Touchstone Mid Cap Growth Fund Class C NCSR Certified annual shareholder report (management investment company)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-03651

Touchstone Strategic Trust-December Funds
(Exact name of registrant as specified in charter)

303 Broadway, Suite 1100
Cincinnati, Ohio 45202-4203
(Address of principal executive offices) (Zip code)

Jill T. McGruder

303 Broadway, Suite 1100
Cincinnati, Ohio 45202-4203
(Name and address of agent for service)

Registrant's telephone number, including area code: 800-638-8194

Date of fiscal year end: December 31

Date of reporting period: December 31, 2012

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

Item 1. Reports to Stockholders.

The Report to Shareholders is attached herewith.

December 31, 2012

Annual Report

Touchstone Strategic Trust

Touchstone Dynamic Equity Fund

Touchstone Emerging Growth Fund

Touchstone International Equity Fund

Touchstone Balanced Allocation Fund

Touchstone Conservative Allocation Fund

Touchstone Growth Allocation Fund

Touchstone Moderate Growth Allocation Fund

Table of Contents

	Page
Letter from the President	3
Management's Discussion of Fund Performance (Unaudited)	4 - 24
Tabular Presentation of Portfolios of Investments (Unaudited)	25 - 27
Portfolios of Investments:
Touchstone Dynamic Equity Fund	28
Touchstone Emerging Growth Fund	31
Touchstone International Equity Fund	33
Touchstone Balanced Allocation Fund	37
Touchstone Conservative Allocation Fund	38
Touchstone Growth Allocation Fund	39
Touchstone Moderate Growth Allocation Fund	40
Statements of Assets and Liabilities	42 - 45
Statements of Operations	46 - 49
Statements of Changes in Net Assets	50 - 55
Statements of Changes in Net Assets - Capital Stock Activity	56 - 62
Statements of Cash Flows	63
Financial Highlights	64 - 87
Notes to Financial Statements	89 - 120
Report of Independent Registered Public Accounting Firm	121
Other Items (Unaudited)	122 - 125
Management of the Trust (Unaudited)	126
Privacy Protection Policy	131

Letter from the President

Dear Shareholder:

We are pleased to provide you with the Touchstone Strategic Trust Annual Report. Inside you will find key financial information and manager commentaries for the five months ended December 31, 2012.

Against a backdrop of stagnant unemployment and economic growth, historically low interest rates, the European debt crisis, U.S. political uncertainty, and the fears of a “fiscal cliff,” the U.S. economy managed sparse growth over the previous five-month period.

The outset of the period witnessed an equity market resurgence in the third quarter following news of strong company earnings and positive outlooks. The fourth quarter was dominated by the U.S. Presidential election and concern over the “fiscal cliff,” keeping the markets on edge.

Overall, equities outperformed fixed income investments during the period, as historically low interest rates remained intact. The Federal Reserve (Fed) announced a third round of quantitative easing at the outset of the period, thus affirming low rates for the long-term. Investors turned to equities as a result, though fears of volatility and political uncertainty prevailed.

Among equities, developed international stocks slightly outperformed their emerging market counterparts during the period. U.S. value stocks bested growth stocks, while small-capitalization stocks outperformed mid- and large-capitalization stocks. Within fixed income, non-investment grade bonds outperformed investment grade bonds. U.S. Treasury securities lagged both due to the unprecedented low-yield environment.

As unforeseen events and uncertainty continue to impact the markets, a long-term investment strategy continues to be the best course for weathering future market environments. Consult with your financial professional to build a diversified asset allocation portfolio of stock, bond, alternative and money market mutual funds.

Touchstone is committed to helping investors achieve their financial goals by providing access to a distinctive selection of institutional asset managers who are known and respected for proficiency in their specific area of expertise. We hope that you will find the enclosed commentaries to be helpful and informative.

We thank you for including Touchstone as part of your investment plan.

Sincerely,

Jill T. McGruder

President

Touchstone Strategic Trust

Management's Discussion of Fund Performance (Unaudited)

Touchstone Dynamic Equity Fund

Sub-Advised by Analytic Investors, LLC

Investment Philosophy

The Fund seeks long-term capital appreciation from hedged equity investments with less risk than a fully invested, unhedged equity portfolio. A proprietary system that ranks stocks according to a mathematical model is utilized in an attempt to create a diversified and hedged portfolio, which invests in a combination of stocks and options, including covered calls. A security’s intrinsic value is determined by evaluating variables such as relative valuation, price momentum, company fundamentals, liquidity and risk. Portfolio optimization is utilized to select securities that are expected to maximize return, minimize volatility and diversify assets.

Fund Performance

The Touchstone Dynamic Equity Fund (Class A Shares) underperformed its benchmark the S&P 500 Index for the five-month period ended December 31, 2012. The Fund’s total return was -1.34 percent (calculated excluding the maximum sales charge) while the total return of the benchmark was 4.50 percent for the same period.

Market Environment and Portfolio Review

Equities moved higher for the five-month period, as represented by the S&P 500. This occurred early in the period as the bond-buying programs by the U.S. Federal Reserve Board and the European Central Bank were well-received by investors. Markets ended the period flat, however, as politics dominated the headlines during the final quarter of 2012 as news about the U.S. Presidential election quickly turned into widespread worry over the impact of the “fiscal cliff.”

The Fund is a hedged equity fund, comprised of equities and options. During the period, the equity component of the Fund posted positive returns but underperformed the S&P 500, while the options component posted negative total returns but outperformed the passive option component of the Chicago Board Options Exchange (CBOE) S&P 500 BuyWrite Index (BXM Index). The negative total return primarily occurred in November when the market experienced a strong rally after options positions were reset. (Options expire the third Friday of each month.)

The Fund is structured to be sector, style and beta¹neutral relative to the S&P 500 Index. During the period, stock selection within the Health Care and Financial Services sectors contributed to Fund performance, while stock selection within the Information Technology and Consumer Staples sectors negatively impacted Fund performance. Options written on broad-based indices, such as the S&P 500 and the S&P 100 Index, were the primary sources of negative option returns, while options sold on the PHLX Semiconductor Index produced positive results.

The Fund’s investment process uses a multi-characteristic approach when valuing securities. During the period, the Fund’s overweight to certain valuation characteristics helped performance, as did exposure to certain quality characteristics. Specifically, investors rewarded stocks with strong cash flow and sales relative to the company’s price per share. From a quality perspective, stocks with strong return on equity outperformed. This helped performance, as the Fund was tilted toward these types of stocks. On the other hand, the Fund’s emphasis to certain technical characteristics negatively impacted performance during the period. Specifically, stocks with strong price momentum underperformed, while stocks with negative momentum shifted course and posted positive returns. The Fund was not properly positioned to take advantage of these price trends.

Among the stocks that contributed to Fund performance during the period were overweight positions in Mylan Inc., Delta Air Lines Inc., Safeway Inc., and Home Depot Inc. A position in pharmaceutical company Mylan helped Fund performance, as the company’s stock moved higher after Moody’s Investors Service Inc. upgraded the company’s rating to investment grade. Delta Air Lines’ shares also moved higher as investors applauded the company’s purchase of a 49% stake in Virgin Atlantic Airways Ltd. Safeway rallied after the grocer announced it would pay its regular quarterly dividend early, which investors viewed as a sign of confidence that the company’s cash flow was strong. Finally, home improvement retailer Home Depot delivered profits that surpassed analyst estimates as customer spending increased at company stores.

Management's Discussion of Fund Performance (Unaudited) (Continued)

Among the stocks that detracted from Fund performance were short positions in Solera Holdings Inc. and Visteon Corp., and long positions in CA, Inc. and Intel Corp. Shares of Solera Holdings, a software provider to the automobile industry, rallied after the company posted a strong fiscal quarter and its revenues beat analysts’ estimates. Visteon, a supplier of components to automobile manufacturers, reported strong results and also announced a restructuring program aimed at reducing expenses. CA, a provider of IT management solutions, saw its stock price fall the most in three years after the company cut its 2013 forecasts as a result of lower-than-anticipated sales of new products. Shares of semiconductor manufacturer Intel moved lower after the company cut its third-quarter sales forecasts, citing weak demand.

Outlook

Our process is based on the fundamental belief that there is persistency in the types of characteristics investors prefer. If this holds going forward, we expect the Fund to benefit from being properly positioned toward stocks with characteristics favored by investors.

Going forward, if the market has a strong rally, it will be difficult for the Fund to keep pace with the unhedged index (S&P 500). But, over time, a disciplined covered call strategy has historically kept pace with the broad market with lower volatility than the market as measured by standard deviation.² We intend to emphasize stocks with certain attractive valuation characteristics, such as stocks with above-average cash flow-to-price ratios and above-average earnings-to-price ratios. We also intend to focus on companies with strong quality metrics, such as stocks with above-average asset utilization and return on assets. Furthermore, we anticipate continuing to underweight companies with above-average insider selling and underweight stocks where analysts vary widely in their earnings predictions.

¹ Beta is a measure of the volatility of a fund relative to its benchmark. The Beta of a benchmark is 1.00.

²Standard Deviation is a measure of how closely a fund's return moves above or below its average. It is a measure of total risk, including both market and security-specific risks.

Management's Discussion of Fund Performance (Unaudited) (Continued)

Comparison of the Change in Value of a $10,000 Investment in the Touchstone Dynamic
Equity Fund - Class A*, the S&P 500 Index and the Citigroup 3-Month T-Bill Index

The chart above represents performance of Class A shares only, which will vary from the performance of Class C shares, Class Y shares and Institutional Class shares based on the differences in loads and fees paid by shareholders in the different classes. Class Y shares commenced operations on July 1, 1978, Class A shares and Class C shares commenced operations on March 31, 2005 and Institutional Class shares commenced operations on December 9, 2005. The Class A and Class C shares performance information is calculated using the historical performance of Class Y shares for periods prior to March 31, 2005 and Institutional Class shares performance information is calculated using the historical performance of Class Y shares for periods prior to December 9, 2005. The returns have been restated for sales charges and for fees applicable to Class A, Class C, and Institutional Class shares.

The average annual total returns shown above are adjusted for maximum applicable sales charges.

***

Not Annualized.

The performance of the above Fund does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Notes to Chart

S&P 500 Index is a group of 500 widely held stocks and is commonly regarded to be representative of the large capitalization stock universe.

Citigroup 3-Month T-Bill Index tracks the performance of U.S. Treasury Bills with a remaining maturity of three months.

Management's Discussion of Fund Performance (Unaudited)

Touchstone Emerging Growth Fund

Sub-Advised by Copper Rock Capital Partners, LLC

Investment Philosophy

The Fund seeks capital appreciation by investing primarily in equity securities of emerging growth companies of any size, emphasizing small- to mid-cap companies diversified across sectors and industries. A fundamental, bottom-up approach is employed. The approach focuses on companies that exhibit strong management teams, the potential for strong and sustainable revenue and earnings growth, and strong financial and competitive positions.

Fund Performance

The Touchstone Emerging Growth Fund (Class A Shares) underperformed its benchmark the Russell 2500™ Growth Index (Index) for the five-month period ended December 31, 2012. The Fund’s total return was 7.62 percent (calculated excluding the maximum sales charge) while the total return of the benchmark was 8.16 percent for the same period.

Market Environment and Portfolio Review

The small-cap and small- to mid-cap markets generally continued their positive climb during the five month period (as represented by the Russell 2000^® Growth Index and Russell 2500™ Growth Index, respectively). This translated into outperformance of small-cap stocks over large-cap stocks during the period. Stimulative monetary policy action by the Federal Reserve (Fed) during the period contributed to the positive returns of the market as a whole, and markets rose even in the face of uncertainty about the U.S. Presidential election and “fiscal cliff ” negotiations. There continued to be swift rotations from one sector to another, culminating with the rise of the Industrials sector in early October through the end of the period. As a result, the Industrials and Materials sectors outperformed at the end of the period. In addition, growth remained out of favor and Real Estate Investment Trusts (REITs) and the Financials sectors rallied performance.

Stock selection in the Financials, Industrials, and Health Care sectors contributed to Fund performance during the period. The Fund also benefited from an underweight position relative to the Index in the Health Care sector. Stock selection in the Consumer Discretionary and Information Technology sectors detracted from relative return in the period, with the modest underperformance stemming from specific circumstances related to a few specific holdings that occurred near period end. The Consumer Discretionary sector underperformed due to lighter-than-expected holiday sales and weak consumer sentiment surrounding the impact of the “fiscal cliff ” negotiations.

Eagle Materials, Inc. (Materials sector), B/E Aerospace Inc. (Industrials sector), and PVH Corp. (Consumer Discretionary sector) were among the individual stocks that contributed to performance. Eagle Materials, a wallboard and cement manufacturer, reported another strong quarter as wallboard demand continued to improve and pricing rose as the industry focused on profitability over share gains. In addition, the company made an accretive acquisition during the period that contributed to gains for the stock. B/E Aerospace is a manufacturer of seats, food and beverage storage equipment, and other interior systems for the commercial-aircraft industry. B/E Aerospace reported strong earnings in the third and fourth quarters of the year, which contributed to the stock’s rise. The company also made positive comments about its long-term outlook, including a projection of 20%+ EPS (earnings per share) growth over the next several years. In addition, B/E Aerospace management and industry peers cited improvements in the commercial aftermarket and OEM (original equipment manufacturer)-build, which is expected to provide a good backdrop for future growth. Despite overall underperformance from the Consumer Discretionary sector, PVH Corp., a designer and marketer of clothing brands including Van Heusen, IZOD, and Kenneth Cole, contributed to the Fund’s positive relative return in the period. PVH Corp. announced its acquisition of Warnaco Group Inc. during the month of October, which sent shares higher. Warnaco previously held the license to Calvin Klein Jeans and Underwear, and by bringing both brands in-house, PVH Corp. is expected to realize significant synergies on both expenses and sales. The company raised 2013 earnings estimates based on strong stock performance during the period.

Among the individual stocks that detracted from performance were Align Technology, Inc. (Health Care sector) and Tangoe Inc. (Information Technology sector). Despite overall positive contribution within the Health Care

Management's Discussion of Fund Performance (Unaudited) (Continued)

sector, the portfolio’s position in Align Technology detracted from Fund performance. Align Technology, the manufacturer and marketer of the Invisalign orthodontic system, underperformed in the fourth quarter after reporting quarterly earnings below expectations. In addition, the company made an acquisition that we felt was not synergistic or accretive to existing operations and thus exited the position. Tangoe is a global provider of communications lifecycle management (CLM) and was among the leading detractors to relative return within the InformationTechnology sector. Tangoe’s stock underperformed primarily due to questions about the company’s true organic growth rate and the credibility of its management team. We are not in agreement with these reports and the Fund continues to own the stock, as we believe Tangoe is positioned for robust growth and profitability in the near term.

Outlook

We remain optimistic that U.S. equity market performance is sustainable. U.S. gross domestic product (GDP) growth expectations are mixed, but corporate earnings expectations continue to fluctuate within historical bands. We even saw earnings growth accelerate in the fourth quarter despite a general economic slowing. This factor remains a core component to our investment process as we look to find stocks where estimates are higher than Wall Street forecasts over the next 12 to 18 months. When the economy is less certain, we believe stocks with strong secular growth and a sharp focus on improving incremental operating margins have a better chance to outperform. We do not anticipate macro headlines or headwinds to go by the wayside in 2013, but we continue to believe the market reaction to headline-grabbing statements and news events remains short-lived.

Within the Fund, our bottom-up, fundamentals-first approach to stock selection has led to modest overweight positions relative to the Index in the Energy, Information Technology, and Consumer Discretionary sectors where Fund holdings benefit from strong secular growth drivers. The Fund maintains an underweight relative to the Index in the Health Care, Telecommunications Services, Materials, Consumer Staples and Utilities sectors.

Through diligent analysis, we continue to expect good earnings growth from company management that embrace improving incremental operating margins and sustained revenue growth through focused execution. We are pleased that current markets are differentiating between successful and unsuccessful business models, thus offering stock pickers like ourselves ample opportunity to add alpha.¹

¹Alpha is the portion of a fund's total return that is unique to that fund and is independent of movements in the benchmark.

Management's Discussion of Fund Performance (Unaudited) (Continued)

Comparison of the Change in Value of a $10,000 Investment in the
Touchstone Emerging Growth Fund - Class A* and the Russell 2500™ Growth Index

The chart above represents performance of Class A shares only, which will vary from the performance of Class C shares, Class Y shares and Institutional Class shares based on the differences in loads and fees paid by shareholders in the different classes. Class A shares and Institutional Class shares commenced operations on July 29, 2005, Class Y shares commenced operations on December 9, 2005, and Class C shares commenced operations on April 12, 2012. Class Y shares performance information is calculated using the historical performance of Class A shares for periods prior to December 9, 2005 and Class C shares performance information is calculated using the historical performance of Class A shares for periods prior to April 12, 2012 . The returns have been restated for sales charges and for fees applicable to Class C and Class Y shares.

The average annual total returns shown above are adjusted for maximum applicable sales charges.

***

Not Annualized.

The performance of the above Fund does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Note to Chart

Russell 2500™ Growth Index measures the performance of the small to mid-cap growth segment of the U.S. equity universe. It includes those Russell 2500 Index companies with higher price-to-book ratios and higher forecasted growth values.

Management's Discussion of Fund Performance (Unaudited)

Touchstone International Equity Fund

Sub-Advised by Acadian Asset Management LLC

Investment Philosophy

The Fund seeks long-term capital appreciation by primarily investing in equity securities of non-U.S. issues. Stock factors are utilized in an effort to predict how well each security will perform relative to its region and industry peer groups, and forecasts are combined to determine a world-relative return forecast for each stock in the allowable universe. A sophisticated portfolio optimization system is employed to trade off the expected return of the stocks with such considerations as the benchmark index, desired level of risk, transaction cost estimates, available liquidity, and other requirements. A disciplined process is utilized, which is based on the belief that it is crucial to avoid emotional decision-making, and focus on potential returns and risk control.

Fund Performance

The Touchstone International Equity Fund (Class A Shares) underperformed its benchmark the MSCI EAFE Index for the five-month period ended December 31, 2012. The Fund’s total return was 12.30 percent (calculated excluding the maximum sales charge) while the total return of the benchmark was 12.67 percent for the same period.

Market Environment and Portfolio Review

The five-month period ended December 31, 2012 was generally a strong period for world markets despite softening economic data in some regions. Optimism was driven in part by perceived progress on stabilizing Europe’s economy. Although indicators for the eurozone continued to reflect deep worries about the region’s fiscal and economic health, European equity markets rose as the European Central Bank (ECB) made a strong show of support for the euro. The Asia-Pacific region was sluggish early in the period as exports slowed amid faltering global growth, and Japan struggled with a persistently strong currency and the tailing-off of disaster-driven recovery spending. However, Asian markets rebounded in the fourth quarter amid expectations for strong stimulus. In the emerging markets, the picture was also quite positive, as brighter sentiment out of the eurozone and solid U.S. equity returns boosted investors’ appetite for riskier assets. Investors were also encouraged by signs that the Chinese economy had bottomed and appeared poised for a relatively swift recovery.

During the five-month period, gains from stock selection contributed to the Fund’s performance, but this was offset by the negative effects of active country allocations. Among the most significant of the country impacts were the underweights in Spain and Italy, which detracted from returns as these markets rose sharply on improved eurozone sentiment. Overweights in Japan, Singapore and Canada also detracted from performance. The stock side was more positive, with performance contribution coming from the U.K., France, the Netherlands, Australia, Sweden, Switzerland and Hong Kong. Among the best performing sectors for active stock selection were Health Care and Energy. From an individual holdings perspective, however, stocks in the Financials sector were the largest contributors during the period.

Among the individual stocks that contributed to performance were Barclays plc, BNP Paribas S.A. and Heineken N.V. Shares of Barclays, a U.K.-based banking and financial services company, rose after Goldman Sachs Group Inc. upgraded the company’s rating to “buy” in advance of releasing details of a strategic review in February 2013. BNP Paribas, a France-based lender, saw its stock jump on reports that finance ministers in the eurozone reached a deal on reducing Greece’s debt — a move needed in order for the nation to receive its next loan disbursement. Heineken, a Netherlands-based brewer, saw its stock rally after Deutsche Bank AG raised its recommendation for the company to “buy,” after predicting the brewer’s expansion into Africa would bolster growth.

Among the individual stocks that detracted from performance were Otsuka Holdings Co., Ltd., Central Japan Railway Co., and NipponTelegraph &Telephone Corp. Otsuka Holdings, a Japan-based pharmaceutical company, reported fiscal first-half results that disappointed some analysts, which sent shares lower. Central Japan Railway, a Japan-based rail operator, saw its shares slide after Mitsubishi UFJ Morgan Stanley Securities downgraded its rating for the company to “neutral” from “outperform,” predicting softer shinkansen (i.e., high-speed passenger train) demand among business travelers. Shares of NipponTelegraph &Telephone, a Japan-based telecommunications

Management's Discussion of Fund Performance (Unaudited) (Continued)

company, retreated after the company’s regional units (NTT East and NTT West) announced plans to reduce monthly fees for their fiber-optic Internet connection services.

Outlook

Macroeconomic data in the world’s major markets have presented a mixed picture in recent months, with the U.S. exhibiting moderate growth, Europe showing signs of bottoming, and Japan looking more uneven in its growth patterns. Overall, we expect that reacceleration in China and the emerging markets, and a pickup in Europe will help offset more sluggish growth in the U.S. and Japan in the months ahead. Key central banks have remained committed to stimulative policy, particularly in the U.S., where the U.S. Federal Reserve Board has embarked on a third round of quantitative easing and strengthened its pledge to grow employment and control inflation and, in Japan, where additional easing is expected following the change in government leadership. These monetary measures are expected to underpin global growth prospects in 2013.

With worries of an even deeper eurozone crisis now largely assuaged, U.S. austerity has taken center stage as the major source of global investor uncertainty. Although tax issues have been addressed with the New Year’s Day congressional deal, negotiations with the White House relating to spending cuts and the debt-ceiling limit will likely loom through the first quarter of 2013. We believe geopolitical tensions, particularly surrounding the Middle East and relations in China and Japan, also present some risk to market sentiment in the months ahead. In the U.S., the corporate earnings outlook is clouded by a recent decline in profits as businesses and consumers react to fiscal uncertainty by spending less, a trend that is expected to continue. Business activity has already retrenched, as evidenced by a sharp drop in new orders late in the year, with U.S. consumer spending expected to follow suit. However, we believe the potential for continued strong growth in the emerging-market consumer and the re-emergence of European consumption should at least partially offset these effects in the year ahead.

Management's Discussion of Fund Performance (Unaudited) (Continued)

Comparison of the Change in Value of a $10,000 Investment in the
Touchstone International Equity Fund - Class A* and the MSCI EAFE Index

The chart above represents performance of Class A shares only, which will vary from the performance of Class C shares, Class Y shares and Institutional Class shares based on the differences in loads and fees paid by shareholders in the different classes. Class A shares, Class Y shares and Institutional Class shares commenced operations on December 30, 2005 and Class C shares commenced operations on April 12, 2012. Class C shares performance information is calculated using the historical performance of Class A shares for periods prior to April 12, 2012. The returns have been restated for sales charges and for fees applicable to Class C shares.

The average annual total returns shown above are adjusted for maximum applicable sales charges.

***

Not Annualized.

The performance of the above Fund does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Note to Chart

MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance excluding the U.S. and Canada.

Management's Discussion of Fund Performance (Unaudited)

Touchstone Balanced Allocation Fund

Sub-Advised by Ibbotson Associates, Inc.

Investment Philosophy

The Fund seeks to provide investors with capital appreciation and current income. The Fund is a fund of funds and therefore the value of an investment in the Fund is based on the performance of the underlying funds in which it invests and the allocation of its assets among those funds. This fund of funds primarily invests in a diversified portfolio of underlying equity and fixed income funds. The underlying funds, in turn, invest in a variety of U.S. and foreign equity and fixed income securities and may hold cash, cash equivalents and money market funds. An optimal model allocation among underlying funds is sought, by using an analysis that looks at forecasted returns, standard deviations in historical returns, and the correlation of the performance of different market sectors. The underlying funds are selected and weighted based on historical returns-based style analysis, holdings-based style analysis, manager interviews, relative and absolute performance, including correlations with other underlying funds as well as corresponding benchmarks, and historical volatility (the variability of returns from one period to the next). Under normal circumstances, the Fund expects to allocate its assets among equity and fixed income funds as follows: Equity Fund Allocation: 50–70%, Fixed Income Fund Allocation: 30–50%.

Fund Performance

The Touchstone Balanced Allocation Fund (Class A Shares) outperformed its benchmark the 40% Barclays U.S. Aggregate Bond Index / 60% S&P Composite 1500 Index for the five-month period ended December 31, 2012. The Fund’s total return was 4.37 percent (calculated excluding the maximum sales charge) while the total return of the benchmark was 3.17 percent for the same period.

Market Environment and Portfolio Review

Risk assets rose during the period despite uncertainty surrounding a resolution to the “fiscal cliff.” Amidst a slowing economy and downward trending earnings guidance, stocks rose sharply to surpass bonds by a considerable margin as the S&P Composite 1500 Index outperformed the Barclays U.S. Aggregate Bond Index. U.S. equity returns were strong for the period, with the exception of large-cap growth equities, which lagged due to a few poor-performing technology issues. Mid- and small-cap stocks outperformed large-cap stocks, while value outperformed growth. Foreign equity markets dominated during the period, as the MSCI EAFE Index outpaced Real Estate Investment Trusts (REITs) and U.S. stocks by a large margin. In addition, interest rates rose slightly over the period, which dragged down U.S. Treasuries and muted bond returns. Furthermore, investors were rewarded for taking on credit risk, particularly in high yield bonds, as the Barclays U.S. Corporate High Yield Index posted strong returns.

Strategic asset allocation decisions contributed to Fund performance for the period, which outpaced the detractions from manager selection and defensive dynamic positioning. Returns were boosted by exposure to foreign equities and mid- and small-cap stocks, as they all significantly outpaced the broad market. High yield bond exposure contributed to Fund performance as returns surpassed the effects from lackluster performance of cash and short-term bonds.

During the period, the Fund held multiple tactical asset allocation positions. In particular, the Fund was underweight equities versus short-term bonds, underweight small- and mid-cap stocks versus large-cap stocks, overweight international equities versus domestic equities, underweight global REITs versus large-cap stocks, and overweight short-term bonds versus intermediate-term bonds. In mid-September, the Fund decreased its exposure to high yield bonds as yield spreads lowered to levels that significantly raised downside risk potential. Short-term bond and core bond positions were increased accordingly. Also, in mid-November, the Fund decreased its exposure to equities in favor of short-term bonds as a result of concerns over earnings in the near term. Overall, the Fund’s defensive positioning had a slightly negative impact on performance as the returns to risk assets were strong over the period.

Management's Discussion of Fund Performance (Unaudited) (Continued)

were the largest contributors to relative performance, while Touchstone Value Fund, Touchstone Large Cap Relative Value Fund, Touchstone Global Equity Fund and Touchstone Large Cap Growth Fund were the greatest detractors from relative performance. During the period, the Fund allocated a portion of its assets to Touchstone Strategic Income Fund and Touchstone International Value Fund.

Outlook

The intervention of the European Central Bank (ECB) in 2012 did stop the escalation of the debt crisis. And, the most positive potential outcome in 2013 is that the bond markets do not actually test the ECB’s mettle, and that the central bank’s promise of unlimited bond purchases is sufficient to keep sovereign borrowing costs at a moderate level. On the other hand, if the markets do test the ECB, the size of its purchases will likely disappoint and a flare-up of the sovereign crisis will ensue. In the meantime, we believe the recession in Spain, Greece and Italy will continue. However, if Germany manages to continue growing throughout the year, the southern periphery might see some light at the end of the 2013 tunnel.

The U.S. averted a ruthless fiscal contraction on January 1, 2013, only to set the stage for another fiscal crisis with pending Congressional debt negotiations at the beginning of March. We expect Congress to reach an agreement that will raise the debt limit and allow only a fraction of the sequester to go into effect. However in our opinion, the deal will probably only be reached in the nick of time (late February or early March), and the resulting legislation will simply postpone the day of fiscal reckoning for another year, at most, rather than offer long-term solutions.

In 2013, we believe U.S. private businesses will not have strong incentives to make large, long-term commitments to investing and hiring based on: (1) uncertainty about taxes and about the implementation of health care reform, and (2) the fact that profit margins, overall, are not growing.

We believe that with regard to oil, the dominant factor over the next five years will likely be an increase in supply, even though renewed tensions with Iran are possible in 2013 and the market seems to be placing a premium on short-term prices over medium-term prices related to supply disruptions. In addition, development of unconventional sources of oil and gas in North America is likely to cap prices in the near future. Nevertheless, we do not expect these new supplies to lower prices — after all, it is high prices (greater than $80 per barrel) that make shale oil and gas viable from an economic standpoint. In the next few months, however, we believe that the price of oil will still be sensitive to developments in volatile places such as Iran, Iraq and Libya.

Finally, one additional factor that may shape 2013 is deleveraging (i.e., fiscal tightening). The private sector has meaningfully reduced its debt burden in the U.S., U.K., and Australia, and although rapid credit growth is not expected in the near term, we believe the slog of reducing debts should prove to be a smaller drag than in the last three years. However, in continental Europe and in Canada, the private sector has barely made a dent into its debt load, so deleveraging there should continue to be a burden. Moreover, public sector deleveraging is expected to begin in the medium term almost everywhere in the advanced world, if public finances are to be set on a sustainable path.

The economic environment remains uncertain, with both U.S. stocks and U.S. bonds priced for potential disappointment. On balance, the Fund is positioned to remain defensive and more focused on preserving capital, as we find ourselves with greater international equity exposure and holding more short-term bonds than usual. Going forward, we will continue to monitor valuations and sentiment, and will reduce equities further should the opportunity present itself.

Management's Discussion of Fund Performance (Unaudited) (Continued)

Comparison of the Change in Value of a $10,000 Investment in the

Touchstone Balanced Allocation Fund - Class A*, the S&P Composite 1500 Index and

the Barclays U.S. Aggregate Bond Index

The chart above represents performance of Class A shares only, which will vary from the performance of Class C shares, Class Y shares and Institutional Class shares based on the differences in loads and fees paid by shareholders in the different classes. Class A shares, Class C shares and Institutional Class shares commenced operations on September 30, 2004 and Class Y shares commenced operations on December 9, 2005. Class Y shares performance information is calculated using the historical performance of Institutional Class shares for periods prior to December 9, 2005. The returns have been restated for sales charges and for fees applicable to Class Y shares.

The average annual total returns shown above are adjusted for maximum applicable sales charges.

***

Not Annualized.

The performance of the above Fund does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Notes to Chart

S&P Composite 1500 Index is an unmanaged, broad market index representing the large-cap, mid-cap, and small-cap segments of the U.S. equity market.

Barclays U.S. Aggregate Bond Index is an unmanaged index comprised of U.S. investment grade, fixed rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and ten years.

Management's Discussion of Fund Performance (Unaudited)

Touchstone Conservative Allocation Fund

Sub-Advised by Ibbotson Associates, Inc.

Investment Philosophy

The Fund seeks to provide investors with current income and preservation of capital. The Fund is a fund of funds and therefore the value of an investment in the Fund is based on the performance of the underlying funds in which it invests and the allocation of its assets among those funds. This fund of funds primarily invests in a diversified portfolio of underlying equity and fixed income funds. The underlying funds, in turn, invest in a variety of U.S. and foreign equity and fixed income securities and may hold cash, cash equivalents and money market funds. An optimal model allocation among underlying funds in sought, by using an analysis that looks at forecasted returns, standard deviations in historical returns, and the correlation of the performance of different market sectors. The underlying funds are selected and weighted based on historical returns-based style analysis, holdings-based style analysis, manager interviews, relative and absolute performance, including correlations with other underlying funds as well as corresponding benchmarks, and historical volatility (the variability of returns from one period to the next). Under normal circumstances, the Fund expects to allocate its assets among equity and fixed income funds as follows: Equity Fund Allocation: 20–40%, Fixed Income Fund Allocation: 60–80%.

Fund Performance

The Touchstone Conservative Allocation Fund (Class A Shares) outperformed its benchmark the 70% Barclays U.S. Aggregate Bond Index / 30% S&P Composite 1500 Index for the five-month period ended December 31, 2012. The Fund’s total return was 2.47 percent (calculated excluding the maximum sales charge) while the total return of the benchmark was 1.79 percent for the same period.

Market Environment and Portfolio Review

During the period, the Fund held multiple tactical asset allocation positions. In particular, the Fund was underweight equities versus short-term bonds, underweight small- and mid-cap stocks versus large-cap stocks, overweight international equities versus domestic equities, underweight global REITs versus large-cap stocks, and overweight short-term bonds versus intermediate-term bonds. In mid-September, the Fund decreased its exposure to high yield bonds as yield spreads lowered to levels that significantly raised downside risk potential. Short-term bond and core bond positions were increased accordingly. Also, in mid-November, the Fund decreased its exposure to equities in favor of short-term bonds as a result of concerns over earnings in the near term. Overall, the Fund’s defensive positioning detracted from performance as the returns to risk assets were strong over the period.

Performance was mixed among individual funds within the portfolio versus their respective benchmarks, but in aggregate they detracted from performance. Touchstone Sands Capital Institutional Growth Fund, Touchstone International Fixed Income Fund and Touchstone Total Return Bond Fund were the largest contributors to

Management's Discussion of Fund Performance (Unaudited) (Continued)

relative performance, while Touchstone Value Fund, Touchstone Large Cap Relative Value Fund and Touchstone Dynamic Equity Fund were the greatest detractors from relative performance. During the period, the Fund allocated a portion of its assets to Touchstone Strategic Income Fund and Touchstone International Value Fund.

Outlook

Management's Discussion of Fund Performance (Unaudited) (Continued)

Comparison of the Change in Value of a $10,000 Investment in the
Touchstone Conservative Allocation Fund Class - A*, the S&P Composite 1500 Index and

the Barclays U.S. Aggregate Bond Index

The chart above represents performance of Class A shares only, which will vary from the performance of Class C shares, Class Y shares and Institutional Class shares based on the differences in loads and fees paid by shareholders in the different classes. Class A shares, Class C shares and Institutional Class shares commenced operations on September 30, 2004 and Class Y shares commenced operations on December 9, 2005. Class Y shares performance information is calculated using the historical performance of Institutional Class shares for periods prior to December 9, 2005. The returns have been restated for sales charges and for fees applicable to Class Y shares.

The average annual total returns shown above are adjusted for maximum applicable sales charges.

***

Not Annualized.

The performance of the above Fund does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Notes to Chart

S&P Composite 1500 Index is an unmanaged, broad market index representing the large-cap, mid-cap, and small-cap segments of the U.S. equity market.

Management's Discussion of Fund Performance (Unaudited)

Touchstone Growth Allocation Fund

Sub-Advised by Ibbotson Associates, Inc.

Investment Philosophy

The Fund seeks to provide investors with capital appreciation. The Fund is a fund of funds and therefore the value of an investment in the Fund is based on the performance of the underlying funds in which it invests and the allocation of its assets among those funds. This fund of funds primarily invests in a diversified portfolio of underlying equity and fixed income funds. The underlying funds, in turn, invest in a variety of U.S. and foreign equity and fixed income securities and may hold cash, cash equivalents and money market funds. An optimal model allocation among underlying funds is sought, by using an analysis that looks at forecasted returns, standard deviations in historical returns, and the correlation of the performance of different market sectors. The underlying funds are selected and weighted based on historical returns-based style analysis, holdings-based style analysis, manager interviews, relative and absolute performance, including correlations with other underlying funds as well as corresponding benchmarks, and historical volatility (the variability of returns from one period to the next). Under normal circumstances, the Fund expects to allocate its assets among equity and fixed income funds as follows: Equity Fund Allocation: 90–100%, Fixed Income Fund Allocation: 0–10%.

Fund Performance

The Touchstone Growth Allocation Fund (Class A Shares) outperformed its benchmark the S&P Composite 1500 Index for the five-month period ended December 31, 2012. The Fund’s total return was 7.29 percent (calculated excluding the maximum sales charge) while the total return of the benchmark was 5.02 percent for the same period.

Market Environment and Portfolio Review

Risk assets rose during the period despite uncertainty surrounding a resolution to the “fiscal cliff.” Amidst a slowing economy and downward trending earnings guidance, stocks rose sharply to surpass bonds by a considerable margin as the S&P Composite 1500 Index outperformed the Barclays U.S. Aggregate Bond Index. U.S. equity returns were strong for the period, with the exception of large-cap growth equities, which lagged due to a few poor-performing technology issues. Mid- and small-cap stocks outperformed large-cap stocks, while value outperformed growth. Foreign equity markets dominated during the period, as the MSCI EAFE Index outpaced real estate investment trusts (REITs) and U.S. stocks by a large margin. In addition, interest rates rose slightly over the period, which dragged down U.S. Treasuries and muted bond returns. Furthermore, investors were rewarded for taking on credit risk, particularly in high yield bonds, as the Barclays U.S. Corporate High Yield Index posted strong returns.

Performance was mixed among individual funds within the portfolio versus their respective benchmarks, but in aggregate they detracted from performance. Touchstone Sands Capital Institutional Growth Fund andTouchstone Focused Equity Fund were the largest contributors to relative performance, while Touchstone Value Fund, Touchstone Global Equity Fund, Touchstone Large Cap Relative Value Fund and Touchstone Large Cap Growth Fund were the greatest detractors from relative performance. During the period, the Fund allocated a portion of its assets to the Touchstone International Value Fund.

Management's Discussion of Fund Performance (Unaudited) (Continued)

Outlook

Management's Discussion of Fund Performance (Unaudited) (Continued)

Comparison of the Change in Value of a $10,000 Investment in the
Touchstone Growth Allocation Fund Class - A* and the S&P Composite 1500 Index

The chart above represents performance of Class A shares only, which will vary from the performance of Class C shares, Class Y shares and Institutional Class shares based on the differences in loads and fees paid by shareholders in the different classes. Class A shares, Class C shares and Institutional Class shares commenced operations on September 30, 2004 and Class Y shares commenced operations on December 9, 2005. Class Y shares performance information is calculated using the historical performance of Institutional Class shares for periods prior to December 9, 2005. The returns have been restated for sales charges and for fees applicable to Class Y shares.

The average annual total returns shown above are adjusted for maximum applicable sales charges.

***

Not Annualized.

The performance of the above Fund does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Note to Chart

S&P Composite 1500 Index is an unmanaged, broad market index representing the large-cap, mid-cap, and small-cap segments of the U.S. equity market.

Management's Discussion of Fund Performance (Unaudited)

Touchstone Moderate Growth Allocation Fund

Sub-Advised by Ibbotson Associates, Inc.

Investment Philosophy

Fund Performance

The Touchstone Moderate Growth Allocation Fund (Class A Shares) outperformed its benchmark the 20% Barclays U.S. Aggregate Bond Index / 80% S&P Composite 1500 Index for the five-month period ended December 31, 2012. The Fund’s total return was 5.96 percent (calculated excluding the maximum sales charge) while the total return of the benchmark was 4.10 percent for the same period.

