TOUCHSTONE FAMILY OF FUNDS
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PROSPECTUS
MAY 1, 2000
(Revised May 10, 2000)
o INTERNATIONAL EQUITY FUND
o EMERGING GROWTH FUND
o AGGRESSIVE GROWTH FUND
[photograph]
The Mark of Excellence sm o GROWTH/VALUE FUND
o EQUITY FUND
o ENHANCED 30 FUND
o VALUE PLUS FUND
o UTILITY FUND
Touchstone
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Family of Funds
The Securities and Exchange Commission has
not approved the Funds' shares as an
investment or determined whether this
prospectus is accurate or complete.
Anyone who tells you otherwise is Class A and Class C Shares
committing a crime. are offered by this Prospectus.
<PAGE>
TOUCHSTONE FAMILY OF FUNDS
Each Fund is a series of Touchstone Strategic Trust (the "Trust"), a group of
8 equity mutual funds. The Trust is part of the Touchstone Family of Funds
which also consists of Touchstone Investment Trust, a group of 6 taxable bond
and money market mutual funds, and Touchstone Tax-Free Trust, a group of 6
tax-free bond and money market mutual funds. Each Fund has a different
investment goal and risk level. For further information about the Touchstone
Family of Funds, contact Touchstone at 800.543.0407.
TABLE OF CONTENTS
Page
Touchstone International Equity Fund.......................................
Touchstone Emerging Growth Fund............................................
Touchstone Aggressive Growth Fund..........................................
Touchstone Growth/Value Fund...............................................
Touchstone Equity Fund.....................................................
Touchstone Enhanced 30 Fund................................................
Touchstone Value Plus Fund.................................................
Touchstone Utility Fund....................................................
Investment Strategies And Risks............................................
The Funds' Management......................................................
Investing With Touchstone..................................................
Distributions And Taxes....................................................
Financial Highlights.......................................................
For More Information......................................................
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TOUCHSTONE INTERNATIONAL EQUITY FUND
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THE FUND'S INVESTMENT GOAL
The International Equity Fund seeks to increase the value of Fund shares over
the long-term.
ITS PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily (at least 80% of total assets) in equity securities
of foreign companies and will invest in at least three countries outside the
United States. The Fund focuses on companies located in Europe, Australia and
the Far East. The Fund may invest up to 40% of its assets in securities issued
by companies active in emerging market countries.
The portfolio manager uses a growth-oriented style to choose investments for the
Fund. This includes the use of both qualitative and quantitative analysis to
identify markets and companies that offer solid growth prospects at reasonable
prices. In selecting investments for the Fund, the portfolio manager combines a
top-down regional and country analysis with a bottom-up security selection. Key
factors in determining regional allocations are earnings, interest rates,
valuation and risk. In selecting individual stocks, the portfolio manager
employs a "growth at a reasonable price" approach. The portfolio manager looks
for companies it believes to have above average earnings growth prospects, but
sell at a fair value.
THE KEY RISKS
The Fund's share price will fluctuate. You could lose money on your investment
in the Fund and the Fund could also return less than other investments:
o If the stock market as a whole goes down
o Because investments in foreign securities may have more frequent and
larger price changes than U.S. securities and may lose value due to
changes in currency exchange rates and other factors
o Because securities of companies in emerging market countries involve
unique risks, such as exposure to economies less diverse and mature
than that of the U.S. and economic or political changes may cause
larger price changes in these securities than other foreign securities
o If the stocks in the Fund's portfolio do not grow over the long term
as expected
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other government entity.
As with any mutual fund, there is no guarantee that the Fund will achieve its
goal.
4
<PAGE>
You can find more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading "Investment
Strategies And Risks" later in this Prospectus.
WHO MAY WANT TO INVEST
This Fund is most appropriate for you if you are an aggressive investor and are
willing to assume a relatively high amount of risk. You should be comfortable
with extreme levels of volatility, and safety of principal in the short term
should not be a high priority for you. This Fund's approach may be appropriate
for you if you are comfortable with wide market fluctuations.
THE FUND'S PERFORMANCE
The bar chart shown below indicates the risks of investing in the International
Equity Fund. It shows changes in the performance of the Fund's Class A shares
from year to year since the Fund started. The chart does not reflect any sales
charges. Sales charges will reduce return.
The Fund's past performance does not necessarily indicate how it will perform in
the future.
The return for Class C shares offered by the Fund will differ from the Class A
returns shown in the bar chart, depending on the expenses of that class.
INTERNATIONAL EQUITY FUND --
CLASS A PERFORMANCE
YEARS TOTAL RETURN
1995 5.29%
1996 11.61%
1997 15.57%
1998 19.94%
1999 39.50%
During the period shown in the bar chart, the highest quarterly return was
29.45% (for the quarter ended December 31, 1999) and the lowest quarterly return
was -13.67% (for the quarter ended September 30, 1998).
The year-to-date return for the Fund's Class A shares as of March 31, 2000 is
- -2.12%.
5
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The following table indicates the risks of investing in the International Equity
Fund. It shows how the Fund's average annual returns for the periods shown
compare to those of the MSCI EAFE Index, a Morgan Stanley index that includes
stocks traded on 16 exchanges in Europe, Australia and the Far East. The table
shows the effect of the applicable sales charge.
FOR THE PERIODS ENDED DECEMBER 31, 1999
Past 12 Past 5 Since
Months Years Fund Started*
INTERNATIONAL EQUITY FUND -- CLASS A 31.44% 16.43% 13.61%
- ------------------------------------------ ------ ------ ------
INTERNATIONAL EQUITY FUND -- CLASS C 36.69% 16.65% 13.76%
- ------------------------------------------ ------ ------ ------
MSCI EAFE INDEX 27.30% 13.14% 12.49%
- ------------------------------------------ ------ ------ ------
* Class A shares began operations on October 3, 1994 and Class C shares began
operations on January 1, 1999. We calculated the Class C performance
information in the table using the historical performance information of
the Fund's predecessor, restated to reflect the current sales load
applicable to Class C shares.
THE FUND'S FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees paid
directly from your investment)
Class A Shares Class C Shares
Maximum Sales Charge (Load) 5.75% 2.25%
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Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 5.75%1 1.25%
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Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or the amount redeemed, whichever is less) * 1.00%2
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Redemption Fee ** **
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6
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Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 0.95% 0.95%
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Distribution (12b-1) Fees 0.25% 1.00%
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Other Expenses 2.91% 2.91%
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Total Annual Fund Operating Expenses 4.11% 4.86%
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Fee Waiver and/or Expense Reimbursement3 2.51% 2.51%
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Net Expenses 1.60% 2.35%
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1 You may pay a reduced sales charge on very large purchases. There is
no initial sales charge on certain purchases in a Roth IRA, a Roth
Conversion IRA or a qualified retirement plan.
* There is no sales charge at the time of purchase for purchases of $1
million or more but a sales charge of 1.00% will be assessed on shares
redeemed within one year of purchase.
2 The 1.00% is waived for benefits paid to you through a qualified
pension plan.
** You may be charged a fee for each wire redemption. This fee is subject
to change.
3 Touchstone Advisors has contractually agreed to waive or reimburse
certain of the Total Annual Fund Operating Expenses of each Class of
the Fund (the "Sponsor Agreement"). The Sponsor Agreement will remain
in place until at least December 31, 2000.
7
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The following example should help you compare the cost of investing in the
International Equity Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
Class A Shares Class C Shares
1 Year $ 728 $ 360
3 Years $1,537 $1,347
5 Years $2,359 $2,336
10 Years $4,481 $4,822
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o The example for the 3, 5 and 10-year periods is calculated using the
Total Fund Operating Expenses before the limits agreed to under the
Sponsor Agreement for periods after year 1.
8
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TOUCHSTONE EMERGING GROWTH FUND
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THE FUND'S INVESTMENT GOAL
The Emerging Growth Fund seeks to increase the value of Fund shares as a primary
goal and to earn income as a secondary goal.
ITS PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily (at least 65% of total assets) in the common stocks
of smaller, rapidly growing (emerging growth) companies. In selecting its
investments, the portfolio managers focus on those companies they believe will
grow faster than the U.S. economy in general. They also choose companies they
believe are priced lower in the market than their true value (i.e. companies
whose price to earnings ratios appear reasonable when compared to their
estimated future earnings growth rates).
THE KEY RISKS
The Fund's share price will fluctuate. You could lose money on your investment
in the Fund and the Fund could also return less than other investments:
o If the stock market as a whole goes down o Because securities of small
cap companies may be more thinly traded and may have more frequent and
larger price changes than securities of larger cap companies
o If the market continually values the stocks in the Fund's portfolio
lower than the portfolio managers believe they should be valued
o If the stocks in the Fund's portfolio are not undervalued as expected
o If the companies in which the Fund invests do not grow as rapidly as
expected
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other government entity.
As with any mutual fund, there is no guarantee that the Fund will achieve its
goal.
You can find more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading "Investment
Strategies And Risks" later in this Prospectus.
9
<PAGE>
WHO MAY WANT TO INVEST
This Fund is most appropriate for you if you are an aggressive investor and are
willing to assume a relatively high amount of risk. You should be comfortable
with extreme levels of volatility, and safety of principal in the short term
should not be a high priority for you. This Fund's approach may be appropriate
for you if you are comfortable with wide market fluctuations.
THE FUND'S PERFORMANCE
The following bar chart indicates the risks of investing in the Emerging Growth
Fund. It shows changes in the performance of the Fund's Class A shares from year
to year since the Fund started. The chart does not reflect any sales charges.
Sales charges will reduce return.
The Fund's past performance does not necessarily indicate how it will perform in
the future.
The return for Class C shares offered by the Fund will differ from the Class A
returns shown in the bar chart, depending on the expenses of that class.
EMERGING GROWTH FUND -- CLASS A PERFORMANCE
YEARS TOTAL RETURN
1995 22.56%
1996 10.56%
1997 32.20%
1998 2.57%
1999 45.85%
During the period shown in the bar chart, the highest quarterly return was
26.84% (for the quarter ended December 31, 1999) and the lowest quarterly return
was -19.30% (for the quarter ended September 30, 1998).
The year-to-date return for the Fund's Class A shares as of March 31, 2000 is
17.92%.
The following table indicates the risks of investing in the Emerging Growth
Fund. It shows how the Fund's average annual returns for the periods shown
compare to those of the Russell 2000 Index, a widely recognized unmanaged index
of small cap stock performance. The table shows the effect of the applicable
sales charge.
10
<PAGE>
FOR THE PERIODS ENDED DECEMBER 31, 1999
Past 12 Past 5 Since
Months Years Fund Started*
EMERGING GROWTH FUND -- CLASS A 37.45% 20.36% 19.95%
- ------------------------------------------ ------ ------ ------
EMERGING GROWTH FUND -- CLASS C 43.00% 20.40% 19.93%
- ------------------------------------------ ------ ------ ------
RUSSELL 2000 INDEX 20.93% 16.62% 15.61%
- ------------------------------------------ ------ ------ ------
* Class A shares began operations on October 3, 1994 and Class C shares began
operations on January 1, 1999. We calculated the Class C performance in
the table using the historical performance information of the Fund's
predecessor, restated to reflect the current sales load applicable to
Class C shares.
THE FUND'S FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees paid
directly from your investment)
Class A Shares Class C Shares
Maximum Sales Charge (Load) 5.75% 2.25%
- --------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 5.75%1 1.25%
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or amount redeemed, whichever is less) * 1.00%2
- --------------------------------------------------------------------------------
Redemption Fee ** **
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11
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Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 0.80% 0.80%
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Distribution (12b-1) Fees 0.25% 1.00%
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Other Expenses 2.24% 2.23%
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Total Annual Fund Operating Expenses 3.29% 4.03%
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Fee Waiver and/or Expense Reimbursement3 1.79% 1.78%
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Net Expenses 1.50% 2.25%
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1 You may pay a reduced sales charge on very large purchases. There is
no initial sales charge on certain purchases in a Roth IRA, a Roth
Conversion IRA or a qualified retirement plan.
* There is no sales charge at the time of purchase for purchases of $1
million or more but a sales charge of 1.00% will be assessed on shares
redeemed within one year of purchase.
2 The 1.00% is waived for benefits paid to you through a qualified
pension plan.
** You may be charged a fee for each wire redemption. This fee is subject
to change.
3 Touchstone Advisors has contractually agreed to waive or reimburse
certain of the Total Annual Fund Operating Expenses of each Class of
the Fund (the "Sponsor Agreement"). The Sponsor Agreement will remain
in place until at least December 31, 2000.
The following example should help you compare the cost of investing in the
Emerging Growth Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
Class A Shares Class C Shares
1 Year $ 719 $ 350
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3 Years $1,372 $1,178
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5 Years $2,047 $2,022
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10 Years $3,839 $4,203
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o The example for the 3, 5 and 10-year periods is calculated using the
Total Fund Operating Expenses before the limits agreed to under the
Sponsor Agreement for periods after year 1.
12
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TOUCHSTONE AGGRESSIVE GROWTH FUND
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THE FUND'S INVESTMENT GOAL
The Aggressive Growth Fund seeks long-term capital appreciation primarily
through equity investments. The Fund will seek growth opportunities among
companies of various sizes whose valuation may not yet reflect the prospectus
for accelerated earnings/cash flow growth.
ITS PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in stocks of domestic growth companies that are
likely to benefit from new or innovative products, services or processes that
the portfolio manager believes will enhance the companies' prospects for future
growth in earnings and cash flow. The Fund will invest in companies of various
sizes, including stocks of mid cap and small cap companies. In choosing
securities, the portfolio manager looks for companies it believes to be priced
lower than their true value. These may include companies in the technology
sector. The Fund may also invest (up to 15% of total assets) in common stocks
which are not actively traded on a national or regional stock exchange.
The portfolio manager will invest in two basic categories of companies:
o "Core" companies (approximately 67%) which the portfolio manager
believes have shown above-average and consistent long-term growth in
earnings and cash flow (net income plus depreciation and amortization)
earnings and have excellent prospects for future growth
o "Earnings/cash flow acceleration" companies (up to 34%) which are
currently experiencing a dramatic increase in earnings and/or cash
flow or are projected to do so
The Fund is non-diversified and may invest a significant percentage of its
assets in the securities of a single company.
The Fund may make short-term trades in order to take advantage of changing
market, industry or company conditions. The Fund's portfolio turnover may vary
greatly from year to year and during a particular year. The portfolio manager
does not set a price target for its holdings in order to determine when to sell
an investment. Rather, the portfolio manager generally will sell a security if
one or more of the following occurs:
(1) a change in the fundamentals of a company or an industry;
(2) excessive valuation;
(3) better risk/reward opportunities may be found in other stocks; or
(4) excessive overweighting.
13
<PAGE>
THE KEY RISKS
The Fund's share price will fluctuate. You could lose money on your investment
in the Fund and the Fund could also return less than other investments:
o If the stock market as a whole goes down
o If the portfolio manager is unable to sell the stocks in the Fund's
portfolio which are not actively traded on a regional or national
stock exchange.
o If the stocks in the Fund's portfolio are not undervalued as expected
o If the companies in the Fund's portfolio do not grow earnings and/or
cash flow as expected
o Because the Fund may invest in the technology sector which at times
may be subject to greater market fluctuation than other sectors
o Because the Fund is non-diversified, it may hold a significant
percentage of its assets in the securities of one company and the
securities of that company may not increase in value as expected
o Because securities of small cap and medium cap companies may be more
thinly traded and may have more frequent and larger price changes than
securities of larger cap companies
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other government entity.
As with any mutual fund, there is no guarantee that the Fund will achieve its
goal.
You can find out more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading "Investment
Strategies and Risks" later in this Prospectus.
WHO MAY WANT TO INVEST
The Fund is most appropriate for you if you are an aggressive investor and are
willing to assume a relatively high amount of risk. You should be comfortable
with extreme levels of volatility, and safety of principal in the short term
should not be a high priority for you. This Fund's approach may be appropriate
for you if you are comfortable with wide market fluctuations.
THE FUND'S PERFORMANCE
The following bar chart indicates the risks of investing in the Aggressive
Growth Fund. It shows changes in the performance of the Fund's Class A shares
from year to year since the Fund started. The chart does not reflect any sales
charges. Sales charges will reduce return.
The Fund's past performance does not necessarily indicate how it will perform in
the future.
14
<PAGE>
The return for Class C shares offered by the Fund will differ from the Class A
returns shown in the bar chart, depending on the expenses of that class. As of
the date of this Prospectus, no Class C shares have been issued by the Fund.
AGGRESSIVE GROWTH FUND - CLASS A PERFORMANCE
YEARS TOTAL RETURN
1996 24.08%
1997 17.05%
1998 25.24%
1999 87.37%
During the period shown in the bar chart, the highest quarterly return was
61.81% (for the quarter ended December 31, 1999) and the lowest quarterly
return was -17.13% (for the quarter ended December 31, 1997).
The year-to-date return for the Fund's Class A shares as of March 31, 2000
is 16%.
The following table indicates the risks of investing in the Aggressive Growth
Fund. It shows how the Fund's average annual returns for the periods shown
compare to that of the NASDAQ Composite Index. The NASDAQ Composite Index is an
unmanaged index of common stocks of companies traded over-the-counter and
offered through the National Association of Securities Dealers Automated
Quotations system. The table shows the effect of the applicable sales charge.
