Touchstone Mid Cap Growth Fund Class C (TOECX) N-CSRS Certified semi-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: June 30, 2013

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.

June 30, 2013

(Unaudited)

Semi-Annual Report

Touchstone Strategic Trust

Touchstone Dynamic Equity Fund

Touchstone Balanced Allocation Fund

Touchstone Conservative Allocation Fund

Touchstone Growth Allocation Fund

Touchstone Moderate Growth Allocation Fund

Table of Contents  

	Page
Tabular Presentation of Portfolios of Investments	3 - 4
Portfolios of Investments:
Touchstone Dynamic Equity Fund	5
Touchstone Balanced Allocation Fund	8
Touchstone Conservative Allocation Fund	9
Touchstone Growth Allocation Fund	10
Touchstone Moderate Growth Allocation Fund	11
Statements of Assets and Liabilities	12 - 15
Statements of Operations	16 - 17
Statements of Changes in Net Assets	18 - 21
Statements of Changes in Net Assets - Capital Stock Activity	22 - 26
Statement of Cash Flows	27
Financial Highlights	28 - 47
Notes to Financial Statements	48 - 70
Other Items	71 - 75
Privacy Protection Policy	79

2

Tabular Presentation of Portfolios of Investments (Unaudited) 

June 30, 2013

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		22.4	%
Consumer Discretionary		15.2
Health Care		14.9
Financials		14.7
Energy		13.9
Consumer Staples		11.9
Industrials		10.6
Materials		5.6
Telecommunication Services		4.8
Utilities		2.3
Investment Fund		3.6
Other Assets/Liabilities (Net)		0.0
		119.9	%
Short Positions and Written Options
Information Technology		(4.9	)
Energy		(3.6	)
Consumer Discretionary		(3.1	)
Health Care		(2.9	)
Materials		(2.2	)
Telecommunication Services		(2.2	)
Call and Put Options		(0.6	)
Consumer Staples		(0.4	)
Industrials		0.0
		(19.9	)
Total		100.0	%

Touchstone Balanced Allocation Fund

Sector Allocation	(% of Net Assets)
Government/Corporate		23.5	%
International Equity		13.8
Value		11.9
Growth		9.1
Equity Income		6.1
Balanced		5.0
International Debt		5.0
Blue Chip		4.1
Emerging Market -Equity		3.8
Various Assets		3.1
Taxable -Money Market		3.1
Value Small-Cap		3.0
Corporate/Preferred -High Yield		3.0
Sector Fund Real -Estate		2.9
Growth Mid-Cap		2.0
Growth Small- Cap		1.0
Other Assets/Liabilities (Net)		(0.4	)
Total		100.0	%

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

3

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

Touchstone Conservative Allocation Fund

Sector Allocation	(% of Net Assets)
Government/Corporate		44.8	%
International Debt		8.1
Balanced		7.1
International Equity		6.0
Equity Income		5.1
Taxable-Money Market		5.1
Growth		5.1
Various Assets		5.1
Value		5.1
Blue Chip		3.0
Corporate/Preferred-High Yield		3.0
Sector Fund Real-Estate		2.0
Value Small-Cap		1.0
Emerging Market-Equity		1.0
Other Assets/Liabilities (Net)		(1.5	)
Total		100.0	%

Touchstone Growth Allocation Fund

Sector Allocation	(% of Net Assets)
International Equity		23.1	%
Value		16.3
Growth		11.2
Emerging Market-Equity		8.6
Government/Corporate		6.2
Equity Income		6.1
Value Small-Cap		6.1
Sector Fund Real-Estate		5.8
Growth Mid-Cap		5.1
Blue Chip		4.1
Value Mid-Cap		3.1
Growth Small-Cap		3.1
Various Assets		2.1
Other Assets/Liabilities (Net)		(0.9	)
Total		100.0	%

Touchstone Moderate Growth Allocation Fund

Sector Allocation	(% of Net Assets)
International Equity		16.9	%
Government/Corporate		15.2
Value		14.2
Growth		10.1
Emerging Market-Equity		6.6
Equity Income		6.1
Value Small-Cap		5.1
Blue Chip		4.1
Growth Mid-Cap		4.1
Balanced		4.0
Sector Fund Real-Estate		3.8
Various Assets		2.1
Value Mid-Cap		2.0
Growth Small-Cap		2.0
Corporate/Preferred-High Yield		2.0
International Debt		2.0
Other Assets/Liabilities (Net)		(0.3	)
Total		100.0	%

4

Portfolio of Investments 

Touchstone Dynamic Equity Fund – June 30, 2013 (Unaudited)

			Market
	Shares		Value
Common Stocks†— 116.3%
Information Technology — 22.4%
AOL, Inc.		7,177	$	261,817
Apple, Inc.		1,134		449,155
Arrow Electronics, Inc.*		1,256		50,052
Avnet, Inc.*		12,918		434,045
Booz Allen Hamilton Holding Corp.		25,121		436,604
Cisco Systems, Inc.		45,851		1,114,638
Computer Sciences Corp.		27,065		1,184,635
Dell, Inc.		4,456		59,488
Harris Corp.		24,099		1,186,876
Hewlett-Packard Co.		16,340		405,232
Ingram Micro, Inc. - Class A*		30,732		583,601
International Business Machines Corp.		13,774		2,632,349
Microsoft Corp.		33,012		1,139,904
Oracle Corp.		63,346		1,945,989
SAIC, Inc.		53,256		741,856
Seagate Technology PLC (Ireland)		6,242		279,829
Symantec Corp.		25,221		566,716
Western Digital Corp.		15,239		946,189
				14,418,975
Consumer Discretionary — 15.2%
AutoNation, Inc.*		1,368		59,358
Best Buy Co., Inc.		3,201		87,483
Brinker International, Inc.		23,608		930,863
Cablevision Systems Corp. - Class A		18,009		302,911
Charter Communications, Inc.*		2,480		307,148
CST Brands, Inc.*		2		62
Delphi Automotive PLC (Channel Islands)		33,040		1,674,798
Ford Motor Co.		32,893		508,855
Goodyear Tire & Rubber Co. (The)*		78,359		1,198,109
Home Depot, Inc. (The)		27,084		2,098,197
Kohl's Corp.		1,119		56,521
Liberty Global PLC (United Kingdom)*		1,650		122,232
Macy's, Inc.		16,937		812,976
Regal Entertainment Group		33,971		608,081
Sears Holdings Corp.*		2,759		116,099
Staples, Inc.		1,744		27,660
Target Corp.		12,532		862,953
				9,774,306
Health Care — 14.9%
AbbVie, Inc.		45,775		1,892,338
Amgen, Inc.		21,012		2,073,044
Cardinal Health, Inc.		35,255		1,664,036
Covance, Inc.*		1,979		150,681
Eli Lilly & Co.		23,401		1,149,457
HCA Holdings, Inc.		15,724		567,007
Life Technologies Corp.*		323		23,905
Mylan, Inc.*		48,208		1,495,894
Pfizer, Inc.		19,231		538,660
				9,555,022
Financials — 14.7%
Allstate Corp. (The)		41,476		1,995,825
American Express Co.		4,948		369,912
Bank of America Corp.		55,526		714,064
CBRE Group, Inc. - Class A*		2,503		58,470
Citigroup, Inc.		28,101		1,348,005
Fidelity National Financial, Inc.		7,474		177,956
Jones Lang LaSalle, Inc.		4,117		375,223
Legg Mason, Inc.		2,687		83,324
Morgan Stanley		32,998		806,141
NYSE Euronext		247		10,226
Popular, Inc. (Puerto Rico)*		33,109		1,004,197
Realogy Holdings Corp.*		5,928		284,781
US Bancorp		60,451		2,185,304
				9,413,428
Energy — 13.9%
Anadarko Petroleum Corp.		327		28,099
Chevron Corp.		21,020		2,487,507
ConocoPhillips		35,750		2,162,875
Marathon Petroleum Corp.		9,986		709,605
Murphy Oil Corp.		9,130		555,926
PBF Energy, Inc.		10,380		268,842
Phillips 66		10,587		623,680
Tesoro Corp.		19,074		997,952
Valero Energy Corp.		31,932		1,110,276
				8,944,762
Consumer Staples — 11.9%
Altria Group, Inc.		9,693		339,158
Archer-Daniels-Midland Co.		24,105		817,401
Bunge Ltd. (Bermuda)		16,263		1,150,933
Coca-Cola Enterprises, Inc.		18,204		640,053
Herbalife Ltd. (Cayman Islands)		204		9,209
Kroger Co. (The)		12,494		431,543
Philip Morris International, Inc.		13,195		1,142,951
Procter & Gamble Co. (The)		996		76,682
Safeway, Inc.		31,744		751,063
Wal-Mart Stores, Inc.		30,384		2,263,304
WhiteWave Foods Co.*		1		16
				7,622,313
Industrials — 10.6%
3M Co.		16,809		1,838,064
Boeing Co. (The)		6,795		696,080
CNH Global N.V.		13,806		575,158
Delta Air Lines, Inc.*		30,501		570,674
Emerson Electric Co.		3,260		177,800
FedEx Corp.		4,907		483,732
General Electric Co.		7,961		184,616
Lockheed Martin Corp.		5,514		598,048
Masco Corp.		4,354		84,859
Northrop Grumman Corp.		2,657		220,000
Pitney Bowes, Inc.		87,352		1,282,327
RR Donnelley & Sons Co.		3,115		43,641
Terex Corp.*		1,271		33,427
				6,788,426
Materials — 5.6%
Freeport-McMoRan Copper & Gold, Inc.		31,179		860,852

5

Touchstone Dynamic Equity Fund (Unaudited) (Continued) 

					Market
		Shares			Value
Common Stocks† — 116.3% (Continued)
Materials — (Continued)
Huntsman Corp.			18,525		$	306,774
Lyondellbasell Industries N.V.			23,194			1,536,834
Newmont Mining Corp.			23,993			718,590
Southern Copper Corp.			5,783			159,726
						3,582,776
Telecommunication Services — 4.8%
Sprint Nextel Corp.*			111,541			783,018
Verizon Communications, Inc.			45,466			2,288,758
						3,071,776
Utilities — 2.3%
Edison International			28,901			1,391,872
Exelon Corp.			2,614			80,720
						1,472,592
Total Common Stocks					$	74,644,376	��
Investment Fund — 3.6%
Touchstone Institutional Money Market Fund^			2,301,056			2,301,056
Total Long Positions
(Cost $69,390,129)					$	76,945,432
Securities Sold Short— (19.3%)
Common Stocks— (19.3%)
Information Technology — (4.9%)
F5 Networks, Inc.*			(4,201	)		(289,029	)
Fortinet, Inc.*			(549	)		(9,608	)
Fusion-io, Inc.*			(17,015	)		(242,294	)
Informatica Corp.*			(2,921	)		(102,177	)
IPG Photonics Corp.			(12,549	)		(762,101	)
JDS Uniphase Corp.*			(1,624	)		(23,353	)
Nuance Communications, Inc.*			(23,563	)		(433,088	)
Palo Alto Networks, Inc.*			(2,364	)		(99,666	)
Rackspace Hosting, Inc.*			(9,286	)		(351,846	)
Splunk, Inc.*			(4,506	)		(208,898	)
Stratasys Ltd. (Ireland)*			(4,889	)		(409,405	)
VeriFone Systems, Inc.*			(3,137	)		(52,732	)
Workday, Inc.*			(2,473	)		(158,495	)
Zynga, Inc.*			(5,106	)		(14,195	)
						(3,156,887	)
Energy — (3.6%)
Alpha Natural Resources, Inc.*			(53,309	)		(279,339	)
Cheniere Energy, Inc.*			(25,834	)		(717,152	)
EXCO Resources, Inc.			(7,569	)		(57,827	)
Golar LNG Ltd.			(22,510	)		(717,844	)
Peabody Energy Corp.			(22,070	)		(323,105	)
Pioneer Natural Resources Co.			(1,343	)		(194,399	)
						(2,289,666	)
Consumer Discretionary — (3.1%)
DreamWorks Animation SKG, Inc. - Class A*			(7,042	)		(180,698	)
DSW, Inc.			(5,468	)		(401,733	)
Gentex Corp.			(32,258	)		(743,547	)
JC Penney Co., Inc.*			(20,710	)		(353,727	)
Liberty Media Corp.*			(1,792	)		(227,154	)
Toll Brothers, Inc.*			(2,311	)		(75,408	)
						(1,982,267	)
Health Care — (2.9%)
Ariad Pharmaceuticals, Inc.*			(9,238	)		(161,573	)
Catamaran Corp. (Canada)*			(10,662	)		(519,453	)
Incyte Corp. Ltd.*			(30,231	)		(665,082	)
Salix Pharmaceuticals Ltd.*			(1,531	)		(101,276	)
Vertex Pharmaceuticals, Inc.*			(5,516	)		(440,563	)
						(1,887,947	)
Materials — (2.2%)
Cliffs Natural Resources, Inc.			(7,302	)		(118,657	)
Tahoe Resources, Inc. (Canada)*			(7,693	)		(108,856	)
United States Steel Corp.			(47,081	)		(825,330	)
Walter Energy, Inc.			(34,596	)		(359,798	)
						(1,412,641	)
Telecommunication Services — (2.2%)
Crown Castle International Corp.*			(13,407	)		(970,533	)
NII Holdings, Inc.*			(51,490	)		(343,438	)
SBA Communications Corp.*			(987	)		(73,156	)
						(1,387,127	)
Consumer Staples — (0.4%)
Fresh Market, Inc. (The)*			(5,286	)		(262,820	)
	��
Industrials — 0.0%
GrafTech International Ltd.*			(1,690	)		(12,303	)
Total Common Stocks					$	(12,391,658	)
Total Securities Sold Short
(Proceeds $(13,605,418))					$	(12,391,658	)
			Number
			of
			Contracts
Written Options Contracts†— (0.6%)
Call Options — (0.5%)
SPDR S&P 500 ETF Trust
July 2013
Strike Price $161			(3,285	)		(312,075	)
SPDR S&P 500 ETF Trust
July 2013
Strike Price $162			(765	)		(39,780	)
Total Call Options						(351,855	)

6

Touchstone Dynamic Equity Fund (Unaudited) (Continued) 

	Number
	of			Market
	Contracts			Value
Put Options — (0.1%)
S&P 500 Index
July 2013
Strike Price $1,590		(30	)	$	(52,200	)
Total Written Options Contracts
(Proceeds $(488,538))				$	(404,055	)
Total Investment Securities —100.0%
(Cost $55,296,173)				$	64,149,719
Other Assets in Excess of Liabilities — 0.0%					28,300
Net Assets — 100.0%				$	64,178,019

* Non-income producing security.

^ Affiliated Fund. See Note 4 in Notes to Financial Statements.

† All or a portion of these securities are held as collateral for securities sold short and written options. The total value of the securities held as collateral as of June 30, 2013 was $74,644,376.

Portfolio Abbreviations:

ETF - Exchange Traded Fund

PLC - Public Limited Company

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:
Long Positions
Common Stocks	$	74,644,376		$	—	$	—	$	74,644,376
Investment Fund		2,301,056			—		—		2,301,056
								$	76,945,432
Liabilities:
Securities Sold Short
Common Stocks	$	(12,391,658	)	$	—	$	—	$	(12,391,658	)
Other Financial Instruments
Liabilities:
Written Option Equity Contracts		(404,055	)		—		—		(404,055	)
								$	(12,795,713	)

Transactions in written options for the period ended June 30, 2013

	Number of
	Contracts			Premium
Beginning of Period, December 31, 2012		930		$	1,799,847
Call Options Written		9,350			9,034,134
Put Options Written		148			365,083
Call Options Closed		(5,018	)		(10,271,877	)
Put Options Closed		(70	)		(150,545	)
Call Options Expired		(1,182	)		(111,065	)
Put Options Expired		(78	)		(177,039	)
Call Options Exercised		—			—
June 30, 2013		4,080		$	488,538

See accompanying Notes to Financial Statements.

7

Portfolio of Investments 

Touchstone Balanced Allocation Fund – June 30, 2013 (Unaudited)

			Market
	Shares		Value
Affiliated Mutual Funds^— 100.4%
Government/Corporate—23.5%
Touchstone Core Bond Fund		370,203	$	3,816,791
Touchstone Total Return Bond Fund		1,282,699		13,032,222
Touchstone Ultra Short Duration Fixed Income Fund		1,359,615		12,861,959
				29,710,972
International Equity — 13.8%
Touchstone International Small Cap Fund		294,605		3,803,348
Touchstone International Value Fund		1,797,390		13,696,109
				17,499,457
Value — 11.9%
Touchstone Focused Fund		179,451		5,141,274
Touchstone Value Fund		1,235,083		9,917,716
				15,058,990
Growth — 9.1%
Touchstone Growth Opportunities Fund		91,672		2,547,555
Touchstone Sands Capital Institutional Growth Fund		479,286		8,909,932
				11,457,487
Equity Income — 6.1%
Touchstone Premium Yield Equity Fund, Class Y		886,564		7,695,373
Balanced — 5.0%
Touchstone Flexible Income Fund		603,948		6,341,451
International Debt — 5.0%
Touchstone International Fixed Income Fund		621,684		6,316,308
Blue Chip — 4.1%
Touchstone Dynamic Equity Fund*		415,028		5,150,503
Emerging Market-Equity — 3.8%
Touchstone Emerging Markets Equity Fund		423,503		4,861,816
Various Assets — 3.1%
Touchstone Merger Arbitrage Fund		351,532		3,870,366
Taxable-Money Market — 3.1%
Touchstone Institutional Money Market Fund		3,869,553		3,869,553
Value Small-Cap — 3.0%
Touchstone Small Cap Core Fund		134,143		2,547,371
Touchstone Small Company Value Fund		70,683		1,298,439
				3,845,810
Corporate/Preferred-High Yield — 3.0%
Touchstone High Yield Fund		421,555		3,789,779
Sector Fund Real-Estate — 2.9%
Touchstone Global Real Estate Fund		297,533		3,665,605
Growth Mid-Cap — 2.0%
Touchstone Mid Cap Fund		125,627		2,553,997
Growth Small-Cap — 1.0%
Touchstone Small Cap Growth Fund		236,749		1,290,280
Total Affiliated Mutual Funds			$	126,977,747
Total Investment Securities —100.4%
(Cost $122,143,048)			$	126,977,747
Liabilities in Excess of Other Assets — (0.4%)				(472,022	)
Net Assets — 100.0%			$	126,505,725

* Non-income producing security.