Market Environment and Portfolio Review

Risk assets rose during the period despite uncertainty surrounding a resolution to the “fiscal cliff.” Amidst a slowing economy and downward trending earnings guidance, stocks rose sharply to surpass bonds by a considerable margin as the S&P Composite 1500 Index outperformed the Barclays U.S. Aggregate Bond Index. U.S. equity returns were strong for the period, with the exception of large-cap growth equities, which lagged due to a few poor-performing technology issues. Mid- and small-cap stocks outperformed large-cap stocks, while value outperformed growth. Foreign equity markets dominated during the period, as the MSCI EAFE Index outpaced real estate investment trusts (REITs) and U.S. stocks by a large margin. In addition, interest rates rose slightly over the period, which dragged down U.S. Treasuries and muted bond returns. Furthermore, investors were rewarded for taking on credit risk, particularly in high yield bonds, as the Barclays U.S. Corporate High Yield Index posted strong returns.

During the period, the Fund held multiple tactical asset allocation positions. In particular, the Fund was underweight equities versus short-term bonds, underweight small- and mid-cap stocks versus large-cap stocks, overweight international equities versus domestic equities, underweight global REITs versus large-cap stocks, and overweight short-term bonds versus intermediate-term bonds. In mid-September, the Fund decreased its exposure to high yield bonds as yield spreads lowered to levels that significantly raised downside risk potential. Short-term bond and core bond positions were increased accordingly. Also, in mid-November, the Fund decreased its exposure to equities in favor of short-term bonds as a result of concerns over earnings in the near term. Overall, the Fund’s defensive positioning detracted from performance as the returns to risk assets were strong over the period.

Performance was mixed among individual funds within the portfolio versus their respective benchmarks, but in aggregate they detracted from performance. Touchstone Sands Capital Institutional Growth Fund, Touchstone Focused Equity Fund andTouchstoneTotal Return Bond Fund were the largest contributors to relative performance, while Touchstone Value Fund, Touchstone Global Equity Fund, Touchstone Large Cap Relative Value Fund

Management's Discussion of Fund Performance (Unaudited) (Continued)

and Touchstone Large Cap Growth Fund were the greatest detractors from relative performance. During the period, the Fund allocated a portion of its assets toTouchstone Strategic Income Fund andTouchstone International Value Fund.

Outlook

Management's Discussion of Fund Performance (Unaudited) (Continued)

Comparison of the Change in Value of a $10,000 Investment in the
Touchstone Moderate Growth Allocation Fund Class-A*, the S&P Composite 1500 Index and
the Barclays U.S. Aggregate Bond Index

The chart above represents performance of Class A shares only, which will vary from the performance of Class C shares, Class Y shares and Institutional Class shares based on the differences in loads and fees paid by shareholders in the different classes. Class A shares, Class C shares and Institutional Class shares commenced operations on September 30, 2004 and Class Y shares commenced operations on December 9, 2005. Class Y shares performance information is calculated using the historical performance of Institutional Class shares for periods prior to December 9, 2005. The returns have been restated for sales charges and for fees applicable to Class Y shares.

The average annual total returns shown above are adjusted for maximum applicable sales charges.

***

Not Annualized.

The performance of the above Fund does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Notes to Chart

S&P Composite 1500 Index is an unmanaged, broad market index representing the large-cap, mid-cap, and small-cap segments of the U.S. equity market.

Tabular Presentation of Portfolios of Investments (Unaudited)

December 31, 2012

The tables below provide each Fund’s sector allocation. We hope it will be useful to shareholders as it summarizes key information about each Fund’s investments.

Touchstone Dynamic Equity Fund
Sector Allocation*	(% of Net Assets)
Long Positions
Information Technology		24.9	%
Consumer Discretionary		18.6
Financials		16.7
Energy		13.6
Health Care		13.2
Consumer Staples		11.7
Industrials		6.9
Utilities		4.7
Telecommunication Services		4.1
Materials		3.2
Investment Fund		4.5
Other Assets/Liabilities (Net)		0.3
		122.4
Short Positions and Written Options
Consumer Discretionary		(6.3	)
Energy		(4.2	)
Information Technology		(3.2	)
Call and Put Options		(2.6	)
Financials		(2.2	)
Health Care		(1.4	)
Materials		(1.3	)
Industrials		(1.2	)
		(22.4	)
Total		100.0	%

Touchstone Emerging Growth Fund
Sector Allocation*	(% of Net Assets)
Information Technology		23.0	%
Industrials		19.6
Consumer Discretionary		19.2
Health Care		12.1
Exchange Traded Funds		11.1
Financials		9.1
Energy		7.2
Materials		6.2
Consumer Staples		2.9
Investment Funds		3.6
Other Assets/Liabilities (Net)		(14.0	)
Total		100.0	%

Sector classifications are based upon the Global Industry Classification Standard (GICS^®).

Tabular Presentation of Portfolios of Investments (Unaudited) (Continued)

Touchstone International Equity Fund
Sector Allocation*	(% of Net Assets)
Financials		19.9	%
Consumer Discretionary		14.1
Health Care		13.3
Industrials		11.9
Energy		11.4
Materials		11.3
Consumer Staples		6.0
Information Technology		5.2
Utilities		1.9
Telecommunication Services		1.9
Other Assets/Liabilities (Net)		3.1
Total		100.0	%

Touchstone Balanced Allocation Fund
Sector Allocation		(% of Net Assets)
Government/Corporate			27.8	%
International Equity	��		16.4
Value			12.7
Growth			7.0
International Debt			5.7
Balanced			5.2
Emerging Market-Equity			4.7
Growth Mid-Cap			4.6
Blue Chip			4.6
Value Large-Cap			4.1
Sector Fund Real-Estate			3.5
Various Assets			3.5
Taxable-Money Market			3.4
Corporate/Preferred-High Yield			2.9
Value Mid-Cap			2.3
Global Equity			2.3
Value Small-Cap			2.3
Growth Large-Cap			2.3
Other Assets/Liabilities (Net)			(15.3	)
Total			100.0	%

Sector classifications are based upon the Global Industry Classification Standard (GICS^®).

Tabular Presentation of Portfolios of Investments (Unaudited) (Continued)

Touchstone Conservative Allocation Fund
Sector Allocation	(% of Net Assets)
Government/Corporate		46.4	%
International Debt		8.2
Value		6.2
Balanced		5.7
Growth		5.2
International Equity		5.2
Taxable-Money Market		5.2
Blue Chip		4.1
Various Assets		4.1
Corporate/Preferred-High Yield		3.1
Value Large-Cap		2.6
Value Small-Cap		2.1
Sector Fund Real-Estate		2.1
Emerging Market-Equity		1.1
Global Equity		1.0
Growth Mid-Cap		1.0
Other Assets/Liabilities (Net)		(3.3	)
Total		100.0	%

Touchstone Moderate Growth Allocation Fund
Sector Allocation	(% of Net Assets)
International Equity		16.6	%
Government/Corporate		15.6
Value		15.2
Growth		9.8
Emerging Market-Equity		7.7
Growth Mid-Cap		5.5
Sector Fund Real-Estate		4.4
Value Large-Cap		4.4
Value Small-Cap		4.4
Global Equity		4.4
Blue Chip		4.3
Balanced		3.8
Value Mid-Cap		3.3
Corporate/Preferred-High Yield		2.2
Various Assets		2.2
International Debt		2.1
Growth Large-Cap		2.1
Other Assets/Liabilities (Net)		(8.0	)
Total		100.0	%

Touchstone Growth Allocation Fund
Sector Allocation	(% of Net Assets)
International Equity		20.7	%
Value		14.3
Growth		11.3
Emerging Market-Equity		10.4
Sector Fund Real-Estate		6.2
Value Small-Cap		6.2
Global Equity		5.1
Growth Mid-Cap		5.1
Government/Corporate		4.9
Value Mid-Cap		4.1
Value Large-Cap		4.1
Blue Chip		4.0
Growth Large-Cap		3.1
Various Assets		2.0
Other Assets/Liabilities (Net)		(1.5	)
Total		100.0	%

Portfolio of Investments

Touchstone Dynamic Equity Fund – December 31, 2012

			Market
	Shares		Value

Common Stocks† — 117.6%

Information Technology — 24.9%
AOL, Inc.		42,755	$	1,265,976
Apple, Inc.		4,653		2,480,189
Arrow Electronics, Inc.*		15,913		605,967
Avnet, Inc.*		18,039		552,174
Booz Allen Hamilton Holding Corp.		22,154		308,384
CA, Inc.		2,004		44,048
eBay, Inc.*		1,540		78,571
FleetCor Technologies, Inc.*		4,047		217,122
Freescale Semiconductor Ltd. (Bermuda)*		1,873		20,622
Harris Corp.		25,851		1,265,665
IAC/InterActiveCorp		1,612		76,248
Intel Corp.		63,211		1,304,043
International Business Machines Corp.		15,522		2,973,239
Microsoft Corp.		85,315		2,280,470
Rackspace Hosting, Inc. (Puerto Rico)*		5,437		403,806
Seagate Technology PLC (Ireland)		49,567		1,510,802
Symantec Corp.*		34,530		649,509
VeriSign, Inc.*		17,047		661,765
				16,698,600

Consumer Discretionary — 18.6%
Advance Auto Parts, Inc.		7,461		539,803
Best Buy Co., Inc.		13,150		155,828
Brinker International, Inc.		62,309		1,930,956
Comcast Corp. - Class A		7,159		267,603
Darden Restaurants, Inc.		264		11,898
Delphi Automotive PLC (Channel Islands)*		22,277		852,095
Expedia, Inc.		5,540		340,433
Ford Motor Co.		6,834		88,500
Gap, Inc. (The)		10,904		338,460
General Motors Co.*		28,039		808,364
Goodyear Tire & Rubber Co. (The)*		9,915		136,926
Home Depot, Inc. (The)		32,378		2,002,579
Kohl's Corp.		1,174		50,459
Liberty Interactive Corp. - Class A*		57,321		1,128,077
Macy's, Inc.		39,610		1,545,582
Sears Holdings Corp.*		1,384		57,242
Viacom, Inc. - Class B		38,915		2,052,377
Virgin Media, Inc.		4,331		159,164
				12,466,346

Financials — 16.7%
Allstate Corp. (The)		1,799		72,266
American Express Co.		16,075		923,991
American International Group, Inc.*		59,014		2,083,194
Bank of America Corp.		205,671		2,385,784
BB&T Corp.		1,364		39,706
CBL & Associates Properties, Inc. REIT		5,189		110,059
CIT Group, Inc.*		6,664		257,497
Citigroup, Inc.		25,999		1,028,521
New York Community Bancorp, Inc.		57,301		750,643
Popular, Inc. (Puerto Rico)*		10,041		208,752
Regions Financial Corp.		136,055		968,712
SLM Corp.		2,503		42,876
Wells Fargo & Co.		9,907		338,621
Weyerhaeuser Co. REIT		71,597		1,991,829
				11,202,451

Energy — 13.6%
Chevron Corp.		27,715		2,997,100
ConocoPhillips		4,650		269,654
Exxon Mobil Corp.		45,868		3,969,875
Marathon Oil Corp.		11,006		337,444
Noble Corp. (Switzerland)		417		14,520
Tesoro Corp.		34,608		1,524,482
				9,113,075

Health Care — 13.2%
AmerisourceBergen Corp.		10,520		454,254
Amgen, Inc.		26,176		2,259,512
Cardinal Health, Inc.		47,839		1,970,010
Charles River Laboratories International, Inc.*		2,627		98,434
Community Health Systems, Inc.		335		10,298
Eli Lilly & Co.		6,049		298,337
HCA Holdings, Inc.		19,944		601,710
Illumina, Inc.*		2,640		146,758
Mylan, Inc.*		71,738		1,971,360
Myriad Genetics, Inc.*		15,196		414,091
Onyx Pharmaceuticals, Inc.*		3,917		295,851
ResMed, Inc.		1,483		61,648
St Jude Medical, Inc.		4,914		177,592
Zimmer Holdings, Inc.		1,341		89,391
				8,849,246

Consumer Staples — 11.7%
Altria Group, Inc.		22,286		700,226
Bunge Ltd. (Bermuda)		24,553		1,784,758
Dean Foods Co.*		39,884		658,485
Herbalife Ltd. (Cayman Islands)		11,271		371,267
Nu Skin Enterprises, Inc. Class A		16,041		594,319
Philip Morris International, Inc.		22,290		1,864,336
Safeway, Inc.		59,780		1,081,420
Wal-Mart Stores, Inc.		11,879		810,504
				7,865,315

Industrials — 6.9%
Delta Air Lines, Inc.*		80,376		954,063
General Electric Co.		65,957		1,384,437
Pitney Bowes, Inc.		56,985		606,320
Southwest Airlines Co.		16,077		164,628
Waste Management, Inc.		45,814		1,545,764
				4,655,212

Utilities — 4.7%
AES Corp. (The)		110,802		1,185,582
American Electric Power Co., Inc.		688		29,364
Calpine Corp.*		49,775		902,421
NextEra Energy, Inc.		10,671		738,326
PPL Corp.		9,600		274,848
				3,130,541

Touchstone Dynamic Equity Fund (Continued)

				Market
	Shares			Value

Common Stocks† — 117.6% (Continued)

Telecommunication Services — 4.1%
Sprint Nextel Corp.*		139,024		$	788,266
Verizon Communications, Inc.		45,981			1,989,598
					2,777,864

Materials — 3.2%
Freeport-McMoRan Copper & Gold, Inc.		17,372			594,122
Huntsman Corp.		38,508			612,277
Royal Gold, Inc.		11,093			901,972
					2,108,371
Total Common Stocks				$	78,867,021

Investment Fund — 4.5%
Touchstone Institutional Money Market Fund^		2,985,549			2,985,549

Total Long Positions
(Cost $73,880,970)				$	81,852,570

Securities Sold Short — (19.8%)

Common Stocks — (19.8%)

Consumer Discretionary — (6.3%)
Gentex Corp.		(69,933	)		(1,316,139	)
Hyatt Hotels Corp. - Class A*		(29,800	)		(1,149,386	)
Pandora Media, Inc.*		(49,782	)		(456,999	)
Visteon Corp.*		(23,972	)		(1,290,173	)
					(4,212,697	)

Energy — (4.2%)
Alpha Natural Resources, Inc.*		(31,299	)		(304,852	)
Cheniere Energy, Inc.*		(49,797	)		(935,188	)
EXCO Resources, Inc.		(7,720	)		(52,264	)
Golar LNG Ltd. (Bermuda)		(9,822	)		(361,253	)
Range Resources Corp.		(5,347	)		(335,952	)
Spectra Energy Corp.		(7,952	)		(217,726	)
Ultra Petroleum Corp. (Canada)*		(31,932	)		(578,927	)
					(2,786,162	)

Information Technology — (3.2%)
Acme Packet, Inc.*		(37,282	)		(824,678	)
Informatica Corp.*		(25,617	)		(776,708	)
Solera Holdings, Inc.		(10,261	)		(548,656	)
					(2,150,042	)

Financials — (2.2%)
American National Insurance Co.		(3,601	)		(245,912	)
Howard Hughes Corp. (The)*		(3,764	)		(274,847	)
Interactive Brokers Group, Inc. - Class A		(13,433	)		(183,763	)
StanCorp Financial Group, Inc.		(1,428	)		(52,365	)
Torchmark Corp.		(6,673	)		(344,794	)
Unum Group		(17,940	)		(373,511	)
					(1,475,192	)

Health Care — (1.4%)
Incyte Corp. Ltd.*		(46,107	)		(765,837	)
Salix Pharmaceuticals Ltd.*		(2,171	)		(87,882	)
Warner Chilcott PLC - Class A (Ireland)		(6,955	)		(83,738	)
					(937,457	)

Materials — (1.3%)
Sealed Air Corp.		(3,866	)		(67,694	)
Walter Energy, Inc.		(22,975	)		(824,343	)
					(892,037	)

Industrials — (1.2%)
Colfax Corp.*		(3,432	)		(138,481	)
Engility Holdings, Inc.*		(1,032	)		(19,877	)
ITT Corp.		(14,553	)		(341,413	)
Joy Global, Inc.		(945	)		(60,272	)
Owens Corning*		(805	)		(29,777	)
Towers Watson & Co. - Class A		(3,706	)		(208,314	)
					(798,134	)
Total Common Stocks				$	(13,251,721	)

Total Securities Sold Short
(Proceeds $(13,044,518))				$	(13,251,721	)

	Number
	of
	Contracts

Written Options Contracts† — (2.6%)

Call Options — (2.5%)
Russell 2000 Index
January2013
Strike Price $800		(60	)		(328,080	)
S&P 100 Index
January 2013
Strike Price $630		(620	)		(1,376,400	)
S&P 100 Index
January 2013
Strike Price $685		(135	)		(2,700	)
S&P 500 Index
January 2013
Strike Price $1,505		(85	)		(5,100	)
Total Call Options					(1,712,280	)

Put Options — (0.1%)
S&P 500 Index
January 2013
Strike Price $1,430		(30	)		(62,700	)

Total Written Options Contracts
(Proceeds $(1,799,847))				$	(1,774,980	)

Touchstone Dynamic Equity Fund (Continued)

	Market
	Value

Total Investment Securities —99.7%
(Cost $59,036,605)	$	66,825,869

Other Assets in Excess of Liabilities — 0.3%		233,255

Net Assets — 100.0%	$	67,059,124

†

All or a portion of these securities are held as collateral for securities sold short and written options. The total value of thesecuritiesheldascollateralasofDecember31,2012was $63,823,809.

Non-income producing security.

AffiliatedFund. SeeNote4inNotestoFinancialStatements.

Portfolio Abbreviations:

PLC - Public Limited Company

REIT - Real Estate Investment Trust

Other Information:

The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the security valuation section in the accompanying Notes to Financial Statements.

Valuation inputs at Reporting Date:

Description	Level 1			Level 2			Level 3		Total
Assets:
Common Stocks	$	78,867,021		$	—		$	—	$	78,867,021
Investment Fund		2,985,549			—			—		2,985,549
									$	81,852,570

Liabilities:
Securities Sold Short
Common Stocks	$	(13,251,721	)	$	—		$	—	$	(13,251,721	)
Other Financial Instruments^(A)
Liabilities:
Written Option Contracts		—			(1,774,980	)		—		(1,774,980	)
									$	(15,026,701	)

^(A)

OtherFinancialInstrumentsarederivativeinstrumentsnot reflected in total investments.

Transactions in written options for the period ended December 31, 2012

	Number of
	Contracts			Premium
Beginning of Period, July 31, 2012		2,260		$	1,419,538
Call Options Written		8,559			8,960,565
Put Options Written		136			351,414
Call Options Closed		(3,041	)		(6,307,714	)
Put Options Closed		(60	)		(133,453	)
Call Options Expired		(5,097	)		(1,129,017	)
Put Options Expired		(71	)		(200,215	)
Call Options Exercised		(1,756	)		(1,161,271	)
December 31, 2012		930		$	1,799,847

See accompanying Notes to Financial Statements.

Portfolio of Investments

Touchstone Emerging Growth Fund – December 31, 2012

			Market
	Shares		Value

Common Stocks — 99.3%

Information Technology — 23.0%
ACI Worldwide, Inc.*		5,332	$	232,955
Cadence Design Systems, Inc.*		19,589		264,647
CommVault Systems, Inc.*		3,462		241,336
CoStar Group, Inc.*		1,498		133,876
FEI Co.		4,474		248,128
Gartner, Inc.*		5,192		238,936
Heartland Payment Systems, Inc.		9,322		274,999
IPG Photonics Corp.†		3,997		266,400
Manhattan Associates, Inc.*		2,618		157,970
MICROS Systems, Inc.*		5,039		213,855
NETGEAR, Inc.*		3,526		138,995
OpenTable, Inc.†*		4,706		229,653
OSI Systems, Inc.*		2,273		145,563
Tangoe, Inc.*		8,052		95,577
TIBCO Software, Inc.*		5,440		119,734
Trimble Navigation Ltd.*		5,851		349,773
Ultimate Software Group, Inc.*		2,695		254,435
Ultratech, Inc.*		4,820		179,786
WEX, Inc.*		2,714		204,554
				3,991,172

Industrials — 19.6%
Alaska Air Group, Inc.*		4,267		183,865
AMETEK, Inc.		5,529		207,725
BE Aerospace, Inc.*		8,748		432,151
Beacon Roofing Supply, Inc.*		5,314		176,850
Equifax, Inc.		2,672		144,609
Lincoln Electric Holdings, Inc.		4,448		216,529
Mistras Group, Inc.*		5,432		134,116
Old Dominion Freight Line, Inc.*		10,487		359,494
Portfolio Recovery Associates, Inc.*		2,482		265,227
Roper Industries, Inc.		1,585		176,696
Toro Co. (The)		4,769		204,972
TransDigm Group, Inc.		2,516		343,082
United Rentals, Inc.*		4,760		216,675
Verisk Analytics, Inc. - Class A*		2,530		129,030
WESCO International, Inc.*		3,180		214,427
				3,405,448

Consumer Discretionary — 19.2%
Brunswick Corp. DE		8,557		248,923
Buffalo Wild Wings, Inc.*		1,663		121,100
Cheesecake Factory, Inc. (The)		5,605		183,396
Dick's Sporting Goods, Inc.		7,091		322,570
DSW, Inc. - Class A		2,109		138,540
Genesco, Inc.*		2,294		126,170
GNC Holdings, Inc. - Class A		3,239		107,794
Jarden Corp.		2,267		117,204
LKQ Corp.*		8,817		186,039
Penske Automotive Group, Inc.		4,123		124,061
PetSmart, Inc.		2,673		182,673
Polaris Industries, Inc.		2,927		246,307
Pool Corp.		4,752		201,105
PVH Corp.		3,107		344,908
Steven Madden Ltd.*		3,712		156,906
Tenneco, Inc.*		4,300		150,973
Tractor Supply Co.		2,443		215,863
Under Armour, Inc. - Class A*		3,370		163,546
				3,338,078

Health Care — 12.1%
Air Methods Corp.		7,410		273,355
Catamaran Corp. (Canada)*		2,372		111,745
Cooper Cos., Inc. (The)		3,721		344,118
Cyberonics, Inc.*		4,955		260,286
Insulet Corp.*		4,387		93,092
IPC Hospitalist Co., Inc. (The)*		3,859		153,241
Mettler-Toledo International, Inc.*		1,068		206,444
MWI Veterinary Supply, Inc.*		2,801		308,110
Perrigo Co.		1,695		176,331
Team Health Holdings, Inc.*		6,316		181,711
				2,108,433

Financials — 9.1%
Affiliated Managers Group, Inc.*		3,198		416,220
DFC Global Corp.*		5,857		108,413
Extra Space Storage, Inc. REIT		6,246		227,292
HFF, Inc. - Class A		9,890		147,361
MarketAxess Holdings, Inc.		6,134		216,530
Signature Bank*		5,245		374,178
Zillow, Inc. - Class A†*		3,468		96,237
				1,586,231

Energy — 7.2%
Core Laboratories N.V. (Netherlands)		1,200		131,172
Energy XXI Bermuda Ltd. (Bermuda)		5,850		188,312
Oasis Petroleum, Inc.*		10,520		334,536
Oceaneering International, Inc.		4,559		245,229
Oil States International, Inc.*		2,290		163,827
Rosetta Resources, Inc.*		4,065		184,388
				1,247,464

Materials — 6.2%
Airgas, Inc.		2,287		208,780
Cytec Industries, Inc.		2,880		198,230
Eagle Materials, Inc.		1,528		89,387
FMC Corp.		3,536		206,927
Haynes International, Inc.		3,393		175,995
Koppers Holdings, Inc.		5,100		194,565
				1,073,884

Consumer Staples — 2.9%
Elizabeth Arden, Inc.*		4,034		181,570
Prestige Brands Holdings, Inc.*		4,086		81,843
Snyders-Lance, Inc.		10,079		243,005
				506,418
Total Common Stocks			$	17,257,128

Touchstone Emerging Growth Fund (Continued)

			Market
	Shares		Value

Exchange Traded Funds — 11.1%
iShares Russell 2000 Growth Index Fund		10,192	$	971,400
iShares Russell Midcap Growth Index Fund		15,391		966,555
Total Exchange Traded Funds			$	1,937,955

Investment Funds — 3.6%
Invesco Government & Agency Portfolio**		605,474		605,474
Touchstone Institutional Money Market Fund^		17,682		17,682
Total Investment Funds			$	623,156

Total Investment Securities —114.0%
(Cost $15,976,337)			$	19,818,239

Liabilities in Excess of Other Assets — (14.0%)				(2,430,003	)

Net Assets — 100.0%			$	17,388,236

†

All or a portion of the security is on loan. The total value of the securities on loan as of December 31, 2012 was $602,579.

Non-income producing security.

Represents collateral for securities loaned.

AffiliatedFund. SeeNote4inNotestoFinancialStatements.

Portfolio Abbreviations:

REIT - Real Estate Investment Trust

Other Information:

Valuation inputs at Reporting Date:

Description	Level 1		Level 2		Level 3		Total
Common Stocks	$	17,257,128	$	—	$	—	$	17,257,128
Exchange Traded Funds		1,937,955		—		—		1,937,955
Investment Funds		623,156		—		—		623,156
							$	19,818,239

See accompanying Notes to Financial Statements.

Portfolio of Investments

Touchstone International Equity Fund – December 31, 2012

			Market
	Shares		Value

Common Stocks — 96.2%

Japan — 22.1%
Ahresty Corp.		500	$	2,786
Airport Facilities Co. Ltd.		3,400		15,894
Alpen Co. Ltd.		800		14,060
AOI Electronic Co. Ltd.		300		4,712
Arnest One Corp.		1,800		29,486
Bando Chemical Industries Ltd.		8,000		26,881
Belluna Co. Ltd.		7,550		53,553
Bunka Shutter Co. Ltd.		2,000		9,331
Central Japan Railway Co.		4,100		332,754
Chubu Steel Plate Co. Ltd.		300		1,169
Cleanup Corp.		900		6,421
Coca-Cola Central Japan Co. Ltd.		2,800		34,646
Daihatsu Diesel Manufacturing Co. Ltd.		13,000		38,591
Daito Pharmaceutical Co. Ltd.		800		12,486
Daito Trust Construction Co. Ltd.		400		37,804
Daiwa House Industry Co. Ltd.		27,000		464,205
Faith, Inc.		928		96,895
Fuji Heavy Industries Ltd.		19,000		239,596
Fuji Soft, Inc.		700		13,316
Fujimori Kogyo Co. Ltd.		400		10,789
Fujitsu Frontech Ltd.		1,100		5,826
Fujitsu Ltd.		54,000		226,475
Fukuda Denshi Co. Ltd.		1,300		40,195
Fukushima Industries Corp.		300		6,253
Gamecard-Joyco Holdings, Inc.		3,300		52,985
Geo Holdings Corp.		53		55,448
Happinet Corp.		3,100		25,130
Haruyama Trading Co. Ltd.		1,500		8,706
Haseko Corp.*		500		398
Hitachi Ltd.		59,000		347,186
Hokkaido Coca-Cola Bottling Co. Ltd.		2,000		9,165
Hokkan Holdings Ltd.		4,000		11,392
Ichikoh Industries Ltd.*		3,000		4,766
IMI Co. Ltd.		300		5,194
IT Holdings Corp.		11,800		142,449
Japan Digital Laboratory Co. Ltd.		800		8,982
JMS Co. Ltd.		2,000		7,174
Kamei Corp.		4,000		36,167
Kasai Kogyo Co. Ltd.		8,000		37,566
Kawasumi Laboratories, Inc.		5,800		34,300
Kenko Mayonnaise Co. Ltd.		800		7,010
Koike Sanso Kogyo Co. Ltd.		6,000		12,931
Komatsu Seiren Co. Ltd.		10,000		45,671
Komatsu Wall Industry Co. Ltd.		1,400		18,764
KRS Corp.		800		8,424
Mac House Co. Ltd.		1,800		13,907
Macnica, Inc.		900		17,864
Maeda Road Construction Co. Ltd.		2,000		30,557
Maezawa Kyuso Industries Co. Ltd.		700		8,688
Marubun Corp.		1,000		4,304
Mimasu Semiconductor Industry Co. Ltd.		1,500		12,255
Mitani Corp.		2,300		29,342
Mitsubishi UFJ Financial Group, Inc.		93,200		504,316
Mitsui High-Tec, Inc.*		2,400		17,134
Mitsui Home Co. Ltd.		2,000		11,694
Nagawa Co. Ltd.		500		8,689
Nakano Refrigerators Co. Ltd.		200		3,486
Namura Shipbuilding Co. Ltd.		22,000		72,037
Nichireki Co. Ltd.		10,289		60,321
NIFTY Corp.		59		92,351
Nippo Corp.		5,000		69,140
Nippon Steel Trading Co. Ltd.		1,000		2,674
Nippon Telegraph & Telephone Corp.		9,400		395,768
NIS Group Co. Ltd.*^±		24,287		—
Nisshin Fudosan Co.		5,600		34,981
Nissin Sugar Holdings Co. Ltd.*		700		13,511
Nojima Corp.		828		5,018
Nomura Real Estate Holdings, Inc.		2,000		38,245
Otsuka Holdings Co. Ltd.		4,800		135,222
Pacific Industrial Co. Ltd.		4,000		21,916
Piolax, Inc.		500		11,530
Raysum Co. Ltd.*		3		1,910
Relo Holdings, Inc.		200		7,461
Saison Information Systems Co. Ltd.		992		11,966
Shidax Corp.		5,000		24,363
Shin Nippon Air Technologies Co. Ltd.		800		4,475
Shinsho Corp.		2,000		3,936
Sinko Industries Ltd.		1,000		6,460
Soken Chemical & Engineering Co. Ltd.		700		6,474
Sumikin Bussan Corp.		2,000		5,177
Sumitomo Densetsu Co. Ltd.		7,200		78,497
Suncall Corp.		4,000		19,217
T&K Toka Co. Ltd.		400		5,754
Tachibana Eletech Co. Ltd.		400		3,240
Tact Home Co. Ltd.		16		19,963
TKC Corp.		1,900		33,087
Totetsu Kogyo Co. Ltd.		13,400		183,580
UKC Holdings Corp.		300		5,977
Vital KSK Holdings, Inc.		1,600		14,782
Warabeya Nichiyo Co. Ltd.		1,200		22,240
Watabe Wedding Corp.		3,377		25,063
Yachiyo Industry Co. Ltd.		1,400		9,242
Yellow Hat Ltd.		200		3,026
Zojirushi Corp.		12,000		38,078
				4,752,850

United Kingdom — 18.3%
AstraZeneca PLC		9,749		462,005
AstraZeneca PLC		317		14,965
Barclays PLC		63,379		275,318
Berendsen PLC		31,578		307,093
BHP Billiton PLC		3,718		131,147
BP PLC		11,216		77,984
BP PLC ADR		4,024		167,559
British American Tobacco PLC		69		3,508
British Polythene Industries PLC		2,378		15,355
Dart Group PLC		40,418		82,728
Eurasian Natural Resources Corp. PLC		29,375		138,929
Hilton Food Group Ltd.		1,087		4,856
HSBC Holdings PLC		58,814		623,242
Johnson Service Group PLC		13,568		7,880
Kazakhmys PLC		8,817		113,957

Touchstone International Equity Fund (Continued)

			Market
	Shares		Value

Common Stocks — 96.2% (Continued)

United Kingdom — (Continued)
Rio Tinto PLC		7,990	$	466,024
Royal Dutch Shell PLC - Class A		22,949		789,914
Taylor Wimpey PLC		222,700		241,560
				3,924,024

France — 9.6%
Air France-KLM*		9,394		88,082
BNP Paribas SA		4,977		283,342
Boiron SA		462		15,959
Cegid Group		578		11,673
Cie Generale des Etablissements Michelin		3,323		318,408
Credit Agricole SA*		3,198		26,045
Etam Developpement SA*		427		9,429
EuropaCorp*		2,186		12,090
France Telecom SA		370		4,105
L.D.C. SA		91		9,837
Linedata Services		20		316
Maisons France Confort		1,060		33,639
Nexity SA		4,300		145,860
Sanofi		6,181		586,147
Tessi SA		8		839
Total SA		9,998		520,228
				2,065,999

Germany — 6.8%
BASF SE		3,428		324,153
Bayer AG		4,084		389,460
Borussia Dortmund GmbH & Co. KGaA		7,713		27,725
Cewe Color Holding AG		456		18,738
Deutsche Post AG		3,330		73,345
Freenet AG		62		1,149
Muenchener Rueckversicherungs AG		1,649		297,692
Schuler AG		343		8,807
Volkswagen AG		1,495		324,323
				1,465,392

Sweden — 6.0%
Bilia AB		6,770		97,589
Electrolux AB		7,974		210,629
Nordea Bank AB		27,023		259,932
Saab AB		18,784		391,243
Semcon AB*		1,898		14,102
Skandinaviska Enskilda Banken AB - Class A		4,775		40,853
Swedbank AB - Class A		13,466		264,545
				1,278,893

Australia — 5.1%
Australia & New Zealand Banking Group Ltd.		1,577		41,533
BHP Billiton Ltd.		13,600		530,952
Commonwealth Bank of Australia		7,572		493,139
Troy Resources Ltd.		5,541		21,048
				1,086,672

Switzerland — 4.8%
Advanced Digital Broadcast Holdings SA*		2,822		39,647
Bell AG		28		61,379
Emmi AG		472		118,690
OC Oerlikon Corp. AG*		5,123		58,343
Roche Holding AG		3,272		661,537
Swiss Life Holding AG		648		86,493
				1,026,089

Canada — 3.3%
Agrium, Inc.		3,300		328,905
Exco Technologies Ltd.		2,900		17,988
Norbord, Inc.*		3,609		109,536
Pulse Seismic, Inc.		3,600		9,844
Saputo, Inc.		2,400		121,387
Suncor Energy, Inc.		3,500		115,095
				702,755

Norway — 3.0%
DNB ASA		19,577		250,227
Statoil ASA		15,664		394,805
				645,032

Netherlands — 2.9%
BE Semiconductor Industries NV		1,789		13,673
European Aeronautic Defence and Space Co. NV		8,634		340,365
Heineken NV		3,783		253,627
ING Groep NV*		2,193		20,829
PostNL NV*		58		226
				628,720

Belgium — 2.7%
Anheuser-Busch InBev N.V.		6,094		530,696
Euronav N.V.*		40		242
Recticel SA		5,366		37,481
				568,419

Singapore — 2.5%
GP Batteries International Ltd.		2,405		1,877
Jardine Cycle & Carriage Ltd.		9,526		379,419
Metro Holdings Ltd.		22,992		15,603
New Toyo International Holdings Ltd.		32,000		7,075
QAF Ltd.		7,000		4,423
Sim Lian Group Ltd.		50,000		31,401
STX OSV Holdings Ltd.		97,000		104,818
SunVic Chemical Holdings Ltd.*		1,000		363
				544,979

Denmark — 2.2%
Novo Nordisk A/S - Class B		2,932		477,437

Austria — 1.8%
OMV AG		10,194		369,392
Telekom Austria AG		200		1,519
Voestalpine AG		127		4,666
				375,577

Touchstone International Equity Fund (Continued)

			Market
	Shares		Value

Common Stocks — 96.2% (Continued)

Italy — 1.6%
Banca Popolare dell'Emilia Romagna Scrl		171	$	1,188
Enel SpA		60,866		253,172
Exor SpA		635		16,003
Fiat SpA*		14,988		75,501
Milano Assicurazioni SpA*		521		217
				346,081

Bermuda — 1.0%
Champion Technology Holdings Ltd.		1,542,000		22,725
CSI Properties Ltd.		1,690,000		69,341
Dickson Concepts International Ltd.		7,500		4,001
DMX Technologies Group Ltd.		38,000		6,940
Global Sources Ltd.*		319		2,067
Hongkong Land Holdings Ltd.		1,000		7,063
TAI Cheung Holdings		74,000		60,992
Victory City International Holdings Ltd.		170,000		17,081
Wing On Co. International Ltd.		6,000		16,526
Wuling Motors Holdings Ltd.*		20,000		1,379
				208,115

New Zealand — 0.8%
Briscoe Group Ltd.		4,926		8,954
Fletcher Building Ltd.		23,480		164,813
Sky Network Television Ltd.		210		853
				174,620

Hong Kong — 0.7%
CLP Holdings Ltd.		500		4,201
Galaxy Entertainment Group Ltd.*		34,000		136,333
Keck Seng Investments		8,900		4,570
Sun Hung Kai Properties Ltd.		1,000		15,165
				160,269

Spain — 0.7%
Endesa SA		7,162		159,693

Cayman Islands — 0.2%
Kantone Holdings Ltd.		60,000		564
Luen Thai Holdings Ltd.		69,000		10,513
Pacific Textile Holdings Ltd.		33,000		29,834
				40,911

Finland — 0.1%
Digia PLC		3,602		12,457

Portugal — 0.0%
Novabase SGPS SA		1,343		4,077
Total Common Stocks			$	20,649,061

Preferred Stocks — 0.7%

Germany — 0.7%
Henkel AG & Co. KGaA		976		80,297
Volkswagen AG		346		79,390
				159,687

Investment Fund — 0.0%
Touchstone Institutional Money Market Fund^		2	$	2

Total Investment Securities —96.9%
(Cost $18,011,801)			$	20,808,750

Other Assets in Excess of Liabilities — 3.1%				662,647

Net Assets — 100.0%			$	21,471,397

Non-income producing security.

AffiliatedFund. SeeNote4inNotestoFinancialStatements.

^±

Fair valued security by Fund's Investment Advisor.

Portfolio Abbreviations:

ADR - American Depositary Receipt

PLC - Public Limited Company

Other Information:

Touchstone International Equity Fund (Continued)

Valuation inputs at Reporting Date:

Description	Level 1		Level 2		Level 3			Total
Common Stocks
Japan		24,617		4,728,233		—	**		4,752,850
United Kingdom		278,378		3,645,646		—			3,924,024
France		49,151		2,016,848		—			2,065,999
Germany		—		1,465,392		—			1,465,392
Sweden		—		1,278,893		—			1,278,893
Australia		—		1,086,672		—			1,086,672
Switzerland		219,716		806,373		—			1,026,089
Canada		702,755		—		—			702,755
Norway		—		645,032		—			645,032
Netherlands		13,673		615,047		—			628,720
Belgium		242		568,177		—			568,419
Singapore		104,818		440,161		—			544,979
Denmark		—		477,437		—			477,437
Austria		—		375,577		—			375,577
Italy		—		346,081		—			346,081
Bermuda		2,067		206,048		—			208,115
New Zealand		—		174,620		—			174,620
Hong Kong		4,570		155,699		—			160,269
Spain		—		159,693		—			159,693
Cayman Islands		—		40,911		—			40,911
Finland		12,457		—		—			12,457
Portugal		4,077		—		—			4,077
Preferred Stocks		—		159,687		—			159,687
Investment Fund		2		—		—			2
								$	20,808,750

At December 31, 2012, equity securities valued at $15,009,426 were transferred from Level 1 to Level 2. At December 31, 2012, these securities were valued using observable inputs other than quoted prices. At July 31, 2012, these securities were valued using inputs that reflected quoted prices in active markets.

Level 3 Rollfoward Disclosure:

The following is a rollforward of the Fund's investments that were valued using unobservable inputs for the period ended December 31, 2012:

Measurements Using Unobservable Inputs (Level 3)

	Common Stock
Assets	Japan			Total
Beginning balance	$	311		$	311
Unrealized Appreciation (Depreciation)		(311	)		(311	)
Ending balance	$	—		$	—

The change in unrealized appreciation/depreciation relating to the Level 3 investments held at December 31, 2012 was ($311).