FOR THE PERIODS ENDED DECEMBER 31, 1999
Past 12 Since Fund
Months Started*
Aggressive Growth Fund-Class A 76.60% 31.42%
- ----------------------------------------- ------ ------
NASDAQ Composite Index 86.13% 38.16%
- ----------------------------------------- ------ ------
* The Fund started selling Class A shares on September 29, 1995.
15
<PAGE>
THE FUND'S FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees paid
directly from your investment)
Class A Shares Class C Shares
Maximum Sales Charge (Load) 5.75% 2.25%
- --------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 5.75%1 1.25%
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price * 1.00%2
or the amount redeemed, whichever is less)
- --------------------------------------------------------------------------------
Redemption Fee ** **
- --------------------------------------------------------------------------------
Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 1.00% 1.00%
- --------------------------------------------------------------------------------
Distribution (12b-1) Fees 0.16% 1.00%
- --------------------------------------------------------------------------------
Other Expenses 0.84% 0.84%3
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 2.00% 2.84%
- --------------------------------------------------------------------------------
Fee Waiver and/or Expense Reimbursement 0.05%4 0.14%
- --------------------------------------------------------------------------------
Net Expenses 1.95% 2.70%
- --------------------------------------------------------------------------------
1 You may pay a reduced sales charge on very large purchases. There is
also no initial sales charge on certain purchases in a Roth IRA, a
Roth Conversion IRA or a qualified retirement plan.
* There is no sales charge at the time of purchase for purchases of $1
million or more but a sales charge of 1.00% will be assessed on shares
redeemed within one year of purchase.
2 The 1.00% is waived for benefits paid to you through a qualified
pension plan.
** You will be charged a fee for each wire redemption. This fee is
subject to change.
3 Other Expenses are based on estimated amounts for the current fiscal
year.
4 Pursuant to a written contract between Touchstone Advisors and the
Trust, Touchstone Advisors has agreed to waive a portion of its
advisory fee and/or reimburse certain expenses of Class A shares
in order to limit Total Annual Fund Operating Expenses to 1.95%.
Touchstone Advisors has agreed to maintain these expense limitations
through at least March 31, 2001.
16
<PAGE>
The following example should help you compare the cost of investing in the
Aggressive Growth Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
Class A Shares Class C Shares
1 Year $ 766 $ 395
- --------------------------------------------------------------------------------
3 Years $1,166 $ 981
- --------------------------------------------------------------------------------
5 Years $1,591 $1,593
- --------------------------------------------------------------------------------
10 Years $2,768 $3,242
- --------------------------------------------------------------------------------
17
<PAGE>
TOUCHSTONE GROWTH/VALUE FUND
- ----------------------------
THE FUND'S INVESTMENT GOAL
The Growth/Value Fund seeks long-term capital appreciation primarily through
equity investments in companies whose valuation may not reflect the prospects
for accelerated earnings/cash flow growth.
ITS PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in domestic stocks of large cap growth companies that
the portfolio manager believes have a demonstrated record of achievement with
excellent prospects for earnings and/or cash flow growth over a 3 to 5 year
period. In choosing securities, the portfolio manager looks for companies that
it believes to be priced lower than their true value. These may include
companies in the technology sector. The Fund may also invest (up to 10% of total
assets) in common stocks of small cap companies.
The portfolio manager will invest in two basic categories of companies:
o "Core" companies (approximately 67%) which the portfolio manager
believes have shown above-average and consistent long-term growth in
earnings and cash flow (net income plus depreciation and amortization)
and have excellent prospects for future growth
o "Earnings/cash flow acceleration" companies (up to 34%) which are
currently experiencing a dramatic increase in earnings and/or cash
flow or are projected to do so
The Fund is non-diversified and may invest a significant percentage of its
assets in the securities of a single company.
The portfolio manager expects to hold investments in the Fund for an average of
18 to 36 months. However, changes in the portfolio manager's outlook and market
conditions may significantly affect the amount of time the Fund holds a
security. The Fund's portfolio turnover may vary greatly from year to year and
during a particular year. The portfolio manager does not set a price target for
its holdings in order to determine when to sell an investment. Rather, the
portfolio manager generally will sell a security if one or more of the following
occurs:
(1) a change in the fundamentals of a company or an industry;
(2) excessive valuation;
(3) better risk/reward opportunities may be found in other stocks; or
(4) excessive overweighting.
THE KEY RISKS
The Fund's share price will fluctuate. You could lose money on your investment
in the Fund and the Fund could also return less than other investments:
18
<PAGE>
o If the stock market as a whole goes down
o If the market continually values the stocks in the Fund's portfolio
lower than the portfolio manager believes they should be valued
o If the stocks in the Fund's portfolio are not undervalued as expected
o If the companies in the Fund's portfolio do not increase their
earnings and/or cash flow as expected o Because the Fund may invest in
the technology sector which at times may be subject to greater market
fluctuation than other sectors
o Because the Fund is non-diversified, it may hold a significant
percentage of its assets in the securities of one company and the
securities of that company may not increase in value as expected
o Because securities of small cap companies may be more thinly traded
and may have more frequent and larger price changes than securities of
larger cap companies
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other government entity.
As with any mutual fund, there is no guarantee that the Fund will achieve its
goal.
You can find more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading "Investment
Strategies And Risks" later in this Prospectus.
WHO MAY WANT TO INVEST
This Fund will be most appealing to you if you are a moderate or risk tolerant
investor. You should be comfortable with a fair to high degree of volatility.
Capital appreciation may be important to you, but you may not want to take
extreme risks in order to achieve it. This Fund's approach may be most
appropriate for you if you are comfortable with a moderate level of risk.
THE FUND'S PERFORMANCE
The following bar chart indicates the risks of investing in the Growth/Value
Fund. It shows changes in the performance of the Fund's Class A shares from year
to year since the Fund started. The chart does not reflect any sales charges.
Sales charges will reduce return.
The Fund's past performance does not necessarily indicate how it will perform in
the future.
The return for Class C shares offered by the Fund will differ from the Class A
returns shown in the bar chart, depending on the expenses of that class.
19
<PAGE>
GROWTH/VALUE FUND -- CLASS A PERFORMANCE
YEARS TOTAL RETURN
1996 20.65%
1997 23.78%
1998 39.06%
1999 68.25%
During the period shown in the bar chart, the highest quarterly return was
47.98% (for the quarter ended December 31, 1999) and the lowest quarterly
return was -8.50% (for the quarter ended September 30, 1998).
The year-to-date return for the Fund's Class A shares as of March 31, 2000
is 16.82%.
The following table indicates the risks of investing in the Growth/Value Fund.
It shows how the Fund's average annual returns for the periods shown compare to
that of the Standard & Poor's 500 Index. The Standard & Poor's 500 Index is a
widely recognized unmanaged index of common stock prices. The table shows the
effect of the applicable sales charge.
FOR THE PERIODS ENDED DECEMBER 31, 1999
Past 12 Since Fund
Months Started*
GROWTH/VALUE FUND - CLASS A 58.57% 33.94%
- ----------------------------------------- ------ ------
Standard & Poor's 500 Index 21.04% 26.33%
- ----------------------------------------- ------ ------
GROWTH/VALUE FUND - CLASS C -- 49.49%
- ----------------------------------------- ------ ------
Standard & Poor's 500 Index -- 29.35%
- ----------------------------------------- ------ ------
* Class A shares began operations on September 29, 1995. Class C shares
began operations on August 1, 1999.
20
<PAGE>
THE FUND'S FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees paid
directly from your investment)
Class A Shares Class C Shares
Maximum Sales Charge (Load) 5.75% 2.25%
- --------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 5.75%1 1.25%
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or amount redeemed, whichever is less) * 1.00%2
- --------------------------------------------------------------------------------
Redemption Fee ** **
- --------------------------------------------------------------------------------
Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 1.00% 1.00%
- --------------------------------------------------------------------------------
Distribution (12b-1) Fees 0.23% 0.98%
- --------------------------------------------------------------------------------
Other Expenses 0.43% 0.43%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.66% 2.41%3
- --------------------------------------------------------------------------------
1 You may pay a reduced sales charge on very large purchases. There is
no initial sales charge on certain purchases in a Roth IRA, a Roth
Conversion IRA or a qualified retirement plan.
* There is no sales charge at the time of purchase for purchases of $1
million or more but a sales charge of 1.00% will be assessed on shares
redeemed within one year of purchase.
2 The 1.00% is waived for benefits paid to you through a qualified
pension plan.
** You will be charged a fee for each wire redemption. This fee is
subject to change.
3 These expenses are based on estimates for the current fiscal year.
21
<PAGE>
The following example should help you compare the cost of investing in the
Growth/Value Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated and
then sell all of your shares at the end of those periods. The example also
assumes that your investment has a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
Class A Shares Class C Shares
1 Year $ 734 $ 366
- --------------------------------------------------------------------------------
3 Years $1,068 $ 867
- --------------------------------------------------------------------------------
5 Years $1,425 $1,394
- --------------------------------------------------------------------------------
10 Years $2,427 $2,837
- --------------------------------------------------------------------------------
22
<PAGE>
TOUCHSTONE EQUITY FUND
- ----------------------
THE FUND'S INVESTMENT GOAL
The Equity Fund seeks long-term growth of capital by investing primarily in
growth-oriented stocks.
ITS PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in a diversified portfolio of common stocks which are
believed to have growth attributes superior to the general market. In selecting
investments, the portfolio manager focuses on those companies that have
attractive opportunities for growth of principal, yet sell at reasonable
valuations compared to the portfolio manager's expected growth rates of
revenues, cash flows and earnings. Under normal circumstances, the Fund will
invest at least 65% of its total assets in common stocks.
The portfolio manager uses a database of stocks from which to choose companies
and then performs a detailed fundamental analysis on the companies which pass
the initial screening. The intent of this analysis is to:
o Identify superior growth attributes relative to the general market
o Identify high quality large cap companies with superior financial
condition
o Acquire a detailed understanding of a company's earnings power
o Position the portfolio for a superior risk/reward ratio
THE KEY RISKS
The Fund's share price will fluctuate. You could lose money on your investment
in the Fund and the Fund could also return less than other investments:
o If the stock market as a whole goes down
o If the detailed fundamental analysis of companies in the stock
screening process is not accurate
o If the companies in which the Fund invests do not grow as rapidly or
increase in value as expected
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other government entity.
As with any mutual fund, there is no guarantee that the Fund will achieve its
goal.
You can find more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading "Investment
Strategies And Risks" later in this Prospectus.
23
<PAGE>
WHO MAY WANT TO INVEST
This Fund will be most appealing to you if you are a moderate or risk tolerant
person. You should be comfortable with a fair degree of volatility. Capital
appreciation of your investment capital may be important to you, however, you
may be uncomfortable taking extreme risk in order to achieve it. This Fund's
approach may be appropriate for you if you are comfortable with a moderate level
of risk.
THE FUND'S PERFORMANCE
The following bar chart indicates the risks of investing in the Equity Fund. It
shows changes in the performance of the Fund's Class C shares from year to year
since the Fund started. The chart does not reflect any sales charges. Sales
charges will reduce return.
The Fund's past performance does not necessarily indicate how it will perform in
the future.
The return for Class A shares offered by the Fund will differ from the Class C
returns shown in the bar chart, depending on the expenses of that class.
EQUITY FUND -- CLASS C PERFORMANCE
YEARS TOTAL RETURN
1994 -2.43%
1995 31.03%
1996 13.42%
1997 28.37%
1998 20.70%
1999 17.17%
During the period shown in the bar chart, the highest quarterly return was
19.92% (for the quarter ended December 31, 1998) and the lowest quarterly
return was -10.57% (for the quarter ended September 30, 1998).
The year-to-date return for the Fund's Class C shares as of March 31, 2000
is 6.50%.
24
<PAGE>
The following table indicates the risk of investing in the Equity Fund. It
shows how the Fund's average annual returns for the periods shown compare to
that of the Standard & Poor's 500 Index. The Standard & Poor's 500 Index is a
widely recognized unmanaged index of common stock prices. The table shows the
effect of the applicable sales charge.
FOR THE PERIODS ENDED DECEMBER 31, 1999
Past 12 Past 5 Since
Months Years Fund Started*
EQUITY FUND -- CLASS A 11.71% 21.59% 16.16%
- ------------------------------------------ ------ ------ ------
Standard & Poor's 500 Index 21.04% 28.51% 22.82%
- ------------------------------------------ ------ ------ ------
EQUITY FUND -- CLASS C 15.70% 21.65% 15.64%
- ------------------------------------------ ------ ------ ------
Standard & Poor's 500 Index 21.04% 28.51% 22.17%
- ------------------------------------------ ------ ------ ------
* Class A shares began operations on August 2, 1993. Class C shares
began operations on June 7, 1993.
THE FUND'S FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees paid
directly from your investment)
Class A Shares Class C Shares
Maximum Sales Charge (Load) 5.75% 2.25%
- --------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 5.75%1 1.25%
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or amount redeemed, whichever is less) * 1.00%2
- --------------------------------------------------------------------------------
Redemption Fee ** **
- --------------------------------------------------------------------------------
Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 0.75% 0.75%
- --------------------------------------------------------------------------------
Distribution (12b-1) Fees 0.25% 1.00%
- --------------------------------------------------------------------------------
Other Expenses 0.31% 0.66%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.31% 2.41%
- --------------------------------------------------------------------------------
1 You may pay a reduced sales charge on very large purchases. There is
no initial sales charge on certain purchases in a Roth IRA, a Roth
Conversion IRA or a qualified retirement plan.
* There is no sales charge at the time of purchase for purchases of $1
million or more but a sales charge of 1.00% will be assessed on shares
redeemed within one year of purchase.
2 The 1.00% is waived for benefits paid to you through a qualified
pension plan.
** You will be charged a fee for each wire redemption. This fee is
subject to change.
25
<PAGE>
The following example should help you compare the cost of investing in the
Equity Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated and
then sell all of your shares at the end of those periods. The example also
assumes that your investment has a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
Class A Shares Class C Shares
1 Year $ 701 $ 366
- --------------------------------------------------------------------------------
3 Years $ 966 $ 867
- --------------------------------------------------------------------------------
5 Years $1,252 $1,394
- --------------------------------------------------------------------------------
10 Years $2,063 $2,837
- --------------------------------------------------------------------------------
26
<PAGE>
TOUCHSTONE ENHANCED 30 FUND
- ---------------------------
THE FUND'S INVESTMENT GOAL
The Enhanced 30 Fund seeks to achieve a total return which is higher than the
total return of the Dow Jones Industrial Average.
ITS PRINCIPAL INVESTMENT STRATEGIES
The Fund's portfolio is based on the 30 stocks that comprise the Dow Jones
Industrial Average. The Dow Jones Industrial Average is a measurement of general
market price movement for 30 widely held stocks. The portfolio manager seeks to
surpass the total return of the Dow Jones Industrial Average by substituting
stocks that offer above average growth potential for those stocks in the Dow
Jones Industrial Average that appear to have less growth potential. The Fund's
portfolio will at all times consist of 30 stocks and up to 1/3 of these holdings
may represent substituted stocks in the enhanced portion of the portfolio.
The portfolio manager uses a database of 4,000 stocks from which to choose the
companies that will be substituted in the enhanced portion of the portfolio. A
specific process is followed to assist the portfolio manager in its selections:
o The 4,000 stocks are reduced to 1,400 by screening for quality and
market capitalization ($10 billion minimum).
o A model is applied to select stocks that the portfolio manager
believes are priced at a discount to intrinsic value. This model
reduces the stock choices to about 300 companies.
o The portfolio manager then searches for those companies that currently
have a catalyst at work which may help to unlock their earnings
potential.
Stocks are sold when the portfolio manager believes they are overpriced or face
a significant reduction in earnings prospects. The portfolio is rebalanced
periodically or as needed due to changes in the Dow Jones Industrial Average or
the other securities in the portfolio.
The portfolio manager's selection process is expected to cause the Fund's
portfolio to have the following characteristics:
o Attractive valuation
o Above-average earnings and dividend growth
o Above-average market capitalization ratio
o Dominant industry position
o Seasoned management
o Above-average quality
Unlike the Dow Jones Industrial Average, the Enhanced 30 Fund is not
price-weighted.
27
<PAGE>
THE KEY RISKS
The Fund's share price will fluctuate. You could lose money on your investment
in the Fund and the Fund could also return less than other investments:
o If the stock market as a whole goes down
o If the stock selection model is not accurate in its stock screening
process
o If the stocks in the enhanced portion of the portfolio do not increase
the Fund's return as expected o If the market continually values the
stocks in the Fund's portfolio lower than the portfolio manager
believes they should be valued
o If the stocks in the Fund's portfolio are not undervalued as expected
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other government entity.
As with any mutual fund, there is no guarantee that the Fund will achieve its
goal.
You can find out more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading Investment
Strategies and Risks later in this Prospectus.
WHO MAY WANT TO INVEST
This Fund will be most appealing to you if you are a moderate, or risk tolerant
investor. You should be comfortable with a fair degree of volatility. Capital
appreciation may be important to you, but you may not want to take extreme risks
in order to achieve it. This Fund's approach may be most appropriate for you if
you are comfortable with a moderate level of risk.
