIBUTION
The Trust has a Plan of Distribution (Class A Plan) under which shares of each
Fund having one class of shares and Class A shares of each Fund having two
classes of shares may directly incur or reimburse the Adviser for expenses
related to the distribution and promotion of shares. The annual limitation for
payment of such expenses under the Class A Plan is 0.25% of average daily net
assets attributable to such shares.
The Trust also has a Plan of Distribution (Class C Plan) under which Class C
shares of each Fund having two classes of shares may directly incur or reimburse
the Adviser for expenses related to the distribution and promotion of shares.
The annual limitation for payment of such expenses under the Class C Plan is 1%
of average daily net assets attributable to Class C shares.
CUSTODIAN AGREEMENTS
Firstar Bank, N.A., which serves as the custodian for the Growth/Value Fund and
Aggressive Growth Fund, was a significant shareholder of record of each Fund as
of September 30, 2000. Under the terms of its Custodian Agreements, Firstar Bank
receives from each Fund an asset-based fee plus certain transaction charges.
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<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
================================================================================
5. CAPITAL SHARE TRANSACTIONS
Proceeds and payments on capital shares as shown in the Statements of Changes in
Net Assets are the result of the following capital share transactions for the
periods shown:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
UTILITY FUND EQUITY FUND
-------------------------------------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
SEPT. 30, ENDED SEPT. 30, ENDED
2000 MARCH 31, 2000 MARCH 31,
(000's) (UNAUDITED) 2000 (UNAUDITED) 2000
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold ............................................ 56 257 561 689
Shares reinvested ...................................... 11 442 -- 398
Shares redeemed ........................................ (302) (769) (398) (752)
-------------------------------------------------
Net increase (decrease) in shares outstanding .......... (235) (70) 163 335
Shares outstanding, beginning of period ................ 2,419 2,489 2,846 2,511
-------------------------------------------------
Shares outstanding, end of period ...................... 2,184 2,419 3,009 2,846
=================================================
CLASS C
Shares sold ............................................ 15 24 10 23
Shares reinvested ...................................... -- 34 -- 23
Shares redeemed ........................................ (35) (73) (6) (28)
-------------------------------------------------
Net increase (decrease) in shares outstanding .......... (20) (15) 4 (18)
Shares outstanding, beginning of period ................ 194 209 162 144
-------------------------------------------------
Shares outstanding, end of period ...................... 174 194 166 162
=================================================
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
GROWTH/VALUE FUND AGGRESSIVE GROWTH FUND
-------------------------------------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
SEPT. 30, ENDED SEPT. 30, ENDED
2000 MARCH 31, 2000(B) MARCH 31,
(000's) (UNAUDITED) 2000(A) (UNAUDITED) 2000
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold ............................................ 1,937 1,772 376 829
Shares reinvested ...................................... -- 30 -- 3
Shares redeemed ........................................ (672) (774) (374) (365)
-------------------------------------------------
Net increase in shares outstanding ..................... 1,265 1,028 2 467
Shares outstanding, beginning of period ................ 2,438 1,410 1,192 725
-------------------------------------------------
Shares outstanding, end of period ...................... 3,703 2,438 1,194 1,192
=================================================
CLASS C
Shares sold ............................................ 609 342 64 --
Shares reinvested ...................................... -- 1 -- --
Shares redeemed ........................................ (18) (9) -- --
-------------------------------------------------
Net increase in shares outstanding ..................... 591 334 64 --
Shares outstanding, beginning of period ................ 334 -- -- --
-------------------------------------------------
Shares outstanding, end of period ...................... 925 334 64 --
=================================================
-------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Except for the Growth/Value Fund Class C shares which represents the period
from the initial public offering (August 2, 1999) through September 30,
2000.
(B) Except for the Aggressive Growth Fund Class C shares which represents the
period from the initial public offering (May 17, 2000) through September
30, 2000.