Level 3 Security held with $0 market value.

See accompanying Notes to Financial Statements.

Portfolio of Investments

Touchstone Balanced Allocation Fund – December 31, 2012

			Market
	Shares		Value

Affiliated Mutual Funds^ — 115.3%

Government/Corporate — 27.8%
Touchstone Core Bond Fund		575,758	$	6,177,880
Touchstone Short Duration Fixed Income Fund, Class Y		1,529,748		14,991,535
Touchstone Total Return Bond Fund		1,540,367		16,189,261
				37,358,676

International Equity — 16.4%
Touchstone International Equity Fund		710,594		6,302,967
Touchstone International Small Cap Fund		394,333		4,700,450
Touchstone International Value Fund		1,449,437		11,030,219
				22,033,636

Value — 12.7%
Touchstone Focused Equity		270,165		3,142,016
Touchstone Value Fund		1,989,745		13,987,910
				17,129,926

Growth — 7.0%
Touchstone Sands Capital Institutional Growth Fund		545,987		9,347,300

International Debt — 5.7%
Touchstone International Fixed Income Fund		732,482		7,713,033

Balanced — 5.2%
Touchstone Strategic Income Fund		647,744		6,982,686

Emerging Market-Equity — 4.7%
Touchstone Emerging Markets Equity Fund		484,537		6,303,825

Growth Mid-Cap — 4.6%
Touchstone Mid Cap Fund		182,107		3,104,921
Touchstone Mid Cap Growth Fund*		145,145		3,129,330
				6,234,251

Blue Chip — 4.6%
Touchstone Dynamic Equity Fund		547,990		6,153,930

Value Large-Cap — 4.1%
Touchstone Large Cap Relative Value Fund - Class Y		448,575		5,445,697

Sector Fund Real-Estate — 3.5%
Touchstone Global Real Estate Fund		380,201		4,741,109

Various Assets — 3.5%
Touchstone Merger Arbitrage Fund		435,339		4,645,072

Taxable-Money Market — 3.4%
Touchstone Institutional Money Market Fund		4,624,881		4,624,881

Corporate/Preferred-High Yield — 2.9%
Touchstone High Yield Fund		421,628		3,878,975

Value Mid-Cap — 2.3%
Touchstone Mid Cap Value Fund		236,276		3,130,656

Global Equity — 2.3%
Touchstone Global Equity Fund		304,102		3,129,207

Value Small-Cap — 2.3%
Touchstone Small Cap Core Fund		191,322		3,118,541

Growth Large-Cap — 2.3%
Touchstone Large Cap Growth Fund, Class Y		115,090		3,079,810
Total Affiliated Mutual Funds			$	155,051,211

Total Investment Securities —115.3%
(Cost $150,780,948)			$	155,051,211

Liabilities in Excess of Other Assets — (15.3%)				(20,584,136	)

Net Assets — 100.0%			$	134,467,075

Non-income producing security.

All affiliated funds are invested in Institutional Class,unless otherwise indicated. The financial statements of the underlying funds can be found on the SEC website. See Note 4 in Notes to Financial Statements.

Other Information:

Valuation inputs at Reporting Date:

Description		Level 1				Level 2				Level 3				Total
Affiliated Mutual Funds		$	155,051,211			$	—			$	—			$	155,051,211

See accompanying Notes to Financial Statements.

Portfolio of Investments

Touchstone Conservative Allocation Fund – December 31, 2012

			Market
	Shares		Value

Affiliated Mutual Funds^ — 103.3%

Government/Corporate — 46.4%
Touchstone Core Bond Fund		492,656	$	5,286,194
Touchstone Short Duration Fixed Income Fund, Class Y		1,796,803		17,608,669
Touchstone Total Return Bond Fund		1,591,222		16,723,746
				39,618,609

International Debt — 8.2%
Touchstone International Fixed Income Fund		666,714		7,020,502

Value — 6.2%
Touchstone Value Fund		755,252		5,309,423

Balanced — 5.7%
Touchstone Strategic Income Fund		450,478		4,856,148

Growth — 5.2%
Touchstone Sands Capital Institutional Growth Fund		259,802		4,447,805

International Equity — 5.2%
Touchstone International Small Cap Fund		74,321		885,908
Touchstone International Value Fund		467,343		3,556,478
				4,442,386

Taxable-Money Market — 5.2%
Touchstone Institutional Money Market Fund		4,399,148		4,399,148

Blue Chip — 4.1%
Touchstone Dynamic Equity Fund		315,098		3,538,549

Various Assets — 4.1%
Touchstone Merger Arbitrage Fund		330,513		3,526,575

Corporate/Preferred-High Yield — 3.1%
Touchstone High Yield Fund		287,461		2,644,642

Value Large-Cap — 2.6%
Touchstone Large Cap Relative Value Fund		182,309		2,213,230

Value Small-Cap — 2.1%
Touchstone Small Cap Core Fund		109,221		1,780,296

Sector Fund Real-Estate — 2.1%
Touchstone Global Real Estate Fund		142,273		1,774,138

Emerging Market-Equity — 1.1%
Touchstone Emerging Markets Equity Fund		68,640		893,014

Global Equity — 1.0%
Touchstone Global Equity Fund		86,389		888,940

Growth Mid-Cap — 1.0%
Touchstone Mid Cap Fund		52,047		887,405
Total Affiliated Mutual Funds			$	88,240,810

Total Investment Securities —103.3%
(Cost $86,542,394)			$	88,240,810

Liabilities in Excess of Other Assets — (3.3%)				(2,778,042	)

Net Assets — 100.0%			$	85,462,768

Other Information:

Valuation inputs at Reporting Date:

Description		Level 1				Level 2				Level 3				Total
Affiliated Mutual Funds		$	88,240,810			$	—			$	—			$	88,240,810

See accompanying Notes to Financial Statements.

Portfolio of Investments

Touchstone Growth Allocation Fund – December 31, 2012

			Market
	Shares		Value

Affiliated Mutual Funds^ — 101.5%

International Equity — 20.7%
Touchstone International Equity Fund		584,378	$	5,183,432
Touchstone International Small Cap Fund		359,710		4,287,749
Touchstone International Value Fund		1,024,053		7,793,043
				17,264,224

Value — 14.3%
Touchstone Focused Equity		369,501		4,297,300
Touchstone Value Fund		1,090,552		7,666,581
				11,963,881

Growth — 11.3%
Touchstone Emerging Growth Fund		221,508		2,578,351
Touchstone Sands Capital Institutional Growth Fund		398,989		6,830,699
				9,409,050

Emerging Market-Equity — 10.4%
Touchstone Emerging Markets Equity Fund		663,266		8,629,095

Sector Fund Real-Estate — 6.2%
Touchstone Global Real Estate Fund		416,010		5,187,649

Value Small-Cap — 6.2%
Touchstone Small Cap Core Fund		209,900		3,421,373
Touchstone Small Company Value Fund		105,316		1,725,072
				5,146,445

Global Equity — 5.1%
Touchstone Global Equity Fund		416,068		4,281,335

Growth Mid-Cap — 5.1%
Touchstone Mid Cap Fund		149,814		2,554,320
Touchstone Mid Cap Growth Fund*		79,428		1,712,471
				4,266,791

Government/Corporate — 4.9%
Touchstone Short Duration Fixed Income Fund, Class Y		420,890		4,124,718

Value Mid-Cap — 4.1%
Touchstone Mid Cap Value Fund		258,556		3,425,871

Value Large-Cap — 4.1%
Touchstone Large Cap Relative Value Fund		280,689		3,407,567

Blue Chip — 4.0%
Touchstone Dynamic Equity Fund		299,251		3,360,589

Growth Large-Cap — 3.1%
Touchstone Large Cap Growth Fund, Class Y		95,072		2,544,130

Various Assets — 2.0%
Touchstone Merger Arbitrage Fund		156,887		1,673,988
Total Affiliated Mutual Funds			$	84,685,333

Total Investment Securities —101.5%
(Cost $81,072,772)			$	84,685,333

Liabilities in Excess of Other Assets — (1.5%)				(1,286,418	)

Net Assets — 100.0%			$	83,398,915

Non-income producing security.

Other Information:

Valuation inputs at Reporting Date:

Description		Level 1				Level 2				Level 3				Total
Affiliated Mutual Funds		$	84,685,333			$	—			$	—			$	84,685,333

See accompanying Notes to Financial Statements.

Portfolio of Investments

Touchstone Moderate Growth Allocation Fund – December 31, 2012

			Market
	Shares		Value

Affiliated Mutual Funds^ — 108.0%

International Equity — 16.6%
Touchstone International Equity Fund		1,023,425	$	9,077,781
Touchstone International Small Cap Fund		452,357		5,392,096
Touchstone International Value Fund		1,670,644		12,713,598
				27,183,475

Government/Corporate — 15.6%
Touchstone Short Duration Fixed Income Fund, Class Y		765,381		7,500,729
Touchstone Total Return Bond Fund		1,712,395		17,997,268
				25,497,997

Value — 15.2%
Touchstone Focused Equity		773,765		8,998,887
Touchstone Value Fund		2,274,135		15,987,166
				24,986,053

Growth — 9.8%
Touchstone Emerging Growth Fund		154,988		1,804,063
Touchstone Sands Capital Institutional Growth Fund		834,830		14,292,292
				16,096,355

Emerging Market-Equity — 7.7%
Touchstone Emerging Markets Equity Fund		976,000		12,697,765

Growth Mid-Cap — 5.5%
Touchstone Mid Cap Fund		313,337		5,342,402
Touchstone Mid Cap Growth Fund*		166,538		3,590,562
				8,932,964

Sector Fund Real-Estate — 4.4%
Touchstone Global Real Estate Fund		582,815		7,267,697

Value Large-Cap — 4.4%
Touchstone Large Cap Relative Value Fund		591,303		7,178,423

Value Small-Cap — 4.4%
Touchstone Small Cap Core Fund		329,066		5,363,774
Touchstone Small Company Value Fund		110,430		1,808,838
				7,172,612

Global Equity — 4.4%
Touchstone Global Equity Fund		696,592		7,167,931

Blue Chip — 4.3%
Touchstone Dynamic Equity Fund		624,647		7,014,788

Balanced — 3.8%
Touchstone Strategic Income Fund		573,073		6,177,725

Value Mid-Cap — 3.3%
Touchstone Mid Cap Value Fund		407,063		5,393,583

Corporate/Preferred-High Yield — 2.2%
Touchstone High Yield Fund		386,042		3,551,584

Various Assets — 2.2%
Touchstone Merger Arbitrage Fund		331,576		3,537,913

International Debt — 2.1%
Touchstone International Fixed Income Fund		334,329		3,520,481

Growth Large-Cap — 2.1%
Touchstone Large Cap Growth Fund, Class Y		131,179	��	3,510,342
Total Affiliated Mutual Funds			$	176,887,688

Total Investment Securities —108.0%
(Cost $169,605,353)			$	176,887,688

Liabilities in Excess of Other Assets — (8.0%)				(13,074,718	)

Net Assets — 100.0%			$	163,812,970

Non-income producing security.

Other Information:

Valuation inputs at Reporting Date:

Description		Level 1				Level 2				Level 3				Total
Affiliated Mutual Funds		$	176,887,688			$	—			$	—			$	176,887,688

See accompanying Notes to Financial Statements.

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Statements of Assets and Liabilities

December 31, 2012

	Touchstone			Touchstone		Touchstone
	Dynamic			Emerging		International
	Equity			Growth		Equity
	Fund			Fund		Fund
Assets
Investments, at cost	$	73,880,970		$	15,976,337	$	18,011,801
Affiliated securities, at market value	$	2,985,549		$	17,682	$	2
Non-affiliated securities, at market value		78,867,021			19,800,557		20,808,748
Investments, at market value ^(A)	$	81,852,570		$	19,818,239	$	20,808,750
Cash		—			—		—
Cash deposits held at prime broker		159,153			—		—
Foreign currency ^(B)		—			—		49,792
Dividends and interest receivable		72,666			2,127		7,432
Receivable for capital shares sold		145,370			13,833		14,317
Receivable for investments sold		—			2,494,232		1,838,022
Receivable for securities lending income		—			594		718
Receivable from Investment Advisor		—			48		10,295
Tax reclaim receivable		—			—		22,210
Other assets		33,308			28,785		26,736
Total Assets		82,263,067			22,357,858		22,778,272

Liabilities
Written options, at market value ^(C)		1,774,980			—		—
Securities sold short ^(D)		13,251,721			—		—
Dividends for securities sold short payable		4,116			—		—
Bank overdrafts		—			—		109,407
Payable for return of collateral for securities on loan		—			605,474		—
Payable for capital shares redeemed		44,491			2,390,992		97,744
Payable for investments purchased		—			1,917,873		1,028,055
Payable to Investment Advisor		37,851			—		—
Payable to other affiliates		23,244			1,059		881
Payable to Trustees		896			963		1,112
Payable for professional services		15,826			15,751		28,309
Other accrued expenses and liabilities		50,818			37,510		41,367
Total Liabilities		15,203,943			4,969,622		1,306,875

Net Assets	$	67,059,124		$	17,388,236	$	21,471,397

Net assets consist of:
Paid-in capital	$	209,858,860		$	13,174,099	$	61,448,538
Accumulated net investment income (loss)		15,903			—		(36,085	)
Accumulated net realized gains (losses) on investments, written options, foreign currency transactions and short positions		(150,604,903	)		372,235		(42,737,691	)
Net unrealized appreciation on investments, written options, foreign currency transactions and short positions		7,789,264			3,841,902		2,796,635
Net Assets	$	67,059,124		$	17,388,236	$	21,471,397
^(A) Includes market value of securities on loan of:	$	—		$	602,579	$	—
^(B) Cost of foreign currency:	$	—		$	—	$	50,556
^(C) Proceeds received for written options:	$	1,799,847		$	—	$	—
^(D) Proceeds received for securities sold short:	$	13,044,518		$	—	$	—

See accompanying Notes to Financial Statements.

Statements of Assets and Liabilities (Continued)

									Touchstone
Touchstone			Touchstone			Touchstone			Moderate
Balanced			Conservative			Growth			Growth
Allocation			Allocation			Allocation			Allocation
Fund			Fund			Fund			Fund

$	150,780,948		$	86,542,394		$	81,072,772		$	169,605,353
$	155,051,211		$	88,240,810		$	84,685,333		$	176,887,688
	—			—			—			—
$	155,051,211		$	88,240,810		$	84,685,333		$	176,887,688
	—			172,529			—			—
	—			—			—			—
	—			—			—			—
	—			—			—			—
	98,173			127,047			60,463			33,191
	154,173			—			219,840			263,588
	—			—			—			—
	27,076			19,297			34,523			38,598
	—			—			—			—
	36,644			36,107			35,648			37,992
	155,367,277			88,595,790			85,035,807			177,261,057


	—			—			—			—
	—			—			—			—
	—			—			—			—
	152,139			—			220,078			262,537
	—			—			—			—
	20,664,656			2,919,174			1,346,895			13,068,897
	—			170,622			—			—
	—			—			—			—
	47,665			25,198			29,960			63,074
	951			968			886			949
	5,853			—			3,987			4,522
	28,938			17,060			35,086			48,108
	20,900,202			3,133,022			1,636,892			13,448,087

$	134,467,075		$	85,462,768		$	83,398,915		$	163,812,970


$	174,626,681		$	88,896,170		$	126,560,757		$	205,016,828
	—			—			—			—
	(44,429,869	)		(5,131,818	)		(46,774,403	)		(48,486,193	)
	4,270,263			1,698,416			3,612,561			7,282,335
$	134,467,075		$	85,462,768		$	83,398,915		$	163,812,970
$	—		$	—		$	—		$	—
$	—		$	—		$	—		$	—
$	—		$	—		$	—		$	—
$	—		$	—		$	—		$	—

Statements of Assets and Liabilities (Continued)

	Touchstone		Touchstone		Touchstone
	Dynamic		Emerging		International
	Equity		Growth		Equity
	Fund		Fund		Fund

Pricing of Class A Shares
Net assets applicable to Class A shares	$	16,156,458	$	1,857,165	$	267,872
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		1,461,673		165,343		30,306
Net asset value price per share*	$	11.05	$	11.23	$	8.84
Maximum offering price per share	$	11.72	$	11.92	$	9.38

Pricing of Class C Shares
Net assets applicable to Class C shares	$	10,420,478	$	2,569	$	202,767
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		996,420		230		23,013
Net asset value, offering price per share**	$	10.46	$	11.18	$	8.81

Pricing of Class Y Shares
Net assets applicable to Class Y shares	$	20,397,264	$	6,509,790	$	410,654
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		1,818,509		568,162		46,236
Net asset value, offering price and redemption price per share	$	11.22	$	11.46	$	8.88

Pricing of Institutional Class Shares
Net assets applicable to Institutional Class Shares	$	20,084,924	$	9,018,712	$	20,590,104
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		1,788,002		774,630		2,322,854
Net asset value, offering price and redemption price per share	$	11.23	$	11.64	$	8.86

* There is no sales load on subscriptions of $ 1 million or more. Redemptions that were part of a $ 1 million or more subscription may be subject to a contingent deferred sales load.

** Redemption price per share varies by length of time shares are held.

See accompanying Notes to Financial Statements.

Statements of Assets and Liabilities (Continued)

						Touchstone
Touchstone		Touchstone		Touchstone		Moderate
Balanced		Conservative		Growth		Growth
Allocation		Allocation		Allocation		Allocation
Fund		Fund		Fund		Fund

$	49,118,090	$	32,965,045	$	31,431,765	$	71,234,803
	4,412,691		3,138,810		2,675,942		6,306,359
$	11.13	$	10.50	$	11.75	$	11.30
$	11.81	$	11.14	$	12.47	$	11.99


$	38,225,674	$	17,971,537	$	24,064,663	$	48,984,801
	3,437,689		1,719,321		2,124,942		4,399,733
$	11.12	$	10.45	$	11.32	$	11.13


$	47,092,302	$	33,328,617	$	27,873,461	$	43,584,738
	4,223,790		3,172,104		2,350,332		3,830,705
$	11.15	$	10.51	$	11.86	$	11.38


$	31,009	$	1,197,569	$	29,026	$	8,628
	2,794		113,909		2,683		762
$	11.10	$	10.51	$	10.82	$	11.33

Statements of Operations

For the Period Ended December 31, 2012 and the Year Ended July 31, 2012

	Touchstone
	Dynamic
	Equity
	Fund
	For the
	Five Months			For the
	Ended			Year
	December 31,			Ended
	2012^(D)			July 31, 2012
Investment Income
Dividends from affiliated funds	$	1,322		$	1,207
Dividends from non-affiliated securities^(A)		942,602			1,353,780
Interest		—			887
Income from securities loaned		—			—
Total Investment Income		943,924			1,355,874
Expenses
Investment advisory fees		239,904			529,397
Administration fees		50,297			77,610
Compliance fees and expenses		915			425
Custody fees		460			19,651
Professional fees		19,145			52,581
Transfer Agent fees, Class A		10,416			72,310
Transfer Agent fees, Class C		8,839			31,465
Transfer Agent fees, Class Y		11,888			42,660
Transfer Agent fees, Institutional Class		18			651
Pricing Expense		3,935			2,061
Registration Fees, Class A		3,903			8,055
Registration Fees, Class C		3,242			6,624
Registration Fees, Class Y		3,362			6,972
Registration Fees, Institutional Class		4,350			6,538
Dividend expense on securities sold short		255,937			781,980
Reports to Shareholders, Class A		9,298			4,447
Reports to Shareholders, Class C		7,053			5,958
Reports to Shareholders, Class Y		7,412			6,872
Reports to Shareholders, Institutional Class		2,743			2,461
Distribution expenses, Class A		17,984			49,819
Distribution and shareholder servicing expenses, Class C		46,472			125,778
Trustee fees		3,860			13,342
Other expenses		10,717			19,923
Total Expenses		722,150			1,867,580
Fees waived and/or reimbursed by the Advisor and/or Affiliates^(B)		(37,575	)		(101,748	)
Net Expenses		684,575			1,765,832
Net Investment Income (Loss)		259,349			(409,958	)
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on investments from non-affiliated securities		2,431,895			1,517,094
Net realized gain on investments from affiliated securities		—			—
Net realized gain on warrants		—			638
Net realized gain (loss) on written options		(1,102,848	)		2,823,456
Net realized loss on foreign currency		—			—
Net realized loss on securities sold short		(1,636,817	)		(513,766	)
Capital gain distributions received from affiliated funds		—			—
Net change in unrealized appreciation (depreciation) on investments^(C)		467,741			2,052,589
Net change in unrealized appreciation (depreciation) on written options		143,584			(350,810	)
Net change in unrealized depreciation on foreign currency transactions		—			—
Net change in unrealized appreciation (depreciation) on securities sold short		(1,630,505	)		729,261
Net Realized and Unrealized Gain (Loss) on Investments		(1,326,950	)		6,258,462
Change in Net Assets Resulting from Operations	$	(1,067,601	)	$	5,848,504
^(A) Net of foreign tax withholding of:	$	—		$	221
^(B) See Note 4 in Notes to Financial Statements.

^(C) Change in unrealized appreciation does not include net appreciation of $5,211,794 for the Balanced Allocation Fund in the connection with the Fund's merger. See Note 7 in the Notes to Financial Statements.

^(D) The Fund changed its fiscal year from July 31 to December 31. See Note 7 in the Notes to Financial Statements.

See accompanying Notes to Financial Statements.

Statements of Operations (Continued)

Touchstone						Touchstone						Touchstone
Emerging						International						Balanced
Growth						Equity						Allocation
Fund						Fund						Fund
For the						For the						For the
Five Months			For the			Five Months			For the			Five Months			For the
Ended			Year			Ended			Year			Ended			Year
December 31,			Ended			December 31,			Ended			December 31,			Ended
2012^(D)			July 31, 2012			2012^(D)			July 31, 2012			2012^(D)			July 31, 2012

$	122		$	226		$	153		$	138		$	1,709,367		$	1,251,707
	153,139			109,169			192,474			795,322			—			—
	—			—			—			—			—			—
	2,038			455			2,341			982			—			—
	155,299			109,850			194,968			796,442			1,709,367			1,251,707

	81,949			349,447			77,356			245,005			108,104			112,509
	16,303			45,921			15,316			29,908			95,684			69,348
	915			425			915			425			915			425
	211			8,806			4,411			56,690			2,964			376
	17,040			40,187			31,854			57,592			14,427			45,929
	1,229			8,189			539			1,796			14,347			15,918
	5			5			78			5			12,593			55,004
	8,521			16,229			1,935			3,510			11,571			2,643
	—			7,674			243			890			11			612
	2,689			1,467			22,180			55,766			—			—
	5,048			8,544			4,419			11,800			5,621			5,784
	101			92			121			108			5,666			7,884
	4,744			11,893			7,417			11,832			5,078			8,873
	4,801			8,276			4,247			10,458			4,596			5,134
	—			—			—			—			—			—
	2,198			13,651			3,689			3,231			3,963			7,021
	3,808			2,151			2,785			2,236			8,512			17,894
	5,723			6,480			3,817			3,717			1,328			3,034
	3,687			3,916			3,166			2,840			2,483			2,500
	2,024			6,155			255			632			41,454			27,329
	11			7			546			7			162,770			437,396
	3,960			9,113			4,104			6,715			3,921			12,310
	4,180			13,186			2,508			11,348			8,146			18,172
	169,147			561,814			191,901			516,511			514,154			856,095
	(71,563	)		(89,253	)		(105,331	)		(260,879	)		(222,749	)		(171,947	)
	97,584			472,561			86,570			255,632			291,405			684,148
	57,715			(362,711	)		108,398			540,810			1,417,962			567,559

	1,619,043			7,475,767			474,649			295,168			—			—
	—			—			—			—			4,341,627			4,106,492
	—			—			—			—			—			—
	—			—			—			—			—			—
	—			—			(17,032	)		(34,598	)		—			—
	—			—			—			—			—			—
	—			—			—			—			1,290,443			1,356,115
	316,104			(9,272,185	)		1,775,992			(4,822,699	)		(3,322,821	)		(5,042,105	)
	—			—			—			—			—			—
	—			—			959			(11,182	)		—			—
	—			—			—			—			—			—
	1,935,147			(1,796,418	)		2,234,568			(4,573,311	)		2,309,249			420,502
$	1,992,862		$	(2,159,129	)	$	2,342,966		$	(4,032,501	)	$	3,727,211		$	988,061
$	45		$	386		$	9,661		$	60,016		$	—		$	—

Statements of Operations (Continued)

	Touchstone
	Conservative
	Allocation
	Fund
	For the
	Five Months			For the
	Ended			Year
	December 31,			Ended
	2012^(D)			July 31, 2012
Investment Income
Dividends from affiliated funds^(A)	$	845,376		$	858,368
Total Investment Income		845,376			858,368
Expenses
Investment advisory fees		63,040			67,153
Administration fees		55,804			41,885
Compliance fees and expenses		734			452
Custody fees		1,236			256
Professional fees		12,421			37,651
Transfer Agent fees, Class A		9,580			8,402
Transfer Agent fees, Class C		5,785			19,776
Transfer Agent fees, Class Y		6,108			4,414
Transfer Agent fees, Institutional Class		31			721
Registration Fees, Class A		5,438			6,417
Registration Fees, Class C		5,443			6,385
Registration Fees, Class Y		5,229			9,477
Registration Fees, Institutional Class		4,838			5,872
Reports to Shareholders, Class A		3,501			5,504
Reports to Shareholders, Class C		5,379			9,939
Reports to Shareholders, Class Y		2,747			3,641
Reports to Shareholders, Institutional Class		3,002			2,657
Distribution expenses, Class A		28,323			18,813
Distribution and shareholder servicing expenses, Class C		75,425			183,602
Trustee fees		3,996			8,138
Other expenses		5,020			12,473
Total Expenses		303,080			453,628
Fees waived and/or reimbursed by the Advisor and/or Affiliates^(B)		(150,975	)		(130,332	)
Net Expenses		152,105			323,296
Net Investment Income		693,271			535,072
Net Realized and Unrealized Gain (Loss) on Investments
Net realized gain on investments from affiliated securities		3,320,847			2,007,543
Capital Gain Distributions Received from Affiliated Funds		523,504			1,104,985
Net change in unrealized appreciation (depreciation) on investments^(C)		(3,335,699	)		(2,902,390	)
Net Realized and Unrealized Gain (Loss) on Investments		508,652			210,138
Change in Net Assets Resulting from Operations	$	1,201,923		$	745,210
^(A) Net of foreign tax withholding of:	$	—		$	—
^(B) See Note 4 in Notes to Financial Statements.

^(C) Change in unrealized appreciation does not include net unrealized appreciation of $3,831,428, $3,817,238, $13,091,873 for the Conservative Allocation Fund, Growth Allocation Fund and Moderate Growth Allocation Fund, respectively, in connection with each Fund's merger. See Note 7 in the Notes to Financial Statements..

^(D) The Fund changed its fiscal year from July 31 to December 31. See Note 7 in the Notes to Financial Statements.

See accompanying Notes to Financial Statements.

Statements of Operations (Continued)

Touchstone						Touchstone
Growth						Moderate Growth
Allocation						Allocation
Fund						Fund
For the						For the
Five Months			For the			Five Months			For the
Ended			Year			Ended			Year
December 31,			Ended			December 31,			Ended
2012^(D)			July 31, 2012			2012^(D)			July 31, 2012

$	1,024,423		$	697,138		$	2,053,601		$	1,352,741
	1,024,423			697,138			2,053,601			1,352,741

	76,439			100,148			155,819			173,457
	54,207			49,298			110,407			85,813
	915			425			915			425
	2,540			353			2,940			432
	12,580			40,500			13,342			50,528
	18,608			31,314			31,219			29,563
	15,479			62,340			23,022			93,075
	4,923			2,909			3,839			1,813
	27			724			6			610
	5,383			6,031			5,093			6,062
	5,439			7,485			5,568			7,360
	4,957			9,399			5,104			8,974
	4,774			5,421			4,768			5,421
	5,512			10,619			3,609			10,119
	8,433			18,461			11,186			25,230
	1,723			2,927			880			2,802
	3,057			2,492			3,321			2,512
	27,881			28,710			61,087			40,971
	102,504			270,363			205,519			520,093
	3,901			9,569			3,943			14,653
	10,073			17,431			14,783			23,133
	369,355			676,919			666,370			1,103,046
	(195,156	)		(249,437	)		(310,489	)		(319,765	)
	174,199			427,482			355,881			783,281
	850,224			269,656			1,697,720			569,460

	3,528,548			2,049,149			11,049,411			2,672,895
	1,243,874			483,641			1,989,086			1,434,017
	(1,824,714	)		(3,917,579	)		(8,653,626	)		(4,637,598	)
	2,947,708			(1,384,789	)		4,384,871			(530,686	)
$	3,797,932		$	(1,115,133	)	$	6,082,591		$	38,774
$	—		$	—		$	—		$	303

Statements of Changes in Net Assets

				Touchstone
				Dynamic Equity
				Fund
	For the
	Five Months			For the			For the
	Ended			Year			Year
	December 31,			Ended			Ended
	2012^(B)			July 31, 2012			July 31, 2011
From Operations
Net investment income (loss)	$	259,349		$	(409,958	)	$	382,949
Net realized gain (loss) on investments, written options, foreign currency transactions and securities sold short		(307,770	)		3,827,422			10,031,159
Net change in unrealized appreciation (depreciation) on investments, written options, foreign currency transactions and securities sold short		(1,019,180	)		2,431,040			(1,046,590	)
Change in Net Assets from Operations		(1,067,601	)		5,848,504			9,367,518

Distributions to Shareholders from:
Net investment income, Class A		—			(151,828	)		—
Net investment income, Class C		—			(59,199	)		—
Net investment income, Class Y		—			—			—
Net investment income, Class Z		—			(303,846	)		—
Net investment income, Institutional Class		—			(17	)		—
Net realized gains, Class A		—			—			—
Net realized gains, Class C		—			—			—
Net realized gains, Class Y		—			—			—
Net realized gains, Institutional Class		—			—			—
Total Distributions		—			(514,890	)		—

Net Increase (Decrease) from Share Transactions^(A)		8,301,265			(13,768,800	)		(22,288,278	)

Total Increase (Decrease) in Net Assets		7,233,664			(8,435,186	)		(12,920,760	)

Net Assets
Beginning of period		59,825,460			68,260,646			81,181,406
End of period	$	67,059,124		$	59,825,460		$	68,260,646
Accumulated Net Investment Income (Loss)	$	15,903		$	(386,369	)	$	514,875

^(A) For details on share transaction by class, see statements of changes in net assets - capital stock activity on pages 56 and 58.

^(B) The Fund changed its fiscal year from July 31 to December 31. See Note 7 in the Notes to Financial Statements.

See accompanying Notes to Financial Statements.

Statements of Changes in Net Assets (Continued)

			Touchstone									Touchstone
			Emerging Growth									International Equity
			Fund									Fund
For the									For the
Five Months			For the			For the			Five Months			For the			For the
Ended			Year			Year			Ended			Year			Year
December 31,			Ended			Ended			December 31,			Ended			Ended
2012^(B)			July 31, 2012			July 31, 2011			2012^(B)			July 31, 2012			July 31, 2011

$	57,715		$	(362,711	)	$	(657,692	)	$	108,398		$	540,810		$	888,925

	1,619,043			7,475,767			13,660,970			457,617			260,570			4,379,909

	316,104			(9,272,185	)		9,619,386			1,776,951			(4,833,881	)		3,213,593
	1,992,862			(2,159,129	)		22,622,664			2,342,966			(4,032,501	)		8,482,427


	—			—			—			(5,339	)		(8,085	)		(4,775	)
	—			—			—			(3,850	)		—			—
	—			—			—			(9,512	)		—			—
	—			—			—			—			(16,541	)		(10,456	)
	—			—			—			(471,885	)		(942,626	)		(874,978	)
	(152,618	)		—			—			—			—			—
	(206	)		—			—			—			—			—
	(523,647	)		—			—			—			—			—
	(872,193	)		—			—			—			—			—
	(1,548,664	)		—			—			(490,586	)		(967,252	)		(890,209	)

	(8,676,134	)		(22,571,750	)		(35,834,842	)		1,456,593			(12,908,076	)		(20,659,354	)

	(8,231,936	)		(24,730,879	)		(13,212,178	)		3,308,973			(17,907,829	)		(13,067,136	)


	25,620,172			50,351,051			63,563,229			18,162,424			36,070,253			49,137,389
$	17,388,236		$	25,620,172		$	50,351,051		$	21,471,397		$	18,162,424		$	36,070,253
$	—		$	(179,955	)	$	—		$	(36,085	)	$	342,867		$	778,589

Statements of Changes in Net Assets (Continued)

	Touchstone
	Balanced Allocation
	Fund
	For the
	Five Months			For the			For the
	Ended			Year			Year
	December 31,			Ended			Ended
	2012^(B)			July 31, 2012			July 31, 2011
From Operations
Net investment income	$	1,417,962		$	567,559		$	832,993
Net realized gain (loss) on investments and capital gain distributions received		5,632,070			5,462,607			(73,744	)
Net change in unrealized appreciation (depreciation) on investments		(3,322,821	)		(5,042,105	)		7,941,193
Change in Net Assets from Operations		3,727,211			988,061			8,700,442

Distributions to Shareholders from:
Net investment income, Class A		(751,006	)		(164,728	)		(368,940	)
Net investment income, Class C		(585,993	)		(414,996	)		(975,077	)
Net investment income, Class Y		(998,571	)		—			—
Net investment income, Class Z		—			(27,150	)		(47,450	)
Net investment income, Institutional Class		(707	)		(477	)		(817	)
Net realized gains, Class A		(1,250,595	)		—			—
Net realized gains, Class C		(989,596	)		—			—
Net realized gains, Class Y		(1,701,479	)		—			—
Net realized gains, Institutional Class		(783	)		—			—
Total Distributions		(6,278,730	)		(607,351	)		(1,392,284	)

Net Increase (Decrease) from Share Transactions^(A)		87,474,773			(15,492,104	)		(24,401,338	)

Total Increase (Decrease) in Net Assets		84,923,254			(15,111,394	)		(17,093,180	)

Net Assets
Beginning of period		49,543,821			64,655,215			81,748,395
End of period	$	134,467,075		$	49,543,821		$	64,655,215
Accumulated Net Investment Income	$	—		$	271,112		$	25,032

^(A) For details on share transaction by class, see statements of changes in net assets - capital stock activity on pages 59 to 60.

^(B) The Fund changed its fiscal year from July 31 to December 31. See Note 7 in the Notes to Financial Statements.

See accompanying Notes to Financial Statements.

Statements of Changes in Net Assets (Continued)

Touchstone
Conservative Allocation
Fund
For the
Five Months			For the			For the
Ended			Year			Year
December 31,			Ended			Ended
2012^(B)			July 31, 2012			July 31, 2011

$	693,271		$	535,072		$	875,122
	3,844,351			3,112,528			525,578
	(3,335,699	)		(2,902,390	)		2,017,091
	1,201,923			745,210			3,417,791


	(479,405	)		(135,704	)		(440,204	)
	(376,396	)		(266,757	)		(683,075	)
	(456,004	)		(7,041	)		—
	—			(43,132	)		(54,125	)
	(34,395	)		(136,455	)		(260,494	)
	(1,422,514	)		—			—
	(773,349	)		—			—
	(1,620,816	)		—			—
	(52,524	)		—			—
	(5,215,403	)		(589,089	)		(1,437,898	)

	60,408,531			(10,055,229	)		(6,426,082	)

	56,395,051			(9,899,108	)		(4,446,189	)


	29,067,717			38,966,825			43,413,014
$	85,462,768		$	29,067,717		$	38,966,825
$	—		$	359,301		$	69,789

Statements of Changes in Net Assets (Continued)

	Touchstone
	Growth Allocation
	Fund
	For the
	Five Months			For the			For the
	Ended			Year			Year
	December 31,			Ended			Ended
	2012^(B)			July 31, 2012			July 31, 2011
From Operations
Net investment income	$	850,224		$	269,656		$	170,509
Net realized gain (loss) on investments and capital gain distributions received		4,772,422			2,532,790			(1,537,576	)
Net change in unrealized appreciation (depreciation) on investments		(1,824,714	)		(3,917,579	)		11,238,436
Change in Net Assets from Operations		3,797,932			(1,115,133	)		9,871,369

Distributions to Shareholders from:
Net investment income, Class A		(646,035	)		(114,772	)		(84,082	)
Net investment income, Class C		(450,497	)		(44,632	)		—
Net investment income, Class Y		(503,325	)		—			—
Net investment income, Class Z		—			(20,102	)		(28,354	)
Net investment income, Institutional Class		(901	)		(983	)		(5,997	)
Net realized gains, Class A		—			—			—
Net realized gains, Class C		—			—			—
Net realized gains, Class Y		—			—			—
Net realized gains, Institutional Class		—			—			—
Total Distributions		(1,600,758	)		(180,489	)		(118,433	)

Net Decrease from Share Transactions^(A)		46,019,976			(14,968,001	)		(14,679,907	)

Total Decrease in Net Assets		48,217,150			(16,263,623	)		(4,926,971	)

Net Assets
Beginning of period		35,181,765			51,445,388			56,372,359
End of period	$	83,398,915		$	35,181,765		$	51,445,388
Accumulated Net Investment Income	$	—		$	269,645		$	177,476

^(A) For details on share transaction by class, see statements of changes in net assets - capital stock activity on pages 61 and 62.

^(B)The Fund changed its fiscal year from July 31 to December 31. See Note 7 in the Notes to Financial Statements.

See accompanying Notes to Financial Statements.