^ All affiliated fund investments are in Institutional Class shares, 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:

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
Affiliated Mutual Funds	$	126,977,747	$	—	$	—	$	126,977,747

See accompanying Notes to Financial Statements.

8

Portfolio of Investments 

Touchstone Conservative Allocation Fund – June 30, 2013 (Unaudited)

			Market
	Shares		Value
Affiliated Mutual Funds^— 101.5%
Government/Corporate—44.8%
Touchstone Core Bond Fund		346,928	$	3,576,823
Touchstone Total Return Bond Fund		1,336,710		13,580,971
Touchstone Ultra Short Duration Fixed Income Fund		1,507,500		14,260,954
				31,418,748
International Debt — 8.1%
Touchstone International Fixed Income Fund		560,190		5,691,528
Balanced — 7.1%
Touchstone Flexible Income Fund		477,317		5,011,829
International Equity — 6.0%
Touchstone International Small Cap Fund		55,061		710,842
Touchstone International Value Fund		459,687		3,502,813
				4,213,655
Equity Income — 5.1%
Touchstone Premium Yield Equity Fund, Class Y		411,985		3,576,034
Taxable-Money Market — 5.1%
Touchstone Institutional Money Market Fund		3,568,896		3,568,896
Growth — 5.1%
Touchstone Growth Opportunities Fund		25,623		712,062
Touchstone Sands Capital Institutional Growth Fund		153,440		2,852,448
				3,564,510
Various Assets — 5.1%
Touchstone Merger Arbitrage Fund		323,614		3,562,987
Value — 5.1%
Touchstone Value Fund		442,200		3,550,864
Blue Chip — 3.0%
Touchstone Dynamic Equity Fund*		172,278		2,137,973
Corporate/Preferred-High Yield — 3.0%
Touchstone High Yield Fund		237,465		2,134,813
Sector Fund Real-Estate — 2.0%
Touchstone Global Real Estate Fund		111,927		1,378,947
Value Small-Cap — 1.0%
Touchstone Small Cap Core Fund		37,435		710,887
Emerging Market-Equity — 1.0%
Touchstone Emerging Markets Equity Fund		59,987		688,655
Total Affiliated Mutual Funds			$	71,210,326
Total Investment Securities —101.5%
(Cost $69,714,199)			$	71,210,326
Liabilities in Excess of Other Assets — (1.5%)				(1,065,204	)
Net Assets — 100.0%			$	70,145,122

* Non-income producing security.

^ All affiliated fund investments are in Institutional Class shares, 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:

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
Affiliated Mutual Funds	$	71,210,326	$	—	$	—	$	71,210,326

See accompanying Notes to Financial Statements.

9

Portfolio of Investments 

Touchstone Growth Allocation Fund – June 30, 2013 (Unaudited) 

			Market
	Shares		Value
Affiliated Mutual Funds^— 100.9%
International Equity — 23.1%
Touchstone International Small Cap Fund		432,225	$	5,580,023
Touchstone International Value Fund		1,646,724		12,548,038
				18,128,061
Value — 16.3%
Touchstone Focused Fund		224,628		6,435,599
Touchstone Value Fund		796,223		6,393,668
				12,829,267
Growth — 11.2%
Touchstone Growth Opportunities Fund		57,609		1,600,970
Touchstone Sands Capital Institutional Growth Fund		388,174		7,216,152
				8,817,122
Emerging Market-Equity — 8.6%
Touchstone Emerging Markets Equity Fund		587,730		6,747,143
Government/Corporate—6.2%
Touchstone Ultra Short Duration Fixed Income Fund		511,136		4,835,349
Equity Income — 6.1%
Touchstone Premium Yield Equity Fund, Class Y		556,902		4,833,912
Value Small-Cap — 6.1%
Touchstone Small Cap Core Fund		168,315		3,196,299
Touchstone Small Company Value Fund		88,155		1,619,407
				4,815,706
Sector Fund Real-Estate — 5.8%
Touchstone Global Real Estate Fund		367,171		4,523,542
Growth Mid-Cap — 5.1%
Touchstone Mid Cap Fund		78,898		1,603,987
Touchstone Mid Cap Growth Fund		99,093		2,399,039
				4,003,026
Blue Chip — 4.1%
Touchstone Dynamic Equity Fund*		259,690		3,222,752
Value Mid-Cap — 3.1%
Touchstone Mid Cap Value Fund		157,854		2,424,639
Growth Small-Cap — 3.1%
Touchstone Small Cap Growth Fund		442,360		2,410,861
Various Assets — 2.1%
Touchstone Merger Arbitrage Fund		146,896		1,617,325
Total Affiliated Mutual Funds			$	79,208,705
Total Investment Securities —100.9%
(Cost $74,391,234)			$	79,208,705
Liabilities in Excess of Other Assets — (0.9%)				(674,039	)
Net Assets — 100.0%			$	78,534,666

* Non-income producing security.

^ All affiliated fund investments are in Institutional Class shares, 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:

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
Affiliated Mutual Funds	$	79,208,705	$	—	$	—	$	79,208,705

See accompanying Notes to Financial Statements.

10

Portfolio of Investments 

Touchstone Moderate Growth Allocation Fund – June 30, 2013 (Unaudited) 

			Market
	Shares		Value
Affiliated Mutual Funds^— 100.3%
International Equity — 16.9%
Touchstone International Small Cap Fund		474,820	$	6,129,921
Touchstone International Value Fund		2,572,650		19,603,594
				25,733,515
Government/Corporate—15.2%
Touchstone Total Return Bond Fund		1,478,133		15,017,829
Touchstone Ultra Short Duration Fixed Income Fund		863,478		8,168,502
				23,186,331
Value — 14.2%
Touchstone Focused Fund		324,645		9,301,092
Touchstone Value Fund		1,536,818		12,340,651
				21,641,743
Growth — 10.1%
Touchstone Growth Opportunities Fund		110,817		3,079,618
Touchstone Sands Capital Institutional Growth Fund		664,140		12,346,359
				15,425,977
Emerging Market-Equity — 6.6%
Touchstone Emerging Markets Equity Fund		869,571		9,982,675
Equity Income — 6.1%
Touchstone Premium Yield Equity Fund, Class Y		1,072,872		9,312,533
Value Small-Cap — 5.1%
Touchstone Small Cap Core Fund		243,718		4,628,210
Touchstone Small Company Value Fund		170,027		3,123,389
				7,751,599
Blue Chip — 4.1%
Touchstone Dynamic Equity Fund*		500,882		6,215,946
Growth Mid-Cap — 4.1%
Touchstone Mid Cap Fund		151,932		3,088,779
Touchstone Mid Cap Growth Fund		127,272		3,081,258
				6,170,037
Balanced — 4.0%
Touchstone Flexible Income Fund		586,363		6,156,811
Sector Fund Real-Estate — 3.8%
Touchstone Global Real Estate Fund		463,326		5,708,171
Various Assets — 2.1%
Touchstone Merger Arbitrage Fund		283,073		3,116,634
Value Mid-Cap — 2.0%
Touchstone Mid Cap Value Fund		202,711		3,113,642
Growth Small-Cap — 2.0%
Touchstone Small Cap Growth Fund		568,819		3,100,065
Corporate/Preferred-High Yield — 2.0%
Touchstone High Yield Fund		341,134		3,066,792
International Debt — 2.0%
Touchstone International Fixed Income Fund		301,452		3,062,749
Total Affiliated Mutual Funds			$	152,745,220
Total Investment Securities —100.3%
(Cost $143,766,011)			$	152,745,220
Liabilities in Excess of Other Assets — (0.3%)				(468,173	)
Net Assets — 100.0%			$	152,277,047

* Non-income producing security.

^ All affiliated fund investments are in Institutional Class shares, 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:

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
Affiliated Mutual Funds	$	152,745,220	$	—	$	—	$	152,745,220

See accompanying Notes to Financial Statements.

11

Statements of Assets and Liabilities

June 30, 2013 (Unaudited)

	Touchstone			Touchstone			Touchstone
	Dynamic			Balanced			Conservative
	Equity			Allocation			Allocation
	Fund			Fund			Fund
Assets
Investments, at cost	$	69,390,129		$	122,143,048		$	69,714,199
Affiliated securities, at market value	$	2,301,056		$	126,977,747		$	71,210,326
Non-affiliated securities, at market value		74,644,376			—			—
Investments, at market value	$	76,945,432		$	126,977,747		$	71,210,326
Cash deposits held at prime broker		125,527			—			—
Dividends and interest receivable		87,004			22,077			24,621
Receivable for capital shares sold		42,418			65,842			48,839
Receivable from Investment Advisor		—			11,803			4,857
Other assets		46,559			11,524			12,049
Total Assets		77,246,940			127,088,993			71,300,692
Liabilities
Written options, at market value (A)		404,055			—			—
Securities sold short (B)		12,391,658			—			—
Dividends for securities sold short payable		4,278			—			—
Dividends payable		—			—			—
Payable to Transfer Agent		25,197			30,300			26,016
Payable for capital shares redeemed		134,235			499,614			1,097,279
Payable to Investment Advisor		55,412			—			—
Payable to other affiliates		13,793			30,070			12,530
Payable to Trustees		1,502			1,262			1,253
Payable for professional services		6,491			8,097			7,037
Other accrued expenses and liabilities		32,300			13,925			11,455
Total Liabilities		13,068,921			583,268			1,155,570
Net Assets	$	64,178,019		$	126,505,725		$	70,145,122
Net assets consist of:
Paid-in capital	$	200,570,784		$	161,801,994		$	72,773,594
Accumulated net investment income (loss)		225,444			(236	)		(210	)
Accumulated net realized losses on investments, written options, foreign currency transactions and short positions		(145,471,755	)		(40,130,732	)		(4,124,389	)
Net unrealized appreciation on investments, written options, foreign currency transactions and short positions		8,853,546			4,834,699			1,496,127
Net Assets	$	64,178,019		$	126,505,725		$	70,145,122
(A) Proceeds received for written options:	$	488,538		$	—		$	—
(B) Proceeds received for securities sold short:	$	13,605,418		$	—		$	—

See accompanying Notes to Financial Statements.

12

Statements of Assets and Liabilities (Unaudited) (Continued)

			Touchstone
Touchstone			Moderate
Growth			Growth
Allocation			Allocation
Fund			Fund
$	74,391,234		$	143,766,011
$	79,208,705		$	152,745,220
	—			—
$	79,208,705		$	152,745,220
	—			—
	8,272			13,945
	10,401			63,335
	6,132			239
	9,783			16,326
	79,243,293			152,839,065
	—			—
	—			—
	—			—
	—			65
	43,837			80,249
	623,555			429,938
	—			—
	15,337			33,066
	807			1,567
	6,160			7,031
	18,931			10,102
	708,627			562,018
$	78,534,666		$	152,277,047
$	116,402,572		$	185,275,388
	(126	)		(197	)
	(42,685,251	)		(41,977,353	)
	4,817,471			8,979,209
$	78,534,666		$	152,277,047
$	—		$	—
$	—		$	—

13

Statements of Assets and Liabilities (Unaudited) (Continued) 

	Touchstone		Touchstone		Touchstone
	Dynamic		Balanced		Conservative
	Equity		Allocation		Allocation
	Fund		Fund		Fund
Pricing of Class A Shares
Net assets applicable to Class A shares	$	15,532,979	$	47,071,093	$	24,442,236
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		1,273,536		4,082,249		2,309,110
Net asset value price per share*	$	12.20	$	11.53	$	10.59
Maximum offering price per share	$	12.94	$	12.23	$	11.24
Pricing of Class C Shares
Net assets applicable to Class C shares	$	10,196,116	$	36,856,792	$	17,190,114
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		886,859		3,199,820		1,631,872
Net asset value, offering price per share**	$	11.50	$	11.52	$	10.53
Pricing of Class Y Shares
Net assets applicable to Class Y shares	$	21,704,084	$	42,545,497	$	27,877,834
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		1,751,415		3,683,860		2,632,987
Net asset value, offering price and redemption price per share	$	12.39	$	11.55	$	10.59
Pricing of Institutional Class Shares
Net assets applicable to Institutional Class Shares	$	16,744,840	$	32,343	$	634,938
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value)		1,348,876		2,813		59,940
Net asset value, offering price and redemption price per share	$	12.41	$	11.50	$	10.59

* 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 if redeemed within a one-year period from the date of purchase.

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

See accompanying Notes to Financial Statements.

14

Statements of Assets and Liabilities (Unaudited) (Continued) 

		Touchstone
Touchstone		Moderate
Growth		Growth
Allocation		Allocation
Fund		Fund
$	29,368,068	$	66,682,229
	2,348,153		5,616,075
$	12.51	$	11.87
$	13.27	$	12.59
$	23,957,784	$	48,503,898
	1,992,488		4,149,553
$	12.02	$	11.69
$	25,190,831	$	37,081,801
	1,994,999		3,100,569
$	12.63	$	11.96
$	17,983	$	9,119
	1,562		766
$	11.51	$	11.91

15

Statements of Operations

For the Six Months Ended June 30, 2013 (Unaudited) 

	Touchstone			Touchstone			Touchstone
	Dynamic			Balanced			Conservative
	Equity			Allocation			Allocation
	Fund			Fund			Fund
Investment Income
Dividends from affiliated funds	$	519		$	932,028		$	716,437
Dividends from non-affiliated securities(A)		801,514			—			—
Total Investment Income		802,033			932,028			716,437
Expenses
Investment advisory fees		273,623			131,370			75,975
Administration fees		54,752			111,743			64,637
Compliance fees and expenses		477			644			1,153
Custody fees		3,634			3,503			1,891
Professional fees		8,167			8,304			8,207
Transfer Agent fees, Class A		13,183			33,989			21,028
Transfer Agent fees, Class C		5,989			11,833			5,734
Transfer Agent fees, Class Y		10,041			21,576			13,660
Transfer Agent fees, Institutional Class		43			13			35
Registration Fees, Class A		5,942			11,691			11,609
Registration Fees, Class C		7,546			11,925			9,940
Registration Fees, Class Y		6,472			8,627			9,736
Registration Fees, Institutional Class		9,059			10,440			10,394
Dividend expense on securities sold short		106,623			—			—
Reports to Shareholders, Class A		9,141			3,971			2,985
Reports to Shareholders, Class C		5,293			5,856			3,617
Reports to Shareholders, Class Y		5,952			2,235			2,486
Reports to Shareholders, Institutional Class		3,058			3,260			3,201
Distribution expenses, Class A		20,057			60,585			34,295
Distribution and shareholder servicing expenses, Class C		51,505			189,604			89,445
Trustee fees		5,630			5,334			5,309
Other expenses		12,654			15,808			8,662
Total Expenses		618,841			652,311			383,999
Fees waived and/or reimbursed by the Advisor and/or Affiliates(B)		(26,349	)		(349,554	)		(229,871	)
Net Expenses		592,492			302,757			154,128
Net Investment Income		209,541			629,271			562,309
Realized and Unrealized Gain (Loss) on Investments
Net realized gain on investments from non-affiliated securities		10,538,844			—			—
Net realized gain on investments from affiliated securities		—			4,299,137			1,007,429
Net realized loss on written options		(2,513,889	)		—			—
Net realized loss on securities sold short		(2,891,807	)		—			—
Net change in unrealized appreciation (depreciation) on investments		(416,297	)		564,436			(202,289	)
Net change in unrealized appreciation on written options		59,616			—			—
Net change in unrealized appreciation on securities sold short		1,420,963			—			—
Net Realized and Unrealized Gain on Investments		6,197,430			4,863,573			805,140
Change in Net Assets Resulting from Operations	$	6,406,971		$	5,492,844		$	1,367,449
(A) Net of foreign tax withholding of:	$	1,897		$	—		$	—
(B) See Note 4 in Notes to Financial Statements.

See accompanying Notes to Financial Statements.

16

Statements of Operations (Unaudited) (Continued)

			Touchstone
Touchstone			Moderate
Growth			Growth
Allocation			Allocation
Fund			Fund
$	276,385		$	930,211
	—			—
	276,385			930,211
	103,130			199,031
	70,167			135,425
	477			993
	2,292			3,265
	7,045			9,233
	39,369			75,966
	12,898			18,656
	9,908			10,163
	74			12
	11,929			12,199
	11,939			9,746
	9,197			6,192
	10,358			10,379
	—			—
	4,208			4,391
	6,468			9,422
	2,300			2,038
	3,480			3,271
	38,972			87,971
	123,000			248,361
	4,944			5,642
	14,953			23,772
	487,108			876,128
	(292,078	)		(476,026	)
	195,030			400,102
	81,355			530,109
	—			—
	4,089,152			6,508,840
	—			—
	—			—
	1,204,910			1,696,874
	—			—
	—			—
	5,294,062			8,205,714
$	5,375,417		$	8,735,823
$	—		$	—

17

Statements of Changes in Net Assets

	Touchstone
	Dynamic Equity
	Fund
	For the			For the
	Six Months			Five Months			For the
	Ended			Ended			Year
	June 30, 2013			December 31,			Ended
	(Unaudited)			2012(B)			July 31, 2012
From Operations
Net investment income (loss)	$	209,541		$	259,349		$	(409,958	)
Net realized gain (loss) on investments, written options, foreign currency transactions and securities sold short		5,133,148			(307,770	)		3,827,422
Net change in unrealized appreciation (depreciation) on investments, written options, foreign currency transactions and securities sold short		1,064,282			(1,019,180	)		2,431,040
Change in Net Assets from Operations		6,406,971			(1,067,601	)		5,848,504
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)		(9,288,076	)		8,301,265			(13,768,800	)
Total Increase (Decrease) in Net Assets		(2,881,105	)		7,233,664			(8,435,186	)
Net Assets
Beginning of period		67,059,124			59,825,460			68,260,646
End of period	$	64,178,019		$	67,059,124		$	59,825,460
Accumulated Net Investment Income (Loss)	$	225,444		$	15,903		$	(386,369	)

^(A) For details on share transaction by class, see statements of changes in net assets - capital stock activity on pages 22 to 24.