PERFORMANCE NOTE
Performance information is only shown for those Funds which have had a full
calendar year of operations. Since the Enhanced 30 Fund started on May 1, 2000,
there is no performance information included in this Prospectus.
28
<PAGE>
THE FUND'S FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees paid
directly from your investment)
Class A Shares Class C Shares
Maximum Sales Charge (Load) 5.75% 2.25%
- --------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 5.75%1 1.25%
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or amount redeemed, whichever is less) * 1.00%2
- --------------------------------------------------------------------------------
Redemption Fee ** **
- --------------------------------------------------------------------------------
Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 0.65% 0.65%
- --------------------------------------------------------------------------------
Distribution (12b-1) Fees 0.25% 1.00%
- --------------------------------------------------------------------------------
Other Expenses3 1.00% 1.00%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.90% 2.65%
- --------------------------------------------------------------------------------
Fee Waiver and/or Expense Reimbursement4 .90% .90%
- --------------------------------------------------------------------------------
Net Expenses 1.00% 1.75%
- --------------------------------------------------------------------------------
1 You may pay a reduced sales charge on very large purchases. There is
no initial sales charge on certain purchases in a Roth IRA, a Roth
Conversion IRA or a qualified retirement plan.
* There is no sales charge at the time of purchase for purchases of $1
million or more but a sales charge of 1.00% will be assessed on shares
redeemed within one year of purchase.
2 The 1.00% is waived for benefits paid to you through a qualified
pension plan
** You will be charged a fee for each wire redemption. This fee is
subject to change.
3 Other expenses are based on estimated amounts for the current fiscal
year.
29
<PAGE>
4 Touchstone Advisors has contractually agreed to waive or reimburse
certain of the Total Annual Fund Operating Expenses of each Class of
the Fund (the "Sponsor Agreement"). The Sponsor Agreement will remain
in place until at least March 31, 2001.
The following example should help you compare the cost of investing in the
Enhanced 30 Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated and
then sell all of your shares at the end of those periods. The example also
assumes that your investment has a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
Class A Shares Class C Shares
1 Year $ 671 $ 301
- --------------------------------------------------------------------------------
3 Years $1,055 $ 854
- --------------------------------------------------------------------------------
o The example for the 3 year period is calculated using the Total Fund
Operating Expenses before the limits agreed to under the Sponsor
Agreement for the period after year 1.
30
<PAGE>
TOUCHSTONE VALUE PLUS FUND
- --------------------------
THE FUND'S INVESTMENT GOAL
The Value Plus Fund seeks to increase the value of Fund shares over the
long-term.
ITS PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily (at least 65% of total assets) in common stock of
larger companies that the portfolio manager believes are undervalued. In
choosing undervalued stocks, the portfolio manager looks for companies that have
proven management and unique features or advantages, but are believed to be
priced lower than their true value. These companies may not pay dividends. The
Fund may also invest in common stocks of rapidly growing companies to enhance
the Fund's return and vary its investments to avoid having too much of the
Fund's assets subject to risks specific to undervalued stocks.
Approximately 70% of total assets will generally be invested in large cap
companies and approximately 30% will generally be invested in mid cap companies.
A large cap company has a market capitalization of more than $5 billion. A mid
cap company has a market capitalization of between $1 billion and $5 billion.
THE KEY RISKS
The Fund's share price will fluctuate. You could lose money on your investment
in the Fund and the Fund could also return less than other investments:
o If the stock market as a whole goes down
o If the market continually values the stocks in the Fund's portfolio
lower than the portfolio manager believes they should be valued
o If the stocks in the Fund's portfolio are not undervalued as expected
o Because the price of mid cap stocks may fluctuate more than the price
of large cap stocks
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other government entity.
As with any mutual fund, there is no guarantee that it will achieve its goal.
You can find more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading "Investment
Strategies And Risks" later in this Prospectus.
31
<PAGE>
WHO MAY WANT TO INVEST
This Fund will be most appealing to you if you are a moderate or risk tolerant
investor. You should be comfortable with a fair degree of volatility. Capital
appreciation may be important to you, but you may not want to take extreme risks
in order to achieve it. This Fund's approach may be most appropriate for you if
you are comfortable with a moderate level of risk.
THE FUND'S PERFORMANCE
The following bar chart indicates the risks of investing in the Value Plus Fund.
It shows changes in the performance of the Fund's Class A shares from year to
year since the Fund started. The chart does not reflect any sales charges. Sales
charges will reduce return.
The Fund's past performance does not necessarily indicate how it will perform in
the future.
The return for Class C shares offered by the Fund will differ from the Class A
returns shown in the bar chart, depending on the expenses of that class.
VALUE PLUS FUND -- CLASS A PERFORMANCE
YEAR TOTAL RETURN
1999 15.51%
During the period shown in the bar chart, the highest quarterly return was
13.01% (for the quarter ended December 31,1999) and the lowest quarterly return
was -8.68% (for the quarter ended September 30, 1999).
The year-to-date return for the Fund's Class A shares as of March 31, 2000 is
- -1.74%.
The following table indicates the risks of investing in the Value Plus Fund. It
shows how the Fund's average annual returns for the periods shown compare to
those of the S&P 500 Index, the S&P/Barra Value Index and the Wilshire Large Cap
Value Index. The S&P 500 Index is a widely recognized unmanaged index of common
stock prices. The S&P/Barra Value Index is a capitalization-weighted index of
stocks in the S&P 500 with high book-to-price ratios relative to the S&P 500 as
a whole. The Wilshire Large Cap Value Index is an index of equity securities
that fit Wilshire Asset Management's value stock characteristics and fall into
the largest 750 securities in the Wilshire 500 Index. The table shows the effect
of the applicable sales charge.
32
<PAGE>
FOR THE PERIODS ENDED DECEMBER 31, 1999
Past 12 Since Fund
Months Started*
VALUE PLUS FUND -- CLASS A 8.82% 7.89%
- ----------------------------------------- ------ ------
VALUE PLUS FUND -- CLASS C 12.81% 9.12%
- ----------------------------------------- ------ ------
S&P 500 INDEX 21.04% 18.16%
- ----------------------------------------- ------ ------
S&P/BARRA VALUE INDEX 12.01% 8.05%
- ----------------------------------------- ------ ------
WILSHIRE LARGE CAP VALUE INDEX 3.55% 2.57%
- ----------------------------------------- ------ ------
* Class A shares began operations on May 1, 1998 and Class C shares began
operations on January 1, 1999. We calculated the Class C performance in the
table using the historical performance information of the Fund's
predecessor, restated to reflect the current sales load applicable to Class
C shares.
THE FUND'S FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees paid
directly from your investment)
Class A Shares Class C Shares
Maximum Sales Charge (Load) 5.75% 2.25%
- --------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 5.75%1 1.25%
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or amount redeemed, whichever is less) * 1.00%2
- --------------------------------------------------------------------------------
Redemption Fee ** **
- --------------------------------------------------------------------------------
33
<PAGE>
Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 0.75% 0.75%
- --------------------------------------------------------------------------------
Distribution (12b-1) Fees 0.25% 1.00%
- --------------------------------------------------------------------------------
Other Expenses 1.02% 1.02%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 2.02% 2.77%
- --------------------------------------------------------------------------------
Fee Waiver and/or Expense Reimbursement3 0.72% 0.72%
- --------------------------------------------------------------------------------
Net Expenses 1.30% 2.05%
- --------------------------------------------------------------------------------
1 You may pay a reduced sales charge on very large purchases. There is
no initial sales charge on certain purchases in a Roth IRA, a Roth
Conversion IRA or a qualified retirement plan.
* There is no sales charge at the time of purchase for purchases of $1
million or more but a sales charge of 1.00% will be assessed on shares
redeemed within one year of purchase.
2 The 1.00% is waived for benefits paid to you through a qualified
pension plan.
** You may be charged a fee for each wire redemption. This fee is subject
to change.
3 Touchstone Advisors has contractually agreed to waive or reimburse
certain of the Total Annual Fund Operating Expenses of each Class of
the Fund (the "Sponsor Agreement"). The Sponsor Agreement will remain
in place until at least December 31, 2000.
34
<PAGE>
The following example should help you compare the cost of investing in the Value
Plus Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund for the time periods indicated and then sell
all of your shares at the end of those periods. The example also assumes that
your investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
Class A Shares Class C Shares
1 Year $ 700 $ 330
- --------------------------------------------------------------------------------
3 Years $1,107 $ 906
- --------------------------------------------------------------------------------
5 Years $1,538 $1,508
- --------------------------------------------------------------------------------
10 Years $2,734 $3,134
- --------------------------------------------------------------------------------
o The example for the 3, 5 and 10-year period is calculated using the
Total Fund Operating Expenses before the limits agreed to under the
Sponsor Agreement for periods after year 1.
35
<PAGE>
TOUCHSTONE UTILITY FUND
- -----------------------
THE FUND'S INVESTMENT GOAL
The Utility Fund seeks growth of capital and current income by investing
primarily in securities of public utilities.
ITS PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in a diversified portfolio of common, preferred, and
convertible preferred stocks and bonds of domestic public utilities. The Fund
will invest at least 65% of its total assets in the securities of public
utilities, which are those companies involved in the production, supply or
distribution of electricity, natural gas, telecommunications (including cable
and wireless companies) and water. The Fund will invest in investment grade debt
securities which mature within 30 years.
The portfolio manager selects investments for the Fund by identifying companies
that have
o Sustainable growth rates in revenues, earnings, dividends, cash flows
and return on investment
o Favorable relative valuation indicators
o "Hidden assets" not recognized by the market
o Positive management assessment
o Favorable regulatory climate
The portfolio manager also determines the competitive strengths and weaknesses,
opportunities and threats to both the company and the industry. The portfolio
manager expects to hold the Fund's securities for the long term, but will sell a
security when a serious deterioration in the fundamental competitive position of
the company occurs or when there is a change in the company's management which
the portfolio manager believes is not in the best interests of shareholders.
THE KEY RISKS
The Fund's share price will fluctuate. You could lose money on your investment
in the Fund and the Fund could also return less than other investments:
o If the stock market as a whole goes down
o If the stocks of public utilities go down because of the occurrence of
events and risks unique to the public utilities market
o If the stocks in the Fund's portfolio do not grow over the long term
as expected
o If interest rates go up, causing the value of any debt securities held
by the Fund to decline
36
<PAGE>
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other government entity.
As with any mutual fund, there is no guarantee that the Fund will achieve its
goal.
You can find more information about certain securities in which the Fund may
invest and a more detailed description of risks under the heading "Investment
Strategies And Risks" later in this Prospectus.
WHO MAY WANT TO INVEST
This Fund is most appropriate for you if you are a moderate or risk tolerant
investor. You should be comfortable with a fair degree of volatility. Capital
appreciation may be important to you, but you may not want to take extreme risks
in order to achieve it. This Fund's approach may be most appropriate for you if
you are comfortable with a moderate level of risk.
THE FUND'S PERFORMANCE
The following bar chart indicates the risks of investing in the Utility Fund. It
shows changes in the performance of the Fund's Class A shares from year to year
since the Fund started. The chart does not reflect any sales charges. Sales
charges will reduce return.
The Fund's past performance does not necessarily indicate how it will perform in
the future.
The return for Class C shares offered by the Fund will differ from the Class A
returns shown in the bar chart, depending on the expenses of that class.
37
<PAGE>
UTILITY FUND -- CLASS A PERFORMANCE
YEARS TOTAL RETURN
1990 2.34%
1991 22.70%
1992 7.66%
1993 8.03%
1994 -2.02%
1995 26.46%
1996 5.77%
1997 27.90%
1998 17.64%
1999 1.45%
During the period shown in the bar chart, the highest quarterly return was
16.83% (for the quarter ended December 31, 1997) and the lowest quarterly
return was -12.26% (for the quarter ended March 31, 1999).
The year-to-date return for the Fund's Class A shares as of March 31, 2000
is 2.11%.
The following table indicates the risks of investing in the Utility Fund. It
shows how the Fund's average annual returns for the periods shown compare to
those of the Standard & Poor's Utility Index. The Standard & Poor's Utility
Index is a widely recognized unmanaged index consisting of electric power,
natural gas and telephone companies. The table shows the effect of the
applicable sales charge.
FOR THE PERIODS ENDED DECEMBER 31, 1999
Since
Past 12 Past 5 Past 10 Fund
Months Years Years Started*
UTILITY FUND -- CLASS A -4.39% 13.99% 10.66% 11.01%
- ----------------------------------- ------ ------ ------ ------
Standard & Poor's Utility Index -8.91% 13.81% 9.18% 10.03%
- ----------------------------------- ------ ------ ------ ------
UTILITY FUND -- CLASS C -0.98% 14.02% -- 9.98%
- ----------------------------------- ------ ------ ------ ------
Standard & Poor's Utility Index -8.91% 13.81% -- 8.89%
- ----------------------------------- ------ ------ ------ ------
38
<PAGE>
* Class A shares began operations on August 15, 1989. Class C shares
began operations on August 2, 1993.
THE FUND'S FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund:
Shareholder Fees (fees paid
directly from your investment)
Class A Shares Class C Shares
Maximum Sales Charge (Load) 5.75% 2.25%
- --------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 5.75%1 1.25%
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price * 1.00%2
or the amount redeemed, whichever is less)
- --------------------------------------------------------------------------------
Redemption Fee ** **
- --------------------------------------------------------------------------------
Annual Fund Operating
Expenses (expenses that are
deducted from Fund assets)
Management Fees 0.75% 0.75%
- --------------------------------------------------------------------------------
Distribution (12b-1) Fees 0.23% 0.92%
- --------------------------------------------------------------------------------
Other Expenses 0.35% 0.83%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.33% 2.50%
- --------------------------------------------------------------------------------
1 You may pay a reduced sales charge on very large purchases. There is
no initial sales charge on certain purchases in a Roth IRA, a Roth
Conversion IRA or a qualified retirement plan.
* There is no sales charge at the time of purchase for purchases of $1
million or more but a sales charge of 1.00% will be assessed on shares
redeemed within one year of purchase.
2 The 1.00% is waived for benefits paid to you through a qualified
pension plan.
** You will be charged a fee for each wire redemption. This fee is
subject to change.
39
<PAGE>
The following example should help you compare the cost of investing in the
Utility Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated and
then sell all of your shares at the end of those periods. The example also
assumes that your investment has a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
Class A Shares Class C Shares
1 Year $ 703 $ 375
- --------------------------------------------------------------------------------
3 Years $ 972 $ 894
- --------------------------------------------------------------------------------
5 Years $1,262 $1,439
- --------------------------------------------------------------------------------
10 Years $2,084 $2,925
- --------------------------------------------------------------------------------
40
<PAGE>
INVESTMENT STRATEGIES AND RISKS
- -------------------------------
CAN A FUND DEPART FROM ITS NORMAL STRATEGIES?
Each Fund may depart from its investment strategies by taking temporary
defensive positions in response to adverse market, economic or political
conditions. During these times, a Fund may not achieve its investment goals.
DO THE FUNDS ENGAGE IN ACTIVE TRADING OF SECURITIES?
The Aggressive Growth Fund and the International Equity Fund may engage in
active trading to achieve their investment goals. This may cause the Funds to
realize higher capital gains which would be passed on to you. Higher capital
gains could increase your tax liability. Frequent trading also increases
transaction costs, which would lower a Fund's performance.
CAN A FUND CHANGE ITS INVESTMENT GOAL?
Each Fund (except the Growth/Value Fund and the Aggressive Growth Fund) may
change its investment goal(s) by a vote of the Board of Trustees without
shareholder approval. You would be notified at least 30 days before any such
change took effect.
DO THE FUNDS HAVE OTHER INVESTMENT STRATEGIES, IN ADDITION TO THEIR PRINCIPAL
INVESTMENT STRATEGIES?
INTERNATIONAL EQUITY FUND. The International Equity Fund may also invest in
certain debt securities issued by U.S. and non-U.S. entities (up to 20%),
including non-investment grade debt securities rated as low as B.
EMERGING GROWTH FUND. When the portfolio managers believe the following
securities offer a good potential for capital growth or income, up to 35% of the
Fund's assets may be invested in:
o Larger company stocks
o Preferred stocks
o Convertible bonds
The Emerging Growth Fund may also invest in:
o Securities of foreign companies traded mainly outside the U.S. (up to
20%)
o American Depository Receipts (ADRs) (up to 20%)
o Securities of emerging market countries (up to 10%)
41
<PAGE>
VALUE PLUS FUND. The Value Plus Fund may invest in:
o Preferred stocks
o Investment grade debt securities
o Convertible securities
In addition, the Value Plus Fund may invest in (up to 10%):
o Cash equivalent investments
o Short-term debt securities
THE FUNDS AT A GLANCE.
The following two tables can give you a quick basic understanding of the types
of securities a Fund tends to invest in and some of the risks associated with a
Fund's investments. You should read all of the information about a Fund and its
risks before deciding to invest.
42
<PAGE>
HOW CAN I TELL, AT A GLANCE, WHICH TYPES OF SECURITIES A FUND MIGHT INVEST IN?