Statements of Changes in Net Assets (Continued)

Touchstone
Moderate Growth Allocation
Fund
For the
Five Months			For the			For the
Ended			Year			Year
December 31,			Ended			Ended
2012^(B)			July 31, 2012			July 31, 2011

$	1,697,720		$	569,460		$	584,373
	13,038,497			4,106,912			(98,699	)
	(8,653,626	)		(4,637,598	)		13,302,810
	6,082,591			38,774			13,788,484


	(1,238,170	)		(237,914	)		(285,883	)
	(772,314	)		(314,758	)		(398,121	)
	(880,957	)		—			—
	—			(20,136	)		(22,700	)
	(254	)		(127	)		(155	)
	(1,119,959	)		—			—
	(769,189	)		—			—
	(855,859	)		—			—
	(131	)		—			—
	(5,636,833	)		(572,935	)		(706,859	)

	99,907,478			(17,225,588	)		(26,178,377	)

	100,353,236			(17,759,749	)		(13,096,752	)


	63,459,734			81,219,483			94,316,235
$	163,812,970		$	63,459,734		$	81,219,483
$	—		$	392,606		$	191,574

Statements of Changes in Net Assets - Capital Stock Activity

	Touchstone Dynamic
	Equity Fund
	For the Five Months						For the Year						For the Year
	Ended						Ended						Ended
	December 31, 2012^(C)						July 31, 2012						July 31, 2011
	Shares			Dollars			Shares			Dollars			Shares			Dollars
Class A
Proceeds from Shares sold		113,667		$	1,270,554			97,187		$	1,023,913			112,957		$	1,091,204
Reinvestment of distributions		—			—			12,141			127,964			—			—
Redemption fees		—			—			—			22			—			—
Cost of Shares redeemed		(252,268	)		(2,812,907	)		(799,021	)		(8,368,813	)		(2,065,760	)		(19,823,671	)
Change in Net Assets from Class A Share Transactions		(138,601	)		(1,542,353	)		(689,693	)		(7,216,914	)		(1,952,803	)		(18,732,467	)
Class C^(A)
Proceeds from Shares sold		11,073			118,005			38,462			411,299			16,406			155,336
Reinvestment of distributions		—			—			2,418			24,273			—			—
Redemption fees		—			—			—			14			—			—
Cost of Shares redeemed		(113,949	)		(1,211,134	)		(396,981	)		(3,980,527	)		(933,294	)		(8,682,644	)
Change in Net Assets from Class C Share Transactions		(102,876	)		(1,093,129	)		(356,101	)		(3,544,941	)		(916,888	)		(8,527,308	)
Class Y
Proceeds from Shares sold		17,727			201,695			115,845			1,254,036			—			—
Proceeds from Shares issued in connection with merger^(B)		—			—			2,239,679			21,354,181			—			—
Reinvestment of distributions		—			—			—			—			—			—
Cost of Shares redeemed		(318,203	)		(3,604,761	)		(236,539	)		(2,604,497	)		—			—
Change in Net Assets from Class Y Share Transactions		(300,476	)		(3,403,066	)		2,118,985			20,003,720			—			—
Class Z
Proceeds from Shares sold		—			—			685,868			7,058,978			1,298,184			13,149,589
Reinvestment of distributions		—			—			26,540			283,182			—			—
Redemption fees		—			—			—			30			—			73
Cost of Shares redeemed		—			—			(1,407,539	)		(14,954,589	)		(815,371	)		(8,178,165	)
Cost of Shares redeemed in connection with merger^(B)		—			—			(2,239,679	)		(21,354,181	)		—			—
Change in Net Assets from Class Z Share Transactions		—			—			(2,934,810	)		(28,966,580	)		482,813			4,971,497
Institutional Class
Proceeds from Shares sold		1,329,419			15,304,513			623,310			6,847,071			—			—
Reinvestment of distributions		—			—			1			17			—			—
Redemption fees		—			—			—			8			—			—
Cost of Shares redeemed		(84,149	)		(964,700	)		(80,747	)		(891,181	)		—			—
Change in Net Assets from Institutional Class Share Transactions		1,245,270			14,339,813			542,564			5,955,915			—			—
Net Increase (Decrease) from Share Transactions		703,317		$	8,301,265			(1,319,055	)	$	(13,768,800	)		(2,386,878	)	$	(22,288,278	)

^(A)

Touchstone Emerging Growth Fund began issuing Class C shares on April 12, 2012.

^(B)

See Note 7 in the Notes to Financial Statements.

^(C)

The Fund changed its fiscal year from July 31 to December 31. See Note 7 in the Notes to Financial Statements.

See accompanying Notes to Financial Statements.

Statements of Changes in Net Assets - Capital Stock Activity (Continued)

Touchstone Emerging
Growth Fund
For the Five Months						For the Year						For the Year
Ended						Ended						Ended
December 31, 2012^(C)						July 31, 2012						July 31, 2011
Shares			Dollars			Shares			Dollars			Shares			Dollars

	1,248		$	14,397			16,997		$	185,270			106,046		$	1,152,722
	12,500			137,628			—			—			—			—
	—			—			—			—			—			995
	(27,248	)		(320,242	)		(171,955	)		(1,881,656	)		(130,176	)		(1,426,226	)
	(13,500	)		(168,217	)		(154,958	)		(1,696,386	)		(24,130	)		(272,509	)

	—			—			211			2,500			—			—
	19			206			—			—			—			—
	—			—			—			—			—			—
	—			—			—			—			—			—
	19			206			211			2,500			—			—

	23,199			270,256			3,419			40,251			—			—
	—			—			657,674			7,620,741			—			—
	38,445			431,742			—			—			—			—
	(93,515	)		(1,106,710	)		(61,060	)		(713,249	)		—			—
	(31,871	)		(404,712	)		600,033			6,947,743			—			—

	—			—			77,510			876,449			264,276			3,076,410
	—			—			—			—			—			—
	—			—			—			—			—			318
	—			—			(155,247	)		(1,745,912	)		(1,077,898	)		(11,562,495	)
	—			—			(657,674	)		(7,620,741	)		—			—
	—			—			(735,411	)		(8,490,204	)		(813,622	)		(8,485,767	)

	279,545			3,518,735			542,787			6,268,110			435,840			4,874,795
	66,813			762,336			—			—			—			—
	—			—			—			—			—			56
	(992,021	)		(12,384,482	)		(2,100,648	)		(25,603,513	)		(2,797,123	)		(31,951,417	)
	(645,663	)		(8,103,411	)		(1,557,861	)		(19,335,403	)		(2,361,283	)		(27,076,566	)
	(691,015	)	$	(8,676,134	)		(1,847,986	)	$	(22,571,750	)		(3,199,035	)	$	(35,834,842	)

Statements of Changes in Net Assets - Capital Stock Activity (Continued)

							Touchstone International
							Equity Fund
	For the Five Months						For the Year						For the Year
	Ended						Ended						Ended
	December 31, 2012^(C)						July 31, 2012						July 31, 2011
	Shares			Dollars			Shares			Dollars			Shares			Dollars
Class A
Proceeds from Shares sold		3,357		$	28,942			13,241		$	108,234			2,383		$	21,950
Cost of Shares redeemed in connection with merger^(B)		—			—			—			—			—			—
Reinvestment of distributions		550			4,851			1,019			7,582			506			4,474
Cost of Shares redeemed		(2,607	)		(22,367	)		(12,417	)		(98,803	)		(21,064	)		(193,932	)
Change in Net Assets from Class A Share Transactions		1,300			11,426			1,843			17,013			(18,175	)		(167,508	)
Class C^(A)
Proceeds from Shares sold		22,283			188,301			305			2,499			—			—
Cost of Shares redeemed in connection with merger^(B)		—			—			—			—			—			—
Reinvestment of distributions		425			3,733			—			—
Redemption fees		—			—			—			—			—			—
Cost of Shares redeemed		—			—			—			—			—			—
Change in Net Assets from Class C Share Transactions		22,708			192,034			305			2,499			—			—
Class Y
Proceeds from Shares sold		588			5,084			241			1,642			—			—
Proceeds from Shares issued in connection with merger^(B)		—			—			55,599			923,556			—			—
Reinvestment of distributions		927			8,201			—			—			—			—
Cost of Shares redeemed		(7,783	)		(68,320	)		(3,336	)		(25,612	)		—			—
Change in Net Assets from Class Y Share Transactions		(6,268	)		(55,035	)		52,504			899,586			—			—
Class Z
Proceeds from Shares sold		—			—			3,681			30,192			30,109			274,127
Reinvestment of distributions		—			—			2,144			15,971			1,145			10,157
Cost of Shares redeemed		—			—			(7,613	)		(63,817	)		(39,590	)		(357,275	)
Cost of Shares redeemed in connection with merger^(B)		—			—			(55,599	)		(923,556	)		—			—
Change in Net Assets from Class Z Share Transactions		—			—			(57,387	)		(941,210	)		(8,336	)		(72,991	)
Institutional Class
Proceeds from Shares sold		548,360			4,694,082			592,217			4,975,354			79,358			700,603
Reinvestment of distributions		53,441			471,885			126,697			942,626			98,645			874,978
Cost of Shares redeemed		(448,871	)		(3,857,799	)		(2,277,576	)		(18,803,944	)		(2,436,524	)		(21,994,436	)
Change in Net Assets from Institutional Class
Share Transactions		152,930			1,308,168			(1,558,662	)		(12,885,964	)		(2,258,521	)		(20,418,855	)
Net Increase (Decrease) from Share Transactions		170,670		$	1,456,593			(1,561,397	)	$	(12,908,076	)		(2,285,032	)	$	(20,659,354	)

^(A)Touchstone International Equity Fund began issuing Class C shares on April 12, 2012.

^(B)See Note 7 in the Notes to Financial Statements.

^(C)The Fund changed its fiscal year from July 31 to December 31. See Note 7 in the Notes to Financial Statements.

See accompanying Notes to Financial Statements.

Statements of Changes in Net Assets - Capital Stock Activity (Continued)

Touchstone Balanced
Allocation Fund
For the Five Months						For the Year						For the Year
Ended						Ended						Ended
December 31,2012^(C)						July 31, 2012						July 31, 2011
Shares			Dollars			Shares			Dollars			Shares			Dollars

	133,156			1,512,715			51,372			555,561			107,825			1,134,540

	3,650,589			41,600,137			—			—			—			—
	160,880			1,794,307			11,764			124,335			26,608			283,451
	(411,962	)		(4,677,019	)		(329,730	)		(3,549,105	)		(1,120,890	)		(11,626,588	)

	3,532,663			40,230,140			(266,594	)		(2,869,209	)		(986,457	)		(10,208,597	)

	93,366			1,049,120			111,052			1,192,025			255,749			2,713,585

	191,231			2,174,823			—			—			—			—
	91,476			1,018,509			24,035			254,301			54,153			576,525
	—			—			—			9			—			11

	(385,238	)		(4,344,101	)		(1,239,184	)		(13,462,919	)		(1,723,353	)		(18,313,299	)

	(9,165	)		(101,649	)		(1,104,097	)		(12,016,584	)		(1,413,451	)		(15,023,178	)

	301,709			3,426,829			4,552			49,425			—			—

	6,276,974			71,649,327			114,668			1,301,456			—			—
	234,665			2,620,777			—			—			—			—
	(2,704,435	)		(30,352,141	)		(4,343	)		(47,913	)		—			—

	4,108,913			47,344,792			114,877			1,302,968			—			—

	—			—			8,853			96,418			125,842			1,354,208
	—			—			1,293			13,562			2,227			23,787
	—			—			(64,331	)		(716,348	)		(52,042	)		(548,375	)
	—			—			(114,668	)		(1,301,456	)		—			—

	—			—			(168,853	)		(1,907,824	)		76,027			829,620

	—			—			35			372			—			—
	134			1,490			19			205			77			817
	—			—			(197	)		(2,032	)		—			—
	134			1,490			(143	)		(1,455	)		77			817
	7,632,545		$	87,474,773			(1,424,810	)	$	(15,492,104	)		(2,323,804	)	$	(24,401,338	)

Statements of Changes in Net Assets - Capital Stock Activity (Continued)

							Touchstone Conservative
							Allocation Fund
	For the Five Months						For the Year							For the Year
	Ended						Ended							Ended
	December 31, 2012^(B)						July 31, 2012							July 31, 2011
	Shares			Dollars			Shares			Dollars				Shares			Dollars
Class A
Proceeds from Shares sold		182,352		$	1,984,226			435,959		$	4,679,336				469,086		$	4,910,814
Proceeds from Shares issued in connection with merger^(A)		2,370,245			26,062,498			—			—				—			—
Reinvestment of distributions		140,042			1,482,044			8,431			89,062				32,731			346,890
Redemption fees		—			—			—			—				—			2,501
Cost of Shares redeemed		(324,849	)		(3,545,483	)		(698,325	)		(7,410,892	)			(646,598	)		(6,848,583	)
Change in Net Assets from Class A Share Transactions		2,367,790			25,983,285			(253,935	)		(2,642,494	)			(144,781	)		(1,588,378	)
Class C
Proceeds from Shares sold		87,113			933,883			120,414			1,289,950				139,547			1,463,986
Proceeds from Shares issued in connection with merger^(A)		161,697			1,770,015			—			—				—			—
Reinvestment of distributions		75,779			801,084			15,629			163,870				39,670			418,257
Redemption fees		—			—			—			—				—			—
Cost of Shares redeemed		(170,909	)		(1,856,950	)		(419,692	)		(4,493,992	)			(651,300	)		(6,912,341	)
Change in Net Assets from Class C Share Transactions		153,680			1,648,032			(283,649	)		(3,040,172	)			(472,083	)		(5,030,098	)
Class Y													��
Proceeds from Shares sold		170,254			1,861,753			6,373			68,638				—			—
Proceeds from Shares issued in connection with merger^(A)		3,465,392			38,120,235			197,512			2,081,642				—			—
Reinvestment of distributions		191,804			2,030,304			527			5,686				—			—
Cost of Shares redeemed		(851,598	)		(9,144,512	)		(8,160	)		(88,920	)			—			—
Change in Net Assets from Class Y Share Transactions		2,975,852			32,867,780			196,252			2,067,046				—			—
Class Z
Proceeds from Shares sold		—			—			169,193			1,789,083				73,005			788,093
Reinvestment of distributions		—			—			3,396			35,873				3,946			41,838
Redemption fees		—			—			—			—				—			1
Cost of Shares redeemed		—			—			(101,097	)		(1,080,371	)			(59,660	)		(642,737	)
Cost of Shares redeemed in connection with merger^(A)		—			—			(197,512	)		(2,081,642	)			—			—
Change in Net Assets from Class Z Share Transactions		—			—			(126,020	)		(1,337,057	)			17,291			187,195
Institutional Class
Proceeds from Shares sold		—			—			12,061			130,383				76,058			816,440
Reinvestment of distributions		8,105			86,416			12,914			136,455				24,550			260,493
Redemption fees		—			—			—			—				—			—
Cost of Shares redeemed		(16,235	)		(176,982	)		(496,227	)		(5,369,390	)			(99,534	)		(1,071,734	)
Change in Net Assets from Institutional Class Share Transactions		(8,130	)		(90,566	)		(471,252	)		(5,102,552	)			1,074			5,199
Net Increase (Decrease) from Share Transactions		5,489,192		$	60,408,531			(938,604	)	$	(10,055,229	)			(598,499	)	$	(6,426,082	)

^(A)See Note 7 in the Notes to Financial Statements.

^(B)The Fund changed its fiscal year from July 31 to December 31. See Note 7 in the Notes to Financial Statements.

See accompanying Notes to Financial Statements.

Statements of Changes in Net Assets - Capital Stock Activity (Continued)

Touchstone Growth
Allocation Fund
For the Five Months						For the Year						For the Year
Ended						Ended						Ended
December 31, 2012^(B)						July 31, 2012						July 31, 2011
Shares			Dollars			Shares			Dollars			Shares			Dollars

	83,538		$	975,036			55,210		$	587,614			97,155		$	1,068,075
	1,982,555			23,010,705			—			—			—			—
	50,396			581,838			9,788			101,796			6,822			74,091
	—			—			—			2			—			12
	(355,247	)		(4,130,048	)		(344,708	)		(3,716,622	)		(654,642	)		(7,043,329	)
	1,761,242			20,437,531			(279,710	)		(3,027,210	)		(550,665	)		(5,901,151	)

	25,816			286,872			66,499			633,936			139,720			1,445,033
	86,836			971,379			—			—			—			—
	29,133			323,605			3,080			30,774			—			—
	—			—			—			—			—			577
	(236,712	)		(2,642,774	)		(920,431	)		(9,388,471	)		(1,062,299	)		(10,929,585	)
	(94,927	)		(1,060,918	)		(850,852	)		(8,723,761	)		(922,579	)		(9,483,975	)

	92,145			1,085,271			9,691			107,236			—			—
	2,547,823			29,855,473			68,967			732,300			—			—
	40,877			478,642			—			—			—			—
	(407,565	)		(4,791,580	)		(1,606	)		(17,612	)		—			—
	2,273,280			26,627,806			77,052			821,924			—			—

	—			—			7,102			75,977			125,398			1,356,454
	—			—			1,071			11,260			1,926			21,185
	—			—			—			—			—			—
	—			—			(246,979	)		(2,681,751	)		(58,423	)		(660,062	)
	—			—			(68,967	)		(732,300	)		—			—
	—			—			(307,773	)		(3,326,814	)		68,901			717,577

	1,400			15,008			623			6,895			9,836			108,725
	85			901			100			983			546			5,997
	—			—			—			—			—			3
	(32	)		(352	)		(67,704	)		(720,018	)		(11,594	)		(127,083	)
	1,453			15,557			(66,981	)		(712,140	)		(1,212	)		(12,358	)
	3,941,048		$	46,019,976			(1,428,264	)	$	(14,968,001	)		(1,405,555	)	$	(14,679,907	)

Statements of Changes in Net Assets - Capital Stock Activity (Continued)

	Touchstone Moderate Growth
	Allocation Fund
	For the Five Months						For the Year						For the Year
	Ended						Ended						Ended
	December 31, 2012^(B)						July 31, 2012						July 31, 2011
	Shares			Dollars			Shares			Dollars			Shares			Dollars
Class A
Proceeds from Shares sold		129,646		$	1,475,971			97,822		$	1,064,952			276,734		$	2,958,325
Proceeds from Shares issued in connection with merger^(A)		5,396,673			61,461,849			—			—			—			—
Reinvestment of distributions		187,033			2,104,863			19,053			196,629			22,915			243,124
Redemption fees		—			—			—			2			—			4
Cost of Shares redeemed		(771,111	)		(8,774,777	)		(448,546	)		(4,814,500	)		(957,821	)		(10,240,936	)
Change in Net Assets from Class A Share Transactions		4,942,241			56,267,906			(331,671	)		(3,552,917	)		(658,172	)		(7,039,483	)
Class C
Proceeds from Shares sold		106,912			1,194,059			133,586			1,407,737			236,158			2,457,625
Proceeds from Shares issued in connection with merger^(A)		221,281			2,482,569			—			—			—			—
Reinvestment of distributions		88,949			985,199			18,947			192,127			22,961			239,020
Redemption fees		—			—			—			1			—			47
Cost of Shares redeemed		(381,823	)		(4,268,695	)		(1,411,866	)		(14,742,597	)		(2,152,558	)		(22,352,790	)
Change in Net Assets from Class C Share Transactions		35,319			393,132			(1,259,333	)		(13,142,732	)		(1,893,439	)		(19,656,098	)
Class Y
Proceeds from Shares sold		214,196			2,459,768			14,400			155,956			—			—
Proceeds from Shares issued in connection with merger^(A)		4,909,444			56,310,746			59,133			690,081			—			—
Reinvestment of distributions		146,774			1,665,234			—			—			—			—
Cost of Shares redeemed		(1,507,596	)		(17,189,693	)		(5,646	)		(61,748	)		—			—
Change in Net Assets from Class Y Share Transactions		3,762,818			43,246,055			67,887			784,289			—			—
Class Z
Proceeds from Shares sold		—			—			5,102			56,108			96,286			1,030,308
Reinvestment of distributions		—			—			1,101			11,461			967			10,340
Cost of Shares redeemed		—			—			(61,849	)		(691,938	)		(47,614	)		(523,599	)
Cost of Shares redeemed in connection with merger^(A)		—			—			(59,133	)		(690,081	)		—			—
Change in Net Assets from Class Z Share Transactions		—			—			(114,779	)		(1,314,450	)		49,639			517,049
Institutional Class
Proceeds from Shares sold		—			—			9			100			—			—
Reinvestment of distributions		34			385			12			127			15			155
Cost of Shares redeemed		—			—			—			(5	)		—			—
Change in Net Assets from Institutional Class Share Transactions		34			385			21			222			15			155

Net Increase (Decrease) from Share Transactions		8,740,412		$	99,907,478			(1,637,875	)	$	(17,225,588	)		(2,501,957	)	$	(26,178,377	)

^(A) See Note 7 in the Notes to Financial Statements.

^(B)The Fund changed its fiscal year from July 31 to December 31. See Note 7 in the Notes to Financial Statements.

See accompanying Notes to Financial Statements.

Statements of Cash Flows

For the Period Ended December 31, 2012 and the Year Ended July 31, 2012

	Touchstone
	Dynamic Equity
	Fund
	For the
	Five Months
	Ended			For the
	December 31,			Year Ended
	2012^(A)			July 31, 2012
Cash Flows Provided by/ Used in Operating Activities

Change in net assets resulting from operations	$	(1,067,601	)	$	5,848,504

Adjustments to reconcile net increase (decrease) in net assets derived from operations to net cash (used in) provided by operating activities:
Purchases of investments		(86,832,779	)		(175,622,762	)
Proceeds from disposition of investments		82,839,295			190,676,934
Premiums on call and put options written		9,311,979			24,430,056
Costs to cover written options		(10,034,518	)		(22,282,305	)
Proceeds from securities sold short		42,464,801			150,000,584
Covers of securities sold short		(43,759,919	)		(152,514,398	)
Net sales of short term securities		(2,339,569	)		(23,865	)
Decrease in deposits with Prime Broker		208,781			31,532
(Increase) decrease in dividends and interest receivable		(20,256	)		31,630
Increase (decrease) in dividends for securities sold short payable		(234,918	)		239,034
Decrease in receivable from Investment Advisor		—			6,099
Increase (decrease) in payable to Trustees		(1,339	)		622
Increase (decrease) in payable to other affiliates		(8,050	)		6,865
Increase (decrease) in other accrued expenses and liabilities		5,478			(25,508	)
(Increase) decrease in other assets		1,961			(27,824	)
Net realized (gain) from investments and warrants		(2,431,895	)		(1,517,732	)
Net realized (gain) loss from written options		1,102,848			(2,823,456	)
Net realized loss from securities sold short		1,636,817			513,766
Net change in unrealized (appreciation) depreciation on investments and warrants		(467,741	)		(2,052,589	)
Net change in unrealized (appreciation) depreciation on written options		(143,584	)		350,810
Net change in unrealized (appreciation) depreciation on securities sold short		1,630,505			(729,261	)
Net cash used in operating activities		(8,139,704	)		(14,516,736	)

Cash Flows from Financing Activities
Proceeds from shares sold		16,750,518			16,444,205
Cash distributions paid		—			(79,454	)
Payment of shares redeemed		(8,610,814	)		(30,881,487	)
Net cash provided by (used in) financing activities		8,139,704			(14,516,736	)
Net change in cash		—			—

Cash - beginning of the period		—			—
Cash - end of period	$	—			—

Supplemental disclosure of cash flow information:
Reinvestment of dividends and distributions	$	—		$	435,436

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

See accompanying Notes to Financial Statements.

Financial Highlights

Touchstone Dynamic Equity Fund—Class A

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.20		$	10.26		$	9.02		$	8.68		$	11.88		$	14.51
Income (loss) from investment operations:
Net investment income (loss)^(B)		0.04			(0.07	)		0.06			0.05			0.02			0.05
Net realized and unrealized gains (losses) on investments		(0.19	)		1.09			1.18			0.29			(3.22	)		(1.80	)
Total from investment operations		(0.15	)		1.02			1.24			0.34			(3.20	)		(1.75	)
Distributions from:
Net investment income		—			(0.08	)		—			—			—			(0.18	)
Realized capital gains		—			—			—			—			—			(0.70	)
Total distributions		—			(0.08	)		—			—			—			(0.88	)
Net asset value at end of period	$	11.05		$	11.20		$	10.26		$	9.02		$	8.68		$	11.88
Total return^(C)		(1.34	%)^(D)		10.00	%		13.75	%		3.92	%		(26.94	%)		(12.60	%)
Ratios and supplemental data:
Net assets at end of period (000's)	$	16,156		$	17,919		$	23,505		$	38,274		$	83,169		$	285,305
Ratio to average net assets:
Net expenses (including dividend expense on securities sold short)^(E)		2.46	%^(F)		2.80	%		1.82	%		1.78	%		2.07	%		1.92	%
Gross expenses (including dividend expense on securities sold short)^(G)		2.65	%^(F)		3.08	%		2.16	%		2.27	%		2.41	%		2.13	%
Net investment income (loss)		0.88	%^(F)		(0.63	%)		0.66	%		0.52	%		0.24	%		0.40	%
Portfolio turnover rate		105	%^(D)		234	%		231	%		168	%		195	%		172	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

Per share amounts for the year or period are calculated based on average outstanding shares.

^(C)

Total returns shown exclude the effect of applicable sales loads. If these charges were included, the returns would be lower.

^(D)

Not annualized.

^(E)

The ratio of net expenses to average net assets excluding dividend expense on securities sold short is 1.55%, 1.55%, 1.66%, 1.65%, 1.71% and 1.53% for the period ended December 31, 2012 and years ended July 2012, 2011, 2010, 2009 and 2008, respectively.

^(F)

Annualized.

^(G)

The ratio of gross expenses to average net assets excluding dividend expense on securities sold short is 1.74%, 1.82%, 2.00%, 2.14%, 2.05% and 1.74% for the period ended December 31, 2012 and years ended July 2012, 2011, 2010, 2009 and 2008, respectively.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Dynamic Equity Fund—Class C

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	10.63		$	9.79		$	8.67		$	8.40		$	11.59		$	14.32
Income (loss) from investment operations:
Net investment income (loss)^(B)		0.01			(0.14	)		(0.01	)		(0.02	)		(0.05	)		(0.04	)
Net realized and unrealized gains (losses) on investments		(0.18	)		1.03			1.13			0.29			(3.14	)		(1.77	)
Total from investment operations		(0.17	)		0.89			1.12			0.27			(3.19	)		(1.81	)
Distributions from:
Net investment income		—			(0.05	)		—			—			—			(0.22	)
Realized capital gains		—			—			—			—			—			(0.70	)
Total distributions		—			(0.05	)		—			—			—			(0.92	)
Net asset value at end of period	$	10.46		$	10.63		$	9.79		$	8.67		$	8.40		$	11.59
Total return^(C)		(1.60	%)^(D)		9.09	%		12.92	%		3.21	%		(27.52	%)		(13.23	%)
Ratios and supplemental data:
Net assets at end of period (000's)	$	10,420		$	11,684		$	14,243		$	20,558		$	51,879		$	158,508
Ratio to average net assets:
Net expenses (including dividend expense on securities sold short)^(E)		3.21	%^(F)		3.55	%		2.57	%		2.53	%		2.82	%		2.65	%
Gross expenses (including dividend expense on securities sold short)^(G)		3.48	%^(F)		3.75	%		2.78	%		2.91	%		2.97	%		2.85	%
Net investment income (loss)		0.13	%^(F)		(1.38	%)		(0.10	%)		(0.23	%)		(0.52	%)		(0.34	%)
Portfolio turnover rate		105	%^(D)		234	%		231	%		168	%		195	%		172	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

Per share amounts for the year or period are calculated based on average outstanding shares.

^(C)

Total returns shown exclude the effect of applicable sales loads. If these charges were included, the returns would be lower.

^(D)

Not annualized.

^(E)

The ratio of net expenses to average net assets excluding dividend expense on securities sold short is 2.30%, 2.30%, 2.41%, 2.40%, 2.46% and 2.26% for the period ended December 31, 2012 and years ended July 2012, 2011, 2010, 2009 and 2008, respectively.

^(F)

Annualized.

^(G)

The ratio of gross expenses to average net assets excluding dividend expense on securities sold short is 2.57%, 2.50%, 2.62%, 2.78%, 2.61% and 2.46% for the period ended December 31, 2012 and years ended July 2012, 2011, 2010, 2009 and 2008, respectively.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Dynamic Equity Fund—Class Y

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.35		$	10.40		$	9.11		$	8.75		$	11.94		$	14.54
Income (loss) from investment operations:
Net investment income (loss)^(B)		0.05			(0.04	)		0.08			0.07			0.04			0.09
Net realized and unrealized gains (losses) on
investments		(0.18	)		1.09			1.21			0.29			(3.23	)		(1.82	)
Total from investment operations		(0.13	)		1.05			1.29			0.36			(3.19	)		(1.73	)
Distributions from:
Net investment income		—			(0.10	)		—			—			—			(0.17	)
Realized capital gains		—			—			—			—			—			(0.70	)
Total distributions		—			(0.10	)		—			—			—			(0.87	)
Net asset value at end of period	$	11.22		$	11.35		$	10.40		$	9.11		$	8.75		$	11.94
Total return		(1.15	%)^(C)		10.14	%		14.16	%		4.11	%		(26.72	%)		(12.46	%)
Ratios and supplemental data:
Net assets at end of period (000's)	$	20,397		$	24,054		$	30,511		$	22,347		$	29,734		$	58,107
Ratio to average net assets:
Net expenses (including dividend expense on securities sold short)^(D)		2.21	%^(E)		2.56	%		1.59	%		1.52	%		1.81	%		1.64	%
Gross expenses (including dividend expense on securities sold short)^(F)		2.31	%^(E)		2.60	%		1.68	%		1.68	%		1.97	%		1.86	%
Net investment income (loss)		1.13	%^(E)		(0.38	%)		0.77	%		0.81	%		0.45	%		0.68	%
Portfolio turnover rate		105	%^(C)		234	%		231	%		168	%		195	%		172	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

Per share amounts for the year or period are calculated based on average outstanding shares.

^(C)

Not annualized.

^(D)

The ratio of net expenses to average net assets excluding dividend expense on securities sold short is 1.30%, 1.30%, 1.42%, 1.40%, 1.46% and 1.25% for the period ended December 31, 2012 and years ended July 2012, 2011, 2010, 2009 and 2008, respectively.

^(E)

Annualized.

^(F)

The ratio of gross expenses to average net assets excluding dividend expense on securities sold short is 1.40%, 1.35%, 1.51%, 1.56%, 1.62% and 1.47% for the period ended December 31, 2012 and years ended July 2012, 2011, 2010, 2009 and 2008, respectively.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Dynamic Equity Fund—Institutional Class

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012				2011			2010			2009			2008
Net asset value at beginning of period	$	11.36		$	10.40			$	9.12		$	8.76		$	11.96		$	14.54
Income (loss) from investment operations:
Net investment income (loss)^(B)		0.06			(0.04	)			0.09			0.11			0.05			0.09
Net realized and unrealized gains (losses) on investments		(0.19	)		1.10		��		1.19			0.25			(3.25	)		(1.81	)
Total from investment operations		(0.13	)		1.06				1.28			0.36			(3.20	)		(1.72	)
Distributions from:
Net investment income		—			(0.10	)			—			—			—			(0.16	)
Realized capital gains		—			—				—			—			—			(0.70	)
Total distributions		—			(0.10	)			—			—			—			(0.86	)
Net asset value at end of period	$	11.23		$	11.36			$	10.40		$	9.12		$	8.76		$	11.96
Total return		(1.15	%)^(C)		10.27	%			14.04	%		4.11	%		(26.76	%)		(12.33	%)
Ratios and supplemental data:
Net assets at end of period (000's)	$	20,085		$	6,168			$	2		$	2		$	12,547		$	29,025
Ratio to average net assets:
Net expenses (including dividend expense on securities sold short)^(D)		2.16	%^(E)		2.50	%			1.52	%		1.41	%		1.77	%		1.63	%
Gross expenses (including dividend expense on securities sold short)^(F)		2.18	%^(E)		2.95	%			816.82	%		2.84	%		1.87	%		1.89	%
Net investment income (loss)		1.18	%^(E)		(0.33	%)			0.92	%		1.31	%		0.55	%		0.70	%
Portfolio turnover rate		105	%^(C)		234	%			231	%		168	%		195	%		172	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

Per share amounts for the year or period are calculated based on average outstanding shares.

^(C)

Not annualized.

^(D)

The ratio of net expenses to average net assets excluding dividend expense on securities sold short is 1.25%, 1.25%, 1.35%, 1.36%, 1.41% and 1.21% for the period ended December 31, 2012 and years ended July 2012, 2011, 2010, 2009 and 2008, respectively.

^(E)

Annualized.

^(F)

The ratio of gross expenses to average net assets excluding dividend expense on securities sold short is 1.27%, 1.70%, 816.65%, 2.79%, 1.51% and 1.47% for the period ended December 31, 2012 and years ended July 2012, 2011, 2010, 2009 and 2008, respectively.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Emerging Growth Fund—Class A

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.36		$	12.16		$	8.60		$	7.71		$	10.10		$	12.90
Income (loss) from investment operations:
Net investment income (loss)^(B)		0.02			(0.14	)		(0.16	)		(0.07	)		(0.10	)		(0.16	)
Net realized and unrealized gains (losses) on investments		0.83			(0.66	)		3.72			0.96			(2.29	)^(C)		(1.71	)
Total from investment operations		0.85			(0.80	)		3.56			0.89			(2.39	)		(1.87	)
Distributions from:
Realized capital gains		(0.98	)		—			—			—			—			(0.93	)
Net asset value at end of period	$	11.23		$	11.36		$	12.16		$	8.60		$	7.71		$	10.10
Total return^(D)		7.62	%^(E)		(6.58	%)		41.40	%		11.54	%		(23.66	%)^(C)		(16.08	%)
Ratios and supplemental data:
Net assets at end of period (000's)	$	1,857		$	2,032		$	4,060		$	3,079		$	3,480		$	11,213
Ratio to average net assets:
Net expenses		1.39	%^(F)		1.59	%		1.67	%		1.67	%		1.67	%		1.67	%
Gross expenses		2.69	%^(F)		2.69	%		2.13	%		2.37	%		1.90	%		1.88	%
Net investment income (loss)		0.32	%^(F)		(1.31	%)		(1.49	%)		(0.87	%)		(1.35	%)		(1.33	%)
Portfolio turnover rate		51	%^(E)		173	%		194	%		249	%		284	%		261	%

Touchstone Emerging Growth Fund—Class C

Selected Data for a Share Outstanding Throughout Each Period

	Five Months			Period
	Ended			Ended
	December 31,			July 31,
	2012^(A)			2012^(G)
Net asset value at beginning of period	$	11.35		$	11.85
Income (loss) from investment operations:
Net investment loss^(B)		(0.02	)		(0.06	)
Net realized and unrealized gains (losses) on investments		0.83			(0.44	)
Total from investment operations		0.81			(0.50	)
Distributions from:
Realized capital gains		(0.98	)		—
Net asset value at end of period	$	11.18		$	11.35
Total return^(D)		7.37	%^(E)		(4.30	%)^(E)
Ratios and supplemental data:
Net assets at end of period (000's)	$	3		$	2
Ratio to average net assets:
Net expenses		2.13	%^(F)		2.14	%^(F)
Gross expenses		375.77	%^(F)		324.29	%^(F)
Net investment loss		(0.43	%)^(F)		(1.86	%)^(F)
Portfolio turnover rate		51	%^(E)		173	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

The net investment income per share is based on average shares outstanding for the period or year.

^(C)

Impact of payment from affiliate was less then $0.01 per share and 0.01%, respectively.

^(D)

Total returns shown exclude the effect of applicable sales loads. If these charges were included, the returns would be lower.

^(E)

Not annualized.

^(F)

Annualized.

^(G)

The Fund began issuing Class C shares on April 12, 2012.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Emerging Growth Fund—Class Y

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.56		$	12.34		$	8.71		$	7.79		$	10.18		$	12.97
Income (loss) from investment operations:
Net investment income (loss)^(B)		0.03			(0.12	)		(0.13	)		(0.05	)		(0.08	)		(0.13	)
Net realized and unrealized gains (losses) on investments		0.85			(0.66	)		3.76			0.97			(2.31	)^(C)		(1.73	)
Total from investment operations		0.88			(0.78	)		3.63			0.92			(2.39	)		(1.86	)
Distributions from:
Realized capital gains		(0.98	)		—			—			—			—			(0.93	)
Net asset value at end of period	$	11.46		$	11.56		$	12.34		$	8.71		$	7.79		$	10.18
Total return		7.75	%^(D)		(6.32	%)		41.68	%		11.81	%		(23.48	%)^(C)		(15.90	%)
Ratios and supplemental data:
Net assets at end of period (000's)	$	6,510		$	6,936		$	9,079		$	13,498		$	19,771		$	15,510
Ratio to average net assets:
Net expenses		1.14	%^(E)		1.34	%		1.42	%		1.42	%		1.42	%		1.42	%
Gross expenses		2.08	%^(E)		1.66	%		1.46	%		1.51	%		1.57	%		1.65	%
Net investment income (loss)		0.57	%^(E)		(1.06	%)		(1.22	%)		(0.54	%)		(1.09	%)		(1.11	%)
Portfolio turnover rate		51	%^(D)		173	%		194	%		249	%		284	%		261	%

Touchstone Emerging Growth Fund—Institutional Class

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.72		$	12.50		$	8.80		$	7.86		$	10.24		$	13.01
Income (loss) from investment operations:
Net investment income (loss)^(B)		0.04			(0.10	)		(0.11	)		(0.05	)		(0.07	)		(0.11	)
Net realized and unrealized gains (losses) on investments		0.86			(0.68	)		3.81			0.99			(2.31	)^(C)		(1.73	)
Total from investment operations		0.90			(0.78	)		3.70			0.94			(2.38	)		(1.84	)
Distributions from:
Realized capital gains		(0.98	)		—			—			—			—			(0.93	)
Net asset value at end of period	$	11.64		$	11.72		$	12.50		$	8.80		$	7.86		$	10.24
Total return		7.81	%^(D)		(6.24	%)		42.05	%		11.96	%		(23.24	%)^(C)		(15.69	%)
Ratios and supplemental data:
Net assets at end of period (000's)	$	9,019		$	16,650		$	37,212		$	46,986		$	35,660		$	34,651
Ratio to average net assets:
Net expenses		0.99	%^(E)		1.15	%		1.22	%		1.22	%		1.22	%		1.17	%
Gross expenses		1.53	%^(E)		1.28	%		1.20	%		1.22	%		1.18	%		1.35	%
Net investment income (loss)		0.71	%^(E)		(0.87	%)		(1.03	%)		(0.51	%)		(0.89	%)		(0.85	%)
Portfolio turnover rate		51	%^(D)		173	%		194	%		249	%		284	%		261	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

The net investment income per share is based on average shares outstanding for the period or year.

^(C)

Impact of payment from affiliate was less then $0.01 per share and 0.01%, respectively.

^(D)

Not annualized.

^(E)

Annualized.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone International Equity Fund—Class A

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	8.04		$	9.40		$	8.00		$	7.67		$	11.12		$	13.51
Income (loss) from investment operations:
Net investment income^(B)		0.03			0.14			0.12			0.11			0.12			0.17
Net realized and unrealized gains (losses) on investments		0.96			(1.23	)		1.41			0.34			(3.46	)^(C)		(2.45	)
Total from investment operations		0.99			(1.09	)		1.53			0.45			(3.34	)		(2.28	)
Distributions from:
Net investment income		(0.19	)		(0.27	)		(0.13	)		(0.12	)		(0.11	)		(0.03	)
Realized capital gains		—			—			—			—			—			(0.08	)
Total distributions		(0.19	)		(0.27	)		(0.13	)		(0.12	)		(0.11	)		(0.11	)
Net asset value at end of period	$	8.84		$	8.04		$	9.40		$	8.00		$	7.67		$	11.12
Total return^(D)		12.30	%^(E)		(11.40	%)		19.24	%		5.89	%		(29.95	%)^(C)		(17.04	%)
Ratios and supplemental data:
Net assets at end of period (000's)	$	268		$	233		$	255		$	363		$	617		$	1,875
Ratio to average net assets:
Net expenses		1.39	%^(F)		1.48	%		1.52	%		1.52	%		1.52	%		1.60	%
Gross expenses		10.54	%^(F)		8.75	%		6.85	%		5.59	%		3.43	%		2.76	%
Net investment income		0.87	%^(F)		1.70	%		1.33	%		1.30	%		1.62	%		1.34	%
Portfolio turnover rate		45	%^(E)		55	%		40	%		92	%		152	%		181	%

Touchstone International Equity Fund—Class C

Selected Data for a Share Outstanding Throughout Each Period

	Five Months			Period
	Ended			Ended
	December 31,			July 31,
	2012^(A)			2012^(G)
Net asset value at beginning of period	$	8.03		$	8.20
Income (loss) from investment operations:
Net investment income^(B)		—	^(H)		0.02
Net realized and unrealized gains (losses) on investments		0.95			(0.19	)
Total from investment operations		0.95			(0.17	)
Distributions from:
Net investment income		(0.17	)		—
Net asset value at end of period	$	8.81		$	8.03
Total return^(D)		11.97	%^(E)		(2.07	%)^(E)
Ratios and supplemental data:
Net assets at end of period (000's)	$	203		$	2
Ratio to average net assets:
Net expenses		2.14	%^(F)		2.14	%^(F)
Gross expenses		8.30	%^(F)		342.38	%^(F)
Net investment income		0.12	%^(F)		1.02	%^(F)
Portfolio turnover rate		45	%^(E)		55	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B⁾

The net investment income per share is based on average shares outstanding for the period or year.