^(B) The Fund changed its fiscal year from July 31 to December 31. See Note 8 in the Notes to Financial Statements.

See accompanying Notes to Financial Statements.

18

Statements of Changes in Net Assets (Continued) 

Touchstone									Touchstone
Balanced Allocation									Conservative Allocation
Fund									Fund
For the			For the						For the			For the
Six Months			Five Months			For the			Six Months			Five Months			For the
Ended			Ended			Year			Ended			Ended			Year
June 30, 2013			December 31,			Ended			June 30, 2013			December 31,			Ended
(Unaudited)			2012(B)			July 31, 2012			(Unaudited)			2012(B)			July 31, 2012
$	629,271		$	1,417,962		$	567,559		$	562,309		$	693,271		$	535,072
	4,299,137			5,632,070			5,462,607			1,007,429			3,844,351			3,112,528
	564,436			(3,322,821	)		(5,042,105	)		(202,289	)		(3,335,699	)		(2,902,390	)
	5,492,844			3,727,211			988,061			1,367,449			1,201,923			745,210
	(264,910	)		(751,006	)		(164,728	)		(206,573	)		(479,405	)		(135,704	)
	(70,103	)		(585,993	)		(414,996	)		(76,590	)		(376,396	)		(266,757	)
	(294,273	)		(998,571	)		—			(272,955	)		(456,004	)		(7,041	)
	—			—			(27,150	)		—			—			(43,132	)
	(221	)		(707	)		(477	)		(6,401	)		(34,395	)		(136,455	)
	—			(1,250,595	)		—			—			(1,422,514	)		—
	—			(989,596	)		—			—			(773,349	)		—
	—			(1,701,479	)		—			—			(1,620,816	)		—
	—			(783	)		—			—			(52,524	)		—
	(629,507	)		(6,278,730	)		(607,351	)		(562,519	)		(5,215,403	)		(589,089	)
	(12,824,687	)		87,474,773			(15,492,104	)		(16,122,576	)		60,408,531			(10,055,229	)
	(7,961,350	)		84,923,254			(15,111,394	)		(15,317,646	)		56,395,051			(9,899,108	)
	134,467,075			49,543,821			64,655,215			85,462,768			29,067,717			38,966,825
$	126,505,725		$	134,467,075		$	49,543,821		$	70,145,122		$	85,462,768		$	29,067,717
$	(236	)	$	—		$	271,112		$	(210	)	$	—		$	359,301

19

Statements of Changes in Net Assets (Continued) 

	Touchstone
	Growth Allocation
	Fund
	For the			For the Five
	Six Months			Months			For the
	Ended			Ended			Year
	June 30, 2013			December 31,			Ended
	(Unaudited)			2012(B)			July 31, 2012
From Operations
Net investment income	$	81,355		$	850,224		$	269,656
Net realized gain on investments		4,089,152			4,772,422			2,532,790
Net change in unrealized appreciation (depreciation) on investments		1,204,910			(1,824,714	)		(3,917,579	)
Change in Net Assets from Operations		5,375,417			3,797,932			(1,115,133	)
Distributions to Shareholders from:
Net investment income, Class A		(25,695	)		(646,035	)		(114,772	)
Net investment income, Class C		—			(450,497	)		(44,632	)
Net investment income, Class Y		(55,743	)		(503,325	)		—
Net investment income, Class Z		—			—			(20,102	)
Net investment income, Institutional Class		(43	)		(901	)		(983	)
Net realized gains, Class A		—			—			—
Net realized gains, Class C		—			—			—
Net realized gains, Class Y		—			—			—
Net realized gains, Institutional Class		—			—			—
Total Distributions		(81,481	)		(1,600,758	)		(180,489	)
Net Increase (Decrease) from Share Transactions(A)		(10,158,185	)		46,019,976			(14,968,001	)
Total Increase (Decrease) in Net Assets		(4,864,249	)		48,217,150			(16,263,623	)
Net Assets
Beginning of period		83,398,915			35,181,765			51,445,388
End of period	$	78,534,666		$	83,398,915		$	35,181,765
Accumulated Net Investment Income (Loss)	$	(126	)	$	—		$	269,645

^(A) For details on share transaction by class, see statements of changes in net assets - capital stock activity on pages 25 and 26.

^(B) The Fund changed its fiscal year from July 31 to December 31. See Note 8 in the Notes to Financial Statements.

See accompanying Notes to Financial Statements.

20

Statements of Changes in Net Assets (Continued) 

Touchstone
Moderate Growth Allocation
Fund
For the			For the Five
Six Months			Months			For the
Ended			Ended			Year
June 30, 2013			December 31,			Ended
(Unaudited)			2012(B)			July 31, 2012
$	530,109		$	1,697,720		$	569,460
	6,508,840			13,038,497			4,106,912
	1,696,874			(8,653,626	)		(4,637,598	)
	8,735,823			6,082,591			38,774
	(265,530	)		(1,238,170	)		(237,914	)
	(69,669	)		(772,314	)		(314,758	)
	(195,060	)		(880,957	)		—
	—			—			(20,136	)
	(47	)		(254	)		(127	)
	—			(1,119,959	)		—
	—			(769,189	)		—
	—			(855,859	)		—
	—			(131	)		—
	(530,306	)		(5,636,833	)		(572,935	)
	(19,741,440	)		99,907,478			(17,225,588	)
	(11,535,923	)		100,353,236			(17,759,749	)
							��
	163,812,970			63,459,734			81,219,483
$	152,277,047		$	163,812,970		$	63,459,734
$	(197	)	$	—		$	392,606

21

Statements of Changes in Net Assets - Capital Stock Activity 

	Touchstone Dynamic
	Equity Fund
	For the Six Months
	Ended						For the Five Months						For the Year
	June 30, 2013						Ended						Ended
	(Unaudited)						December 31, 2012(B)						July 31, 2012
	Shares			Dollars			Shares			Dollars			Shares			Dollars
Class A
Proceeds from Shares sold		306,549		$	3,635,060			113,667		$	1,270,554			97,187		$	1,023,913
Cost of Shares redeemed in connection with merger(A)		—			—			—			—			—			—
Reinvestment of distributions		—			—			—			—			12,141			127,964
Redemption fees		—			—			—			—			—			22
Cost of Shares redeemed		(494,686	)		(5,838,237	)		(252,268	)		(2,812,907	)		(799,021	)		(8,368,813	)
Change in Net Assets from Class A Share Transactions		(188,137	)		(2,203,177	)		(138,601	)		(1,542,353	)		(689,693	)		(7,216,914	)
Class C
Proceeds from Shares sold		24,168			274,815			11,073			118,005			38,462			411,299
Cost of Shares redeemed in connection with merger(A)		—			—			—			—			—			—
Reinvestment of distributions		—			—			—			—			2,418			24,273
Redemption fees		—			—			—			—			—			14
Cost of Shares redeemed		(133,729	)		(1,484,420	)		(113,949	)		(1,211,134	)		(396,981	)		(3,980,527	)
Change in Net Assets from Class C Share Transactions		(109,561	)		(1,209,605	)		(102,876	)		(1,093,129	)		(356,101	)		(3,544,941	)
Class Y
Proceeds from Shares sold		605,917			7,408,150			17,727			201,695			115,845			1,254,036
Proceeds from Shares issued in connection with merger(A)		—			—			—			—			2,239,679			21,354,181
Reinvestment of distributions		—			—			—			—			—			—
Cost of Shares redeemed		(673,011	)		(8,096,901	)		(318,203	)		(3,604,761	)		(236,539	)		(2,604,497	)
Change in Net Assets from Class Y Share Transactions		(67,094	)		(688,751	)		(300,476	)		(3,403,066	)		2,118,985			20,003,720
Class Z
Proceeds from Shares sold		—			—			—			—			685,868			7,058,978
Reinvestment of distributions		—			—			—			—			26,540			283,182
Redemption fees		—			—			—			—			—			30
Cost of Shares redeemed		—			—			—			—			(1,407,539	)		(14,954,589	)
Cost of Shares redeemed in connection with merger(A)		—			—			—			—			(2,239,679	)		(21,354,181	)
Change in Net Assets from Class Z Share Transactions		—			—			—			—			(2,934,810	)		(28,966,580	)
Institutional Class
Proceeds from Shares sold		18,812			227,597			1,329,419			15,304,513			623,310			6,847,071
Reinvestment of distributions		—			—			—			—			1			17
Redemption fees		—			—			—			—			—			8
Cost of Shares redeemed		(457,938	)		(5,414,140	)		(84,149	)		(964,700	)		(80,747	)		(891,181	)
Change in Net Assets from Institutional Class Share Transactions		(439,126	)		(5,186,543	)		1,245,270			14,339,813			542,564			5,955,915
Net Increase (Decrease) from Share Transactions		(803,918	)	$	(9,288,076	)		703,317		$	8,301,265			(1,319,055	)	$	(13,768,800	)

^(A) See Note 8 in the Notes to Financial Statements.

^(B) The Fund changed its fiscal year from July 31 to December 31. See Note 8 in the Notes to Financial Statements.

See accompanying Notes to Financial Statements.

22

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

Touchstone Balanced
Allocation Fund
For the Six Months
Ended						For the Five Months						For the Year
June 30, 2013						Ended						Ended
(Unaudited)						December 31, 2012(B)						July 31, 2012
Shares			Dollars			Shares			Dollars			Shares			Dollars
	183,869			2,141,121			133,156			1,512,715			51,372			555,561
	—			—			3,650,589			41,600,137			—			—
	20,861			241,005			160,880			1,794,307			11,764			124,335
	—			—			—			—			—			—
	(535,172	)		(6,195,996	)		(411,962	)		(4,677,019	)		(329,730	)		(3,549,105	)
	(330,442	)		(3,813,870	)		3,532,663			40,230,140			(266,594	)		(2,869,209	)
	70,185			812,343			93,366			1,049,120			111,052			1,192,025
	—			—			191,231			2,174,823			—			—
	3,983			45,926			91,476			1,018,509			24,035			254,301
	—			—			—			—			—			9
	(312,037	)		(3,606,647	)		(385,238	)		(4,344,101	)		(1,239,184	)		(13,462,919	)
	(237,869	)		(2,748,378	)		(9,165	)		(101,649	)		(1,104,097	)		(12,016,584	)
	290,705			3,374,748			301,709			3,426,829			4,552			49,425
	—			—			6,276,974			71,649,327			114,668			1,301,456
	24,048			278,174			234,665			2,620,777			—			—
	(854,683	)		(9,915,582	)		(2,704,435	)		(30,352,141	)		(4,343	)		(47,913	)
	(539,930	)		(6,262,660	)		4,108,913			47,344,792			114,877			1,302,968
	—			—			—			—			8,853			96,418
	—			—			—			—			1,293			13,562
	—			—			—			—			—			—
	—			—			—			—			(64,331	)		(716,348	)
	—			—			—			—			(114,668	)		(1,301,456	)
	—			—			—			—			(168,853	)		(1,907,824	)
	—			—			—			—			35			372
	19			221			134			1,490			19			205
	—			—			—			—			—			—
	—			—			—			—			(197	)		(2,032	)
	19			221			134			1,490			(143	)		(1,455	)
	(1,108,222	)	$	(12,824,687	)		7,632,545		$	87,474,773			(1,424,810	)	$	(15,492,104	)

23

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

	Touchstone Conservative
	Allocation Fund
	For the Six Months
	Ended						For the Five Months						For the Year
	June 30, 2013						Ended						Ended
	(Unaudited)						December 31, 2012(B)						July 31, 2012
	Shares			Dollars			Shares			Dollars			Shares			Dollars
Class A
Proceeds from Shares sold		109,028		$	1,166,319			182,352		$	1,984,226			435,959		$	4,679,336
Proceeds from Shares issued in connection with merger(A)		—			—			2,370,245			26,062,498			—			—
Reinvestment of distributions		17,458			185,696			140,042			1,482,044			8,431			89,062
Redemption fees		—			—			—			—			—			—
Cost of Shares redeemed		(956,186	)		(10,223,737	)		(324,849	)		(3,545,483	)		(698,325	)		(7,410,892	)
Change in Net Assets from Class A Share Transactions		(829,700	)		(8,871,722	)		2,367,790			25,983,285			(253,935	)		(2,642,494	)
Class C
Proceeds from Shares sold		75,794			807,285			87,113			933,883			120,414			1,289,950
Proceeds from Shares issued in connection with merger(A)		—			—			161,697			1,770,015			—			—
Reinvestment of distributions		5,149			54,460			75,779			801,084			15,629			163,870
Cost of Shares redeemed		(168,392	)		(1,799,004	)		(170,909	)		(1,856,950	)		(419,692	)		(4,493,992	)
Change in Net Assets from Class C Share Transactions		(87,449	)		(937,259	)		153,680			1,648,032			(283,649	)		(3,040,172	)
Class Y
Proceeds from Shares sold		395,817			4,257,452			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		23,868			253,950			191,804			2,030,304			527			5,686
Cost of Shares redeemed		(958,802	)		(10,247,663	)		(851,598	)		(9,144,512	)		(8,160	)		(88,920	)
Change in Net Assets from Class Y Share Transactions		(539,117	)		(5,736,261	)		2,975,852			32,867,780			196,252			2,067,046
Class Z
Proceeds from Shares sold		—			—			—			—			169,193			1,789,083
Reinvestment of distributions		—			—			—			—			3,396			35,873
Cost of Shares redeemed		—			—			—			—			(101,097	)		(1,080,371	)
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	)
Institutional Class
Proceeds from Shares sold		—			—			—			—			12,061			130,383
Reinvestment of distributions		557			5,937			8,105			86,416			12,914			136,455
Cost of Shares redeemed		(54,526	)		(583,271	)		(16,235	)		(176,982	)		(496,227	)		(5,369,390	)
Change in Net Assets from Institutional Class Share Transactions		(53,969	)		(577,334	)		(8,130	)		(90,566	)		(471,252	)		(5,102,552	)
Net Increase (Decrease) from Share Transactions		(1,510,235	)	$	(16,122,576	)		5,489,192		$	60,408,531			(938,604	)	$	(10,055,229	)

^(A) See Note 8 in the Notes to Financial Statements.

^(B) The Fund changed its fiscal year from July 31 to December 31. See Note 8 in the Notes to Financial Statements.

See accompanying Notes to Financial Statements.