The following table shows the main types of securities in which each Fund
generally will invest. Investments marked P are principal investments.
Investments marked 0 are other types of securities in which a Fund may invest to
a lesser extent. Some of the Funds' investments are described in detail below:
<TABLE>
<CAPTION>
International Emerging Aggressive Growth/ Enhanced Value
Equity Growth Growth Value Equity 30 Plus Utility
Fund Fund Fund Fund Fund Fund Fund Fund
FINANCIAL INSTRUMENTS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Invests in U.S. stocks P P P P P P P
- ----------------------------------------------------------------------------------------------------------------------------------
Invests in foreign stocks P O
- ----------------------------------------------------------------------------------------------------------------------------------
Invests in investment grade
debt securities O 0 0 P
- ----------------------------------------------------------------------------------------------------------------------------------
Invests in non-investment
grade debt securities O
- ----------------------------------------------------------------------------------------------------------------------------------
Invests in foreign debt
securities O
- ----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT TECHNIQUES
Emphasizes securities of
small cap companies P P 0
- ----------------------------------------------------------------------------------------------------------------------------------
Emphasizes securities of
mid cap companies P P
- ----------------------------------------------------------------------------------------------------------------------------------
Emphasizes securities of
large cap companies P P P P P
- ----------------------------------------------------------------------------------------------------------------------------------
Emphasizes undervalued
stocks O O O P O
- ----------------------------------------------------------------------------------------------------------------------------------
Invests in securities of
emerging market countries P O
- ----------------------------------------------------------------------------------------------------------------------------------
Invests in technology
securities O O O
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS
FOREIGN COMPANIES. A foreign company is organized under the laws of a foreign
country and:
o Has the principal trading market for its stock in a foreign country
o Derives at least 50% of its revenues or profits from operations in
foreign countries or has at least 50% of its assets located in foreign
countries
INVESTMENT GRADE SECURITIES. Investment grade securities are generally rated BBB
or better by Standard & Poor's Rating Service (S&P) or Baa or better by Moody's
Investor Service, Inc. (Moody's).
NON-INVESTMENT GRADE SECURITIES. Non-investment grade securities are higher
risk, lower quality securities, often referred to as "junk bonds", and are
considered speculative. They are rated by S&P as less than BBB or by Moody's as
less than Baa.
"LARGE CAP," "MID CAP" AND "SMALL CAP" COMPANIES. A large cap company has a
market capitalization of more than $5 billion. A mid cap company has a market
capitalization of between $1 billion and $5 billion. A small cap company has a
market capitalization of less than $1 billion.
EMERGING GROWTH COMPANIES. Emerging Growth companies are companies that have:
o A total market capitalization less than that of the average of the
companies in the Standard & Poor's Composite Index of 500 Stocks
o Earnings that the portfolio managers believe may grow faster than the
U.S. economy in general due to new products, management changes at the
company or economic shocks such as high inflation or sudden increases
or decreases in interest rates
EMERGING MARKET COUNTRIES. Emerging Market Countries are countries other than
Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Holland,
Italy, Japan, Luxembourg, New Zealand, Norway, Spain, Sweden, Switzerland, the
United Kingdom and the United States. When a Fund invests in securities of a
company in an emerging market country, it invests in securities issued by a
company that:
o Is organized under the laws of an emerging market country
o Has its principal trading market for its stock in an emerging market
country
o Derives at least 50% of its revenues or profits from operations within
emerging market countries or has at least 50% of its assets located in
emerging market countries
44
<PAGE>
UNDERVALUED STOCKS. A stock is considered undervalued if the portfolio manager
believes it should be trading at a higher price than it is at the time of
purchase. Factors considered are:
o Price relative to earnings
o Price relative to cash flow
o Price relative to financial strength
STOCKS NOT ACTIVELY TRADED ON STOCK EXCHANGE. A stock is considered not actively
traded if the volume of shares of the stock bought and sold on a daily basis on
the regional and national stock exchanges is minimal or non-existent. Because of
the low volume of shares of such stocks that are bought and sold on a daily
basis, the Fund may have difficulty selling shares of stock of this type.
PUBLIC UTILITIES SECURITIES. Common stock, preferred stock, convertible
preferred stock and bonds of domestic companies involved in the production,
supply or distribution of electricity, natural gas, telecommunications
(including cable and wireless) and water.
HOW CAN I TELL, AT A GLANCE, A FUND'S KEY RISKS?
The following table shows some of the principal and other risks to which each
Fund is subject. Risks marked P are principal risks. Risks marked 0 are other
risks that may impact the Fund to a lesser extent. Each risk is described in
detail below:
45
<PAGE>
<TABLE>
<CAPTION>
International Emerging Aggressive Growth/ Enhanced Value
Equity Growth Growth Value Equity 30 Plus Utility
Fund Fund Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MARKET RISK P P P P P P P P
Emerging Growth Companies P
Public Utilities P
Stocks Not Actively Traded 0
Mid Cap and Small Cap P P 0 P
Technology Securities 0 0 0
INTEREST RATE RISK 0 0 0 P
CREDIT RISK 0 0 0 P
Non-Investment Grade Securities 0
FOREIGN INVESTING RISK P 0
Emerging Market Risk P 0
Political Risk 0
NON-DIVERSIFICATION RISK 0 0
</TABLE>
46
<PAGE>
RISKS OF INVESTING IN THE FUNDS
MARKET RISK. A Fund that invests in common stocks is subject to stock market
risk. Stock prices in general may decline over short or even extended periods,
regardless of the success or failure of a particular company's operations. Stock
markets tend to run in cycles, with periods when stock prices generally go up
and periods when they generally go down. Common stock prices tend to go up and
down more than those of bonds.
o Emerging Growth Companies. Investment in Emerging Growth companies is
subject to enhanced risks because such companies generally have
limited product lines, markets or financial resources and often
exhibit a lack of management depth. The securities of such companies
can be difficult to sell and are usually more volatile than securities
of larger, more established companies.
o Public Utilities. Investment in Public Utilities is subject to
enhanced risks because such companies may be the subject of rate
regulation by government agencies, which may make it difficult to
obtain adequate return on invested capital, pass on cost increases and
finance large construction projects. Public Utilities that provide
power or other energy related services are exposed to additional risks
such as, difficulties in obtaining fuel at reasonable prices,
shortages of fuel, energy conservation measures, restrictions on
operations and increased costs and delays from licensing and
environmental considerations and the special risks of constructing and
operating nuclear power generating facilities or other specialized
types of facilities. In addition, stocks of Public Utilities may be
more sensitive to changes in interest rates than other types of equity
investments.
o Stocks Not Actively Traded. Investment in Stocks Not Actively Traded
is subject to enhanced risks because the stocks are not actively
traded on the regional or national stock exchange. The stocks can be
difficult to sell because the Fund may not be able to locate a buyer
for the stock at the time the Fund desires to sell the stock. Also,
the Fund may not be able to obtain the best price when it desires to
sell the stock.
o Small Cap and Medium Cap Companies. Because small cap and medium cap
companies normally have fewer shares outstanding than larger
companies, it may be more difficult for the portfolio manager to buy
or sell significant amounts of these shares without an unfavorable
impact on prevailing prices. Small cap companies may have limited
product lines,
47
<PAGE>
markets or financial resources and may lack management depth. In
addition, small cap and medium cap companies are typically subject to
a greater degree of changes in earnings and business prospects than
are larger, more established companies. There is typically less
publicly available information concerning small cap and medium cap
companies than for larger, more established ones. Although investing
in securities of small and medium cap companies offers potential for
above-average returns if the companies are successful, the risk exists
that such companies will not succeed and the prices of their shares
could significantly decline in value.
o Technology Securities. The value of technology securities may
fluctuate dramatically and technology securities may be subject to
greater than average financial and market risk. Investments in the
high technology sector include the risk that certain products and
services may be subject to competitive pressures and aggressive
pricing and the risk that new products will not meet expectations or
even reach the marketplace.
INTEREST RATE RISK. A Fund that invests in debt securities is subject to the
risk that the market value of the debt securities will decline because of rising
interest rates. The prices of debt securities are generally linked to the
prevailing market interest rates. In general, when interest rates rise, the
prices of debt securities fall, and when interest rates fall, the prices of debt
securities rise. The price volatility of a debt security also depends on its
maturity. Generally, the longer the maturity of a debt security, the greater its
sensitivity to changes in interest rates. To compensate investors for this
higher risk, debt securities with longer maturities generally offer higher
yields than debt securities with shorter maturities.
CREDIT RISK. The debt securities in a Fund's portfolio are subject to credit
risk. Credit risk is the possibility that an issuer will fail to make timely
payments of interest or principal. Securities rated in the lowest category of
investment grade securities have some risky characteristics and changes in
economic conditions are more likely to cause issuers of these securities to be
unable to make payments.
o Non-Investment Grade Securities. Non-investment grade securities are
sometimes referred to as "junk bonds" and are very risky with respect
to their issuers' ability to make payments of interest and principal.
There is a high risk that a Fund which invests in non-investment grade
securities could suffer a loss caused by the default of an issuer of
such securities. Part of the reason for this high risk is that, in the
event of a default or bankruptcy, holders of non-investment grade
securities generally will not receive payments until the holders of
all other debt have been
48
<PAGE>
paid. In addition, the market for non-investment grade securities has,
in the past, had more frequent and larger price changes than the
markets for other securities. Non-investment grade securities can also
be more difficult to sell for good value.
FOREIGN INVESTING. Investing in foreign securities poses unique risks such as
fluctuation in currency exchange rates, market illiquidity, price volatility,
high trading costs, difficulties in settlement, regulations on stock exchanges,
limits on foreign ownership, less stringent accounting, reporting and disclosure
requirements, and other considerations. In the past, equity and debt instruments
of foreign markets have had more frequent and larger price changes than those of
U.S. markets.
o Emerging Market Countries. Investments in a country that is still
relatively underdeveloped involves exposure to economic structures
that are generally less diverse and mature than in the U.S. and to
political and legal systems which may be less stable. In the past,
markets of developing countries have had more frequent and larger
price changes than those of developed countries.
o Political Risk. Political risk includes a greater potential for
revolts, and the taking of assets by governments. For example, a Fund
may invest in Eastern Europe and former states of the Soviet Union.
These countries were under communist systems that took control of
private industry. This could occur again in this region or others in
which a Fund may invest, in which case the Fund may lose all or part
of its investment in that country's issuers.
NON-DIVERSIFICATION RISK. A non-diversified Fund may invest a significant
percentage of its assets in the securities of a single company. Because of the
Fund's ownership of securities may be concentrated in a single company, the Fund
may be more sensitive to any single economic, business, political or regulatory
occurrence than a diversified fund.
49
<PAGE>
THE FUNDS' MANAGEMENT
- ---------------------
REORGANIZATION OF TOUCHSTONE SERIES TRUST
Under the terms of an Agreement and Plan of Reorganization, on May 1, 2000, each
of the Emerging Growth Fund, the International Equity Fund and the Value Plus
Fund will succeed to the assets and liabilities of another mutual fund of the
same name (the "Predecessor Fund"), which is a series of Touchstone Series
Trust. The investment goals and strategies of each Fund and its Predecessor Fund
are substantially identical.
INVESTMENT ADVISOR
Touchstone Advisors, Inc. (the "Advisor" or "Touchstone Advisors") located at
311 Pike Street, Cincinnati, Ohio 45202, is the investment advisor for the
Funds.
Touchstone Advisors has been registered as an investment advisor under the
Investment Advisers Act of 1940, as amended (the"Advisers Act") since 1994. As
of December 31, 1999, Touchstone Advisors had approximately $532 million in
assets under management.
Touchstone Advisors is responsible for selecting Fund Sub-Advisors, subject to
review by the Board of Trustees. Touchstone Advisors selects a Fund Sub-Advisor
that has shown good investment performance in its areas of expertise. Touchstone
Advisors considers various factors in evaluating Fund Sub-Advisors, including:
o Level of knowledge and skill
o Performance as compared to its peers or benchmark
o Consistency of performance over five years or more
o Level of compliance with investment rules and strategies
o Employees, facilities and financial strength
o Quality of service
Touchstone Advisors will also continually monitor each Fund Sub-Advisor's
performance through various analyses and through in-person, telephone and
written consultations with the Fund Sub-Advisors.
Touchstone Advisors discusses its expectations for performance with each Fund
Sub-Advisor. Touchstone Advisors provides written evaluations and
recommendations to the Board of Trustees, including whether or not each Fund's
Sub-Advisor contract should be renewed, modified or terminated.
Touchstone Advisors is also responsible for running all of the operations of the
Funds, except for those that are subcontracted to the Fund Sub-Advisors,
custodian, transfer agent and administrator.
Two or more Fund Sub-Advisors may manage a Fund, with each managing a portion of
the Fund's assets. If a Fund has more than one Fund Sub-Advisor, Touchstone
Advisors allocates
50
<PAGE>
how much of a Fund's assets are managed by each Sub-Advisor. Touchstone Advisors
may change these allocations from time to time, often based upon the results of
the evaluations of the Fund Sub-Advisors.
Each Fund pays Touchstone Advisors a fee for its services. Out of this fee
Touchstone Advisors pays each Fund Sub-Advisor a fee for its services.
The fee paid to Touchstone Advisors by each Fund is shown in the table below:
Fee to Touchstone Advisors
(as % of average daily net assets)
International Equity Fund 0.95%
- -----------------------------------
Emerging Growth Fund 0.80%
- --------------------------------------------------------------------------------
Aggressive Growth Fund and 1.00% of assets up to $50 million
Growth/Value Fund 0.90% of assets from $50 million to $100 million
0.80% of assets from $100 million to $200 million
0.75% of assets over $200 million
- --------------------------------------------------------------------------------
Equity Fund and Utility Fund 0.75% of assets up to $200 million
0.70% of assets from $200 million to $500 million
0.50% of assets over $500 million
- --------------------------------------------------------------------------------
Enhanced 30 Fund 0.65%
- -----------------------------------
Value Plus Fund 0.75%
- -----------------------------------
During the fiscal year ended March 31, 1999, the advisory fees paid by each of
the Aggressive Growth Fund and the Growth/Value Fund were 1% of average net
assets and the advisory fees paid by each of the Equity Fund and the Utility
Fund were .75% of average net assets.
FUND SUB-ADVISORS
The Fund Sub-Advisors make the day-to-day decisions regarding buying and selling
specific securities for a Fund. Each Fund Sub-Advisor manages the investments
held by the Fund it serves according to the applicable investment goals and
strategies.
FUND SUB-ADVISOR TO THE INTERNATIONAL EQUITY FUND
CREDIT SUISSE ASSET MANAGEMENT LLC (CREDIT SUISSE)
One Citicorp Center, 153 East 53rd Street, New York, NY 10022
Credit Suisse has been registered as an investment advisor under the Advisers
Act since 1968. Credit Suisse provides investment advisory services to
individual and institutional clients. As of December 31, 1999, Credit Suisse had
assets under management of approximately $202.9 billion. Credit Suisse has been
managing the International Equity Fund since the Fund's inception.
51
<PAGE>
The Fund is managed by the Credit Suisse International Equity Management Team.
The team consists of Larry Smith, Steven D. Bleiberg, Richard Watt, Alan Zlater,
Emily Alejos and Robert B. Hrabchak.
FUND SUB-ADVISORS TO THE EMERGING GROWTH FUND
DAVID L. BABSON & COMPANY, INC. (BABSON)
One Memorial Drive, Cambridge, MA 02142-1300
Babson has been registered as an investment advisor under the Advisers Act since
1940. Babson provides investment advisory services to individual and
institutional clients. As of December 31, 1999, Babson and affiliates had assets
under management of $ 18.9 billion. Babson has been managing the Emerging Growth
Fund since the Fund's inception.
Lance F. James has primary responsibility for the day-to-day management of the
Fund. Mr. James has been with the firm since 1986.
WESTFIELD CAPITAL MANAGEMENT COMPANY, INC. (WESTFIELD)
One Financial Center, Boston, MA 02111
Westfield has been registered as an investment advisor under the Advisers Act
since 1989. Westfield provides investment advisory services to individual and
institutional clients. As of December 31, 1999, Westfield had assets under
management of approximately $1.9 billion. Westfield has been managing the
Emerging Growth Fund since the Fund's inception.
William A. Muggia has managed the portion of the Emerging Growth Fund's assets
allocated to Westfield by the Advisor since April 1999. Mr. Muggia has been with
Westfield since 1994.
FUND SUB-ADVISOR TO THE AGGRESSIVE GROWTH FUND AND THE GROWTH/VALUE FUND
MASTRAPASQUA & ASSOCIATES, INC. (MASTRAPASQUA)
814 CHURCH STREET, NASHVILLE, TENNESSEE 37203
Mastrapasqua has been registered as an investment advisor under the Advisers Act
since 1993. Mastrapasqua provides investment advisory services to individual and
institutional clients. As of December 31, 1999, Mastrapasqua had assets under
management of approximately $1.3 billion. Frank Mastrapasqua, Ph.D., Chairman
and Chief Executive Officer of Mastrapasqua, and Thomas A. Trantum, President of
Mastrapasqua, are primarily responsible for the day-to-day management of the
Funds. Prior to founding Mastrapasqua in 1993, Mr. Mastrapasqua was Director of
Research and Chief Investment Strategist and a partner at J.C. Bradford & Co.