^(C)

Impact of payment from affiliate was less then $0.01 per share and 0.01%, respectively.

^(D)

Total returns shown exclude the effect of applicable sales loads. If these charges were included, the returns would be lower.

^(E)

Not annualized.

^(F)

Annualized.

^(G)

The Fund began issuing Class C shares on April 12, 2012.

^(H)

Less than $0.005 per share.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone International Equity Fund—Class Y

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	8.07		$	9.44		$	8.03		$	7.70		$	11.20		$	13.57
Income (loss) from investment operations:
Net investment income^(B)		0.04			0.16			0.15			0.13			0.14			0.22
Net realized and unrealized gains (losses) on investments		0.96			(1.24	)		1.41			0.34			(3.49	)^(C)		(2.49	)
Total from investment operations		1.00			(1.08	)		1.56			0.47			(3.35	)		(2.27	)
Distributions from:
Net investment income		(0.19	)		(0.29	)		(0.15	)		(0.14	)		(0.15	)		(0.02	)
Realized capital gains		—			—			—			—			—			(0.08	)
Total distributions		(0.19	)		(0.29	)		(0.15	)		(0.14	)		(0.15	)		(0.10	)
Net asset value at end of period	$	8.88		$	8.07		$	9.44		$	8.03		$	7.70		$	11.20
Total return		12.38	%^(D)		(11.10	%)		19.57	%		6.07	%		(29.70	%)^(C)		(16.88	%)
Ratios and supplemental data:
Net assets at end of period (000's)	$	411		$	424		$	541		$	528		$	513		$	1,269
Ratio to average net assets:
Net expenses		1.14	%^(E)		1.23	%		1.27	%		1.27	%		1.27	%		1.34	%
Gross expenses		8.97	%^(E)		5.98	%		4.65	%		4.77	%		3.85	%		3.44	%
Net investment income		1.12	%^(E)		1.95	%		1.64	%		1.64	%		1.94	%		1.74	%
Portfolio turnover rate		45	%^(D)		55	%		40	%		92	%		152	%		181	%

Touchstone International Equity Fund — Institutional Class

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	8.07		$	9.46		$	8.06		$	7.73		$	11.27		$	13.61
Income (loss) from investment operations:
Net investment income^(B)		0.05			0.18			0.18			0.15			0.16			0.25
Net realized and unrealized gains (losses) on investments		0.95			(1.24	)		1.40			0.35			(3.52	)^(C)		(2.49	)
Total from investment operations		1.00			(1.06	)		1.58			0.50			(3.36	)		(2.24	)
Distributions from:
Net investment income		(0.21	)		(0.33	)		(0.18	)		(0.17	)		(0.18	)		(0.02	)
Realized capital gains		—			—			—			—			—			(0.08	)
Total distributions		(0.21	)		(0.33	)		(0.18	)		(0.17	)		(0.18	)		(0.10	)
Net asset value at end of period	$	8.86		$	8.07		$	9.46		$	8.06		$	7.73		$	11.27
Total return		12.47	%^(D)		(10.96	%)		19.75	%		6.43	%		(29.58	%)^(C)		(16.61	%)
Ratios and supplemental data:
Net assets at end of period (000's)	$	20,590		$	17,503		$	35,274		$	48,246		$	72,759		$	113,297
Ratio to average net assets:
Net expenses		0.99	%^(E)		1.01	%		1.02	%		1.02	%		1.02	%		1.06	%
Gross expenses		1.94	%^(E)		1.91	%		1.45	%		1.52	%		1.55	%		1.32	%
Net investment income		1.27	%^(E)		2.17	%		2.02	%		1.80	%		2.15	%		1.96	%
Portfolio turnover rate		45	%^(D)		55	%		40	%		92	%		152	%		181	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

The net investment income per share is based on average shares outstanding for the period or year.

^(C)

Impact of payment from affiliate was less then $0.01 per share and 0.01%, respectively.

^(D)

Not annualized.

^(E)

Annualized.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Balanced Allocation Fund—Class A

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.18		$	11.03		$	9.99		$	9.28		$	11.27		$	12.68
Income (loss) from investment operations:
Net investment income^(B)		0.13			0.17			0.18			0.22			0.29			0.21
Net realized and unrealized gains (losses) on investments		0.35			0.14			1.13			0.80			(1.46	)		(0.74	)^(C)
Total from investment operations		0.48			0.31			1.31			1.02			(1.17	)		(0.53	)
Distributions from:
Net investment income		(0.24	)		(0.16	)		(0.27	)		(0.31	)		(0.36	)		(0.26	)
Realized capital gains		(0.29	)		—			—			—			(0.46	)		(0.62	)
Total distributions		(0.53	)		(0.16	)		(0.27	)		(0.31	)		(0.82	)		(0.88	)
Net asset value at end of period	$	11.13		$	11.18		$	11.03		$	9.99		$	9.28		$	11.27
Total return^(D)		4.37	%^(E)		2.89	%		13.21	%		10.99	%		(9.30	%)		(4.59	%)^(C)
Ratios and supplemental data:
Net assets at end of period (000's)	$	49,118		$	9,839		$	12,650		$	21,312		$	25,356		$	44,959
Ratio to average net assets:
Net expenses^(F)		0.41	%^(G)		0.64	%		0.64	%		0.64	%		0.65	%		0.94	%
Gross expenses^(F)		0.83	%^(G)		0.97	%		0.94	%		0.93	%		0.79	%		1.13	%
Net investment income^(F)		2.75	%^(G)		1.58	%		1.71	%		2.26	%		3.30	%		1.71	%
Portfolio turnover rate		74	%^(E)(H)		76	%		6	%		33	%		30	%		52	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

Per share amounts for the year or period are calculated based on average outstanding shares.

^(C)

Impact of payment from affiliate was less then $0.01 per share and 0.01%, respectively.

^(D)

Total returns shown exclude the effect of applicable sales loads. If these charges were included, the returns would be lower.

^(E)

Not annualized.

^(F)

Ratio does not include income and expenses of the underlying funds.

^(G)

Annualized.

^(H)

Portfolio turnover excludes the purchase and sales of the Acquired Funds (see Note 7). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Balanced Allocation Fund—Class C

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.14		$	11.01		$	9.97		$	9.26		$	11.17		$	12.64
Income (loss) from investment operations:
Net investment income^(B)		0.09			0.09			0.10			0.15			0.22			0.11
Net realized and unrealized gains (losses) on investments		0.35			0.14			1.13			0.79			(1.44	)		(0.73	)^(C)
Total from investment operations		0.44			0.23			1.23			0.94			(1.22	)		(0.62	)
Distributions from:
Net investment income		(0.17	)		(0.10	)		(0.19	)		(0.23	)		(0.23	)		(0.23	)
Realized capital gains		(0.29	)		—			—			—			(0.46	)		(0.62	)
Total distributions		(0.46	)		(0.10	)		(0.19	)		(0.23	)		(0.69	)		(0.85	)
Net asset value at end of period	$	11.12		$	11.14		$	11.01		$	9.97		$	9.26		$	11.17
Total return^(D)		4.03	%^(E)		2.13	%		12.41	%		10.19	%		(10.00	%)		(5.34	%)^(C)
Ratios and supplemental data:
Net assets at end of period (000's)	$	38,226		$	38,388		$	50,108		$	59,480		$	77,330		$	120,085
Ratio to average net assets:
Net expenses^(F)		1.16	%^(G)		1.39	%		1.39	%		1.39	%		1.40	%		1.67.	%
Gross expenses^(F)		1.60	%^(G)		1.59	%		1.59	%		1.62	%		1.51	%		1.85	%
Net investment income^(F)		2.00	%^(G)		0.84	%		0.98	%		1.51	%		2.46	%		0.92	%
Portfolio turnover rate		74	%^(E)(H)		76	%		6	%		33	%		30	%		52	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

Per share amounts for the year or period are calculated based on average outstanding shares.

^(C)

Impact of payment from affiliate was less then $0.01 per share and 0.01%, respectively.

^(D)

Total returns shown exclude the effect of applicable sales loads. If these charges were included, the returns would be lower.

^(E)

Not annualized.

^(F)

Ratio does not include income and expenses of the underlying funds.

^(G)

Annualized.

^(H)

Portfolio turnover excludes the purchase and sales of the Acquired Funds (see Note 7). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Balanced Allocation Fund—Class Y

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.21		$	11.05		$	10.01		$	9.30		$	11.31		$	12.70
Income (loss) from investment operations:
Net investment income^(B)		0.14			0.20			0.23			0.24			0.31			0.23
Net realized and unrealized gains (losses) on investments		0.35			0.14			1.11			0.80			(1.46	)		(0.74	)^(C)
Total from investment operations		0.49			0.34			1.34			1.04			(1.15	)		(0.51	)
Distributions from:
Net investment income		(0.26	)		(0.18	)		(0.30	)		(0.33	)		(0.40	)		(0.26	)
Realized capital gains		(0.29	)		—			—			—			(0.46	)		(0.62	)
Total distributions		(0.55	)		(0.18	)		(0.30	)		(0.33	)		(0.86	)		(0.88	)
Net asset value at end of period	$	11.15		$	11.21		$	11.05		$	10.01		$	9.30		$	11.31
Total return		4.45	%^(D)		3.18	%		13.49	%		11.25	%		(9.00	%)		(4.40	%)^(C)
Ratios and supplemental data:
Net assets at end of period (000's)	$	47,092		$	1,287		$	1,866		$	929		$	672		$	732
Ratio to average net assets:
Net expenses^(E)		0.16	%^(F)		0.39	%		0.39	%		0.39	%		0.40	%		0.65	%
Gross expenses^(E)		0.52	%^(F)		1.40	%		1.41	%		2.28	%		1.41	%		5.13	%
Net investment income^(E)		3.00	%^(F)		1.84	%		2.11	%		2.46	%		3.53	%		1.91	%
Portfolio turnover rate		74	%^(D)(G)		76	%		6	%		33	%		30	%		52	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

Per share amounts for the year or period are calculated based on average outstanding shares.

^(C)

Impact of payment from affiliate was less then $0.01 per share and 0.01%, respectively.

^(D)

Not annualized.

^(E)

Ratio does not include income and expenses of the underlying funds.

^(F)

Annualized.

^(G)

Portfolio turnover excludes the purchase and sales of the Acquired Funds (see Note 7). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Balanced Allocation Fund—Institutional Class

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.16		$	11.00		$	9.97		$	9.26		$	11.28		$	12.71
Income (loss) from investment operations:
Net investment income^(B)		0.14			0.20			0.21			0.35			0.30			0.27
Net realized and unrealized gains (losses) on investments		0.35			0.14			1.12			0.69			(1.46	)		(0.78	)^(C)
Total from investment operations		0.49			0.34			1.33			1.04			(1.16	)		(0.51	)
Distributions from:
Net investment income		(0.26	)		(0.18	)		(0.30	)		(0.33	)		(0.40	)		(0.30	)
Realized capital gains		(0.29	)		—			—			—			(0.46	)		(0.62	)
Total distributions		(0.55	)		(0.18	)		(0.30	)		(0.33	)		(0.86	)		(0.92	)
Net asset value at end of period	$	11.10		$	11.16		$	11.00		$	9.97		$	9.26		$	11.28
Total return		4.47	%^(D)		3.19	%		13.44	%		11.29	%		(9.13	%)		(4.46	%)^(C)
Ratios and supplemental data:
Net assets at end of period (000's)	$	31		$	30		$	31		$	27		$	2,011		$	6,196
Ratio to average net assets:
Net expenses^(E)		0.16	%^(F)		0.39	%		0.39	%		0.39	%		0.40	%		0.85	%
Gross expenses^(E)		56.07	%^(F)		28.86	%		46.94	%		2.29	%		0.58	%		1.41	%
Net investment income^(E)		3.00	%^(F)		1.85	%		1.97	%		3.55	%		3.35	%		2.24	%
Portfolio turnover rate		74	%^(D)(G)		76	%		6	%		33	%		30	%		52	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

Per share amounts for the year or period are calculated based on average outstanding shares.

^(C)

Impact of payment from affiliate was less then $0.01 per share and 0.01%, respectively.

^(D)

Not annualized.

^(E)

Ratio does not include income and expenses of the underlying funds.

^(F)

Annualized.

^(G)

Portfolio turnover excludes the purchase and sales of the Acquired Funds (see Note 7). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Conservative Allocation Fund—Class A

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	10.98		$	10.87		$	10.38		$	9.84		$	10.76		$	11.30
Income (loss) from investment operations:
Net investment income^(B)		0.10			0.21			0.26			0.34			0.48			0.29
Net realized and unrealized gains (losses) on investments		0.17			0.13			0.64			0.66			(0.61	)		(0.25	)
Total from investment operations		0.27			0.34			0.90			1.00			(0.13	)		0.04
Distributions from:
Net investment income		(0.28	)		(0.23	)		(0.41	)		(0.46	)		(0.57	)		(0.31	)
Realized capital gains		(0.47	)		—			—			—			(0.22	)		(0.27	)
Total distributions		(0.75	)		(0.23	)		(0.41	)		(0.46	)		(0.79	)		(0.58	)
Net asset value at end of period	$	10.50		$	10.98		$	10.87		$	10.38		$	9.84		$	10.76
Total return^(C)		2.47	%^(D)		3.23	%		8.81	%		10.27	%		(0.49	%)		0.24	%
Ratios and supplemental data:
Net assets at end of period (000's)	$	32,965		$	8,466		$	11,138		$	12,141		$	13,632		$	15,858
Ratio to average net assets:
Net expenses^(E)		0.40	%^(F)		0.61	%		0.61	%		0.61	%		0.65	%		0.93	%
Gross expenses^(E)		0.85	%^(F)		1.02	%		0.91	%		0.94	%		0.86	%		1.31	%
Net investment income^(E)		2.28	%^(F)		1.95	%		2.43	%		3.36	%		5.09	%		2.62	%
Portfolio turnover rate		79	%^(D)(G)		89	%		13	%		33	%		40	%		49	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

Per share amounts for the year or period are calculated based on average outstanding shares.

^(C)

Total returns shown exclude the effect of applicable sales loads. If these charges were included, the returns would be lower.

^(D)

Not annualized.

^(E)

Ratio does not include income and expenses of the underlying funds.

^(F)

Annualized.

^(G)

Portfolio turnover excludes the purchase and sales of the Acquired Funds (see Note 7). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Conservative Allocation Fund—Class C

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	10.92		$	10.81		$	10.33		$	9.80		$	10.66		$	11.25
Income (loss) from investment operations:
Net investment income^(B)		0.07			0.13			0.18			0.27			0.39			0.21
Net realized and unrealized gains (losses) on investments		0.17			0.13			0.63			0.64			(0.58	)		(0.25	)
Total from investment operations		0.24			0.26			0.81			0.91			(0.19	)		(0.04	)
Distributions from:
Net investment income		(0.24	)		(0.15	)		(0.33	)		(0.38	)		(0.45	)		(0.28	)
Realized capital gains		(0.47	)		—			—			—			(0.22	)		(0.27	)
Total distributions		(0.71	)		(0.15	)		(0.33	)		(0.38	)		(0.67	)		(0.55	)
Net asset value at end of period	$	10.45		$	10.92		$	10.81		$	10.33		$	9.80		$	10.66
Total return^(C)		2.18	%^(D)		2.50	%		7.93	%		9.37	%		(1.20	%)		(0.47	%)
Ratios and supplemental data:
Net assets at end of period (000's)	$	17,972		$	17,104		$	20,000		$	23,985		$	31,465		$	34,242
Ratio to average net assets:
Net expenses^(E)		1.15	%^(F)		1.36	%		1.36	%		1.36	%		1.41	%		1.67	%
Gross expenses^(E)		1.67	%^(F)		1.70	%		1.61	%		1.65	%		1.54	%		1.95	%
Net investment income^(E)		1.53	%^(F)		1.20	%		1.72	%		2.61	%		4.23	%		1.86	%
Portfolio turnover rate		79	%^(D)(G)		89	%		13	%		33	%		40	%		49	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

Per share amounts for the year or period are calculated based on average outstanding shares.

^(C)

Total returns shown exclude the effect of applicable sales loads. If these charges were included, the returns would be lower.

^(D)

Not annualized.

^(E)

Ratio does not include income and expenses of the underlying funds.

^(F)

Annualized.

^(G)

Portfolio turnover excludes the purchase and sales of the Acquired Funds (see Note 7). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Conservative Allocation Fund—Class Y

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	10.99		$	10.87		$	10.39		$	9.85		$	10.78		$	11.30
Income (loss) from investment operations:
Net investment income^(B)		0.12			0.24			0.29			0.35			0.44			0.32
Net realized and unrealized gains (losses) on investments		0.16			0.14			0.62			0.67			(0.54	)		(0.25	)
Total from investment operations		0.28			0.38			0.91			1.02			(0.10	)		0.07
Distributions from:
Net investment income		(0.29	)		(0.26	)		(0.43	)		(0.48	)		(0.61	)		(0.32	)
Realized capital gains		(0.47	)		—			—			—			(0.22	)		(0.27	)
Total distributions		(0.76	)		(0.26	)		(0.43	)		(0.48	)		(0.83	)		(0.59	)
Net asset value at end of period	$	10.51		$	10.99		$	10.87		$	10.39		$	9.85		$	10.78
Total return		2.60	%^(C)		3.60	%		8.97	%		10.54	%		(0.17	%)		0.54	%
Ratios and supplemental data:
Net assets at end of period (000's)	$	33,329		$	2,156		$	1,370		$	1,129		$	234		$	640
Ratio to average net assets:
Net expenses^(D)		0.15	%^(E)		0.36	%		0.36	%		0.34	%		0.40	%		0.67	%
Gross expenses^(D)		0.57	%^(E)		1.38	%		1.65	%		1.65	%		7.77	%		4.34	%
Net investment income^(D)		2.53	%^(E)		2.20	%		2.72	%		3.40	%		4.56	%		2.86	%
Portfolio turnover rate		79	%^(C)(F)		89	%		13	%		33	%		40	%		49	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

Per share amounts for the year or period are calculated based on average outstanding shares.

^(C)

Not annualized.

^(D)

Ratio does not include income and expenses of the underlying funds.

^(E)

Annualized.

^(F)

Portfolio turnover excludes the purchase and sales of the Acquired Funds (see Note 7). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Conservative Allocation Fund—Institutional Class

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	10.99		$	10.89		$	10.40		$	9.86		$	10.79		$	11.32
Income (loss) from investment operations:
Net investment income^(B)		0.12			0.24			0.29			0.37			0.47			0.32
Net realized and unrealized gains (losses) on investments		0.16			0.12			0.63			0.65			(0.58	)		(0.26	)
Total from investment operations		0.28			0.36			0.92			1.02			(0.11	)		0.06
Distributions from:
Net investment income		(0.29	)		(0.26	)		(0.43	)		(0.48	)		(0.60	)		(0.32	)
Realized capital gains		(0.47	)		—			—			—			(0.22	)		(0.27	)
Total distributions		(0.76	)		(0.26	)		(0.43	)		(0.48	)		(0.82	)		(0.59	)
Net asset value at end of period	$	10.51		$	10.99		$	10.89		$	10.40		$	9.86		$	10.79
Total return		2.50	%^(C)		3.52	%		9.06	%		10.52	%		(0.19	%)		0.41	%
Ratios and supplemental data:
Net assets at end of period (000's)	$	1,198		$	1,342		$	6,459		$	6,158		$	6,017		$	6,816
Ratio to average net assets:
Net expenses^(D)		0.15	%^(E)		0.36	%		0.36	%		0.36	%		0.40	%		0.69	%
Gross expenses^(D)		1.93	%^(E)		0.66	%		0.63	%		0.56	%		1.43	%		1.05	%
Net investment income^(D)		2.53	%^(E)		2.20	%		2.70	%		3.62	%		4.85	%		2.87	%
Portfolio turnover rate		79	%^(C)(F)		89	%		13	%		33	%		40	%		49	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

Per share amounts for the year or period are calculated based on average outstanding shares.

^(C)

Not annualized.

^(D)

Ratio does not include income and expenses of the underlying funds.

^(E)

Annualized.

^(F)

Portfolio turnover excludes the purchase and sales of the Acquired Funds (see Note 7). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Growth Allocation Fund—Class A

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.28		$	11.40		$	9.58		$	8.66		$	12.33		$	14.82
Income (loss) from investment operations:
Net investment income^(B)		0.14			0.13			0.08			0.12			0.10			0.07
Net realized and unrealized gains (losses) on investments		0.67			(0.14	)		1.80			0.99			(3.12	)		(1.67	)^(C)
Total from investment operations		0.81			(0.01	)		1.88			1.11			(3.02	)		(1.60	)
Distributions from:
Net investment income		(0.34	)		(0.11	)		(0.06	)		(0.19	)		—			(0.20	)
Realized capital gains		—			—			—			—			(0.65	)		(0.69	)
Total distributions		(0.34	)		(0.11	)		(0.06	)		(0.19	)		(0.65	)		(0.89	)
Net asset value at end of period	$	11.75		$	11.28		$	11.40		$	9.58		$	8.66		$	12.33
Total return^(D)		7.29	%^(E)		(0.04	%)		19.65	%		12.78	%		(23.55	%)		(11.45	%)^(C)
Ratios and supplemental data:
Net assets at end of period (000's)	$	31,432		$	10,320		$	13,619		$	16,721		$	20,556		$	43,129
Ratio to average net assets:
Net expenses^(F)		0.39	%^(G)		0.57	%		0.57	%		0.57	%		0.56	%		0.91	%
Gross expenses^(F)		1.04	%^(G)		1.21	%		1.13	%		1.18	%		1.03	%		1.26	%
Net investment income^(F)		2.95	%^(G)		1.17	%		0.77	%		1.26	%		1.14	%		0.48	%
Portfolio turnover rate		65	%^(E)(H)		77	%		8	%		41	%		27	%		46	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

The net investment income per share is based on average shares outstanding for the period or year.

^(C)

Impact of payment from affiliate was less then $0.01 per share and 0.01%, respectively.

^(D)

Total returns shown exclude the effect of applicable sales loads. If these charges were included, the returns would be lower.

^(E)

Not annualized.

^(F)

Ratio does not include income and expenses of the underlying funds.

^(G)

Annualized.

^(H)

Portfolio turnover excludes the purchase and sales of the Acquired Funds (see Note 7). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Growth Allocation Fund—Class C

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	10.80		$	10.90		$	9.18		$	8.30		$	11.95		$	14.53
Income (loss) from investment operations:
Net investment income (loss)^(B)		0.10			0.04			—	^(C)		0.04			0.03			(0.04	)
Net realized and unrealized gains (losses) on investments		0.63			(0.12	)		1.72			0.96			(3.03	)		(1.61	)^(D)
Total from investment operations		0.73			(0.08	)		1.72			1.00			(3.00	)		(1.65	)
Distributions from:
Net investment income		(0.21	)		(0.02	)		—			(0.12	)		—			(0.24	)
Realized capital gains		—			—			—			—			(0.65	)		(0.69	)
Total distributions		(0.21	)		(0.02	)		—			(0.12	)		(0.65	)		(0.93	)
Net asset value at end of period	$	11.32		$	10.80		$	10.90		$	9.18		$	8.30		$	11.95
Total return^(E)		6.82	%^(F)		(0.75	%)		18.74	%		12.03	%		(24.16	%)		(12.08	%)^(D)
Ratios and supplemental data:
Net assets at end of period (000's)	$	24,065		$	23,968		$	33,477		$	36,655		$	48,126		$	83,127
Ratio to average net assets:
Net expenses^(G)		1.14	%^(H)		1.32	%		1.32	%		1.32	%		1.31	%		1.66	%
Gross expenses^(G)		1.81	%^(H)		1.87	%		1.75	%		1.84	%		1.75	%		2.01	%
Net investment income (loss)^(G)		2.20	%^(H)		0.42	%		0.02	%		0.47	%		0.42	%		(0.29	%)
Portfolio turnover rate		65	%^(F)(I)		77	%		8	%		41	%		27	%		46	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

The net investment income per share is based on average shares outstanding for the period or year.

^(C)

Less than $0.005 per share.

^(D)

Impact of payment from affiliate was less then $0.01 per share and 0.01%, respectively.

^(E)

Total returns shown exclude the effect of applicable sales loads. If these charges were included, the returns would be lower.

^(F)

Not annualized.

^(G)

Ratio does not include income and expenses of the underlying funds.

^(H)

Annualized.

^(I)

Portfolio turnover excludes the purchase and sales of the Acquired Funds (see Note 7). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Growth Allocation Fund—Class Y

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.43		$	11.57		$	9.72		$	8.77		$	12.45		$	14.91
Income (loss) from investment operations:
Net investment income^(B)		0.16			0.15			0.12			0.05			0.12			0.09
Net realized and unrealized gains (losses) on investments		0.67			(0.14	)		1.81			1.11			(3.15	)		(1.67	)^(C)
Total from investment operations		0.83			0.01			1.93			1.16			(3.03	)		(1.58	)
Distributions from:
Net investment income		(0.40	)		(0.15	)		(0.08	)		(0.21	)		—			(0.19	)
Realized capital gains		—			—			—			—			(0.65	)		(0.69	)
Total distributions		(0.40	)		(0.15	)		(0.08	)		(0.21	)		(0.65	)		(0.88	)
Net asset value at end of period	$	11.86		$	11.43		$	11.57		$	9.72		$	8.77		$	12.45
Total return		7.35	%^(D)		0.22	%		19.94	%		13.22	%		(23.40	%)		(11.25	%)^(C)
Ratios and supplemental data:
Net assets at end of period (000's)	$	27,873		$	881		$	3,561		$	2,322		$	667		$	750
Ratio to average net assets:
Net expenses^(E)		0.14	%^(F)		0.32	%		0.32	%		0.32	%		0.32	%		0.61	%
Gross expenses^(E)		0.65	%^(F)		1.62	%		1.13	%		1.33	%		3.50	%		5.47	%
Net investment income^(E)		3.20	%^(F)		1.42	%		1.11	%		0.56	%		1.46	%		0.68	%
Portfolio turnover rate		65	%^(D)(G)		77	%		8	%		41	%		27	%		46	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

The net investment income per share is based on average shares outstanding for the period or year.

^(C)

Impact of payment from affiliate was less then $0.01 per share and 0.01%, respectively.

^(D)

Not annualized.

^(E)

Ratio does not include income and expenses of the underlying funds.

^(F)

Annualized.

^(G)

Portfolio turnover excludes the purchase and sales of the Acquired Funds (see Note 7). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Growth Allocation Fund—Institutional Class

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	10.58		$	11.56		$	9.71		$	8.77		$	12.44		$	14.91
Income (loss) from investment operations:
Net investment income^(B)		0.14			0.15			0.11			0.32			0.12			0.09
Net realized and unrealized gains (losses) on investments		0.61			(0.25	)		1.83			0.83			(3.14	)		(1.68	)^(C)
Total from investment operations		0.75			(0.10	)		1.94			1.15			(3.02	)		(1.59	)
Distributions from:
Net investment income		(0.51	)		(0.88	)		(0.09	)		(0.21	)		—			(0.19	)
Realized capital gains		—			—			—			—			(0.65	)		(0.69	)
Total distributions		(0.51	)		(0.88	)		(0.09	)		(0.21	)		(0.65	)		(0.88	)
Net asset value at end of period	$	10.82		$	10.58		$	11.56		$	9.71		$	8.77		$	12.44
Total return		7.30	%^(D)		(0.26	%)		20.01	%		13.10	%		(23.34	%)		(11.32	%)^(C)
Ratios and supplemental data:
Net assets at end of period (000's)	$	29		$	13		$	788		$	674		$	17,845		$	24,509
Ratio to average net assets:
Net expenses^(E)		0.14	%^(F)		0.32	%		0.32	%		0.32	%		0.31	%		0.64	%
Gross expenses^(E)		94.73	%^(F)		7.68	%		2.29	%		0.67	%		0.50	%		0.84	%
Net investment income^(E)		3.20	%^(F)		1.42	%		0.96	%		3.37	%		1.39	%		0.67	%
Portfolio turnover rate		65	%^(D)(G)		77	%		8	%		41	%		27	%		46	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

The net investment income per share is based on average shares outstanding for the period or year.

^(C)

Impact of payment from affiliate was less then $0.01 per share and 0.01%, respectively.

^(D)

Not annualized.

^(E)

Ratio does not include income and expenses of the underlying funds.

^(F)

Annualized.

^(G)

Portfolio turnover excludes the purchase and sales of the Acquired Funds (see Note 7). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Moderate Growth Allocation Fund—Class A

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.13		$	11.11		$	9.66		$	8.87		$	11.91		$	13.76
Income (loss) from investment operations:
Net investment income^(B)		0.14			0.15			0.12			0.15			0.17			0.10
Net realized and unrealized gains (losses) on investments		0.51			0.02	^(C)		1.47			0.87			(2.37	)		(1.11	)^(D)
Total from investment operations		0.65			0.17			1.59			1.02			(2.20	)		(1.01	)
Distributions from:
Net investment income		(0.30	)		(0.15	)		(0.14	)		(0.23	)		(0.16	)		(0.15	)
Realized capital gains		(0.18	)		—			—			—			(0.68	)		(0.69	)
Total distributions		(0.48	)		(0.15	)		(0.14	)		(0.23	)		(0.84	)		(0.84	)
Net asset value at end of period	$	11.30		$	11.13		$	11.11		$	9.66		$	8.87		$	11.91
Total return^(E)		5.96	%^(F)		1.65	%		16.56	%		11.52	%^(D)		(17.27	%)		(7.86	%)^(D)
Ratios and supplemental data:
Net assets at end of period (000's)	$	71,235		$	15,181		$	18,848		$	22,740		$	25,782		$	52,854
Ratio to average net assets:
Net expenses^(G)		0.39	%^(H)		0.57	%		0.57	%		0.57	%		0.57	%		0.89	%
Gross expenses^(G)		0.90	%^(H)		1.03	%		1.01	%		1.08	%		0.99	%		1.26	%
Net investment income^(G)		2.90	%^(H)		1.38	%		1.17	%		1.53	%		2.00	%		0.74	%
Portfolio turnover rate		73	%^(F)(I)		77	%		9	%		38	%		32	%		43	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

The net investment income per share is based on average shares outstanding for the period or year.

^(C)

The amounts shown for a share outstanding throughout the period does not accord with the change in net realized and unrealized gains (losses) on investments for the period due to the timing of purchases and sales of fund shares in relation to fluctuating market values during the period.

^(D)

Impact of payment from affiliate was less then $0.01 per share and 0.01%, respectively.

^(E)

Total returns shown exclude the effect of applicable sales loads. If these charges were included, the returns would be lower.

^(F)

Not annualized.

^(G)

Ratio does not include income and expenses of the underlying funds.

^(H)

Annualized.

^(I)

Portfolio turnover excludes the purchase and sales of the Acquired Funds (see Note 7). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Moderate Growth Allocation Fund—Class C

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	10.89		$	10.86		$	9.44		$	8.67		$	11.63		$	13.59
Income (loss) from investment operations:
Net investment income^(B)		0.10			0.07			0.05			0.07			0.11			—	^(C)
Net realized and unrealized gains (losses) on investments		0.50			0.02	^(D)		1.43			0.86			(2.31	)		(1.08	)^(E)
Total from investment operations		0.60			0.09			1.48			0.93			(2.20	)		(1.08	)
Distributions from:
Net investment income		(0.18	)		(0.06	)		(0.06	)		(0.16	)		(0.08	)		(0.19	)
Realized capital gains		(0.18	)		—			—			—			(0.68	)		(0.69	)
Total distributions		(0.36	)		(0.06	)		(0.06	)		(0.16	)		(0.76	)		(0.88	)
Net asset value at end of period	$	11.13		$	10.89		$	10.86		$	9.44		$	8.67		$	11.63
Total return^(F)		5.52	%^(G)		0.89	%		15.70	%		10.71	%		(17.90	%)		(8.55	%)^(E)
Ratios and supplemental data:
Net assets at end of period (000's)	$	48,985		$	47,508		$	61,074		$	70,934		$	92,373		$	154,281
Ratio to average net assets:
Net expenses^(H)		1.14	%^(I)		1.32	%		1.32	%		1.32	%		1.32	%		1.63	%
Gross expenses^(H)		1.68	%^(I)		1.74	%		1.69	%		1.74	%		1.69	%		1.88	%
Net investment income (loss)^(H)		2.15	%^(I)		0.63	%		0.46	%		0.78	%		1.33	%		(0.02	%)
Portfolio turnover rate		73	%^(G)(J)		77	%		9	%		38	%		32	%		43	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

The net investment income per share is based on average shares outstanding for the period or year.

^(C)

Less than $0.005 per share.

^(D)

^(E)

Impact of payment from affiliate was less then $0.01 per share and 0.01%, respectively.

^(F)

Total returns shown exclude the effect of applicable sales loads. If these charges were included, the returns would be lower.

^(G)

Not annualized.

^(H)

Ratio does not include income and expenses of the underlying funds.

^(I)

Annualized.

^(J)

Portfolio turnover excludes the purchase and sales of the Acquired Funds (see Note 7). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Moderate Growth Allocation Fund—Class Y

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.24		$	11.23		$	9.75		$	8.95		$	12.02		$	13.84
Income (loss) from investment operations:
Net investment income^(B)		0.15			0.18			0.18			0.17			0.20			0.13
Net realized and unrealized gains (losses) on investments		0.52			0.01	^(C)		1.46			0.88			(2.40	)		(1.11	)^(D)
Total from investment operations		0.67			0.19			1.64			1.05			(2.20	)		(0.98	)
Distributions from:
Net investment income		(0.35	)		(0.18	)		(0.16	)		(0.25	)		(0.19	)		(0.15	)
Realized capital gains		(0.18	)		—			—			—			(0.68	)		(0.69	)
Total distributions		(0.53	)		(0.18	)		(0.16	)		(0.25	)		(0.87	)		(0.84	)
Net asset value at end of period	$	11.38		$	11.24		$	11.23		$	9.75		$	8.95		$	12.02
Total return		6.04	%^(E)		1.84	%		16.93	%		11.77	%^(D)		(17.07	%)		(7.64	%)^(D)
Ratios and supplemental data:
Net assets at end of period (000's)	$	43,585		$	763		$	1,289		$	635		$	508		$	600
Ratio to average net assets:
Net expenses^(F)		0.14	%^(G)		0.32	%		0.32	%		0.32	%		0.32	%		0.61	%
Gross expenses^(F)		0.54	%^(G)		1.89	%		1.65	%		2.59	%		2.64	%		4.40	%
Net investment income^(F)		3.15	%^(G)		1.63	%		1.63	%		1.72	%		2.34	%		0.97	%
Portfolio turnover rate		73	%^(E)(H)		77	%		9	%		38	%		32	%		43	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

The net investment income per share is based on average shares outstanding for the period or year.

^(C)

^(D)

Impact of payment from affiliate was less then $0.01 per share and 0.01%, respectively.

^(E)

Not annualized.

^(F)

Ratio does not include income and expenses of the underlying funds.

^(G)

Annualized.

^(H)

Portfolio turnover excludes the purchase and sales of the Acquired Funds (see Note 7). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

Financial Highlights (Continued)

Touchstone Moderate Growth Allocation Fund—Institutional Class

Selected Data for a Share Outstanding Throughout Each Period

	Five Months
	Ended
	December 31,			Year Ended July 31,
	2012^(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.18		$	11.16		$	9.75		$	8.95		$	12.01		$	13.82
Income (loss) from investment operations:
Net investment income^(B)		0.15			0.18			0.15			0.28			0.19			0.13
Net realized and unrealized gains (losses) on investments		0.52			0.02	^(C)		1.48			0.78			(2.38	)		(1.11	)^(D)
Total from investment operations		0.67			0.20			1.63			1.06			(2.19	)		(0.98	)
Distributions from:
Net investment income		(0.34	)		(0.18	)		(0.22	)		(0.26	)		(0.19	)		(0.14	)
Realized capital gains		(0.18	)		—			—			—			(0.68	)		(0.69	)
Total distributions		(0.52	)		(0.18	)		(0.22	)		(0.26	)		(0.87	)		(0.83	)
Net asset value at end of period	$	11.33		$	11.18		$	11.16		$	9.75		$	8.95		$	12.01
Total return		6.11	%^(E)		1.92	%		16.88	%		11.79	%^(D)		(16.99	%)		(7.59	%)^(D)
Ratios and supplemental data:
Net assets at end of period (000's)	$	9		$	8		$	8		$	7		$	7,948		$	8,836
Ratio to average net assets:
Net expenses^(F)		0.14	%^(G)		0.32	%		0.32	%		0.32	%		0.32	%		0.70	%
Gross expenses^(F)		230.25	%^(G)		111.34	%		183.59	%		0.99	%		0.61	%		0.99	%
Net investment income^(F)		3.15	%^(G)		1.63	%		1.43	%		2.99	%		2.21	%		0.98	%
Portfolio turnover rate		73	%^(E)(H)		77	%		9	%		38	%		32	%		43	%

^(A)

The Fund changed its fiscal year end from July 31 to December 31. See Note 7 in Notes to Financial Statements.

^(B)

The net investment income per share is based on average shares outstanding for the period or year.

^(C)

^(D)

Impact of payment from affiliate was less then $0.01 per share and 0.01%, respectively.

^(E)

Not annualized.

^(F)

Ratio does not include income and expenses of the underlying funds.

^(G)

Annualized.