24

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

Touchstone Growth
Allocation Fund
For the Six Months
Ended						For the Five Months						For the Year
June 30, 2013						Ended						Ended
(Unaudited)						December 31, 2012(B)						July 31, 2012
Shares			Dollars			Shares			Dollars			Shares			Dollars
	77,725		$	963,580			83,538		$	975,036			55,210		$	587,614
	—			—			1,982,555			23,010,705			—			—
	1,866			23,341			50,396			581,838			9,788			101,796
	—			—			—			—			—			2
	(407,380	)		(5,091,333	)		(355,247	)		(4,130,048	)		(344,708	)		(3,716,622	)
	(327,789	)		(4,104,412	)		1,761,242			20,437,531			(279,710	)		(3,027,210	)
	80,808			968,363			25,816			286,872			66,499			633,936
	—			—			86,836			971,379			—			—
	—			—			29,133			323,605			3,080			30,774
	(213,262	)		(2,556,154	)		(236,712	)		(2,642,774	)		(920,431	)		(9,388,471	)
	(132,454	)		(1,587,791	)		(94,927	)		(1,060,918	)		(850,852	)		(8,723,761	)
	263,339			3,345,580			92,145			1,085,271			9,691			107,236
	—			—			2,547,823			29,855,473			68,967			732,300
	4,257			53,766			40,877			478,642			—			—
	(622,929	)		(7,852,615	)		(407,565	)		(4,791,580	)		(1,606	)		(17,612	)
	(355,333	)		(4,453,269	)		2,273,280			26,627,806			77,052			821,924
	—			—			—			—			7,102			75,977
	—			—			—			—			1,071			11,260
	—			—			—			—			(246,979	)		(2,681,751	)
	—			—			—			—			(68,967	)		(732,300	)
	—			—			—			—			(307,773	)		(3,326,814	)
	329			3,690			1,400			15,008			623			6,895
	4			43			85			901			100			983
	(1,454	)		(16,446	)		(32	)		(352	)		(67,704	)		(720,018	)
	(1,121	)		(12,713	)		1,453			15,557			(66,981	)		(712,140	)
	(816,697	)	$	(10,158,185	)		3,941,048		$	46,019,976			(1,428,264	)	$	(14,968,001	)

25

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

	Touchstone Moderate Growth
	Allocation Fund
	For the Six Months
	Ended						For the Five Months						For the Year
	June 30, 2013						Ended						Ended
	(Unaudited)						December 31, 2012(B)						July 31, 2012
	Shares			Dollars			Shares			Dollars			Shares			Dollars
Class A
Proceeds from Shares sold		127,788		$	1,518,828			129,646		$	1,475,971			97,822		$	1,064,952
Proceeds from Shares issued in connection with merger(A)		—			—			5,396,673			61,461,849			—			—
Reinvestment of distributions		20,049			238,251			187,033			2,104,863			19,053			196,629
Redemption fees		—			—			—			—			—			2
Cost of Shares redeemed		(838,121	)		(9,975,028	)		(771,111	)		(8,774,777	)		(448,546	)		(4,814,500	)
Change in Net Assets from Class A Share Transactions		(690,284	)		(8,217,949	)		4,942,241			56,267,906			(331,671	)		(3,552,917	)
Class C
Proceeds from Shares sold		52,583			614,473			106,912			1,194,059			133,586			1,407,737
Proceeds from Shares issued in connection with merger(A)		—			—			221,281			2,482,569			—			—
Reinvestment of distributions		3,883			45,392			88,949			985,199			18,947			192,127
Redemption fees		—			—			—			—			—			1
Cost of Shares redeemed		(306,646	)		(3,590,845	)		(381,823	)		(4,268,695	)		(1,411,866	)		(14,742,597	)
Change in Net Assets from Class C Share Transactions		(250,180	)		(2,930,980	)		35,319			393,132			(1,259,333	)		(13,142,732	)
Class Y
Proceeds from Shares sold		316,497			3,805,501			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		15,167			181,470			146,774			1,665,234			—			—
Cost of Shares redeemed		(1,061,800	)		(12,579,529	)		(1,507,596	)		(17,189,693	)		(5,646	)		(61,748	)
Change in Net Assets from Class Y Share Transactions		(730,136	)		(8,592,558	)		3,762,818			43,246,055			67,887			784,289
Class Z
Proceeds from Shares sold		—			—			—			—			5,102			56,108
Reinvestment of distributions		—			—			—			—			1,101			11,461
Cost of Shares redeemed		—			—			—			—			(61,849	)		(691,938	)
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	)
Institutional Class
Proceeds from Shares sold		—			—			—			—			9			100
Reinvestment of distributions		4			47			34			385			12			127
Cost of Shares redeemed		—			—			—			—			—			(5	)
Change in Net Assets from Institutional Class Share Transactions		4			47			34			385			21			222
Net Increase (Decrease) from Share Transactions		(1,670,596	)	$	(19,741,440	)		8,740,412		$	99,907,478			(1,637,875	)	$	(17,225,588	)

^(A)See Note 8 in the Notes to Financial Statements.

^(B)The Fund changed its fiscal year from July 31 to December 31. See Note 8 in the Notes to Financial Statements.

See accompanying Notes to Financial Statements.

26

Statement of Cash Flows

For the Six Months Ended June 30, 2013 (Unaudited)

	Touchstone
	Dynamic
	Equity
	Fund
	For the
	Six Months
	Ended
	June 30, 2013
Cash Flows Provided by Operating Activities
Change in net assets resulting from operations	$	6,406,971
Adjustments to reconcile net increase (decrease) in net assets derived from operations to net cash (used in) provided by operating activities:
Purchases of investments		(79,882,640	)
Proceeds from disposition of investments		94,829,812
Net purchases from purchased options		(601,980	)
Premiums on call and put options written		9,399,217
Costs to cover written options		(13,224,414	)
Proceeds from securities sold short		19,331,256
Covers of securities sold short		(21,662,164	)
Net sales of short term securities		684,493
Decrease in deposits with Prime Broker		33,626
(Increase) decrease in dividends and interest receivable		(14,338	)
Increase (decrease) in dividends for securities sold short payable		162
Increase (decrease) in payable to Trustees		606
Increase (decrease) in payable to Investment Advisor		17,561
Increase (decrease) in payable to other affiliates		(9,451	)
Increase (decrease) in other accrued expenses and liabilities		(2,656	)
(Increase) decrease in other assets		(13,251	)
Net realized (gain) from investments and warrants		(10,538,844	)
Net realized (gain) loss from written options		2,513,889
Net realized loss from securities sold short		2,891,807
Net change in unrealized (appreciation) depreciation on investments and warrants		416,297
Net change in unrealized (appreciation) depreciation on written options		(59,616	)
Net change in unrealized (appreciation) depreciation on securities sold short		(1,420,963	)
Net cash provided by operating activities		9,095,380
Cash Flows from Financing Activities
Proceeds from shares sold		11,648,574
Payment of shares redeemed		(20,743,954	)
Net cash used in financing activities		(9,095,380	)
Net change in cash		—
Cash - beginning of the period		—
Cash - end of period	$	—

See accompanying Notes to Financial Statements.

27

Financial Highlights

Touchstone Dynamic Equity Fund—Class A

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,			Year Ended July 31,
	(Unaudited)			2012(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.05		$	11.20		$	10.26		$	9.02		$	8.68		$	11.88		$	14.51
Income (loss) from investment operations:
Net investment income (loss)		0.04			0.04	(B)		(0.07	)(B)		0.06	(B)		0.05	(B)		0.02	(B)		0.05	(B)
Net realized and unrealized gains (losses) on investments		1.11			(0.19	)		1.09			1.18			0.29			(3.22	)		(1.80	)
Total from investment operations		1.15			(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	$	12.20		$	11.05		$	11.20		$	10.26		$	9.02		$	8.68		$	11.88
Total return(C)		10.41	%(D)		(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)	$	15,533		$	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)		1.88	%(F)		2.46	%(F)		2.80	%		1.82	%		1.78	%		2.07	%		1.92	%
Gross expenses (including dividend expense on securities sold short)(G)		2.05	%(F)		2.65	%(F)		3.08	%		2.16	%		2.27	%		2.41	%		2.13	%
Net investment income (loss)		0.61	%(F)		0.88	%(F)		(0.63	%)		0.66	%		0.52	%		0.24	%		0.40	%
Portfolio turnover rate		103	%(D)		105	%(D)		234	%		231	%		168	%		195	%		172	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(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%, 1.55%, 1.66%, 1.65%, 1.71% and 1.53% for the periods ended June 30, 2013 and 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 1.72%, 1.74%, 1.82%, 2.00%, 2.14%, 2.05% and 1.74% for the periods ended June 30, 2013 and December 31, 2012 and years ended July 2012, 2011, 2010, 2009 and 2008, respectively.

See accompanying Notes to Financial Statements.

28

Financial Highlights (Continued)

Touchstone Dynamic Equity Fund—Class C

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,			Year Ended July 31,
	(Unaudited)			2012(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	10.46		$	10.63		$	9.79		$	8.67		$	8.40		$	11.59		$	14.32
Income (loss) from investment operations:
Net investment income (loss)		(0.01	)		0.01	(B)		(0.14	)(B)		(0.01	)(B)		(0.02	)(B)		(0.05	)(B)		(0.04	)(B)
Net realized and unrealized gains (losses) on investments		1.05			(0.18	)		1.03			1.13			0.29			(3.14	)		(1.77	)
Total from investment operations		1.04			(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	$	11.50		$	10.46		$	10.63		$	9.79		$	8.67		$	8.40		$	11.59
Total return(C)		9.94	%(D)		(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)	$	10,196		$	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)		2.63	%(F)		3.21	%(F)		3.55	%		2.57	%		2.53	%		2.82	%		2.65	%
Gross expenses (including dividend expense on securities sold short)(G)		2.81	%(F)		3.48	%(F)		3.75	%		2.78	%		2.91	%		2.97	%		2.85	%
Net investment income (loss)		(0.14	%)(F)		0.13	%(F)		(1.38	%)		(0.10	%)		(0.23	%)		(0.52	%)		(0.34	%)
Portfolio turnover rate		103	%(D)		105	%(D)		234	%		231	%		168	%		195	%		172	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(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%, 2.30%, 2.41%, 2.40%, 2.46% and 2.26% for the periods ended June 30, 2013 and 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 2.48%, 2.57%, 2.50%, 2.62%, 2.78%, 2.61% and 2.46% for the periods ended June 30, 2013 and December 31, 2012 and years ended July 2012, 2011, 2010, 2009 and 2008, respectively.

See accompanying Notes to Financial Statements.

29

Financial Highlights (Continued)

Touchstone Dynamic Equity Fund—Class Y

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,			Year Ended July 31,
	(Unaudited)			2012(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.22		$	11.35		$	10.40		$	9.11		$	8.75		$	11.94		$	14.54
Income (loss) from investment operations:
Net investment income (loss)		0.05			0.05	(B)		(0.04	)(B)		0.08	(B)		0.07	(B)		0.04	(B)		0.09	(B)
Net realized and unrealized gains (losses) on investments		1.12			(0.18	)		1.09			1.21			0.29			(3.23	)		(1.82	)
Total from investment operations		1.17			(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	$	12.39		$	11.22		$	11.35		$	10.40		$	9.11		$	8.75		$	11.94
Total return		10.43	%(C)		(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)	$	21,704		$	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)		1.63	%(E)		2.21	%(E)		2.56	%		1.59	%		1.52	%		1.81	%		1.64	%
Gross expenses (including dividend expense on securities sold short)(F)		1.67	%(E)		2.31	%(E)		2.60	%		1.68	%		1.68	%		1.97	%		1.86	%
Net investment income (loss)		0.86	%(E)		1.13	%(E)		(0.38	%)		0.77	%		0.81	%		0.45	%		0.68	%
Portfolio turnover rate		103	%(C)		105	%(C)		234	%		231	%		168	%		195	%		172	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(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%, 1.30%, 1.42%, 1.40%, 1.46% and 1.25% for the periods ended June 30, 2013 and 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 1.34%, 1.40%, 1.35%, 1.51%, 1.56%, 1.62% and 1.47% for the periods ended June 30, 2013 and December 31, 2012 and years ended July 2012, 2011, 2010, 2009 and 2008, respectively.

See accompanying Notes to Financial Statements.

30

Financial Highlights (Continued)

Touchstone Dynamic Equity Fund—Institutional Class

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,			Year Ended July 31,
	(Unaudited)			2012(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.23		$	11.36		$	10.40		$	9.12		$	8.76		$	11.96		$	14.54
Income (loss) from investment operations:
Net investment income (loss)		0.06			0.06	(B)		(0.04	)(B)		0.09	(B)		0.11	(B)		0.05	(B)		0.09	(B)
Net realized and unrealized gains (losses) on investments		1.12			(0.19	)		1.10			1.19			0.25			(3.25	)		(1.81	)
Total from investment operations		1.18			(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	$	12.41		$	11.23		$	11.36		$	10.40		$	9.12		$	8.76		$	11.96
Total return		10.51	%(C)		(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)	$	16,745		$	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)		1.58	%(E)		2.16	%(E)		2.50	%		1.52	%		1.41	%		1.77	%		1.63	%
Gross expenses (including dividend expense on securities sold short)(F)		1.58	%(E)		2.18	%(E)		2.95	%		816.82	%		2.84	%		1.87	%		1.89	%
Net investment income (loss)		0.91	%(E)		1.18	%(E)		(0.33	%)		0.92	%		1.31	%		0.55	%		0.70	%
Portfolio turnover rate		103	%(C)		105	%(C)		234	%		231	%		168	%		195	%		172	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(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%, 1.25%, 1.35%, 1.36%, 1.41% and 1.21% for the periods ended June 30, 2013 and 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 1.25%, 1.27%, 1.70%, 816.65%, 2.79%, 1.51% and 1.47% for the periods ended June 30, 2013 and December 31, 2012 and years ended July 2012, 2011, 2010, 2009 and 2008, respectively.

See accompanying Notes to Financial Statements.

31

Financial Highlights (Continued)

Touchstone Balanced Allocation Fund—Class A

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,			Year Ended July 31,
	(Unaudited)			2012(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.13		$	11.18		$	11.03		$	9.99		$	9.28		$	11.27		$	12.68
Income (loss) from investment operations:
Net investment income		0.06			0.13	(B)		0.17	(B)		0.18	(B)		0.22	(B)		0.29	(B)		0.21	(B)
Net realized and unrealized gains (losses) on investments		0.40			0.35			0.14			1.13			0.80			(1.46	)		(0.74	)(C)
Total from investment operations		0.46			0.48			0.31			1.31			1.02			(1.17	)		(0.53	)
Distributions from:
Net investment income		(0.06	)		(0.24	)		(0.16	)		(0.27	)		(0.31	)		(0.36	)		(0.26	)
Realized capital gains		—			(0.29	)		—			—			—			(0.46	)		(0.62	)
Total distributions		(0.06	)		(0.53	)		(0.16	)		(0.27	)		(0.31	)		(0.82	)		(0.88	)
Net asset value at end of period	$	11.53		$	11.13		$	11.18		$	11.03		$	9.99		$	9.28		$	11.27
Total return(D)		4.17	%(E)		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)	$	47,071		$	49,118		$	9,839		$	12,650		$	21,312		$	25,356		$	44,959
Ratio to average net assets:
Net expenses(F)		0.33	%(G)		0.41	%(G)		0.64	%		0.64	%		0.64	%		0.65	%		0.94	%
Gross expenses(F)		0.88	%(G)		0.83	%(G)		0.97	%		0.94	%		0.93	%		0.79	%		1.13	%
Net investment income(F)		1.09	%(G)		2.75	%(G)		1.58	%		1.71	%		2.26	%		3.30	%		1.71	%
Portfolio turnover rate		21	%(E)		74	%(E)(H)		76	%		6	%		33	%		30	%		52	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(C) Impact of payment from affiliate was less than $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 purchases and sales of the Acquired Funds (see Note 8). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

32

Financial Highlights (Continued)

Touchstone Balanced Allocation Fund—Class C

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,			Year Ended July 31,
	(Unaudited)			2012(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.12		$	11.14		$	11.01		$	9.97		$	9.26		$	11.17		$	12.64
Income (loss) from investment operations:
Net investment income		0.02			0.09	(B)		0.09	(B)		0.10	(B)		0.15	(B)		0.22	(B)		0.11	(B)
Net realized and unrealized gains (losses) on investments		0.40			0.35			0.14			1.13			0.79			(1.44	)		(0.73	)(C)
Total from investment operations		0.42			0.44			0.23			1.23			0.94			(1.22	)		(0.62	)
Distributions from:
Net investment income		(0.02	)		(0.17	)		(0.10	)		(0.19	)		(0.23	)		(0.23	)		(0.23	)
Realized capital gains		—			(0.29	)		—			—			—			(0.46	)		(0.62	)
Total distributions		(0.02	)		(0.46	)		(0.10	)		(0.19	)		(0.23	)		(0.69	)		(0.85	)
Net asset value at end of period	$	11.52		$	11.12		$	11.14		$	11.01		$	9.97		$	9.26		$	11.17
Total return(D)		3.79	%(E)		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)	$	36,857		$	38,226		$	38,388		$	50,108		$	59,480		$	77,330		$	120,085
Ratio to average net assets:
Net expenses(F)		1.08	%(G)		1.16	%(G)		1.39	%		1.39	%		1.39	%		1.40	%		1.67.	%
Gross expenses(F)		1.58	%(G)		1.60	%(G)		1.59	%		1.59	%		1.62	%		1.51	%		1.85	%
Net investment income(F)		0.34	%(G)		2.00	%(G)		0.84	%		0.98	%		1.51	%		2.46	%		0.92	%
Portfolio turnover rate		21	%(E)		74	%(E)(H)		76	%		6	%		33	%		30	%		52	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(C) Impact of payment from affiliate was less than $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 purchases and sales of the Acquired Funds (see Note 8). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

33

Financial Highlights (Continued)

Touchstone Balanced Allocation Fund—Class Y

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,			Year Ended July 31,
	(Unaudited)			2012(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.15		$	11.21		$	11.05		$	10.01		$	9.30		$	11.31		$	12.70
Income (loss) from investment operations:
Net investment income		0.08			0.14	(B)		0.20	(B)		0.23	(B)		0.24	(B)		0.31	(B)		0.23	(B)
Net realized and unrealized gains (losses) on investments		0.40			0.35			0.14			1.11			0.80			(1.46	)		(0.74	)(C)
Total from investment operations		0.48			0.49			0.34			1.34			1.04			(1.15	)		(0.51	)
Distributions from:
Net investment income		(0.08	)		(0.26	)		(0.18	)		(0.30	)		(0.33	)		(0.40	)		(0.26	)
Realized capital gains		—			(0.29	)		—			—			—			(0.46	)		(0.62	)
Total distributions		(0.08	)		(0.55	)		(0.18	)		(0.30	)		(0.33	)		(0.86	)		(0.88	)
Net asset value at end of period	$	11.55		$	11.15		$	11.21		$	11.05		$	10.01		$	9.30		$	11.31
Total return		4.30	%(D)		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)	$	42,545		$	47,092		$	1,287		$	1,866		$	929		$	672		$	732
Ratio to average net assets:
Net expenses(E)		0.08	%(F)		0.16	%(F)		0.39	%		0.39	%		0.39	%		0.40	%		0.65	%
Gross expenses(E)		0.57	%(F)		0.52	%(F)		1.40	%		1.41	%		2.28	%		1.41	%		5.13	%
Net investment income(E)		1.34	%(F)		3.00	%(F)		1.84	%		2.11	%		2.46	%		3.53	%		1.91	%
Portfolio turnover rate		21	%(D)		74	%(D)(G)		76	%		6	%		33	%		30	%		52	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(C) Impact of payment from affiliate was less than $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 purchases and sales of the Acquired Funds (see Note 8). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

34

Financial Highlights (Continued)