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<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
================================================================================
--------------------------------------------------------------------------------
ENHANCED 30 FUND
--------------------------------------------------------------------------------
PERIOD ENDED
SEPT. 30,
2000(A)
(UNAUDITED)
--------------------------------------------------------------------------------
CLASS A
Shares sold ..................................................... 681
Shares reinvested ............................................... 2
Shares redeemed ................................................. (2)
------------
Net increase in shares outstanding .............................. 681
Shares outstanding, beginning of period ......................... --
------------
Shares outstanding, end of period ............................... 681
============
CLASS C
Shares sold ..................................................... 1
Shares reinvested ............................................... --
Shares redeemed ................................................. --
------------
Net increase in shares outstanding .............................. 1
Shares outstanding, beginning of period ......................... --
------------
Shares outstanding, end of period ............................... 1
============
(A) Represents the period from the initial public offering, (May 1, 2000 and
May 16, 2000) for the Class A and Class C shares, respectively, through
September 30, 2000.
6. BORROWINGS
The Growth/Value Fund and Aggressive Growth Fund each have a Loan Agreement with
Firstar Bank, N.A., to be used for temporary or emergency purposes, including
the financing of capital share redemption requests that might otherwise require
the untimely disposition of securities. The Loan Agreements permit borrowings up
to a maximum principal amount outstanding not to exceed the lesser of $1,500,000
for the Growth/Value Fund and $3,000,000 for the Aggressive Growth Fund or
certain other amounts which are calculated based upon the amounts and
composition of assets in each Fund as defined in the Loan Agreement. Each Fund
agrees to pay interest on any unpaid principal balance at prevailing market
rates as defined in the Loan Agreement.
As of September 30, 2000, neither Fund had outstanding borrowings under the Loan
Agreement. The maximum amount outstanding during the six months ended September
30, 2000 for the Aggressive Growth Fund was $2,397,000 at a weighted average
interest rate of 9.23%. For the six months ended September 30, 2000, the
Aggressive Growth Fund incurred, and the Adviser reimbursed, $44,123 of interest
expense on such borrowings.
7. RESTRICTED SECURITY
On December 20, 1999, the Aggressive Growth Fund purchased 83,333 shares of 21e
Web Network, Inc. at an original cost of $500,000. At September 30, 2000, this
security was valued at $167,000 and represented 0.38% of net assets.
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<PAGE>
UTILITY FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000 (UNAUDITED)
================================================================================
PAR MARKET
VALUE VALUE
PREFERRED STOCK-- 1.8% (000'S) (000'S)
--------------------------------------------------------------------------------
ELECTRIC UTILITIES-- 1.7%
Appalachian Power, 8.25% ............................. 5 $ 122
Carolina Power & Light Company, 8.55% ................ 2 50
Columbus Southern Power, 8.38% ....................... 6 158
IES Utilities, Inc., 7.875% .......................... 5 117
Ohio Power Co., 8.16% ................................ 5 120
Virginia Power Capital, 8.05% ........................ 4 96
--------
$ 663
--------
FINANCE - OTHER SERVICES -- 0.1%
PSO Capital I, Series A, 8% .......................... 2 $ 47
--------
TOTAL PREFERRED STOCK (Amortized Cost $677) .......... $ 710
--------
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
COMMON STOCKS-- 94.9% (000'S) (000'S)
--------------------------------------------------------------------------------
ELECTRIC COMPANIES-- 41.5%
Cinergy Corp. ........................................ 44 $ 1,455
CMS Energy Corp. ..................................... 36 970
Constellation Energy Group ........................... 67 3,333
Dominion Resources, Inc. ............................. 8 464
DPL, Inc. ............................................ 70 2,082
Duke Energy Corp. .................................... 38 3,258
FPL Group, Inc. ...................................... 20 1,315
Kansas City Power & Light Co. ........................ 58 1,548
Southern Co. ......................................... 45 1,460
--------
$ 15,885
--------
TELEPHONE -- 18.7%