Mr. Trantum was a Senior Analyst and a partner at J.C. Bradford & Co. until
1993.
52
<PAGE>
FUND SUB-ADVISOR TO THE EQUITY FUND, THE VALUE PLUS FUND AND THE UTILITY FUND
FORT WASHINGTON INVESTMENT ADVISORS, INC. (FORT WASHINGTON)
420 East Fourth Street, Cincinnati, OH 45202
Fort Washington has been registered as an investment advisor under the Advisers
Act since 1990. Fort Washington provides investment advisory services to
individual and institutional clients. As of December 31, 1999, Fort Washington
had assets under management of approximately $13 billion. Fort Washington has
been managing the Equity Fund and the Utility Fund since May 2000 and the Value
Plus Fund since its inception.
John C. Holden has managed the Value Plus Fund since May, 1998. Mr. Holden (CFA)
joined Fort Washington in 1997 and is Vice President and Senior Portfolio
Manager. From 1993 until 1997 he served as Vice President and Senior Portfolio
Manager with Mellon Private Asset Management in Pittsburgh Pennsylvania.
Charles E. Stutenroth IV and Charles A. Ulbricht are primarily responsible for
managing the Equity Fund and have been managing the Fund since November 1999.
Mr. Stutenroth has served as Vice President of Fort Washington since 1999. From
1996 until 1999, he was Senior Vice President of Bank of America Investment
Management, prior to which he was Vice President of National City Investment
Management & Trust. Mr. Ulbricht has served as a Senior Research Manager of Fort
Washington since 1995. From 1984 until 1995, he was Vice President-Research of
Cowgill-Haberer Investment Counselors.
John C. Holden and William H. Bunn are primarily responsible for managing the
Utility Fund and have been managing the Fund since November 1999. Mr. Holden has
served as Vice President of Fort Washington since 1997. From 1993 until 1997, he
was Vice President of Mellon Private Asset Management. Mr. Bunn has been
employed by Fort Washington since 1994 as a securities analyst for the
telecommunications and utilities industries.
Fort Washington is an affiliate of Touchstone Advisors. Therefore, Touchstone
Advisors may have a conflict of interest when making decisions to keep Fort
Washington as a Fund Sub-Advisor. The Board of Trustees reviews all of
Touchstone Advisor's decisions to reduce the possibility of a conflict of
interest situation.
FUND SUB-ADVISOR TO THE ENHANCED 30 FUND
TODD INVESTMENT ADVISORS, INC. (TODD)
3160 NATIONAL CITY TOWER, LOUISVILLE, KY 40202
Todd has been registered as an investment advisor under the Advisers Act since
1979. Todd provides investment advisory services to individual and institutional
clients. As of December 31, 1999, Todd had assets under management of
approximately $ 3.3 billion.
53
<PAGE>
Curtiss M. Scott, Jr., CFA has primary responsibility for the day-to-day
management of the Fund. Mr. Scott joined Todd in 1996. He currently manages both
small cap and large cap products for Todd. He has 15 years of experience as a
small cap portfolio manager and 20 years of industry experience. Prior to
joining Todd, Mr. Scott was a partner with Executive Investment Advisors. He has
also held portfolio management positions at Lazard Freres Asset Management and
Oppenheimer Management, both in New York.
Todd is an affiliate of Touchstone Advisors. Therefore, Touchstone Advisors may
have a conflict of interest when making decisions to keep Todd as the Fund's
Sub-Advisor. The Board of Trustees reviews all of Touchstone Advisor's decisions
to reduce the possibility of a conflict of interest situation.
INVESTING WITH TOUCHSTONE
- -------------------------
CHOOSING THE APPROPRIATE INVESTMENTS TO MATCH YOUR GOALS. Investing well
requires a plan. We recommend that you meet with your financial advisor to plan
a strategy that will best meet your financial goals.
OPENING AN ACCOUNT
You can contact your financial advisor to purchase shares of the Funds. You may
also purchase shares of any Fund directly from Touchstone Securities, Inc.
("Touchstone"). In any event, you must complete the Investment Application
included in this Prospectus. You may also obtain an Investment Application from
Touchstone or your financial advisor.
o Investor Alert: Touchstone may choose to refuse any purchase order.
You should read this Prospectus carefully and then determine how much you want
to invest. Check below to find the minimum investment amount required to
purchase shares as well as to learn about the various ways you can purchase your
shares
Initial Additional
Investment Investment
---------- ----------
Regular Account $1,000 None
---------------
Retirement Plan Account or Custodial account under $ 250 None
a Uniform Gifts/Transfers to Minors Act ("UGTMA")
- -------------------------------------------------
Investments through the Automatic Investment Plan $ 50 $ 50
- -------------------------------------------------
o Investor Alert: Touchstone may change these initial and additional
investment minimums at any time.
54
<PAGE>
PRICING OF FUND SHARES
Each Fund's share price, also called net asset value (NAV), is determined as of
the close of trading (normally 4:00 p.m. Eastern time) every day the New York
Stock Exchange (NYSE) is open. Each Fund calculates its NAV per share, generally
using market prices, by dividing the total value of its net assets by the number
of shares outstanding. Shares are purchased or sold at the next offering price
determined after your purchase or sale order is received in proper form by
Touchstone. The offering price is the NAV plus a sales charge, if applicable.
The Funds' investments are valued based on market value or, if no market value
is available, based on fair value as determined by the Board of Trustees (or
under their direction). All assets and liabilities initially expressed in
foreign currency values will be converted into U.S. dollar values. Some specific
pricing strategies follow:
o All short-term dollar-denominated investments that mature in 60 days
or less are valued on the basis of amortized cost which the Board of
Trustees has determined represents fair value.
o Securities mainly traded on a U.S. exchange are valued at the last
sale price on that exchange or, if no sales occurred during the day,
at the current quoted bid price.
o Securities mainly traded on a non-U.S. exchange are generally valued
according to the preceding closing values on that exchange. However,
if an event which may change the value of a security occurs after the
time that the closing value on the non-U.S. exchange was determined,
the Board of Trustees might decide to value the security based on fair
value. This may cause the value of the security on the books of the
Fund to be significantly different from the closing value on the
non-U.S. exchange and may affect the calculation of the NAV.
o Because portfolio securities that are primarily listed on a non-U.S.
exchange may trade on weekends or other days when a Fund does not
price its shares, a Fund's NAV may change on days when shareholders
will not be able to buy or sell shares.
CHOOSING A CLASS OF SHARES
Each Fund offers Class A shares and Class C shares. Each class of shares has
different sales charges and distribution fees. The amount of sales charges and
distribution fees you pay will depend on which class of shares you decide to
purchase.
CLASS A SHARES
The offering price of Class A shares of each Fund is equal to its NAV plus a
front-end sales charge that you pay when you buy your shares. The front-end
sales charge is generally deducted from the amount of your investment.
55
<PAGE>
The following table shows the amount of front-end sales charge you will pay on
purchases of Class A shares of each Fund as a percentage of (1) offering price
and (2) the net amount invested after the charge has been subtracted. Note that
the front-end sales charge gets lower as your investment amount gets larger.
Sales Charge as % of Sales Charge as % of
Amount of Your Investment Offering Price Net Amount Invested
- ------------------------- ----------------- -------------------
Under $50,000 5.75% 6.10%
$50,000 but less than $100,000 4.50% 4.71%
$100,000 but less than $250,000 3.50% 3.63%
$250,000 but less than $500,000 2.95% 3.04%
$500,000 but less than $1 million 2.25% 2.30%
$1 million or more 0.00% 0.00%
There is no front-end sales charge if you invest $1 million or more in a Fund.
This includes large total purchases made through programs such as Aggregation,
Concurrent Purchases, Letters of Intent and Rights of Accumulation. These
programs are described more fully in the Statement of Additional Information
("SAI"). In addition, there is no front-end sales charge on purchases by certain
persons related to the Funds or their service providers and certain other
persons listed in the SAI.
If you redeem shares that you purchased as part of the $1 million purchase
within one year, you will pay a contingent deferred sales charge (a sales charge
you pay when you redeem your shares) of 1% on the shares redeemed.
Each Fund has adopted a distribution plan under Rule 12b-1 of the Investment
Company Act of 1940, as amended (the "1940 Act") for its Class A shares. This
plan allows each Fund to pay distribution fees for the sale and distribution of
its Class A shares. Under the plan, each Fund pays an annual fee of up to 0.25%
of its average daily net assets that are attributable to Class A shares. Because
these fees are paid out of a Fund's assets on an ongoing basis, these fees will
increase the cost of your investment and over time may cost you more than paying
other types of sales charges.
CLASS C SHARES
The offering price of Class C shares of the Funds is equal to its NAV plus a
1.25% front-end sales charge that you pay when you buy your shares. The
front-end sales charge is generally deducted from the amount of your investment.
A contingent deferred sales charge of 1% of the offering price will be charged
on Class C shares redeemed within one year after you purchased them.
No contingent deferred sales charge is applied if:
o The shares which you redeem were acquired through the reinvestment of
dividends or capital gains distributions
o The amount redeemed resulted from increases in the value of the
account above the amount of the total purchase payments
56
<PAGE>
When we determine whether a contingent deferred sales charge is payable on a
redemption, we assume that:
o The redemption is made first from amounts free of any contingent
deferred sales charge; then
o From the earliest purchase payment(s) that remain invested in the Fund
When we determine if amounts are available for redemption free of any contingent
deferred sales charge, we:
o Add together all of your original purchase payments
o Subtract any amounts previously withdrawn
o Check if there is any remaining amount free of any contingent deferred
sales charge that can be applied to the total of the current value of
the shares you have asked to redeem
The Fund has adopted a distribution plan under Rule 12b-1 of the 1940 Act for
its Class C shares. This plan allows each Fund to pay distribution and other
fees for the sale and distribution of its Class C shares and for services
provided to holders of Class C shares.
Under the plan, each Fund pays an annual fee of up to 1.00% of its average daily
net assets that are attributable to Class C shares. Because these fees are paid
out of the Funds' assets on an ongoing basis, these fees will increase the cost
of your investment and over time may cost you more than paying other types of
sales charges.
PURCHASING YOUR SHARES
For information about how to purchase shares, telephone Touchstone (Nationwide
call toll-free 800-543-0407).
You can invest in the Funds in the following ways:
OPENING AN ACCOUNT
o Please make your check (in U.S. dollars) payable to the
applicable Fund.
o Send your check with the completed account application to
Touchstone, P.O. Box 5354, Cincinnati, Ohio 45201-5354 Your
application will be processed subject to your check
clearing.
o You may also open an account through your financial advisor.
o We price direct purchases based upon the next determined
public offering price (NAV plus any applicable sales load)
after your order is received. Direct purchase orders
received by Touchstone by 4:00 p.m., Eastern time, are
processed at that day's public offering price. Direct
investments received by Touchstone after 4:00 p.m., Eastern
time, are processed at the public offering price next
determined on the following business day. Purchase orders
received from financial advisors before 4:00 p.m., Eastern
57
<PAGE>
time, and transmitted to Touchstone by 5:00 p.m., Eastern
time, are processed at that day's public offering price.
Purchase orders received from financial advisors after 5:00
p.m., Eastern time, are processed at the public offering
price next determined on the following business day.
BY MAIL OR
THROUGH YOUR
FINANCIAL ADVISOR
- --------------------------------------------------------------------------------
o You may exchange shares of the Funds for shares of the same
class of another Touchstone Fund at NAV. You may also
exchange shares of the Funds for shares of any Touchstone
money market fund.
o You do not have to pay any exchange fee for these exchanges.
o You should review the disclosure provided in the Prospectus
relating to the exchanged-for shares carefully before making
an exchange of your Fund shares.
BY EXCHANGE
- --------------------------------------------------------------------------------
o You may invest in the Funds through various retirement
plans. The Funds' shares are designed for use with certain
types of tax qualified retirement plans including defined
benefit and defined contribution plans.
o For further information about any of the plans, agreements,
applications and annual fees, contact Touchstone or your
financial advisor
THROUGH
RETIREMENT
PLANS
- --------------------------------------------------------------------------------
ADDING TO YOUR ACCOUNT
o Complete the investment form provided at the bottom of a
recent account statement.
o Make your check payable to the applicable Fund.
o Write your account number on the check.
o Either: (1) Mail the check with the investment form in the
envelope provided with your account statement; or (2) Mail
your check directly to your financial advisor at the address
printed on your account statement. Your financial advisor is
responsible for forwarding payment promptly to Touchstone.
BY CHECK
- --------------------------------------------------------------------------------
o Specify your name and account number. If Touchstone receives
a properly executed wire by 4:00 p.m. Eastern time on a day
when the NYSE is open for regular trading, your order will
be processed at that day's public offering price.
BY WIRE
- --------------------------------------------------------------------------------
o You may exchange your shares by calling Touchstone.
o You do not have to pay any exchange fee for these exchanges.
o You should review the disclosure provided in the Prospectus
relating to the exchanged-for shares carefully before making
an exchange of your Fund shares.
BY EXCHANGE
- --------------------------------------------------------------------------------
o You may add to your account in the Funds through various
retirement plans. For further information, contact
Touchstone or your financial advisor.
THROUGH
RETIREMENT
PLANS
- --------------------------------------------------------------------------------
58
<PAGE>
INFORMATION ABOUT WIRE TRANSFERS.
You may make additional purchases in the Funds directly by wire transfers.
Contact your bank and ask it to wire federal funds to Touchstone. Banks may
charge a fee for handling wire transfers. You should contact Touchstone or your
financial advisor for further instructions.
ooo Special Tax
Consideration
- --------------------------------------------------------------------------------
To determine which type of retirement plan is appropriate for you, please
contact your tax advisor.
MORE INFORMATION ABOUT RETIREMENT PLANS.
Retirement Plans may include the following:
INDIVIDUAL RETIREMENT PLANS
o Traditional Individual Retirement Accounts (IRAs)
o Savings Incentive Match Plan for Employees (SIMPLE) IRAs
o Spousal IRAs
o Roth Individual Retirement Accounts (Roth IRAs)
o Education Individual Retirement Accounts (Education IRAs)
o Simplified Employee Pension Plans (SEP IRAs)
o 403(b) Tax Sheltered Accounts that employ as custodian a bank
acceptable to Touchstone
EMPLOYER SPONSORED RETIREMENT PLANS
o Defined benefit plans
o Defined contribution plans (including 401K plans, profit sharing plans
and money purchase plans)
o 457 plans
AUTOMATIC INVESTMENT OPTIONS
The various ways that you can invest in the Funds are outlined below. Touchstone
does not charge any fees for these services.
AUTOMATIC INVESTMENT PLAN. You can pre-authorize monthly investments of $50 or
more in a Fund to be processed electronically from a checking or savings
account. You will need to complete the appropriate section in the Investment
Application to do this. For further details about this service call Touchstone
at 1-800-543-0407.
REINVESTMENT/CROSS REINVESTMENT. Dividends and capital gains can be
automatically reinvested in the Fund that pays them or in another Fund within
the
59
<PAGE>
same class of shares without a fee or sales charge. Dividends and capital gains
will be reinvested in the Fund that pays them, unless you indicate otherwise on
your account application. You may also choose to have your dividends or capital
gains paid to you in cash.
DIRECT DEPOSIT PURCHASE PLAN. You may automatically invest Social Security
checks, private payroll checks, pension pay outs or any other pre-authorized
government or private recurring payments in our Funds. This occurs on a monthly
basis and the minimum investment is $50.
DOLLAR COST AVERAGING. Our Dollar Cost Averaging program allows you to diversify
your investments by investing the same amount on a regular basis. You can set up
periodic automatic transfers of at least $50 from one Touchstone Fund to any
other. The applicable sales charge, if any, will be assessed.
PROCESSING ORGANIZATIONS. You may also purchase shares of the Funds through a
"processing organization," (e.g., a mutual fund supermarket) which is a
broker-dealer, bank or other financial institution that purchases shares for its
customers. Some of the Funds have authorized certain processing organizations to
receive purchase and sales orders on their behalf. Before investing in the Funds
through a processing organization, you should read any materials provided by the
processing organization in conjunction with this Prospectus.
When shares are purchased this way, there may be various differences. The
processing organization may:
o Charge a fee for its services
o Act as the shareholder of record of the shares
o Set different minimum initial and additional investment requirements
o Impose other charges and restrictions
o Designate intermediaries to accept purchase and sales orders on the
Funds' behalf
Touchstone considers a purchase or sales order as received when an authorized
processing organization, or its authorized designee, receives the order in
proper form. These orders will be priced based on the Fund's NAV next computed
after such order is received in proper form.
Shares held through a processing organization may be transferred into your name
following procedures established by your processing organization and Touchstone.
Certain processing organizations may receive compensation from the Funds,
Touchstone, the Advisor or their affiliates.