Touchstone Balanced Allocation Fund—Institutional Class

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,			Year Ended July 31,
	(Unaudited)			2012(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.10		$	11.16		$	11.00		$	9.97		$	9.26		$	11.28			12.71
Income (loss) from investment operations:
Net investment income		0.08			0.14	(B)		0.20	(B)		0.21	(B)		0.35	(B)		0.30	(B)		0.27	(B)
Net realized and unrealized gains (losses) on investments		0.40			0.35			0.14			1.12			0.69			(1.46	)		(0.78	)(C)
Total from investment operations		0.48			0.49			0.34			1.33			1.04			(1.16	)		(0.51	)
Distributions from:
Net investment income		(0.08	)		(0.26	)		(0.18	)		(0.30	)		(0.33	)		(0.40	)		(0.30	)
Realized capital gains		—			(0.29	)		—			—			—			(0.46	)		(0.62	)
Total distributions		(0.08	)		(0.55	)		(0.18	)		(0.30	)		(0.33	)		(0.86	)		(0.92	)
Net asset value at end of period	$	11.50		$	11.10		$	11.16		$	11.00		$	9.97		$	9.26			11.28
Total return		4.32	%(D)		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)	$	32		$	31		$	30		$	31		$	27		$	2,011		$	6,196
Ratio to average net assets:
Net expenses(E)		0.08	%(F)		0.16	%(F)		0.39	%		0.39	%		0.39	%		0.40	%		0.85	%
Gross expenses(E)		85.94	%(F)		56.07	%(F)		28.86	%		46.94	%		2.29	%		0.58	%		1.41	%
Net investment income(E)		1.34	%(F)		3.00	%(F)		1.85	%		1.97	%		3.55	%		3.35	%		2.24	%
Portfolio turnover rate		21	%(D)		74	%(D)(G)		76	%		6	%		33	%		30	%		52	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(C) Impact of payment from affiliate was less than $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 purchases and sales of the Acquired Funds (see Note 8). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

35

Financial Highlights (Continued)

Touchstone Conservative Allocation Fund—Class A

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,				Year Ended July 31,
	(Unaudited)			2012(A)				2012			2011			2010			2009			2008
Net asset value at beginning of period	$	10.50		$	10.98			$	10.87		$	10.38		$	9.84		$	10.76		$	11.30
Income (loss) from investment operations:
Net investment income		0.09			0.10	(B)			0.21	(B)		0.26	(B)		0.34	(B)		0.48	(B)		0.29	(B)
Net realized and unrealized gains (losses) on investments		0.09			0.17				0.13			0.64			0.66			(0.61	)		(0.25	)
Total from investment operations		0.18			0.27				0.34			0.90			1.00			(0.13	)		0.04
Distributions from:
Net investment income		(0.09	)		(0.28	)			(0.23	)		(0.41	)		(0.46	)		(0.57	)		(0.31	)
Realized capital gains		—			(0.47	)			—			—			—			(0.22	)		(0.27	)
Total distributions		(0.09	)		(0.75	)	��		(0.23	)		(0.41	)		(0.46	)		(0.79	)		(0.58	)
Net asset value at end of period	$	10.59		$	10.50			$	10.98		$	10.87		$	10.38		$	9.84		$	10.76
Total return(C)		1.68	%(D)		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)	$	24,442		$	32,965			$	8,466		$	11,138		$	12,141		$	13,632		$	15,858
Ratio to average net assets:
Net expenses(E)		0.33	%(F)		0.40	%(F)			0.61	%		0.61	%		0.61	%		0.65	%		0.93	%
Gross expenses(E)		0.95	%(F)		0.85	%(F)			1.02	%		0.91	%		0.94	%		0.86	%		1.31	%
Net investment income(E)		1.56	%(F)		2.28	%(F)			1.95	%		2.43	%		3.36	%		5.09	%		2.62	%
Portfolio turnover rate		14	%(D)		79	%(D)(G)			89	%		13	%		33	%		40	%		49	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(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 purchases and sales of the Acquired Funds (see Note 8). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

36

Financial Highlights (Continued)

Touchstone Conservative Allocation Fund—Class C

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,			Year Ended July 31,
	(Unaudited)			2012(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	10.45		$	10.92		$	10.81		$	10.33		$	9.80		$	10.66		$	11.25
Income (loss) from investment operations:
Net investment income		0.05			0.07	(B)		0.13	(B)		0.18	(B)		0.27	(B)		0.39	(B)		0.21	(B)
Net realized and unrealized gains (losses) on investments		0.08			0.17			0.13			0.63			0.64			(0.58	)		(0.25	)
Total from investment operations		0.13			0.24			0.26			0.81			0.91			(0.19	)		(0.04	)
Distributions from:
Net investment income		(0.05	)		(0.24	)		(0.15	)		(0.33	)		(0.38	)		(0.45	)		(0.28	)
Realized capital gains		—			(0.47	)		—			—			—			(0.22	)		(0.27	)
Total distributions		(0.05	)		(0.71	)		(0.15	)		(0.33	)		(0.38	)		(0.67	)		(0.55	)
Net asset value at end of period	$	10.53		$	10.45		$	10.92		$	10.81		$	10.33		$	9.80		$	10.66
Total return(C)		1.21	%(D)		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)	$	17,190		$	17,972		$	17,104		$	20,000		$	23,985		$	31,465		$	34,242
Ratio to average net assets:
Net expenses(E)		1.08	%(F)		1.15	%(F)		1.36	%		1.36	%		1.36	%		1.41	%		1.67	%
Gross expenses(E)		1.65	%(F)		1.67	%(F)		1.70	%		1.61	%		1.65	%		1.54	%		1.95	%
Net investment income(E)		0.81	%(F)		1.53	%(F)		1.20	%		1.72	%		2.61	%		4.23	%		1.86	%
Portfolio turnover rate		14	%(D)		79	%(D)(G)		89	%		13	%		33	%		40	%		49	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(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 purchases and sales of the Acquired Funds (see Note 8). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

37

Financial Highlights (Continued)

Touchstone Conservative Allocation Fund—Class Y

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,			Year Ended July 31,
	(Unaudited)			2012(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	10.51		$	10.99		$	10.87		$	10.39		$	9.85		$	10.78		$	11.30
Income (loss) from investment operations:
Net investment income		0.10			0.12	(B)		0.24	(B)		0.29	(B)		0.35	(B)		0.44	(B)		0.32	(B)
Net realized and unrealized gains (losses) on investments		0.08			0.16			0.14			0.62			0.67			(0.54	)		(0.25	)
Total from investment operations		0.18			0.28			0.38			0.91			1.02			(0.10	)		0.07
Distributions from:
Net investment income		(0.10	)		(0.29	)		(0.26	)		(0.43	)		(0.48	)		(0.61	)		(0.32	)
Realized capital gains		—			(0.47	)		—			—			—			(0.22	)		(0.27	)
Total distributions		(0.10	)		(0.76	)		(0.26	)		(0.43	)		(0.48	)		(0.83	)		(0.59	)
Net asset value at end of period	$	10.59		$	10.51		$	10.99		$	10.87		$	10.39		$	9.85		$	10.78
Total return		1.71	%(C)		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)	$	27,878		$	33,329		$	2,156		$	1,370		$	1,129		$	234		$	640
Ratio to average net assets:
Net expenses(D)		0.08	%(E)		0.15	%(E)		0.36	%		0.36	%		0.34	%		0.40	%		0.67	%
Gross expenses(D)		0.61	%(E)		0.57	%(E)		1.38	%		1.65	%		1.65	%		7.77	%		4.34	%
Net investment income(D)		1.81	%(E)		2.53	%(E)		2.20	%		2.72	%		3.40	%		4.56	%		2.86	%
Portfolio turnover rate		14	%(C)		79	%(C)(F)		89	%		13	%		33	%		40	%		49	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(C) Not annualized.

^(D) Ratio does not include income and expenses of the underlying funds.

^(E) Annualized.

^(F) Portfolio turnover excludes the purchases and sales of the Acquired Funds (see Note 8). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

38

Financial Highlights (Continued)

Touchstone Conservative Allocation Fund—Institutional Class

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,			Year Ended July 31,
	(Unaudited)			2012(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	10.51		$	10.99		$	10.89		$	10.40		$	9.86		$	10.79		$	11.32
Income (loss) from investment operations:
Net investment income		0.11			0.12	(B)		0.24	(B)		0.29	(B)		0.37	(B)		0.47	(B)		0.32	(B)
Net realized and unrealized gains (losses) on investments		0.07			0.16			0.12			0.63			0.65			(0.58	)		(0.26	)
Total from investment operations		0.18			0.28			0.36			0.92			1.02			(0.11	)		0.06
Distributions from:
Net investment income		(0.10	)		(0.29	)		(0.26	)		(0.43	)		(0.48	)		(0.60	)		(0.32	)
Realized capital gains		—			(0.47	)		—			—			—			(0.22	)		(0.27	)
Total distributions		(0.10	)		(0.76	)		(0.26	)		(0.43	)		(0.48	)		(0.82	)		(0.59	)
Net asset value at end of period	$	10.59		$	10.51		$	10.99		$	10.89		$	10.40		$	9.86		$	10.79
Total return		1.71	%(C)		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)	$	635		$	1,198		$	1,342		$	6,459		$	6,158		$	6,017		$	6,816
Ratio to average net assets:
Net expenses(D)		0.08	%(E)		0.15	%(E)		0.36	%		0.36	%		0.36	%		0.40	%		0.69	%
Gross expenses(D)		3.92	%(E)		1.93	%(E)		0.66	%		0.63	%		0.56	%		1.43	%		1.05	%
Net investment income(D)		1.81	%(E)		2.53	%(E)		2.20	%		2.70	%		3.62	%		4.85	%		2.87	%
Portfolio turnover rate		14	%(C)		79	%(C)(F)		89	%		13	%		33	%		40	%		49	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(C) Not annualized.

^(D) Ratio does not include income and expenses of the underlying funds.

^(E) Annualized.

^(F) Portfolio turnover excludes the purchases and sales of the Acquired Funds (see Note 8). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

39

Financial Highlights (Continued)

Touchstone Growth Allocation Fund—Class A

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,			Year Ended July 31,
	(Unaudited)			2012(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.75		$	11.28		$	11.40		$	9.58		$	8.66		$	12.33		$	14.82
Income (loss) from investment operations:
Net investment income		0.02			0.14	(B)		0.13	(B)		0.08	(B)		0.12	(B)		0.10	(B)		0.07	(B)
Net realized and unrealized gains (losses) on investments		0.75			0.67			(0.14	)		1.80			0.99			(3.12	)		(1.67	)(C)
Total from investment operations		0.77			0.81			(0.01	)		1.88			1.11			(3.02	)		(1.60	)
Distributions from:
Net investment income		(0.01	)		(0.34	)		(0.11	)		(0.06	)		(0.19	)		—			(0.20	)
Realized capital gains		—			—			—			—			—			(0.65	)		(0.69	)
Total distributions		(0.01	)		(0.34	)		(0.11	)		(0.06	)		(0.19	)		(0.65	)		(0.89	)
Net asset value at end of period	$	12.51		$	11.75		$	11.28		$	11.40		$	9.58		$	8.66		$	12.33
Total return(D)		6.56	%(E)		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)	$	29,368		$	31,432		$	10,320		$	13,619		$	16,721		$	20,556		$	43,129
Ratio to average net assets:
Net expenses(F)		0.33	%(G)		0.39	%(G)		0.57	%		0.57	%		0.57	%		0.56	%		0.91	%
Gross expenses(F)		1.10	%(G)		1.04	%(G)		1.21	%		1.13	%		1.18	%		1.03	%		1.26	%
Net investment income(F)		0.34	%(G)		2.95	%(G)		1.17	%		0.77	%		1.26	%		1.14	%		0.48	%
Portfolio turnover rate		34	%(E)		65	%(E)(H)		77	%		8	%		41	%		27	%		46	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(C) Impact of payment from affiliate was less than $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 purchases and sales of the Acquired Funds (see Note 8). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

40

Financial Highlights (Continued)

Touchstone Growth Allocation Fund—Class C

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,			Year Ended July 31,
	(Unaudited)			2012(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.32		$	10.80		$	10.90		$	9.18		$	8.30		$	11.95		$	14.53
Income (loss) from investment operations:
Net investment income (loss)		(0.03	)		0.10	(B)		0.04	(B)		—	(B)(C)		0.04	(B)		0.03	(B)		(0.04	)(B)
Net realized and unrealized gains (losses) on investments		0.73			0.63			(0.12	)		1.72			0.96			(3.03	)		(1.61	)(D)
Total from investment operations		0.70			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	$	12.02		$	11.32		$	10.80		$	10.90		$	9.18		$	8.30		$	11.95
Total return(E)		6.18	%(F)		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)	$	23,958		$	24,065		$	23,968		$	33,477		$	36,655		$	48,126		$	83,127
Ratio to average net assets:
Net expenses(G)		1.08	%(H)		1.14	%(H)		1.32	%		1.32	%		1.32	%		1.31	%		1.66	%
Gross expenses(G)		1.75	%(H)		1.81	%(H)		1.87	%		1.75	%		1.84	%		1.75	%		2.01	%
Net investment income (loss)(G)		(0.41	%)(H)		2.20	%(H)		0.42	%		0.02	%		0.47	%		0.42	%		(0.29	%)
Portfolio turnover rate		34	%(F)		65	%(F)(I)		77	%		8	%		41	%		27	%		46	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(C) Less than $0.005 per share.

^(D) Impact of payment from affiliate was less than $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 purchases and sales of the Acquired Funds (see Note 8). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

41

Financial Highlights (Continued)

Touchstone Growth Allocation Fund—Class Y

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,			Year Ended July 31,
	(Unaudited)			2012(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.86		$	11.43		$	11.57		$	9.72		$	8.77		$	12.45		$	14.91
Income (loss) from investment operations:
Net investment income		0.04			0.16	(B)		0.15	(B)		0.12	(B)		0.05	(B)		0.12	(B)		0.09	(B)
Net realized and unrealized gains (losses) on investments		0.76			0.67			(0.14	)		1.81			1.11			(3.15	)		(1.67	)(C)
Total from investment operations		0.80			0.83			0.01			1.93			1.16			(3.03	)		(1.58	)
Distributions from:
Net investment income		(0.03	)		(0.40	)		(0.15	)		(0.08	)		(0.21	)		—			(0.19	)
Realized capital gains		—			—			—			—			—			(0.65	)		(0.69	)
Total distributions		(0.03	)		(0.40	)		(0.15	)		(0.08	)		(0.21	)		(0.65	)		(0.88	)
Net asset value at end of period	$	12.63		$	11.86		$	11.43		$	11.57		$	9.72		$	8.77		$	12.45
Total return		6.73	%(D)		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)	$	25,191		$	27,873		$	881		$	3,561		$	2,322		$	667		$	750
Ratio to average net assets:
Net expenses(E)		0.08	%(F)		0.14	%(F)		0.32	%		0.32	%		0.32	%		0.32	%		0.61	%
Gross expenses(E)		0.65	%(F)		0.65	%(F)		1.62	%		1.13	%		1.33	%		3.50	%		5.47	%
Net investment income(E)		0.59	%(F)		3.20	%(F)		1.42	%		1.11	%		0.56	%		1.46	%		0.68	%
Portfolio turnover rate		34	%(D)		65	%(D)(G)		77	%		8	%		41	%		27	%		46	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(C) Impact of payment from affiliate was less than $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 purchases and sales of the Acquired Funds (see Note 8). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

42

Financial Highlights (Continued)

Touchstone Growth Allocation Fund—Institutional Class

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,			Year Ended July 31,
	(Unaudited)			2012(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	10.82		$	10.58		$	11.56		$	9.71		$	8.77		$	12.44		$	14.91
Income (loss) from investment operations:
Net investment income		0.04			0.14	(B)		0.15	(B)		0.11	(B)		0.32	(B)		0.12	(B)		0.09	(B)
Net realized and unrealized gains (losses) on investments		0.68			0.61			(0.25	)		1.83			0.83			(3.14	)		(1.68	)(C)
Total from investment operations		0.72			0.75			(0.10	)		1.94			1.15			(3.02	)		(1.59	)
Distributions from:
Net investment income		(0.03	)		(0.51	)		(0.88	)		(0.09	)		(0.21	)		—			(0.19	)
Realized capital gains		—			—			—			—			—			(0.65	)		(0.69	)
Total distributions		(0.03	)		(0.51	)		(0.88	)		(0.09	)		(0.21	)		(0.65	)		(0.88	)
Net asset value at end of period	$	11.51		$	10.82		$	10.58		$	11.56		$	9.71		$	8.77		$	12.44
Total return		6.63	%(D)		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)	$	18		$	29		$	13		$	788		$	674		$	17,845		$	24,509
Ratio to average net assets:
Net expenses(E)		0.08	%(F)		0.14	%(F)		0.32	%		0.32	%		0.32	%		0.31	%		0.64	%
Gross expenses(E)		129.61	%(F)		94.73	%(F)		7.68	%		2.29	%		0.67	%		0.50	%		0.84	%
Net investment income(E)		0.59	%(F)		3.20	%(F)		1.42	%		0.96	%		3.37	%		1.39	%		0.67	%
Portfolio turnover rate		34	%(D)		65	%(D)(G)		77	%		8	%		41	%		27	%		46	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(C) Impact of payment from affiliate was less than $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 purchases and sales of the Acquired Funds (see Note 8). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

43

Financial Highlights (Continued)