^(H)

Portfolio turnover excludes the purchase and sales of the Acquired Funds (see Note 7). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

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Notes to Financial Statements

December 31, 2012

1. Organization

The Touchstone Strategic Trust (the “Trust”) is registered under the Investment Company Act of 1940, as amended, (the “1940 Act”) as an open-end management investment company. The Trust was established as a Massachusetts business trust under a Declaration of Trust dated November 18, 1982. The Trust consists of twenty two funds, including the following seven funds, individually, a “Fund”, and collectively, the “Funds”:

Touchstone Dynamic Equity Fund (“Dynamic Equity Fund”)

Touchstone Emerging Growth Fund (“Emerging Growth Fund”)

Touchstone International Equity Fund (“International Equity Fund”)

Touchstone Balanced Allocation Fund (“Balanced Allocation Fund”)

Touchstone Conservative Allocation Fund (“Conservative Allocation Fund”)

Touchstone Growth Allocation Fund (“Growth Allocation Fund”)

Touchstone Moderate Growth Allocation Fund (“Moderate Growth Allocation Fund”)

Each Fund is an open end, diversified management investment company. Additionally, the Balanced Allocation Fund, Conservative Allocation Fund, Growth Allocation Fund and Moderate Growth Allocation Fund (collectively, the “Allocation Funds”) are “Funds of Funds”, which seek to achieve their investment objective by primarily investing in a diversified portfolio of affiliated underlying equity and fixed income funds that are sub-advised by Ibbotson Associates, Inc. These underlying funds, in turn, invest in a variety of U.S. and foreign equity and fixed income securities. Under normal circumstances, the funds expect to invest their assets among equity and fixed income funds in the following ranges:

	Equity	Fixed Income
	Allocation Fund	Allocation Fund
Balanced Allocation Fund	50-70%	30-50%
Conservative Allocation Fund	20-40%	60-80%
Growth Allocation Fund	90-100%	0-10%
Moderate Growth Allocation Fund	70-90%	10-30%

The investment objective of each of the underlying funds that the Funds invest in is as follows:

Fund		Investment Objective

Touchstone Core Bond Fund		Seeks to provide as high level of current income as is consistent with the preservation of capital. Capital appreciation is a secondary objective.

Touchstone Dynamic Equity Fund		Seeks to obtain long-term capital appreciation from hedged equity investments with less risk than a fully invested, unhedged equity portfolio.

Touchstone Emerging Growth Fund		Seeks to provide investors with capital appreciation by investing in equity securities of emerging growth companies.

Touchstone Emerging Markets Equity Fund		Seeks capital appreciation by primarily investing in equity securities of companies in emerging markets.

Touchstone Focused Fund		Seeks capital appreciation by investing in equity securities of companies of any size.

Touchstone Focused Equity Fund		Seeks capital appreciation by investing in equity securities of companies of any size.

Touchstone Global Equity Fund		Seeks capital appreciation by primarily investing in U.S. and foreign equity securities, including those of emerging market countries.

Touchstone Global Real Estate Fund		Seeks capital appreciation by primarily investing in common stocks and other equity securities of U.S. and foreign real estate companies without regard to market capitalization.

Touchstone High Yield Fund		Seeks to achieve a high level of income by primarily investing in non-investment grade debt securities. Capital appreciation is a secondary consideration.

Touchstone Institutional Money Market Fund		Seeks high current income, consistent with the protection of capital. It primarily invests in U.S. Government securities and high quality money market instruments rated in one of the top short-term rating categories or determined to be of comparable quality.

Touchstone International Equity Fund		Seeks long-term capital appreciation by primarily investing in equity securities of non-U.S. issuers.

Notes to Financial Statements (Continued)

Fund		Investment Objective

Touchstone International Fixed Income Fund		Seeks total return by investing primarily in fixed income securities of issuers located outside the United States.

Touchstone International Small Cap Fund		Seeks capital appreciation by investing primarily in equity securities of non-U.S. small-cap companies, including companies located in countries with emerging markets.

Touchstone International Value Fund		Seeks long-term capital growth by investing primarily in equity securities of non-U.S. small-cap companies.

Touchstone Large Cap Growth Fund		Seeks long-term growth of capital and primarily invests in common stocks of large-capitalization U.S. companies.

Touchstone Large Cap Relative Value Fund		Seeks capital appreciation by investing in stocks of large capitalization companies.

Touchstone Merger Arbitrage Fund		Seeks to achieve positive absolute returns regardless of market conditions over the long-term. It primarily invests, under normal market conditions, in equity securities of U.S. and foreign issuers.

Touchstone Mid Cap Fund		Seeks long-term capital growth by investing primarily in common stocks of mid-cap U.S. listed companies.

Touchstone Mid Cap Growth Fund		Seeks to increase the value of Fund shares as a primary goal and to earn income as a secondary goal by investing in common stocks of mid-capitalization U.S. companies.

Touchstone Mid Cap Value Fund		Seeks capital appreciation by investing in common stocks of medium capitalization companies.

Touchstone Sands Capital Institutional Growth Fund		Seeks long-term capital appreciation by primarily investing in common stocks of U.S. companies believed to have above average potential for earnings or revenue growth.

Touchstone Short Duration Fixed Income Fund		Seeks maximum total return consistent with the preservation of capital by primarily investing at least 80% of its assets in fixed income securities.

Touchstone Small Cap Core Fund		Seeks capital appreciation by primarily investing in stocks of small capitalization U.S. companies.

Touchstone Small Cap Value Fund		Seeks long-term capital growth by primarily investing in small-capitalization companies have potential for growth and appear to be trading below their perceived value.

Touchstone Small Company Value Fund		Seeks long-term capital growth by investing primarily in stocks of small-cap companies.

Touchstone Strategic Income Fund		Seeks a high level of income consistent with reasonable risk by investing primarily in income producing securities.

Touchstone Total Return Bond Fund		Seeks to provide current income, by primarily investing in fixed-income securities. Capital appreciation is a secondary goal.

Touchstone Value Fund		Seeks long-term capital growth by primarily investing in U.S. equity securities of large- and mid-cap companies believed to be undervalued.

The Declaration of Trust permits the Trust to issue an unlimited number of shares of beneficial interest of each Fund. The Funds are registered to offer the following classes of shares: Class A shares, Class C shares, Class Y shares, and Institutional Class shares. The assets of each Fund are segregated, and a shareholder’s interest is limited to the Fund in which shares are held. The Funds’ prospectus provides a description of each Fund’s investment goals, policies, and strategies along with information on the classes of shares currently being offered.

Notes to Financial Statements (Continued)

2. Significant Accounting Policies

The following is a summary of the Funds’ significant accounting policies:

Security valuation and fair value measurements — All investments in securities are recorded at their estimated fair value. The Funds define the term “market value”, as used throughout this report, as the estimated fair value. The Funds use various methods to measure fair value of its portfolio securities on a recurring basis. Generally accepted accounting principles in the United States (“U.S. GAAP”) establish a hierarchy that prioritizes inputs to valuation methods. These inputs are summarized in the three broad levels listed below:

• Level 1 –

quoted prices in active markets for identical securities

• Level 2 –

other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

• Level 3 –

significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For example, money market instruments are valued using amortized cost, in accordance with rules under the 1940 Act. Generally, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as Level 2.

The aggregate value by input level, as of December 31, 2012, for each Fund’s investments, as well as a reconciliation of assets for which significant unobservable inputs (Level 3) were used in determining value, if applicable, is included in each Fund’s Portfolio of Investments, which also includes a breakdown of the Fund’s investments by sector concentration. There were no material Level 3 securities during the period.

All transfers in and out of the levels are recognized at the value at the end of the period. During the five months ended December 31, 2012, there were no transfers between Levels 1, 2 and 3 for all Funds except as shown in the Portfolios of Investments for the International Equity Fund.

The Funds’ portfolio securities are valued as of the close of the regular session of trading on the New York Stock Exchange (“NYSE”) (currently 4:00 p.m., Eastern time). Portfolio securities traded on stock exchanges are valued at the last sale price, and to the extent these securities are actively traded, they are categorized in Level 1 of the fair value hierarchy. Portfolio securities quoted by NASDAQ are valued at the NASDAQ Official Closing Price (“NOCP”). Securities not traded on a particular day, or for which the last sale price is not readily available, are valued at their last broker-quoted bid prices as obtained from one or more of the major market makers for such securities by an independent pricing service and are categorized in Level 2. Debt securities for which market quotations are readily available are valued at their most recent bid prices as obtained from one or more of the major market makers for such securities by an independent pricing service and are categorized in Level 2. Money market instruments and other debt securities with a remaining maturity of less than 60 days are valued at amortized cost, which approximates market value and are categorized in Level 2. While this method provides consistency in valuation (and may only be used if it approximates market value), it may result in periods during which value, as determined by amortized cost, is higher or lower than the price that would be received if the Fund sold the investment. Securities for which market quotations or the NOCP are not readily available are fair valued as determined by or under the direction of the Board of Trustees and are categorized in Level 3. Shares of open end mutual funds in which the Funds invest are valued at their respective net asset values as reported by the underlying funds and are categorized in Level 1. The prices for foreign securities are reported in local currency and translated into U.S. dollars using currency exchange rates.

Notes to Financial Statements (Continued)

Level 2 Valuation — 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 that may change the value of a security occurs after the time that the closing value on the non-U.S. exchange was determined, but before the close of regular trading on the NYSE, the security may be priced based on fair value. This may cause the value of the security on the books of the Funds to be significantly different from the closing value on the non-U.S. exchange and may affect the calculation of the net asset value (“NAV”) of a Fund. Any debt securities held by the Funds for which market quotations are not readily available are generally priced at their most recent bid prices as obtained from one or more of the major market makers for such securities.

Level 3 Valuation — Securities held by the Funds that do not have readily available market quotations, or securities for which the available market quotations are not reliable, are priced at their fair value using procedures approved by the Funds’ Board of Trustees. The Funds may use fair value pricing under the following circumstances, among others:

•

If the value of a security has been materially affected by events occurring before the Fund’s pricing time but after the close of the primary markets on which the security is traded.

•

If the exchange on which a portfolio security is principally traded closes early or if trading in a particular portfolio security was halted during the day and did not resume prior to the Fund’s NAV calculation.

•

If a security is so thinly traded that reliable market quotations are unavailable due to infrequent trading.

•

If the validity of market quotations is not reliable.

The Allocation Funds invest in securities of affiliated mutual funds (“underlying funds”). The value of an investment in the Allocation Funds is based on the performance of the underlying funds in which they invest and the allocation of their assets among those funds. Because the Allocation Funds invest in mutual funds, shareholders of the Allocation Funds indirectly bear a proportionate share of the expenses charged by the underlying funds in which they invest as well as their share of the Allocation Funds’ fees and expenses. The principal risks of an investment in the Allocation Funds include the principal risks of investing in the underlying funds. Investments in the underlying funds are valued at the NAV per share of each class of the underlying funds and are categorized as Level 1.

Certain Funds invest in securities of other investment companies, including exchange traded funds (“ETFs”), open-end funds and closed-end funds. Open-end funds are investment companies that issue new shares continuously and redeem shares daily. Closed-end funds are investment companies that typically issue a fixed number of shares that trade on a securities exchange or over-the-counter. An ETF is an investment company that seeks to track the performance of an index by holding in its portfolio shares of all the companies, or a representative sample of the companies, that are components of a particular index. ETFs are traded on a securities exchange based on their market value. The risks of investment in other investment companies typically reflect the risks of the types of securities in which investment companies invest. Investments in ETFs and closed-end funds are subject to the additional risk that shares of the fund may trade at a premium or discount to their NAV per share. When a Fund invests in another investment company, shareholders of the Fund indirectly bear their proportionate share of the other investment company’s fees and expenses, including operating, registration, trustee, licensing and marketing, as well as their share of the Fund’s fees and expenses.

New accounting pronouncements — In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ASU No. 2011-11,“Disclosures about Offsetting Assets and Liabilities”. ASU No.2011-11 requires disclosures to make financial statements that are prepared under U.S.GAAP more comparable to those prepared under the International Financial Reporting Standards (“IFRS”).The new disclosure requirements mandate that entities disclose both gross and net information about instruments and transactions eligible for offset in the statement of assets and liabilities, as well as instruments and transactions subject to an agreement similar to a master netting arrangement. In addition, ASU No.2011-11 requires disclosure of collateral

Notes to Financial Statements (Continued)

received and posted in connection with master netting agreements or similar arrangements. New disclosures are required for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. Management is evaluating the impact of ASU No.2011-11 on the financial statements and disclosures.

Cash and cash equivalents — The Funds consider liquid assets deposited with a bank, money market funds, and certain short term debt instruments with maturities of 3 months or less to be cash equivalents and are included in the investments on the financial statements. These investments represent amounts held with financial institutions that are readily accessible to pay Fund expenses or investments. Cash and cash equivalents are valued at cost plus accrued interest, which approximates market value. The value of cash equivalents denominated in foreign currencies is determined by converting to U.S. dollars on the date of the Statement of Assets and Liabilities.

Securities sold short — The Dynamic Equity Fund engages in selling securities short, which obligates the Fund to replace a security borrowed by purchasing the same security at the current market value. The Fund would incur a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. The Fund would realize a gain if the price of the security declines between those dates. As of December 31, 2012, the Fund held securities sold short with a fair value of $13,251,721 and had securities with a fair value of $65,603,039 held as collateral for the securities sold short.

Options — The Funds may write or purchase financial option contracts primarily to hedge against changes in the value of equity securities (or securities that the Funds intend to purchase), against fluctuations in fair value caused by changes in prevailing market interest rates or foreign currency exchange rates and against changes in overall equity market volatility. In addition, the Funds may utilize options in an attempt to generate gains from option premiums or to reduce overall portfolio risk. The Funds’ option strategy primarily focuses on the use of writing call options on equity indexes. When the Funds write or purchase an option, an amount equal to the premium received or paid by the Funds is recorded as a liability or an asset and is subsequently adjusted to the current market value of the option written or purchased. Premiums received or paid from writing or purchasing options which expire unexercised are treated by the Funds on the expiration date as realized gains or losses. The difference between the premium and the amount paid or received on effecting a closing purchase or sale transaction, including brokerage commissions, is also treated as a realized gain or loss. If an option is exercised, the premium paid or received is added to the cost of the purchase or proceeds from the sale in determining whether the Funds have realized a gain or loss on investment transactions. The Funds, as writers of an option, may have no control over whether the underlying securities may be sold (call) or purchased (put) and as a result bear the market risk of an unfavorable change in the price of the security underlying the written option. The Funds, as purchasers of an option, bear the risk that the counterparties to the option may not have the ability to meet the terms of the option contracts. There is minimal counterparty credit risk involved in entering into option contracts since they are exchanged-traded instruments and the exchange’s clearinghouse, as counterparty to all exchange-traded options, guarantees the options against default. Options are valued at the last quoted sales price. If there is no such reported sale on the valuation date, long option positions are valued at the most recent bid price, and short option positions are valued at the most recent ask price. As of December 31, 2012, the Dynamic Equity Fund held written options with a fair value of $1,774,980 and had securities with a fair value of $1,779,230 held as collateral for options written. Additionally, as of December 31, 2012, the Dynamic Equity Fund also had cash collateral in the amount of $159,152 for both securities sold short and options written.

Foreign currency translation — The books and records of the Funds are maintained in U.S. dollars and translated into U.S. dollars on the following basis:

Notes to Financial Statements (Continued)

(1)

market value of investment securities, assets and liabilities at the current rate of exchange on the valuation date; and

(2)

purchases and sales of investment securities, income and expenses at the relevant rates of exchange prevailing on the respective dates of such transactions.

The Funds do not isolate that portion of gains and losses on investments in equity securities that is due to changes in the foreign exchange rates from that which is due to changes in market prices of equity securities.

Derivative instruments and hedging activities — The following table sets forth the fair value of the Funds’ derivative financial instruments by primary risk exposure as of December 31, 2012:

	Fair Value of Derivative Investments As of December 31, 2012
		Asset		Liability
		Derivatives		Derivatives*
	Derivatives not accounted for as hedging	Unrealized		Unrealized
Fund	instruments under ASC 815	Appreciation		Depreciation
Dynamic Equity Fund	Options - Equity Contracts	$	24,867	$	—

* Statements of Assets and Liabilities Location: Written option contract, at value

For the five months ended December 31, 2012, the average balances of outstanding derivative financial instruments were as follows:

	Dynamic
	Equity
	Fund
Equity contracts:
Options - Average number of contracts (quarterly)		1,380

	The Effect of Derivative Investments on the Statement of Operations
	for the Five Months Ended December 31, 2012
					Change in
					Unrealized
	Derivatives not accounted for as hedging	Realized Loss			Appreciation
Fund	instruments under ASC 815	on Derivatives*				on Derivatives**
Dynamic Equity Fund	Options - Equity Contacts	$	(1,102,848	)	$	143,584

* Statements of Operations Location: Net realized gain from written options

** Statements of Operations Location: Net change in unrealized appreciation (depreciation) on written options

For the year ended July 31, 2012, the average balances of outstanding derivative financial instruments were as follows:

The Effect of Derivative Investments on the Statement of Operations
for the Year Ended July 31, 2012
				Change in
				Unrealized
	Derivatives not accounted for as hedging	Realized Gain		Depreciation
Fund	instruments under ASC 815	on Derivatives*			on Derivatives**
Dynamic Equity Fund	Options - Equity Contacts	$	2,823,456	$	(350,810	)
	Warrants - Equity Contacts		638		—

* Statements of Operations Location: Net realized gain from written options and net realized gains from warrants

** Statements of Operations Location: Net change in unrealized appreciation (depreciation) on written options

Notes to Financial Statements (Continued)

Portfolio securities loaned — Each Fund may lend its portfolio securities. Lending portfolio securities exposes a Fund to the risk that the borrower may fail to return the loaned securities or may not be able to provide additional collateral or that the Fund may experience delays in recovery of the loaned securities or loss of rights in the collateral if the borrower fails financially. To minimize these risks, the borrower must agree to maintain cash collateral with the Funds’ custodian in an amount at least equal to the market value of the loaned securities. The loaned securities are secured by collateral valued at least equal, at all times, to the market value of the securities loaned plus accrued interest, if any. When the collateral falls below specified amounts the lending agent will use its best effort to obtain additional collateral on the next business day to meet required amounts under the security lending agreement. The cash collateral is reinvested by the Funds’ custodian into an approved investment vehicle.

As of December 31, 2012, the following Funds loaned securities and received collateral as follows:

	Market Value of		Market Value of
	Securities		Collateral
Fund	Loaned		Received
Emerging Growth Fund	$	602,579	$	605,474

All collateral received as cash is received, held and administered by the Funds’ custodian for the benefit of the Funds in the applicable custody account or other account established for the purpose of holding collateral.

Funds participating in securities lending receive compensation in the form of fees, or retain a portion of interest or dividends on the investment of any cash received as collateral. The Funds also continue to receive interest or dividends on the securities loaned.

Unrealized gain or loss on the market value of the securities loaned that may occur during the term of the loan is recognized by the Funds. The Funds have the right under the lending agreement to recover the securities from the borrower on demand.

Share valuation — The NAV per share of each class of shares of each Fund is calculated daily by dividing the total value of a Fund’s assets attributable to that class, less liabilities attributable to that class, by the number of outstanding shares of that class.

The maximum offering price per share of Class A shares of the Funds is equal to the NAV per share plus a sales load equal to 6.10% of the NAV (or 5.75% of the offering price). There is no sales load on purchases of $1 million or more of Class A shares. The maximum offering price per share of Class C, Class Y, and Institutional Class shares of the Funds is equal to the NAV per share.

The redemption price per share of each class of shares of the Funds is generally equal to the NAV per share. However, Class A redemptions that were part of no load $1 million subscriptions may be subject to a contingent deferred sales charge (“CDSC”) of up to 1%. Additionally, purchases of Class C shares of the Funds are subject to a CDSC of 1.00% of the original purchase price if redeemed within a one-year period from the date of purchase.

Investment income — Dividend income from securities is recognized on the ex-dividend date, net of foreign withholding taxes, if any, which are reduced by any amounts reclaimable by the Funds, where applicable. Interest income from securities is recorded on the basis of interest accrued, premium amortized and discount accreted.

Distributions to shareholders — Each Fund intends to distribute to its shareholders substantially all of its income and capital gains. The Touchstone Dynamic Equity Fund, Touchtone Emerging Growth Fund and Touchstone International Equity Fund distribute their income, if any, annually to shareholders. The Touchstone Conservative Allocation Fund, Touchstone Balanced Allocation Fund, Touchstone Moderate Growth Allocation Fund, and Touchstone Growth Allocation Fund distribute their income, if any, quarterly. Each Fund makes distributions of capital gains, if any, at least annually, net of applicable capital loss carryforwards. Income distributions

Notes to Financial Statements (Continued)

and capital gain distributions are determined in accordance with income tax regulations. Recognition of the funds net investment income that invests in underlying funds is affected by the timing of dividend declarations by investee funds. Effective August 16, 2012, the Growth Allocation Fund and the Moderate Growth Allocation Fund adopted to distribute net investment income, if any, quarterly.

Allocations — Investment income earned, realized capital gains and losses, and unrealized appreciation and depreciation for a Fund are allocated daily to each class of shares based upon its proportionate share of total net assets of the Fund. Class specific expenses are charged directly to the class incurring the expense. Common expenses, which are not attributable to a specific class, are allocated daily to each class of shares based upon their proportionate share of total net assets of the Fund. Expenses not directly billed to a Fund are allocated proportionally among all Funds daily in relation to net assets of each Fund or another reasonable measure.

Security transactions — Security transactions are reflected for financial reporting purposes as of the trade date, which may cause the NAV as stated in the accompanying financial statements to be different than the NAV applied to Fund share transactions. Realized gains and losses on sales of portfolio securities are calculated using the identified cost basis.

Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

Redemption Fees — Prior to April 16, 2012, the Funds imposed a 2% redemption/exchange fee on total redemption proceeds (after applicable deferred sales charges) of any shareholder redeeming shares (including redemptions by exchange) of the Funds within 10 calendar days of their purchase. The Funds charged the redemption/exchange fee to discourage market timing by those shareholders initiating redemptions or exchanges to take advantage of short-term market movements. The redemption fee was imposed to the extent that the number of Fund shares redeemed exceeded the number of the Fund shares that had been held for more than 10 calendar days. In determining how long shares of the Fund had been held, shares held by the shareholder for the longest period of time were sold first. The redemption Fees can be found on the Statement of Changes in Net Assets. Effective April 16, 2012, the redemption fee plan was terminated.

3. Investment Transactions

Investment transactions (excluding short-term investments and US. Government securities) were as follows for the five months ended December 31, 2012:

	Dynamic		Emerging
	Equity		Growth		International
	Fund		Fund		Equity Fund
Purchases of investment securities	$	86,832,779	$	11,004,513	$	9,590,063
Proceeds from sales and maturities	$	82,839,295	$	19,162,326	$	8,984,937

							Moderate
	Balanced		Conservative		Growth		Growth
	Allocation		Allocation		Allocation		Allocation
	Fund		Fund		Fund		Fund
Purchases of investment securities*	$	89,504,810	$	55,586,944	$	45,170,732	$	102,694,269
Proceeds from sales and maturities	$	100,716,282	$	62,348,492	$	51,362,472	$	112,203,453

* The cost of purchases excludes $110,262,435, $62,169,461, $50,055,561 and $107,226,200 on Balanced Allocation Fund, Conservative Allocation Fund, Growth Allocation Fund and Moderate Growth Allocation Fund, respectively, from securities received from Acquired Funds (as defined in Note 7). See Note 7 in the Notes to Financial Statements.

Notes to Financial Statements (Continued)

There were no purchases or sales of U.S. Government securities for the Funds for the five months ended December 31, 2012.

4. Transactions with Affiliates and Other Related Parties

Certain officers of Trust are also officers of Touchstone Advisors, Inc. (the “Advisor”), the Touchstone Securities, Inc. (the “Underwriter”) and/or BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”), the Sub-Administrator and Transfer Agent to the Funds. The Advisor and Underwriter are each wholly owned, indirect subsidiaries of The Western and Southern Life Insurance Company (“Western-Southern”).

MANAGEMENT & EXPENSE LIMITATIONS AGREEMENTS

The Advisor provides general investment supervisory services for the Funds, under terms of an (“Advisory Agreement”). Under the Advisory Agreement, the Funds pay the Advisor a fee, which is computed and accrued daily and paid monthly, at an annual rate based on average daily net assets as shown in the table below.

Touchstone Dynamic Equity Fund		0.85% on the first $300 million of assets
		0.80% on the next $200 million of assets
		0.75% on the next $250 million of assets
		0.70% on the next $250 million of assets
		0.65% on the next $500 million of assets
		0.60% on the next $500 million of assets
		0.55% on such assets in excess of $2 billion
Touchstone Emerging Growth Fund		0.90%
Touchstone International Equity Fund		0.90% on the first $300 million of assets
		0.85% on the next $200 million of assets
		0.80% of such assets in excess of $500 million
Touchstone Balanced Allocation Fund		0.20% on the first $1 billion of assets
		0.175% on the next $1 billion of assets
		0.150% on the next $1 billion of assets
		0.125% of such assets in excess of $3 billion
Touchstone Conservative Allocation Fund		0.20% on the first $1 billion of assets
		0.175% on the next $1 billion of assets
		0.150% on the next $1 billion of assets
		0.125% of such assets in excess of $3 billion
Touchstone Growth Allocation Fund		0.25% on the first $1 billion of assets
		0.225% on the next $1 billion of assets
		0.20% on the next $1 billion of assets
		0.175% of such assets in excess of $3 billion
Touchstone Moderate Growth Allocation Fund		0.25% on the first $1 billion of assets
		0.225% on the next $1 billion of assets
		0.20% on the next $1 billion of assets
		0.175% of such assets in excess of $3 billion

Prior to April 16, 2012, Old Mutual Capital, Inc. (the “Former Advisor”) served as the adviser and administrator to the Funds. For its services, the Funds paid the Former Adviser the same fees listed above with the exception of the following:

Touchstone Dynamic Equity Fund		0.85%
Touchstone International Equity Fund		1.00% on the first $1 billion of assets
		0.975% on the next $1 billion of assets
		0.950% on the next $1 billion of assets
		0.925% of such assets in excess of $3 billion

Notes to Financial Statements (Continued)

The Advisor has entered into investment sub-advisory agreements with the following parties (each a “Sub-Advisor”):

Acadian Asset Management LLC	Ibbotson Associates, Inc
International Equity Fund	Balanced Allocation Fund
	Conservative Allocation Fund
Analytic Investors, LLC	Growth Allocation Fund
Dynamic Equity Fund	Moderate Growth Allocation Fund

Copper Rock Capital Partners LLC
Emerging Growth Fund

The Advisor, not the Funds, pays sub-advisory fees to each Sub-Advisor.

Prior to April 16, 2012, the Former Advisor had sub-advisory agreements with the above listed Sub-Advisors. The Former Advisor, not the Funds, paid sub-advisory fees to each Sub-Advisor.

Effective April 16, 2012, the Advisor entered into an Expense Limitation Agreement (“Expense Limitation Agreement”) to contractually limit operating expenses of the Funds, excluding dividend expenses on short sales, interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with generally accepted accounting principles, the cost of “Acquired Fund Fees and Expenses”, if any and other extraordinary expenses not incurred in the ordinary course of business. The maximum operating expense limit in any year with respect to the Funds is based on a percentage of the average daily net assets of the Funds. The Advisor has agreed to separately waive class level expenses, administration fees and reimburse expenses in order to maintain expense limitations for the Funds as follows:

										Institutional
Fund	Class A			Class C			Class Y			Class
Dynamic Equity Fund		1.55	%		2.30	%		1.30	%		1.25	%
Emerging Growth Fund		1.39	%		2.14	%		1.14	%		0.99	%
International Equity Fund		1.39	%		2.14	%		1.14	%		0.99	%
Balanced Allocation Fund		0.64	%		1.39	%		0.39	%		0.39	%
Conservative Allocation Fund		0.61	%		1.36	%		0.36	%		0.36	%
Growth Allocation Fund		0.57	%		1.32	%		0.32	%		0.32	%
Moderate Growth Allocation Fund		0.57	%		1.32	%		0.32	%		0.32	%

The expense limitations in the Expense Limitation Agreement were to remain in effect until at least April 16, 2014.

Effective September 10, 2012, the Advisor amended the Expense Limitation Agreement. In accordance with the Expense Limitation Agreement, the Advisor agreed to contractually limit operating expenses of the Funds, excluding dividend expenses on short sales, interest, taxes, brokerage commissions, other expenditures which are capitalized in accordance with generally accepted accounting principles, the cost of “Acquired Fund Fees and Expenses”, if any and other extraordinary expenses not incurred in the ordinary course of business. The maximum operating expense limit in any year with respect to the Funds is based on a percentage of the average daily net assets of the Funds. The Advisor has agreed to separately waive class level expenses, administration fees and reimburse expenses in order to maintain expense limitations for the Funds as follows:

										Institutional
Fund	Class A			Class C			Class Y			Class
Dynamic Equity Fund		1.55	%		2.30	%		1.30	%		1.25	%
Emerging Growth Fund		1.39	%		2.14	%		1.14	%		0.99	%
International Equity Fund		1.39	%		2.14	%		1.14	%		0.99	%

Notes to Financial Statements (Continued)

										Institutional
Fund	Class A			Class C			Class Y			Class
Balanced Allocation Fund		0.33	%*		1.08	%*		0.08	%*		0.08	%*
Balanced Allocation Fund		0.41	%**		1.16	%**		0.16	%**		0.16	%**
Conservative Allocation Fund		0.33	%*		1.08	%*		0.08	%*		0.08	%*
Conservative Allocation Fund		0.41	%**		1.16	%**		0.16	%**		0.16	%**
Growth Allocation Fund		0.33	%*		1.08	%*		0.08	%*		0.08	%*
Growth Allocation Fund		0.41	%**		1.16	%**		0.16	%**		0.16	%**
Moderate Growth Allocation Fund		0.33	%*		1.08	%*		0.08	%*		0.08	%*
Moderate Growth Allocation Fund		0.41	%**		1.16	%**		0.16	%**		0.16	%**

* The expense limitation will remain in effect until at least September 10, 2013.

** The expense limitation will remain in effect until at least April 16, 2014.

Where multiple caps are in effect, the lower of the two amounts will apply.

For Dynamic Equity, Emerging Growth and International Equity Funds these expense limitations will remain in effect until at least April 16, 2014.

Prior to April 16, 2012, the Former Advisor was also contractually obligated to maintain the expense limitations as listed above with the exception of the following:

								Institutional
Fund	Class A			Class C*	Class Z**			Class
Emerging Growth Fund		1.67	%	N/A		1.42	%		1.22	%
International Equity Fund		1.52	%	N/A		1.27	%		1.02	%

Prior to April 16, 2012, the Emerging Growth Fund and the International Equity Fund did not issue Class C Shares.

Funds had Class Z shares outstanding immediately prior to the reorganization, which were exchanged for Class Y Shares of the corresponding Touchstone Fund.

During the five months ended December 31, 2012, the Advisor waived investment advisory fees and administration fees and/or reimbursed expenses of the Funds as follows:

					Other
	Investment				Operating
	Advisory		Administration		Expenses
	Fees Waived		Fees Waived		Reimbursed
Dynamic Equity Fund	$	—	$	—	$	37,575
Emerging Growth Fund		21,239		16,303		34,021
International Equity Fund		58,461		15,316		31,554
Balanced Allocation Fund		51,770		95,684		75,295
Conservative Allocation Fund		38,330		55,804		56,841
Growth Allocation Fund		63,547		54,207		77,402
Moderate Growth Allocation Fund		103,088		110,407		96,994

At December 31, 2012, the Advisor may seek recoupment of previously waived and reimbursed fees as follows:

	Expiration		Expiration
	July 31,		December
Fund	2015		31, 2015
Dynamic Equity Fund	$	-	$	10,969
Emerging Growth Fund		45,846		68,508
International Equity Fund		68,877		104,529
Balanced Allocation Fund		18,241		172,469
Conservative Allocation Fund		24,108		115,995
Growth Allocation Fund		32,481		138,241
Moderate Growth Allocation Fund		31,679		231,358

Notes to Financial Statements (Continued)

During the period April 16, 2012 through July 31, 2012, the Advisor waived investment advisory fees and administration fees and/or reimbursed expenses of the Funds as follows:

	Investment				Other
	Advisory		Administration		Operating
	Fees		Fees		Expenses
Fund	Waived		Waived		Reimbursed
Emerging Growth Fund	$	16,287	$	15,230	$	15,669
International Equity Fund		19,493		10,415		39,208
Balanced Allocation Fund		—		17,060		5,486
Conservative Allocation Fund		3,550		17,834		7,296
Growth Allocation Fund		11,431		19,834		11,921
Moderate Growth Allocation Fund		—		30,284		18,599

For the period August 1, 2011 through April 15, 2012, the Former Advisor earned and waived investment advisory fees of the funds, which are included in the Investment Advisory and Administration Fees and fees waived and/or reimbursed by the Advisor and/or Affiliated on the Statement of Operations, as follows:

					Former
					Investment
	Former		Former		Advisory
	Investment		Investment		and
	Advisory		Administration		Administration
Fund	Fees Accrued		Fees Accrued		Fees Waived
Dynamic Equity Fund	$	380,016	$	44,708	$	101,748
Emerging Growth Fund		276,216		30,691		42,067
International Equity Fund		194,928		19,493		191,763
Balanced Allocation Fund		82,483		41,241		149,401
Conservative Allocation Fund		48,102		24,051		101,652
Growth Allocation Fund		73,661		29,464		206,251
Moderate Growth Allocation Fund		126,357		50,543		270,882

Under the terms of the Expense Limitations Agreement the Advisor is entitled to recover, subject to approval by the Funds’ Board of Trustees, such amounts waived or reimbursed for a period of up to three years from the year in which the Advisor reduced its compensation and/or assumed expenses for a Fund. No recoupment will occur unless the Fund’s operating expenses are below the expense limitation amount.

The Advisor did not recoup any amounts it previously waived or reimbursed for the period April 16, 2012 through December 31, 2012. For the period August 1, 2011 through April 15, 2012, the Former Advisor did not recover waived and reimbursed fees on the Funds.

ADMINISTRATION AGREEMENT

The Advisor entered into an Administration and Accounting Services Agreement with the Trust, whereby the Advisor is responsible for: supplying executive and regulatory compliance services; supervising the preparation of tax returns; coordinating the preparation of reports to shareholders and reports to, and filings with, the Securities and Exchange Commission and state securities authorities, as well as materials for meetings of the Board of Trustees; calculating the daily NAV per share; and maintaining the financial books and records of each Fund. For its services, the Advisor receives an annual fee of 0.20% of the aggregate average daily net assets of the Trust, Touchstone Investment Trust (excluding Institutional Money Market Fund), Touchstone Funds Group Trust, and Touchstone Tax-Free Trust up to and including $6 billion; 0.16% of the next $4 billion of aggregate average daily net assets; and 0.12% of the aggregate average daily net assets of all such assets in excess of $10 billion. The fee is allocated among the Funds on the basis of relative daily net assets.

100

Notes to Financial Statements (Continued)

The Advisor has engaged BNY Mellon as the Sub-Administrator to the Trust. BNY Mellon provides administrator and accounting services to the Trust and is compensated directly by the Advisor, not the Trust.

TRANSFER AGENT AGREEMENT

Under the terms of the Transfer Agent Agreement between the Trust and BNY Mellon, BNY Mellon maintains the records of each shareholder’s account, answers shareholders’ inquiries concerning their accounts, processes purchases and redemptions of each Fund’s shares, acts as dividend and distribution disbursing agent and performs other shareholder service functions. For these services, BNY Mellon receives a monthly fee per shareholder account from each Fund. In addition, each Fund pays out-of-pocket expenses incurred by BNY Mellon, including, but not limited to, postage and supplies.

PLANS OF DISTRIBUTION

Effective April 16, 2012, the Trust has adopted distribution plans pursuant to Rule 12b-1 under the 1940 Act for each class of shares it offers that are subject to 12b-1 distribution fees. The plans allow each Fund to pay distribution and other fees for the sale and distribution of its shares and for services provided to shareholders. Under the Class A plan, each Fund offering Class A shares pays an annual fee of up to 0.25% of average daily net assets that are attributable to Class A shares. Under the Class C plan, each Fund pays an annual fee of up to 1.00% of average daily net assets that are attributable to Class C shares (of which up to 0.75% is a distribution fee and up to 0.25% is a shareholder servicing fee).

For the period ended April 16, 2012 through July 31, 2012, the Funds accrued the following distributions for Class A and distributions and shareholder servicing for Class C, respectively.

			Distribution
			and
			Shareholder
	Distribution		Servicing
	Expenses		Expenses
Fund	Class A		Class C
Dynamic Equity Fund	$	13,401	$	34,236
Emerging Growth Fund		1,517		7
International Equity Fund		180		7
Balanced Allocation Fund		7,425		116,647
Conservative Allocation Fund		6,229		50,701
Growth Allocation Fund		7,838		72,204
Moderate Growth Allocation Fund		11,213		141,456

Prior to April 16, 2012, the Fund’s had a Plan of Distribution (“Former Class A Plan”) under which Class A shares of each Fund could directly incur or reimburse the former Advisor or the Underwriter for expenses related to the distribution and promotion of shares. The annual limitation for payment of such expenses under the Former Class A Plan was 0.25% of average daily net assets attributable to such shares. Prior to April 16, 2012, the Trust also had a Plan of Distribution (“Former Class C Plan”) under which Class C shares for all Funds except Emerging Growth and International Equity Funds could directly incur or reimburse the Advisor or the Underwriter for expenses related to the distribution and promotion of shares. The annual limitation for payment of such expenses under the Former Class C Plan was 0.75% of average daily net assets attributable to such shares. For the period August 1, 2011 through April 15, 2012, the Funds paid expenses under the Former Class A and Class C Plans, which is included in the Distribution expenses, Class A and Distributions and Shareholder servicing expenses Class C, respectively on the Statements of Operations as follows:

101

Notes to Financial Statements (Continued)

			Distribution
			and
			Shareholder
	Distribution		Servicing
	Expenses		Expenses
Fund	Class A		Class C
Dynamic Equity Fund	$	36,418	$	91,542
Emerging Growth Fund		4,638		—
International Equity Fund		452		—
Balanced Allocation Fund		19,904		320,749
Conservative Allocation Fund		12,584		132,901
Growth Allocation Fund		20,872		198,159
Moderate Growth Allocation Fund		29,758		378,637

UNDERWRITING AGREEMENT

The Underwriter is the Funds’ principal underwriter and, as such, acts as exclusive agent for distribution of the Funds’ shares.

Under the terms of the Underwriting Agreement between the Trust and Underwriter, the Underwriter earned the following from underwriting and broker commissions on the sale of shares of the following Funds during the five months ended December 31, 2012:

Fund	Amount
Dynamic Equity Fund	$	27,356
Emerging Growth Fund		589
International Equity Fund		1,391
Balanced Allocation Fund		10,911
Conservative Allocation Fund		6,325
Growth Allocation Fund		10,798
Moderate Growth Allocation Fund		18,782

In addition, the Underwriter collected contingent deferred sales charges on the redemption of Class C shares of the following Funds during the five months ended December 31, 2012:

Fund	Amount
Dynamic Equity Fund	$	398
Balanced Allocation Fund		90
Conservative Allocation Fund		12
Growth Allocation Fund		580
Moderate Growth Allocation Fund		112

The Underwriter earned the following from underwriting and broker commissions on the sale of shares of the following Funds during the year ended July 31, 2012:

Fund	Amount
Dynamic Equity Fund	$	9,841
Emerging Growth Fund		1,960
International Equity Fund		271
Balanced Allocation Fund		3,522
Conservative Allocation Fund		80
Growth Allocation Fund		3,918
Moderate Growth Allocation Fund		8,077

102

Notes to Financial Statements (Continued)

The Underwriter collected contingent deferred sales charges on the redemption of Class C shares of the following Funds during the year ended July 31, 2012:

Fund	Amount
Dynamic Equity Fund	$	3
Balanced Allocation Fund		408
Conservative Allocation Fund		228
Growth Allocation Fund		348
Moderate Growth Allocation Fund		556

AFFILIATED INVESTMENTS

Each Fund may invest in the Touchstone Institutional Money Market Fund, subject to compliance with several conditions set forth in an exemptive order received by the Trust from the Securities and Exchange Commission. To the extent that the other Touchstone Funds are invested in the Touchstone Institutional Money Market Fund, the Advisor and Administrator will be paid additional fees from the Touchstone Institutional Money Market Fund that will not be waived or reimbursed.