ALLTEL Corp. ......................................... 12 $ 626
BellSouth Corp. ...................................... 28 1,127
Broadwing, Inc.* ..................................... 37 946
Qwest Communications International,Inc.* ............. 9 433
SBC Communications, Inc. ............................. 39 1,950
Verizon Communications ............................... 40 1,938
WorldPages.com, Inc.* ................................ 30 128
--------
$ 7,148
--------
NATURAL GAS-- 12.8%
Coastal Corp. ........................................ 16 $ 1,186
El Paso Energy Corp. ................................. 10 616
Enron Corp. .......................................... 18 1,577
Williams Cos., Inc. .................................. 36 1,521
--------
$ 4,900
--------
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<PAGE>
UTILITY FUND (CONTINUED)
================================================================================
MARKET
SHARES VALUE
COMMON STOCKS-- 94.9% (000'S) (000'S)
--------------------------------------------------------------------------------
POWER PRODUCERS -- 10.7%
AES Corp.* ........................................... 60 $ 4,110
--------
COMMUNICATION EQUIPMENT-- 8.0%
Lucent Technologies, Inc. ............................ 26 $ 795
Nortel Networks Corp. ................................ 38 2,263
--------
$ 3,058
--------
COMMUNICATION -- 3.0%
Centennial Cellular Communications ................... 30 $ 660
McLeodusa, Inc. - Class A ............................ 35 501
--------
$ 1,161
--------
TELECOMMUNICATIONS - LONG DISTANCE-- 0.2%
RSL Communications, Ltd. - Class A* .................. 35 $ 70
--------
TOTAL COMMON STOCKS (Cost $22,004) ................... $ 36,332
--------
--------------------------------------------------------------------------------
PAR MARKET
VALUE VALUE
COMMERCIAL PAPER-- 3.6% (000'S) (000'S)
--------------------------------------------------------------------------------
Nevada Power, 10/02/00 (Amortized Cost $1,384) ....... $1,384 $ 1,384
--------
TOTAL INVESTMENTS AT VALUE-- 100.3% (Amortized Cost $24,065) $ 38,426
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.3%) ...... (124)
--------
NET ASSETS -- 100.0% ................................. $ 38,302
========
* Non-income producing security.
See accompanying notes to financial statements.
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<PAGE>
EQUITY FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000 (UNAUDITED)
================================================================================
MARKET
SHARES VALUE
COMMON STOCKS-- 96.8% (000'S) (000'S)
--------------------------------------------------------------------------------
TECHNOLOGY-- 34.0%
Cisco Systems, Inc.* ................................. 40 $ 2,210
Corning, Inc. ........................................ 8 2,376
EMC Corp.* ........................................... 30 2,974
Intel Corp. .......................................... 42 1,748
Juniper Networks, Inc.* .............................. 10 2,189
Microsoft Corp.* ..................................... 5 301
Nokia Oyj - ADR ...................................... 40 1,592
Oracle Corp.* ........................................ 30 2,362
PMC-Sierra, Inc.* .................................... 5 1,076
Sun Microsystems, Inc.* .............................. 27 3,152
Texas Instruments, Inc. .............................. 21 991
VERITAS Software Corp.* .............................. 15 2,130
--------
$ 23,101
--------
FINANCIAL SERVICES -- 13.3%
American International Group ......................... 31 $ 2,960
Citigroup, Inc. ...................................... 53 2,883
Northern Trust Corp. ................................. 36 3,200
--------
$ 9,043
--------
HEALTH-- 12.3%
Elan Corp. plc - ADR* ................................ 35 $ 1,916
Johnson & Johnson .................................... 15 1,409
Medtronic, Inc. ...................................... 55 2,850
Pfizer, Inc. ......................................... 48 2,157
--------
$ 8,332
--------
COMMUNICATION SERVICES-- 8.1%
Global Crossing Ltd.* ................................ 30 $ 930
Nortel Networks Corp. ................................ 50 2,978
Sprint PCS Group ..................................... 15 526
WorldCom, Inc.* ...................................... 34 1,033
--------
$ 5,467
--------
CONSUMER, CYCLICAL-- 7.9%
Home Depot, Inc. ..................................... 35 $ 1,859
Omnicom Group, Inc. .................................. 25 1,823
Wal-Mart Stores, Inc. ................................ 35 1,684
--------
$ 5,366
--------
CONSUMER STAPLES -- 5.7%
AT&T Corporation - Liberty Media Group - Class A* .... 100 $ 1,800
Univision Communications, Inc. - Class A* ............ 55 2,056
--------
$ 3,856