Touchstone Moderate Growth Allocation Fund—Class A

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,			Year Ended July 31,
	(Unaudited)			2012(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.30		$	11.13		$	11.11		$	9.66		$	8.87		$	11.91		$	13.76
Income (loss) from investment operations:
Net investment income		0.06			0.14	(B)		0.15	(B)		0.12	(B)		0.15	(B)		0.17	(B)		0.10	(B)
Net realized and unrealized gains (losses) on investments		0.56			0.51			0.02	(C)		1.47			0.87			(2.37	)		(1.11	)(D)
Total from investment operations		0.62			0.65			0.17			1.59			1.02			(2.20	)		(1.01	)
Distributions from:
Net investment income		(0.05	)		(0.30	)		(0.15	)		(0.14	)		(0.23	)		(0.16	)		(0.15	)
Realized capital gains		—			(0.18	)		—			—			—			(0.68	)		(0.69	)
Total distributions		(0.05	)		(0.48	)		(0.15	)		(0.14	)		(0.23	)		(0.84	)		(0.84	)
Net asset value at end of period	$	11.87		$	11.30		$	11.13		$	11.11		$	9.66		$	8.87		$	11.91
Total return(E)		5.46	%(F)		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)	$	66,682		$	71,235		$	15,181		$	18,848		$	22,740		$	25,782		$	52,854
Ratio to average net assets:
Net expenses(G)		0.33	%(H)		0.39	%(H)		0.57	%		0.57	%		0.57	%		0.57	%		0.89	%
Gross expenses(G)		0.99	%(H)		0.90	%(H)		1.03	%		1.01	%		1.08	%		0.99	%		1.26	%
Net investment income(G)		0.84	%(H)		2.90	%(H)		1.38	%		1.17	%		1.53	%		2.00	%		0.74	%
Portfolio turnover rate		25	%(F)		73	%(F)(I)		77	%		9	%		38	%		32	%		43	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(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 than $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 purchases and sales of the Acquired Funds (see Note 8). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

44

Financial Highlights (Continued)

Touchstone Moderate Growth Allocation Fund—Class C

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,			Year Ended July 31,
	(Unaudited)			2012(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.13		$	10.89		$	10.86		$	9.44		$	8.67		$	11.63		$	13.59
Income (loss) from investment operations:
Net investment income (loss)		0.01			0.10	(B)		0.07	(B)		0.05	(B)		0.07	(B)		0.11	(B)		(—	)(B)(C)
Net realized and unrealized gains (losses) on investments		0.57			0.50			0.02	(D)		1.43			0.86			(2.31	)		(1.08	)(E)
Total from investment operations		0.58			0.60			0.09			1.48			0.93			(2.20	)		(1.08	)
Distributions from:
Net investment income		(0.02	)		(0.18	)		(0.06	)		(0.06	)		(0.16	)		(0.08	)		(0.19	)
Realized capital gains		—			(0.18	)		—			—			—			(0.68	)		(0.69	)
Total distributions		(0.02	)		(0.36	)		(0.06	)		(0.06	)		(0.16	)		(0.76	)		(0.88	)
Net asset value at end of period	$	11.69		$	11.13		$	10.89		$	10.86		$	9.44		$	8.67		$	11.63
Total return(F)		5.18	%(G)		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)	$	48,504		$	48,985		$	47,508		$	61,074		$	70,934		$	92,373		$	154,281
Ratio to average net assets:
Net expenses(H)		1.08	%(I)		1.14	%(I)		1.32	%		1.32	%		1.32	%		1.32	%		1.63	%
Gross expenses(H)		1.63	%(I)		1.68	%(I)		1.74	%		1.69	%		1.74	%		1.69	%		1.88	%
Net investment income (loss)(H)		0.09	%(I)		2.15	%(I)		0.63	%		0.46	%		0.78	%		1.33	%		(0.02	%)
Portfolio turnover rate		25	%(G)		73	%(G)(J)		77	%		9	%		38	%		32	%		43	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(C) Less than $0.005 per share.

^(D) 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.

^(E) Impact of payment from affiliate was less than $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 purchases and sales of the Acquired Funds (see Note 8). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

45

Financial Highlights (Continued)

Touchstone Moderate Growth Allocation Fund—Class Y

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,			Year Ended July 31,
	(Unaudited)			2012(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.38		$	11.24		$	11.23		$	9.75		$	8.95		$	12.02		$	13.84
Income (loss) from investment operations:
Net investment income		0.07			0.15	(B)		0.18	(B)		0.18	(B)		0.17	(B)		0.20	(B)		0.13	(B)
Net realized and unrealized gains (losses) on investments		0.57			0.52			0.01	(C)		1.46			0.88			(2.40	)		(1.11	)(D)
Total from investment operations		0.64			0.67			0.19			1.64			1.05			(2.20	)		(0.98	)
Distributions from:
Net investment income		(0.06	)		(0.35	)		(0.18	)		(0.16	)		(0.25	)		(0.19	)		(0.15	)
Realized capital gains		—			(0.18	)		—			—			—			(0.68	)		(0.69	)
Total distributions		(0.06	)		(0.53	)		(0.18	)		(0.16	)		(0.25	)		(0.87	)		(0.84	)
Net asset value at end of period	$	11.96		$	11.38		$	11.24		$	11.23		$	9.75		$	8.95		$	12.02
Total return		5.64	%(E)		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)	$	37,082		$	43,585		$	763		$	1,289		$	635		$	508		$	600
Ratio to average net assets:
Net expenses(F)		0.08	%(G)		0.14	%(G)		0.32	%		0.32	%		0.32	%		0.32	%		0.61	%
Gross expenses(F)		0.57	%(G)		0.54	%(G)		1.89	%		1.65	%		2.59	%		2.64	%		4.40	%
Net investment income(F)		1.09	%(G)		3.15	%(G)		1.63	%		1.63	%		1.72	%		2.34	%		0.97	%
Portfolio turnover rate		25	%(E)		73	%(E)(H)		77	%		9	%		38	%		32	%		43	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(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 than $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 purchases and sales of the Acquired Funds (see Note 8). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

46

Financial Highlights (Continued)

Touchstone Moderate Growth Allocation Fund—Institutional Class

Selected Data for a Share Outstanding Throughout Each Period

	Six
	Months			Five
	Ended			Months
	June 30,			Ended
	2013			December 31,			Year Ended July 31,
	(Unaudited)			2012(A)			2012			2011			2010			2009			2008
Net asset value at beginning of period	$	11.33		$	11.18		$	11.16		$	9.75		$	8.95		$	12.01		$	13.82
Income (loss) from investment operations:
Net investment income		0.06			0.15	(B)		0.18	(B)		0.15	(B)		0.28	(B)		0.19	(B)		0.13	(B)
Net realized and unrealized gains (losses) on investments		0.58			0.52			0.02	(C)		1.48			0.78			(2.38	)		(1.11	)(D)
Total from investment operations		0.64			0.67			0.20			1.63			1.06			(2.19	)		(0.98	)
Distributions from:
Net investment income		(0.06	)		(0.34	)		(0.18	)		(0.22	)		(0.26	)		(0.19	)		(0.14	)
Realized capital gains		—			(0.18	)		—			—			—			(0.68	)		(0.69	)
Total distributions		(0.06	)		(0.52	)		(0.18	)		(0.22	)		(0.26	)		(0.87	)		(0.83	)
Net asset value at end of period	$	11.91		$	11.33		$	11.18		$	11.16		$	9.75		$	8.95		$	12.01
Total return		5.66	%(E)		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		$	9		$	8		$	8		$	7		$	7,948		$	8,836
Ratio to average net assets:
Net expenses(F)		0.08	%(G)		0.14	%(G)		0.32	%		0.32	%		0.32	%		0.32	%		0.70	%
Gross expenses(F)		303.36	%(G)		230.25	%(G)		111.34	%		183.59	%		0.99	%		0.61	%		0.99	%
Net investment income(F)		1.09	%(G)		3.15	%(G)		1.63	%		1.43	%		2.99	%		2.21	%		0.98	%
Portfolio turnover rate		25	%(E)		73	%(E)(H)		77	%		9	%		38	%		32	%		43	%

^(A) The Fund changed its fiscal year end from July 31 to December 31. See Note 8 in Notes to Financial Statements.

^(B) The net investment income per share is based on average shares outstanding for the period.

^(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 than $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 purchases and sales of the Acquired Funds (see Note 8). If these transactions were included, portfolio turnover would have been higher.

See accompanying Notes to Financial Statements.

47

Notes to Financial Statements

June 30, 2013 (Unaudited)

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 pursuant to a Declaration of Trust dated November 18, 1982. The Trust consists of nineteen funds, including the following five funds (individually, a “Fund”, and collectively, the “Funds”):

Touchstone Dynamic Equity Fund (“Dynamic 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 Allocation 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 goal of each of the underlying funds that the Allocation Funds invest in is as follows:

Fund	Investment Goal
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 Markets Equity Fund	Seeks capital appreciation by primarily investing in equity securities of companies in emerging markets.
Touchstone Flexible Income Fund	Seeks a high level of income consistent with reasonable risk by investing primarily in income producing securities. Capital appreciation is a secondary goal.
Touchstone Focused Fund	Seeks capital appreciation by primarily investing in equity securities.
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 Growth Opportunities Fund	Seeks long-term growth of capital by investing primarily in stocks of U.S. companies of any size.
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 liquidity and stability of principal. It invests in U.S. government securities and high quality money market instruments rated in one of the top two short-term rating categories or determined to be of comparable quality.
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 primarily investing in equity securities of non-U.S. small capitalization companies, including companies located in countries with emerging markets.

48

Notes to Financial Statements (Unaudited) (Continued)

Fund	Investment Goal
Touchstone International Value Fund	Seeks long-term capital growth by primarily investing in equity securities of non-U.S. companies.
Touchstone Merger Arbitrage Fund	Seeks to achieve positive absolute returns regardless of market conditions over the long-term. It primarily invests 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 its shares as a primary goal and to earn income as a secondary goal by primarily investing in common stocks of mid capitalization U.S. companies.
Touchstone Mid Cap Value Fund	Seeks capital appreciation by primarily investing in common stocks of medium capitalization companies.
Touchstone Premium Yield Equity Fund	Seeks long-term growth of capital and high current income by investing primarily in equity securities of any size.
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 Small Cap Core Fund	Seeks capital appreciation by primarily investing in common stocks of small capitalization U.S. companies.
Touchstone Small Cap Growth Fund	Seeks long-term capital growth by investing primarily in stocks of small-cap companies.
Touchstone Small Company Value Fund	Seeks long-term capital growth by investing primarily in stocks of small-cap companies.
Touchstone Total Return Bond Fund	Seeks to provide current income, by primarily investing in fixed-income securities. Capital appreciation is a secondary goal.
Touchstone Ultra Short Duration Fixed Income Fund	Seeks maximum total return consistent with the preservation of capital by investing primarily in fixed income securities.
Touchstone Value Fund	Seeks long-term capital growth by primarily investing in equity securities of large- and mid-capitalization 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.

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 their 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 a Fund’s own assumptions in determining the fairvalue of investments)

49

Notes to Financial Statements (Unaudited) (Continued)

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 June 30, 2013, 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 or Tabular Presentation, which also includes a breakdown of the Fund’s investments by sector allocation. There were no Level 3 securities for the Funds during the six months ended June 30, 2013.

All transfers in and out of the levels are recognized at the value at the end of the period. During the six months ended June 30, 2013, there were no transfers between Levels 1, 2 and 3 for all Funds.

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 (“NAV”) 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.

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 NAV of the Funds. 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 Funds’ 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

50

Notes to Financial Statements (Unaudited) (Continued)

portfolio security was halted during the day and did not resume prior to the Funds’ 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 (the “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 typically 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 their shares may trade at a premium or discount to their NAV. 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 Funds’ fees and expenses.

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 periodically 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 June 30, 2013, the Dynamic Equity Fund held securities sold short with a fair value of $12,391,658 and had securities with a fair value of $74,644,376 held as collateral for both securities sold short and written options. Additionally, as of June 30, 2013, the Dynamic Equity Fund had cash collateral in the amount of $125,527 for both securities sold short and options written.

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

51

Notes to Financial Statements (Unaudited) (Continued)

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 exchange-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 June 30, 2013, the Dynamic Equity Fund held written options with a fair value of $404,055 and had securities with a fair value of $74,644,376 held as collateral for both securities sold short and options written. Additionally, as of June 30, 2013, the Dynamic Equity Fund also had cash collateral in the amount of $125,527 for both securities sold short and options written.

Derivative instruments and hedging activities — In order to better define its contractual rights and to secure rights that will help the Funds mitigate their counterparty risk, the Funds may enter into an International Swaps and Derivatives Association, Inc. Master Agreements (“ISDA Master Agreement” or “MNA”) or similar agreement with certain counterparties. An ISDA Master Agreement is a bilateral agreement between a Fund and a counterparty that governs over-the-counter (“OTC”) derivates and foreign exchange contracts, and typically contains, among other things, collateral posting terms and master netting provisions in the event of a default or termination. Under an ISDA Master Agreement, a party may, under certain circumstances, offset with the counterparty certain derivative financial instrument’s payables or receivables with collateral held or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default (close-out netting). These default events include bankruptcy or insolvency of the counterparty. Note, however, that bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset.

When entering into a derivative transaction, a Fund may be required to post and maintain collateral or margin (including both initial and maintenance margin). Collateral and margin requirements differ by type of derivative. Margin requirements are established by the broker or clearing house for exchange traded and centrally cleared derivatives (financial futures contracts, options, and centrally cleared swaps). Brokers can ask for margining in excess of the clearing house’s minimum in certain circumstances. Collateral terms are contract specific for OTC derivatives (foreign currency exchange contracts, options, and swaps). For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the marked-to-market amount for each transaction under such agreement and comparing that amount to the value of any collateral currently pledged by the Fund and the counterparty. For financial reporting purposes, cash collateral that has been pledged to cover obligations of the Fund and cash collateral received from the counterparty, if any, is reported separately on the Statements of Assets and Liabilities as cash pledged as collateral and cash received as collateral, respectively. Non-cash collateral pledged by the Fund, if any, is noted in the Portfolio of Investments. To the extent amounts due to the Fund from its counterparties are not fully collateralized, contractually or otherwise, the Fund bears the risk of loss from counterparty non-performance. A Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

52

Notes to Financial Statements (Unaudited) (Continued)

Certain ISDA Master Agreements allow counterparties to OTC derivatives transactions to terminate derivative contracts prior to maturity in the event the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of their ISDA Master Agreement, which would cause the Fund to accelerate payment of any net liability owed to the counterparty.

For financial reporting purposes, the Funds do not offset derivative assets and derivative liabilities that are subject to netting arrangements in the Statements of Assets and Liabilities.

As of June 30, 2013, the Dynamic Equity Fund’s derivative assets and liabilities (by type) on a gross basis were as follows:

	Assets		Liabilities
Derivative Financial Instruments:
Written Options	$	—	$	404,055
Total gross amount of assets and liabilities subject to MNA	$	—	$	404,055

The following table presents the Dynamic Equity Fund’s derivative liabilities net of amounts available for offset under a MNA and net of the related collateral pledged by the Fund as of June 30, 2013:

			Gross Amounts
			Offset in
	Gross Amount of		Statement of		Non-cash						Net Amount of
	Recognized		Assets and		Collateral			Cash Collateral			Derivative
	Liabilities(A)		Liabilities		Pledged(B)			Pledged(B)			Liabilities(C)
Written Options	$	404,055	$	—	$	(400,092	)	$	(3,963	)	$	—
Total	$	404,055	$	—	$	(400,092	)	$	(3,963	)	$	—

(A) Gross and net amounts are equal.

(B) Pershing is the counterparty.

(C) Net amount represents the net amount payable due to the counterparty in the event of default.

The following table sets forth the fair value of the Funds’ derivative financial instruments by primary risk exposure as of June 30, 2013:

Fair Value of Derivative Investments

As of June 30, 2013

	Derivatives not accounted for as hedging	Asset		Liability
Fund	instruments under ASC 815	Derivatives*		Derivatives*
Dynamic Equity Fund	Options - Equity Contracts	$	—	$	404,055

* Statements of Assets and Liabilities Location: Written options, at market value.

53

Notes to Financial Statements (Unaudited) (Continued) 

The following table sets forth the operations of the Funds’ derivative financial instruments by primary risk exposure as of June 30, 2013.

The Effect of Derivative Investments on the Statement of Operations

for the Six Months Ended June 30, 2013

					Change in
					Unrealized
	Derivatives not accounted for as hedging	Realized Loss			Appreciation
Fund	instruments under ASC 815	on Derivatives			on Derivatives*
Dynamic Equity Fund	Purchased Options - Equity Contacts	$	(720,908	)*	$	—
	Written Options - Equity Contacts		(2,513,889	)**		59,616

* Statements of Operations Location: Net realized gain on investments from non-affiliated securities.

** Statements of Operations Location: Net realized loss on written options and net change in unrealized appreciation on written options.

For the six months ended June 30, 2013, the average quarterly balances of outstanding derivative financial instruments were as follows:

	Dynamic
	Equity
	Fund
Equity contracts:
Written Options - Average number of contracts		1,866

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 a no-load $1 million subscription may be subject to a contingent deferred sales charge (“CDSC”) of up to 1% if redeemed within a one-year period from the date of purchase. 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 Dynamic Equity Fund declares and distributes net investment income, if any, annually as a dividend to shareholders. The Balanced Allocation Fund, Conservative Allocation Fund, Growth Allocation Fund, and Moderate Growth Allocation Fund each declare and distribute net investment income, if any, quarterly as a dividend to shareholders. Each Fund makes distributions of capital gains, if any, at least annually, net of applicable capital loss carryforwards. Income distributions 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.

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

54

Notes to Financial Statements (Unaudited) (Continued)

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 in the Trust, and/or in Touchstone Investment Trust, Touchstone Institutional Funds Trust, Touchstone Variable Series Trust, Touchstone Funds Group Trust, and Touchstone Tax-Free Trust (“Touchstone Fund Complex”), 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. 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 Funds retained the redemption/exchange fee for the benefit of the remaining shareholders by crediting Paid-in Capital. The redemption fees can be found on the Statements of Changes in Net Assets - Capital Stock Activity. Effective April 16, 2012, the redemption fee plan was terminated.