60
<PAGE>
SELLING YOUR SHARES
You may sell some or all of your Fund shares on any day that the Fund calculates
its NAV. If your request is received in proper form before the close of regular
trading on the NYSE, you will receive a price based on that day's NAV for the
shares you sell. Otherwise, the price you receive will be based on the NAV that
is next calculated.
o You can sell or exchange your shares over the telephone,
unless you have specifically declined this option. If you do
not wish to have this ability, you must mark the appropriate
section of the Investment Application. You may only sell
shares over the telephone if the amount is less than
$25,000.
o To sell your Fund shares by telephone, call Touchstone,
Nationwide at 800-543-0407.
o IRA accounts cannot be sold by telephone
BY TELEPHONE
- --------------------------------------------------------------------------------
o Write to Touchstone.
o Indicate the number of shares or dollar amount to be sold.
o Include your name and account number.
o Sign your request exactly as your name appears on your
Investment Application.
BY MAIL
- --------------------------------------------------------------------------------
o Complete the appropriate information on the Investment
Application.
o If your proceeds are $1,000 or more, you may request that
Touchstone wire them to your bank account.
o You will be charged a wire redemption fee
o Redemption proceeds will only be wired to a commercial bank
or brokerage firm in the United States.
o Your redemption proceeds may be deposited without a charge
directly into your bank account through an ACH transaction.
Contact Touchstone for more information.
BY WIRE
- --------------------------------------------------------------------------------
o You may also sell shares by contacting your financial
advisor, who may charge you a fee for this service. Shares
held in street name must be sold through your financial
advisor or, if applicable, the processing organization.
o Your financial advisor is responsible for making sure that
sale requests are transmitted to Touchstone in proper form
in a timely manner.
THROUGH
YOUR FINANCIAL
ADVISOR
- --------------------------------------------------------------------------------
ooo Special Tax
Consideration
- --------------------------------------------------------------------------------
Selling your shares may cause you to incur a taxable gain or loss.
o Investor Alert: Unless otherwise specified, proceeds will be sent to
the record owner at the address shown on Touchstone's records.
61
<PAGE>
SIGNATURE GUARANTEES. Some circumstances require that the request for the sale
of shares have a signature guarantee. A signature guarantee helps protect you
against fraud. You can obtain one from most banks or securities dealers, but not
from a notary public. Some circumstances requiring a signature guarantee
include:
o Proceeds from the sale of shares that exceed $25,000
o Proceeds to be paid when the name or the address on the account has
been changed within 30 days of your sale request.
TELEPHONE SALES. If we receive your share sale request before 4:00 p.m., Eastern
time on a day when the NYSE is open for regular trading, the sale of your shares
will be processed at the next determined NAV on that day. Otherwise it will
occur on the next business day.
Interruptions in telephone service could prevent you from selling your shares in
this manner when you want to. When you have difficulty making telephone sales,
you should mail (or send by overnight delivery) a written request for sale of
your shares to Touchstone.
In order to protect your investment assets, Touchstone will only follow
instructions received by telephone that it reasonably believes to be genuine.
However, there is no guarantee that the instructions relied upon will always be
genuine and Touchstone will not be liable, in those cases. Touchstone has
certain procedures to confirm that telephone instructions are genuine. If it
does not follow such procedures in a particular case it may be liable for any
losses due to unauthorized or fraudulent instructions. Some of these procedures
include:
o Requiring personal identification
o Making checks payable only to the owner(s) of the account shown on
Touchstone's records
o Mailing checks only to the account address shown on Touchstone's
records
o Directing wires only to the bank account shown on Touchstone's records
o Providing written confirmation for transactions requested by telephone
o Tape recording instructions received by telephone
SYSTEMATIC WITHDRAWAL PLAN. You may elect to receive or send to a third party
monthly or quarterly withdrawals of $50 or more if your account value is at
least $5,000. There is no special fee for this service and no minimum amount is
required for retirement plans.
62
<PAGE>
ooo Special Tax
Consideration
- --------------------------------------------------------------------------------
If you exercise the Reinstatement Privilege, you should contact your tax
advisor.
ooo Special Tax
Consideration
- --------------------------------------------------------------------------------
Involuntary sales may result in the sale of your Fund shares at a loss or may
result in taxable investment gains.
REINSTATEMENT PRIVILEGE. You may reinvest proceeds from a sale of Fund shares or
a dividend or capital gain distribution on Fund shares without a sales charge in
any of the Touchstone Funds. You may do so by sending a written request and a
check to Touchstone within 90 days after the date of the sale, dividend or
distribution. Reinvestment will be at the next NAV calculated after Touchstone
receives your request.
LOW ACCOUNT BALANCES
Touchstone may sell your Fund shares if your balance falls below the minimum
amount required for your account as a result of redemptions that you have made
(as opposed to a reduction from market changes). This involuntary sale does not
apply to retirement accounts or custodian accounts under the Uniform Gift to
Minors Act (UGTMA). Touchstone will notify you if your shares are about to be
sold and you will have 30 days to increase your account balance to the minimum
amount.
RECEIVING SALE PROCEEDS
Touchstone will forward the proceeds of your sale to you (or to your financial
advisor) within 7 days (normally within 3 business days) from the date of a
proper request.
PROCEEDS SENT TO FINANCIAL ADVISORS
Proceeds which are sent to your financial advisor will not usually be
re-invested for you unless you provide specific instructions to do so.
Therefore, the financial advisor may benefit from the use of your money.
63
<PAGE>
FUND SHARES PURCHASED BY CHECK
If you purchase Fund shares by personal check, the proceeds of a sale of those
shares will not be sent to you until the check has cleared, which may take up to
15 days. If you may need your money more quickly, you should purchase shares by
federal funds, bank wire, or with a certified or cashier's check.
It is possible that the payments of your sale proceeds could be postponed or
your right to sell your shares could be suspended during certain circumstances.
These circumstances can occur:
o When the NYSE is closed for other than customary weekends and holidays
o When trading on the NYSE is restricted
o When an emergency situation causes a Fund Sub-Advisor to not be
reasonably able to dispose of certain securities or to fairly
determine the value of its net assets
o During any other time when the SEC, by order, permits.
DISTRIBUTIONS AND TAXES
ooo Special Tax
Consideration
- --------------------------------------------------------------------------------
You should consult with your tax advisor to address your own tax situation.
Each Fund intends to distribute to its shareholders substantially all of its
income and capital gains. The table below outlines when dividends are declared
and paid for each Fund:
Dividends Declared Dividends Paid
International Equity Fund
Emerging Growth Fund
Aggressive Growth Fund
Growth/Value Fund Annually Annually
----------------------------------------------------------------------
Equity Fund
Enhanced 30 Fund
Value Plus Fund
Utility Fund Quarterly Quarterly
----------------------------------------------------------------------
Distributions of any capital gains earned by a Fund will be made at least
annually.
TAX INFORMATION
DISTRIBUTIONS. Each Fund will make distributions that may be taxed as ordinary
income or capital gains (which may be taxed at different rates depending on the
64
<PAGE>
length of time a Fund holds its assets). Each Fund's distributions may be
subject to federal income tax whether you reinvest such dividends in additional
shares of a Fund or choose to receive cash.
ORDINARY INCOME. Income and short-term capital gains that are distributed to you
are taxable as ordinary income for federal income tax purposes regardless of how
long you have held your Fund shares.
LONG-TERM CAPITAL GAINS. Long-term capital gains distributed to you are taxable
as long-term capital gains for federal income tax purposes regardless of how
long you have held your Fund shares.
ooo Special Tax
Consideration
- --------------------------------------------------------------------------------
For federal income tax purposes, an exchange of shares is treated as a sale of
the shares and a purchase of the shares you receive in exchange. Therefore, you
may incur a taxable gain or loss in connection with the exchange.
STATEMENTS AND NOTICES. You will receive an annual statement outlining the tax
status of your distributions. You will also receive written notices of certain
foreign taxes paid by the Funds and certain distributions paid by the Funds
during the prior taxable year.
65
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------
The financial highlights table for the International Equity Fund is intended to
help you understand the Fund's financial performance for the past five years.
Certain information reflects financial results for a single Fund share. The
total returns in the table represent the rate an investor would have earned or
lost on an investment in the Fund (assuming reinvestment of all dividends and
distributions). The information for the period ending December 31, 1999 has been
audited by Ernst & Young LLP, whose report, along with the Fund's financial
statements is included in the SAI, which is available upon request. Information
for the periods ending before December 31, 1999 was audited by other independent
accountants.
INTERNATIONAL EQUITY FUND - CLASS A
<TABLE>
<CAPTION>
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- ----------------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $ 12.89 $ 11.41 $ 10.63 $ 9.58 $ 9.12
- ----------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income (loss) ............. 0.00 0.00(a) 0.02 0.05 0.21
Net realized and unrealized gain (loss)
on investments ........................ 5.06 2.27 1.64 1.06 0.47
- ----------------------------------------------------------------------------------------------------------------
Total from investment operations ...... 5.06 2.27 1.66 1.11 0.68
- ----------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income ................. (0.06) (0.05) (0.02) (0.06) (0.22)
Realized capital gains ................ (1.37) (0.74) (0.86) -- --
Return of capital ..................... -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------
Total dividends and distributions ........ (1.43) (0.79) (0.88) (0.06) (0.22)
- ----------------------------------------------------------------------------------------------------------------
Net asset value, end of period ........... $ 16.52 $ 12.89 $ 11.41 $ 10.63 $ 9.58
================================================================================================================
Total return(b) .......................... 39.50% 19.94% 15.57% 11.61% 5.29%
RATIOS AND SUPPLEMENTAL DATA: ............ $ 9,043 $ 6,876 $ 4,761 $ 3,449 $ 2,617
Net assets at end of period (000s)
Ratios to average net assets:
Expenses (c) .......................... 1.60% 1.60% 1.60% 1.60% 1.60%
Net investment income (loss) .......... (0.08)% (0.03)% 0.17% 0.42% 0.11%
Portfolio turnover ....................... 155% 138% 151% 86% 90%
- ----------------------------------------------------------------------------------------------------------------
(a) Amount rounds to less than $0.01.
(b) The return is calculated without the effects of a sales charge. Total
returns would have been lower had certain expenses not been reimbursed or
waived during the period shown.
(c) If the waiver and reimbursement had not been in place for the periods
listed, the ratios of expenses to average net assets would have been as
follows:
4.11% 5.18% 7.07% 6.63% 7.30%
</TABLE>
66
<PAGE>
INTERNATIONAL EQUITY FUND - CLASS C
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE YEAR ENDED DECEMBER 31, 1999(A)
- --------------------------------------------------------------------------------
Net asset value, beginning of period .... $ 12.51
- ------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income (loss) ............ (0.11)
Net realized and unrealized gain (loss)
on investments ..................... 4.89
- ------------------------------------------------------
Total from investment operations ..... 4.78
- ------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income ............... --
Realized capital gains .............. (1.37)
Return of capital ................... --
- ------------------------------------------------------
Total dividends and distributions ....... (1.37)
- ------------------------------------------------------
Net asset value, end of period .......... $ 15.92
======================================================
Total return (b) .................. 38.44%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000s) ...... $ 6,475
Ratios to average net assets(c)
Expenses .......................... 2.35%
Net investment income (loss) ............ (0.81)%
Portfolio turnover ...................... 155%
- ------------------------------------------------------
(a) The Class commenced operations on January 1, 1999.
(b) The return is calculated without the effects of a sales charge. Total
returns would have been lower had certain expenses not been reimbursed or
waived during the period shown.
(c) If the waiver and reimbursement had not been in place for the period
listed, the ratios of expenses to average net assets would have been 4.86%.
67
<PAGE>
The financial highlights table for the Emerging Growth Fund is intended to help
you understand the Fund's financial performance for the past five years. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate an investor would have earned or lost on
an investment in the Fund (assuming reinvestment of all dividends and
distributions). The information for the period ending December 31, 1999 has been
audited by Ernst & Young LLP, whose report, along with the Fund's financial
statements is included in the SAI, which is available upon request. Information
for periods ending before December 31, 1999 was audited by other independent
accountants.
EMERGING GROWTH FUND - CLASS A
<TABLE>
<CAPTION>
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
- ----------------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .. $ 13.40 $ 13.85 $ 11.55 $ 11.52 $ 10.11
- ----------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income (loss) .......... (0.09) (0.04) (0.03) 0.01 (0.01)
Net realized and unrealized gain (loss)
on investments ................... 6.18 0.37 3.71 1.20 2.29
- ----------------------------------------------------------------------------------------------------------------
Total from investment operations ... 6.09 0.33 3.68 1.21 2.28
- ----------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income .............. -- -- -- (0.01) (0.03)
Realized capital gains ............. (2.53) (0.78) (1.38) (1.17) (0.84)
Return of capital .................. -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------
Total dividends and distributions ..... (2.53) (0.78) (1.38) (1.18) (0.87)
- ----------------------------------------------------------------------------------------------------------------
Net asset value, end of period ........ $ 16.96 $ 13.40 $ 13.85 $ 11.55 $ 11.52
================================================================================================================
Total return(a) ................... 45.85% 2.57% 32.20% 10.56% 22.56%
RATIOS AND SUPPLEMENTAL DATA: ......... $ 10,743 $ 8,335 $ 4,949 $ 2,873 $ 2,520
Net assets at end of period (000s)
Ratios to average net assets:
Expenses (b) .................... 1.50% 1.50% 1.50% 1.50% 1.50%
Net investment income (loss) .... (0.66)% (0.41)% (0.30)% (0.12)% (0.05)%
Portfolio turnover .................... 97% 78% 101% 117% 109%
- ----------------------------------------------------------------------------------------------------------------
(a) The return is calculated without the effects of a sales charge. Total
returns would have been lower had certain expenses not been reimbursed or
waived during the period shown.
(b) If the waiver and reimbursement had not been in place for the periods
listed, the ratios of expenses to average net assets would have been as
follows:
3.29% 4.11% 5.94% 6.58% 7.09%
</TABLE>
68
<PAGE>
EMERGING GROWTH FUND - CLASS C
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE YEAR ENDED DECEMBER 31, 1999(A)
- --------------------------------------------------------------------------------
Net asset value, beginning of period .... $ 13.04
- ------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income (loss) ............ (0.19)
Net realized and unrealized gain (loss)
on investments ..................... 5.97
- ------------------------------------------------------
Total from investment operations ..... 5.78
- ------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income ............... --
Realized capital gains .............. (2.53)
Return of capital ................... --
- ------------------------------------------------------
Total dividends and distributions ....... (2.53)
- ------------------------------------------------------
Net asset value, end of period .......... $ 16.29
======================================================
Total return (b) .................. 44.86%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000s) ...... $ 3,964
Ratios to average net assets(c)
Expenses .......................... 2.25%
Net investment income (loss) ............ (1.41)%
Portfolio turnover ...................... 97%
- ------------------------------------------------------
(a) The Class commenced operations on January 1, 1999.
(b) The return is calculated without the effects of a sales charge. Total
returns would have been lower had certain expenses not been reimbursed or
waived during the period shown.
(c) If the waiver and reimbursement had not been in place for the period
listed, the ratios of expenses to average net assets would have been 4.03%.
69
<PAGE>
The financial highlights table for the Aggressive Growth Fund is intended to
help you understand the Fund's financial performance during its operations.
Certain information reflects financial results for a single Fund share. The
total returns in the table represent the rate an investor would have earned or
lost on an investment in the Fund (assuming reinvestment of all dividends and
distributions). Information for periods ending August 31, 1997, March 31, 1998
and March 31, 1999 has been audited by Arthur Andersen LLP, whose report, along
with the Fund's financial statements, is included in the SAI, which is available
upon request. Information for the period ending August 31, 1996 was audited by
other independent accountants. Information for the period ending September 30,
1999 was unaudited. The following information is for Class A shares only.
Information is not available for Class C shares since their public offering did
not begin until May 1, 2000.
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR SEVEN MONTHS YEAR PERIOD
SEPT. 30, ENDED ENDED ENDED ENDED
1999 MARCH 31, MARCH 31, AUGUST 31, AUGUST 31,
(UNAUDITED) 1999 1998(A) 1997 1996(B)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 15.73 $ 15.81 $ 16.29 $ 10.95 $ 10.00
--------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (0.14) (0.27) (0.15) (0.17) (0.11)(C)
Net realized and unrealized gains
(losses) on investments 2.43 2.67 (0.33) 5.54 1.06
--------------------------------------------------------------------------------
Total from investment operations 2.29 2.40 (0.48) 5.37 0.95
--------------------------------------------------------------------------------
Distributions from net realized gains -- (2.48) -- (0.03) --
--------------------------------------------------------------------------------
Net asset value at end of period $ 18.02 $ 15.73 $ 15.81 $ 16.29 $ 10.95
================================================================================
Total return(D) 14.56% 15.46% (2.95%) 49.09% 9.50%
================================================================================
Net assets at end of period (000's) $ 10,692 $ 11,402 $ 15,495 $ 13,984 $ 6,550
================================================================================
Ratio of net expenses
to average net assets(E) 1.95%(F) 1.95% 1.95%(F) 1.94% 1.95%(F)
Ratio of net investment loss
to average net assets (1.74%)(F) (1.52%) (1.66%)(F) (1.57%) (1.26%)(F)
Portfolio turnover rate 17%(F) 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) $ 550 $ 80 n/a n/a n/a
Average daily number of capital shares
outstanding during the
period (000's) 593 818 n/a n/a n/a
Average amount of debt per share
during the period $ 0.93 $ 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 2.86%(F), 2.00%, 2.62% and 5.05%(F) for
the periods ended September 30, 1999, March 31, 1999, August 31, 1997 and
August 31, 1996, respectively.