--------
ENERGY -- 4.4%
Enron Corporation .................................... 18 $ 1,577
Schlumberger Limited ................................. 17 1,399
--------
$ 2,976
--------
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<PAGE>
EQUITY FUND (CONTINUED)
================================================================================
MARKET
SHARES VALUE
COMMON STOCKS-- 96.8% (000'S) (000'S)
--------------------------------------------------------------------------------
CAPITAL GOODS-- 4.2%
General Electric Co. ................................. 50 $ 2,884
--------
BIOLOGICAL PRODUCTS-- 2.1%
Amgen* ............................................... 20 $ 1,397
--------
ELECTRIC SERVICES -- 2.0%
AES Corp.* ........................................... 20 $ 1,370
--------
MANUFACTURING-- 1.9%
Tyco International, Ltd. ............................. 25 $ 1,297
--------
NATURAL GAS TRANSMISSION-- 0.9%
Williams Companies, Inc. ............................. 15 $ 634
--------
TOTAL COMMON STOCKS (Cost $50,682) ................... $ 65,723
--------
--------------------------------------------------------------------------------
PAR MARKET
VALUE VALUE
COMMERCIAL PAPER-- 2.4% (000'S) (000'S)
--------------------------------------------------------------------------------
Nevada Power, 10/02/00 (Amortized Cost $1,626) ....... $1,626 $ 1,626
--------
TOTAL INVESTMENTS AT VALUE-- 99.2% (Amortized Cost $52,308) $ 67,349
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.8% ........ 573
--------
NET ASSETS -- 100.0% ................................. $ 67,922
========
* Non-income producing security.
ADR - American Depository Receipt
See accompanying notes to financial statements.
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<PAGE>
GROWTH/VALUE FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000 (UNAUDITED)
================================================================================
MARKET
SHARES VALUE
COMMON STOCKS-- 95.9% (000'S) (000'S)
--------------------------------------------------------------------------------
INDUSTRIAL-- 2.0%
Emerson Electric Co. ................................. 47 $ 3,156
--------
CONSUMER STAPLES-- 4.5%
AT&T Corp.- Liberty Media- Class A* .................. 119 $ 2,142
USA Networks,Inc.* ................................... 110 2,426
Viacom, Inc. - Class B* .............................. 42 2,457
--------
271 $ 7,025
--------
CONSUMER, NON-CYCLICAL-- 2.2%
Procter & Gamble Co. ................................. 52 $ 3,484
--------
TECHNOLOGY -- 45.7%
Analog Devices ....................................... 32 $ 2,642
Applied Materials, Inc.* ............................. 43 2,562
Broadcom Corp. - Class A* ............................ 20 4,753
Ciena Corp. .......................................... 36 4,421
Cisco Systems, Inc.* ................................. 44 2,431
EMC Corp.* ........................................... 45 4,480
Integrated Device Tech ............................... 24 2,172
Intel Corp. .......................................... 51 2,127
JDS Uniphase Corp.* .................................. 32 3,030
Nortel Networks Corp. ................................ 50 2,978
Novell, Inc.* ........................................ 91 907
Oracle Corp.* ........................................ 124 9,726
PMC-Sierra, Inc.* .................................... 21 4,423
RealNetworks, Inc.* .................................. 43 1,709
Sun Microsystems, Inc.* .............................. 82 9,574
Teradyne, Inc.* ...................................... 34 1,190
Texas Instruments, Inc. .............................. 68 3,195
VERITAS Software Corp.* .............................. 33 4,686
Waters Corp.* ........................................ 52 4,628
--------
924 $ 71,634
--------
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<PAGE>
GROWTH/VALUE FUND (CONTINUED)
================================================================================
MARKET
SHARES VALUE
COMMON STOCKS -- 95.9% (CONTINUED) (000'S) (000'S)
--------------------------------------------------------------------------------
HEALTH-- 28.1%
Amgen, Inc.* ......................................... 56 $ 3,889
Baxter International, Inc. ........................... 48 3,831
Biovail Corp.* ....................................... 39 3,176
Elan Corp. plc- ADR* ................................. 65 3,559
Forest Laboratories, Inc.* ........................... 30 3,441
Genentech, Inc.* ..................................... 20 3,695
IDEC Pharmaceuticals Corp.* .......................... 26 4,472
Medimmune Inc.* ...................................... 39 3,013
PE-Corp.-Celera Genomics* ............................ 28 2,790
Pe Corp. -Pe Biosystems .............................. 37 4,311