3. Investment Transactions

Investment transactions (excluding short-term investments and U.S. Government securities) were as follows for the six months ended June 30, 2013:

	Dynamic		Balanced		Conservative
	Equity		Allocation		Allocation
	Fund		Fund		Fund
Purchases of investment securities	$	79,882,640	$	28,074,479	$	10,682,816
Proceeds from sales and maturities	$	94,829,812	$	61,011,078	$	28,518,398
			Moderate
	Growth		Growth
	Allocation		Allocation
	Fund		Fund
Purchases of investment securities	$	27,900,309	$	40,867,931
Proceeds from sales and maturities	$	38,670,441	$	73,215,351

There were no purchases or proceeds from sales and maturities of U.S. Government securities by the Funds for the six months ended June 30, 2013.

4. Transactions with Affiliates and Other Related Parties

Certain officers of the Trust are also officers of Touchstone Advisors, Inc. (the “Advisor”),Touchstone Securities, Inc. (the “Underwriter”) or BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”), the Sub-Administrator and Transfer Agent to the Funds. Such officers receive no compensation from the Trust. The Advisor and the Underwriter are each wholly-owned, indirect subsidiaries of The Western & Southern Financial Group, Inc.

55

Notes to Financial Statements (Unaudited) (Continued) 

MANAGEMENT & EXPENSE LIMITATIONS AGREEMENTS

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

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
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
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
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
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

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

Analytic Investors, LLC	Ibbotson Associates, Inc
Dynamic Equity Fund	Balanced Allocation Fund
	Conservative Allocation Fund
	Growth Allocation Fund
	Moderate Growth Allocation Fund

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

The Advisor entered into an Expense Limitation Agreement (the “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 GAAP; 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

56

Notes to Financial Statements (Unaudited) (Continued)

expenses, advisory fees, administration fees and to reimburse expenses in order to maintain the following expense limitations for the Funds:

										Institutional
Fund	Class A			Class C			Class Y			Class
Dynamic Equity Fund		1.55	%**		2.30	%**		1.30	%**		1.25	%**
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	%**

* These expense limitations will remain in effect until at least September 10, 2013.

** These expense limitations will remain in effect until at least April 29, 2014.

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

During the six months ended June 30, 2013, the Advisor or affiliates waived investment advisory fees and administration fees or reimbursed expenses, including 12b-1 fees, of the Funds as follows:

					Other
	Investment				Operating
	Advisory		Administration		Expenses
	Fees Waived		Fees Waived		Reimbursed
Dynamic Equity Fund	$	—	$	—	$	26,349
Balanced Allocation Fund		112,653		111,743		125,158
Conservative Allocation Fund		71,181		64,637		94,053
Growth Allocation Fund		99,960		70,167		121,951
Moderate Growth Allocation Fund		178,567		135,425		162,034

Under the terms of the Expense Limitation 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 or assumed expenses for the Funds. No recoupment will occur unless a Fund’s operating expenses are below the expense limitation amount.

As of June 30, 2013, the Advisor may seek recoupment of previously waived and reimbursed fees as follows:

	Expiration		Expiration		Expiration
	July 31,		December		June
Fund	2015		31, 2015		30, 2016
Dynamic Equity Fund	$	-	$	10,969	$	3,757
Balanced Allocation Fund		18,241		172,469		270,433
Conservative Allocation Fund		24,108		115,995		176,366
Growth Allocation Fund		32,481		138,241		221,842
Moderate Growth Allocation Fund		31,679		231,358		350,327

The Advisor did not recoup any amounts it previously waived or reimbursed during the six months ended June 30, 2013.

ADMINISTRATION AGREEMENT

The Advisor entered into an Administration 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

57

Notes to Financial Statements (Unaudited) (Continued) 

(“SEC”) 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% on the first $6 billion of the aggregate average daily net assets of the Touchstone Fund Complex (excluding Touchstone Institutional Money Market Fund,Touchstone Institutional Funds Trust, and Touchstone Variable Series Trust); 0.16% of the next $4 billion of aggregate average daily net assets; and 0.12% of the aggregate average daily net assets over $10 billion. The fee is allocated among the funds of the Touchstone Fund Complex (excluding Touchstone Institutional Money Market Fund, Touchstone Institutional Funds Trust, and Touchstone Variable Series Trust) on the basis of relative daily net assets.

The Advisor has engaged BNY Mellon as the Sub-Administrator to the Trust. BNY Mellon provides administrative 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 AND SHAREHOLDER SERVICING FEE ARRANGEMENTS

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 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 offering Class C shares 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).

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 the Underwriter, the Underwriter earned the following from underwriting and broker commissions on the sale of Class A shares of the Funds listed below during the six months ended June 30, 2013:

Fund	Amount
Dynamic Equity Fund	$	15,581
Balanced Allocation Fund		50,862
Conservative Allocation Fund		13,909
Growth Allocation Fund		13,505
Moderate Growth Allocation Fund		40,202

58

Notes to Financial Statements (Unaudited) (Continued)

In addition, the Underwriter collected CDSCs on the redemption of Class C shares of the Funds listed below during the six months ended June 30, 2013:

Fund	Amount
Dynamic Equity Fund	$	120
Balanced Allocation Fund		153
Conservative Allocation Fund		16
Growth Allocation Fund		138
Moderate Growth Allocation Fund		690

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 SEC. To the extent that the 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 the Dynamic Equity Fund’s investment in the Touchstone Institutional Money Market Fund for the six months ended June 30, 2013, is as follows:

	Share Activity
												Market
	Balance							Balance				Value
Fund	12/31/12		Purchases		Sales			06/30/13		Dividends		06/30/13
Dynamic Equity Fund		2,985,549		18,064,713		(18,749,206	)		2,301,056	$	519	$	2,301,056

A summary of each Allocation Fund’s transactions in affiliated underlying funds during the six months ended June 30, 2013 is as follows:

Balanced Allocation Fund
	Purchases at		Proceeds		Market Value		Dividend		Net Realized
Underlying Fund	cost		from sale		06/30/13		Income		Gain/Loss
Touchstone Core Bond Fund	$	186,330	$	2,376,139	$	3,816,791	$	81,947	$	(13,380	)
Touchstone Total Return Bond Fund		570,894		3,273,499		13,032,222		205,112		3,773
Touchstone Ultra Short Duration Fixed Income Fund ^		13,889,493		15,898,250		12,861,959		128,222		(8,242	)
Touchstone International Small Cap Fund		59,385		1,295,845		3,803,348		—		78,121
Touchstone International Value Fund		5,332,825		2,691,945		13,696,109		—		(53,607	)
Touchstone Focused Fund		7,459,094		5,906,959		5,141,274		19,954		53,421
Touchstone Value Fund		105,106		5,839,857		9,917,716		102,874		712,102
Touchstone Growth Opportunities Fund		2,613,531		122,673		2,547,555		—		4,444
Touchstone Sands Capital Institutional Growth		1,285,981		2,470,219		8,909,932		—		(16,230	)
Touchstone Premium Yield Equity Fund		7,964,446		279,087		7,695,373		59,219		3,763
Touchstone Flexible Income Fund		868,218		1,339,962		6,341,451		153,202		(2,362	)
Touchstone International Fixed Income Fund		144,723		1,310,504		6,316,308		—		(30,049	)
Touchstone Dynamic Equity Fund		3,477		1,558,939		5,150,503		—		23,735

59

Notes to Financial Statements (Unaudited) (Continued)

Balanced Allocation Fund 

	Purchases at		Proceeds		Market Value		Dividend		Net Realized
Underlying Fund	cost		from sale		06/30/13		Income		Gain/Loss
Touchstone Emerging Markets Equity Fund	$	364,468	$	1,193,485	$	4,861,816	$	—	$	76,426
Touchstone Merger Arbitrage Fund		65,949		968,184		3,870,366		—		5,494
Touchstone Institutional Money Market Fund		87,815		843,143		3,869,553		1,219		—
Touchstone Small Cap Core Fund		25,072		1,030,614		2,547,371		—		62,663
Touchstone Small Company Value Fund		1,319,360		54,245		1,298,439		7,678		1,516
Touchstone High Yield Fund		791,384		789,853		3,789,779		106,101		8,515
Touchstone Global Real Estate Fund		235,624		1,301,411		3,665,605		60,547		48,888
Touchstone Mid Cap Fund		14,994		1,061,362		2,553,997		—		86,776
Touchstone Small Cap Growth Fund		1,365,438		65,874		1,290,280		—		187
Touchstone Mid Cap Growth Fund		2,588		3,463,460		—		—		183,933
Touchstone Large Cap Relative Value Fund +		3,462		5,849,641		—		—		213,433
Touchstone Mid Cap Value Fund		2,335		3,480,220		—		5,953		371,207
Touchstone Global Equity Fund +		4,481		3,300,698		—		—		243,051
Touchstone Large Cap Growth Fund, Class Y		—		3,289,584		—		—		916,661
Touchstone International Equity Fund +		3,977		6,623,697		—		—		1,297,198
Touchstone Small Cap Growth Fund		1,356,551		1,384,251		—				27,700
Total:	$	46,127,001	$	79,063,600	$	126,977,747	$	932,028	$	4,299,137

Conservative Allocation Fund 

	Purchases at		Proceeds		Market Value		Dividend		Net Realized
Underlying Fund	cost		from sale		06/30/13		Income		Gain/Loss
Touchstone Core Bond Fund	$	181,731	$	1,733,061	$	3,576,823	$	74,862	$	48,437
Touchstone Total Return Bond Fund		617,443		3,281,799		13,580,971		217,578		(2,046	)
Touchstone Ultra Short Duration Fixed Income Fund ^		15,597,333		18,805,128		14,260,954		149,954		(16,162	)
Touchstone International Fixed Income Fund		253,482		1,372,459		5,691,528		—		(33,166	)
Touchstone Flexible Income Fund		1,345,488		1,049,877		5,011,829		116,905		79
Touchstone International Small Cap Fund		23,451		265,692		710,842		—		18,025
Touchstone International Value Fund		996,673		1,075,526		3,502,813		—		(7,015	)
Touchstone Premium Yield Equity Fund		3,917,988		373,308		3,576,034		29,141		6,517
Touchstone Institutional Money Market Fund		84,348		914,600		3,568,896		1,202		—

60

Notes to Financial Statements (Unaudited) (Continued) 

Conservative Allocation Fund 

	Purchases at		Proceeds		Market Value		Dividend		Net Realized
Underlying Fund	cost		from sale		06/30/13		Income		Gain/Loss
Touchstone Growth Opportunities Fund	$	781,620	$	86,379	$	712,062	$	—	$	2,192
Touchstone Sands Capital Institutional Growth Fund		293,445		2,221,779		2,852,448		—		5,292
Touchstone Merger Arbitrage Fund		823,242		894,409		3,562,987		—		5,848
Touchstone Value Fund		208,388		2,579,090		3,550,864		36,995		453,377
Touchstone Dynamic Equity Fund		118,231		1,811,749		2,137,973		—		48,207
Touchstone High Yield Fund		124,305		590,244		2,134,813		66,926		8,758
Touchstone Global Real Estate Fund		150,622		547,556		1,378,947		22,874		22,175
Touchstone Small Cap Core Fund		83,081		1,394,768		710,887		—		129,683
Touchstone Emerging Markets Equity Fund		75,370		193,109		688,655		—		9,846
Touchstone Large Cap Relative Value Fund +		25,310		2,404,253		—		—		94,292
Touchstone Global Equity Fund +		8,500		946,568		—		—		73,625
Touchstone Mid Cap Fund		14,181		1,018,460		—		—		139,465
Total:	$	25,724,232	$	43,559,814	$	71,210,326	$	716,437	$	1,007,429

Growth Allocation Fund 

	Purchases at		Proceeds		Market Value		Dividend		Net Realized
Underlying Fund	cost		from sale		06/30/13		Income		Gain/Loss
Touchstone International Small Cap Fund	$	1,703,928	$	705,267	$	5,580,023	$	—	$	17,056
Touchstone International Value Fund		6,148,715		1,386,409		12,548,038		—		(35,142	)
Touchstone Focused Fund		8,643,990		7,129,306		6,435,599		25,543		46,165
Touchstone Value Fund		129,182		2,434,404		6,393,668		66,212		337,483
Touchstone Growth Opportunities Fund		2,519,876		988,585		1,600,970		—		36,841
Touchstone Sands Capital Institutional Growth Fund		816,801		1,017,976		7,216,152		—		7,563
Touchstone Emerging Markets Equity Fund		516,115		1,514,694		6,747,143		—		78,162
Touchstone Ultra Short Duration Fixed Income Fund ^		6,212,993		5,458,158		4,835,349		34,415		(2,523	)
Touchstone Premium Yield Equity Fund, Class Y		5,106,283		277,916		4,833,912		37,461		613
Touchstone Small Cap Core Fund		47,297		805,257		3,196,299		—		72,218
Touchstone Small Company Value Fund		78,156		384,229		1,619,407		11,830		32,338
Touchstone Global Real Estate Fund		182,312		827,201		4,523,542		75,159		43,169
Touchstone Mid Cap Fund		32,010		1,460,331		1,603,987		—		223,459
Touchstone Mid Cap Growth Fund		1,710,042		1,270,409		2,399,039		—		36,198
Touchstone Dynamic Equity Fund		54,801		531,283		3,222,752		—		20,737

61

Notes to Financial Statements (Unaudited) (Continued)

Growth Allocation Fund 

	Purchases at		Proceeds		Market Value		Dividend		Net Realized
Underlying Fund	cost		from sale		06/30/13		Income		Gain/Loss
Touchstone Mid Cap Value Fund	$	25,532	$	1,514,470	$	2,424,639	$	14,185	$	140,045
Touchstone Small Cap Growth Fund		2,576,479		148,445		2,410,861		—		521
Touchstone Merger Arbitrage Fund		60,930		170,357		1,617,325		—		2,519
Touchstone International Equity Fund +		—		5,469,091		—		—		1,241,131
Touchstone Emerging Growth Fund +		—		2,841,554		—		—		437,022
Touchstone Global Equity Fund +		—		4,535,697		—		—		306,397
Touchstone Large Cap Relative Value Fund +		—		3,680,357		—		—		176,932
Touchstone Large Cap Growth Fund		—		2,732,356		—		—		818,427
Touchstone Small Cap Growth Fund		2,532,668		2,584,490		—		—		51,821
Touchstone Total Return Bond Fund		—		—		—		11,580		—
Total:	$	39,098,110	$	49,868,242	$	79,208,705	$	276,385	$	4,089,152

Moderate Growth Allocation Fund 

	Purchases at		Proceeds		Market Value		Dividend		Net Realized
Underlying Fund	cost		from sale		06/30/13		Income		Gain/Loss
Touchstone International Small Cap Fund	$	1,555,785	$	1,215,331	$	6,129,921	$	—	$	32,159
Touchstone International Value Fund		9,851,554		2,963,640		19,603,594		—		(39,309	)
Touchstone Total Return Bond Fund		832,670		3,287,772		15,017,829		240,578		2,808
Touchstone Ultra Short Duration Fixed Income Fund ^		10,433,642		9,692,336		8,168,502		76,224		(5,021	)
Touchstone Focused Fund		10,074,604		10,876,575		9,301,092		36,585		100,680
Touchstone Value Fund		155,035		5,817,817		12,340,651		128,079		1,081,657
Touchstone Growth Opportunities Fund		4,851,277		1,904,285		3,079,618		—		69,460
Touchstone Sands Capital Institutional Growth Fund		41,348		3,114,471		12,346,359		—		(11,251	)
Touchstone Emerging Markets Equity Fund		514,909		1,925,110		9,982,675		—		114,603
Touchstone Premium Yield Equity Fund, Class Y		9,800,373		500,289		9,312,533		72,006		3,235
Touchstone Small Cap Core Fund		12,648		1,527,581		4,628,210		—		107,550
Touchstone Small Company Value Fund		1,704,007		627,991		3,123,389		20,704		29,388
Touchstone Dynamic Equity Fund		51,088		1,512,059		6,215,946		—		35,196
Touchstone Mid Cap Fund		8,986		3,192,982		3,088,779		—		441,721
Touchstone Mid Cap Growth Fund		5,990		909,547		3,081,258		—		3,186
Touchstone Flexible Income Fund		1,016,423		865,301		6,156,811		147,235		(3,636	)

62

Notes to Financial Statements (Unaudited) (Continued)

Moderate Growth Allocation Fund 

	Purchases at		Proceeds		Market Value		Dividend		Net Realized
Underlying Fund	cost		from sale		06/30/13		Income		Gain/Loss
Touchstone Global Real Estate Fund	$	115,670	$	1,663,657	$	5,708,171	$	95,217	$	70,992
Touchstone Merger Arbitrage Fund		101,890		626,214		3,116,634		—		5,346
Touchstone Mid Cap Value Fund		25,649		3,011,571		3,113,642		19,659		247,609
Touchstone Small Cap Growth Fund		3,273,801		151,589		3,100,065		—		606
Touchstone High Yield Fund		153,049		568,866		3,066,792		93,924		7,341
Touchstone International Fixed Income Fund		84,605		428,628		3,062,749		—		(10,820	)
Touchstone International Equity Fund +		—		9,544,929		—		—		1,774,821
Touchstone Emerging Growth Fund +		—		1,977,570		—		—		258,849
Touchstone Large Cap Relative Value Fund +		—		7,716,921		—		—		315,137
Touchstone Global Equity Fund +		—		7,564,889		—		—		437,063
Touchstone Large Cap Growth Fund		—		3,758,535		—		—		1,373,503
Touchstone Small Cap Growth Fund		3,223,959		3,289,925		—		—		65,967
Total:	$	57,888,962	$	90,236,381	$	152,745,220	$	930,211	$	6,508,840

^ Includes activity of the Touchstone Short Duration Fixed Income Fund prior to merging into the Touchstone Ultra Short Duration Fixed Income Fund on May 17, 2013.