A summary of each Fund’s investment, as applicable, in the Touchstone Institutional Money Market Fund for the five months ended December 31, 2012, is as follows:

	Share Activity
	Balance							Balance				Value
Fund	07/31/12		Purchases		Sales			12/31/12		Dividends		12/31/12
Dynamic Equity Fund		645,981		27,511,693		(25,172,125	)		2,985,549	$	1,322	$	2,985,549
Emerging Growth Fund		247,376		5,235,173		(5,464,867	)		17,682		122		17,682
International Equity Fund		228,830		5,823,097		(6,051,925	)		2		153		2

A summary of each Allocation Fund’s transactions in affiliated underlying funds during the five months ended December 31, 2012 is as follows:

Balanced Allocation Fund
		Purchases at		Proceeds		Value at		Dividend		Net Realized
Underlying Fund		cost		from sale		12/31/12		Income		Gain/Loss
Ttouchstone Core Bond Fund	$	69,593,448	$	30,230,776	$	6,177,880	$	85,116	$	(470,085	)
Touchstone Short Duration Fixed Income Fund, Class Y		11,991,501		1,092,188		14,991,535		88,570		69
Touchstone Total Return Bond Fund		11,121,264		1,471,854		16,189,261		169,267		19,210
Touchstone International Equity Fund		2,188,844		901,300		6,302,967		144,540		29,847
Touchstone International Small Cap Fund		4,501,378		461,035		4,700,450		76,393		(18,352	)
Touchstone International Value Fund		12,423,385		1,008,399		11,030,219		353,286		(62,869	)
Touchstone Focused Fund		5,446,947		3,444,489		3,142,016		24,512		266,538
Touchstone Value Fund		40,657,469		12,746,367		13,987,910		128,232		1,442,475
Touchstone Sands Capital Institutional Growth		7,348,960		698,760		9,347,300		4,177		326,871
Touchstone International Fixed Income Fund		5,308,140		552,829		7,713,033		35,151		26,907
Touchstone Strategic Income Fund		7,322,214		499,455		6,982,686		133,152		(2,108	)

103

Notes to Financial Statements (Continued)

Balanced Allocation Fund
	Purchases at		Proceeds		Value at		Dividend		Net Realized
Underlying Fund	cost		from sale		12/31/12		Income		Gain/Loss
Touchstone Emerging Markets Equity Fund	$	6,763,888	$	838,980	$	6,303,825	$	48,304	$	16,026
Touchstone Mid Cap Fund		2,370,923		323,919		3,104,921		67,019		(139	)
Touchstone Mid Cap Growth Fund		2,492,483		252,473		3,129,330		—		195,917
Touchstone Dynamic Equity Fund		4,633,206		350,251		6,153,930		—		2,039
Touchstone Large Cap Relative Value Fund, Class Y		4,717,274		1,075,664		5,445,697		31,769		(11,133	)
Touchstone Global Real Estate Fund		3,142,264		518,322		4,741,109		124,103		34,789
Touchstone Merger Arbitrage Fund		3,516,830		370,907		4,645,072		—		47,977
Touchstone Institutional Money Market Fund		3,470,638		340,403		4,624,881		2,103		—
Touchstone High Yield Fund		2,211,698		400,408		3,878,975		90,592		52
Touchstone Mid Cap Value Fund		2,360,661		271,478		3,130,656		11,160		30,238
Touchstone Global Equity Fund		478,193		224,235		3,129,207		28,261		17,574
Touchstone Small Cap Core Fund		2,375,199		272,740		3,118,541		43,773		21,001
Touchstone Large Cap Growth Fund, Class Y		14,839,834		14,570,207		3,079,810		19,887		1,096,170
Touchstone Growth Opportunities		14,809,135		9,074,460		—		—		1,672,788
Touchstone Small Company Value Fund		2,382,662		3,015,660		—		—		632,997
Touchstone Ultra Short Duration Fixed Income Fund		25,271,625		12,953,084		—		—		317,271
Total:	$	273,740,063	$	97,960,643	$	155,051,211	$	1,709,367	$	5,632,070

Conservative Allocation Fund

	Purchases at		Proceeds		Value at		Dividend		Net Realized
Underlying Fund	cost		from sale		12/31/12		Income		Gain/Loss
Touchstone Core Bond Fund	$	57,037,870	$	25,209,579	$	5,286,194	$	74,254	$	(80,275	)
Touchstone Short Duration Fixed Income Fund, Class Y		13,458,732		1,179,416		17,608,669		107,625		(340	)
Touchstone Total Return Bond Fund		11,996,626		1,719,976		16,723,746		177,547		19,836
Touchstone International Fixed Income Fund		5,055,461		614,419		7,020,502		32,521		23,853
Touchstone Value Fund		13,998,740		4,575,206		5,309,423		48,627		634,340
Touchstone Strategic Income Fund		5,202,613		426,368		4,856,148		94,035		(2,092	)
Touchstone Sands Capital Institutional Growth Fund		3,624,405		490,511		4,447,805		1,959		151,774
Touchstone International Small Cap Fund		968,688		105,142		885,908		14,319		1,765

104

Notes to Financial Statements (Continued)

Conservative Allocation Fund

	Purchases at		Proceeds		Value at		Dividend		Net Realized
Underlying Fund	cost		from sale		12/31/12		Income		Gain/Loss
Touchstone International Value Fund	$	3,987,596	$	425,409	$	3,556,478	$	113,037	$	(17,814	)
Touchstone Institutional Money Market Fund		3,761,186		807,898		4,399,148		2,028		—
Touchstone Dynamic Equity Fund		2,679,186		233,363		3,538,549		—		(975	)
Touchstone Merger Arbitrage Fund		2,699,765		331,310		3,526,575		—		37,566
Touchstone High Yield Fund		1,457,906		315,847		2,644,642		63,678		1,418
Touchstone Large Cap Relative Value Fund		2,051,736		627,364		2,213,230		13,036		(14,261	)
Touchstone Small Cap Core Fund		1,388,829		207,301		1,780,296		24,781		14,001
Touchstone Global Real Estate Fund		1,388,463		245,714		1,774,138		46,160		15,766
Touchstone Emerging Markets Equity Fund		996,055		146,091		893,014		6,989		3,723
Touchstone Global Equity Fund		256,561		98,822		888,940		8,004		4,679
Touchstone Mid Cap Fund		688,185		113,529		887,405		16,776		1,931
Touchstone Growth Opportunities Fund		4,521,196		3,209,955		—		—		949,357
Touchstone International Equity Fund		104,880		1,354,117		—		—		329,421
Touchstone Large Cap Growth Fund		4,499,588		5,790,885		—		—		1,293,297
Touchstone Small Company Value Fund		829,213		1,066,722		—		—		237,510
Touchstone Ultra Short Duration Fixed Income Fund		20,284,081		10,381,912		—		—		239,871
Total:	$	162,937,561	$	59,676,856	$	88,240,810	$	845,376	$	3,844,351

Growth Allocation Fund

	Purchases at		Proceeds		Value at		Dividend		Net Realized
Underlying Fund	cost		from sale		12/31/12		Income		Gain/Loss
Touchstone International Equity Fund	$	728,362	$	664,480	$	5,183,432	$	119,433	$	17,303
Touchstone International Small Cap Fund		3,069,254		446,679		4,287,749		69,895		(22,095	)
Touchstone International Value Fund		8,929,772		809,130		7,793,043		250,755		(49,181	)
Touchstone Focused Equity Fund		6,978,582		4,695,690		4,297,300		33,617		377,685
Touchstone Value Fund		34,243,973		13,899,642		7,666,581		74,637		1,028,975
Touchstone Emerging Growth Fund		1,825,237		164,356		2,578,351		—		204,909
Touchstone Sands Capital Institutional Growth Fund		4,520,194		352,501		6,830,699		3,058		240,085
Touchstone Emerging Markets Equity Fund		9,280,392		1,101,697		8,629,095		74,960		20,172
Touchstone Global Real Estate Fund		3,420,932		509,694		5,187,649		136,064		37,335

105

Notes to Financial Statements (Continued)

Growth Allocation Fund

	Purchases at		Proceeds		Value at		Dividend		Net Realized
Underlying Fund	cost		from sale		12/31/12		Income		Gain/Loss
Touchstone Small Cap Core Fund	$	2,210,684	$	253,681	$	3,421,373	$	48,024	$	23,136
Touchstone Small Company Value Fund		2,271,187		803,882		1,725,072		41,730		407,053
Touchstone Global Equity Fund		1,713,106		238,007		4,281,335		38,793		21,213
Touchstone Mid Cap Fund		1,658,239		232,286		2,554,320		48,775		(2	)
Touchstone Mid Cap Growth Fund		1,173,698		125,898		1,712,471		—		106,684
Touchstone Short Duration Fixed Income Fund		2,774,440		381,762		4,124,718		26,761		(10	)
Touchstone Mid Cap Value Fund		2,193,257		257,301		3,425,871		20,717		32,363
Touchstone Large Cap Relative Value Fund		2,735,641		985,763		3,407,567		20,403		(31,890	)
Touchstone Dynamic Equity Fund		2,526,788		157,497		3,360,589		—		(1,103	)
Touchstone Large Cap Growth Fund		11,844,208		11,855,213		2,544,130		16,801		864,222
Touchstone Merger Arbitrage Fund		1,049,305		421,254		1,673,988		—		18,099
Touchstone Growth Opportunities Fund		12,348,655		7,485,071		—		—		1,311,776
Touchstone Small Cap Value Opportunities Fund		31,999		804,965		—		—		60,964
Touchstone Ultra Short Duration Fixed Income Fund		1,046,327		538,397		—		—		15,234
Touchstone Core Bond Fund		2,062,055		1,076,740		—		—		45,713
Touchstone Strategic Income Fund		1,043,119		1,086,900		—		—		43,782
Total:	$	121,679,406	$	49,348,489	$	84,685,333	$	1,024,423	$	4,772,422

Moderate Growth Allocation Fund

	Purchases at		Proceeds		Value at		Dividend		Net Realized
Underlying Fund	cost		from sale		12/31/12		Income		Gain/Loss
Touchstone International Equity Fund	$	2,142,983	$	934,152	$	9,077,781	$	207,013	$	4,419
Touchstone International Small Cap Fund		4,274,111		419,136		5,392,096		87,496		(17,815	)
Touchstone International Value Fund		15,374,405		2,797,809		12,713,598		405,856		(134,975	)
Touchstone Short Duration Fixed Income Fund		5,363,868		409,217		7,500,729		46,178		70
Touchstone Total Return Bond Fund		11,540,237		1,219,824		17,997,268		188,961		16,245
Touchstone Focused Equity Fund		14,913,510		9,560,451		8,998,887		69,845		690,196
Touchstone Value Fund		54,789,462		21,010,468		15,987,166		150,710		2,642,179
Touchstone Emerging Growth Fund		1,334,172		62,660		1,804,063		—		141,725
Touchstone Sands Capital Institutional Growth Fund		10,021,718		451,980		14,292,292		6,393		509,921

106

Notes to Financial Statements (Continued)

Moderate Growth Allocation Fund

	Purchases at		Proceeds		Value at		Dividend		Net Realized
Underlying Fund	cost		from sale		12/31/12		Income		Gain/Loss
Touchstone Emerging Markets Equity Fund	$	13,298,598	$	1,304,703	$	12,697,765	$	57,948	$	25,873
Touchstone Mid Cap Fund		3,674,015		401,936		5,342,402		102,014		2,570
Touchstone Mid Cap Growth Fund		2,601,209		163,475		3,590,562		—		226,290
Touchstone Global Real Estate Fund		5,039,443		572,514		7,267,697		188,703		57,848
Touchstone Large Cap Relative Value Fund		6,083,075		1,853,256		7,178,423		42,675		(45,929	)
Touchstone Small Cap Core Fund		3,668,422		304,949		5,363,774		75,288		37,989
Touchstone Small Company Value Fund		3,768,111		2,593,723		1,808,838		—		780,611
Touchstone Global Equity Fund		3,923,627		258,645		7,167,931		64,722		39,372
Touchstone Dynamic Equity Fund		5,453,906		223,588		7,014,788		—		(290	)
Touchstone Strategic Income Fund		6,452,888		354,219		6,177,725		117,244		(1,264	)
Touchstone Mid Cap Value Fund		3,649,300		278,040		5,393,583		32,217		56,652
Touchstone High Yield Fund		1,821,600		254,294		3,551,584		83,328		114
Touchstone Merger Arbitrage Fund		2,258,906		620,595		3,537,913		—		38,347
Touchstone International Fixed Income Fund		1,752,648		156,398		3,520,481		16,773		12,264
Touchstone Large Cap Growth Fund		18,542,792		21,066,758		3,510,342		22,892		3,635,507
Touchstone Growth Opportunities Fund		20,073,300		13,127,134		—		—		3,090,484
Touchstone Core Bond Fund		37,938,955		19,943,408		—		—		973,931
Touchstone Small Cap Value Fund		26,064		729,318		—		43,140		53,390
Touchstone Ultra Short Duration Fixed Income Fund		14,099,986		7,252,766		—		—		202,773
Touchstone Emerging Markets Equity Fund II		—		—		—		44,205		—
Total:	$	273,881,311	$	108,325,416	$	176,887,688	$	2,053,601	$	13,038,497

A summary of each Fund’s investment, as applicable, in the Old Mutual Cash Reserves Fund and the Touchstone Institutional Money Market Fund for the year ended July 31, 2012, is as follows:

	Share Activity
	Balance							Balance				Value
Fund	07/31/11		Purchases		Sales			07/31/12		Dividends		07/31/12
Dynamic Equity Fund		594,282		40,038,758		(39,987,059	)		645,981	$	1,207	$	645,981
Emerging Growth Fund		262,400		27,448,148		(27,463,172	)		247,376		226		247,376
International Equity Fund		456,154		10,340,150		10,567,474			228,830		138		228,830

107

Notes to Financial Statements (Continued)

A summary of the Fund’s transactions in affiliated underlying funds during the year ended July 31, 2012 is as follows:

Balanced Allocation Fund

	Purchases at		Proceeds		Value at		Dividend		Net Realized
Underlying Fund	cost		from sale		07/31/12		Income		Gain/Loss *
Touchstone Core Bond Fund ^	$	396,661	$	2,463,462	$	1,994,840	$	89,542	$	104,005
Touchstone Short Duration Fixed Income Fund		4,947,996		833,494		4,122,249		26,577		(640	)
Touchstone Total Return Bond Fund ^		2,056,695		9,988,141		6,477,995		359,042		1,028,654
Touchstone Focused Fund ^		658,210		3,981,703		997,485		75,384		165,400
Touchstone Value Fund ^		269,758		4,057,138		4,477,134		120,981		1,093,888
Touchstone International Equity Fund ^		1,370,314		2,970,635		4,527,385		201,627		(501,104	)
Touchstone International Small Cap Fund ^		50,125		742,935		500,617		31,053		(51,906	)
Touchstone International Fixed Income Fund		3,290,729		311,983		3,010,204		14,079		(1,877	)
Touchstone Sands Capital Institutional Growth Fund		3,280,105		157,743		2,949,680		—		(5,176	)
Touchstone Global Equity Fund		2,809,493		9,551		2,764,259		—		(244	)
Touchstone Emerging Markets Equity Fund II		2,191,400		105,597		2,006,578		—		(4,797	)
Touchstone High Yield Fund		2,231,734		237,298		2,004,630		46,368		(904	)
Touchstone Dynamic Equity Fund ^		2,182,150		248,109		2,001,470		—		951
Touchstone Large Cap Relative Value Fund		2,190,658		145,901		1,993,030		6,463		(2,580	)
Touchstone Global Real Estate Fund		2,197,156		299,351		1,992,955		14,279		2,259
Touchstone Mid Cap Fund		1,090,701		106,988		995,267		—		(1,579	)
Touchstone Mid Cap Growth Fund		1,093,172		48,399		990,981		—		(1,539	)
Touchstone Merger Arbitrage Fund		1,639,687		144,394		1,496,886		—		(416	)
Touchstone Mid Cap Value Fund ^		1,093,577		69,228		1,000,015		72,957		(1,611	)
Touchstone Large Cap Growth Fund		1,090,855		83,040		991,152		—		(689	)
Touchstone Small Cap Core Fund		1,091,451		89,768		989,446		—		(1,862	)
Touchstone Capital Growth Fund ^		907,621		4,095,559		—		7,621		1,201,314
Touchstone Emerging Growth Fund ^		500,000		2,539,762		—		—		691,208
Touchstone Mid Cap Value Opportunities Fund ^		417,019		6,641,504		—		—		260,975
Touchstone Institutional Money Market Fund		1,641,212		146,566		1,494,647		739		—
Touchstone Small Cap Value Fund		152,331		3,119,704		—		—		957,703
Touchstone Ultra Short Fixed Income Fund ^		2,616,494		7,410,715		—		79,465		33,348

108

Notes to Financial Statements (Continued)

Balanced Allocation Fund

	Purchases at		Proceeds		Value at		Dividend		Net Realized
Underlying Fund	cost		from sale		07/31/12		Income		Gain/Loss *
Touchstone U.S. Long/Short Fund ^	$	571,946	$	2,894,127	$	—	$	21,946	$	(147,274	)
Old Mutual Cash Reserves Fund +		7,683,041		8,074,670		—		—		—
Old Mutual Dwight High Yield Fund +		106,631		2,514,412		—		74,155		158,462
Old Mutual Heitman REIT Fund +		209,429		1,394,951		—		9,429		475,424
Total:	$	52,028,351	$	65,926,828	$	49,778,905	$	1,251,707	$	5,449,393

* Litigation income from investments held by securities within the underlying funds of $13,124 is not included in this table.

Conservative Allocation Fund

	Purchases at		Proceeds		Value at		Dividend		Net Realized
Underlying Fund	cost		from sale		07/31/12		Income		Gain/Loss **
Touchstone Core Bond Fund ^	$	775,477	$	4,572,497	$	1,740,155	$	99,633	$	100,957
Touchstone Short Duration Fixed Income Fund		6,826,065		1,471,142		5,365,566		36,741		(269	)
Touchstone Total Return Bond Fund ^		3,240,739		10,473,277		6,380,367		370,720		929,827
Touchstone International Fixed Income Fund		3,226,312		621,386		2,631,387		13,685		(4,149	)
Touchstone Value Fund ^		761,678		1,310,371		1,752,963		41,971		67,367
Touchstone High Yield Fund		1,822,240		372,216		1,455,959		37,487		(2,461	)
Touchstone Institutional Money Market Fund		1,787,145		341,284		1,445,861		793		—
Touchstone Sands Capital Institutional Growth Fund		1,828,441		299,282		1,430,773		—		(17,009	)
Touchstone International Equity Fund ^		652,826		1,494,203		1,171,642		65,293		(310,015	)
Touchstone Dynamic Equity Fund ^		1,427,787		302,001		1,168,789		—		3,907
Touchstone Merger Arbitrage Fund		1,427,828		274,100		1,156,072		—		161
Touchstone Large Cap Relative Value Fund		1,084,091		187,637		870,165		3,196		(5,061	)
Touchstone Global Equity Fund		830,786		116,035		703,234		—		(7,430	)
Touchstone Global Real Estate Fund		718,618		157,988		588,995		4,730		458
Touchstone Small Cap Core Fund		723,866		133,905		580,192		—		(5,298	)
Touchstone Small Cap Value Fund		3,291		24,268		—		—		5,193
Touchstone Emerging Markets Equity Fund II		359,045		52,020		292,662		—		(3,525	)
Touchstone Mid Cap Fund		358,262		68,446		292,467		—		(1,589	)
Touchstone Ultra Short Duration Fixed Income Fund ^		2,045,579		7,586,059		—		84,530		112,444
Touchstone Capital Growth Fund ^		362,161		1,628,277		—		2,109		554,281
Touchstone Emerging Growth Fund ^		91,101		1,030,121		—		—		284,533

109

Notes to Financial Statements (Continued)

Conservative Allocation Fund

	Purchases at		Proceeds		Value at		Dividend		Net Realized
Underlying Fund	cost		from sale		07/31/12		Income		Gain/Loss **
Touchstone Focused Fund ^	$	392,992	$	1,812,219	$	—	$	20,619	$	415,237
Touchstone Mid Cap Value Opportunities Fund ^		403,349		2,841,388		—		27,161		582,759
Touchstone U.S. Long/Short Fund ^		269,663		1,013,172		—		5,769		256,310
Old Mutual Cash Reserves Fund +		4,998,675		5,221,409		—		—		—
Old Mutual Dwight High Yield Fund +		61,144		2,328,550		—		43,931		152,797
Total:	$	36,479,161	$	45,733,253	$	29,027,249	$	858,368	$	3,109,425

** Litigation income from investments held by securities within the underlying funds of $3,103 is not included in this table.

Growth Allocation Fund

	Purchases at		Proceeds		Value at		Dividend		Net Realized
Underlying Fund	cost		from sale		07/31/12		Income		Gain/Loss ***
Touchstone International Equity Fund ^	$	1,822,059	$	7,926,888	$	4,653,582	$	311,151	$	(2,295,517	)
Touchstone International Small Cap Fund ^		144,865		475,944		1,425,634		50,176		(50,672	)
Touchstone Focused Fund ^		191,487		3,145,031		1,772,815		69,182		(175,475	)
Touchstone Value Fund ^		321,274		6,195,544		3,194,168		108,226		638,564
Touchstone Emerging Growth Fund ^		71,016		2,021,901		1,055,454		—		629,060
Touchstone Sands Capital Institutional Growth Fund		3,130,447		169,042		2,795,339		—		(8,436	)
Touchstone Emerging Markets Equity Fund II		3,917,462		182,320		3,590,598		—		(10,648	)
Touchstone Global Equity Fund		2,759,835		1,930		2,719,940		—		(188	)
Touchstone Global Real Estate Fund		2,365,986		323,795		2,140,854		15,093		(977	)
Touchstone Small Cap Core Fund		1,568,216		136,129		1,413,563		—		(4,004	)
Touchstone Mid Cap Fund		1,174,498		122,199		1,063,249		—		(3,108	)
Touchstone Mid Cap Growth Fund		782,893		38,372		706,120		—		(1,209	)
Touchstone Large Cap Relative Value Fund		1,963,209		148,678		1,767,061		5,696		(4,067	)
Touchstone Short Duration Fixed Income Fund		2,366,465		629,015		1,740,451		20,385		(535	)
Touchstone Mid Cap Value Fund		1,570,058		117,031		1,417,723		4,033		(3,261	)
Touchstone Dynamic Equity Fund ^		1,175,306		148,511		1,061,228		—		(760	)
Touchstone Large Cap Growth Fund		1,176,070		113,470		1,043,880		—		(1,887	)
Touchstone Merger Arbitrage Fund		1,177,492		136,454		1,041,795		—		(544	)
Touchstone Capital Growth Fund ^		358,211		4,978,087		—		8,211		1,371,989

110

Notes to Financial Statements (Continued)

Growth Allocation Fund

	Purchases at		Proceeds		Value at		Dividend		Net Realized
Underlying Fund	cost		from sale		07/31/12		Income		Gain/Loss ***
Touchstone Mid Cap Value Opportunities Fund ^	$	380,073	$	7,442,621	$	—	$	63,881	$	731,660
Touchstone Small Cap Value Fund		1,080,320		3,833,476		698,257		3,262		1,096,849
Touchstone Ultra Short Duration Fixed Income Fund ^		1,207,711		1,210,331		—		339		2,620
Touchstone U.S. Long/Short Fund ^		21,143		2,955,265		—		21,143		(310,625	)
Old Mutual Cash Reserves Fund +		7,223,219		7,740,562		—		—		—
Old Mutual Heitman REIT Fund +		291,361		2,442,951		—		16,360		909,765
Total:	$	38,240,676	$	52,635,547	$	35,301,711	$	697,138	$	2,508,594

*** Litigation income from investments held by securities within the underlying funds of $24,196 is not included in this table.

Moderate Growth Allocation Fund

									Net Realized
	Purchases at		Proceeds		Value at		Dividend		Gain/Loss
Underlying Fund	cost		from sale		07/31/12		Income		****
Touchstone Short Duration Fixed Income Fund	$	3,452,764	$	895,951	$	2,561,284	$	17,470	$	(740	)
Touchstone Total Return Bond Fund ^		1,306,135		7,569,673		7,609,988		340,840		891,359
Touchstone Focused Fund ^		251,584		3,926,510		3,192,187		106,631		(226,139	)
Touchstone Value Fund ^		427,322		6,016,597		5,824,458		166,407		1,673,234
Touchstone International Equity Fund ^		2,081,643		6,403,564		7,119,995		362,747		(3,044,693	)
Touchstone International Small Cap Fund ^		124,735		1,354,181		1,283,338		66,755		(93,022	)
Touchstone Emerging Growth Fund ^		828,990		4,591,882		635,949		—		1,033,881
Touchstone Sands Capital Institutional Growth Fund		5,493,404		143,903		5,059,404		—		(3,052	)
Touchstone Emerging Markets Equity Fund II		4,808,515		106,981		4,526,730		—		(5,367	)
Touchstone Global Equity Fund		3,469,635		4,758		3,417,333		—		(4	)
Touchstone Mid Cap Fund		2,060,737		135,802		1,947,330		—		(2,858	)
Touchstone Mid Cap Growth Fund		1,373,696		49,235		1,256,726		—		(1,337	)
Touchstone Large Cap Relative Value Fund		3,444,788		168,289		3,193,147		10,206		(4,580	)
Touchstone Global Real Estate Fund		2,765,905		264,258		2,623,991		18,081		792
Touchstone Small Cap Core Fund		2,059,993		99,058		1,937,706		—		(2,181	)
Touchstone Dynamic Equity Fund ^		2,061,727		190,699		1,933,844		—		(1,311	)
Touchstone Mid Cap Value Fund		2,066,168		92,516		1,927,936		5,405		(1,872	)
Touchstone International Fixed Income Fund		2,070,458		164,556		1,925,741		8,859		(1,275	)

111

Notes to Financial Statements (Continued)

Moderate Growth Allocation Fund

									Net Realized
	Purchases at		Proceeds		Value at		Dividend		Gain/Loss
Underlying Fund	cost		from sale		07/31/12		Income		****
Touchstone High Yield Fund	$	2,105,025	$	190,794	$	1,923,991	$	44,589	$	(843	)
Touchstone Merger Arbitrage Fund		2,061,340		170,760		1,892,368		—		(581	)
Touchstone Large Cap Growth Fund		1,374,097		96,390		1,255,828		—		(1,562	)
Touchstone Capital Growth Fund ^		1,010,499		5,478,868		—		31,414		1,771,581
Touchstone Core Bond Fund ^		84,621		1,926,461		—		10,500		30,869
Touchstone Mid Cap Value Opportunities Fund ^		515,301		9,718,916		—		86,610		2,415
Touchstone Small Cap Value Fund		1,028,811		7,515,475		635,342		2,925		2,025,135
Touchstone U.S. Long/Short Fund		31,414		4,839,493		—		—		(645,876	)
Touchstone Ultra Short Duration Fixed Income Fund		4,620,000		4,625,633		—		56,389		5,633
Old Mutual Cash Reserves Fund +		10,707,799		11,207,540		—		—		—
Old Mutual Heitman REIT Fund +		1,116,913		2,656,812		—		16,913		680,224
Total:	$	64,804,019	$	80,605,555	$	63,684,616	$	1,352,741	$	4,077,830

**** Litigation income from investments held by securities within the underlying funds of $29,082 is not included in this table.

Underlying Fund is no longer held by the Fund at July 31, 2012. The underlying Fund was affiliated with Old Mutual Funds I (See Note 7).

^ Includes activity of the Reorganizing Funds (as defined in Note 7), prior to the merger (See Note 7).

5. Federal Tax Information

Federal income tax — It is each Fund’s policy to continue to comply with the special provisions of the Internal Revenue Code applicable to regulated investment companies. As provided therein, in any fiscal year in which a Fund so qualifies and distributes at least 90% of its investment company taxable income, the Fund (but not the shareholders) will be relieved of federal income tax on the income distributed. Accordingly, no provision for income taxes has been made.

In order to avoid imposition of the excise tax applicable to regulated investment companies, it is also each Fund’s intention to declare and pay as dividends in each calendar year at least 98% of its investment company taxable income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ending October 31) plus undistributed amounts from prior years.

112

Notes to Financial Statements (Continued)

The tax character of distributions paid for the five months ended December 31, 2012 and years ended July 31, 2012 and July 31, 2011 was as follows:

	Dynamic						Emerging
	Equity Fund						Growth Fund
	Five Months						Five Months
	Ended		Year Ended		Year Ended		Ended		Year Ended		Year Ended
	December 31,		July 31,		July 31,		December 31,		July 31,		July 31,
	2012		2012		2011		2012		2012		2011
From ordinary income	$	—	$	514,890	$	—	$	435,878	$	—	$	—
From long-term capital gains				—		—		1,112,786		—		—
	$	—	$	514,890	$	—	$	1,548,664	$	—	$	—

	International						Balanced
	Equity Fund						Allocation Fund
	Five Months						Five Months
	Ended		Year Ended		Year Ended		Ended		Year Ended		Year Ended
	December 31,		July 31,		July 31,		December 31,		July 31,		July 31,
	2012		2012		2011		2012		2012		2011
From ordinary income	$	490,586	$	967,252	$	890,209	$	6,140,882	$	607,351	$	1,392,283
From long-term capital gains		—		—		—		137,848		—		—
	$	490,586	$	967,252	$	890,209	$	6,278,730	$	607,351	$	1,392,283

	Conservative						Growth
	Allocation Fund						Allocation Fund
	Five Months						Five Months
	Ended		Year Ended		Year Ended		Ended		Year Ended		Year Ended
	December 31,		July 31,		July 31,		December 31,		July 31,		July 31,
	2012		2012		2011		2012		2012		2011
From ordinary income	$	5,215,403	$	589,089	$	1,437,898	$	1,600,296	$	180,489	$	118,434
From long-term capital gains		—		—		—		462		—		—
	$	5,215,403	$	589,089	$	1,437,898	$	1,600,758	$	180,489	$	118,434

	Moderate Growth
	Allocation Fund
	Five Months
	Ended		Year Ended		Year Ended
	December 31,		July 31,		July 31,
	2012		2012		2011
From ordinary income	$	3,961,419	$	572,935	$	706,859
From long-term capital gains		1,675,414		—		—
	$	5,636,833	$	572,935	$	706,859

The following information is computed on a tax basis for each item as of December 31, 2012:

	Dynamic			Emerging			International
	Equity Fund			Growth Fund			Equity Fund
Tax cost of portfolio investments	$	74,694,953		$	16,259,562		$	18,145,102
Gross unrealized appreciation		8,882,208			4,018,883			3,584,792
Gross unrealized depreciation		(1,724,591	)		(460,206	)		(921,144	)
Net unrealized appreciation (depreciation)		7,157,617			3,558,677			2,663,648
Net unrealized appreciation (depreciation) on written options, short sales and foreign currency and translation of other assets and liabilities denominated in foreign currency		(182,336	)		—			(314	)
Accumulated capital and other losses		(148,826,198	)		—			(42,665,961	)
Post-October and qualified late-year losses		(933,316	)		—			—

113

Notes to Financial Statements (Continued)

	Dynamic			Emerging		International
	Equity Fund			Growth Fund		Equity Fund
Undistributed ordinary income	$	15,903		$	123,718	$	24,059
Undistributed capital gains		—			531,742		—
Other temporary differences		(31,406	)		—		1,427
Accumulated earnings (deficit)	$	(142,799,736	)	$	4,214,137	$	(39,977,141	)

										Moderate
	Balanced			Conservative			Growth			Growth
	Allocation Fund			Allocation Fund			Allocation Fund			Allocation Fund
Tax cost of portfolio investments	$	152,721,699		$	88,036,474		$	83,860,637		$	173,227,179
Gross unrealized appreciation		5,437,347			2,033,192			4,381,174			8,377,699
Gross unrealized depreciation		(3,107,835	)		(1,828,856	)		(3,556,478	)		(4,717,190	)
Net unrealized appreciation (depreciation)		2,329,512			204,336			824,696			3,660,509
Accumulated capital and other losses		(42,487,158	)		(3,634,373	)		(44,481,926	)		(44,872,260	)
Post-October and qualified late-year losses		(1,960	)		(3,365	)		(2,937	)		(31,574	)
Undistributed ordinary income		—			—			—			—
Undistributed capital gains		—			—			498,325			—
Other temporary differences		—			—			—			39,467
Accumulated earnings (deficit)	$	(40,159,606	)	$	(3,433,402	)	$	(43,161,842	)	$	(41,203,858	)

The difference between the tax cost of portfolio investments and the financial statement cost is primarily due to wash sale loss and passive foreign investment company deferrals.

As of December 31, 2012, the Funds had the following capital loss carryforwards for federal income tax purposes:

														No
														Expiration		No
	Short Term Expiring On													Short		Expiration
	2015		2016			2017			2018			2019		Term*		Long Term*		Total
Dynamic Equity Fund	$	39,657,235	$	31,726,954		$	77,442,009		$	—		$	—	$	—	$	—	$	148,826,198
International Equity Fund		—		20,386,332			22,279,629			—			—		—		—		42,665,961
Balanced Allocation Fund		—		13,311,819			24,373,973	**		4,801,366	**		—		—		—		42,487,158
Conservative Allocation Fund		—		—			3,611,052	**		23,321			—		—		—		3,634,373
Growth Allocation Fund		—		3,557,561	**		30,260,646	**		10,663,719	**		—		—		—		44,481,926
Moderate Growth Allocation Fund		—		—			35,744,603	**		9,127,657	**		—		—		—		44,872,260

* The Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted on December 22, 2010. The Act makes changes to several tax rules impacting the Funds. In general, the provisions of the Act are in effect for the Funds’ fiscal year ending December 31, 2012. Although the Act provides several benefits, including the unlimited carryover of future capital losses, there may be a greater likelihood that all or a portion of each Fund’s pre-enactment capital loss carryovers may expire without being utilized due to the fact that post-enactment capital losses must be utilized before pre-enactment capital loss carryovers may be utilized. Under the Act, new capital losses may now be carried forward indefinitely, and retain the character of the original loss as compared with pre-enactment law, where capital losses could be carried forward for up to eight years, and carried forward as short-term capital losses, irrespective of the character of the original loss.

** Subject to usage limitation.

The capital loss carryforwards may be utilized in future years to offset net realized capital gains, if any, prior to distributing such gains to shareholders.

During the five months ended December 31, 2012, the following Funds utilized capital loss carryforwards:

Fund	Amount
Dynamic Equity Fund	$	873,307
International Equity Fund		202,007
Balanced Allocation Fund		4,312,696

114

Notes to Financial Statements (Continued)

Fund	Amount
Conservative Allocation Fund	$	2,010,956
Growth Allocation Fund		3,035,969
Moderate Growth Allocation Fund		9,574,279

Under current laws, certain capital losses realized after October 31 and ordinary losses realized after January 1 may be deferred (and certain ordinary losses after January 1st may be deferred ) and treated as occurring on the first day of the following fiscal year. For the five months ended December 31, 2012, the Funds elected to defer the following losses:

	Realized		Realized
	Short-Term		Long-Term
	Capital		Capital		Ordinary
Fund	Losses		Losses		Losses
Dynamic Equity Fund	$	933,316	$	—	$	—
Balanced Allocation Fund		1,960		—		—
Conservative Allocation Fund		3,365		—		—
Growth Allocation Fund		2,937		—		—
Moderate Growth Allocation Fund		31,574		—		—

The Funds have analyzed their tax positions taken on Federal income tax returns for all open tax years (tax years ended December 31, 2012 and July 31, 2009 through 2012) and have concluded that no provision for income tax is required in their financial statements.

Certain reclassifications, the result of permanent differences between financial statement and income tax reporting requirements, have been made to the components of capital. These reclassifications have no impact on the net assets or NAV per share of the Funds and are designed to present the Funds’ capital accounts on a tax basis. The following reclassifications, which are primarily attributed to the tax treatment of net investment losses, foreign currency gains/losses, gains/losses and dividend expenses on short sales, gains/losses on passive foreign investment companies, reclassifications of distributions, expiration of prior year capital loss carryovers and carryovers of temporary differences due to mergers have been made to the following Funds for the five months ended December 31, 2012:

			Accumulated		Accumulated
	Paid-In		Net Investment		Net Realized
Fund	Capital		Income(Loss)		Gains(Losses)
Dynamic Equity Fund	$	—	$	142,923	$	(142,923	)
Emerging Growth Fund		—		122,240		(122,240	)
International Equity Fund		—		3,236		(3,236	)
Balanced Allocation Fund		23,354,866		647,203		(24,002,069	)
Conservative Allocation Fund		3,850,044		293,628		(4,143,672	)
Growth Allocation Fund		12,844,502		480,889		(13,325,391	)
Moderate Growth Allocation Fund		17,533,716		801,369		(18,335,085	)

6. Commitments and Contingencies

The Funds indemnify the Trust’s officers and Trustees for certain liabilities that might arise from their performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.

115

Notes to Financial Statements (Continued)

7. Fund Mergers

On February 10, 2012, the Shareholders of the Old Mutual Funds I (the “Reorganizing Funds”) approved an Agreement and Plan of Reorganization (the “Plan”) providing for the transfer of all assets and liabilities of each Reorganizing Fund to the corresponding Touchstone Fund as noted below. The merger took place on April 13, 2012. The fiscal year end of the Reorganizing Funds was July 31. After the fiscal year end July 31, 2012, the Funds year end changed to December 31.

		Net		Shares
Reorganizing Funds*	Touchstone Funds	Assets		Outstanding
Old Mutual Analytic Fund	Dynamic Equity Fund	$	56,128,406		5,182,646
Old Mutual Copper Rock Emerging Growth Fund	Emerging Growth Fund		43,528,427		3,579,888
Old Mutual International Equity Fund	International Equity Fund		28,419,782		3,455,688
Old Mutual Asset Allocation Balanced Portfolio	Balanced Allocation Fund		54,581,260		4,909,161
Old Mutual Asset Allocation Conservative Portfolio	Conservative Allocation Fund		35,536,596		3,274,555
Old Mutual Asset Allocation Growth Portfolio	Growth Allocation Fund		38,970,804		3,527,780
Old Mutual Asset Allocation Moderate Growth Portfolio	Moderate Growth Allocation Fund		68,462,430		6,232,923

Funds had Class Z shares outstanding immediately prior to the reorganization, which were exchanged for Class Y Shares of the corresponding Touchstone Fund.

At the meeting held on March 13, 2012, the Board of Trustees approved an Agreement and Plan of Reorganization (the “Plans”) providing for the transfer of all the assets and liabilities of the Fifth Third LifeModel Moderate Fund, Fifth Third LifeModel Conservative Fund, Fifth Third LifeModel Moderately Conservative Fund, Fifth Third LifeModel Aggressive Fund and FifthThird LifeModel Moderately Aggressive Fund (the “Acquired Funds”) to the corresponding Touchstone Funds shown below. The merger took place on September 10, 2012.