Pfizer, Inc. ......................................... 90 4,045
Pharmacia Corporation ................................ 62 3,731
--------
$ 43,953
--------
FINANCIAL SERVICES -- 10.9%
American Express Company ............................. 56 $ 3,402
Bank Of New York Co. Inc. ............................ 72 4,036
Citigroup, Inc. ...................................... 70 3,802
Merrill Lynch & Co., Inc. ............................ 47 3,102
Morgan Stanley Dean Witter & Co. ..................... 30 2,743
--------
$ 17,085
--------
CONGLOMERATES-- 2.5%
General Electric Co. ................................. 67 $ 3,866
--------
TOTAL COMMON STOCK (Cost $105,230) ................... $150,203
--------
--------------------------------------------------------------------------------
PAR MARKET
VALUE VALUE
COMMERCIAL PAPER-- 6.2% (000'S) (000'S)
--------------------------------------------------------------------------------
Nevada Power 10/02/00 ................................ $6,236 $ 6,239
PG & E Generating 10/2/00 ............................ 3,534 3,535
--------
TOTAL COMMERCIAL PAPER (Amortized Cost $9,770) ....... $ 9,774
--------
TOTAL INVESTMENTS AT VALUE-- 102.1% (Amortized Cost $115,000) $159,977
LIABILITIES IN EXCESS OF OTHER ASSETS -- (2.1%) ...... (3,302)
--------
NET ASSETS -- 100.0% ................................. $156,675
========
* Non-income producing security.
ADR - American Depository Receipt.
See accompanying notes to financial statements.
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<PAGE>
AGGRESSIVE GROWTH FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000 (UNAUDITED)
================================================================================
MARKET
SHARES VALUE
COMMON STOCKS-- 95.5% (000'S) (000'S)
--------------------------------------------------------------------------------
HEALTH-- 21.6%
Amgen, Inc.* ......................................... 15 $ 1,047
Elan Corp plc - ADR* ................................. 21 1,150
Forest Laboratories, Inc.* ........................... 10 1,147
Genentech, Inc.* ..................................... 9 1,615
IDEC Pharmaceuticals Corp.* .......................... 9 1,543
Medimmune Inc. ....................................... 15 1,159
MiniMed, Inc.* ....................................... 11 983
Pharmacia Corporation ................................ 13 788
--------
$ 9,432
--------
TECHNOLOGY-- 68.4%
21 E Web Network*(A) ................................. 83 $ 167
Applied Materials, Inc.* ............................. 11 664
Broadcom Corp. - Class A* ............................ 7 1,804
CV Therapeutics Inc. ................................. 6 467
CIENA Corp.* ......................................... 9 1,105
EMC Corp.* ........................................... 29 2,875
Exodus Communications, Inc.* ......................... 12 593
Integrated Device Tech ............................... 7 634
Intel Corp. .......................................... 22 932
JDS Uniphase Corp.* .................................. 29 2,727
Nortel Networks Corp. ................................ 12 685
Novell, Inc.* ........................................ 62 616
Oracle Corp.* ........................................ 42 3,288
PE-Corp. - Celera Genomics ........................... 11 1,066
PE Corp. - PE Biosystems ............................. 15 1,701
PMC-Sierra, Inc.* .................................... 7 1,399
RealNetworks, Inc.* .................................. 13 497
SDL, Inc.* ........................................... 4 1,232
Sun Microsystems Inc.* ............................... 25 2,919
Sycamore Networks, Inc.* ............................. 6 605
Teradyne, Inc.* ...................................... 18 613
VERITAS Software Corp.* .............................. 11 1,566
Waters Corp.* ........................................ 19 1,690
--------
$ 29,845
--------
FINANCIAL SERVICES 5.5%
Merrill Lynch & Co., Inc. ............................ 19 $ 1,253
Morgan Stanley Dean Witter & Co. ..................... 13 1,188
--------
$ 2,441
--------
TOTAL COMMON STOCK (Cost $21,573) .................... $ 41,718
========
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<PAGE>
AGGRESSIVE GROWTH FUND (CONTINUED)
================================================================================
PAR MARKET
VALUE VALUE
COMMERCIAL PAPER-- 3.2% (000'S) (000'S)
--------------------------------------------------------------------------------
Nevada Power, 10/02/00 (Amortized Cost $1,381) ....... $1,381 $ 1,381
--------
TOTAL INVESTMENTS AT VALUE-- 98.7% (Amortized Cost $22,954) $ 43,099
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.3% ........ $ 557
--------
NET ASSETS -- 100% ................................... $ 43,656
========
* Non-income producing security.