+ The Fund ceased operations on March 27, 2013.

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. It is each Fund’s policy to distribute all of its taxable income and 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.

63

Notes to Financial Statements (Unaudited) (Continued) 

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

			Dynamic						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	$	—	$	514,890	$	—	$	6,140,882	$	607,351	$	1,392,283
From long-term capital gains		—		—		—		137,848		—		—
Total distributions	$	—	$	514,890	$	—	$	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		—		—
Total distributions	$	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		—		—
Total distributions	$	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			Balanced			Conservative
	Equity Fund			Allocation Fund			Allocation Fund
Tax cost of portfolio investments	$	74,694,953		$	152,721,699		$	88,036,474
Gross unrealized appreciation		8,882,208			5,437,347			2,033,192
Gross unrealized depreciation		(1,724,591	)		(3,107,835	)		(1,828,856	)
Net unrealized appreciation (depreciation)		7,157,617			2,329,512			204,336
Net unrealized appreciation (depreciation) on written options and short sales		(182,336	)		—			—
Accumulated capital and other losses		(148,826,198	)		(42,487,158	)		(3,634,373	)
Post-October and qualified late-year losses		(933,316	)		(1,960	)		(3,365	)
Undistributed ordinary income		15,903			—			—
Undistributed capital gains		—			—			—
Other temporary differences		(31,406	)		—			—
Accumulated earnings (deficit)	$	(142,799,736	)	$	(40,159,606	)	$	(3,433,402	)

64

Notes to Financial Statements (Unaudited) (Continued) 

				Moderate
	Growth			Growth
	Allocation Fund			Allocation Fund
Tax cost of portfolio investments	$	83,860,637		$	173,227,179
Gross unrealized appreciation		4,381,174			8,377,699
Gross unrealized depreciation		(3,556,478	)		(4,717,190	)
Net unrealized appreciation (depreciation)		824,696			3,660,509
Accumulated capital and other losses		(44,481,926	)		(44,872,260	)
Post-October and qualified late-year losses		(2,937	)		(31,574	)
Undistributed ordinary income		—			—
Undistributed capital gains		498,325			—
Other temporary differences		—			39,467
Accumulated earnings (deficit)	$	(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 deferrals and passive foreign investment company adjustment.

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
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. The provisions of the Act became effective 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.

** Utilization may be limited by current income tax regulations.

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.

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.

As of June 30, 2013, the Trust had the following federal tax cost resulting in net unrealized appreciation (depreciation) as follows:

								Net
			Gross		Gross			Unrealized
	Federal Tax		Unrealized		Unrealized			Appreciation
Fund	Cost		Appreciation		Depreciation			(Depreciation)
Dynamic Equity Fund	$	69,390,129	$	9,033,602	$	(1,478,299	)	$	7,555,303
Balanced Allocation Fund		122,143,048		6,008,061		(1,173,362	)		4,834,699
Conservative Allocation Fund		69,714,199		2,123,201		(627,074	)		1,496,127

65

Notes to Financial Statements (Unaudited) (Continued) 

								Net
			Gross		Gross			Unrealized
	Federal Tax		Unrealized		Unrealized			Appreciation
Fund	Cost		Appreciation		Depreciation			(Depreciation)
Growth Allocation Fund	$	74,391,234	$	5,541,591	$	(724,120	)	$	4,817,471
Moderate Growth Allocation Fund		143,766,011		10,061,406		(1,082,197	)		8,979,209

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. However, based on experience, the Funds expect the risk of loss to be remote.

7. 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.

8. 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 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

* Fund 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 of the Trust approved an Agreement and Plan of Reorganization (the “Plans”) providing for the transfer of all the assets and liabilities of the Fifth Third Life Model Moderate Fund, Fifth Third Life Model Conservative Fund, Fifth Third Life Model Moderately Conservative Fund, Fifth Third Life Model Aggressive Fund, and Fifth Third Life Model 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 Life Model Moderate Fund	Balanced Allocation Fund
Fifth Third Life Model Conservative Fund	Conservative Allocation Fund
Fifth Third Life Model Moderately Conservative Fund	Conservative Allocation Fund
Fifth Third Life Model Aggressive Fund	Growth Allocation Fund

66

Notes to Financial Statements (Unaudited) (Continued)

Acquired Funds	Touchstone Funds
Fifth Third Life Model 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
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 corresponding Touchstone Fund.  

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

67

Notes to Financial Statements (Unaudited) (Continued) 

									After
				Before Reorganization					Reorganization
				Fifth Third
	Fifth Third			LifeModel			Touchstone		Touchstone
	LifeModel			Moderately			Conservative		Conservative
	Conservative			Conservative			Allocation		Allocation
	Fund			Fund			Fund		Fund
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. 

(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 corresponding Touchstone Fund. 

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

68

Notes to Financial Statements (Unaudited) (Continued)

					After
	Before Reorganization				Reorganization
	Fifth Third		Touchstone		Touchstone
	Life Model		Growth		Growth
	Aggressive		Allocation		Allocation
	Fund		Fund		Fund
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 corresponding Touchstone Fund.  

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

						After
	Before Reorganization					Reorganization
	Fifth Third			Touchstone		Touchstone
	Life Model			Moderate		Moderate
	Moderately			Growth		Growth
	Aggressive			Allocation		Allocation
	Fund			Fund		Fund
Class A*
Shares		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	$	11.39
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 corresponding Touchstone Fund.  

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

69

Notes to Financial Statements (Unaudited) (Continued)

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.

9. 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. There were no subsequent events that necessitated recognition or disclosure on the Funds’ financial statements.

70

Other Items (Unaudited) 

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 is available as an appendix to the most recent Statement of Additional Information, which can be obtained without charge upon request by calling toll free 1.800.543.0407 or by visiting the Touchstone website at www.touchstoneinvestments.com or on the Securities and Exchange Commission’s (the “Commission”) website at www.sec.gov. Information regarding how those proxies were voted during the most recent twelve-month period ended June 30 is also available without charge by calling toll free 1.800.543.0407 or on the Commission’s website at www.sec.gov.

Quarterly Portfolio Disclosure

The Trust files a complete listing of portfolio holdings for each Fund as of the end of the first and third quarters of each fiscal year on Form N-Q. The complete listing (i) is available on the Commission’s website; (ii) may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC; (iii) will be made available to shareholders upon request by calling 1.800.543.0407; or (iv) can be obtained on the Touchstone website at www.touchstoneinvestments.com. 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, (January 1, 2013 through June 30, 2013).

Actual Expenses

The first line of the table below for each share class of a Fund 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 June 30, 2013” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line of the table below for each share class of a Fund 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.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line for each share class of a Fund in the table below is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

71

Other Items (Unaudited) (Continued) 

		Net Expense			Beginning		Ending		Expenses
		Ratio			Account		Account		Paid During
		Annualized			Value		Value		the Period
		June 30,			January 1,		June 30,		Ended
		2013			2013		2013		June 30, 2013*
Touchstone Dynamic Equity Fund
Class A	Actual		1.88	%	$	1,000.00	$	1,015.47	$	9.81	**
Class A	Hypothetical		1.88	%	$	1,000.00	$	1,012.80	$	9.39
Class C	Actual		2.63	%	$	1,000.00	$	1,099.40	$	13.69	**
Class C	Hypothetical		2.63	%	$	1,000.00	$	1,011.75	$	13.12
Class Y	Actual		1.63	%	$	1,000.00	$	1,104.30	$	8.50	**
Class Y	Hypothetical		1.63	%	$	1,000.00	$	1,016.71	$	8.15
Institutional Class	Actual		1.58	%	$	1,000.00	$	1,105.10	$	8.25	**
Institutional Class	Hypothetical		1.58	%	$	1,000.00	$	1,016.96	$	7.90
Touchstone Balanced Allocation Fund***
Class A	Actual		0.33	%	$	1,000.00	$	1,041.70	$	1.67
Class A	Hypothetical		0.33	%	$	1,000.00	$	1,023.16	$	1.66
Class C	Actual		1.08	%	$	1,000.00	$	1,037.90	$	5.46
Class C	Hypothetical		1.08	%	$	1,000.00	$	1,019.44	$	5.41
Class Y	Actual		0.08	%	$	1,000.00	$	1,043.00	$	0.41
Class Y	Hypothetical		0.08	%	$	1,000.00	$	1,024.40	$	0.40
Institutional Class	Actual		0.08	%	$	1,000.00	$	1,043.20	$	0.41
Institutional Class	Hypothetical		0.08	%	$	1,000.00	$	1,024.40	$	0.40
Touchstone Conservative Allocation Fund***
Class A	Actual		0.33	%	$	1,000.00	$	1,016.80	$	1.65
Class A	Hypothetical		0.33	%	$	1,000.00	$	1,023.16	$	1.66
Class C	Actual		1.08	%	$	1,000.00	$	1,012.10	$	5.39
Class C	Hypothetical		1.08	%	$	1,000.00	$	1,019.44	$	5.41
Class Y	Actual		0.08	%	$	1,000.00	$	1,017.10	$	0.40
Class Y	Hypothetical		0.08	%	$	1,000.00	$	1,024.40	$	0.40
Institutional Class	Actual		0.08	%	$	1,000.00	$	1,017.10	$	0.40
Institutional Class	Hypothetical		0.08	%	$	1,000.00	$	1,024.40	$	0.40
Touchstone Growth Allocation Fund***
Class A	Actual		0.33	%	$	1,000.00	$	1,065.60	$	1.69
Class A	Hypothetical		0.33	%	$	1,000.00	$	1,023.16	$	1.66
Class C	Actual		1.08	%	$	1,000.00	$	1,061.80	$	5.52
Class C	Hypothetical		1.08	%	$	1,000.00	$	1,019.44	$	5.41

72

Other Items (Unaudited) (Continued)

		Net Expense			Beginning		Ending		Expenses
		Ratio			Account		Account		Paid During
		Annualized			Value		Value		the Period
		June 30,			January 1,		June 30,		Ended
		2013			2013		2013		June 30, 2013*
Touchstone Growth Allocation Fund*** (Continued)
Class Y	Actual		0.08	%	$	1,000.00	$	1,067.30	$	0.41
Class Y	Hypothetical		0.08	%	$	1,000.00	$	1,024.40	$	0.40
Institutional Class	Actual		0.08	%	$	1,000.00	$	1,066.30	$	0.41
Institutional Class	Hypothetical		0.08	%	$	1,000.00	$	1,024.40	$	0.40
Touchstone Moderate Growth Allocation Fund***
Class A	Actual		0.33	%	$	1,000.00	$	1,054.60	$	1.68
Class A	Hypothetical		0.33	%	$	1,000.00	$	1,023.16	$	1.66
Class C	Actual		1.08	%	$	1,000.00	$	1,051.80	$	5.49
Class C	Hypothetical		1.08	%	$	1,000.00	$	1,019.44	$	5.41
Class Y	Actual		0.08	%	$	1,000.00	$	1,056.40	$	0.41
Class Y	Hypothetical		0.08	%	$	1,000.00	$	1,024.40	$	0.40
Institutional Class	Actual		0.08	%	$	1,000.00	$	1,056.60	$	0.41
Institutional Class	Hypothetical		0.08	%	$	1,000.00	$	1,024.40	$	0.40

* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (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 $8.09, $11.97, $6.52 and $6.78, respectively.

*** The annualized expense ratios for the Allocation Funds do not include fees and expenses of the Underlying Funds in which the Allocation Funds invest.

Advisory Agreement Approval Disclosure

At a meeting held on November 15, 2012, the Board of Trustees (the “Board”) of the Touchstone Strategic Trust (the “Trust”), and by a separate vote, the Independent Trustees of the Trust, considered and approved a new sub-advisory agreement (the “New Sub-Advisory Agreement”) between Touchstone Advisors, Inc. (“Touchstone”) and Analytic Investors, LLC (“Analytic”) with respect to Touchstone Dynamic Equity Fund (the “Fund”), a series of the Trust, to be effective on January 1, 2013. At the meeting, Touchstone informed the Board that the current sub-advisory agreement, dated April 16, 2012, as amended, between Touchstone and Analytic (the “Prior Sub-Advisory Agreement”) was expected to be automatically terminated on or about December 31, 2012 due to an expected change in control at Analytic. Analytic was expected to undergo a restructuring in which its employees would purchase the shares owned by Old Mutual Intermediary, LLC, a subsidiary of Old Mutual (US) Holdings, Inc., which was the majority owner of Analytic. Touchstone recommended the Fund continue to use Analytic as its sub-advisor. Touchstone reported the change in control would not affect Analytic’s management of the Fund. Analytic’s management team and key investment personnel would continue to manage the Fund and Analytic would operate the Fund under the same terms and conditions as previously agreed to by the Board.

Touchstone and Analytic provided the Board with various written materials in advance of the meeting to assist with the Board’s consideration of Analytic as sub-advisor to the Fund. Touchstone provided written and oral information stating the basis for its recommendation to continue engaging Analytic. The information also included details regarding Analytic’s: (a) investment philosophy and investment process; (b) investment management services proposed to be provided to the Fund; (c) investment management personnel; (d) operating history, infrastructure, and financial condition; (e) proposed sub-advisory fee that would be paid to Analytic by Touchstone;

73

Other Items (Unaudited) (Continued) 

and (f) reputation, expertise, and resources as an investment advisor. The Board then discussed the written materials that it received before the meeting and all other information that it received at the meeting.

In approving the New Sub-Advisory Agreement, the Board considered various factors, among them: (1) the nature, extent, and quality of services to be provided to the Fund, including the personnel who would be providing such services; (2) the Sub-Advisor’s proposed compensation; (3) the Sub-Advisor’s past performance; and (4) the terms of the New Sub-Advisory Agreement. The Board’s analysis of these factors is set forth below. The Independent Trustees were advised by independent legal counsel throughout the process.

Nature, Extent, and Quality of Services Provided; Investment Personnel. The Board considered information provided by Touchstone regarding the services to be provided by Analytic. The Board considered Analytic’s level of knowledge and investment style. The Board reviewed the experience and credentials of the investment personnel who would continue to be responsible for managing the investment of portfolio securities with respect to the Fund. The Board also noted that it is familiar with Analytic, as the sub-advisor already served as investment manager to the Fund. The Board also recognized that there would be no personnel change relating to the management of the Fund. The Board also took into account certain information and materials it received and considered in connection with its initial approval of the Prior Sub-Advisory Agreement between Touchstone and Analytic with respect to the Fund at a meeting held in February 2012.

Analytic’s Compensation. The Board took into consideration the financial condition of Analytic and any direct and indirect benefits to be derived by Analytic and its affiliates from Analytic’s relationship with the Fund. In considering the anticipated level of profitability to Analytic and its affiliates, the Board noted the proposed contractual undertaking of Touchstone to maintain expense limitations for the Fund. The Board also noted that the sub-advisory fee under the New Sub-Advisory Agreement would be paid by Touchstone out of the advisory fee that Touchstone receives from the Fund, and that the sub-advisory fee is negotiated at arm’s length. Finally, the Board noted that the proposed sub-advisory fee schedule contains breakpoints that would reduce the sub-advisory fee rate on Fund assets above specified levels.

The Board also considered certain comparative fee information concerning the current sub-advisory fee paid to Analytic for managing the Fund. The proposed sub-advisory fee was identical to the fee previously approved by the Board and shareholders of the Fund. The Board considered the amount of the advisory fee to be retained by Touchstone and the amount to be paid to Analytic with respect to the various services to be provided by each. Finally, the Board noted that from April 16, 2012 through the fiscal year end July 31, 2012, Analytic received from Touchstone sub-advisory fees totaling $149,381. Based upon their review, theTrustees concluded that the Fund’s proposed sub-advisory fee under the New Sub-Advisory Agreement was reasonable in light of Analytic’s services to the Fund.

Fund Performance. The Board also considered Analytic’s investment performance and the Fund’s performance under Analytic’s management. The Trustees reviewed Analytic’s investment performance across various sectors, highlighting its strong performance in the large-cap value universe. The Board was mindful of Touchstone’s focus on the performance of sub-advisors, including Analytic, and Touchstone’s ways of addressing underperformance.

Conclusion. The Board reached the following conclusions regarding the New Sub-Advisory Agreement: (a) Analytic is qualified to continue managing the Fund’s assets in accordance with the Fund’s investment goal and policies; (b) Analytic maintains an appropriate compliance program; (c) the Fund’s proposed sub-advisory fee is reasonable in relation to the fees of similar funds and the services to be provided by Analytic; and (d) Analytic’s proposed investment strategies are appropriate for pursuing the investment goal of the Fund. In considering the approval

74

Other Items (Unaudited) (Continued) 

of the New Sub-Advisory Agreement, the Board, including the Independent Trustees, did not identify any single factor as controlling, and each Trustee attributed different weights to the various factors. Based on its conclusions, the Board determined that approval of the New Sub-Advisory Agreement was in the best interests of the Fund and its shareholders.

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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 Semi-Annual Report. 

78

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 

West borough, MA 01581

Shareholder Service 

800.543.0407

* A Member of Western & Southern Financial Group

TSF-54CC-TST-SAR-1306

Item 2. Code of Ethics.

Not applicable.

Item 3. Audit Committee Financial Expert.

Not applicable.

Item 4. Principal Accountant Fees and Services.

Not applicable.

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) Not applicable.

(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 08/29/13

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 08/29/13

By (Signature and Title)*	/s/ Terrie A. Wiedenheft
	Terrie A. Wiedenheft, Controller and Treasurer
	(principal financial officer)

Date 08/29/13

^* Print the name and title of each signing officer under his or her signature.