Acquired Funds		Touchstone Funds
Fifth Third LifeModel Moderate Fund		Balanced Allocation Fund
Fifth Third LifeModel Conservative Fund		Conservative Allocation Fund
Fifth Third LifeModel Moderately Conservative Fund		Conservative Allocation Fund
Fifth Third LifeModel Aggressive Fund		Growth Allocation Fund
Fifth Third LifeModel Moderately Aggressive Fund		Moderate Growth Allocation Fund

The following is a summary of shares outstanding, net assets, net assets value per share and unrealized appreciation (depreciation) immediately before and after the September 10, 2012 reorganization for the Allocation Funds:

						After
	Before Reorganization					Reorganization
	Fifth Third
	LifeModel			Touchstone		Touchstone
	Moderate			Balanced		Balanced
	Fund			Allocation Fund		Allocation Fund
Class A*
Shares		3,650,589	^(A)		856,628		4,507,217
Net Assets	$	41,600,137		$	9,761,746	$	51,361,883
Net Asset Value	$	11.40	^(A)	$	11.40	$	11.40
Class C
Shares		191,231	^(B)		3,356,100		3,547,331
Net Assets	$	2,174,823		$	38,167,906	$	40,342,729
Net Asset Value	$	11.37	^(B)	$	11.37	$	11.37
Class Y**
Shares		6,276,974	^(C)		132,241		6,409,215
Net Assets	$	71,649,327		$	1,509,480	$	73,158,807
Net Asset Value	$	11.41	^(C)	$	11.41	$	11.41

116

Notes to Financial Statements (Continued)

					After
	Before Reorganization				Reorganization
	Fifth Third
	LifeModel		Touchstone		Touchstone
	Moderate		Balanced		Balanced
	Fund		Allocation Fund		Allocation Fund
Institutional Class
Shares		—		2,683		2,683
Net Assets	$	—	$	30,489	$	30,489
Net Asset Value	$	—	$	11.36	$	11.36
Fund Total
Shares Outstanding		10,277,468		4,347,652		14,466,446
Net Assets	$	115,424,287	$	49,469,621	$	164,893,908
Unrealized Appreciation (Depreciation)	$	5,211,794	$	3,570,090	$	8,781,884

(A) Reflects a 0.9853:1 stock split on Class A Shares and a 0.9807:1 stock split on Class B Shares which occurred on the date of reorganization, September 10, 2012.

(B)

Reflects a 0.9820:1 stock split which occurred on the date of reorganization, September 10, 2012.

(C)

Reflects a 0.9845:1 stock split which occurred on the date of reorganization, September 10, 2012.

* The Acquired Fund had Class B Shares outstanding immediately prior to the reorganization, which were exchanged for Class A Shares of the Acquiring Fund.

** The Acquired Fund had Institutional Class Shares outstanding immediately prior to the reorganization, which were exchanged for Class Y Shares of the Acquiring Fund.

									After
				Before Reorganization					Reorganization
				Fifth Third
	Fifth Third			LifeModel			Touchstone		Touchstone
	LifeModel			Moderately			Conservative		Conservative
	Conservative			Conservative			Allocation		Allocation
	Fund			Fund			Fund		Fund
Class A*
Shares		912,961	^(A)		1,457,284	^(B)		778,704		3,148,949
Net Assets	$	10,038,678		$	16,023,820		$	8,562,424	$	34,624,922
Net Asset Value	$	11.00	^(A)	$	11.00	^(B)	$	11.00	$	11.00
Class C
Shares		72,314	^(C)		89,383	^(D)		1,541,709		1,703,406
Net Assets	$	791,586		$	978,429		$	16,876,314	$	18,646,329
Net Asset Value	$	10.95	^(C)	$	10.95	^(D)	$	10.95	$	10.95
Class Y**
Shares		1,658,986	^(E)		1,806,406	^(F)		198,245		3,663,637
Net Assets	$	18,249,300		$	19,870,935		$	2,180,756	$	40,300,991
Net Asset Value	$	11.00	^(E)	$	11.00	^(F)	$	11.00	$	11.00
Institutional Class
Shares		—			��			119,726		119,726
Net Assets	$	—		$	—		$	1,318,057	$	1,318,057
Net Asset Value	$	—		$	—		$	11.01	$	11.01
Fund Total
Shares Outstanding		2,869,464			3,603,186			2,638,384		8,635,718
Net Assets	$	29,079,564		$	36,873,184		$	28,937,551	$	94,890,299
Unrealized Appreciation
(Depreciation)	$	705,303		$	3,126,125		$	1,614,689	$	5,446,117

(A) Reflects a 0.9206:1 stock split on Class A Shares and a 0.9190:1 stock split on Class B Shares which occurred on the date of reorganization, September 10, 2012.

(B) Reflects a 0.9301:1 stock split on Class A Shares and a 0.9270:1 stock split on Class B Shares which occurred on the date of reorganization, September 10, 2012.

117

Notes to Financial Statements (Continued)

(C)

Reflects a 0.9235:1 stock split which occurred on the date of reorganization, September 10, 2012.

(D)

Reflects a 0.9309:1 stock split which occurred on the date of reorganization, September 10, 2012.

(E)

Reflects a 0.92200:1 stock split which occurred on the date of reorganization, September 10, 2012.

(F)

Reflects a 0.9311:1 stock split which occurred on the date of reorganization, September 10, 2012.

* The Acquired Fund had Class B Shares outstanding immediately prior to the reorganization, which were exchanged for Class A Shares of the Acquiring Fund.

** The Acquired Fund had Institutional Class Shares outstanding immediately prior to the reorganization, which were exchanged for Class Y Shares of the Acquiring Fund.

						After
	Before Reorganization					Reorganization
	Fifth Third			Touchstone		Touchstone
	LifeModel			Growth		Growth
	Aggressive			Allocation		Allocation
	Fund			Fund		Fund
Class A*
Shares		1,982,555	^(A)		905,293		2,887,848
Net Assets	$	23,010,705		$	10,507,403	$	33,518,108
Net Asset Value	$	11.61	^(A)	$	11.61	$	11.61
Class C
Shares		86,836	^(B)		2,187,151		2,273,987
Net Assets	$	971,379		$	24,466,210	$	25,437,589
Net Asset Value	$	11.19	^(B)	$	11.19	$	11.19
Class Y**
Shares		2,547,823	^(C)		73,550		2,621,373
Net Assets	$	29,855,473		$	861,864	$	30,717,337
Net Asset Value	$	11.72	^(C)	$	11.72	$	11.72
Institutional Class
Shares		—			1,267		1,267
Net Assets	$	—		$	13,568	$	13,568
Net Asset Value	$	—		$	10.71	$	10.71
Fund Total
Shares Outstanding		4,576,737			3,167,261		7,784,475
Net Assets	$	53,837,557		$	35,849,045	$	89,686,602
Unrealized Appreciation (Depreciation)	$	3,817,238		$	3,056,427	$	6,873,665

(A) Reflects a 1.0117:1 reverse stock on Class A Shares and a 0.9675:1 stock split on Class B Shares which occurred on the date of reorganization, September 10, 2012.

(B)

Reflects a 1.0019:1 reverse stock split which occurred on the date of reorganization, September 10, 2012.

(C)

Reflects a 1.010:1 reverse stock split which occurred on the date of reorganization, September 10, 2012.

* The Acquired Fund had Class B Shares outstanding immediately prior to the reorganization, which were exchanged for Class A Shares of the Acquiring Fund.

** The Acquired Fund had Institutional Class Shares outstanding immediately prior to the reorganization, which were exchanged for Class Y Shares of the Acquiring Fund.

After

Before Reorganization

Reorganization

Fifth Third

Touchstone

LifeModel

Moderate

Moderately

Growth

Aggressive

Allocation

Fund

Class A*

��

5,396,673

^(A)

1,340,687

6,737,360

Net Assets

61,461,849

15,268,777

76,730,626

Net Asset Value

11.39

^(A)

11.39

118

Notes to Financial Statements (Continued)

						After
	Before Reorganization					Reorganization
	Fifth Third			Touchstone		Touchstone
	LifeModel			Moderate		Moderate
	Moderately			Growth		Growth
	Aggressive			Allocation		Allocation
	Fund			Fund		Fund
Class C
Shares		221,281	^(B)		4,305,668		4,526,949
Net Assets	$	2,482,569		$	48,305,735	$	50,788,304
Net Asset Value	$	11.22	^(B)	$	11.22	$	11.22
Class Y**
Shares		4,909,444	^(C)		78,182		4,987,626
Net Assets	$	56,310,746		$	896,739	$	57,207,485
Net Asset Value	$	11.47	^(C)	$	11.47	$	11.47
Institutional Class
Shares		—			738		738
Net Assets	$	—		$	8,431	$	8,431
Net Asset Value	$	—		$	11.42	$	11.42
Fund Total
Shares Outstanding		10,118,280			5,725,275		16,252,673
Net Assets	$	120,255,164		$	64,479,682	$	184,734,846
Unrealized Appreciation (Depreciation)	$	13,091,873		$	5,016,633	$	18,108,506

(A) Reflects a 1.0437:1 reverse stock split on Class A Shares and a 1.0329:1 reverse stock split on Class B Shares which occurred on the date of reorganization, September 10, 2012.

(B)

Reflects a 1.0475:1 reverse stock split which occurred on the date of reorganization, September 10, 2012.

(C)

Reflects a 1.0378:1 reverse stock split which occurred on the date of reorganization, September 10, 2012.

* The Acquired Fund had Class B Shares outstanding immediately prior to the reorganization, which were exchanged for Class A Shares of the Acquiring Fund.

** The Acquired Fund had Institutional Class Shares outstanding immediately prior to the reorganization, which were exchanged for Class Y Shares of the Acquiring Fund.

Assuming these September 10, 2012 reorganizations had been completed on August 1, 2012, the Balanced Allocation Fund, Conservative Allocation Fund, Growth Allocation Fund and Moderate Growth Allocation Fund results of operations for the five months ended December 31, 2012, would have been as follows:

							Touchstone
	Touchstone		Touchstone		Touchstone		Moderate
	Balanced		Conservative		Growth		Growth
	Allocation		Allocation		Allocation		Allocation
(Unaudited)	Fund		Fund		Fund		Fund
Net investment income	$	2,451,480	$	1,210,897	$	1,323,552	$	2,716,948
Net realized and unrealized gain (loss) on investments		11,632,977		5,230,795		10,153,370		22,183,410
Net increase (decrease) in asset from operations		14,084,457		6,441,692		11,476,922		24,900,358

Because the combined investment portfolios have been managed as single portfolios since the reorganizations were completed, it is not practical to separate the amounts of revenue and earnings to the Acquiring Funds that have been included in their statements of operations since the reorganizations.

8. Risks Associated with Foreign Investments

Some of the Funds may invest in the securities of foreign issuers. Investing in securities issued by companies whose principal business activities are outside the U.S. may involve significant risks not present in domestic

119

Notes to Financial Statements (Continued)

investments. For example, there is generally less publicly available information about foreign companies, particularly those not subject to the disclosure and reporting requirements of the U.S. securities laws. Foreign issuers are generally not bound by uniform accounting, auditing, and financial reporting requirements and standards of practice comparable to those applicable to domestic issuers. Investments in foreign securities also involve the risk of possible adverse changes in investment or exchange control regulations, expropriation or confiscatory taxation, limitations on the removal of funds or other assets of the Fund, political or financial instability or diplomatic and other developments which could affect such investments. Foreign stock markets, while growing in volume and sophistication, are generally not as developed as those in the U.S., and securities of some foreign issuers (particularly those located in developing countries) may be less liquid and more volatile than securities of comparable U.S. companies. In general, there is less overall governmental supervision and regulation of foreign securities markets, broker-dealers, and issuers than in the U.S.

9. Risks Associated with Leverage

By investing the proceeds received from selling securities short, the Dynamic Equity Fund is employing leverage, which creates special risks. The use of leverage may increase the Fund’s exposure to long or short equity positions and may cause the Fund’s NAV to be more volatile than if the Fund had not used leverage. This could result in increased volatility of returns.

10. Subsequent Events

Subsequent events occurring after the date of this report have been evaluated for potential impact to this report through the date the financial statements were issued.

At a meeting of the Board of Trustees (the “Board”) of Touchstone Strategic Trust held on February 21, 2013, the Board approved a plan to close and liquidate the Touchstone International Equity Fund and the Touchstone Emerging Growth Fund (the “Liquidation Funds”). The Liquidation Funds will be closed and liquidated on or about March 26, 2013.

There were no other subsequent events that necessitated recognition or disclosure on the Funds’ financial statements.

120

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of Touchstone Dynamic Equity Fund, Touchstone Emerging Growth Equity Fund,Touchstone International Equity Fund,Touchstone Balanced Allocation Fund,Touchstone Conservative Allocation Fund, Touchstone Growth Allocation Fund, and Touchstone Moderate Growth Allocation Fund

We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Touchstone Dynamic Equity Fund, Touchstone Emerging Growth Equity Fund, Touchstone International Equity Fund, Touchstone Balanced Allocation Fund, Touchstone Conservative Allocation Fund, Touchstone Growth Allocation Fund, and Touchstone Moderate Growth Allocation Fund (the “Funds”) (seven of the funds constituting the Touchstone Strategic Trust), as of December 31, 2012, and the related statement of operations, the statement of cash flows for the Touchstone Dynamic Equity Fund, the statement of changes in net assets, and the financial highlights for the period then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The statements of operations for the year ended July 31, 2012, the statement of cash flows for the Touchstone Dynamic Equity Fund for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated in the period then ended, of the Touchstone Dynamic Equity Fund, Touchstone Emerging Growth Equity Fund, Touchstone International Equity Fund, Touchstone Balanced Allocation Fund, Touchstone Conservative Allocation Fund, Touchstone Growth Allocation Fund, and Touchstone Moderate Growth Allocation Fund were audited by other auditors whose report dated September 21, 2012, expressed an unqualified opinion on those financial statements and financial highlights.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Funds’ internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2012, by correspondence with the custodian, transfer agent, and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Touchstone Dynamic Equity Fund, Touchstone Emerging Growth Equity Fund, Touchstone International Equity Fund, Touchstone Balanced Allocation Fund, Touchstone Conservative Allocation Fund, Touchstone Growth Allocation Fund, and Touchstone Moderate Growth Allocation Fund (seven of the funds constituting the Touchstone Strategic Trust) at December 31, 2012, the results of their operations, the cash flows for the Touchstone Dynamic Equity Fund, the changes in their net assets, and the financial highlights for the period then ended, in conformity with accounting principles generally accepted in the United States.

Cincinnati, Ohio

February 25, 2013

121

Other Items (Unaudited)

Qualified Dividend Income

Under the Jobs and Growth Tax Relief Reconciliation Act of 2003 (the “Act”), the following percentages of ordinary dividends paid during the fiscal year ended December 31, 2012 are designated as “qualified dividend income,” as defined in the Act, and are subject to reduced tax rates. The Funds intend to pass through the maximum allowable percentage for 1099s.

Dynamic Equity Fund	100.00	%
Emerging Growth Fund	47.62	%
International Equity Fund	100.00	%
Balanced Allocation Fund	18.87	%
Conservative Allocation Fund	6.22	%
Growth Allocation Fund	70.72	%
Moderate Growth Allocation Fund	41.06	%

Dividend Received Deduction

For corporate shareholders, the following ordinary distributions paid during the current fiscal year ended December 31, 2012 qualify for the corporate dividends received deduction. The Funds intend to pass through the maximum allowable percentage for 1099s.

Dynamic Equity Fund	100.00	%
Emerging Growth Fund	46.22	%
International Equity Fund	0.09	%
Balanced Allocation Fund	10.92	%
Conservative Allocation Fund	4.35	%
Growth Allocation Fund	38.02	%
Moderate Growth Allocation Fund	23.65	%

For the fiscal year ended December 31, 2012, the Emerging Growth Fund, Balanced Allocation Fund, Growth Allocation Fund and Moderate Growth Allocation designates $1,112,786, $137,848, $498,787 and $1,675,414, respectively as long-term capital gains.

Foreign Tax Income & Foreign Tax Credit

International Equity Fund, Balanced Allocation Fund, Conservative Allocation Fund, Growth Allocation Fund and Moderate Growth Allocation Fund intend to pass through a foreign tax credit to their respective shareholders. For the fiscal year ended December 31, 2012, the total amount of foreign source income is $504,665 or $0.21 per share, $688,817 or $0.05, $194,048 or $0.02 per share, $560,528 or $0.08 per share and $881,949 or $0.06 per share, respectively. The total amount of foreign taxes to be paid is $45,263 or $0.019 per share, $81,415 or $0.006 per share, $19,620 or $0.002 per share, $70,100 or $0.01 per share and $109,210 or $0.01 per share, respectively. Shareholders’ allocable share of the foreign tax credit will be reported on Form 1099 Div.

Proxy Voting Guidelines

The Sub-Advisors are responsible for exercising the voting rights associated with the securities purchased and held by the Funds. A description of the policies and procedures that the Sub-Advisors use in fulfilling this responsibility and information regarding how those proxies were voted during the twelve month period ended June 30 are available as an exhibit to the most recent Statement of Additional Information, which can be obtained without charge upon request by calling toll free 1.800.543.0407. These items are also available on the Securities and Exchange Commission’s (the Commission) website at http://www.sec.gov.

122

Other Items (Unaudited) (Continued)

Quarterly Portfolio Disclosure

The Trust files a complete listing of portfolio holdings for each Fund as of the end of the first and third quarters of each fiscal year on Form N-Q. The complete listing (i) is available on the Commission’s website; (ii) may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC; and (iii) will be made available to shareholders upon request by calling 1.800.543.0407. Information on the operation of the Public Reference Room may be obtained by calling 1.800.SEC.0330.

Schedule of Shareholder Expenses

As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, including reinvested dividends or other distributions; and (2) ongoing costs, including investment advisory fees; distribution (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, (July 1, 2012 through December 31, 2012).

Actual Expenses

The first line for each share class of a Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Six Months Ended December 31, 2012” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line for each share class of a Fund in the table below provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

									Expenses
		Net Expense			Beginning		Ending		Paid During
		Ratio			Account		Account		the Period
		Annualized			Value		Value		Ended
		December 31,			July 1,		December 31,		December 31,
		2012			2012		2012		2012
Touchstone Dynamic Equity Fund
Class A	Actual*		2.46	%	$	1,000.00	$	986.60	$	10.24	***
Class A	Hypothetical**		2.46	%	$	1,000.00	$	1,012.80	$	12.48

Class C	Actual*		3.21	%	$	1,000.00	$	984.00	$	13.35	***
Class C	Hypothetical**		3.21	%	$	1,000.00	$	1,009.02	$	16.25

Class Y	Actual*		2.21	%	$	1,000.00	$	988.50	$	9.21	***
Class Y	Hypothetical**		2.21	%	$	1,000.00	$	1,014.06	$	11.22

Institutional Class	Actual*		2.16	%	$	1,000.00	$	988.50	$	9.00	***
Institutional Class	Hypothetical**		2.16	%	$	1,000.00	$	1,014.32	$	10.97

Touchstone Emerging Growth Fund
Class A	Actual*		1.39	%	$	1,000.00	$	1,076.20	$	6.05
Class A	Hypothetical**		1.39	%	$	1,000.00	$	1,018.20	$	7.07

123

Other Items (Unaudited) (Continued)

									Expenses
		Net Expense			Beginning		Ending		Paid During
		Ratio			Account		Account		the Period
		Annualized			Value		Value		Ended
		December 31,			July 1,		December 31,		December 31,
		2012			2012		2012		2012
Class C	Actual*		2.14	%	$	1,000.00	$	1,073.70	$	9.30
Class C	Hypothetical**		2.14	%	$	1,000.00	$	1,014.42	$	10.87

Class Y	Actual*		1.14	%	$	1,000.00	$	1,077.50	$	4.96
Class Y	Hypothetical**		1.14	%	$	1,000.00	$	1,019.46	$	5.80

Institutional Class	Actual*		0.99	%	$	1,000.00	$	1,078.10	$	4.31
Institutional Class	Hypothetical**		0.99	%	$	1,000.00	$	1,020.21	$	5.04

Touchstone International Equity Fund
Class A	Actual*		1.39	%	$	1,000.00	$	1,123.00	$	6.18
Class A	Hypothetical**		1.39	%	$	1,000.00	$	1,018.20	$	7.07

Class C	Actual*		2.14	%	$	1,000.00	$	1,119.70	$	9.51
Class C	Hypothetical**		2.14	%	$	1,000.00	$	1,014.42	$	10.87

Class Y	Actual*		1.14	%	$	1,000.00	$	1,123.80	$	5.07
Class Y	Hypothetical**		1.14	%	$	1,000.00	$	1,019.46	$	5.80

Institutional Class	Actual*		0.99	%	$	1,000.00	$	1,124.70	$	4.41
Institutional Class	Hypothetical**		0.99	%	$	1,000.00	$	1,020.21	$	5.04

Touchstone Balanced Allocation Fund
Class A	Actual*		0.41	%	$	1,000.00	$	1,043.70	$	1.76
Class A	Hypothetical**		0.41	%	$	1,000.00	$	1,023.14	$	2.09

Class C	Actual*		1.16	%	$	1,000.00	$	1,040.30	$	4.96
Class C	Hypothetical**		1.16	%	$	1,000.00	$	1,019.36	$	5.90

Class Y	Actual*		0.16	%	$	1,000.00	$	1,044.50	$	0.69
Class Y	Hypothetical**		0.16	%	$	1,000.00	$	1,024.40	$	0.82

Institutional Class	Actual*		0.16	%	$	1,000.00	$	1,044.70	$	0.69
Institutional Class	Hypothetical**		0.16	%	$	1,000.00	$	1,024.40	$	0.82

Touchstone Conservative Allocation Fund
Class A	Actual*		0.40	%	$	1,000.00	$	1,024.70	$	1.70
Class A	Hypothetical**		0.40	%	$	1,000.00	$	1,023.19	$	2.04

Class C	Actual*		1.15	%	$	1,000.00	$	1,021.80	$	4.87
Class C	Hypothetical**		1.15	%	$	1,000.00	$	1,019.41	$	5.85

Class Y	Actual*		0.15	%	$	1,000.00	$	1,026.00	$	0.64
Class Y	Hypothetical**		0.15	%	$	1,000.00	$	1,024.45	$	0.77

Institutional Class	Actual*		0.15	%	$	1,000.00	$	1,025.00	$	0.64
Institutional Class	Hypothetical**		0.15	%	$	1,000.00	$	1,024.45	$	0.77

Touchstone Growth Allocation Fund
Class A	Actual*		0.39	%	$	1,000.00	$	1,072.90	$	1.69
Class A	Hypothetical**		0.39	%	$	1,000.00	$	1,023.24	$	1.99

Class C	Actual*		1.14	%	$	1,000.00	$	1,068.20	$	4.94
Class C	Hypothetical**		1.14	%	$	1,000.00	$	1,019.46	$	5.80

124

Other Items (Unaudited) (Continued)

									Expenses
		Net Expense			Beginning		Ending		Paid During
		Ratio			Account		Account		the Period
		Annualized			Value		Value		Ended
		December 31,			July 1,		December 31,		December 31,
		2012			2012		2012		2012
Class Y	Actual*		0.14	%	$	1,000.00	$	1,073.50	$	0.61
Class Y	Hypothetical**		0.14	%	$	1,000.00	$	1,024.50	$	0.71

Institutional Class	Actual*		0.14	%	$	1,000.00	$	1,073.00	$	0.61
Institutional Class	Hypothetical**		0.14	%	$	1,000.00	$	1,024.50	$	0.71

Touchstone Moderate Growth Allocation Fund
Class A	Actual*		0.39	%	$	1,000.00	$	1,059.60	$	1.68
Class A	Hypothetical**		0.39	%	$	1,000.00	$	1,023.24	$	1.99

Class C	Actual*		1.14	%	$	1,000.00	$	1,055.20	$	4.91
Class C	Hypothetical**		1.14	%	$	1,000.00	$	1,019.46	$	5.80

Class Y	Actual*		0.14	%	$	1,000.00	$	1,060.40	$	0.60
Class Y	Hypothetical**		0.14	%	$	1,000.00	$	1,024.50	$	0.71

Institutional Class	Actual*		0.14	%	$	1,000.00	$	1,061.10	$	0.60
Institutional Class	Hypothetical**		0.14	%	$	1,000.00	$	1,024.50	$	0.71

	*	Actual Expenses are equal to fund's annualized expense ratio multiplied by the average account value over the period, multiplied by 153/365 ( to reflect a five month period). Actual returns are for the period August 1, 2012 through December 31, 2012.

	**	Hypothetical Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect one-half year period).

***

Excluding interest and dividend expenses on securities sold short, your actual cost of investment in Class A, Class C, Class Y and Institutional Class would be $6.45, $9.55, $5.42 and $5.20, respectively.

125

Management of the Trust (Unaudited)

Listed below is basic information regarding the Trustees and principal officers of the Trust. The Trust’s Statement of Additional Information includes additional information about the Trustees and is available, without charge, upon request by calling 1.800.543.0407.

Interested Trustees¹:

				Number
				of Funds
				Overseen	Other
		Term of		in the	Directorships
Name	Position(s)	Office² And		Touchstone	Held During
Address	Held with	Length of	Principal Occupation(s)	Fund	the Past
Age	Trust	Time Served	During Past 5 Years	Complex³	5 Years⁴
Jill T. McGruder Touchstone Advisors, Inc 303 Broadway Cincinnati, OH Year of Birth: 1955	President and Trustee	Until retirement at age 75 or until she resigns or is removed Trustee since 1999	President and CEO of IFS Financial Services, Inc. (a holding company).	58	Director of LaRosa’s (a restaurant chain), Capital Analysts Incorporated (an investment advisor and broker- dealer), IFS Financial Services, Inc. (a holding company), Integrity and National Integrity Life Insurance Co., Touchstone Securities (the Trust’s distributor), Touchstone Advisors (the Trust’s investment advisor and administrator), W&S Brokerage Services (a brokerage company) and W&S Financial Group Distributors (a distribution company).

Independent Trustees:
Phillip R. Cox 105 East Fourth Street Cincinnati, OH Year of Birth: 1947	Trustee	Until retirement at age 75 or until he resigns or is removed Trustee since 1994	President and Chief Executive Officer of Cox Financial Corp. (a financial services company).	58	Director of Cincinnati Bell (a communications company), Bethesda Inc. (a hospital), Timken Co. (a manufacturing company), Diebold (a technology solutions company), and Ohio Business Alliance for Higher Education. Director of Duke Energy from 1994-2008.

H. Jerome Lerner c/o Touchstone Advisors, Inc. 303 Broadway Cincinnati, OH Year of Birth: 1938	Trustee	Until retirement at age 75 or until he resigns or is removed Trustee since 1999	None	58	BASCO Shower Enclosures (a design and manufacturing company) from 2000 to present; Hebrew Union College-Jewish Institute of Religior from 1990 to present.

126

Management of the Trust (Unaudited) (Continued)

Independent Trustees (Continued):

				Number
				of Funds
				Overseen
		Term of		in the
Name	Position(s)	Office² And		Touchstone	Other
Address	Held with	Length of	Principal Occupation(s)	Fund	Directorships
Age	Trust	Time Served	During Past 5 Years	Complex³	Held⁴
Donald C. Siekmann c/o Touchstone Advisors, Inc. 303 Broadway Cincinnati, OH Year of Birth: 1938	Trustee	Until retirement at age 75 or until he resigns or is removed Trustee since 2005	Executive for Duro Bag Manufacturing Co. (a bag manufacturer) from 2002-2008.	58	Riverfront Mutual Funds (until 2008).
John P. Zanotti c/o Touchstone Advisors, Inc. 303 Broadway Cincinnati, OH Year of Birth: 1948	Trustee	Until retirement at age 75 or until he resigns or is removed Trustee since 2002	Chairman of Integrated Media Technologies (a media company) from 2007 to present.	58	Cincinnati Children’s Hospital from 1994-2010.

Susan J. Hickenlooper c/o Touchstone Advisors, Inc. 303 Broadway Cincinnati, OH Year of Birth: 1946	Trustee	Until retirement at age 75 or until he resigns or is removed Trustee since 2009	Financial Analyst for Impact 100 (Charitable Organization) from 11/ 2012 to present.	58	Trustee of Gateway Trust (a mutual fund) from 2006-2009, Trustee of Cincinnati Parks Foundation (a charitable organization) from 2000- present; Trustee of Episcopal Retirement Homes Foundation from 1998-2011.

Ms. McGruder, as a director of the Advisor and Touchstone Securities, and an officer of various affiliates of the Advisor, is an “interested person” of the Trust within the meaning of Section 2(a)(19) of the 1940 Act.

² Each Trustee is elected to serve until the age of 75 or until he or she sooner resigns or is removed.

The Touchstone Fund Complex consists of 22 series of the Trust, 3 series of Touchstone Tax-Free Trust, 17 series of Touchstone Funds Group Trust, 4 series of Touchstone Investment Trust, 1 series of Touchstone Institutional Funds Trust and 11 variable annuity series of Touchstone Variable Series Trust.

⁴

Each Trustee is also a Trustee of Touchstone Funds Group Trust, Touchstone Tax-Free Trust, Touchstone Investment Trust, Touchstone Institutional Trust, and Touchstone Variable Series Trust.

127

Management of the Trust (Unaudited) (Continued)

Principal Officers¹:

		Term of
Name	Position(s)	Office² And
Address	Held with	Length of	Principal Occupation(s)
Age	Trust	Time Served	During Past 5 Years
Jill T. McGruder Touchstone Advisors, Inc. 303 Broadway Cincinnati, OH Year of Birth: 1955	President	Until resignation, removal or disqualification President since 2004; President from 2000-2002	See biography above.

Steven M. Graziano Touchstone Advisors, Inc. 303 Broadway Cincinnati, OH Year of Birth: 1954	Vice President	Until resignation, removal or disqualification Vice President since 2009	President of Touchstone Advisors, Inc.; Executive Vice President of Pioneer Investment Management, Head of Retail Distribution and Strategic Marketing 2007- 2008; Executive Vice President of Pioneer Investment Management, Chief Marketing Officer 2002-2007.

Timothy D. Paulin Touchstone Advisors, Inc. 303 Broadway Cincinnati, OH Year of Birth: 1963	Vice President	Until resignation, removal or disqualification Vice President since 2010	Senior Vice President of Investment Research and Product Management of Touchstone Advisors, Inc.; Principal of Klein Decisions, Inc. 2003-2010.

Michael Moser³ Western & Southern Financial Group 400 Broadway Cincinnati, OH Year of Birth: 1968	Chief Compliance Officer	Until resignation, removal or disqualification Chief Compliance Officer since 2012	Vice President and Chief Compliance Officer of the Western & Southern Financial Group and Chief Compliance Officer of Touchstone Advisors.

Terrie A. Wiedenheft Touchstone Advisors, Inc. 303 Broadway Cincinnati, OH Year of Birth: 1962	Controller and Treasurer	Until resignation, removal or disqualification Controller and Treasurer since 2006	Chief Operating Officer, Chief Financial Officer and Senior Vice President of IFS Financial Services, Inc.

Principal Officers¹ (Continued):
				Number
				of Funds
				Overseen
		Term of		in the
Name	Position(s)	Office² And		Touchstone	Other
Address	Held with	Length of	Principal Occupation(s)	Fund	Directorships
Age	Trust	Time Served	During Past 5 Years	Complex²	Held
Elizabeth R. Freeman BNY Mellon 201 Washington Street Boston, MA Year of Birth: 1962	Secretary	Until resignation, Managing Director and Senior Counsel at BNY removal or disqualification. Secretary since 2011	Mellon Investment Servicing (US) Inc.	58	None

Each officer also holds the same office with Touchstone Funds Group Trust, Touchstone Institutional Funds Trust, Touchstone Investment Trust, Touchstone Tax-Free Trust, and Touchstone Tax-Free Trust.

³ Joseph Melcher resigned as Chief Compliance Officer effective September 5, 2012.

128

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PRIVACY PROTECTION POLICY

We Respect Your Privacy

Thank you for your decision to invest with us. Touchstone and its affiliates have always placed a high value on the trust and confidence our clients place in us. We believe that confidence must be earned and validated through time. In today’s world, when technology allows the sharing of information at light speeds, trust must be reinforced by our sincere pledge to take the steps necessary to ensure that the information you share with us is treated with respect and confidentiality.

Our Pledge to Our Clients

We collect only the information we need to service your account and administer our business.

We are committed to keeping your information confidential and we place strict limits and controls on the use and sharing of your information.

We make every effort to ensure the accuracy of your information.

We Collect the Following Nonpublic Personal Information About You:

Information we receive from you on or in applications or other forms, correspondence, or conversations, including, but not limited to, your name, address, phone number, social security number, assets, income and date of birth; and

Information about your transactions with us, our affiliates, or others, including, but not limited to, your account number and balance, payment history, parties to transactions, cost basis information, and other financial information.

Categories of Information We Disclose and Parties to Whom We Disclose

We do not disclose any nonpublic personal information about our current or former clients to nonaffiliated third parties, except as required or permitted by law.

We Place Strict Limits and Controls on the Use and Sharing of Your Information

We restrict access to nonpublic personal information about you to authorized employees who need the information to administer your business.

We maintain physical, electronic and procedural safeguards that comply with federal standards to protect this information.

We do not disclose any nonpublic personal information about our current or former clients to anyone, except as required or permitted by law or as described in this document.

We will not sell your personal information to anyone.

We May Provide Information to Service Your Account

Sometimes it is necessary to provide information about you to various companies such as transfer agents, custodians, broker-dealers and marketing service firms to facilitate the servicing of your account. These organizations have a legitimate business need to see some of your personal information in order for us to provide service to you. We may disclose to these various companies the information that we collect as described above. We require that these companies, including our own subsidiaries and affiliates, strictly maintain the confidentiality of this information and abide by all applicable laws. Companies within our corporate family that may receive this information are financial service providers and insurance companies. We do not permit these associated companies to sell the information for their own purposes, and we never sell our customer information.

This policy is applicable to the following affiliated companies: Touchstone Funds Group Trust, Touchstone Investment Trust, Touchstone Strategic Trust, Touchstone Tax-Free Trust, Touchstone Variable Series Trust, Touchstone Institutional Funds Trust, Touchstone Securities, Inc.* and W&S Brokerage Services, Inc.

* Touchstone Securities, Inc. serves as the underwriter to the Touchstone Funds.

A Member of Western & Southern Financial Group^®

The Privacy Protection Policy is not part of the Annual Report.

131

Touchstone Investments

Distributor

Touchstone Securities, Inc.*

303 Broadway

Cincinnati, Ohio 45202-4203 800.638.8194

www.touchstoneinvestments.com

Investment Advisor

Touchstone Advisors, Inc.*

303 Broadway

Cincinnati, Ohio 45202-4203

Transfer Agent

BNY Mellon Investment Servicing (US) Inc.

4400 Computer Drive

Westborough, MA 01581

Shareholder Service

800.543.0407

* A Member of Western & Southern Financial Group

TSF-54CC-TST-AR-1212

Item 2. Code of Ethics.

(a)

The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.

(c)

There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description.

(d)

The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item’s instructions.

Item 3. Audit Committee Financial Expert.

The registrant’s Board of Trustees has determined that the registrant has at least one audit committee financial expert serving on its audit committee. Mr. Donald Siekmann is the registrant’s audit committee financial expert and is an independent trustee within the meaning of the Investment Company Act of 1940, as amended (the “1940 Act”).

Item 4. Principal Accountant Fees and Services.

Audit Fees

(a)

The Audit fees for Touchstone Strategic Trust (December Funds) totaled $85,680 for the fiscal year ended December 31, 2012, including fees associated with the annual audit and filing of Form N-1A and Form N-SAR.

The aggregate fees billed for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements from the period April 1, 2012 through fiscal year ended July 31, 2012 is $153,800. The Funds were acquired by Touchstone Strategic Trust on April 16, 2012.

Audit-Related Fees

(b)

There were no audit-related fees for the fiscal year end December 31, 2012 and for the period April 1, 2012 through the fiscal year ended July 31, 2012 for the Touchstone Strategic Trust (December Funds). The Funds were acquired by Touchstone Strategic Trust on April 16, 2012.

Tax Fees

(c)

Fees for tax compliance services totaled $25,000 for the fiscal year ended December 31, 2012 and $25,000 from the period April 1, 2012 through fiscal year ended July 31, 2012. The Funds were acquired by Touchstone Strategic Trust on April 16, 2012. Fees for 2012 relate to the preparation of federal income and excise tax returns and review of capital gains distribution calculations.

All Other Fees

(d)

There were no fees for all other services to Touchstone Strategic Trust (December Funds) not included above. The Funds were acquired by Touchstone Strategic Trust on April 16, 2012.

(e)(1)

Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.

The Audit Committee’s pre-approval policies describe the types of audit, audit-related, tax and other services that have the general pre-approval of the Audit Committee. The pre-approval policies provide that annual audit service fees, tax services not specifically granted pre-approval, services exceeding pre-approved cost levels and other services that have not received general pre-approval will be subject to specific pre-approval by the Audit Committee. The pre-approval policies further provide that the Committee may grant general pre-approval to other audit services (statutory audits and services associated with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings), audit-related services (accounting consultations related to accounting, financial reporting or disclosure matters not classified as “audit services,” assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities, agreed-upon or expanded audit procedures related to accounting and/or billing records required to respond to or comply with financial, accounting or regulatory reporting matters and assistance with internal control reporting requirements under Form N-SAR and Form N-CSR), tax services that have historically been provided by the auditor that the Committee believes would not impair the independence of the auditor and are consistent with the SEC’s rules on auditor independence and permissible non-audit services classified as “all other services” that are routine and recurring services.

(e)(2)

All services described in paragraphs (c) through (d) of Item 4 were approved by the Audit Committee. Not applicable for paragraph (b) of Item 4.

(f)

The percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was less than fifty percent.

(g)

The aggregate non-audit fees for Touchstone Strategic Trust (December Funds) and certain entities*, totaled approximately $66,500 for the fiscal year ended December 31, 2012 and $25,000 from the period April 1, 2012 through fiscal year ended July 31, 2012. The Funds were acquired by Touchstone Strategic Trust on April 16, 2012.

* These include the advisors (excluding sub-advisors) and any entity controlling, controlled by or under common control with the advisors that provides ongoing services to the registrant (Funds)

(h)

The registrant's audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence.

Item 5. Audit Committee of Listed registrants.

Not applicable.

Item 6. Investments.

(a)

Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form.

(b)

Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s board of trustees, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.

Item 11. Controls and Procedures.

(a)

The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).

(b)

There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a)(1)

Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto.

(a)(2)

Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.

(a)(3)

Not applicable.

(b)

Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes- Oxley Act of 2002 are attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant)

Touchstone Strategic Trust

By (Signature and Title)*	/s/ Jill T. McGruder
	Jill T. McGruder, President
	(principal executive officer)

Date

02/27/13

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title)*	/s/ Jill T. McGruder
	Jill T. McGruder, President
	(principal executive officer)

Date

02/27/13

By (Signature and Title)*	/s/ Terrie A. Wiedenheft
	Terrie A. Wiedenheft, Controller and Treasurer
	(principal financial officer)

Date

02/27/13

^* Print the name and title of each signing officer under his or her signature.

Touchstone Mid Cap Growth Fund Class C (TOECX) N-CSRCertified annual shareholder report (management investment company)