(F) Annualized.
<PAGE>
The financial highlights table for the Growth/Value Fund is intended to help you
understand the Fund's financial performance during its operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate an investor would have earned or lost on
an investment in the Fund (assuming reinvestment of all dividends and
distributions). The information for the periods ending August 31, 1997, March
31, 1998 and March 31, 1999 has been audited by Arthur Andersen LLP, whose
report, along with the Fund's financial statements, is included in the SAI,
which is available upon request. Information for the period ending August 31,
1996 was audited by other independent accountants. Information for the period
ending September 30, 1999 was unaudited.
<TABLE>
<CAPTION>
GROWTH/VALUE FUND - CLASS A
- --------------------------------------------------------------------------------
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR SEVEN MONTHS YEAR PERIOD
SEPT. 30, ENDED ENDED ENDED ENDED
1999 MARCH 31, MARCH 31, AUGUST 31, AUGUST 31,
(UNAUDITED) 1999 1998(A) 1997 1996(B)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 17.50 $ 16.30 $ 15.90 $ 11.18 $ 10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (0.10) (0.17) (0.08) (0.13) (0.06)(C)
Net realized and unrealized
gains on investments 1.72 4.84 1.05 5.39 1.24
--------------------------------------------------------------------------------
Total from investment operations 1.62 4.67 0.97 5.26 1.18
--------------------------------------------------------------------------------
Distributions from net realized gains -- (3.47) (0.57) (0.54) --
--------------------------------------------------------------------------------
Net asset value at end of period $ 19.12 $ 17.50 $ 16.30 $ 15.90 $ 11.18
================================================================================
Total return(D) 9.26% 29.89% 6.43% 47.11% 11.80%
================================================================================
Net assets at end of period (000's) $ 24,692 $ 24,664 $ 28,649 $ 26,778 $ 15,108
================================================================================
Ratio of net expenses
to average net assets(E) 1.66%(F) 1.66% 1.66%(F) 1.95% 1.95%(F)
Ratio of net investment loss
to average net assets (1.11%)(F) (0.93%) (0.91%)(F) (1.03%) (0.62%)(F)
Portfolio turnover rate 36%(F) 59% 62%(F) 52% 21%
</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.
70
<PAGE>
GROWTH/VALUE FUND - CLASS C
- --------------------------------------------------------------------------------
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
- --------------------------------------------------------------------------------
PERIOD
ENDED
SEPT. 30,
1999(A)
(UNAUDITED)
- --------------------------------------------------------------------------------
Net asset value at beginning of period $ 18.65
----------
Income from investment operations:
Net investment loss (0.03)
Net realized and unrealized gains on investments 0.49
----------
Total from investment operations 0.46
----------
Net asset value at end of period $ 19.11
==========
Total return(B) 2.47%
==========
Net assets at end of period (000's) $ 443
==========
Ratio of net expenses to average net assets 2.41%(C)
Ratio of net investment loss to average net assets (2.03%)(C)
Portfolio turnover rate 36%(C)
(A) Represents the period from the initial public offering of Class C shares
(August 2, 1999) through September 30, 1999.
(B) Total return shown excludes the effect of applicable sales loads.
(C) Annualized.
<PAGE>
The financial highlights table for the Equity Fund is intended to help you
understand the Fund's financial performance for the past five years. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate an investor would have earned or lost on
an investment in the Fund (assuming reinvestment of all dividends and
distributions). Information for the fiscal years ended March 31, 1995, 1996,
1997, 1998 and 1999 has been audited by Arthur Andersen LLP whose report, along
with the Fund's financial statements, is included in the SAI, which is available
upon request. Information for the period ended September 30, 1999 is unaudited.
<TABLE>
<CAPTION>
EQUITY FUND - CLASS A
- --------------------------------------------------------------------------------
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
SEPT. 30, YEARS ENDED MARCH 31,
1999 -------------------------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 22.12 $ 19.38 $ 13.76 $ 12.45 $ 9.84 $ 9.26
-------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (0.02) 0.04 0.09 0.12 0.13 0.15
Net realized and unrealized gains
(losses) on investments (0.51) 2.73 5.76 1.35 2.60 0.59
-------------------------------------------------------------------------------------------
Total from investment operations (0.53) 2.77 5.85 1.47 2.73 0.74
-------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment
income -- (0.03) (0.08) (0.12) (0.12) (0.16)
Distributions from net realized gains -- -- (0.15) (0.04) -- --
-------------------------------------------------------------------------------------------
Total distributions -- (0.03) (0.23) (0.16) (0.12) (0.16)
-------------------------------------------------------------------------------------------
Net asset value at end of period $ 21.59 $ 22.12 $ 19.38 $ 13.76 $ 12.45 $ 9.84
===========================================================================================
Total return(A) (2.40%) 14.30% 42.74% 11.82% 27.90% 8.07%
===========================================================================================
Net assets at end of period (000's) $ 60,517 $ 55,561 $ 38,336 $ 14,983 $ 8,502 $ 4,300
===========================================================================================
Ratio of net expenses
to average net assets(B) 1.29%(C) 1.31% 1.25% 1.25% 1.25% 1.25%
Ratio of net investment income (loss)
to average net assets (0.15%)(C) 0.18% 0.53% 0.91% 1.06% 1.57%
Portfolio turnover rate 2%(C) 10% 7% 38% 38% 159%
</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%, 2.02% and 1.94%
for the years ended March 31, 1997, 1996 and 1995, respectively.
(C) Annualized.
66
<PAGE>
<TABLE>
<CAPTION>
EQUITY FUND - CLASS C
- --------------------------------------------------------------------------------
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
SEPT. 30, YEARS ENDED MARCH 31,
1999 -------------------------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 21.86 $ 19.34 $ 13.77 $ 12.46 $ 9.86 $ 9.26
-------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (0.14) (0.19) (0.03) 0.02 0.05 0.10
Net realized and unrealized gains
(losses) on investments (0.51) 2.71 5.75 1.35 2.60 0.57
-------------------------------------------------------------------------------------------
Total from investment operations (0.65) 2.52 5.72 1.37 2.65 0.67
-------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment
income -- -- -- (0.02) (0.05) (0.07)
Distributions from net realized gains -- -- (0.15) (0.04) -- --
-------------------------------------------------------------------------------------------
Total distributions -- -- (0.15) (0.06) (0.05) (0.07)
-------------------------------------------------------------------------------------------
Net asset value at end of period $ 21.21 $ 21.86 $ 19.34 $ 13.77 $ 12.46 $ 9.86
===========================================================================================
Total return(A) (2.97%) 13.03% 41.63% 11.01% 26.90% 7.32%
===========================================================================================
Net assets at end of period (000's) $ 3,244 $ 3,146 $ 3,862 $ 2,770 $ 2,436 $ 1,995
===========================================================================================
Ratio of net expenses
to average net assets(B) 2.39%(C) 2.41% 2.00% 2.00% 2.00% 2.00%
Ratio of net investment income (loss)
to average net assets (1.25%)(C) (0.92%) (0.18%) 0.15% 0.38% 0.68%
Portfolio turnover rate 2%(C) 10% 7% 38% 38% 159%
</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%, 2.70% and 2.50%
for the years ended March 31, 1997, 1996 and 1995, respectively.
(C) Annualized.
<PAGE>
The financial highlights table for the Value Plus Fund is intended to help you
understand the Fund's financial performance during its operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate an investor would have earned or lost on
an investment in the Fund (assuming reinvestment of all dividends and
distributions). The information for the period ending December 31, 1999 has been
audited by Ernst & Young LLP, whose report, along with the Fund's financial
statements is included in the SAI, which is available upon request. Information
for the periods ending before December 31, 1999 was audited by other independent
accountants.
VALUE PLUS FUND
<TABLE>
<CAPTION>
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS A SHARES CLASS C SHARES
-------------- -------------------------
PERIODS ENDED DECEMBER 31,
1999 1998(A) 1999(B)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period .... $ 10.41 $ 10.00 $ 10.26
- ---------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income (loss) ............ 0.01 0.02 (0.07)
Net realized and unrealized gain (loss)
on investments ..................... 1.60 0.41 1.53
- ---------------------------------------------------------------------------------------
Total from investment operations .... 1.61 0.43 1.46
- ---------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income ............... (0.01) (0.02) --
Realized capital gains .............. (0.24) -- (0.24)
Return of capital ................... -- (0.00)(c) --
- ---------------------------------------------------------------------------------------
Total dividends and distributions ....... (0.25) (0.02) (0.24)
- ---------------------------------------------------------------------------------------
Net asset value, end of period .......... $ 11.77 $ 10.41 $ 11.48
=======================================================================================
Total return (d) ..................... 15.51% 4.29% 14.24%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000s) ...... $ 31,808 $ 27,068 $ 548
Ratios to average net assets:
Expenses (e) ...................... 1.30% 1.30%(f) 2.05%
Net investment income (loss) ...... 0.08% 0.25%(f) (0.65)%
Portfolio turnover ..................... 60% 60% 34%
- ---------------------------------------------------------------------------------------
(a) Class A Shares commenced operations on May 1, 1998.
(b) Class C Shares commenced operations on January 1, 1999.
(c) Amount rounds to less than $0.01.
(d) The return is calculated without the effects of a sales charge. Total
returns would have been lower had certain expenses not been reimbursed or
waived during the period shown.
(e) If the waiver and reimbursement had not been in place for the periods
listed, the ratios of expenses to average net assets would have been as
follows:
2.02% 2.25%(f) 2.76%
(f) Ratios are annualized.
</TABLE>
73
<PAGE>
The financial highlights table for the Utility Fund is intended to help you
understand the Fund's financial performance for the past five years. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate an investor would have earned or lost on
an investment in the Fund (assuming reinvestment of all dividends and
distributions). Information for the fiscal years ended March 31, 1995, 1996,
1997, 1998 and 1999 has been audited by Arthur Andersen LLP whose report, along
with the Fund's financial statements, is included in the SAI, which is available
upon request. Information for the period ended September 30, 1999 is unaudited.
<TABLE>
<CAPTION>
UTILITY FUND - CLASS A
- --------------------------------------------------------------------------------
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
SEPT. 30, YEARS ENDED MARCH 31,
1999 -------------------------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 15.42 $ 16.76 $ 12.44 $ 12.24 $ 10.47 $ 10.52
-------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.18 0.38 0.43 0.46 0.47 0.43
Net realized and unrealized gains
(losses) on investments 1.61 (1.16) 4.56 0.22 1.77 (0.05)
-------------------------------------------------------------------------------------------
Total from investment operations 1.79 (0.78) 4.99 0.68 2.24 0.38
-------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment
income (0.18) (0.38) (0.43) (0.46) (0.47) (0.43)
Distributions from net realized gains -- (0.18) (0.24) (0.02) -- --
-------------------------------------------------------------------------------------------
Total distributions (0.18) (0.56) (0.67) (0.48) (0.47) (0.43)
-------------------------------------------------------------------------------------------
Net asset value at end of period $ 17.03 $ 15.42 $ 16.76 $ 12.44 $ 12.24 $ 10.47
===========================================================================================
Total return(A) 11.61% (4.79%) 40.92% 5.61% 21.65% 3.68%
===========================================================================================
Net assets at end of period (000's) $ 41,519 $ 38,391 $ 42,463 $ 36,087 $ 40,424 $ 40,012
===========================================================================================
Ratio of net expenses
to average net assets 1.33%(B) 1.33% 1.25% 1.25% 1.25% 1.25%
Ratio of net investment income
to average net assets 2.11%(B) 2.30% 3.03% 3.65% 3.97% 4.06%
Portfolio turnover rate 5%(B) 4% 0% 3% 11% 17%
</TABLE>
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Annualized.
68
<PAGE>
<TABLE>
<CAPTION>
UTILITY FUND - CLASS C
- --------------------------------------------------------------------------------
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
SEPT. 30, YEARS ENDED MARCH 31,
1999 -------------------------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 15.40 $ 16.74 $ 12.43 $ 12.23 $ 10.46 $ 10.51
-------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.08 0.18 0.31 0.35 0.37 0.35
Net realized and unrealized gains
(losses) on investments 1.62 (1.16) 4.57 0.24 1.78 (0.04)
-------------------------------------------------------------------------------------------
Total from investment operations 1.70 (0.98) 4.88 0.59 2.15 0.31
-------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment
income (0.08) (0.18) (0.33) (0.37) (0.38) (0.36)
Distributions from net realized gains -- (0.18) (0.24) (0.02) -- --
-------------------------------------------------------------------------------------------
Total distributions (0.08) (0.36) (0.57) (0.39) (0.38) (0.36)
-------------------------------------------------------------------------------------------
Net asset value at end of period $ 17.02 $ 15.40 $ 16.74 $ 12.43 $ 12.23 $ 10.46
===========================================================================================
Total return(A) 11.01% (5.92%) 39.91% 4.82% 20.78% 3.00%
===========================================================================================
Net assets at end of period (000's) $ 3,348 $ 3,215 $ 3,597 $ 3,099 $ 3,686 $ 3,599
===========================================================================================
Ratio of net expenses
to average net assets 2.50%(B) 2.50% 2.00% 2.00% 2.00% 2.00%
Ratio of net investment income
to average net assets 0.94%(B) 1.13% 2.28% 2.89% 3.19% 3.41%
Portfolio turnover rate 5%(B) 4% 0% 3% 11% 17%
</TABLE>
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Annualized.
<PAGE>
FOR MORE INFORMATION
- --------------------
For investors who want more information about the Funds, the following documents
are available free upon request:
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Funds and is legally a part of this prospectus.
ANNUAL/SEMI-ANNUAL REPORTS: The Funds' annual and semi-annual reports provide
additional information about the Funds' investments. In each Fund's annual
report, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performance during its last
fiscal year.
You can get free copies of the SAI, the reports, other information and answers
to your questions about the Funds by contacting your financial advisor, or the
Funds at:
Touchstone Family of Funds
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
800.543.0407
http://www.touchstonefunds.com
Information about the Funds (including the SAI) can be reviewed and copied at
the Securities and Exchange Commission's public reference room in Washington,
D.C. You can receive information about the operation of the public reference
room by calling the SEC at 1-202-942-8090.
Reports and other information about the Funds are available on the SEC's
internet site at http://www.sec.gov. For a fee, you can receive information
about the SEC's internet site by writing to: SEC, Public Reference Section,
Washington, D.C. 20549-0102, or by e-mailing a request to: [email protected].
Investment Company Act file no. 811-3651
75
<PAGE>
<TABLE>
<S> <C>
[LOGO] Touchstone Return completed form to:
---------- Touchstone Family of Funds
Family of Funds P.O. Box 5354
Cincinnati, OH 45202
For assistance in completing this form, call
NOT FOR USE WITH IRAS, SEP, SIMPLE OR 403B PLANS 800-543-0407
Was order previously telephoned in? o Yes o No If yes, date ( / / ) and confirmation #______________________________________
- ------------------------------------------------------------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION (check one box only)
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] INDIVIDUAL [ ] JOINT TENANT (For joint-owners, joint tenancy with right of survivorship is presumed unless otherwise specified.)
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Individual Owner - First, Initial, Last Name of Joint Owner (if any) - First, Initial, Last
- ------------------------------------------------------------------------------------------------------------------------------------
Owner's Social Security # Date of Birth Joint Owner's Social Security # Date of Birth
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] GIFT/TRANSFER TO A MINOR (Only one custodian and minor)
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Minor - First, Initial, Last Under ___________________ the Uniform Gifts/Transfers to Minors Act
(State of minor's residence)
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Custodian - First, Initial, Last Minor's Social Security # Minor's Date of Birth
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] TRUST
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Trust Agreement Taxpayer I.D. Number Date of Trust Agreement
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Trustee(s) - First, Initial, Last Name of Beneficiary - First, Initial, Last
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Plan Administrator Address Phone Number Fax Number E-mail Address
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] CORPORATION, PARTNERSHIP OR OTHER ENTITY
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Corporation or Other Entity
- ------------------------------------------------------------------------------------------------------------------------------------
Taxpayer I.D. Number
- ------------------------------------------------------------------------------------------------------------------------------------
2. ADDRESS (P.O. Box not acceptable without street address)
- ------------------------------------------------------------------------------------------------------------------------------------
Street Home Phone
( )
- ------------------------------------------------------------------------------------------------------------------------------------
City Business Phone
( )
- ------------------------------------------------------------------------------------------------------------------------------------
State Zip Are you a U.S. Citizen? [ ] Yes [ ] No (please specify country):
- ------------------------------------------------------------------------------------------------------------------------------------
3. INITIAL INVESTMENT
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] ALLOCATE MY INVESTMENT USING THE FOLLOWING FUNDS: [ ] A SHARES OR [ ] C SHARES (A SHARES WILL BE PURCHASED UNLESS
INDICATED OTHERWISE.)