ADR - American Depository Receipt.
(A) Restricted Security (Note 8).
See accompanying notes to financial statements.
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<PAGE>
ENHANCED 30 FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000 (UNAUDITED)
================================================================================
MARKET
SHARES VALUE
COMMON STOCKS-- 97.6% (000'S) (000'S)
--------------------------------------------------------------------------------
CONSUMER STAPLES-- 15.1%
Coca-Cola Co. ........................................ 4 $ 226
Home Depot, Inc. ..................................... 4 228
McDonald's Corp. ..................................... 6 193
The Walt Disney Co. .................................. 5 199
Wal-Mart Stores, Inc. ................................ 4 183
--------
$ 1,029
--------
ENERGY-- 4.3%
El Paso Energy Corp. ................................. 5 $ 296
--------
INDUSTRIAL-- 15.2%
Boeing Co. ........................................... 6 $ 365
Du Pont (E.I) DE Nemours ............................. 5 195
Exxon Mobil Corporation .............................. 3 258
Minnesota Mining & Mfg Co. ........................... 2 219
--------
$ 1,037
--------
HEALTH-- 17.0%
Abbott Laboratories .................................. 6 $ 262
Johnson & Johnson .................................... 3 235
Kimberly-Clark Corp. ................................. 4 212
Merck & Co., Inc. .................................... 3 231
Pfizer, Inc. ......................................... 5 220
--------
$ 1,160
--------
TECHNOLOGY-- 28.2%
Cisco Systems, Inc. .................................. 4 $ 199
Computer Sciences Corp.* ............................. 2 134
Hewlett-Packard Co. .................................. 2 184
Honeywell International, Inc. ........................ 6 203
IBM Corp. ............................................ 2 236
Intel Corp. .......................................... 4 158
Microsoft Corp.* ..................................... 3 187
SBC Communications, Inc. ............................. 5 255
Sprint Corp. ......................................... 4 105
United Technologies Corp. ............................ 4 263
--------
$ 1,924
--------
FINANCIAL SERVICES-- 15.1%
American Express Company ............................. 4 $ 255
Bank Of America Corp. ................................ 4 225
Citigroup, Inc. ...................................... 5 252
J.P. Morgan & Company ................................ 2 294
--------
$ 1,026
--------
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<PAGE>
ENHANCED 30 FUND (CONTINUED)
================================================================================
MARKET
SHARES VALUE
COMMON STOCKS -- 98.3% (CONTINUED) (000'S) (000'S)
--------------------------------------------------------------------------------
CONGLOMERATES-- 3.4%
General Electric Co. ................................. 4 $ 232
--------
TOTAL COMMON STOCK (Amortized Cost $6,610) ........... $ 6,704
--------
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
CASH EQUIVALENTS-- 1.6% (000'S) (000'S)
--------------------------------------------------------------------------------
Fifth Third US Treasury Money Market Fund
(Amortized Cost $108) .............................. 108 $ 108
--------
TOTAL INVESTMENTS AT VALUE-- 99.9% (Amortized Cost $6,718) $ 6,812
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.1% ........ 4
--------
NET ASSETS -- 100% ................................... $ 6,816
========
* Non-income producing security.
See accompanying notes to financial statements.
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<PAGE>
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<PAGE>
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<PAGE>
================================================================================
TOUCHSTONE FAMILY OF FUNDS
DISTRIBUTOR
Touchstone Securities, Inc.
221 East Fourth Street
Cincinnati, Ohio 45202-4094
800.638.8194
www.touchstonefunds.com
INVESTMENT ADVISOR
Touchstone Advisors, Inc.
221 East Fourth Street
Cincinnati, Ohio 45202-4094
TRANSFER AGENT
Integrated Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
SHAREHOLDER SERVICE
800.543.0407
TOUCHSTONE
[LOGO] --------------------------------------------
FAMILY OF FUNDS