STOCK FUNDS TAXABLE BOND FUNDS TAX-FREE BOND FUNDS
[ ] International Equity Fund $________ [ ] High Yield Fund $________ [ ] Ohio Insured Tax-Free Fund $_______
[ ] Emerging Growth Fund $________ [ ] Bond Fund $________ [ ] Tax-Free Intermediate Term Fund $_______
[ ] Aggressive Growth Fund $________ [ ] Intermediate Term
[ ] Growth/Value Fund $________ Government Income Fund $________ TAX-FREE MONEY MARKET FUNDS
[ ] Equity Fund $________ [ ] Tax-Free Money Fund $_______
[ ] Enhanced 30 Fund $________ TAXABLE MONEY MARKET FUNDS [ ] California Tax-Free Money Fund $_______
[ ] Value Plus Fund $________ [ ] Money Market Fund $________ [ ] Florida Tax-Free Money Fund $_______
[ ] Utility Fund $________ [ ] Short Term Government $________ [ ] Ohio Tax-Free Money Fund - R $_______
Income Fund [ ] Ohio Tax-Free Money Fund - I $_______
[ ] Institutional Government
Income Fund $________
[ ] Total investment of $________
Please make check payable to the TOUCHSTONE FAMILY OF FUNDS.
- ------------------------------------------------------------------------------------------------------------------------------------
4. DISTRIBUTION OPTION (check one box only)
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] Reinvest all dividends and capital gains in additional shares [ ] Pay all capital gains in cash and reinvest dividends
[ ] Pay all dividends and capital gains in cash [ ] Cross Reinvestment: Please call Touchstone at
800-543-0407 for further instructions.
[ ] Pay all dividends in cash and reinvest capital gains
If not specified, dividends and capital gains will be reinvested in the Fund that pays them.
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
5. RIGHTS OF ACCUMULATION
- ------------------------------------------------------------------------------------------------------------------------------------
If you already have an account with the Touchstone Family of Funds, you may be eligible for reduced sales charges subject to
Touchstone's confirmation of the following eligible holdings:
- ------------------------------------------------------------------------------------------------------------------------------------
Fund Name
- ------------------------------------------------------------------------------------------------------------------------------------
Shareholder Name
- ------------------------------------------------------------------------------------------------------------------------------------
Account Number
- ------------------------------------------------------------------------------------------------------------------------------------
6. LETTER OF INTENT
- ------------------------------------------------------------------------------------------------------------------------------------
If you intend to invest a certain amount over a 13-month period in one or more of the Touchstone Family of Funds, you may be
entitled to a reduced sales charge. I agree to the terms of the Letter of Intent set forth in the Prospectus.
[ ] Although I'm not obligated to do so, I plan to invest over a 13-month period a total of at least:
[ ] $50,000 [ ] $100,000 [ ] $250,000
[ ] $500,000 [ ] $1,000,000 or more
[ ] I am already investing under an existing Letter of Intent in the following account number: ___________________________________.
- ------------------------------------------------------------------------------------------------------------------------------------
7. AUTOMATIC INVESTMENT PLAN
- ------------------------------------------------------------------------------------------------------------------------------------
This plan provides for regular subsequent investments to be made electronically through Automated Clearing House (ACH) from your
bank account into the Fund(s) you select below. There is no charge at the Touchstone Family of Funds, and you may cancel at any time
with no obligations or penalty.
Please withdraw from my bank account $ ___________ (minimum $50) on the [ ] 8th [ ] 15th [ ] 22nd [ ] 29th
[ ] Monthly [ ] Quarterly [ ] Annual basis, beginning ____/____/____ (date) to be invested per the instructions below.
STOCK FUNDS TAXABLE BOND FUNDS TAX-FREE BOND FUNDS
[ ] International Equity Fund $________ [ ] High Yield Fund $________ [ ] Ohio Insured Tax-Free Fund $_______
[ ] Emerging Growth Fund $________ [ ] Bond Fund $________ [ ] Tax-Free Intermediate Term Fund $_______
[ ] Aggressive Growth Fund $________ [ ] Intermediate Term
[ ] Growth/Value Fund $________ Government Income Fund $________ TAX-FREE MONEY MARKET FUNDS
[ ] Equity Fund $________ [ ] Tax-Free Money Fund $_______
[ ] Enhanced 30 Fund $________ TAXABLE MONEY MARKET FUNDS [ ] California Tax-Free Money Fund $_______
[ ] Value Plus Fund $________ [ ] Money Market Fund $________ [ ] Florida Tax-Free Money Fund $_______
[ ] Utility Fund $________ [ ] Short Term Government $________ [ ] Ohio Tax-Free Money Fund - R $_______
Income Fund [ ] Ohio Tax-Free Money Fund - I $_______
[ ] Institutional Government
Income Fund $________
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] Checking Account (please attach a voided check) o Savings Account (please attach a preprinted deposit slip)
- ------------------------------------------------------------------------------------------------------------------------------------
Bank Account Registration Bank Name
- ------------------------------------------------------------------------------------------------------------------------------------
Street City State Zip
- ------------------------------------------------------------------------------------------------------------------------------------
Bank Routing Number Bank Account Number
- ------------------------------------------------------------------------------------------------------------------------------------
Any Joint Owner of your bank account who is not a Joint Owner of this Date
new account with the Touchstone Family of Funds must sign here:
X
- ------------------------------------------------------------------------------------------------------------------------------------
8. TELEPHONE TRANSFERS AND REDEMPTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
Unless the boxes below are checked, by signing this Application, the investor authorizes each Fund and its Transfer Agent to act on
the investor's telephone instructions, or on telephone instructions from any person representing to be an authorized agent of the
investor and requesting a redemption or exchange on the investor's behalf. The undersigned agrees that any redemption or exchange
made pursuant to this authorization shall be subject to the provisions of the current Prospectus of each Fund, and that neither the
Funds nor their Transfer Agent or Distributor, nor their respective affiliates, will be liable for any loss, damage, expense or cost
which may arise out of any telephone redemption or exchange request they reasonably believe to be genuine, including any fraudulent
or unauthorized requests. The investor(s) will bear the risk of any such loss. In an effort to determine that telephone requests are
genuine, the Funds and/or their Transfer Agent will employ reasonable procedures, which may include, among others, requiring forms
of personal identification prior to acting upon telephone instructions and providing written confirmation of the transactions.
Telephone conversations also may be recorded. REDEMPTION PROCEEDS OF $1,000 OR MORE MAY BE WIRED TO THE SHAREHOLDER'S ACCOUNT AT A
COMMERCIAL BANK OR BROKERAGE FIRM IN THE UNITED STATES UPON VERBAL REQUEST IF THE BANK ACCOUNT INFORMATION IN SECTION 7 IS COMPLETE.
(check only if you do not want to use telephone authorization.)
[ ] I DO NOT elect the telephone exchange privilege. [ ] I DO NOT elect the telephone redemption privilege.
- ------------------------------------------------------------------------------------------------------------------------------------
9. AUTOMATIC REBALANCING
- ------------------------------------------------------------------------------------------------------------------------------------
Do you wish to employ the automatic rebalancing feature? [ ] Yes (if yes, please attach Form 7062) [ ] No
- ------------------------------------------------------------------------------------------------------------------------------------
10. ELIGIBILITY FOR EXEMPTION FROM SALES CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] If you are eligible for exemption from sales charges as described in the Statement of Additional Information, please check here
and attach Form 7008.
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
11. TAXPAYER I.D. NUMBER CERTIFICATION/SIGNATURES
- ------------------------------------------------------------------------------------------------------------------------------------
I (We) are of legal age and capacity, have legal authority to purchase shares, have received and read a current prospectus for each
Fund selected and agree to the terms and conditions on this Application and those contained in the current prospectus(es) (including
the Statement(s) of Additional Information) of the Fund(s) selected for purchase. I (We) acknowledge that the account will be
subject to the telephone exchange and redemption privileges (unless declined) described in the Fund's current Prospectus and agree
that the Fund, its Distributor and Transfer Agent will not be liable for any loss in acting on written or telephone instructions
reasonably believed by them to be authentic. I (We) hereby ratify any instructions given pursuant to this Application and for myself
(ourselves) and my (our) successors and assigns do hereby release each Fund, its Distributor and its Transfer Agent and their
respective officers, employees, agents and affiliates from any and all liability in the performance of the acts instructed herein.
I acknowledge that mutual fund shares are not deposits or obligations of, or guaranteed or endorsed by, any bank, credit union or
insurance company and are not federally insured by the FDIC, the Federal Reserve, or any other agency. Mutual fund shares involve
certain risks, including the possible loss of principal.
Under penalty of perjury, the undersigned whose Social Security (employer I.D.) number is shown on this application certifies that
(i) the number is my (our) correct taxpayer identification number and (ii) currently I (we) are not under IRS notification that I
(we) are subject to backup withholding (line out (ii) if under notification). If no such number is shown, the undersigned further
certifies, under penalties of perjury, that either (a) no such number has been issued, and a number has been or will soon be applied
for (if a number is not provided to you within sixty days, the undersigned understands that all payments -- including redemption --
are subject to a 31% withholding under federal tax law, until a number is provided); or (b) that the undersigned is not a citizen of
the U.S., and either does not expect to be in the U.S. for 183 days during each calendar year and does not conduct business in the
U.S. which should receive any gains from the Funds, or is exempt under an income tax treaty. My (Our) signature below constitutes my
(our) agreement and acceptance of all the terms, conditions and account features selected in any and all parts of this Application.
The Internal Revenue Service does not require your consent to any provision of this document other than the certifications required
to avoid backup withholding.
- ------------------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL, JOINT OR CUSTODIAN ACCOUNTS
- ------------------------------------------------------------------------------------------------------------------------------------
Signature of Individual Owner or Custodian Date
X
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Signature of Joint Owner, if any Date
X
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Corporation, Partnership, Trust or Other Accounts
Signature of Authorized Officer, General Partner, Trustee, etc. Date
X
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Title of Corporate Officer, General Partner, Trustee, etc. Date
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12. FOR COMPLETION BY INVESTMENT DEALER
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We hereby submit this application for purchase of shares in accordance with the terms of our Selling Agreement with Touchstone
Securities, Inc. and with the current Prospectus for the Funds.
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Investment Dealer Name
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Dealer's Corporate Office Address City State Zip
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Representative's Name
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Representative's Branch Office Address City State Zip
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Representative's Telephone Number Representative's Number
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Authorized Signature of Investment Dealer
X
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Title
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FIFTH THIRD - SIGNATURE CARD CHECKING
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Submit one card to establish an optional check redemption account which allows you to write checks against your account in the
________________. Please see a Fund's current Prospectus to determine if checkwriting is available in that Fund.
(Name of Fund)
PRINT CLEARLY
Name of Account ____________________________________________________________________________________________________________________
Account Number ______________________________________________ Date ______________________________________________________________
The registered owner(s) of this account must sign below. By signing this card the signatory(ies) agrees to all of the terms and
conditions set forth on the reverse side of this card.
_____________________________________________________________ ___________________________________________________________________
Signature Signature
_____________________________________________________________ ___________________________________________________________________
Signature Signature
INSTITUTIONAL ACCOUNTS: JOINT TENANCY ACCOUNTS:
[ ] Check here if any two signatures are required on checks [ ] Check here if both signatures are required on checks
[ ] Check here if only one signature is required on checks [ ] Check here if only one signature is required on checks
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[ ] Check here if Business Style Checks (600 per book with voucher stub) are required. A charge will be made to your account.
Individual Style checks are provided at no charge.
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<PAGE>
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SYSTEMATIC WITHDRAWAL PLAN
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This plan enables you to withdraw money regularly-either by check directly to you or electronically to your domestic bank account.
It eliminates your need to make a special request every month, quarter or year. There is no charge at the Touchstone Family of
Funds, and you may cancel at any time with no obligations or penalty.
Please make a total withdrawal of ___________ (minimum $50) from my Touchstone account(s) on a [ ] Monthly [ ] Quarterly [ ] Annual
basis, beginning on or about the last day of ________________ (month, year) from the fund(s) listed below:
STOCK FUNDS TAXABLE BOND FUNDS TAX-FREE BOND FUNDS
[ ] International Equity Fund $________ [ ] High Yield Fund $________ [ ] Ohio Insured Tax-Free Fund $_______
[ ] Emerging Growth Fund $________ [ ] Bond Fund $________ [ ] Tax-Free Intermediate Term Fund $_______
[ ] Aggressive Growth Fund $________ [ ] Intermediate Term
[ ] Growth/Value Fund $________ Government Income Fund $________ TAX-FREE MONEY MARKET FUNDS
[ ] Equity Fund $________ [ ] Tax-Free Money Fund $_______
[ ] Enhanced 30 Fund $________ TAXABLE MONEY MARKET FUNDS [ ] California Tax-Free Money Fund $_______
[ ] Value Plus Fund $________ [ ] Money Market Fund $________ [ ] Florida Tax-Free Money Fund $_______
[ ] Utility Fund $________ [ ] Short Term Government $________ [ ] Ohio Tax-Free Money Fund - R $_______
Income Fund [ ] Ohio Tax-Free Money Fund - I $_______
[ ] Institutional Government
Income Fund $________
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Existing Account Number (if applicable) [ ] Make check payable to the account owner(s) and send to the address of record
[ ] Make check payable to a third party and send to the name and address below:
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Name - First, Initial, Last Street
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City State Zip
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[ ] Deposit payments in my bank account electronically through Automated Clearing House (ACH) to the account designated below.
[ ] Checking Account (please attach a voided check)
[ ] Savings Account (please attach a preprinted deposit slip)
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Bank Account Registration Bank Name
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Street City State Zip
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Bank Routing Number Bank Account Number
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Any Joint Owner of this new account with the Touchstone Family of Funds Date
who is not a Joint Owner of your bank account must sign here:
X
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TERMS AND CONDITIONS
--------------------
1. REDEMPTION AUTHORIZATION: The signatory(ies) whose signature(s) appears on the reverse side, intending to be legally bound,
hereby agrees each with the other and with Fifth Third ("Bank"), that the Bank is appointed agent for such person(s) and as such
agent, is directed to redeem shares registered in the name of such signatory(ies) upon receipt of, and in the amount of, checks
drawn upon the above numbered accounts and to deposit the proceeds of such redemptions in said account or otherwise arrange for
application of such proceeds to payments of said checks. The Bank is expressly authorized to commingle such proceeds of such
redemptions in said account or otherwise arrange for application of such proceeds to payments of said checks also on behalf of
Integrated Fund Services, Inc. in effecting the redemption of shares.
The Bank is expressly authorized to honor checks as redemption instructions hereunder without requiring signature guarantees,
and shall not be liable for any loss or liability resulting from the absence of any such guarantee.
2. CHECK PAYMENT: The signatory(ies) authorizes and directs the Bank to pay each check presented hereunder, subject to all laws and
Bank rules and regulations pertaining to checking accounts. In addition, the signatory(ies) agrees that:
(a) No check shall be issued or honored, or redemption effected, for any amounts represented by shares for which certificates
have been issued.
(b) No check shall be issued or honored, or redemption effected, for any amounts represented by shares unless payment for such
shares has been made in full and any checks given in such payment have been collected through normal banking channels.
Shareholders who wish immediate availability of shares for check redemption may purchase their shares with federal funds or
may contact Integrated Fund Services, Inc. for assistance.
(c) Checks issued hereunder cannot be cashed over the counter at the Bank; and
(d) Checks shall be subject to any further information set forth in the applicable Prospectus, including without limitation any
additions, amendments and supplements thereto.
3. DUAL OWNERSHIP: If more than one person is indicated as a registered owner of shares, as by joint ownership, ownership in
common, or tenants by the entireties, then (a) each registered owner must sign this signature card, (b) each registered owner
must sign each check issued hereunder unless the parties have indicated on the face of this card that only one need sign, in
which case the Bank is authorized to act upon such signature, and (c) each signatory guarantees to the Bank the genuineness and
accuracy of the signature of the other signatory(ies). In the event of the death of a joint tenant or tenant by the entireties,
the survivor shall be deemed to own all of the shares and the proceeds thereof upon delivery of appropriate documentation.
4. TERMINATION: The Bank may at any time terminate this account, related share redemption service and its agency for the
signatory(ies) hereto without prior notice by Bank to the signatory(ies).
5. HEIRS AND ASSIGNS: These terms and conditions shall bind the respective heirs, executors, administrators and assigns of the
signatory(ies).
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</TABLE>
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TOUCHSTONE FAMILY OF FUNDS INVESTMENT ADVISOR
312 Walnut Street, 21st Floor Touchstone Advisors, Inc.
Cincinnati, Ohio 45202-4094 311 Pike Street
Nationwide:(Toll-Free) 800.543.8721 Cincinnati, Ohio 45202
Cincinnati: 513.629.2000
www.touchstonefunds.com
TRANSFER AGENT
William O. Coleman Integrated Fund Services, Inc.
Phillip R. Cox P.O. Box 5354
H. Jerome Lerner Cincinnati, Ohio 45201-5354
Robert H. Leshner
Jill T. McGruder SHAREHOLDER SERVICE
Oscar P. Robertson Nationwide:(Toll-Free)800.543.0407
Nelson Schwab, Jr. Cincinnati: 513.629.2050
Robert E. Stautberg
Joseph S. Stern, Jr.
